Fracking Companies to Build $900 Million Plant in Ohio



You are so dumb, you are really dumb, for realz.
  • "You are so dumb, you are really dumb, for realz."

Big Frack continues to make a hard push into Ohio, with news coming this week that three energy companies are pooling in on a major natural gas processing plant in Columbiana County. The $900 million project — that's a hell of a lot of clams — could churn out 600 million cubic feet of gas daily once it's up and running, so says the Wall Street Journal. The developers hope the plant will go online sometime in spring 2013.

The largest tuna on this project is the Chesapeake Energy Corp, who've teamed up with smaller outfits M3 Midstream and EV Energy Partners. Combined, the companies have the drilling rights to 2 million acres across Ohio. Although a lot of outfits have tired to jump on fracking here, the industry til now has lacked the kind of infrastructure that could knock profits out of the park. This investment would fix that.

It's no surprise Chesapeake is leading the charge on the project. The company is the second-largest natural gas producer in the states, according to the Akron Beacon Journal, and racked up $1 billion in debt in order to grab more drilling rights over the last year.

But besides the high leverage, Chesapeake also doesn't have a squeaky-clean rep in the business: the company was featured this month in a Rolling Stone article that painted Chesapeake as an environmentally unconscious mega-corporation more interested in flipping leases than actually drilling. In fact, much of the company's financial latitude comes from hawking the future proceeds from wells, or as RS put it, “a complex financing deal that enables it to borrow cash now without counting the debt it will owe when it has to drill the wells later.

“The very first deal, made with Deutsche Bank and a Swiss investment firm, brought Chesapeake more than $1 billion in return for 15 years of future production from 4,000 wells,” the article continues.

How Chesapeake's play in Ohio will shake out, we'll have to see. But Big Frack is just going to keep being an issue here in Ohio. We've already seen a big PR push on the part of the industry hoping to sell fracking as the economic engine the state can ride to wallet recovery, complete with specious data points.

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