Ohio Gas & Oil Magazine March 2018 by Gannett NEO

March 2018

A Free Monthly Publication

Billions From Tax Cuts Supercharge Fossil Fuel Sector

Ohioâ&#x20AC;&#x2122;s Orphan Wells Bill Aims To Bolster Orphan Well Plugging

IN THIS ISSUE: GREEN APPROVES NEXUS SETTLEMENT

L�� . x x x x x

x x

ROYALTY DEDUCTION DISPUTES. L�� . A�� . D�� . W�� . S�� . S�� . T�� .

CALL FOR FREE BOOK

E THAN V ESSELS A��

MARIETTA,

OHIO

SOMETIMES, YOU NEED A COUNTRY LAWYER. Courtroom advocate. Ohio & West Virginia. State and Federal. NBTA board-certified Civil Trial Advocate. Million Dollar Advocates Forum. Contingent fees.

CJ-10604115

B�� .

FIELDS, DEHMLOW & VESSELS, LLC 309 Second Street Marietta, Ohio 45750 (740)374-5346

www.fieldsdehmlow.com

MAKE YOUR CUSTOM HOME UNIQUELY YOURS For a home that’s built just for you on your land. Get started at a Schumacher Homes Model Home and Design Studio. Walk through our fully furnished homes and see the latest trends in our design studio for everything you need to build your custom home.

Akron, Ohio Location

Belmont, Ohio Location

779 White Pond Drive, Akron, OH 44320

41201 Bond Drive, Belmont, OH 43718

877-267-3482 · schumacherhomes.com · mon/wed/fri: 9-6, tue/thu: 10-8, sat: 10-5, sun:12-5 KO-10603271

GasandOilMag.com

OhioGas&Oil

Table of Contents MARCH 2018

A Look Ahead Gas & Oil Events

Fifth Annual Utica Midstream Returns on April 4th

Bill Albrecht

Gulfport Energy Fund Opens First Grant Round of 2018

EXECUTIVE EDITORS

FERC Gives Go-Ahead For Boring Under Tuscarawas River

Ohio’s Orphan Wells

OOGA 2018 Winter Meeting On March 7th, 8th & 9th

Statute of Limitations In Lack of Production

Green Approves Nexus Settlement

Billions From Tax Cuts Supercharge Fossil Fuel Sector

Ohio Well Activity

Horizontal Drilling Activity Graph

G ROUP PUBLISHER

Ray Booth rbooth@daily-jeff.com Rob Todor rtodor@the-review.com Ted Daniels tdaniels@the-daily-record.com

CONTENT CO ORDINATOR Emily Rumes

On The Cover:

J&M

erumes@the-daily-record.com Carpentry LTD • Pole Barns • Garages • Barns • Stables • Riding Arenas • Horse Barns • Decks • Outbuildings • Metal Roofing

FREE

“The Quality You Want For Your Project”

AL-10526836

LARGE s Scale Building

Estimates 330.231.0125

Expert Reroofing Metal

Conventional

Most Jobs Are Complete In Just Two

www.jmcarpentrylimited.com

OhioGas&Oil

Days

Fredricksburg, Ohio 44627

March 2018

‘Generations of Amish Craftwork with Modern, Professional Site Management’

Agricultural Residential Commercial Any Size Custom

These pipes were removed from an orphan well in Amsterdam, Ohio. The well was drilled in 1940 and Billions From Tax Cuts Supercharge contaminated a nearby water Fossil Fuel Sector source that was used for Ohio’s Orphan Wells cattle. The Ohio Department r Bill Aims To Bolste Orphan Well Plugging of Natural Resources plugged it in 2015. Orphan wells have been found in pastures and streams, in downtown Cleveland and beneath homes and public buildings, including a school gym in Lorain. A bill that is currently working its way through the statehouse aims to boost Ohio’s program that plugs these potentially dangerous orphan wells. (Photo by: CantonRep.com, Michael S. Balash) A Free Monthly Publication

MARCH 2018 ADVER TISING John Kridelbaugh Cambridge, Ohio Office jkridelbaugh@daily-jeff.com 740-439-3531 Kelly Gearhart Wooster & Holmes, and Ashland, Ohio Offices kgearhart@the-daily-record.com 330-287-1653 419-281-0581 Mindy Cannon Alliance & Minerva, Ohio Offices mcannon@the-review.com 330-821-1200 Kim Brenning Kent, Ohio Office kbrenning@recordpub.com 330-298-2012 Janice Wyatt National Major Accounts Sales Manager jwyatt@recordpub.com 330-541-9450

L AYOUT DESIG NER Kassandra Walter

kwalter@times-gazette.com

S NEXUS SETTLEMENT IN THIS ISSUE: GREEN APPROVE

A Division of GateHouse Media 212 E. Liberty St. Wooster, OH 44691 330-264-1125 editor@spectrumpubs.com. GasandOilMag.com

A Look Ahead to 2018

Gas & Oil Events • March 7-9, 2018

Ohio Oil & Gas Association Winter Meeting 2018 Easton Hilton, Columbus, Ohio ooga.org 740-587-0444

• March 8, 2018

Oil and Gas Issues Briefing Join Ashland, Holmes, Knox, Richland and Wayne County Farm Bureaus for an informational meeting about oil and gas leases.

Guest Speaker: Dale Arnold, Director of Energy Services, Ohio Farm Bureau. Loudonville High School Cafeteria, 421 Campus Ave., Loudonville, Registration 6:30-7pm, meeting from 7-8pm. Cost is free for Farm Bureau Members, $25 for non-members. Please pay at the door.

• April 19, 2018

SOOGA Spring Membership Meeting and 40th Anniversary Celebration Location: Shrine Building, Marietta, OH

• April 22, 2018

Cooperative’s Utica Service Station. 11339 Mt. Vernon Road, Utica, OH 43080 (across from Velvet Ice-Cream). Join us at this free event to celebrate and learn about the Earth and Energy!

