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Dix Communications - Gas & Oil
July 2014 Edition
1
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Gas & Oil
July 2014 Edition - Dix Communications
Table of Contents 4
Recorder’s Office Remains Central
7
Frack Tax Bill Stalled in Statehouse
8
Firefighters Trained for Oilfield Emergencies
11
Crude Exports Yield Economic Benefits
12
Residents Question Location of Well Pad
15
MWCD To Reinvest $300 Million
16
Playing Lease ‘Poker’
18
Ohio Lt. Gov. Visits Drilling Rig
21
Although Shelved, State’s Plan Questioned
22
Energy Briefs
24
OGEEP Announces Scholarship Winners
26
Billions Invested in Midstream Activities
29
Midstream Conference Points Up Potential
30
Industry Professionals Advise Contract Work
33
Transportation Methods in Operation
35
API Launches Shale Workforce Website
36
Asset Protection
39
Employment Outlook for Women, Minorities
40
Energy Coalition Goes to Quarterly Meetings
Judie Perkowski / Dix Communications Marc Kovac / Dix Capital Bureau
Cathryn Stanley / Dix Communications Laurie Huffman / Dix Communications Bill Dannley / Landman Leasemap Ohio Judie Perkowski / Dix Communications Marc Kovac / Dix Capital Bureau
Southern Zone Edition
PUBLISHERS Andrew S. Dix Northern/ Southern Zone ASDix@dixcom.com G.C. Dix II Southern Zone GCDixII@dixcom.com David Dix Northern Zone DEDix@dixcom.com
EXECUTIVE EDITORS Lance White Northern Zone LWhite@dixcom.com Roger DiPaolo Northern Zone RDipaolo@dixcom.com Ray Booth Southern Zone RBooth@dixcom.com Rob Todor Southern Zone RTodor@dixcom.com
REGIONAL EDITORS Laurie Huffman / Dix Communications Thomas Doohan / Dix Communication Amadeus Smith / Dix Communications
Laurie Huffman / Dix Communications Marc Kovac / Dix Capital Bureau Frank McClure / Attorney Sophie Kruse/ Dix Communication Judie Perkowski / Dix Communications
Kimberly Lewis Northern Zone KLewis@dixcom.com Erica Peterson Northern Zone EPeterson@dixcom.com Cathryn Stanley Southern Zone CStanley@dixcom.com Niki Wolfe Southern Zone NWolfe@dixcom.com Judie Perkowski LAYOUT DESIGNER
Southern Zone JPerkowski@dixcom.com
Dix Communications - Gas & Oil
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ADVERTISING DIRECTORS ADVERTISING DIRECTORS Rhonda Geer Northern Zone Sales Southern Zone Sales Wooster & Holmes, Ohio Offices RGeer@dixcom.com 330-287-1653
July 2014 Edition
Ohio octobER 2012 • www.ohiogo.com
A FREE monthly PublicAtion
43
Study Indicates Big Savings for Ohio Schools
44
Selling Your Mineral Rights?
49
U.S. Well Services Moving to Uhrichsville
50
Workshops Aim to Educate Teachers in Oil and Gas
53
Six Counties in Ohio Reach Century Mark
54
Energy Bill Freezes Mandates for Two Years
56
Mid-Year Evaluation for Gas and Oil Industry
58
No Export Restrictions Could Boost Ohio’s Economy
61
Safety First for County Fire Protection Inc.
62
Ohio Court of Appeals Issues Important Ruling
65
Williams Toyota Lift Supports Industry Businesses
66
OGEEP Plans Training Program and Event List
68
Scholarships, Training Available in Industry
DIGITAL CONTENT MANAGER COVERAGE AREA Brad Tansey
70
Local Law Student Earns OSBA Honors
ART DIRECTOR
72
Plan Would Curb Carbon Dioxide Emissions
75
Chamber Review Says ‘Shale-Abration’ a Success
76
Out West, Wells Miss Federal Inspection
78
Company Agrees to Pay Overtime Back Wages
Harry Newman Northern Zone Sales Kent, Ohio Offices HNewman@dixcom.com 330-298-2002 Kim Brenning Southern Zone Sales Cambridge, Barnesville and Newcomerstown, Ohio Offices KBrenning@dixcom.com 740-439-3531Cambridge 740-425-1912 Barnesville 740-498-7117 Newcomerstown Jeff Kaplan Southern Zone Sales Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450 Jeff Pezzano VP Advertising Sales & Marketing Kent Ohio Office JPezzano@dixcom.com 330-541-9455
BTansey@dixcom.com Pete Kiko
LAYOUT DESIGNER Jenna Conaway
“Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio. Copyright 2014.
