September 2013 Ohio Gas & Oil Magazine - Northern Edition by Gannett NEO

Ohio octobER 2012 •2013 www.ohiogo.com SEPTEMBER • www.ohiogo.com

A FREE FREE monthly MONTHLY PublicAtion PUBLICATION

Utica East Opens Facility

FAQ for Gas & Oil A Chesapeake Update

Hauling Industry Keeps on Trucking

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Dix Communications - Gas & Oil

September 2013 Edition

Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

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September 2013 Edition

Table of Contents

ADVERTISING DIRECTORS Rhonda Geer Northern Zone Sales Wooster & Holmes, Ohio Offices RGeer@dixcom.com 330-287-1653

Kinney Receives Oilfield Patriot Award

Chesapeake Energy Update

Gas & Oil 101: Q&A

Kim Brenning Southern Zone Sales Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531

Truckers in Demand

Independent Contractors or Employees

Peggy Murgatroyd Southern Zone Sales Barnesville and Newcomerstown, Ohio Offices PMurgatroyd@dixcom.com 740-425-1912 Barnesville 740-498-7117 Newcomerstown

Great Lakes Truck Expo

Utica East Facilities Begin Sales

Shale Coalition to Have New Leadership

ANGA Summit

Harry Newman Northern Zone Sales Kent, Ohio Offices HNewman@dixcom.com 330-298-2002

Jeff Kaplan Southern Zone Sales Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200

Laurie Huffman / Dix Communications Rhonda Reda / OGEEP

John Lowe / Dix Communications David Shallenberger / CPA

Noble County Wells Showing Promise Shawn Bennett / Energy in Depth - Ohio

Perfect Fit for Power

Jeff Pezzano VP Advertising Sales & Marketing Kent Ohio Office JPezzano@dixcom.com 330-541-9455

Kimberly Lewis / Dix Communications

Science Education Important

LAYOUT DESIGNERS

OTTAWA

KNOX

MADISON

FAIRFIELD

PERRY

HLAND

PIKE

VINTON

COLUMBIANA

CARROLL

HARRISON

GUERNSEY BELMONT

MONROE

WASHINGTON ATHENS

MEIGS JACKSON

MAHONING

MORGAN

HOCKING ROSS

Coverage Area:

GEAUGA

NOBLE

PICKAWAY AY

A Business & Events Directory

PORTAGE

Pipeline

STARK ST

COSHOCTON

LICKING LIN FRANKLIN

JEFFERSON

MORROW ORROW

FAYETTE

SUMMIT

WAYNE YNE

HOLMES

ARE UNION DELAWARE

Preservation of Black Run Rail

TUSCARAWAS

MARION

MEDINA ASHLAND

RICHLAND

DIN

RD FO AW

TRUMBULL

LORAIN

HURON

SENECA

WYANDOT

CUYAHOGA

ERIE

SANDUSKY

OD COCK

Alison Stewart / Dix Communications

Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450

Northern Zone: Pete Kiko Southern Zone: Kelsie Davis

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Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

William Kinney Alison Stewart Dix Communications

he Ohio Oil and Gas Association (OOGA) has presented William Kinney, president and owner of Twinsburg-based Summit Petroleum, with the Oilfield Patriot Award, an annual honor bestowed by the trade association. The award was established in 2006 and recognizes individuals who have made significant contributions to protect, promote and advance the common interests of those engaged in all aspects of Ohio’s crude oil and natural gas industry. “William Kinney epitomizes the Oilfield Patriot Award,” said Joel Rudicil, president of the Ohio Oil and Gas Association. “He has selflessly contributed time, energy and resources for the benefit of the industry and our members. He is a deserving recipient of this prestigious award.” Kinney’s company drills, owns and operates crude oil and natural gas wells in Ohio, Pennsylvania and New York. He is past president of both OOGA and of the OOGA Executive Committee and currently serves as chairman of the OOGA/ Dominion East Ohio Gas Project Review Committee. Kinney, who lives in Hudson, graduated from Kent State University in 1976 with a bachelor’s degree in industrial engineering. Kinney has been in the industry since 1976, initially employed at Park Ohio Energy. “I quit the day my son was born, Sept. 10, 1984,” said Kinney. Park Ohio Energy had wanted him to make a special trip to New York during the birth of his son. It was at this point Kinney knew he wanted to start his own business. Summit Petroleum Inc. is a small independent gas operation that Kinney started in 1984. “There used to be a lot of those around but there are much fewer now,” said Kinney. “All these big businesses are moving in and pushing the small guys out. I’m determined to stay involved in my work.” Kinney said winning this award is the “high water mark” of his career. “It is so prestigious because I was selected by my industry peers,” said Kinney. “I am thrilled to have received it.” Kinney said it takes a lot of people for this industry to run smoothly, including the people he works with.

“Bill is a great example of what this award is,” said Mike Chadsey, OOGA’s director of public relations. “Bill always jumps up on the opportunity to do public speaking. He has a willingness to answer questions for the public.” According to Chadsey, the Ohio Oil and Gas Association has been going strong for more than 65 years with 3,000 plus members. “This industry works because I enjoy doing it,” said Kinney. “It is fun, thrilling, and I work with a great group of people. It has never once felt like work. We provide something that the community and country need. I feel pretty good about what I do.” astewart@recordpub.com

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September 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

