Bloomberg reported that 34 years after Black Monday, the day Youngstown Sheet & Tube announced shutdowns marking the end of the Ohio city's steel era, a USD 650 million mill is coming to life thanks to the natural gas drilling boom.
The factory for Vallourec SA's V&M Star will have 350 workers and produce seamless pipes used in hydraulic fracturing, also known as fracking. It's part of a development that an oil and gas industry study calculates will mean more than 200,000 jobs and USD 22 billion in economic output in Ohio by 2015 and which has neighboring states looking to get in on the action.
The new mill is rising about two miles (3.2 kilometers) from an injection well for disposing wastewater from fracking that has been closed after 11 earthquakes shook the Youngstown area last year. States that that sit atop shale formations are cashing in on the drilling and the expanding businesses that support it, even as the Ohio Department of Natural Resources reviews the earthquake data and the US Environmental Protection Agency studies the effects of fracking on drinking water with an eye on possible nationwide regulations.
Mr Aubrey K McClendon CEO of Chesapeake Energy Corporation said that "This will be the biggest thing to hit the state of Ohio economically since maybe the plow."
Drillers have turned to fracking, a process that injects water, sand and chemicals into rock to free natural gas, in shale formations including the Marcellus and Utica below Ohio, New York, Pennsylvania, Maryland, West Virginia and parts of Kentucky and Tennessee. A boom in production helped cut prices 32% in 2011.
While some shale gas development is anchored to the drilling sites, states are jockeying for spin off investments such as a world scale natural gas processing plant that Royal Dutch Shell Plc said it plans to build in Ohio, Pennsylvania or West Virginia.
All three states say they have offered incentives to Shell, and Kasich flew to Houston in November to hand deliver letters of support for the project.
Ms Keith Burdette, West Virginia's secretary of commerce, said that "States compete every day for every business they can find. Suddenly, there’s this vast new array of manufacturing opportunities that may be returning to this region of the country, and I think we'll all be aggressively looking for every opportunity."
Mr C Alan Walker, secretary of community and economic development, said in a January 4th 2012 interview in Harrisburg that development of the shale gas industry is one of Pennsylvania's top priorities. Republican Governor Mr Tom Corbett has said he wants the state to be the Texas of the natural gas boom.
Mr Eric Planey VP at the Youngstown Warren Regional Chamber said than in Youngstown, which has lost more than half the 168,330 residents it had in 1950, V&M Star may help make the area the Utica Shale's supply chain capital.
He added that "I look at it as being a bridge from our past to our future. Our past was exclusively steel. It looks like our future is going to be significantly a part of the oil and gas and energy business."
(Sourced from www.bloomberg.net)