The Energy Cooperative’s Earth and Energy Day Location: The Energy

• March 21, 2018

PIOGA Spring Meeting Rivers Casino, Pittsburgh, PA pioga.org 724-933-7306

AR-10601175

GasandOilMag.com

OhioGas&Oil

Fifth Annual Utica Midstream

Returns on April 4

ctivity is picking up throughout the Utica. Pipelines are being planned, developed and expanded throughout Ohio to deliver Utica Shale energy to customers in the United States and Canada. Gas processing plants also continue to be an important part of Utica energy development. These infrastructure developments are expected to bring billions of investment dollars to eastern Ohio in coming years. Learn about the latest in pipeline and processing plant development at the 5th Annual Utica Midstream, Northeast Ohio’s leading event on midstream and upstream development, co-produced by the Canton Regional Chamber of Commerce and Shale Directories. Since 2014, energy experts from across the country have educated hundreds of attendees at Utica Midstream on the latest developments and forecasts for the midstream market. Companies working on pipelines in Ohio will find this

seminar very educational. It will be helpful in planning for 2018 and 2019. Utica Midstream will be held on Wednesday, April 4, from, 7:30 a.m. to 3:15 p.m., at The Barrette Center at Walsh University (2020 East Maple Street, North Canton, OH 44720). This year’s seminar includes a jam-packed lineup of leading experts in Midstream, covering aspects from pipeline engineering to construction to technology. Speakers (to date) include: • Brent Breon, President, Business Development, Caiman Energy II and Blue Racer Midstream • Colette Breshears, Natural Gas Analyst, Genscape • Bryce Custer, Commercial Real Estate Agent, NAI Spring • David Ledonne, Vice President Operations, MarkWest • Edward M. Marszal, PE, ISA84 Expert, President, Kenexis • Rick Simmers, Chief, Division of Oil and Gas Resources Management • George Stark, Director, External Affairs, Cabot Oil & Gas • Jason Stechschulte, Commercial Development Manager, Marathon Pipeline LLC • Erika Young, Business Development, Enbridge Utica Midstream is presented by sponsor Kenexis. Additional sponsors to date are: Beaver Excavating, Furbay Oil & Gas, TorcUP, Zimmerman Steel, Akron-Canton Airport, Ohio CAT, Pipeliners Union 798, MAGNET and media partner Kallanish Energy. Reservations can be made at www.uticacapital.com. Tickets are $395 per person. For questions regarding Utica Midstream, please contact Melissa Elsfelder, event manager, at 330.458.2073 or melissae@cantonchamber.org.

OhioGas&Oil

GasandOilMag.com

Gulfport Energy Fund Opens

First Grant Round of 2018

ulfport Energy Fund at the Foundation for Appalachian Ohio (FAO) is pleased to announce its first grant round of 2018 is now open.

Applications are now available and will close on Tuesday, March 27, 2018. This year’s first grant round will support organizations and projects focused on education. Nonprofit and public organizations in Belmont, Guernsey, Harrison, Jefferson, Monroe, and Noble counties are eligible to apply. Applications are available on FAO’s website at www.AppalachianOhio.org/Gulfport<http:// www.AppalachianOhio.org/Gulfport>.

properties located in the Utica Shale of Eastern Ohio and along the Louisiana Gulf Coast. In addition, Gulfport holds a sizeable acreage position in the Alberta Oil Sands in Canada through its 25% interest in Grizzly Oil Sands ULC. About the Foundation for Appalachian Ohio

The Foundation for Appalachian Ohio (FAO) is a regional community foundation serving the 32 counties of Appalachian Ohio. A 501(c)(3) public charity, the Foundation creates opportunities for Appalachian Ohio’s citizens and communities by inspiring and supporting philanthropy. For more information about “Gulfport is pleased to once again support projects in FAO, visit www.AppalachianOhio.org<http://www. education benefitting those in the communities where we appalachianohio.org/>. live and operate,” said Mike Moore, CEO and President of Gulfport Energy. “At Gulfport, we see not only the daily benefit, but also the long-term value a strong educational system can have for the students and the community as a whole. We are looking forward to taking part in the continuing efforts toward success in the region.”

WE RENT

The Gulfport Energy Fund at FAO was created to support nonprofits, schools, and communities in projects that increase quality of life, create access to opportunities, or identify and implement a solution for a community need in the counties where Gulfport Energy operates.

AUGER BORING MACHINES & AUGERS CUTTING HEADS & CASING ADAPTERS GUIDED BORING PILOT TUBE SYSTEMS TUNNEL ATTACHMENTS FOR BORING MACHINES CRADLE BORING MACHINES

The year’s second grant round, slated for late summer 2018, will focus on projects relating to health and human services and environmental stewardship. Please sign up for the Foundation’s e-newsletter on our website at www.AppalachianOhio.org<http://www. appalachianohio.org/> for the latest news on when grant opportunities become available. For more information about the Gulfport Energy Fund, please visit www.AppalachianOhio.org/ Gulfport<http://www.appalachianohio.org/Gulfport> or call 740.753.1111.

Gulfport Energy Corporation is an Oklahoma Citybased independent oil and natural gas exploration and production company with its principal producing GasandOilMag.com

WO-10604204

About Gulfport Energy:

844-333-2754 • www.trs.rent

OhioGas&Oil

FERC Gives Go-Ahead

For Boring Under Tuscarawas River

Shane Hoover • GateHouse Ohio Media he Federal Energy Regulatory Commission gave Rover the go-ahead on Feb. 6, almost two weeks after ordering the company to stop boring and submit additional information on how it planned to control drilling fluid loss as it crossed the river with a second mainline.

If residential wells are contaminated, Rover has told FERC it would install a temporary source of drinking water and a new well, if warranted.

Texas-based Energy Transfer is building the $4.2 billion Rover Pipeline, which will carry 3.25 billion cubic feet of natural gas a day from the Utica and Marcellus shales to Rover told FERC it would sample water from nearby markets in Canada and the United States. residential wells and monitoring wells before, during and after boring to confirm they haven’t been contaminated The part that crosses Stark, Carroll, Tuscarawas by clay-based drilling fluid. and Wayne counties includes twin 42-inch diameter mainlines.