September 2013 Edition

Laurie Huffman Dix Communications

AMASCUS, Oh. — The job boom is yet to hit Ohio, according to an update recently presented by Chesapeake Energy, the second largest natural gas producer in the U.S. The talk, given by Keith Fuller, senior director for government affairs, also revealed natural gas prices are expected to remain low in the state, due to the amount being pulled out of the ground. “We’re in what we call the WOPL (waiting on pipeline) phase right now,” Fuller told community members during a talk in August at the Rotary Club in Damascus. “Once we get the product pulled from the ground and it is separated at the two processing plants Chesapeake will use, that’s when manufacturing companies will be attracted to this area. They will want to be close to the energy sources to keep their costs down. The Timken Company, for instance, is very lucky for this reason. Once this area is proven, companies will want to be located here to be close to these products. So, when we say it’s early, it’s very early.” Fuller noted there will be a lot of indirect job creation as well, such as additional restaurant, construction, excavating, and landscaping workers that will be needed, for instance. “We are in that dance, if you will, between drilling and waiting on pipeline,” Fuller said. “The waiting game is about over, but, with one million acres under contract, we won’t be able to drill it all at once. We have 11 rigs operating in Utica now. We keep that number fluctuating between 11 and 18 because we don’t want to tie all our money up in drilling before we get our product to market.” Fuller further reported the wet gas that’s being produced is “very attractive,” but he noted oil has not yet been tested. “People say the oil production is a disappointment, but it hasn’t been tested yet,” Fuller explained. “As far as natural gas is concerned, you can probably bank on lower prices due to the amount that will be produced. And, at one time, we thought we were going to run out of natural gas in this country.” BP is testing now in Trumbull County, and Hess and other big companies are coming into the area now, he also said. “With all this influx, and $900 million being invested in the

Review Photos/Laurie Huffman Keith Fuller, Chesapeake Energy senior director of government affairs, talks about the waiting game for gas and oil production, jobs that will soon be coming, and more, during a recent presentation given at the Rotary Club in Damascus.

Kensington plant alone, it is evident the Utica is expected to pan out. When you see those kinds of investments, you know the companies have a good idea this activity will be productive. Manufacturing will then, hopefully, come back to this area where people are used to it and know what to do with it.” Two processing plants, in Kensington and Scio, will process and separate Chesapeake’s product and get it ready for market. The Kensington plant is open in a limited capacity that will continue to expand, and the Scio plant will open soon, and this is taking the pressure off Chesapeake, which expects to now turn up its drilling production. “Those two plants will take all the gas we produce and separate it out, and then it will go to market. And, hopefully, there will be enough so some will stay here, and there will be.” Fuller closed by saying, “We know natural gas is the cleanest fossil fuel, and we know we need it. If wet gas production is good, and if oil turns up, that will create more windows for three different areas of marketing. If one dries up for a while, then we can work on another.”

Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

Rhonda Reda OGEEP

What is natural gas and crude oil (collectively known as “Petroleum”)?

The petroleum we use today was formed from the remains of tiny marine organisms over a vast period of time. These dead marine and plant organisms piled up forming layers on the sea floor. They were gradually buried deeper and deeper as sediments accumulated on top of them. Then bacteria, heat and pressure acted on these remains over millions of years to form a liquid (crude oil) or a vapor (natural gas). Once formed, natural gas and crude oil migrated into permeable rocks with lots of pore spaces where it can accumulate. These rocks are known as reservoir rocks. Natural gas and crude oil stops migrating when it reaches a layer of impermeable rock, through which it cannot pass. This is known as a trap or cap rock.

Q: A:

Could a natural gas and crude oil well devalue my property?

There is no evidence that a natural gas and crude oil well will negatively impact the value of your property. On the contrary, the royalty revenues and potential free natural gas, if applicable, may enhance a property’s worth. Many landowners will promote these economic and energy benefits when selling their property. It is also reasonable to request screening and fencing of the well and tanks for aesthetic and safety purposes.

Q: A:

Does my property have the geological potential for natural gas or crude oil?

If there are wells in the vicinity of where you live, there’s a good chance that the geological potential could exist on your property. You can check with a local natural gas and crude oil producer to discuss the possibility of leasing your property for potential development of these natural resources.

Q: A:

Who are the reputable companies drilling for natural gas and crude oil in Ohio?

Talk with your neighbors to see if they have had wells drilled on their property. Are they receiving their royalties in a timely manner? Have the well sites been reclaimed and being maintained? Tank batteries areas should be trimmed, painted and properly identified with signage identifying the well by lease name/well number, permit number, well owner and an emergency contact number.

Q: A:

What are the different types of leases?

Leases can be either development or non-development. A development lease will include access to the surface of the land for drilling and operating the well. A nondevelopment lease is for use of the subsurface minerals only. Both leases share in the landowner royalty of the well, but a non-development lessors typically does not receive free natural gas.

Q: A:

Will there be any changes to my lease if the operator sells the well to another producer?

The terms of the original lease agreement applies. However, most leases have a clause that makes them binding on any successor company. The same applies should the lessor sell his property.

Q: A:

How long does it take to drill a well?

Most Ohio wells can be drilled with rotary rig in 10 days or less. Cable tool wells may take up to a month or more. After drilling, it may take several weeks to complete the well for production. Reclamation work should take place shortly thereafter, and may depend on applicable seasonal weather conditions.

Q: A:

Is drilling a well noisy and disruptive?

While the well is being drilled, the rig must run 24 hours a day, seven days a week. There could be noise from the equipment, light from the rig at night, and some temporary dust or mud from the well site. Once the drilling is completed, there will be some daylight-only operations to put the well into production, Once the site has been restored, the area is essentially returned back to normal.

Q: A:

What rights do I have as surface owner if someone else owns the minerals?

The lease agreement defines the conditions that apply between the company and the mineral interest owner. Any other conditions relative to surface activity (i.e., location approval of wells, roads, tanks, damages, etc.) also have to be declared in the lease. Unless specifically declared otherwise, the interest of the mineral owner takes precedence over the surface occupant in cases of mineral severance.

Q: A:

What if my neighbors lease their property and I don’t want to?

