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Natural gas ‘bust’ after boom can be softened with planning

 

 

By DOUG GRAVES

Ohio Correspondent

 

YOUNGSTOWN, Ohio — Youngstown, long known for its industrial decay along this "Rust Belt," is making a comeback thanks to hydraulic fracturing. Not even an earthquake on New Year’s Eve 2011 of 4.0 on the Richter scale could sway people against fracking.

Officials found out the reason for the quake was a local waste-disposal firm pumped so much of the fracking waste so deep and violently that the ground began to shake. The shock wave was felt 200 miles away. Despite that, voters in Youngstown gave the approval to fracking by double-digit margins at the polls three times the past year.

"There’s only one explanation for that and it’s jobs, jobs, jobs," said Susie Beiersdorfer, a geologist who helped lead the fight for the ban on fracking.

This is an example of shale "boom." Times are good, money is to be made and jobs are plentiful. Next up, though, is the "bust" experts say is sure to follow the good times in this portion of Ohio. It’s a scenario often played out in local economies heavily reliant on one type of industry, especially in the energy sector.

But the cycle isn’t inescapable, say community development specialists with Ohio State University extension. They have received funding to help eastern Ohio communities examine how shale development, or fracking, is affecting their economies, environmental conditions and social structures, and to create plans for long-term viability.

With $200,000 in funding for a three-year project from the U.S. Department of Commerce’s Economic Development Administration (EDA), extension has joined forces with four regional EDA districts representing 25 eastern Ohio counties.

"We are trying to help the communities in the region position themselves for sustainable economic development that leverages the shale play and prevents the bust that inevitably would happen," said Nancy Bowen-Ellzey, an OSU extension field specialist in community economics and one of the project’s principal investigators.

"History tells us that energy-related projects are especially vulnerable to the boom-bust cycle. Coal mining is a good example. Fracking can help the economy greatly, but during downtimes, there is nothing to cushion the fall."

Eric Romich, extension field specialist in energy development who is also helping lead the project, said the team has five core objectives.

•Conduct an advanced cluster analysis. "We’re using data sets to examine the economy in these counties and are identifying what we’re seeing growth in and what we’re seeing contraction in," he said. "We are looking, for example, at whether there’s a jump in employment in this sector or a change in that sector."

•Assess industry capacity. "This is the ‘So what?’ to our cluster analysis," he said. "If industries are showing signs of growth, what does that mean? What type of change is this compared to a national average?"

Romich said the team will examine how dependent companies’ growth is related to the construction aspect of shale development.

•Map assets. As researchers collect data, staff members at EDA’s district offices will input the information into geographic information system (GIS) mapping to provide a visual representation of an area’s economic activity, population and demographics, educational resources and infrastructure.

•Create sustainable strategic plans. Extension and its EDA partners will take the information and incorporate it into the EDA district offices’ Comprehensive Economic Development Strategies (CEDS), which are designed to foster collaboration across community lines and are submitted to EDA every five years.

"This is the hidden gem in the project, the glue that holds everything together," Romich said. "The information we gather as part of this project will give planners the insight to really address shale development in their CEDS plans."

•Establish implementation strategies. Each EDA region involved in the project will use the information to develop strategies to diversify their economies and prepare for any downturn in shale development.

"We’re not just rolling into a community and saying, ‘Here’s what you need to do,’" Romich said. "Maybe one area’s infrastructure is fine but it needs to invest more in micro-loans for manufacturing or in workforce training."

He added these strategic plans will soften the bust that inevitably follows a boom.

7/17/2014