Orme

Hardware

Let our knowledgeable and professional staff assist you with all your home needs • Electrical

• Rental Equipment

• Plumbing

• Locks and Keys

• Screen Repair • Repair Parts ~ VISIT ONE OF OUR 7 LOCATIONS: ~ Newcomerstown Cambridge New Concord 134 North 11th Street Cambridge, OH Phone: 740 432-2712

Cadiz

51 East Main Street New Concord, OH Phone: 740 826-4160

Berlin

Newark

CA-10528229

(Formerly Kandel’s Hdwe.) 634 Lincoln Avenue German Village Center 67 West Main St. Newark, OH Cadiz, OH Berlin, OH Phone: 740 942-1223 Phone: 330-893-2812 Phone: 345-7515 Closed Sunday Closed Sunday

102 N. River Street Newcomerstown, OH Phone: 740 498-8131

Arcanum 210 S. Main Street Arcanum, OH 45304 Phone: 937-692-8282

Rover spokeswoman Alexis Daniel, in an email, wrote that the company was pleased with FERC’s decision and would follow plans approved by the commission. The pipeline is more than 99 percent complete and one mainline already is in use. The Ohio Environmental Protection Agency asked FERC last month to make Rover abandon the current river crossing after workers failed to stop the underground loss of drilling fluid. State regulators had not reported fluid leaking to the surface or contaminating private water wells, but said the underground loss of 200,000 gallons of drilling fluid put a nearby wetland and groundwater at risk. In April, 2 million gallons of drilling fluid pumped underground surfaced in a wetland next to the Tuscarawas River during construction of the first mainline crossing. Ohio EPA issued a statement: “We are again disappointed with FERC and their lack of consultation with Ohio on this most recent decision,” it read.

Near You and Open 7 Days A Week! Shop online: ormehardware.com

OhioGas&Oil

GasandOilMag.com

“States need FERC to be a trusted partner in making sure these interstate projects are protective of human health and the environment. FERC is allowing Rover to drill under the Tuscarawas River knowing they will continue losing excessive drilling fluid and threatening the environment.”

Rover argued that completely stopping fluid loss was never part of the boring plan that FERC approved earlier in the project and even the best horizontal drilling projects lose 20 percent of their fluid. Rover said it had six inspectors at the work site through the day and night shifts, along with thermal imaging cameras and drones to spot surface leaks. Crossing the river in a different location or using a different method would delay completion of the pipeline by several months, if not a year, Rover told FERC. Reach Shane Hoover at 330-580-8338 or shane.hoover@ cantonrep.com

After Ohio EPA’s request, FERC asked Rover how it planned to control future fluid loss and to study the feasibility of crossing the river in a different location or using a different method. The commission also asked Rover to study what would happen if the two mainlines were shunted through one crossing.

Have an oil and gas issue? We can help. • Represented over 2,500 lessors, mineral owners, and landowners for leasing, sale of minerals, and pipeline right-of-ways. • With more than 8 decades of combined oil and gas experience, our attorneys have been involved in over 100 litigation and arbitration cases involving breach of lease, fraud, underpayment of royalties, invalidity of lease, dormant mineral and marketable title issues, and mineral reservation interpretation. Contact one of the attorneys below to discuss your case: William G. Williams | bwilliams@kwgd.com Gregory W. Watts | gwatts@kwgd.com KWGD.com Toll Free at 877-876-9958 4775 Munson Street NW | Canton, Ohio 44718 | 330.497.0700 Offices in Canton, Akron, Alliance, New Philadelphia and Sugarcreek CJ-10596092

GasandOilMag.com

OhioGas&Oil

Ohio’s Orphan Wells Bill Aims to Bolster Orphan Well Plugging Shane Hoover • GateHouse Ohio Media

icky and Dennis Moore’s 160 acres in Carroll Changes proposed County are a graveyard of oil and gas wells. A bill working through the statehouse aims to boost Ohio’s Pumps and pipes rust in the woods next to rotting program that plugs potentially dangerous orphan wells. wooden barrels and a tumbledown equipment shed. There are at least 10 wells on the property that haven’t Groups representing the oil and gas industry, landowners and environmentalists support the bill. They have said it been plugged. Some are a century old. would streamline plugging projects and remove a tax burden On a hot summer day, Vicky Moore said, she can still smell on landowners who take a state grant to plug wells. oil. The bill also mandates a greater share of taxes and fees The company that last owned the wells is out of business, flowing from Ohio’s booming oil and gas production be and the Moores have been trying for more than 15 years to used to clean up the industry’s legacy. get the state to plug the wells and remove the abandoned “There’s urgency to it, there’s been frustration in the public equipment through its orphan well program. and there’s money available, so the question was, why Vicky Moore said she’s angry the owner of the wells left not?” said state Rep. Andy Thompson, R-Marietta, the bill’s sponsor and a member of the House energy and natural them behind. resource committee. “Have the decency to come and get your stuff and clean up the area you were working on and leave,” she said. “Don’t The Ohio Department of Natural Resources, the state agency leave the mess there for someone else to worry about and responsible for plugging wells, has welcomed changes that would speed plugging work, but ODNR and the state Office take care of, and that’s basically what they did.” of Budget and Management have balked at the spending mandate. What’s an orphan? Orphan wells are oil and gas wells that haven’t been plugged properly with cement and don’t have an owner who could pay to do the work. Orphan wells are a problem because they can leak oil, natural gas and brine into surrounding water and soil and can cause explosions when natural gas collects in a building. Ohio started to plug orphan wells in 1977, and has plugged approximately 2,000 since then.

A wooden barrel once used by oil drillers decays at the Carroll County property of Vicky and Dennis Moore in this 2015 photo. The company that once proﬁted from the well is no longer in business (CantonRep.com/Michael S. Balash)

OhioGas&Oil

ODNR estimates 250,000 wells have been drilled in the state since 1860; 59,000 still are producing. The rest are potential orphans depending on if and when they were plugged, and whether the owners are still around. Wells were stuffed with logs, tools, cannonballs or garbage, and during World War II salvagers yanked steel casings

GasandOilMag.com

from some wells to sell as scrap metal, leaving open wellbores. Other wells, like those on the Moores’ Carroll County property, never were plugged. GonzOil, a Jackson Township-based driller, recently plugged a well for ODNR in Cuyahoga County. Drilled in the 1930s, the well was a dry hole and the owner plugged it with part of the rig, including the drill bit, said Doug Gonzalez, company co-owner. Later, a house was built about 10 feet from the well and gas seeped into the basement, forcing the resident to evacuate at times. Funding mandate The cost to plug a well is between $20,000 and $190,000 depending on the well’s depth, location and the difficulty of the job. The average runs about $70,000.