Ohio has spacing requirements, unlike many other states, that protects the correlative mineral rights of property owners. In the case that your property is needed to complete a drilling unit (typically 20, 40 or 80 acres), and you elect not to lease, there is a provision in Ohio law that allows the producing company to apply for a mandatory pooling order to meet state spacing regulations, and to provide the majority of the landowners in the proposed unit the right to development their minerals. If approved, the mandatory pooling includes your property in the unit and you receive your proportionate share of the landowner royalty as though you had leased, but there is no lease agreement between you and the company. Simply put, it is mandatory compensation. Historically, less than 2% of drilling applications request mandatory pooling consideration. The picture shown with this section illustrates well activity in Ohio prior to spacing requirements in the early 1900’s. Without mandatory pooling, there would be no spacing requirements

Q: A:

Could my water well be harmed?

Each drilling application is examined on an individual basis by trained technical staff at Ohio Department of Natural Resources, Division of Mineral Resources Management (DMRM) to identify the deepest source of underground drinking water. A casing plan is then designed to protect the aquifers. Steel casing is installed in the well and cemented under the supervision of highly trained industry experts as well as inspectors from DMRM. In the rare instance that a water supply should become contaminated or diminished as a result of drilling, Ohio law requires that the Operator of the well replace the water supply.

Q: A:

Who is primarily responsible for regulating Ohio’s natural gas and crude oil wells?

The Ohio Department of Natural Resources, Division of Mineral Resources Management (DMRM) primarily regulates the industry. DMRM does not get involved in contractual differences between the landowner and the producer. The primary function of DMRM is to ensure the responsible development of Ohio’s energy and mineral resources in a safe and environmentally sound manner. It is mandated by Chapter 1509 of the Ohio Revised Code and Chapter 1501 of the Ohio Administrative Code to protect correlative rights, the environment and public safety. Trained and experienced professional staff review permit applications, enforce the state regulations for drilling and plugging wells and gather and provide oil and gas well information to the industry and public.

Dix Communications - Gas & Oil

September 2013 Edition

Q: A:

What rights do I have if the company does not fulfill its terms of the lease agreement?

Any dispute concerning the lease is a private matter between the lessor and lessee. Communication between the parties is always strongly encouraged. Most leases have a notification provision that must be followed to try and settle any conflict that cannot be otherwise resolved. If all else fails, legal assistance should be sought.

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September 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

September 2013 Edition

John Lowe Dix Communications

AMBRIDGE —The phoenix-like rise of “We can’t find enough CDL drivers — drivers who can the gas and oil industry in eastern Ohio pass the drug and alcohol test. That controls the growth of has brought the need for employees rang- this company as much as anything.” ing from derrick hands and roustabouts to field Not only does Buckeye Water Service expect sober and engineers. drug-free drivers, the industry demands it. That is as one would expect: Specialists particular to an in“It all comes back to the liability issue,” Badertscher said. dustry. Oil companies place safety and environmental stewardship But the need for workers common to other industries also at the front of their concerns, he said. has surged. And in no instance is that more applicable than The service companies they employ have to have the apto truck drivers. propriate equipment and they have to have drivers trained “The need for CDL truckers is tremendous,” said Norm in spill prevention and in how to clean up if a spill were to Blanchard, executive director of the Cambridge-Guernsey occur. County Community Improvement Corporation. (CDL is an “Zero tolerance [for drug and alcohol use] and zero acacronym for “commercial driver’s license.”) cidents — that is their goal,” Badertscher said. “They are reFred Badertscher, owner of Buckeye Water Service Co. of spectful and they want you to make money, but they demand New Concord, a company that has served the gas and oil in- this. They treat you well as long as you stay in compliance.” dustry since 1954, can attest to the need for drivers. All in all, the GO boom has been good for the community The GO industry’s resurgence with the search for gas and and for the state as well as for people with a wide variety of oil reserves in the Marcellus and Utica shale formations is skills. revitalizing eastern Ohio, Badertscher believes. “When you hire more drivers, you need to hire more of“It’s been an excellent opportunity,” he said. “We have in- fice personnel to handle the paperwork,” Badertscher said. creased probably 60 percent in equipment and people. What “When you get more equipment, you have to hire more medrives us wild sometimes is trying to find people. chanics.” jlowe@daily-jeff.com

Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

September 2013 Edition

David Shallenberger CPA, Wooster

OOSTER — Employers in the oil and gas industry have a long history of hiring workers as independent contractors rather than employees. Ordinarily, these contractors are paid flat day rates rather than the hourly wage which is paid to employees. However, these practices are now being scrutinized making it imperative that businesses review their employee classifications to ensure compliance. The U.S. Department of Labor’s (DOL) Marcellus Shale Initiative is now in its second year, and one area of focus is on worker classification. While the department is currently looking at companies in the Marcellus region, it is believed that the worker classification reviews will spread to other areas where shale plays are active. Proper Classification Courts consider many facts when determining whether a worker is an independent contractor or an employee, and these are reviewed on a case-by-case basis. However, there are three main categories under common law that are weighed, all of which are meant to determine the degree of control and independence in the work relationship. The categories tested are as follows: • Behavioral. This looks at whether or not the company has the right to control what the worker does how the worker performs his service. • Financial. The facts examined here revolve around the economics of the relationship including who dictates how and when the worker is paid. It also looks at whether or not a worker has to provide tools and supplies. • Type and Nature of the Relationship. This is the relationship between a company and a worker such as whether or not there is a written contract between the parties and the permanency of the relationship. Each of these factors needs to be considered when determining if a business has an employee or an independent contractor. Employee Costs As a method to control costs, the independent contractor model is popular in the industry. It’s easier to budget a set amount compared to the uncertainty that can come from having employees on payroll. Reclassifying workers as employees would cost employers, and the industry, in terms of Medicare and Social Security taxes as well as health and benefits compensation. Not to mention the additional administrative costs that would be incurred to simply add these workers to payrolls.

