Over the past five years, the Ohio energy environment has been flipped on its head. We have the luxury of some of the lowest energy prices in the world and investors are taking notice. According to JobsOhio, more than $30 billion in NEW investment has come to our state from the energy sector. Here are the top energy projects under development that are changing the game and impacting your bottom line.
1. Amazon Wind Farms
Amazon has built three massive data centers and two huge distribution centers near Columbus and will use their own wind farms to supply the power. In keeping to its corporate pledge of generating enough renewable energy for all its cloud data centers, it has embarked on two Ohio wind farm projects . Working with developers, Amazon will be building a 189 MW wind farm in Hardin County and a 100 MW farm in Paulding County. These projects will offset traditional generation on the grid and will bring tax dollars to the respective counties.
YOUR BOTTOM LINE IMPACT: The variable cost of wind generation is very low and will displace higher cost traditional generation. However, overall impact should be neutral as the quantity of the MW’s produced by these farms may not be enough to move the needle down.
2. Eleven New Gas Plants
There are 11 new natural gas power plants in the planning or construction phase in Ohio. All are being developed by independent power producers (not the incumbent investor-owned utilities) and will be producing enough energy for 9.2 million homes at an investment of over $9.5 billion. These plants will be using the most efficient generation technology available making electricity at nearly half the costs of current legacy coal plants. The financial success of these plants solely resides with the investors of the facilities and not the ratepayers as historically experienced in the utility monopolies.
YOUR BOTTOM LINE IMPACT: Short term bullish to natural gas prices as they create significant new demand but heavily bearish to long term power prices as they will be displacing higher cost, less efficient plants.
3. Rover and Nexus Pipelines
It is well known that eastern Ohio has been floating in an abundance of natural gas produced by horizontal drilling in the Utica shale formation. The existing pipeline infrastructure has not been sufficient to move the gas out to higher priced markets. This has resulted in extremely low prices for the area causing producers to slow down drilling. The Rover and Nexus pipelines are expected to take 4.8 BCF/d of gas in Southeastern Ohio to the Midwest markets near Chicago and Michigan. Rover is expected to be operational second quarter of this year at a price tag of $4.3 billion while Nexus is expected to be completed the last quarter of this year and cost $2 billion.
YOUR BOTTOM LINE IMPACT: Short term bullish to natural gas pricing as the glut of gas leaves to find higher prices. These higher prices will likely bring on more incentive for producers to increase drilling which should dampen any long term bullish impacts.
4. Gathering and Processing
In order to make natural gas a product that we can use in our homes and businesses it must first be gathered and processed. Six mid-stream gathering and processing facilities have recently been built to handle shale production in our region with the largest processing up to 5.3 BCF/d. This infrastructure is a critical part of the delivery system to get the gas to market.
YOUR BOTTOM LINE IMPACT: Similar to new pipelines, the new gathering and processing facilities should be short term bullish to natural gas pricing. However, these higher prices will likely bring on more incentive for producers to increase drilling which should dampen any long term bullish impacts.
5. PTT Global Ethane Cracker
The $5.7 billion PTT Global ethane cracker proposed for Belmont County would take the ethane pulled from the Utica and Marcellus shale formations and process it into ethylene, a highly sought feedstock for the plastics, textiles and pharmaceutical industries. If the project moves forward it is expected to take three and a half years to complete and would employ highly skilled workers such as chemical engineers and chemists. PTT has been investing in front-end engineering design work with a final investment decision to be made in March of this year.
YOUR BOTTOM LINE IMPACT: Cracking ethane to produce the higher priced ethylene should encourage more drilling in the shale regions bringing long term lower prices.