Agency reactions

To update the plugging program, the Ohio House voted 96-0 earlier this month to pass Sub. House Bill 225. The bill would require ODNR to inspect an orphan well within 30 days of a landowner report, simplify ownership searches and eliminate the tax burden on landowners who get a plugging grant by allowing ODNR to pay those contractors directly.

In testimony earlier this month, Simmers said many of the changes proposed in the bill would reduce costs and make the plugging program safer, but he balked at the 45 percent funding The bill would bar the minimum. state Office of Budget and Management from moving At the current pace of money from the oil and gas revenue receipts, ODNR fund to the state’s general would have to spend $37 revenue fund, which is used million on plugging wells to pay for Medicaid and next fiscal year to meet that other expenses. spending threshold, a task for which the agency lacks During fiscal years 2016 the time and manpower, and 2017, a combined $42.5 Simmers testified. million was transferred from the oil and gas fund to ODNR spokesman Steve the general revenue fund. Irwin said the agency would Another $19.5 million, prefer using the state budget including $1.8 million from process to set spending levels. the plugging program, was

The bill also would increase the amount ODNR has to spend plugging orphan wells from 14 percent of the oil and gas fund to 45 percent. There is $41 million in the fund so far and it could total $82 million this fiscal year. “A lot of money is coming in,” Thompson said. “The question is, where is it going? How is it being utilized?”

WE TEST & REPAIR MOST BRANDS OF CYLINDERS

IN HOUSE!

The Ohio Oil and Gas Association, Ohio The money to plug orphan Environmental Council and wells comes from taxes and Ohio Farm Bureau back the permit fees paid by the oil bill. and gas industry. The boom in Utica Shale drilling has Tom Stewart, OOGA’s swelled the state’s oil and interim chief of staff, said gas fund from almost $3 the state has an opportunity million in 2009 to $52 million to fix the historic problem of last fiscal year. orphan wells. In 2010, state lawmakers mandated that at least 14 percent of the oil and gas fund be used to plug orphan wells, and the plugging budget has grown from $800,000 to $6 million. ODNR also took steps to make the contracting system more efficient.

“It is a lot of money that’s being generated, and I think it’s going to be a challenge to get the program up to meet that, but the resources are there and should be used for the intended purpose,” Stewart said.

Thousands of Seals and packing in Stock!

WE ALSO REPAIR PUMPS & MOTORS

OUR CYLINDER DISASSEMBLY TABLE & HYDRAULIC TORQUE WRENCH

QUALITY REPAIRS HOSES & ON CYLINDERS, FITTINGS MADE PUMPS,AND WHILE YOU MOTORS WAIT!

WE STOCK A LARGE SELECTIONS OF v/ EATON MOTORS!

SAWMILL EQUIPMENT

CUSTOM BUILT, DIESEL POWER HYDRAULIC UNITS

• DESIGN • ENGINEERING • POWERING • PLUMBING

WO-10596926

GasandOilMag.com

“We certainly want a number that’s aggressive but also realistic and taking into consideration the inventory of wells, market conditions and availability of those contractors,” Irwin said.

The bill

WHOLESALE PRICES AVAILABLE

12317 Dover Road Apple Creek OH 44606 Phone: 330.857.0001 Fax: 330.857.2446 OhioGas&Oil

used to settle ODNR court cases that didn’t involve oil and gas issues in fiscal years 2017 and 2018.

“Why put something in law that we’re not going to be able to meet?” Keen asked. “Why not do what we do for every other program where “Given that much of the we spend money and do this money is coming from my in the budget bill?” district and adjacent districts in the shale play, that’s very On the waiting list disconcerting,” Thompson said. If the state plugs 80 wells this fiscal year, and can sustain State Budget Director that pace, it would take Timothy S. Keen said the almost a decade to plug the state is not diverting money current inventory of known that would otherwise allow orphan wells. it to run an effective plugging program. The plugging Meanwhile, the Moores and program hasn’t spent its full other landowners wait, for budget since 2015. someone to fix the problem. He said it’s “highly unusual” for lawmakers to mandate even 14 percent of the fund to be used for plugging wells.

As of last week, the state’s orphan list didn’t include any of the wells on the couple’s property, and Vicky

Moore said she didn’t know where ODNR stood with its review. After an inquiry from The Canton Repository, Irwin provided a document showing that the wells were submitted to the orphan program in December. “We will put them into a package and get them plugged,” said Irwin, but he didn’t know how soon that might happen. Reach Shane Hoover at 330580-8338 or shane.hoover@ cantonrep.com. On Twitter: @ shooverREP

Dennis Moore, shown here in 2015, and his wife, Vicky, have at least 10 orphan wells on their 160 acres in Carroll County. (CantonRep.com/ Michael S. Balash)

OHIO’S LEADING CHOICE RALAW.COM ROETZEL & ANDRESS A LEGAL PROFESSIONAL ASSOCIATION

IN OIL AND GAS

Ohio is the new frontier in the development of America’s shale gas resources. Roetzel’s experienced Oil and Gas attorneys provide a broad array of legal services including:

WO-10604205

• Leasing and lease renewals • Lease ratiﬁcation and amendment • Litigation – Dormant Mineral Act, quiet title, and lack of production • Pipeline easements • Surface development • Pooling and unitization • Mineral LLC’s • Permitting and environmental • Royalty disputes

For additional information, please contact Dave Wigham at dwigham@ralaw.com or Tim Pettorini at tpettorini@ralaw.com. 222 South Main Street Akron, OH 44308 330.376.2700

10 OhioGas&Oil

121 North Market Street, 6th Floor Wooster, OH 44691 330.376.2700

GasandOilMag.com

AR-10602177

GasandOilMag.com

OhioGas&Oil 11

OOGA 2018 Winter Meeting th th th On March 7 , 8 & 9

yndsey Kleven, Communications Coordinator for OOGA, said, “This year OOGA is taking a slightly different approach to the structure of our meeting in hopes of giving attendees choices to concentrate on the topics they’re interested in the most. “This will come in a twopronged approach, the first is to bring very good speakers to provide information to our members. In that vein, this year’s keynote luncheon speaker is Brian Kilmeade, co-host of Fox News’ morning show, Fox & Friends, as well as host of Fox News Radio’s Kilmeade and Friends.