The DOL wants to make sure workers are paid fairly especially those who are eligible for overtime as well as other benefits. However, businesses that misclassify employees will ultimately also be responsible for the employment taxes for those workers. It’s important to note that other agencies are also on the lookout for worker misclassification including the Internal Revenue Service, Ohio Bureau of Workers Compensation and Ohio Jobs and Family. All of these organizations have the ability to make potentially significant claims against employers. Now is not the time to do things as they’ve always been done. Proactively review worker classifications before a government agency comes knocking at the door. David Shallenberger, CPA, is director of oil & gas services at Rea & Associates, Inc. He can be reached at 330.264.0791 or david.shallenberger@reacpa.com.

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Gas & Oil

September 2013 Edition - Dix Communications

Northern Zone Edition

GREAT LAKES TRUCK EXPO RUMBLES INTO CLEVELAND SEPT. 18-19 C

LEVELAND — Cleveland Medical Mart & Convention Center and Positively Cleveland have announced that the 2013 Great Lakes Truck Expo will be held at Cleveland Medical Mart & Convention Center in downtown Cleveland Sept. 18-19. The exhibits will be open from 10 a.m. to 5 p.m. on Wednesday, Sept. 18 and from 9 a.m. to 2 p.m. on Thursday, Sept. 19. Online registration for attendees is open at www.greatlakestruckexpo.com. Interested exhibitors should contact Beth Trnka at beth@greatlakestruckexpo.com. The Marriott Hotel at Key Center will serve as the host hotel for the GLTE event. “We are excited about the 2013 GLTE as we move another step forward towards the industrial revolution that is happening in Ohio,” said Beth Trnka, GLTE show manager. “This opportunity to showcase the natural balance between trucking and the oilfield industry has been our dream that is fi nally turning into a reality. The attendees and exhibitors at the GLTE in September will see an event like none other.” The annual GLTE is the premier show in northeast Ohio with participation by major truck and engine manufacturers, trailer manufacturers, truck body manufacturers and countless product and service suppliers. Also spotlighted at the two-day show will be the refuse, cement mixers and snow/ ice vocations. Among the more than 3,000 expected GLTE attendees include senior level management from local and national companies representing the trucking industry. In addition to these industry segments, the Great Lakes Truck Expo will focus on the latest advances in the Utica shale play in Ohio and information about the Natural Gas Industry. This information will range from new engine technology, CNG and LNG options, education and training which will defi ne the trucking industry for years to come. The GLTE will also offer multiple and varied educational sessions to industry attendees. The Office of Energy at the Ohio Development Services Agency will be conducting an

educational presentation on The Alternative Fuel Transportation Program. This is a new state program that improves air quality through fi nancial assistance for the purchase and installation of alternative fuel refueling, blending, or distribution facilities and terminals. “For many years there has been a steady and growing interest in establishing a truck show for the Great Lakes region based on our market strength in this area and its potential for growth,” said Craig Thompson, director of sales of the Cleveland Convention Center. “We are excited to be a part of this shows’ expansion and to showcase the facility’s capabilities as a venue that can host events with oversized equipment displays.” The Great Lakes Truck Expo is sponsored by Crain’s Cleveland Business, Shale Directories.com, Progressive Commercial, and Allstate Peterbilt Group. The new Cleveland Convention Center, managed by Merchandise Mart Properties, Inc. (MMPI), has 59 trade shows, conferences, and meetings booked into the facility, which opened just this summer.

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Gas & Oil

September 2013 Edition - Dix Communications

CIO — M3 Midstream LLC President and Chief Executive officer Frank Tsuru announced the first phase of the Utica East Ohio Midstream LLC (UEO) project is in service, receiving rich Utica Shale production, processing natural gas liquids and redelivering residue gas to interstate markets. This milestone makes UEO, a joint venture owned 49 percent by Access Midstream, 30 percent by M3 and 21 percent by EV Energy Partners, the first fully integrated gathering, processing and fractionation complex to be put into operation in eastern Ohio. At project start-up, the UEO system includes approximately 63 miles of natural gas and natural-gas liquids gathering lines, a 200-million cubic-feet-per-day cryogenic processing facility located near Kensington in Columbiana County, and a 45,000-barrel-per-day natural gas liquids fractionation, storage and rail facility near Scio in Harrison County. With the completion of the second and third phases of the project, the UEO system will consist of 800-million cubic-feetper-day of cryogenic processing, 135,000 barrels-per-day of natural gas liquids fractionation, 870,000 barrels of natural gas liquids storage and a rail facility capable of loading 90 cars-per day with full scalability to increase processing, fractionation and rail loading capacity to almost double the initial amount. M3 serves as the facility manager of the plant facilities and is responsible for their construction and operation. Access Midstream is responsible for the construction and operation of all pipeline facilities upstream of the UEO plants. “Completing the first stage of this project is an important milestone in advancing the development of the Utica Shale formation in Ohio, as wells can begin producing both natural

Northern Zone Edition

gas and natural-gas liquids, with this processing system getting those products an important step closer to homes, businesses and industrial users,” said Tsuru. “We are pleased to commission the first fully integrated natural-gas processing and fractionation project in Ohio, and proud that these facilities have been built safely and in compliance with Ohio’s environmental regulations.” Access Midstream CEO Mike Stice said, “This heroic accomplishment was the direct result of a collaborative effort between Access and M3 to meet our upstream customer needs. Access provided the gathering and compression while M3 delivered on the processing and fractionation. Together, phase one of this multi-phase development resulted in 200 MMcfd of capacity being placed in operation both on time and on budget.” Mark Houser, president and CEO of EV Energy Partners commented, “We are thrilled to be part of the midstream infrastructure development of the Utica Shale play. The commencement of operations for the UEO project will be a huge boost for the Utica Shale producers that have been significantly constrained by the lack of sufficient midstream infrastructure in the area.” More than 1,700 people have been employed to construct the UEO facilities. Approximately 50 people will be employed to operate the two facilities, with an additional 15 jobs focused on operating the rail terminal at the Scio plant. More than 60 percent of the workers hired to date to operate the plants are natives of Ohio. Construction will continue on the second processing and fractionation units, which are scheduled to be completed in December.