Ethan Vessels / Attorney
Sophie Kruse/ Dix Communication Shawn Bennett / Energy in Depth - Ohio Marc Kovac / Dix Capital Bureau Judie Perkowski / Dix Communications Amadeus Smith / Dix Communications Kristen Tomins / Dix Communications David Wigham / Attorney Tesa Strasser / Dix Communications
Laurie Huffman / Dix Communications
Dina Cappiello, Josh Lederman / Associated Press Judie Perkowski / Dix Communications Hope Yen, Thomas Peipert / Associated Press
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Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
Recorder's office remains center for gas/oil activity Judie Perkowski Dix Communications
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AMBRIDGE — A jaunt up to the Recorder’s Office on the second floor of the Guernsey County Administration building in Cambridge leaves no doubt that “Elvis has not left the building.” Judging from the tables, chairs and computers still lined from one end of the hall to the other, abstractors are still ensconced after almost four years of nonstop searching through thousands of documents for the media superstars — the gas and oil companies. And although traffic in the office remains very busy, numbers tell the story. “Our numbers for recording fees are down from previous years, but that is because most of the property has already been bought or leased,” said Guernsey County Recorder Colleen Wheatley. “What is primarily going on now is big assignments of leases ... gas and oil companies are cleaning up titles, which means companies are picking up the little pieces of properties that were previously held by a person or different gas and oil company. They
are trying to find the original landowner and/or gas and oil company who owned or leased the property. It is a lengthy process. “Companies go out of business or are sold to another company, people move out of state or pass away, or divorce and remarry. It can be a very long paper trail.” And, even though it appears that a gas and oil company previously researched the deed or lease agreement, it is up to the lessee, the person or company purchasing or leasing the property rights, to double check the paperwork to avoid any legal action. The best reason in the world for landowners to hire an attorney before signing anything. Of course, most gas and oil companies have legal experts on retainer. Figures for this year, 320 new leases were registered through May 31, 2014, compared to 1,222 in 2013; 2823 in 2012 and 2,560 in 2011. Recording fees comparison from 2011, when the rush began to research and record leases and deeds through 2012, 2013 up to May 31, 2014:
Dix Communications - Gas & Oil
www.OhioGO.com
July 2014 Edition
Recorder's office remains center for gas/oil activity • 2011 number of documents recorded, 10,953, total revenue, $564,533; • 2012 number of documents recorded, 13,932, total revenue, 1,278,891; • 2013 number of documents recorded, 12,433, total revenue, 1,204,234; Another reason for the downturn Wheatley said, was the transfer of documents, including deeds, to the Internet. “There is no charge to search online,” she said. Documents dating back to 1993 are now available. Wheatley said the plan is to go back to 1990. She said beyond that is very difficult and would require additional personnel. jperkowski@daily-jeff.com u Left: Guernsey County Recorder Colleen Wheatley, c, assists
Landmen Tyler Hamrich of Columbus, l, and Emily Bruning of Cambridge, as they scour landowner records for gas and oil companies at the County Recorder’s office in Cambridge. Wheatley said that although traffic at the office is not as chaotic as it was a year or two ago, the gas and oil companies are still looking for available properties.
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Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
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Dix Communications - Gas & Oil
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July 2014 Edition
7
Frack tax bill stalled in Statehouse Marc Kovac Dix Capital Bureau
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OLUMBUS — Lawmakers left the Statehouse for the summer without acting on a handful of bills connected to Gov. John Kasich’s mid-biennium budget review. Provisions from a few ended up in other legislation, while Republicans balked at the governor’s proposals in several others. The latter list includes Kasich’s long-sought increase in tax rates on oil and gas produced via horizontal drilling and stiffer penalties for those who violate the oil and gas regulations. Among mid-biennium budget bills that did not move before the summer break were: • HB 375: The legislation, which passed the Ohio House in midMay on split vote, would set the tax rate on oil and gas produced via horizontal hydraulic fracturing at 2.5 percent, with lower rates for vertical wells. The first $10 million of production would not be taxed, allowing companies to recoup their initial well investments. The state also would provide nonrefundable tax credits for commercial activity taxes paid on horizontal wells. Portions of the resulting tax collections would be used for state regulatory efforts and well plugging, with a percentage earmarked for local governments in eastern Ohio shale counties. The legislation had a hearing before a Senate committee but did not move any further before the summer recess. The Kasich administration has indicated it does not support the bill. • HB 490: Another fracking-related bill, the legislation would
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expand the Ohio Department of Natural Resources’ authority to revoke or suspend drilling and related activities of those who break the state’s environmental regulations. The legislation also would tighten requirements for transporting brine and increase potential prison time and civil penalties for violations. The bill was prompted, in part, by a Youngstown-area incident involving the dumping of tens of thousands of gallons of oilfield waste into a storm sewer. The bill has had multiple hearings before a House committee but did not move to the floor for a vote before lawmakers left town.
