GasandOilMag.com
April 2017 • A Free Monthly Publication
Tax Exemption Changes For 2017 Beck Energy Seeks Sanctions From Munroe Falls IN THIS ISSUE: TRUST RESPONDS ON EMINENT DOMAIN
Landowner advocate. Landowner advocate.
Landowner advocate. ROYALTY DEDUCTION DISPUT
ROYALTY DEDUCTION DISPUTES. Lease negotiations. ROYALTY DEDUCTION DISPUTES. Lease negotiations. negotiations. Amendments and ratification Lease Amendments and ratifications. Disputes with producers. Amendments and ratifications. Disputes with producers. Wrongful refusals to relea Disputes with producers. Wrongful refusals to release expired leases. Wrongful refusals to release expired leases. expired leases. Sham activities to extend lea Sham activities to extend Sham activities to extendleases. leases. Sale of mineral rights. Sale of of mineral rights. Sale mineral rights. Top dollar offers. dollar offers. TopTop dollar offers.
CALL FREE BOOK CALL FOR FREEFOR BOOK CALL FOR FREE BOOK
EETHAN ESSELS THANVV ESSELS
E THAN V ESSELS Attorney
MARIETTA,
Attorney Attorney
OHIO
MARIETTA, O MARIETTA, OHIO
SOMETIMES, YOU NEED A COUNTRY LAWYER.
SOMETIMES, YOU NEED A COUNTRY LAWYER. OMETIMES, YOUadvocate. NEED A COUNTRY LAWYER. Courtroom Courtroom advocate. Ohio & West Virginia. State and Federal. Courtroom advocate. NBTA CivilState Trial Advocate. Ohioboard-certified & West Virginia. and Federal. Ohio & West Virginia. State and Federal.
Million Advocates Forum. NBTADollar board-certified Civil Trial Advocate.
NBTA board-certified Civil Trial Advocate. Contingent fees.
Million Dollar Advocates Forum. Million Dollar Advocates Forum. Big results from a small town.
Contingent fees. Contingent fees.
CA-10534971
Big results from a small town. Big results from a small town.
FIELDS, DEHMLOW & VESSELS, LLC 309 Second Street
FIELDS , DEHMLOW & VESSELS Marietta, Ohio 45750 FIELDS, DEHMLOW & V(740)374-5346 ESSELS, LLC
309 Second S 309 SecondMarietta, Street Ohio 4 Marietta, Ohio 45750(740)374 www.fieldsdehmlow.com (740)374-5346
www.fieldsdehmlow www.fieldsdehmlow.com
TWO LOCATIONS TOUR OUR DESIGN STUDIOS & 7 MODEL HOMES TODAY
AKRON, OH Design Studio & 6 Model Homes 779 White Pond Dr. Akron, OH 44320
BELMONT, OH Design Studio & Model Home 41201 Bond Dr.
KO-10523473
Belmont, OH 43718
877-267-3482 · www.schumacherhomes.com · Mon-Fri: 11-7, Sat: 10-5, Sun: 12-5
GasandOilMag.com
OhioGas&Oil
1
Table of Contents APRIL 2017
4
A Look Ahead Gas & Oil Events
5
OOGA Celebrates 70th Anniversary
7
PUBLISHERS GateHouse Media
New Change to Sales Tax Exemption for Ohio Oil & Gas Industry for 2017
10 11
EXECUTIVE EDITORS Ray Booth RBooth@dixcom.com Roger DiPaolo RDipaolo@dixcom.com
Utica Upstream Series Kicks Off With April 5 Conference
Rob Todor RTodor@dixcom.com
Rover Pipeline Crews Ready To Roll
Lance White LWhite@dixcom.com
RE G IO NAL E DIT O RS
WE KNOW
THE DRILL
Target the sweet spots of the local gas & oil industry by advertising in the Ohio Gas & Oil Magazine.
Scott Shriner sshriner@recordpub.com Cathryn Stanley CStanley@dixcom.com
CO NTE NT CO O RDINAT O R Emily Rumes
erumes@the-daily-record.com
GasandOilMag.com
MAGAZINE
OHIO’S GAS & OIL INDUSTRY NEWS. BUSINESS. TECHNOLOGY.
CALL YOUR LOCAL OHIO GAS & OIL SALES REP. TODAY SEE PAGE 3 FOR MORE INFO 2
OhioGas&Oil
GasandOilMag.com
Table of Contents APRIL 2017 ADVER TISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Mindy Cannon Alliance & Minerva, Ohio Offices mcannon@the-review.com 330-821-1200 Mark Kraker Ashland, Ohio Office MKraker@times-gazette.com 419-281-0581 Diane K Ringer Kent, Ohio Office DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450
13
Fact Sheet: Shale Development Supports American Farmers
14
Beck Energy Seeks Sanctions From Munroe Falls
16
‘Purple Hayes’ Remains Top Producing Oil Well
19
Trust Responds to Article About Eminent Domain
22
Ohio Well Activity
23
Horizontal Drilling Activity Graph
L AYOUT D E SIG NE R Kassandra Walter
kwalter@times-gazette.com
J&M
Carpentry LTD
• Pole Barns • Garages • Barns • Stables • Riding Arenas • Horse Barns • Decks • Outbuildings • Metal Roofing
FREE
“The Quality You Want For Your Project”
LARGE gs Scale Buildin
AL-10530450
“Gas & Oil” is a monthly publication. Copyright 2017. GasandOilMag.com
jmcarpentrylimited.com
GasandOilMag.com
April 2017 • A Free Monthly Publication
‘Generations of Amish Craftwork with Modern, Professional Site Management’
Agricultural Residential Commercial Any Size Custom
Estimates 330.231.0125
Expert Reroofing Metal
Conventional
Most Jobs Are Complete In Just Two
Days
Fredricksburg, Ohio 44627
Tax Exemption Changes For 2017
Beck Energy Seeks Sanctions From Munroe Falls
On The Cover:
Tyler Wells, a graduate of the Oil and Gas Engineering Technology class at Zane State College, works at a e st Guernsey , MarkWCounty well site. A recent thon xpansion a r E showed a 43 percent increase in Ma report Eye production in Ohio.