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September 2013 Edition

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Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

Kathryn Klaber

ITTSBURGH, Pa. — After nearly four years of leading the Marcellus Shale Coalition (MSC), CEO Kathryn Klaber, along with the organization’s executive board, have announced efforts to begin a nationwide search to identify the organization’s next leader. Klaber, selected to lead the newly formed organization at its inception in late 2009, will play a key role in this important transition for the MSC. “It has been an honor and a privilege to work alongside so many incredibly talented professionals from across the industry, as well as a truly dedicated staff, to realize energy production milestones and new opportunities for prosperity in our state, region and the nation,” said MSC CEO Kathryn Klaber. “Pennsylvania is now producing nearly 10 percent of the nation’s natural gas. Our industry’s work has been described as ‘revolutionary’ and ‘game-changing.’ The work of the MSC, collaborating with public officials, has helped create the climate for growth of an industry that has delivered on its promises to create American jobs, increase our energy security, while holding safety and environmental performance as paramount.” “Over the past several years, our industry has faced and collectively overcome a host of challenges. Katie’s resultsoriented leadership and proven ability to identify and collaboratively tackle these challenges has brought incredible value to our industry. And for that, along with her tireless efforts in building our organization from the ground up, as well as for her friendship, we are deeply grateful,” said MSC Chair Dave Spigelmyer. “From working with both the Rendell and Corbett administrations to modernize and strengthen the Commonwealth’s regulatory framework, to building a topnotch community outreach and advocacy infrastructure, Katie’s vision has positioned the MSC well for the future. On behalf of the MSC’s 300 member companies, we thank Katie for her hard work and service to our industry. Katie will remain the leader of the MSC through our search, though we will certainly continue to seek her counsel beyond that time.” In her final months with the organization, the MSC has asked its CEO to further engage MSC member companies and their employees on key policy issues for the industry, to evaluate the need for public outreach and education in the northeastern states without shale development, to advise on key benchmarks to complement the MSC’s robust Recom-

mended Practices, and to continue to serve as a recognized industry leader and spokesperson. Ms. Klaber will be representing the MSC in key forums in Australia and London in the coming months as well as hosting the MSC’s third annual Shale Insight conference in Philadelphia on September 25-26. Added Klaber: “Over the next several months, and beyond, I am certain that the MSC will remain at the leading edge of the issues and opportunities associated with natural gas. I want to thank our entire membership, our current officers, Dave Spigelmyer, Randy Albert, Scott Roy and John Mollenkopf, our first board chair, Ray Walker, our board of directors, and our staff for their purposeful dedication to ensuring that we can be proud of the legacy we helped create for generations of Pennsylvanians.”

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September 2013 Edition

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Northern Zone Edition

September 2013 Edition - Dix Communications

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September 2013 Edition

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OLUMBUS — America’s Natural Gas Alliance will hold “Think About Energy Summit” at the Greater Columbus Convention Center on Sept. 16-17. The Summit will bring together leading national and regional experts to discuss how natural gas can play a growing role in Ohio’s clean energy future. Speakers for the summit include representatives from American Electric Power, Tennessee Valley Authority, Timken Steel, NiSource, JobsOhio, The Ohio State University. Registration for the Think About Energy Summit is free. For more information, visit www.anga.us/ohioevent. The discussion panels are as follows: Introduction to Natural Gas Dr. Jeffrey Daniels, Director – Subsurface Energy Resource Center, The Ohio State University; Tom Stewart, Executive Vice President, Ohio Oil and Gas Association; Rhonda Reda, Executive Director, Ohio Oil and Gas Energy Education Program; and Chris Ziegler, Executive Director, Ohio Petroleum Council. Economic Impact of Natural Gas for Ohio Moderator: Linda Woggon, Executive Vice President, Ohio Chamber of Commerce; David Dismukes, Associate Director, Center for Energy Studies, Louisiana State University; David Mustine, Managing Director, Energy, Chemicals & Polymers, JobsOhio; and Amy Rutledge, Director, Carroll County Convention Center & Visitors Bureau, Carroll County Chamber of Commerce. Natural Gas for Power Generation Moderator: Michelle Bloodworth, Vice President, America’s Natural Gas Alliance; Marc Gerken, President and Chief Executive Officer, American Municipal Power; Andrew Kosnaski, Vice President Generation Planning, Tennessee Valley Authority; Mark McCullough, Executive Vice President – Generation, American Electric Power; Dr. Paul Sotkiewicz, Senior Economist, PJM Interconnection. Natural Gas Pipeline Infrastructure Moderator: Paul Smith, Director, America’s Natural Gas Alliance; Kathryn Downey Miller, Senior Energy Analyst, BENTEK Energy; and Jim Crews, Vice President of Northeast Business Development. Natural Gas for Manufacturing & Cogeneration Moderator: Bradley Belden, Corporate Manager – Occupational & Regulatory Services, The Belden Brick Company; Shawn Seanor, Vice President – Oil & Gas, Timken Steel. Natural Gas Vehicles & Refueling Infrastructure Moderator: Charlie Riedl, Market Development Manager, Chesapeake Energy; Brad Couch, CNG Business Development Manager, Ariel Corporation; Chuck Diehl, Fleet Manager, Smith Dairy; Hari Jackson, CNG Business Director, IGS Energy CNG Services; Dr. Giorgio Rizzoni, Director, Center for Automotive Research, The Ohio State University.

