Ohio's Supply Chain Infrastructure Maximizes ROI for Shale Gas

COLUMBUS, Ohio, Oct. 4, 2011 /PRNewswire/ -- Costs associated with accessing markets, shipping products and supplies and support services can be a considerable business expense for energy companies involved in the extraction, processing, transportation and distribution of shale gas. In addition, having efficient access to an established energy supply chain and natural gas delivery system can advance or hinder a project.

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Energy companies are looking at both the Marcellus and Utica Shale natural gas reserves to supplement the nation's energy supply and to keep gas commodity costs in check. The Marcellus Shale formation stretches from the edge of Maryland to Pennsylvania, New York, West Virginia and Appalachian Ohio region along the Ohio River. The boundaries of the deeper Utica Shale formation extend under the Marcellus Shale region and beyond. Shale gas has the potential to meet the total U.S. natural gas demand for generations.

Proximity to the population centers of the United States and Canada, along with the expected longevity of the resource, establishes the Marcellus and Utica Shale formations as an important long-term and stable source of natural gas supply for the eastern United States. Energy companies that want to maximize their investment in establishing a supply operation to support drilling, processing or delivering the natural gas derived from shale formations must identify a central location that is proximate to all five states that occupy the formation.

A new white paper by the Ohio Business Development Coalition looks at how Ohio's Appalachian Region provides supply chain companies with cost-effective and easy access to all states involved in the Marcellus and Utica Shale gas industry, while maximizing return on investment now and over the life of the shale gas reserves. To download the white paper, visit http://www.ohiomeansbusiness.com/enterprise_appalachia/.

Ohio is the ideal location choice for Tier I and II suppliers to efficiently and affordably supply the Marcellus and Utica Shale gas industry, offering a central location, logistics infrastructures, a skilled workforce and a favorable state tax structure. Everything that made Ohio the ideal location choice for suppliers to the automotive industry is in place for Tier I and II suppliers to leverage to efficiently and affordably supply the Marcellus and Utica Shale gas industry. This standing capability results in lower operating costs and maximum return on investment.

Extracting and distributing shale gas requires supplies, including drill bits, pipes and fixtures, machinery, sand, water, containers, measurement tools and safety equipment, just to mention a few examples. And, every well is unique, making it important to have fast access to a full range of support services to ensure commercial success.

Shale gas supply chain companies are finding Ohio is optimally situated in the five-state Marcellus and Utica Shale region to achieve the fastest return on their start-up investment and to benefit from both the state's manufacturing know-how and its world-class logistics infrastructure.

"The Kasich administration is focused on economic development opportunities related to shale – upstream, midstream and downstream. We believe this industry has the potential to 'move the needle' in regards to Ohio's economy," said David Mustine, energy manager of JobsOhio, a private non-profit corporation created to encourage business development in Ohio.

According to the Public Utilities Commission of Ohio, the state has over 54,000 miles of natural gas distribution pipeline. Ohio's highway system provides easy access to customers involved in the extraction and distribution of shale gas in each of the five-state Marcellus and Utica Shale region.

In addition, components and finished goods can be shipped quickly to supply chain operations based in Ohio from anywhere in the U.S. or around the globe through Ohio's central location and world-class logistics infrastructure. Ohio is within 600 miles of 60 percent of the U.S. and Canadian population and is within a one-day drive of 70 percent of North America's manufacturing capacity. This supply chain capability helps minimize inventory out-of-stocks and maximize customer service levels.

Energy companies have a growing need for engineers, researchers and skilled manufacturing workers, which are readily available in Ohio. Ohio's colleges and universities are ready to meet the need for new technologies and skilled green collar workers through new research, degrees and training specific to the advanced energy industry through programs such as The University Clean Energy Alliance of Ohio (UCEAO) and investments through Ohio Third Frontier.

Supply chain companies that establish operations in Ohio can reduce operating costs with the state's favorable business climate, because there is no tax on inventory or corporate income tax. Companies also can boost return on investment with no tax on purchases of machinery and equipment. This means a supply chain operation can keep everything on hand that a drilling operation will need without bearing an incremental tax burden.

And, perhaps the most significant tax benefit supply chain companies will gain is that products or services sold to customers outside of Ohio are not taxed by the state; so, companies located in Ohio can easily do business with the other four states located in the Marcellus and Utica Shale region without having to pay Ohio state tax on revenue.

Ohio's comprehensive supply chain is just one of the key benefits for energy companies involved in the commercial development of Marcellus and Utica Shale gas, according to Ed Burghard, executive director of the Ohio Business Development Coalition, the nonprofit organization that markets the state for capital investment.

Ohio promises a perfect balance that allows business owners, their employees and their families the opportunity to achieve both their professional and personal aspirations without having to sacrifice one for the other. Ohio offers businesses an environment that makes it easy to foster work-life balance. The convenience of travel, with short commutes from work to home, lower stress and give more time to priority family activities.

"In Ohio, work-life balance is more than a buzzword; it's the way we do business," Burghard said. "Companies are trying harder to help their employees achieve better work-life balance because this positively impacts a company's bottom line. Ohio's Low-cost, low-stress communities and short commutes create the State of Perfect Balance, where you can achieve both professional and personal success without sacrificing one for the other."

About the Ohio Business Development Coalition

The Ohio Business Development Coalition is a nonprofit organization that provides marketing strategy and implementation to support Ohio's economic development efforts. For more information, visit www.ohiomeansbusiness.com.

SOURCE Ohio Business Development Coalition

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