DS ON EMINENT DOMAIN IN THIS ISSUE: TRUST RESPON
OhioGas&Oil
3
A Look Ahead
Gas & Oil Events • April 20, 2017 SOOGA Spring Membership Meeting at the Marietta Shrine Club in Marietta, Ohio. Register at www.SOOGA.org/upcoming-events.aspx
and it continues to be a sold out event year after year. More information available at www.OhioValleyOilGasExpo.com
• May 6-7, 2017 • April 25-26, 2017 OOGEEP May 2017 Firefighter Workshop Ohio Valley Regional Oil & Gas Expo at the Responding To Oilfield Emergencies at Wayne Belmont County Carnes Center in St. Clairsville, County Fire & Rescue Training Facility in Apple Ohio. The Premier 2017 Oil and Gas Event in the Creek, Ohio. For full details and info visit Marcellus and Utica Shale Regions! The two day www.oogeep.org/event/oogeep-may-2017business to business gathering features a network firefighter-workshop reception with leading industry speakers on Tues., April 25th and a one day expo display on • May 26, 2017 Wed., April 26th. Situated in the rural and rich SOOGA Spring Golf Outing at the Oxbow Golf shale region of Belmont County, space is limited Course in Belpre, Ohio.
At your location or ours, we’ve got you covered. AultWorks Occupational Medicine specializes in treating work-related injuries and illnesses. We are certified by the Ohio Bureau of Workers’ Compensation. Our services include: • • • • • •
Injury Care Drug and Alcohol Screenings DOT and Pre-placement Physicals Pre-placement Physicals Random Management Programs Mobile Medical Unit
www.aultman.org/aultworks 1-844-285-9675
AL-10516731
Canton 330-491-9675
4
OhioGas&Oil
Alliance 330-823-8864
Orrville 330-684-4767
Carrollton 330-627-0091
GasandOilMag.com
OOGA Celebrating th 70 Anniversary Lyndsey Kleven • Communications Coordinator for OOGA
A
On the transmission and distribution side of the equation, the state is waiting on pipeline projects to get the green light from the federal government. Once the remaining projects are authorized that will greatly help move our gas to more favorable markets. The pair of interstate natural gas pipeline projects stretching across Ohio, Pennsylvania, West Virginia and Kentucky were authorized for construction and operation by FERC in mid-January. Kinder Morgan began construction on its 215-mile Utopia Pipeline the first week of February. The Rover Pipeline Speaking of supporting our industry, 2017 has also has received FERC approval (and not a moment too soon). ushered in a change in the White House and, in turn, The pipeline was granted approval the evening before federal policy. While it still remains to be seen what will actually be accomplished on the regulatory front under the Trump administration, he is a welcome relief from the onslaught of regulations that were heaped upon the industry over the past eight years. He has been vocal about wanting to unlock America’s energy potential. President Trump has made clear his administration seeks energy independence for the U.S. and will help revitalize the oil and gas industry. It is refreshing to see this ideology from a new president who has allies in Congress who share this goal and are hard at work using the Congressional Review Act to take steps to repeal a number of onerous regulations. In Ohio and across the Appalachian Basin, we have become victims of our own success. There is an abundance of natural gas with no apparent outlet. Thankfully there are numerous projects on the horizon that will alleviate some of the glut. The Ohio Environmental Protection Agency has issued wastewater permits for the PPT Global’s proposed ethane cracker plant being considered in Belmont County. The plant has not been officially announced, but the issuance of the wastewater treatment permit is another positive sign that Ohio may actually have a cracker built within our borders. Ohio’s oil and gas industry is looking for markets for the products we produce and it would be an economic win for the entire state, and even the Appalachian Basin, if we can maximize downstream products that can be manufactured from ethane.
GasandOilMag.com
WO-10432232
s we begin 2017, we are looking forward to a celebration of the Ohio Oil and Gas Association’s 70-year anniversary. Established in 1947, the Ohio Oil and Gas Association (OOGA) has taken great pride in protecting and promoting the common interests of those engaged in all aspects of the Ohio crude oil and natural gas producing industry. The OOGA hopes to carry on this mission and defend America’s greatest industry for at least 70 more years to come.
OhioGas&Oil
5
the FERC Commissioner’s last day, as the FERC entered a stretch where they will not have a quorum to operate until a new Commissioner is appointed. Approval for the Nexus Pipeline is still currently pending.
all are built, will require about 9,800 megawatts capacity. Lordstown recently approved a second multi-million dollar energy plant to the Trumbull Energy Center in Northeast Ohio.
Another outlet for our gas is to create additional electric generation plants right here in Ohio. There are ten natural gas fired power plants currently in development. Many of the proposed plants are in Eastern Ohio, and if they
The industry had additional cause for celebration in 2016 when the U.S. Bureau of Land Management allowed for leasing in the federally owned portions of the Wayne National Forest. A second lease sale will be held in March for another 1,186 acres and could yield an additional $2 million in revenue. The first sale conducted in December included 719 acres, generating approximately $1.7 million in revenue for taxpayers.