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Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
FIREFIGHTERS GET TRAINED FOR OILFIELD EMERGENCIES
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AMBRIDGE — Area firefighters joined more than 30 emergency responders from across the state to participate in the Ohio Oil and Gas Energy Education Program’s (OOGEEP) Responding to Oilfield Emergencies Training Workshop held recently. Participants from the area included Firefighter Julie Paden of the New Concord Fire Department; Firefighters David Carpenter, Gary Frame, Timothy Neiswonger of the Quaker City Volunteer Fire Department; Training Officer Scott Oakley and Firefighter Beau Guiler of the Senecaville Volunteer Fire Department; and Firefighter William Smith of the Caldwell Fire Company. OOGEEP’s Oilfield Emergency Response Training program began in 2001, and was the first of its kind in the nation. The workshop is fully funded by Ohio’s natural gas and crude oil producers, and is offered at no cost to Ohio firefighters. In the past 13 years over 1100 firefighters from across Ohio and seven other states have attended, with Ohio’s oil and natural gas industry voluntarily funding over $2,000,000 to provide this free training program. Upon completion of the 2-day training, each participant receives a certificate of attendance, documentation for up to 12 CEU contact credit hours, with optional college credit is also available through Hocking College The program is endorsed by the Ohio Fire Chief’s Association, Ohio Society of Fire Service Instructors and the Ohio Fire and Emergency Services Foundation, and has received numerous state and national awards while providing the model for other energy producing states training programs. “As representatives of the industry, we offer the best training by enabling emergency responders to understand and implement effective emergency response practices at typical oilfield drilling sites and production sites. Ohio has always taken the lead in developing safety programs, and we are proud to have built what is such a highly regarded program,” said Charlie Dixon, OOGEEP Safety and Workforce Administrator and fire service veteran with over 37 years experience. In the rare event of an oilfield emergency, the program is devised to provide detailed background information and practical guidelines to assist responders in communicating at the emergency site, evaluating the emergency, and responding to both drilling and production emergencies. The hands-on training portion includes “live burns” utilizing both crude oil and natural gas props. “Ohio’s oil and natural gas industry is dedicated to the safety and well-being of our communities, and our environment, so we train for potential scenarios no matter how rare these events may occur. This program is designed to ensure the both the safety of emergency responders and oilfield workers, as well as alleviate concerns the community may have,” Mr. Dixon added. “We enjoy a great partnership with the emergency responders we work with, and this program allows the communities we operate in to feel confident both the industry and responders are well trained. It’s one more way we can continue to be responsible, community and environmental stewards,” said Ron Grosjean, an Ohio oil and gas producer and Committee Chairman of the OOGEEP Emergency Response Program.
