New Study Says Ohio More Profitable Than Gulf Coast For Energy Companies

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Energy companies around the world soon may be setting their sights on Ohio, according to a new study.

In a report released by London-based company IHS Markit, petrochemical plants built in parts of Ohio, Pennsylvania, and West Virginia stand to be more profitable than plants in the Gulf Coast, a hub of the oil and gas industry in the U.S.

Known as the Shale Crescent, attention has moved to the Ohio, Pennsylvania, and West Virginia area due to these states' location above the Utica and Marcellus shale, a growing producer of natural gas and natural gas liquids. Should oil companies begin focusing their efforts on the Shale Crescent rather than the Gulf Coast, the study estimates that they will see a $3.6 billion increase in profit between 2020 and 2040.

Protochemical plants take natural gas liquids such as ethane and process them to ethylene and polyethylene, which are essential to the creation of plastics. Shale Crescent plants are reported to drastically decrease production costs since they would utilize the region's vast supply of water and natural gas liquids. They would also cut transportation costs as the region is closer to customers than the Gulf Coast.

IHS Markit's report states that there are already about 900 plants in Ohio, with an additional 130 between West Virginia and Pennsylvania. However, additional plants could prove to be an even greater environmental strain on the region's landscape. Should companies take advantage of the area, they would also have to contend with a proposed severance tax in Pennsylvania, which would apply to companies extracting non-renewable resources.

The study was commissioned by Shale Crescent USA, a nonprofit devoted to stimulating business development in the Ohio Valley based on its natural gas supply.

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