MADE IN PENNSYLVANIA
(844) TOP-MATS
Those of you working in the industry for any length of time have weathered storms in the past. As we enter the first few months of 2017, it is with relief that we put the past few years firmly in our rearview mirror to end what has been a difficult regulatory and economic road and we look forward to the opportunities of the next year.
Sales@TopMatsUSA.com www.TopMatsUSA.com CA-10521736
Plum Creek Builders Experienced • Quality • Reliable Daniel Hostetler 330.621.8258
Pole Barns
Levi Hostetler 419.651.4691
2540 Twp. Rd. 457 Loudonville, Ohio 448452 New Homes
• Residential • Garages • Homes • Commercial • Custom Pole Barns
AS-10535053
Reroofs
6
OhioGas&Oil
GasandOilMag.com
New Change to Sales Tax
Exemption for Ohio Oil & Gas Industry for 2017 Jacob Runnels • GateHouse Media
I
n December, 2016, Governor John Kasich vetoed a part of Senate Bill 235 that would affect the oil and gas industry’s sale-tax exemption.
Ohio’s tax code states there is a direct use exemption for the Ohio oil and gas industry that excludes producers from sales tax on exploration and production of crude oil and natural gas. However, news outlets like the Columbus Dispatch reported this as being “a $264 million tax break for the oil and gas industry” and the Youngstown Vindicator called this a “retroactive windfall tax break granted to the oil and gas industry.”
paid. He said this would eventually result in less jobs being created and less money for people making royalties from well operation on their property. “The state of Ohio benefits very much by oil and gas development in the state,” he said. “It brings a lot of prosperity to a portion of the state that has had many economic difficulties in the past in Eastern and Southeastern Ohio. It helps from that aspect and it allows people to develop their land to the fullest. Therefore, we want to encourage that and continue prosperity and I’m not aware of anyone who doesn’t want that to happen.”
In a statement about the veto, Governor Kasich said this part of the bill would have expanded the exemption given to the oil and gas industry to make them “exempt from sales tax on almost everything they purchase.” With this, he said there would be a “more favorable tax treatment” for the oil and gas industry compared to any other industry, making the exemption “not necessary for the industry.” “If this item became effective, then one would expect the oil and gas companies to take advantage of it immediately,” he said in the statement. “The loss of $264 million to the state government and local governments would be a significant impact to the budgets.”
“(With) the new redefinition they started to demand payment for something they never collected before and it was not predicated on something we changed,” he said. “They were fixing a perceived problem and the governor had the ability to veto that out of the bill.” Coley said this redefinition of the tax code affecting the oil and gas industry would cause well producers to slow down their production because of the increased taxes having to be GasandOilMag.com
WO-10516536
However, people like Senator Bill Coley, one of the primary sponsors of the bill, disagrees with this perception and believes this is more of a redefinition of the tax code for the oil and gas industry.
mobile number 330-904-8973
844-333-2754 • www.trs.rent
OhioGas&Oil
7
Coley said there will be more hearings on it while the oil and gas industry goes through four to five months of uncertainty. Meanwhile, Shawn Bennett of the Ohio Oil and Gas Association (OOGA) thinks these are changes to a code that “protects operators from being unfairly taxed.” “The reality is those numbers don’t add up,” he said. “These tax treatments we’ve received are under every other administration. There are no new tax dollars that are being appropriated for the oil and gas industry and that’s a misnomer.” Bennett said, under other administrations, the oil and gas industry has received the same exemptions for years and “never taxed our operators.” He said this vetoed part of the bill wouldn’t have been a refund to the industry because it was a system they never had to pay taxes into. “We haven’t paid into the system so there isn’t a large refund coming back to our operators; that’s where the confusion lies,” he said. “This is a tax we’ve never paid and they’re trying through audits to assess operators for these brand new interpretations of the tax code.” He said the department of taxation was provided incorrect
CA-10534979
740-685-3440
• Tree Removal • Proper Tree Thinning • Stump Removal • Lot Clearing “Call for Your Free Estimate”
8
OhioGas&Oil
information that made the redefinition difficult for the sales tax exemption.
“I don’t think there’s anybody who’s against fair and equal treatment under the law. This was about being treated fairly. Nobody likes a tax grab so hopefully through our outreach, people will get to the hear of the issue and understand a little better.” —Shawn Bennett He said he doesn’t think this issue will die down and he believes the conversation will continue into the next general assembly. As for Jim Aslinides, a former member of the Ohio general assembly and president of OOGA, he thinks there was a big misunderstanding of the sales tax exemption code and the supposed windfall for the oil and gas industry. “To simply suggest the only tax exemption available to oil and gas companies is the exploration and production exemption is a gross misunderstanding of its own code,” he said. “Their assertion ignores exemptions available to the industry. The only way they can assert $264 million is if they’d be successful in claiming that rightful exemptions belong to our industry the same as they belong to other manufacturing industries. It’s an inaccurate assertion.” He said the industry has been asking for tax credits, which could have been misinterpreted as seeking special treatment from taxation. He said this is a modern day problem in understanding a process that has been constantly evolving over 80 years. “We wanted to resolve this in the legislature because individual companies are now forced to deal with this in court and it’s very unfortunate,” he said. “For the state to assert that those dollars can be relied upon is a gross misunderstanding of the exemptions that are available to all industries in the state of Ohio.” For now, the oil and gas industry will have to see this new interpretation of their sales tax exemption for some time before the new general assembly can introduce this part of the bill again. GasandOilMag.com
AL-10487954
GasandOilMag.com
OhioGas&Oil
9
Utica Upstream Series Kicks Off
With April 5 Conference
T
he Canton Regional Chamber of Commerce kicks off this year ’s Utica Upstream Conference Series on Wednesday, April 5, at Walsh University’s Barrette Center, 2020 E. Maple St., in North Canton. The conference begins with registration at 7:30 a.m. and speakers beginning at 8:30 a.m. Presentations will run until lunch at 11:45 a.m. and resume from 12:45 p.m. until the wrap-up at 2:15 p.m. Speakers will explore the many aspects of gas and oil exploration and production as well as public policy related to the natural gas industry. Industry insiders who will speak at the event include Oleg Tolmachev, Executive Vice President and Chief Operating Officer of Eclipse Resources.