“The second component will be several breakout sessions; that will look at different issues and provide an arena to have in-depth discussions. For this year’s event we are really looking to give attendees the choice of what they want to hear, to provide some additional benefit. This format is member driven with a new focus on OOGA committeeestablished issues. There will be a lot of committee work at the Winter Meeting, not just limited to the people in those committees, it will be open to everyone. “To this end, the breakout sessions will feature high-level speakers providing attendees with the opportunity for direct conversation and questions. Speaking during

AR-10592689

330-323-3362 JoAnnClark@CutlerHomes.com JoAnnClark.CutlerHomes.com

12 OhioGas&Oil

these breakout sessions are Chief Rick Simmers (Chief, ODNR’s Division of Oil and Gas Resources Management), Chairman Asim Haque (Chair, Public Utilities Commission of Ohio), Greg Wrightstone (Author, “Inconvenient Facts”), Lee Fuller (Independent Petroleum Association of America), David Dulak (Eureka Midstream) and others. “General session speakers during the meeting include the annual DeBrosse Report, which details Ohio oil and gas activities, Jerry James (Shale Crescent), Allen Brooks (PPHB Energy Investment Banking) and Ohio gubernatorial candidates Attorney General Mike DeWine and Lt. Governor Mary Taylor, amongst others.

significant contributions to the industry.” To learn more about these events, including how to register go to oogawintermeeting.com. Registration on-site at the event will also be available. In addition, the meeting will include the 9th Ohio Oil and Gas Hall of Fame Honors Dinner, which includes a reception, dinner and induction ceremony for the incoming class. Register online: http://hof.ooga.org/ The Ohio Oil and Gas Association Hall of Fame honors those who have made their own distinct contributions to the Ohio oil and gas industry. The Hall of Fame was established in 1987 and since then 125 honored veterans of our industry have been inducted into the Hall. The induction ceremony has been held once every four years since 1994.

“Traditional events, such as the President’s Reception, Ohio Oil & Gas Producers Fund Reception, and networking breakfasts will provide attendees with ample opportunities to interact with others within The Hall of Fame Class of 2018 includes: the industry. “Finally, prior to the official start of the event, the 9th Ohio Oil and Gas Association Hall of Fame Dinner & Ceremony will be held on the evening of March 7 to honor and induct a new 13 member class to its ranks. This event, established in 1987, is now held every four years to recognize and honor those who have made

Jeffery J.A. Baker, Joseph Haas, Gene Huck, Jerry James, Willian Kinney, Mark Lytle, Robert McVicker Jr., Jack Miller, Bob Moss, Dan Pottmeyer, John W. Straker Jr., John B. Walker and Howard Wenger.

GasandOilMag.com

Statute of Limitations

In Lack of Production

As a matter of background to this ruling, it is helpful to understand how most oil and gas leases may expire over time and why it is important to be able to confirm that an old lease has expired. Under Ohio law, most oil and gas leases contain a primary term and a secondary term. The primary term is a period of years within which the producer must commence drilling operations in search of oil and gas. The secondary term of an oil and gas lease is indefinite and extends the producer’s rights under the lease. If, after the expiration of the primary term, the conditions of the secondary term are not being met, then the lease automatically expires by its own terms. A secondary term that continues for so long as oil and gas are

GasandOilMag.com

found in paying quantities requires that oil or gas actually be discovered and produced in paying quantities. There must be actual production that generates a profit over and above operating expenses attributed to the well. An oil and gas lease that is in its secondary term expires on the day the well stops producing in paying quantities. While there is no disagreement over the basic principle that an oil and gas lease in its secondary term expires on the day the well stops producing in paying quantities, there is debate over whether a statute of limitations applies to bar a landowner from bringing these types of cases due to the passage of time, and if a statute of limitations applies, which statute controls. Which statutes controls is key because it sets forth the length of the limitations period that bars these types of cases. Prior to the ruling in Rudolph, other Ohio courts, including the Fourth District Court of Appeals, had declined to impose a statute of limitations in lack of production cases. In Schultheiss v. Heinrich Ents,

Inc., 2016-Ohio-121, the Fourth District held that a case filed in 2013 based on a four-year production gap between 1977 and 1981 was not timebarred by a statute of limitations. Also, in a case out of the Fifth Appellate District, Cox v. Kimble, 2015-Ohio2417, the Court of Appeals refused to find that the statute of limitations barred the Plaintiff’s claims because the landowner’s declaratory judgment claims did not accrue until the landowner demanded that the producer release the acreage, and the producer refused to do so, thereby causing damage to first occur. Story continued on page 19

WO-10432232

David J. Wigham • Attorney hio’s Fourth District Court of Appeals issued an important decision utilizing a statute of limitations to determine whether a landowner’s claims that an oil and gas lease expired due to lack of production were timebarred. In that case, Rudolph v. Viking Internatl. Resources Co., Inc., 2017-Ohio-7369 (August 11, 2017), the court applied the 21-year statute of limitations for recovery of real property under R.C. 2305.06, rather than a shorter eight-year statute of limitation urged by the producer. This ruling means that, in the Fourth District, landowners’ declaratory judgment claims that a lease has expired for non-production may be barred if not brought within 21 years of the date when the landowner’s cause of action based on non-production first accrued.

Is Now the Time to Pursue Your Claims?

