Companies with strong Stark County ties headlined a recent regional conference on transportation issues in the Utica Shale.Representatives of Kenan Advantage Group, Wheeling & Lake Erie Railway Co. and Marathon Petroleum Co. spoke at the 16th Annual Northeast Ohio Logistics Conference and Golf Open hosted by the Northeast Ohio Trade & Economic Consortium and the Cleveland-Cuyahoga County Port Authority at Firestone Country Club.
Transportation is a major issue in oil and gas exploration, from the delivery of water and sand used to hydraulically fracture, or frack, wells, to the disposal of waste water, to the delivery of petroleum products to market. Much of the load lands on trucking companies.An average shale well requires 3 million pounds of sand, 50,000 barrels of water and 2,000 truck trips, said Doug Allen, executive vice president of Jackson Township-based Kenan Advantage Group. “To the general public, trucking is the shale industry,” Allen said.
Founded in 1991, Kenan Advantage Group has quietly grown from 70 trucks to 5,000 trucks and 7,000 employees and more than $1 billion in revenue last year. It is now the largest bulk transporter and logistics provider to the petroleum industry in North America.
The trucking industry is short some 130,000 drivers, and the existing pool of drivers is aging, meaning companies will likely have to increase wages to compete for workers, Allen said. Gas and oil producers and trucking companies also need to make sure they are dealing with reputable partners, Allen said.
Rail also plays a key role in shale logistics, providing transportation for sand and natural gas liquids. Headquartered in Brewster, Wheeling & Lake Erie is the largest Ohio-based railroad. It has 840 miles of track in Ohio, Pennsylvania and West Virginia, and is adding sidings and passing tracks and replacing ties and rails to increase efficiency and safety, said Jonathan Chastek, the railroad’s executive vice president.
Wheeling & Lake Erie is managing the Neomodal intermodal rail yard in Navarre, which is used to ship sand and liquid petroleum gas. A connection with Canadian National Railway Co. allows Utica condensate — a light, volatile liquid — to be shipped to that country’s tar-sands region. The condensate is used to dilute the heavy tar-sands oil so that it will flow through a pipeline.
Marathon, based in Findlay, is the largest refiner in the Utica Shale and is adjusting to process the condensate produced by local shale wells, said Nick De La Garza, Marathon’s refining planning and economics supervisor.
The company views the Utica Shale as a strategic opportunity for its Midwest operations and growth, and is adding condensate splitters to refineries in Canton and Catlettsburg, Ky., De La Garza said.
The Canton refinery can already take 8,000 barrels of condensate a day by truck, while Catlettsburg can accept up to 10,000 barrels a day by barge. Marathon has started a truck fleet to carry crude oil and is looking to add barges, as well as build a new condensate pipeline and repurpose existing pipelines. In all, the company has $300 million in on-going and planned investments. As the local market is flooded with Utica condensate, it will be important to get the product to Canada and the Gulf Coast, De La Garza said.