Tolmachev, who formerly served as Eclipse’s Vice President of Drilling and Completions, was previously Senior Asset Manager of Chesapeake Energy Corporation’s Utica Shale Division, where he was responsible for leading an asset team comprised of land, geology, drilling, resource development and operations for Utica Shale projects in Ohio. Natural gas analyst Colette Breshears, with Genscape, will speak about drilling forecasts that Genscape has developed using data the company collects to track product flow through midstream pipeline networks. Chris Zeigler, Executive Director of the American Petroleum Institute’s API Ohio division, will speak about public policy as it relates to the shale and natural gas industry. A view of the gas and oil industry from the federal level will come from Elena Melchert, Director of the U.S. Department of Energy’s Upstream Gas and Oil Research Division, which includes shale development and offshore spill prevention. Andrew Thomas, University of Akron Associate Professor of International Business, brings his perspective of the economic and business aspects of the shale energy supply chain.
Ron Braucher, Owner
Fleet Maintenance • Inspections Full Service • Trailer Repair Farm Equipment Repair Towing Available
AL-10532722
“Put Our Experience To Work For You”
330-488-2000 1-888-488-2009
Another view of the public policy surrounding gas and oil operations and the energy sector will come from Chris Ventura, Executive Director for Consumer Energy Alliance – Midwest, based in Columbus, Ohio. Conference participants will also hear from Jackie Stewart, State Director of Energy in Depth, who will speak about how schools and local governments have benefitted from Utica exploration, and from Dan Schweitzer, who will bring his experience as Director of Stark State College’s gas and oil technology training programs to a presentation about current workforce needs in the gas and oil sector.
Located on Rts. 30 & 44 • 383 East Walnut • East Canton
10 OhioGas&Oil
GasandOilMag.com
Rover Pipeline Crews Ready To Roll E
Bobby Warren • GateHouse Media nergy Transfer Partners was chomping at the bit to get the Rover Pipeline project underway earlier this year, and with finally receiving a notice to proceed from a federal regulatory agency in February, it’s moving quickly to, well, proceed. Key personnel who will be working on one of the pipeline spreads in Wayne County attended a meetand-greet of sorts in early March with local officials. It was a chance for them to talk about how they expect the workflow to unfold and answer any questions. Precision Pipeline’s Jim Cunningham, a supervisor, and Steven Grice, who handles finances in the field and other responsibilities; Craig Newcomb, a third-party chief inspector; and Susan King, who handles outreach for Rover, met with the county commissioners, sheriff, engineer and Soil & Water Conservation District staff. “We’re starting later than we wanted to,” said Susan King, who handles public outreach for the project. “Our role is to get the pipeline installed in a timely manner ... and have it in service later this year.” The Rover Pipeline, estimated to traverse about 710 miles, will run natural gas from West Virginia to Michigan. It is estimated to be a $4.2 billion project. It will have the capacity to transmit up to 3.25 billion cubic feet of gas, which will be pumped into the pipeline from Eastern Ohio, Western Pennsylvania and West Virginia. GasandOilMag.com
When finished, there will be two, 42-inch parallel lines. The hope is the first line will be installed by June 16, and the second completed in November. Precision Pipeline will be installing 44.5 miles of pipe, mostly in Wayne County. The company recently wrapped up a 190-mile project for ETP in Illinois, and Cunningham said he was pleased to report agriculture officials there said they did not receive one complaint from landowners. “I’m not saying we’ll get 100 percent here,” Cunningham said, but it demonstrates how committed they are to doing things right and doing things in a safe manner. With Wayne County being one of the state’s top agricultural counties, Commissioner Ann Obrecht, a dairy farmer, asked about farmers having access to the back of the fields during the two-stage construction project. Both Cunningham and Grice said access will be maintained. Newcomb pointed out he is a horse farmer, and Cunningham has cattle. So, both understand the needs of farmers. Incidentally, where Cunningham lives in Illinois there are Amish and Amish-related tourism, so he is somewhat familiar with this kind of environment. Precision Pipeline will put in trench plugs to allow access. The company will work with farmers to determine the best spot. In some cases, timber mats will be used. OhioGas&Oil 11
When construction begins in earnest, between 800 to 1,000 people will be working on the pipeline. This will create an issue when all of the workers will report for a 7 a.m. safety meeting once a month at a temporary base in Riceland. Precision Pipeline will be reaching out to Capt. Doug Hunter, who attended the meet-and-greet, to see what can be done about traffic control. Crews will eventually be parking on the project’s right of way, but it will be after access ramps are created, Cunningham said. Boring will start in Ashland County and head east. Conventional boring will be used under most roads, but horizontal directional drilling will be used for longer stretches to go under highways and bodies of water. On the Illinois project, horizontal drilling was used on a 6,200 foot span, and there were no problems, Cunningham said.