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Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

Shawn Bennett Energy in Depth - Ohio

OBLE Co. — Three wells from Rex Energy’s Warrior Prospect South in Noble County now have the infrastructure in place to allow the wells to officially come online, and for the gas to be sold to market. When Rex Energy performed its initial tests in March, the company announced that it had to await pipeline infrastructure before they could place the wells into sales lines for processing and distribution. Since then, the wells have been shut in. But in mid-July, Rex announced the pipeline infrastructure build out has been completed to the well pad, and the company is now producing from three wells in Noble County. Rex also announced its five-day sales rates from their Noble 1H, Guernsey 1H and Guernsey 2H wells, which they said continue to look very promising. The wells that were put into sales are located on the Noble/Guernsey County line near Quaker City. According to Rex’s CEO, Tom Stabley, “The strong initial sales rates of our first three Warrior South wells demonstrate the prospects for Rex’s approximately 7,000 gross acres. Given these impressive initial sales rates, we expect the Warrior South Prospect to have a meaningful impact on Rex’s current and future production growth.” All three wells are liquids rich, producing between 42 and 44 percent natural gas liquids. These natural gas liquids (NGLs) include propane, ethane, pentane and butane, which sell for a higher rate than dry natural gas. NGLs are also what make the Utica a sought after play, as these liquids are in high demand for our chemical and manufacturing base in the United States. Furthermore, these wells also produced 13 to 14 percent condensate, which is a valuable feedstock for oil refining and other petrochemical industries. The results from these wells show a lot of promise for Rex’s Warrior Prospect South, according to officials, and the company is already busy developing the fifth well on a five-well pad just north of these wells in Guernsey County. Those wells are scheduled to go into a sales line in late 2013. With over 7,000 gross acres in their Warrior Prospect South portfolio, Rex Energy expects to develop plenty of great wells in the future – which is only a snapshot of the promise and potential of the Utica Shale.

Warrior South Well Results – 5-Day Sales Rates Natural Gas (Mcf/d)

Condensate (Bbls/d)

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www.OhioGO.com

September 2013 Edition

OHIO WELL ACTIVITY

by the numbers

MARCELLUS SHALE

10 3 7 0 7 0 0 27

Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits

UTICA SHALE

3 3 5 Wells Permitted 79 Wells Drilling 301 Wells Drilled 0 Not Drilled 12 5 Wells Producing 0 Inactive 0 Plugged 840 Total Horizontal Permits

Data as of 7/17/13 Source: Ohio Department of Natural Resources

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Gas & Oil

September 2013 Edition - Dix Communications

Northern Zone Edition

Kimberly Lewis Dix Communications

ARROLL Co. — It is not the growing oil-and-gas industry that has drawn Advanced Power Services to Carroll County with plans to build a 700-megawatt natural-gas electric power plant, but the “right” market and location. Jonathan Winslow, project manager for Carroll County Energy, LLC, explains, “It is the right market, with the retirement of existing power plants, and the right location with an infrastructure capable of supporting a plant like this.” Carroll County Energy, a subsidiary of Advanced Power Services Inc., announced that it intends to build the electric generating facility to “efficiently supply enough energy to provide electricity to 700,000 homes.” According to company’s press release, the project is an $800 million capital investment that will provide up to 500 construction jobs at the peak of construction. Winslow said it will take two to three years to build the plant. He noted the company has made a commitment to hire local as much as possible, but noted some higher-skilled jobs may require employees from out of the area. Lynn Gresock of Tetra Tech, a company that provides environmental services, technical studies, planning, engineering, design, and construction management services, noted there will be plenty of “construction elements that can be done by local laborers.” “Even with those workers who are from out of the area, there are benefits to the local community to do this kind of work. They eat, buy gas and stay here. There is also a lot of opportunity for specialized labor,” she said. She believes the company will fi nd local qualified engineers, and others who have power-plant experience. When completed, the facility will employ 25-30 full-time employees in well-paying engineering, technical, operation, management and administrative positions. The plant will be staffed 24 hours a day, seven days a week. The company been looking at Carroll County for the past eight months, Winslow said. He noted that environmental studies are nearly completed and the project is ready for “more active development.”

The proposed facility is on 77 acres of land that is a part of a 233-acre farm. The site is approximately one-half mile east of state Route 9 and two-and-a-half miles north of Carrollton. It is adjacent to Carroll County Community Improvement Corporation’s land that is designated for industrial and commercial development. “With Ohio’s electricity needs continuing to grow and some 5,800 megawatts of conventional coal-fi res power plants scheduled for retirement by the end of 2015 in Ohio, Carroll County Energy will help fi ll our generation needs with clean American natural gas,” Winslow said. “This facility can be aptly described as ‘efficient generation from a small footprint.’” He estimates the footprint will be less than 17 acres, and, because of the site’s size, the plant will be “well buffered.” Winslow noted the site is ideal with proximity to electric transmission lines and an interstate gas pipeline, Tennessee Gas Pipeline. Advanced Power Services has an agreement with GE Energy to develop facilities using GE’s highly flexible and efficient gas turbine technology. The facility will employ new state-of-the-art General Electric natural-gas and steam turbine technology in a configuration referred to as “combined-cycle.” This configuration captures waste heat and generates additional electricity using a steam turbine. According to a press release, the facility will produce 50 percent of the carbon dioxide and less than 10 percent of the sulfur dioxide and nitrogen that a conventional coal-fi red power plant produces to generate the same electricity. “We will have two sources of energy from one fuel,” Winslow said. The plant will be “air” cooled as opposed to water cooled, which will reduce the amount of water needed to operate the plant. Significant economic benefits are expected as a result of the project. Winslow noted the company could enter an Enterprise Zone Agreement that would provide, long-term, stable tax revenues that would benefit Carroll County schools and

Dix Communications - Gas & Oil

www.OhioGO.com

September 2013 Edition

WINTER IN PARADISE other programs. He also noted significant economic benefits could result from purchases of goods and services, including payments for water and sewer services. Winslow said the project is in the process of completing environmental studies and will be applying for and obtaining the necessary permits. He expects to have Carroll County Energy to submit its application to the Ohio Power Siting Board by the end of summer. Winslow and Gresock noted the company will hold open houses to provide the community with information and address any concerns people have. Carroll County Energy also plans to open up offices in Carrollton in the near future. Winslow said people will be able to stop in and ask questions about the project. Several open houses will be announced in the coming months for people to learn more about the project and the company will have additional information available at www. carrollcountyenergy.com. With the Carroll County Energy project, Advanced Power Services will be generating 2,100 megawatts of power in the United States. It has a plant near New York City and in Massachusetts.