W
OOSTER — Firefighters David Devore and Firefighter/EMT Chris Parker of the Town & Country Fire District, Firefighter Andy Malinish of the Chippewa Fire Department, and Firefighter/EMT Basic Alan Griffiths of the Wooster Township Fire Department joined more than thirty emergency responders from across the state to participate the Ohio Oil and Gas Energy Education Program’s (OOGEEP) Responding to Oilfield Emergencies Training Workshop. OOGEEP’s Oilfield Emergency Response Training program began in 2001, and was the first of its kind in the nation. The workshop is fully funded by Ohio’s natural gas and crude oil producers, and is offered at no cost to Ohio firefighters. In the past 13 years over 1100 firefighters from across Ohio and seven other states have attended, with Ohio’s oil and natural gas industry voluntarily funding over $2,000,000 to provide this free training program. Upon completion of the 2-day training, each participant receives a certificate of attendance, documentation for up to 12 CEU contact credit hours, with optional college credit is also available through Hocking College The program is endorsed by the Ohio Fire Chief’s Association, Ohio Society of Fire Service Instructors and the Ohio Fire and Emergency Services Foundation, and has received numerous state and national awards while providing the model for other energy producing states training programs. “As representatives of the industry, we offer the best training by enabling emergency responders to understand and implement effective emergency response practices at typical oilfield drilling sites and production sites. Ohio has always taken the lead in developing safety programs, and we are proud to have built what is such a highly regarded program,” said Charlie Dixon, OOGEEP Safety and Workforce Administrator and fire service veteran with over 37 years experience. “Wayne County and the adjacent counties have a long history with the oil and gas industry. The fire service needs to understand the industry, and how to respond to incidents related to the industry,” stated Alan Griffiths of the Wooster Township Fire Department. In the rare event of an oilfield emergency, the program is devised to provide detailed background information and practical guidelines to assist responders in communicating at the emergency site, evaluating the emergency, and responding to both drilling and production emergencies. The hands-on training portion includes “live burns” utilizing both crude oil and natural gas props. “Ohio’s oil and natural gas industry is dedicated to the safety and wellbeing of our communities, and our environment, so we train for potential scenarios no matter how rare these events may occur. This program is designed to ensure the both the safety of emergency responders and oilfield workers, as well as alleviate concerns the community may have,” Mr. Dixon added. “We enjoy a great partnership with the emergency responders we work with, and this program allows the communities we operate in to feel confident both the industry and responders are well trained. It’s one more way we can continue to be responsible, community and environmental stewards,” said Ron Grosjean, an Ohio oil and gas producer and Committee Chairman of the OOGEEP Emergency Response Program.
www.OhioGO.com
Dix Communications - Gas & Oil
July 2014 Edition
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Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
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Dix Communications - Gas & Oil
July 2014 Edition
11
Crude exports yield BIG ECONOMIC BENEFITS for Ohio C
OLUMBUS — A new state-by-state analysis shows that Ohio could add up to 15,948 jobs and $2.68 billion to the state economy in 2020 if federal restrictions on U.S. crude exports were lifted, said Executive Director of the API-Ohio Chris Zeigler. “The U.S. is poised to become the world’s largest oil producer, and access to foreign customers will drive job creation here in Ohio and around the country,” said Zeigler. “When it comes to crude oil, the rewards of free trade are amplified wherever energy, manufacturing, and consumer spending drive growth. American energy exports mean new jobs, higher investment, and greater energy security.” The new report was conducted by ICF International and EnSys Energy. It provides a state-by-state analysis of economic benefits first outlined this March in a national report, which showed that lifting export restrictions could save consumers up to $5.8 billion per year, on average, between 2015 and 2035, as higher production and efficient markets help boost supplies and lower costs. The latest report shows that Ohio is among 18 U.S. states that could gain over 5,000 jobs each in 2020 from exports of U.S. crude oil. The study also forecasts that most states could see economic activity grow by hundreds of millions of dollars due to growing energy production and downward pressure on the prices at the pump. In addition: Depending on global price trends, nine states – Florida, Michigan, Indiana, California, New York, Pennsylvania, Ohio, Texas, and North Dakota -- could see over $1 billion each in state economic gains in 2020, with slower growth through 2035 after new drilling plateaus. Eight states – Illinois, Florida, New York, Pennsylvania, Ohio, California, North Dakota, and Texas – could gain over 10,000 jobs each in 2020. Texas alone could gain up to $5.21 billion in added economic
activity and 40,921 jobs in 2020. North Dakota could gain 22,215 added jobs and $4.81 billion in state economic growth in 2020. States with significant manufacturing and consumer spending, such as California, could add 23,787 jobs and $2.06 billion in economic activity in 2020. Illinois could add 10,033 jobs and $990 million in state income in 2020. “Restrictions on exports only limit our potential as a global energy superpower,” said Zeigler. “Additional exports could prompt higher production, generate savings for consumers, and bring more jobs to Ohio. The economic benefits are well-established, and policymakers are right to reexamine 1970s-era trade restrictions that no longer make sense.” API-Ohio is a division of API, which represents all segments of America’s oil and natural gas industry. Its more than 600 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. Space for Lease: Hannibal Professional Center, 52634 Main St. (SR536) Hannibal,OH 43931 Located within a hot spot of the Utica and Marcellus Shale Formations, the Hannibal Professional Center is located at 52634 Main St., Hannibal,OH 43931 on SR536 just 1/2 mile from SR7on the Ohio River in Monroe County, Ohio, less than 1 mile from the New Martinsville, WV Bridge. This location is 3 miles from the Hannibal Industrial Park which offers rail service and barge services. Approximately 5,800 SF available. Flexible space for office, retail or light manufacturing uses. Ample parking is available. Five large open rooms that could be built to suit. One Office suite consisting of 2 private offices (option for 3rd private office), reception area, restroom and walk-in fireproof wall safe ready to move-in. Outparcels available. High speed internet available. Beautiful views of the Ohio River. Banquet facilities available for conferences, training, etc., 24 hrs fitness center to open May-June 2014 on site. Lease Rates & terms are negotiable. Contract (740)213-3568