Photos of the Rover Pipeline taken by Emily Rumes near South Kohler Road between Kidron and Apple Creek in Wayne County, Ohio.
Reporter Bobby Warren can be reached at 330-287-1639 or bwarren@the-daily-record.com. He is @BobbyWarrenTDR on Twitter.
INSTALLATION AVAILABLE
7643 FORT LAURENS ROAD STRASBURG, OH 44680 HOURS: MON, WEDS, FRI 8-5 TUES, THURS 8-6, SAT 8-12
B&W Gooseneck Grill Guards Bumpers Lighting Headache Racks
Tool Boxes Wheels & Tires Lift Kits Nerf Bars
Winches Hitches Fender Flares Floor Mats
WWW.TRUCKOHIO.COM WO-10520795
12 OhioGas&Oil
GasandOilMag.com
GasandOilMag.com
OhioGas&Oil 13
Beck Energy Seeks Sanctions
From Munroe Falls
A
Jeff Saunders • GateHouse Media n oil and “They’re saying basically we’re regas drilling litigating old business,” Munroe Falls company has Law Director Tom Kostoff told City dropped four Council Feb. 7. counterclaims it has made against the city of Munroe Mayor James Armstrong has said Falls, but legal wrangling in the case the city filed the current case to get concerning a well on the Sonoco clarification on the city’s authority paper mill property is not over. because of what is perceived as an ambiguous 2015 Ohio Supreme Court According to Summit County Court decision in a case filed by the city. of Common Pleas records, Ravenna based Beck Energy dismissed its “The Supreme Court case didn’t counterclaims, in which the company directly address the zoning part of contended the city had violated its it,” Armstorng told Council Feb. 7. rights and was asking for unspecified damages, against the city on Feb. 1 in Summit County Common Pleas a declaratory judgment case filed by Judge Paul Gallagher ruled against the city in May 2016. the city this past July, saying state law granting the authority for drilling However, on Feb. 3, Beck Energy to the Ohio Department of Natural then filed a motion asking the court Resources takes precedence over a city for sanctions against the city. The ordinance requiring that Beck Energy company is claiming that the court apply for a zoning certificate to allow case is “frivolous” because it involves a well on a portion of the Sonoco a question already dealt with by an property zoned R-4 residential. earlier Ohio Supreme Court case. Beck is therefore asking the court Armstrong has also said the city to order the city to compensate it would consider appealing Gallagher’s for “court costs, attorney fees, and ruling in the Ninth District Court of other reasonable expenses” Beck is Appeals, but can only do so when spending on the case. the common pleas case is completely resolved. Over a million homes... one address CutlerHomes.com
JoAnn Clark
joannclark@cutlerhomes.com Cell: 330-323-3362 Office: 330-627-6920
involves pending litigation. “That update will have to be part of executive session,” said Kostoff. Court battles between the city and Beck Energy over questions of whether local zoning codes have any authority when it comes to drilling date back to 2011, including a previous common pleas case. The issues have concerned a state law that gives authority over oil and gas wells to the Ohio Department of Natural Resources. In a case filed by the city, the Ohio Supreme Court ruled in February 2015 that the “sole and exclusive authority” to regulate oil and gas well locations is in the hands of the state.
The 4-3 decision said that state law “not only gives ODNR ‘sole and exclusive authority to regulate the permitting, location and spacing of oil and gas wells and production operations within Ohio, it explicitly reserves for the state, to the exclusion of local governments, the right to regulate ‘all aspects’ of the location, drilling and operation of oil and gas wells, including ‘permitting relating Kostoff said he to those activities.’” hoped to have an update as to Justice Terrence O’Donnell sided with what the city’s the majority, but wrote separately response should that the decision focuses on five be to the latest Munroe Falls ordinances specifically development by governing oil and gas well drilling Council’s Feb. and operations, which the city 21 meeting, but subsequently repealed, and not it would not be broader questions about municipal discussed in an control over how land within a given open meeting zoning district can be used as it because it relates to wells.
AL-10423196
14 OhioGas&Oil
GasandOilMag.com
Food
truck
Friday
& 5k race Go Eddie
May 5, 2017 AT THE HOMESTEAD FURNITURE CAMPUS
FEATURING: 10% OF FOOD TRUCK SALES WILL BE DONATED TO GO EDDIE
• IRON RAIL • RAGING AVOCADO
• SQUARE SCULLERY • AND MORE!
TRUCKS OPEN FROM 11AM-8PM
A professionally timed race! Sign up at – GoEddie5k.com or call 330.446.3169
Schedule 5:00pm Registration & Sign-In Opens 6:00pm 1 Mile Family Fun Walk 6:30pm 1 Mile Kid’s Run 7:00pm 5k Race
WO-10527684
Registration table closes 15 minutes before the event starts
Registration Fee Suggested donation $25
Age Groups MEN & WOMEN
ALL PROCEEDS BENEFIT EDDIE MILLER; TO HELP FUND HIS ONGO ING RECOVERY TREATMENTS
13-19, 20-29, 30-39, 40-49, 50+
KIDS – 5-8, 9-10, 11-12
Course
First mile and half winding downhill on paved back road, turning around at Canal Dover and retracing route. Finish at the Event Center at Homestead.
