Shale’s financial impact

A discussion Friday morning was aimed at informing the public and local business owners about the shale boom predicted to hit the area in the next few years and how local lease holders can benefit.

The talk, “Shale and You: How the Shale Industry can Impact Your Finances” was held in the Community Room at Washington State Community College. Among the speakers were Charlotte Keim, president and CEO of the Marietta area chamber of commerce and local attorney Flite Freimann.

Keim said the talk was spurred from a previous meeting about oil and gas.

“The reason we’re doing this is we had a very successful shale meeting two years ago,” Keim said. “We packed the Lafayette Hotel.”

During Friday’s talk, two panels of people spoke about what has happened locally so far and what is coming next.

Chris Schmenk, attorney at Bricker & Eckler, said that the Marcellus and Utica shale booms have been ongoing for several years.

“Marcellus shale play started first in 2002 in Pennsylvania and West Virginia,” she said. “Utica is now really ramping up and affecting us in Ohio now. Utica shale play is expected to increase 10 times the current level; we’re just seeing the beginning. We don’t want this to be another boom and bust.”

Schmenk said that the shale boom is expected to create as many as 20,000 new jobs across the state and could generate $5 billion a year in new economic activity and $19 billion in new investments.

“Some of the stats (from the Department of Jobs and Family Services) from January 2011 to Jan 2013 show a 30 percent increase in core related shale jobs and more than 8,100 new jobs,” Schmenk said, adding that workers are making around $75,000 a year.

Keim said there has been an impact locally, specifically with surrounding hotels opening up and new developers coming in.

“It’s been very exciting to see it develop,” Keim said. “Trying to get a hotel room here in Marietta, it’s extremely difficult.”

Keim added that the bed tax has risen from $786,000 in 2012 to about $896,000 in 2013 and it is continuing to rise.

Tom Webster, chairman of the Southeastern Ohio Port Authority, said that while it is nice to think about booming business, we must also think of some problems that can arise, which include rising rental rates and infrastructure that can’t meet the demands of a large company.

“We’re going to see development in our community,” Webster said. “What we don’t have right now is infrastructure…(Many) don’t have public sewer and don’t have public water.”

Bob Rafferty, a partner of Bricker & Eckler, spoke about the importance of estate planning. He said two of the biggest things are confidentiality and privacy while dealing with estates, which is important with oil and gas royalties.

“Transfer property (and assets) into a revocable trust,” he said. “It’s not going to be a part of public domain at the time of a person’s death.”

He said this is important, especially if there is a child one might not want to leave out of receiving royalties. Another important thing is realizing that leaving something to a spouse means no federal estate tax.

Serving on a second panel were those involved with the oil and gas business.

Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Program, spoke about how employment has skyrocketed in Ohio for the oil and gas industry.

“Right now, $19 billion dollars have been spent (in Ohio),” she said. “There are 14,400 indirect jobs (for contractors). 169,000 are employed in the state of Ohio.”

Rocky Roberts, senior vice president of Appalachian Operations at Triad Hunter, LLC., said that since he started working at Triad in 1991, when it was Triad Energy, he’s seen the company grow.

Roberts said that before Triad Energy underwent bankruptcy, there were about 110 employees in all four divisions of the company: production, drilling, pipelines and water handling and disposal.

He said that in Triad Hunter on the production side, there are 124 employees. Alpha Hunter drilling has 129 employees. Eureka Hunter, for the pipeline, has 28 employees, 10 of which are based out of Houston, Tex. Green Hunter, the water handling company, has 103 employees.

“We went from 110 employees…to well over 350 employees,” Roberts said. “We’ve tripled in size. And in that aspect, these are all local people.”

Gordie Deer, vice president at B.D. Oil, said that those looking to get involved with the oil industry need to find a niche and be the best.

“I think when it comes to serving the industry, do what you do and do it well and do it consistently well.”

He said the shale business is going to provide a unique opportunity.

“Historically, West Virginia and Southeast Ohio have been places where our kids leave,” Deer said. “They go to Charlotte, Atlanta or somewhere else, (Washington) D.C., to work and we have an opportunity to employ our kids right here, and with good jobs. And that’s exciting.”

Keim said Friday’s meeting is a part of a series.

“There will be three additional sessions,” Keim said. “June is the next one; we’ll be holding them every two months and there may be additional ones.”