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Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
Barnesville residents question council about location of well pad site Cathryn Stanley Dix Communications
B
ARNESVILLE -- Residents of Harmony Road near the Slope Creek Reservoir addressed Barnesville Village Council at the Monday, June 16 meeting regarding their concerns about a well pad site planned 500 feet from their home. John and Sally Saliga addressed council about the Snead pad which council authorized Mayor Ron Bischof to sign a lease for drilling with Antero Resources of Colorado on April 7. The Snead pad site is 12 acres of disturbance. The village will receive $20,000 for the first five acres, plus seven acres at $6,000 per acre for a total of $62,000. The timber value there is also $5,000 for a total site price of $67,000. The village also singed a lease agreement for a 23.4 acre pad site at Slope Creek for a total of $111,000. At the time of the lease signing, an Antero representative said access to the Slope Creek Reservoir will not be restricted and the roads in that area will be upgraded by Antero. Sally Saliga provided council with a map of the proposed fracking site where their home is located and read a letter addressed to “the citizens and their elected officials of Barnesville and other affected communities”. (See letter on page A4). John Saliga asked council members if they had looked at the well pad site. None indicated that they had. Sally said the site is 500 feet from the reservoir shore line and 100 feet from a creek. She said bodies of water are located on three sides of the pad site. She said the “existing structure” listed on the site map was their home. “How can you make a good decision about it, if you don’t know what the ‘existing structure’ is,” she asked. Saliga asked council if they would want a well pad 500 feet from their front door. “I beg of you to re-examine this site and get an expert opinion,” she said, asking council to give the decision the same consid-
eration it gave to the REX pipeline location, and most recently the proposed EnerGreen 360 drilling waste recycling site at the Eastern Ohio Regional Industrial Park. John Saliga pointed out that any water contamination would impact not just Barnesville, but the other communities that purchase water from the village. “You have a liability to protect this water source,” he said. Saliga also charged council with not caring about their decisions once their terms were up. Councilman Tim McKelvey said he “took offense” to the implication that “council doesn’t care.” Slope Creek-area resident Jill Hunkler asked council if it was too late to reconsider “putting the well pads that close to the reservoir”. She asked if council had any intentions of getting input from the Ohio Environmental Protection Agency or the Ohio Department of Natural Resources. Village Solicitor Marlin Harper said the lease had been signed and noted that he ensured that “extra provisions to protect water resources” were added to the contract. “I revised the contract, adding extra provision beyond their standard contract,” Harper said. Prior to the April 7 lease signing, he added the following surface use provision language to the original draft of the agreement on the lease: “Lessee understands that the well site is located close to and within the watershed of Slope Creek Reservoir, which is Lessor’s primary source of raw water for its water system which currently serves approximately 15,000 customers in parts of four counties. Any contamination of the waters of Slope Creek Reservoir would threaten the potable water supply of those customers and endanger their health and welfare. Therefore, Lessee shall use the best available current technology to prevent liquid spills and migration of any liquids, solids or gases with may
Dix Communications - Gas & Oil
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Barnesville residents question council about location of well pad site be harmful to or pose a threat to contamination of said reservoir. In the event that a spill occurs or potentially harmful gases or solids are released which migrate or threaten to migrate off of the well pad site, Lessee will immediately notify Lessor and will immediately mobilize all available work forces to remediate the situation and to prevent any harm or damage to the waters of said reservoir. Lessee will also provide testing services to insure that the water is not contaminated for as long as Lessor reasonably believes that there is a threat to its raw water supply.” Harper said the contract was entered into with “a lot of consideration” and stated that the contract with Antero was public record and said he would mail a copy to the Saligas. Harper said the Saligas should have voiced there concerns prior to the lease signing. Sally said they moved to the Harmony Road location permanently just two months ago and were not aware of the pad site previously. John said their property was surveyed without their permission. Barnesville resident Steve Hill asked, “How do you plan to protect the water?” Council President Dale Bunting, acting as mayor, thanked the Saligas for addressing council, but respectfully said the meeting needed to continue. Terri Schmacher said, “I can’t think of anything more important than this issue.” You can’t distance yourself from this potential disaster. This will affect your children and grandchildren.” Schmacher went on to say, “The strength of a small community such as Barnesville can also be its downfall. We trust too much. We take people at their word. I don’t feel we can trust some of these entities involved.” Hunkler added that there was too great a potential for human error and spoke of an incident in the area. Shumacher agreed saying, “You can’t guarantee that mistakes won’t be made.”