866.674.4902 • Monday-Saturday 8:30-5:30 8233 State Route 241 Mount Hope, OH 44660 HomesteadFurnitureOnline.com
GasandOilMag.com
OhioGas&Oil 15
‘Purple Hayes’ Remains Top
Producing Oil Well
M
arcellus Drilling News reported recently that Eclipse Resources once again had the top producing oil well with their Purple Hayes well in Guernsey County. Purple Hayes is currently the longest horizontal well drilled in the United States at 3.5 miles long with Marcellus Drilliing News calling it “the gift that keeps on giving, quarter after quarter.”
length of 18,544 feet, remarkably, in just 18 days, with a 100% slick water completion design consisting of 124 stages or approximately 100 feet per stage – 150 feet per stage at a pace averaging over five stages per day.
“From a cost perspective this translates into a steep reduction in total costs per lateral foot, which is almost 30% better than our lowest cost well previously drilled and far below any In a conference call reported in Oil & Gas 360 in 2016, Eclipse other company drilling in the Utica Shale. Resources Chairman and CEO Ben Hulburt talked about the completion of the Purple Hayes well. “Our concept in drilling was to enhance the return profile of the Utica play by determining the technical limit of “We have completed our Purple Hayes well which was lateral length in the liquid portion of our acreage to confirm designed to completely change the cost structure and return our estimates of total well cost. And finally to assess the profile of Ohio Utica Shale drilling by maximizing lateral recoverability per foot of lateral against our recovery seen in length while also optimizing completing techniques. shorter 8,000 foot laterals to 10,000 foot laterals. “In drilling the Purple Hayes well to a completed lateral “After conducting a very extensive engineering review and
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-10524340
• 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
16 OhioGas&Oil
121 North Market Street, 6th Floor Wooster, OH 44691 330.376.2700
GasandOilMag.com
redesign process which brought several innovative ideas together. We eommenced drilling this well at a lateral length that was actually a bit shorter than what we believe is our technical limit. Although we did not notice at the time, we [have been told] by our service company partners that they believe this to be the longest onshore lateral ever drilled in the United States if not the world. “From the cost perspective I’m very proud to say we drilled and completed this well at less than a 5% variance from our regional costs estimates at $15.8 million. We put the well directly into sales earlier this week and the final test to determine the recoverability per foot of lateral is now underway. While it will take a number of months to have a sense for the long-term performance, we are very excited about the very initial production and pressure numbers we are seeing after the first 48 hours of production testing. “One thing I want to stress, is we believe strongly that the managed pressure draw down production methodology will maximize the long-term performance of the well. We do not manage our wells for maximum 24 hour IP rates just to get a headline which we believe is meaningless and detrimental to well performance.
“We are very encouraged to already be producing at our managed shale target production rates for this well in less than 48 hours of production.” In the same conference call, Tom Liberatore, Eclipse COO, discussed the well in further detail.
“As Ben mentioned, after months of work and planning, the company recently drilled and completed its extended-reach lateral well which we call the Purple Hayes well. In order to successfully drill and complete this well, we fully relied on the deep knowledge base and expertise of one of the most sophisticated operating teams in the Appalachian Basin.” —Tom Liberatore
Williams Toyota Lift
AL-10529079 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 17
“This leading edge well has an 18,544 foot completed lateral with the total measuring depth of 27,048 feet and was drilled in an impressive 17.6 days. Following conversations and confirmation with industry sources, we believe this is the longest U.S. onshore lateral ever drilled and completed. “We successfully completed the well with 123 of 124 plans frac stages at an average pace of 5.3 stages per day. And perhaps most importantly, we had no issues completing the toe stages of the well where the greatest risk of completion issues might have risen. “With the cost of $15.8 million or $854 per lateral foot, we not only believe this proof of concept is repeatable but we have also identified a few areas we can improve on to further reduce cost on subsequent wells. “On the completion side, we utilized the states facing of 150 feet which was tighter than our typical well design and completed the well with 100% slick water. The well was put to sales on May 3rd and is being produced using our aggressive managed choke production method that is intended to tightly control the pressure drawdown over time to attempt to maintain what we believe to be the pressure dependent permeability of this formation and maintain pressure above
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
Near You and Open 7 Days A Week!
18 OhioGas&Oil
Shop online: ormehardware.com
dew point in the reservoir as long as possible. “After the first 24 hours of flowback into sales, the well was producing at a wellhead rate of approximately 5 MMcf per day, of what we expect to be approximately 1,300 BTU gas, and 1,200 barrels of Condensate with flowing tubing pressures of approximately 3,200 pounds. Since that time we have seen the gas rate continue to increase as the well cleans up and we will be targeting a stabilized initial wellhead gas rate of 5.6 MMcf per day. “Based on our processing models and wells in the area we expect an NGL yield of approximately 80 barrels to 90 barrels per MMcf assuming ethane rejection and a post-processing gas shrink of approximately 15%. The current Condensate yield is in line with our original estimates of approximately 175 barrels to 180 barrels per MMcf of gas. “At this point we are very excited about these very early stage results. However, it is obviously still very difficult to draw definitive conclusions about the long-term performance of the well. We will be evaluating its performance over the coming months to determine if the recovery per foot of lateral is in line with our shorter lateral type curve expectations for the Condensate areas. “After we have studied the well performance for a longer period of time we will be able to better estimate reserves and returns and develop extended lateral type well estimates. But our initial estimates are that if this well performs as expected, we help to reduce our individual well F&D cost in the Condensate area by approximately 20% to 30%, which would improve well returns by 35% to 70% over our current shorter lateral type well returns in the area. “While this well was drilled in the Condensate area of our acreage, the technologies, design, and techniques we use can be applied across our entire acreage position allowing us to continue to extend our lateral lengths in the Rich Gas and Dry Gas portions of the Utica Shale. As we move eastward towards our Dry Gas acreage, the depth and pressure of the Utica Shale continues to increase, so we expect that our lateral length will decrease accordingly. “We still believe we can drill wells with lateral lengths of at least 15,000 feet even in the deepest Dry Gas east area of our acreage. By substantially lowering our cost per lateral foot, we are attempting to increase the returns and decrease our breakeven cost across all of our areas of over 100,000 acreage position which includes our highly rich Marcellus Shale acreage in Eastern Ohio. I’m very pleased with this team and their efforts to innovate in order to enhance the overall value of our assets in this difficult pricing environment.”