OhioGas&Oil 13

Workers remove heavy equipment along Gans Ave NW. Clearing and prep work continues for the installation of the NEXUS pipeline across Stark County, Dec. 20, 2017 (CantonRep.com/Ray Stewart)

Green Approves Nexus Settlement

T Connolly, Hillyer, & Ong, Inc. Attorneys and Counselors at Law Since 1964

Brad L. Hillyer • James J. Ong Brett H. Hillyer 201 N. Main St., P.O. Box 272 • Uhrichsville, Ohio 44683

(740) 922-4161 • (740) 922-2229 Fax

CJ-10601680

139 E. Main St., P.O. Box 71 • Newcomerstown, Ohio 43832

(740) 498-5196 • (740) 498-5197 Fax hillyerlaw@hillyerlawofﬁce.com

14 OhioGas&Oil

Eric Poston • TheSuburbanite.com correspondent he NEXUS Pipeline the $7.5 million within four project will be able and half hours of operation. to move forward following a close “We are worried about the vote by Green City Council. crumbs as NEXUS takes the whole cake,” Leonti said. During a special meeting “We need to fight this to the in February, council voted end.” 4-3 in favor of the NEXUS settlement which will give Leonti also said that Green Green $7.5 million and 20 needs to make a statement acres of park land adjacent to show the state and entire to Boettler Park. The vote United States what Green is resulted in many unhappy really made of. residents who said several posed many members of council “sold Residents questions to council about out” the residents. water quality, the amount The vote came following of money offered, but they an hour of comments from all agreed the settlement residents in Green and was not worth taking. surrounding communities urging council to vote no on Green Mayor Gerard the settlement. Neugebauer said there has been a lot of anger in Green resident Justin Leonti the community towards called the deal from NEXUS NEXUS and he understand a scare tactic and said that. He said residents NEXUS would make back should also be upset GasandOilMag.com

with the Federal Energy Regulatory Commission (FERC) for approving the project.

He called the temporary stay of construction order in the 6th Circuit Court of appeals a small win for the city, but knows it could be The mayor along with lifted soon. members of council realize the pipeline coming is a Voting for the settlement reality. was Bob Young, Barbara Babbitt, Rocco Yeargin and Neugebauer stressed to Chris Humphrey. members of council that voting no on the settlement Yeargin stressed he wants would not move the to use the money and pipeline or stop the project resources being offered from coming through. He in the settlement to keep said the $7.5 million doesn’t residents safe. mean much, but voting yes is the most probable Babbitt said she had a hard solution. time with the vote but wants to see a plan put in “No city has worked harder place immediately to move and had more success the ball fields that will be than the city of Green,” impacted by the pipeline Neugebauer said. and the blast zone.

Humphrey said he doesn’t see a legal option or better deal being offered to the city based on the legal council the city has. He said the city can choose to accept this settlement or possibly receive nothing in the future. Voting against the settlement was Matthew Shaughnessy, Stephen Dyer and Justin Speight. Shaughnessy said the residents were loud and clear they didn’t want a casino in Green, medical marijuana and they have also been clear they don’t want the NEXUS pipeline.

Speight said he is not ready to throw in the white flag. “Supporting a settlement was not what I was elected to do,” Speight said. Attorney David Mucklow, who is involved with The Coalition to Reroute NEXUS (CORN), said he has been in the fight since day one and the fight isn’t over. He said since the vote was not a majority, that the process can begin to petition to put the issue on the ballot and let the voters decide.

“A no vote keeps the fight alive,” Shaughnessy said. “We are not a city that can be bought.”

Williams Toyota Lift

AR-10584269 AL-10269253

Sales • Service • Rental • Parts

Supplying the Material Handling Industry for Over 40 Years!

9462 Main Ave SE East Sparta, Ohio 44626 GasandOilMag.com

Phone (330) 866-2121 Fax (330) 866-3701 OhioGas&Oil 15

Billions From Tax Cuts

Supercharge Fossil Fuel Sector

Kevin Crowley • Bloomberg David Wethe • Bloomberg Alex Nussbaum • Bloomberg

Four pumpjacks are silhouetted as they operate at the site of an oil well in North Dakota in 2015. Bloomberg photo by Daniel Acker.

ilmen, wildcatters and particularly refiners are reaping billions in gains from President Donald Trump’s tax overhaul, helping boost the staying power of oldstyle energy even as the world searches for cleaner fuels. The tax adjustments come as crude prices have rallied 54 percent since June. Together, the price rise and the new tax code have supercharged the oil industry in ways that could test the resolve of money managers who’ve vowed to divest from companies that have powered the world’s economic engines for two centuries. The top four refiners this week reaped $7 billion in gains, led by a $2.7 billion jump announced Friday by the biggest, Phillips 66. Meanwhile, the tax overhaul appears to be a mixed bag for solar purveyors and wind farms. They could face higher borrowing costs because the federal tax credits they retain probably won’t be as attractive to large banks that now have lower tax liabilities.

it isn’t going away any time soon,” said Irving Levine, who manages $120 million as chief executive officer of Copley Financial Services Group in Fall River, Massachusetts. “Tax reform, in the long run, only increases their profitability.”

the overhaul makes it easier to repatriate foreign cash and will “significantly lower tax in the future” on drilling in the Gulf of Mexico and Texas shale fields, said John Eckart, the Eldorado, Arkansas-based company’s chief financial officer, on a conference call While corporate America has Thursday. praised Trump’s tax cuts for creating jobs and reviving “We have great returns with flagging industries, its the the 21 percent rate and compete icing on the cake for industries internationally well now,” he that revolve around oil. told analysts on a conference Crude prices are at levels last call. “So it’s a big help for us seen in 2014 and everyone this tax reform, very positive.” from supermajor oil titans to family-owned businesses were Refiners are among the biggest already gung-ho on U.S. oil winners from the reforms. and gas. For Phillips 66, Valero Energy The tax windfall? Simply an Corp., Marathon Petroleum added bonus. Corp. and Andeavor, the four biggest independent ExxonMobil Corp., the oil refiners, the U.S. tax code world’s largest publicly traded overhaul has been more producer by market value, profitable than their actual on Monday praised the “pro- business. They posted onegrowth business climate here in time tax gains of $7 billion the U.S.” as it announced plans combined in the fourth quarter, to spend $50 billion over five matching their net incomes for years and triple production in all of 2016, according to data the Permian Basin. compiled by Bloomberg.

percent dividend increase. Even without the tax gain, Phillips 66 beat earnings estimates by 19 cents. It’s an extra boost to an industry already riding high from fat margins after from turning raw crude oil into fuels and strong worldwide demand for gasoline and diesel. For U.S. explorers, the law should mean a $190 billion boost in asset values, researcher Wood Mackenzie said in a estimate released Tuesday. That will more than compensate for other changes in the law that could limit deductions for past losses or encourage individual states to raise fees on local production. ConocoPhillips and EOG Resources Inc. are among those that posted one-time tax gains, while Shell and BP have indicated the overhaul was a negative for them. These are non-cash elements to earnings and all companies have said that in the long term the reforms will be positive.