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Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 319 2. Harrison County 120 3. Columbiana County 81 4. Noble County 57 5. Belmont County 52 6. Guernsey County 49 Monroe County 49 7. Jefferson County 38 8. Mahoning County 27 9. Portage County 15 10. Stark County 13 Tuscarawas County 13 11. Trumbull County 11 12. Coshocton County 5 Washington County 5 13. Muskingum County 3 Holmes County 3 14. Knox County 2 15. Ashland County 1 Geauga County 1 Medina County 1 Wayne County 1 WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGED SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 8/17/13

100

125

150

320

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OOSTER — Matthew Knight, a geology teacher at Wooster High School, attended a two-day teacher workshop hosted by the Ohio Oil and Gas Energy Education Program (OOGEEP) to learn how to engage and connect students to the energy industry through science education. The Teacher Workshop took place July 31 and Aug. 1 at Mahoning County Career and Technical Center in Canfield, Ohio. “OOGEEP established the Teacher Workshops to help teachers promote how science, technology, engineering and math (STEM) play into energy education and eventually into the workforce for young students who may consider careers in the oil and gas industry,” said Rhonda Reda, executive director of OOGEEP. “Ohio has a long history of drilling and producing oil and gas. Recent technologies have enabled the industry to explore and drill in many geological formations around the state.” In addition to Knight, other teachers from across the state attended the free workshop offered by OOGEEP. The teachers learned all aspects of energy production from formation to exploration, drilling to producing and processing to refi ning. The teachers also engaged in hands on experiments and internet activities. During the second day of the workshop, teachers toured Evets Oil and Gas Construction, a pipe fabrication company in Hubbard, and visited several wells drilled by Everflow Eastern Partners to view how wells had been completed and integrated into residential neighborhoods including one school. They also toured a well that was under construction by Everflow in Massillon and a brine disposal well in Beloit operated by Brineaway. At the end of the workshop, teachers received resource materials, classroom supplies, lesson plans, DVDs, posters and documentation for CEU credits and an optional Ashland graduate credit. The workshop, accommodations and educational materials were funded by Ohio’s natural gas and crude oil producers as part of their public outreach initiatives. “OOGEEP is working hard to develop a trained workforce for the expanding oil and gas industry. And these teacher workshops are an invaluable tool that allows the industry to work with teachers and their students who may one day help develop, produce and supply our domestic energy needs,” adds Sarah Tipka, OOGEEP Board member, Education

Dix Communications - Gas & Oil

September 2013 Edition

Committee Chair and oil and gas producer from A.W. Tipka Oil and Gas, Inc. The mission of OOGEEP is to facilitate educational, scholarship, safety and training programs; to promote public awareness about the industry; and to demonstrate to the general public the environmental, energy and economic benefits of Ohio’s independent natural gas and crude oil producers. OOGEEP is funded by Ohio’s natural gas and crude oil producers and does not utilize any taxpayer dollars. For more information on OOGEEP, visit www.OOGEEP.org.permanency of the relationship.

Matthew Knight, c, a geology teacher at Wooster High School, works on an experiment with other teachers at the OOGEEP Teacher Workshop held in Canﬁeld on July 31 and August 1.

Sparta Steel & Equipment Corp.

www.spartasteel.com

STEEL SERVICE CENTER • Rebar • Angle • Channel• HR Bars • CF Bars • Beams • Tubing • Pipe • Deck Plate • Expanded Metal/Grating • Flat Sheets • HR Plate Galvanized Sheets • Stainless Steel and Aluminum Items

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330-866-9621 • 1-800-732-4272 • Fax 330-866-9625

Gas & Oil

September 2013 Edition - Dix Communications

Northern Zone Edition

Calling all: Industrial, Manufacturing, technical, engineering and Gas and Oil employers!

ReseRve yOuR bOOtH tOday!

October 3, 2013 2:00 pm - 6:00 pm Pritchard-Laughlin Civic Center 7033 Glenn Highway, Cambridge, OH 43725

Call 1-888-296-9650 ext. 4138 or go online to ohiojobfairs.info to register your company today! Brought to you by: The Daily Jeffersonian, Ohio Gas and Oil magazine, Dix Communications and The Community Job Club

www.OhioGO.com

RAZEYSBURG — Ohio Oil Gathering, a subsidiary of Crosstex Energy, recently celebrated the reactivation of the company’s Black Run Rail Terminal by hosting a ribbon cutting ceremony on July 17 at the Ohio Oil Gathering regional office in Frazeysburg. The Black Run rail terminal is the first facility to move light oil condensate out of the region to refinery and petrochemical markets. The state-of-the-art rail loading terminal is on the Ohio Central Railroad, allowing the export of Utica Shale light oil condensate production. The facility includes a 20-car rail rack with tracking gangways designed to top load multiple products, including light oil condensate and various grades of crude oil, at a rate of 24,000 barrels per day. The Black Run terminal, adjacent to the company’s oil gathering pipeline, will leverage existing tankage and piping, as well as the capabilities of its extensive truck fleet in the Ohio River Valley to take advantage of continued growth in the Utica region. The company is investing heavily in midstream development as Utica shale production ramps up. To date, the company’s investments include the 2012 acquisition of Clearfield Energy, the recent formation of E2 Energy Services focused on condensate stabilization and natural gas compression, and upgrades to existing storage facilities, trucking operations and brine disposal services. More at www.daily-jeff.com Crosstex Energy, LP, an integrated midstream energy partnership headquartered in Dallas, Texas, offers diversified,