GasandOilMag.com
Trust Responds to Article
About Eminent Domain
T
rustees for the Teter Trust recenlty responded to an article in the February issue of the Ohio Gas & Oil magazine and asked for an opportunity to address issues raised in an article written by Atty. Monica E. Russell. Carol A. Teter and John K. Lovejoy, trustees for the Teter Trust, said “(your company) has an excellent reputation for serving and informing many communities in eastern Ohio with their hometown newspapers. While the eminent domain article in the Ohio Gas & Oil magazine is informative on a superficial level, so many critical facts are left out that the uninformed reader is likely to walk away as uninformed as before.” Teter and Lovejoy also said that “As Ohio landowners and mineral owners, we appreciate the information Ohio Gas & Oil Magazine offers the public. It discusses
industry information that directly relates to local issues that is often unavailable in newspapers or television. As such, I’m sure you strive to present information in an evenhanded manner.” However, Teter and Lovejoy said the February article fell short, in their opinion. In their remarks, they wrote: “In “Court Rules Sunoco Can Use Eminent Domain for Pipelines”, the author discusses the case Sunoco Pipeline v. the Carol A. Teter Trust. We are the trustees of that trust. When we first saw the article, we were hoping for an informative piece, as there has been a distinct lack of news coverage of our case, outside of the Harrison News Herald weekly paper. With all due respect to the author, it reads like a rehashed Sunoco press briefing. Neither we nor our attorney were contacted for information or comment.
“We Always Have Time For You”
Carol Goff & Associates Your Oil & Gas Connection
REAL ESTATE
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 Millersport • 740-320-0200 Canton • 330-418-7576
YOUR ONE STOP FOR ALL YOUR RESIDENTIAL & COMMERCIAL NEEDS!
550 STEUBENVILLE AVE., CAMBRIDGE Former home to gas station. Glass lined underground gas tanks are still on property. Great location in downtown Cambridge. $169,900
Call our Cambridge office @ 740-439-1111
48647 SARAHSVILLE RD., CALDWELL
Located in a rural setting 5 miles from Interstate 77. An ideal location bordering two state highways for an oil & gas operations. Office is brick & frame of 5409 sf., consisting of 13 offices, 2 reception areas & 3 half baths, kitchen & 2 conference rooms. Large parking lot w/ helicopter pad. Pavilion & bus garage is 4055 SF consisting of garage areas for bus and 3 cars, entertainment pavilion & full kitchen. Maintenance shop frame w/ 5552 SF, consisting of 4 bays for large trucks or equipment, one with mechanic’s pit, 2 offices, storage area, full bath and pressure washer. Barn SF 768. Equipment shed 3240. Main house is brick, 6354 SF.
Call our Cambridge office @ 740-439-1111
CAROL GOFF & ASSOCIATES OPERATES 14 OFFICES. COVERING 10+ 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. CA-10535872
GasandOilMag.com
Visit us at www.carolgoffrealestate.com OhioGas&Oil 19
There are a number of factual misstatements and serious omissions that would lead a reader to a conclusion that is very different from the facts. “First of all, the tone of the article makes it sound like we were using a technicality to try to overturn Ohio’s eminent domain law. Not so. When the law in question, Ohio Revised Code 1723.01, was enacted in 1953, petroleum was understood to mean crude oil, and that was the way it was interpreted. Two appeals court cases in 2001 expanded that to include commonly used fuels such as gasoline, diesel and jet fuel. The ruling in our case represents a huge expansion of the power of this law, which was primarily meant for utilities such as natural gas, water and electricity. We just want the law to be interpreted as written and used for 64 years. “The article stated that our expert witness, Dr. Paul Matter, a PhD in chemical engineering, testified that petroleum is a complex mixture of hydrocarbons that is a liquid at standard temperature and pressure (60 degrees Fahrenheit, 14.7 lbs air pressure). That is true in the world of chemical engineering, and is also what the definition for petroleum is in O.R.C 3737.87(J), which defines petroleum for laws governing underground storage Agricultural & Industrial Service & Repair Hoses
English & Metric. Made While You Wait.