“Going forward, of course, For Murphy Oil Corp., a much Marathon’s board was so it’s very positive,” Ben van “Oil is a resilient industry and smaller driller than Exxon, enthusiastic it approved a 15 Beurden, chief executive officer 16 OhioGas&Oil

GasandOilMag.com

of Royal Dutch Shell Plc, said in a Bloomberg TV interview on Thursday. The $10 billion Shell plans to spend annually in the U.S. over the next few years “is going to be doing well in a much more advantageous tax environment.” For pipeline companies, the big fear was losing the tax status that makes them attractive investments. Many are structured as master limited partnerships, which don’t pay corporate income taxes. Those fears proved to be unfounded and the provision was left alone. In a conference call Wednesday, Enterprise Products Partners LP noted that the tax overhaul “appropriately preserves the favorable tax attributes for

masterlimitedpartnershipsand encourages MLPs to continue investing in infrastructure growth opportunities, which contributes to U.S. job and GDP growth.” The overhaul provided a quick shot in the arm for utilities, which suddenly found themselves flush with extra cash they had set aside for Uncle Sam. Dominion Energy Inc. reported a $988 million fourth-quarter gain, thanks to the lower rates. NextEra Energy Inc. raised its 2018 forecast by about 45 cents, to a range of $7.45 to $7.90 a share.

reduce cash flow. Utilities may argue they should be allowed to invest some of the money to make generating plants and power lines more reliable. Already, American Electric Power Co. is in talks with regulators in 11 states about the issue. Meanwhile, the company said it will cut planned 2020 capital spending 8.3 percent to $5.5 billion.

specter of carbon taxes make fossil fuels a poor longterm investment, according to David Richardson, an executive director at Impax Asset Management, which focuses on sustainability and has about $15.3 billion under management. “For long-term investors, there are uncompensated risks in owning fossil fuels and we think there are better opportunities in the energy markets that would be around energy efficiency, which has higher returns on investment,” Richardson said.

None of the major solar, wind and fuel cell energy companies have reported fourth-quarter yet. Even when they do, lower corporate tax rates likely won’t be much of a boost because the companies regularly post Long term, however, lower losses and owe no income Bloomberg contributors: Kelly rates present utilities with a taxes. Gilblom, Meenal Vamburkar, conundrum. State regulators Jim Polson, Christopher require them to pass savings Regardless of recent trends, Martin, Brian Eckhouse, Jim onto customers, which will electric vehicles and the Efstathiou Jr. and Joe Ryan.

“We Always Have Time For You”

Carol Goff & Associates Your Oil & Gas Connection

Lori Frank, Broker www.carolgoffrealestate.com

Look for us on

Cambridge • 740-439-1111 New Concord • 740-826-7557 Zanesville • 740-454-6777 S.Zanesville • 740-454-6778 Coshocton • 740-622-7653 Newark • 740-366-2121 St. Clairsville • 740-695-5559 New Lexington • 740-342-4511 Hebron • 740-527-2710 Marietta • 740-373-3020 Caldwell • 740-305-5294 Waverly 740 912-9195 Canton • 330-418-7576

YOUR ONE STOP FOR ALL YOUR RESIDENTIAL & COMMERCIAL NEEDS! 72861 IRISH RIDGE Rd., KIMBOLTON

56857 PEACH RD., SENECAVILLE

Salt Fork Area. Park-like setting for this 5 acre+ property. 2 bedrooms and 2 full baths. Vaulted ceiling with stone woodburning fireplace. Gorgeous covered front porch. Finished walkout basement with the potential for a third bedroom. 3 car detached garage with separate workshop. 3 season sunroom overlooks stocked pond. Beautiful trees and perennials. $259,900. Call our Cambridge office @ 740-439-1111

Spectacular views from this lovely lake home with all the extras! This meticulous 3 BR, 2 bath open concept home with bright beautiful views of the lake features a newly remodeled kitchen with exquisite quarts counter tops, beautiful landscaping and patios for entertaining. Enjoy the view year round from the heated four seasons room. Situated on a paved dead end road with the privacy of woods behind, the convenience of the boat dock only 1,000 ft. away with a membership to the Lakeview Boat Club. $339,000. Call Lori Dickens @ 740-255-0182

CAROL GOFF & ASSOCIATES OPERATES 15 OFFICES. COVERING 15 COUNTIES IN SOUTHEASTERN & CENTRAL OHIO, AND NOW OPEN IN VIENNA, WV! We are a full service Real Estate company handling both buyers and sellers of residential, commercial, farms, acreage and investment properties. We also offer auctioneering services and appraisals. CJ-10586622

GasandOilMag.com

Visit us at www.carolgoffrealestate.com OhioGas&Oil 17

NO RTH M AIN O FFIC E • UH R IC H SV ILLE

CJ-10594530

Fo r a delivery o r a tank s et to day! Pre - Buy, Lo ck In , Budget Plans , Flexible Paym ent Plans , Auto D elivery

2406 N . Waters St. Ext • Uhrichsville, Oh 44683 FAX: 740-783-1520 39720 Marietta Road, Caldwell OH 43724 Office H o urs : Mo n .- Fri. 8:30am - 4:30pm Sat. & Sun . Clo s ed Independent Company, CTEP Trained & Certified •

18 OhioGas&Oil

1-888-596-5153 GasandOilMag.com

Story continued from page 13

Finally, there was a case out of the Seventh District Court of Appeals – the Appellate District representing the majority of the counties experiencing Utica Shale development – Potts v. Unglaciated, Inc., 2016-Ohio-8559. Potts was critical of the Schultheiss case, stating that a statute of limitations must apply to all claims. Although the Potts Court analyzed the application of several statutes of limitations, it declined to apply one and affirmed the lower court’s ruling in favor of the producer on other grounds. The Utica Shale boom has raised the stakes over the validity of old leases held by decades-old wells many