Dix Communications - Gas & Oil

September 2013 Edition

Ohio Oil Gathering, LLC, a subsidiary of Crosstex Energy, LP, celebrates the reactivation of the Black Run Rail Terminal in Frazeysburg. From l to r: Crosstex employees Kevin Hyatt, vice president of commercial and business development and Chris Middleton, project engineer; Ohio Central Railroad employee John Murray, assistant vice president of sales and marketing; Paul Weissgarber, senior vice president of Ohio River Valley; Ohio Oil Gathering employee Aaron Fleming, director of operations; Michael LeBlanc, Crosstex vice president of operations; and Ohio Oil Gathering employee Mark Sterling, manager of operations, cut the ceremonial ribbon to officially reopen the facility.

tailored customer solutions spanning the energy value chain with services and infrastructure that link energy production with consumption. Crosstex operates approximately 3,500 miles of natural gas, natural gas liquids and oil pipelines, 10 natural gas processing plants and four fractionators, as well as barge and rail terminals, product storage facilities, brine disposal wells and an extensive truck fleet.

Hours of Operation: Tues.-Sat. 10-6; Sunday 11:30-5 Follow Us On Facebook Locally Owned & Operated Paired with Quality Dealers. Offering a Variety of Vintage, Rare & Unusual Items. Quality Antiques Furniture & Lighting, Oddities, Gaming, Advertising, Gas & Oil, Toys, Industrial, Maritime, Aviation Railroad, Brass, Bronze, Glass, Clothing, Jewelry, Clocks Memorabilia & Paper. We have something for everyone, every age come in & check us out.

Gas & Oil

Northern Zone Edition

September 2013 Edition - Dix Communications

Agricultural & Industrial Service & Repair TRUCK SALES, INC.

New & Used Truck Sales - Leasing Service - Parts - Body Work Not just highway trucks! We also service RV’s, school busses, fire trucks, all types of trailers and specialty vehicles.

Canton, OH

Young Freightliner & Isuzu

Sales, Parts & Service

Hydraulic Cylinders • Mobile Wet Lines Hoses & Fittings • Machining & Fabrication Custom Designed Diesel Powered Hydraulic Units Testing, Diagnostics & Repair of Cylinders Pumps & Motors We Feature

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Young Volvo

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1-800-308-0838

JayMac Body & Frame Body work, alignment & four large paint booths

1-866-601-7654

Young Trailer Repair Trailer repair and rehabilitation

330-479-8992

www.youngtrucks.com

Lubricants

12317 Dover Road • Apple Creek, Ohio 44606 Phone: 330-857-0001 • Fax: 330-857-2446

yhydraulics@pcfreemail.com

Dr. Rambaud & Associates, LLC U.S. Department Of Transportation Qualified Substance Abuse Professional

SAP SERVICES Dr. R. L. Rambaud, DM/LICDC-CS/SAP ~Experienced, Professional, Confidential

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Supplying the Material Handling Industry for Over 40 Years!

Williams Toyota Lift

9462 Main Ave SE East Sparta, Ohio 44626

Phone (330) 866-2121 Fax (330) 866-3701

Dix Communications - Gas & Oil

www.OhioGO.com

Ohio octobER 2012 • www.ohiogo.com

A FREE monthly PublicAtion

PIPELINE

B BROWNFIELD MANAGEMENT – 440-429-5095

September 2013 Edition

A BUSINESS & EVENTS DIRECTORY

K KIKO AUCTIONEERS AND REALTORS – 800-533-5456 Real Estate, Auctions 2722 Fulton Dr NW Canton, OH 44718 www.kikoauctions.com

P PALLOTTA FORD – 800-589-2065 Car Dealership 4199 Cleveland Rd Wooster, OH 44691 www.pallottaford.com

EEDINBURG AUCTION SALES – 330-325-2966 Consignment Auctions 4029 St Rt. 14 Edinburg, OH 44272 www.EdinburgAuction.com

G GREEN ACRES FURNITURE – 800-807-0975 Furniture 7412 Massillon Rd Navarre, OH 44662 www.greenacresfurniture.com

GAS & OIL MAGAZINE / PIPELINE – 330-264-1125 Advertising - Rhonda Geer 212 E. Liberty St Wooster, OH 44691 www.ohiogo.com

H HOMESTEAD FURNITURE – 866-674-4902 Furniture 8233 State Route 241 Mt. Hope, OH 44660 www.homesteadfurnitureonline.com

TTROYER FURNITURE – 330-852-4752 Furniture 985 W. Main St Sugarcreek, OH 44681 www.troyerfurniture.com

W WALNUT CREEK FURNITURE – 877-893-9231 Furniture 3473 State Route 39 Walnut Creek, OH 44687 www.walnutcreekfurniture.com

Ohio

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Advertise your Business or Event in Gas & Oil’s all new PIPELINE Directory. Call Today!

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Northern Zone Edition

September 2013 Edition - Dix Communications

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If forty years of homebuilding has taught us anything, it’s the importance of customization. Because a one-size-fits-all approach quickly becomes one-size-fits-none. So we take the time to get to know you. To build exactly the home you want, at a price you can afford. That’ll always be time well spent. Explore dozens of customizable floorplans at WayneHomes40.com or call our Portage Model Center at 866-928-0170

Selling Gas & Oil mineral rights?

call KIKO

explore your options before you sell!

EXPERIENCED – KNOWLEDGEABLE – TRUSTED – INDUSTRY LEADERS

The Utica and Marcellus Shale are exciting opportunities for Northeast Ohio, making this an excellent time to convert your mineral rights into cash. KIKO, REALTORS® and Auctioneers is the Ohio leader in selling gas and oil rights at auction. Our team of knowledgeable and experienced REALTORS® and Auctioneers are experts in determining leasing rights, understanding state and local laws, and achieving the optimal marketing solution to maximize your selling potential.