OUR NEW CYLINDER DISASSEMBLY TABLE & HYDRAULIC TORQUE WRENCH!
tanks, which often store the products that underground pipelines transport. Matt Gordon, Sunoco’s engineer with a B.S. engineering degree and not an expert witness, testified that in the oil and gas industry, any component of petroleum is still considered petroleum. Under our questioning, he admitted that under Sunoco’s theory, substances such as mercury and arsenic would also be considered petroleum, as they are also components of petroleum, and a company could appropriate land to transport them. The courts chose to ignore our expert’s testimony and O.R.C 3737.87(J). “The article states that Sunoco argued that the propane and butane would be used to heat homes and as an additive to gasoline, and would be used at cracker plants. Not so. Sunoco offered testimony that propane and butane “could” be used this way, but only speculated on the possible uses. They had every opportunity to give evidence as to where and how these products would be used, but they did not. We practically begged them. They stated that up to 7% of the propane, or about 2% of the pipeline’s total capacity, may be used in eastern Pennsylvania on “off ramps” that they may build. But, they could not give the name of a possible propane distributor or oil refinery. We feel that 2% of a pipeline’s capacity to heat homes and provide gas for barbeque grills is not sufficient to justify the use of eminent domain. “Unmentioned in the article is the fact that most or all of the Mariner East I pipeline’s products is being shipped to Europe, and that least most if not all of the products shipped in the Mariner East 2 will end up there too. The name of the pipeline has meaning: Mariner; by sea, and East; to Europe. These products will be used by cracker plants – in places like Sweden. Not a bad thing, but again, is that something we want to use eminent domain for? “Unmentioned in the article is the financial side of the issue. Landowners often get $35-$60 per foot for pipelines of this type and size. Sunoco’s written offers were less than $5 per foot, and they weren’t interested in bargaining. Their only rationale for using eminent domain is so they can save money.
We test & repair ALL TYPES of cylinders IN HOUSE. Thousands of seals and packing IN STOCK! WO-10536374
WE ALSO REPAIR PUMPS & MOTORS 12317 Dover Road • Apple Creek, Ohio 44606 Phone: 330-857-0001 • Fax: 330-857-2446
20 OhioGas&Oil
“Unmentioned in the article is fact that companies like MarkWest have built hundreds of miles of large-diameter natural gas liquids pipelines without using eminent domain at all. Sunoco kept arguing that pipelines were necessary to transport the products out of the area. Nobody was disputing that; their position was that the pipeline could not be built without use of eminent domain, which is clearly not the case.
GasandOilMag.com
“Unmentioned in the article is the fact that on September 2nd Sunoco surveyed a route around us that was approximately the same distance as the route through our property. By the time we filed our motion to stay on October 11th they had options for an easement across more than half of the alternate route. They then did nothing until the fourth week of January. In a flurry of activity, they signed up the rest of the easements in a few days. We have told them for over two years to go around us. All of their delays and/or damages are entirely selfinflicted. The pipeline is currently being constructed around us. “The author points out that when we asked the Ohio Supreme Court to grant an emergency stay, Sunoco opposed it and asked us to post a bond in the princely sum of $9.5 million for their losses. Why they would think we would be responsible for their losses while the matter is under appeal is beyond us. During the stay hearing in the court of common pleas, we repeatedly asked them how they could quantify such a number. They could not. We asked for the emergency stay from the Ohio Supreme Court on October 11th. On October 12th, the Chief Justice notified Sunoco that they had until October 13th to respond to our motion, instead of the usual 10 days. On the morning of October 14th, the Ohio Supreme Court granted our motion by a 5-2 vote, and required no bond from us. The Court had access to all the court documents at the county and appeals court level, and clearly understood what they were doing when they halted construction on our property. They did not have to take the case, and they did not have to grant the stay, but evidently they understood that there are large issues of property rights involved. In the 63 years since this law was enacted, this is the first time it has landed in front of the Ohio Supreme Court. This will be the first eminent domain case accepted by this court in over a decade.
“When the initial decision in the Harrison County Court of Common Pleas was made in December 2015, ruling that ethane, butane and propane were petroleum for the purposes of using eminent domain to construct pipelines, another company, Kinder Morgan, filed appropriation actions against approximately 300 Ohio landowners for their Utopia ethane pipeline, with lowball compensation offers. Stapled to these lawsuits was a copy of the judge’s ruling in our case. “As there are many more NGLs pipelines that are planned for the future in Ohio as the industry grows, the ruling in our case is clearly consequential for landowners and the industry alike. After the Ohio Supreme Court accepted our appeal and granted our emergency stay, Kinder Morgan began settling these cases by fairly negotiating with landowners for easements and dropping the eminent domain actions. At this time, as far as our legal team can determine, there are no new pipeline projects that are using this court’s decision for eminent domain. Pipeline companies are once again negotiating fairly with landowners for easements, as they should.”
330-866-5521 or Toll Free 800-521-7328
10 Evergreen Varieties Available 4 foot to 14 foot
AL-10529083
Instant noise/dust reduction 12 month privacy for your sites Call for a planting quote today!
GasandOilMag.com
www.smithevergreen.com smithevergreen@neo.rr.com OhioGas&Oil 21
By The Numbers
CONTACT US FOR YOUR FABRICATED BUILDINGS... WE HAVE BUILDINGS FOR EVERY NEED!
WO-10535953
330-698-0505 22 OhioGas&Oil
GasandOilMag.com
GasandOilMag.com
OhioGas&Oil 23
DAMIAN KOVARIK
EXCAVATING & HAULING, LLC
• EXCAVATING • • HAULING • • HYDRO EXCAVATING • • PAVING •
740-946-1165 • 88375 Fairview Road, Jewett, OH 43986
damian@kovarikexcavating.com
24 OhioGas&Oil
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 Airgas’ 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 Airgas’ service and product offerings for our customers.
WO-10536357
WO-10495378
Think Airgas, Your single source for supply, service and support.
The Right Products. The Right Locations. The Right Expertise.
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”
LARGE Scale Buildings
Estimates 330.231.0125
Expert Reroofing
AL-10530450
Metal
Conventional
Most Jobs Are Complete In Just Two Days
jmcarpentrylimited.com
Fredricksburg, Ohio 44627