GasandOilMag.com

of which are nearing the end of their productive lives. When leases expire because of a lack of production, the landowner stands to benefit from the lucrative signing bonuses and greater royalty payments. Conversely, if a local producer can operate its wells profitably enough to hold its leases in their secondary term, then the local producer may sell the valuable Utica Shale rights covered by those same leases. Thus, there is new, intense scrutiny over whether oil and gas leases have expired over the years. The question addressed in Rudolph is now how far back in time can a landowner use lack of production as a basis for a

lawsuit. The Rudolph case is likely the beginning of a trend in the Courts that will apply a limitations period to bar certain landowner cases seeking to declare leases as having expired due to lack of production. This is important to landowners, because a new clock has started ticking on the time within which litigation must be filed to challenge the validity of an oil and gas lease based on lack of production. Therefore, landowners should not wait to file their lack of production claims, but instead should seek the aid of an experienced oil and gas attorney if they suspect their lease is no longer held by production in paying

quantities to ensure they do not miss an opportunity to terminate an unproductive lease and regain ownership of their minerals. David J. Wigham is a secondgeneration oil and gas attorney at the ﬁrm of Roetzel & Andress, with more than 25 years of experience in the industry. He maintains ofﬁces in Akron and Wooster, Ohio, and can be reached at 330-7627969 or dwigham@ralaw.com.

OhioGas&Oil 19

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Belmont County 560 2. Carroll County 526 3. Monroe County 421 4. Harrison County 411 5. Noble County 221 5. Guernsey County 221 7. Jefferson County 160 8. Columbiana County 151 9. Mahoning County 30 10. Washington County 22 11. Tuscarawas County 20 12. Portage County 15 Trumbull County 15 13. Stark County 13 14. Coshocton County 5 15. Morgan County 3 Muskingum County 3 Holmes County 3 16. Knox County 2 17. Ashland County 1 Astabula County 1 Geauga County 1 Medina County 1 Wayne County 1 WE L SIT WELL SITES ITES IIN N VAR V VARIOUS A OU AR US SS STA STAGES: T GES GES: PERMITTED, PERMITTED E M T ED D, D DRILLING DRILLING, LLING, DRILLED, D I LE LED, ED D, COM COMPLETED, PLETED PL LET ETED PRODU PRODUCING PRODUCING, PR RODUCING O UCING I G PLUGGED LUGG SOUR SOURCE: S OUR RCEE O OHIO H O DEP DEPARTMENT RTMENT O OF NA NATURAL URAL RESOURCES S U E A AS SO OF 2 2/17/18 2/1

20 OhioGas&Oil

100

200

400 GasandOilMag.com

Go to the experts at Airgas for all your gas, safety, service & equipment needs Go to the experts at Airgas for all your gas, safety, service & equipment needs

NEW Airgas location in Cambridge, OH

Airgas operates more than 1,100 locations nationwide including 8 nearest NEW Airgas location in Cambridge, OHyou. Visit www.Airgas.com for more location and product information.

Airgas operates more than 1,100 nationwide Airgas Canton Airgaslocations New Philadelphia including9057 8 Beldon nearest Ave.you. SE Visit 104www.Airgas.com 11th St. NW OH 44707 Newinformation. Philadelphia, OH 44663 for moreCanton, location and product 330.453.8414

330.339.6211

Airgas Mansfield Airgas Wooster Airgas Youngstown Airgas Canton Airgas New Philadelphia Longview Ave.104 E 11th St. 115NW N Smyser Rd. 905 Beldon 45 Ave. SE Wooster, OH Canton, OHMansfi 44707 eld, OH 44903 New Philadelphia, OH44691 44663 419.524.0511 330.345.0995 330.453.8414 330.339.6211

1055 North Meridian Rd. Youngstown, OH 44509 330.793.9871

Airgas Airgas Scio Airgas Cannonsburg AirgasAirgas Canonsburg Airgas Mansfi eldCambridge Airgas Wooster Youngstown Road 203 NRd. Eastport St. 1718Meridian Route 980Rd. 1718 North Route 980 45 Longview60969 Ave.Southgate E 115 N Smyser 1055 Cambridge, OH 43725 Scio, OH 43988 Canonsburg, PA 15317 Canonsburg, OH PA 44509 15317 Mansfield, OH 44903 Wooster, OH 44691 Youngstown, Airgas now offers nitrogen services and solutions 740.432.0320 740.945.1385 724.745.7520 724.745.7520 419.524.0511 330.345.0995 330.793.9871 to process the industries for purging and pipeline

applications to optimize plant and pipeline operations, Airgas Cambridge further enhancing the quality and breadth of Airgasâ&#x20AC;&#x2122; service and product offerings for our customers.60969 Southgate Road

Cambridge, OH 43725 Airgas now offers nitrogen services and solutions Think Airgas, Your single source for supply, service and support. 740.432.0320 to process the industries for purging and pipeline

YoungstownAirgas Cannonsburg Airgas Scio 1055NNorth Meridian 203 Eastport St. Rd.1718 Route 980 Youngstown, OH 44509 Canonsburg, PA 15317 Scio, OH 43988 330.793.9871 740.945.1385 724.745.7520

The Right Products. The Right Locations. The Right Expertise.

applications to optimize plant and pipeline operations, further enhancing the quality and breadth of Airgasâ&#x20AC;&#x2122; service and product offerings for our customers.

The Right Products. The Right Locations. The Right Expertise. WO-10604042 WO-10555484

WO-10495378

Think Airgas, Your single source for supply, service and support.

J&M

Carpentry LTD

‘Generations of Amish Craftwork with Modern, Professional Site Management’

Agricultural Residential Commercial Any Size Custom

• Pole Barns • Garages • Barns • Stables • Riding Arenas • Horse Barns • Decks • Outbuildings • Metal Roofing

FREE

“The Quality You Want For Your Project”

AL-10526836

LARGE Scale Buildings

Estimates 330.231.0125

Expert Reroofing Metal

Conventional

Most Jobs Are Complete In Just Two Days

www.jmcarpentrylimited.com

Fredricksburg, Ohio 44627