Experts: Kasich’s $1T oil, gas price tag is wrong

Associated Press

COLUMBUS

Ohio Gov. John Kasich’s claim that a single energy company could recover $1 trillion worth of oil and gas from the state’s shale is an exorbitant overestimate, according to experts interviewed by The Associated Press.

At current oil prices, that figure represents more than four times U.S. oil production last year. Viewed another way, every drop of oil produced in America for the next four years will be worth roughly $800 billion, based on current prices and production rates.

“I think he’s way off base,” said Arthur Berman, a Texas-based petroleum geologist and independent energy consultant. “My best estimate is he’s probably wrong by a couple of zeroes.”

U.S. crude oil production in 2011 was 2.078 billion barrels. At $100 a barrel, that’s $200 billion worth of oil. The revenue potential of newly accessible deposits of oil, natural gas and natural-gas liquids under the state is important be- cause Kasich is pursuing an increase in a state tax that large-volume oil and gas producers pay on what they extract. Proceeds from the tax would fund modest statewide income-tax relief.

In his 2010 campaign, Kasich pledged to reduce and eventually phase out the income tax. He faces opposition to his manner of funding the reduction from the well-funded energy industry and some fellow Republicans.

Kasich traces the trillion-dollar figure to a conversation with an energy company CEO. He has repeated the number often in local and national television interviews and in public appearances.

“One energy company said they were going to take a trillion dollars’ worth of value out of our state,” he said in Columbus in March.

“And if we can’t take advantage of some of that and let Ohioans in all 88 counties benefit, it would be a colossal mistake,” the Republican governor continued, “because keeping the money here and letting families have more and small businesses be more successful means that we’re healthier as a state.”

Kasich has never identified the source of the figure.

Portions of both the Utica and Marcellus shale formations lie under much of eastern Ohio.

Philip Budzik, a research analyst with the U.S. Energy Information Administration, said a new report has estimated that just over 1 trillion cubic feet of natural gas within the portion of the Marcellus Shale now reachable under Ohio with modern technology. A similar estimate has not yet been calculated for the Utica Shale, which is more extensive in Ohio. He said many factors would have to go into an estimate of the dollar value of those assets.