July 2014 Edition
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u Left: Harmony Road resident Sally Saliga addresses Barnesville
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Gas & Oil
July 2014 Edition - Dix Communications
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July 2014 Edition
15
MWCD to reinvest
$300 million
of gas, oil bonuses and
royalties over next decade Laurie Huffman Dix Communications
N
EW PHILADELPHIA -- It may be hard to find another single property owner reaping greater benefits from the oil and gas industry in Eastern Ohio than Muskingum Watershed Conservancy District, which received $177.6 million by mid-June in sign on bonuses. Yet, it would also be difficult to find a greater positive impact to the communities in the area provided from any other single property owner gaining from the industry, based on MWCD’s current reinvestment plan. In total, the district has plans to commit more than $300 million into projects across the region it serves. Darrin Lautenschleger, public affairs administrator for MWCD, reported toward the latter part of June, the district has leased 23,649 acres, thus far, for oil and gas development out of the total 54,000 acres it owns. And, along with sign on bonuses, about $3 million has been collected in royalties, and this is only the beginning because production is really just starting to pick up across the state. The agreements are mainly large-acre leases on land located on four reservoirs: Clendening in Harrison County, Leesville in Carroll County, Seneca in Guernsey and Noble counties, and Piedmont in Belmont and Harrison counties. Lautenschleger also noted some of the district’s land won’t be able to be leased due to its location or the fact it is already held for production. “I would like to first explain the district has been leasing property for oil and gas production for the past 81 years, which is its entire history,” said Lautenschleger. He went on to report during 2013, the district’s board of directors prepared a strategy for investment of the funds from the current, highly lucrative, oil and gas development. It was decided the sign on bonuses would be used as follows: 1) to defray the district’ s debt; 2) to improve public access to the district’s property and facilities; and, 3) to improve the district’s facilities through capital investments. “And, these goals are being met as
we speak,” Lautenschleger said. The master plan for capital investment will touch a large amount of communities. It includes recreational facility improvements consisting of $160 million in upgrades over the next eight to 10 years at seven primary facilities: Atwood Lake Park, near Carrollton; Charles Mill Lake Park, near Mansfield; Pleasant Hill Lake Park, near Loudonville; Seneca Lake Park, south of Cambridge; Tappin Lake Park, near Cadiz; and at two marinas operated by the district in Belmont and Harrison counties, Seneca Marina and Piedmont Marina and Campgrounds. “Construction will begin in ernest later this year,” Lautenschleger said, “and, there will be projects underway at all of these facilities in upcoming years that will include everything from infrastructure upgrades to new buildings, facilities, amenities, and activities and events.” As royalty dollars are generated, the district is committed to reviewing the tax assessments it receives across the 18-county region it serves, which includes almost all of Stark County. The district already announced it will reduce property taxes across the board by 50 percent starting in 2015, which is estimated to be a $5.5 million reduction overall. MWCD is also presently working with the Water Development Authority to create a revolving loan fund for local communities in its region to tap into for water quality improvement projects, wastewater treatment facilities, and drainage projects. In addition, the district pays the local share to the federal Army Corps of Engineers for projects at the dams in the area. “The dollars we use for this comes from tax assessments, but we made a promise to the communities to keep those dollars at the same level, even though we will receive only half as much as of next year,” said Lautenschleger. “Since 2009, we have invested $18.8 million in improvements at Dover and Boliver dams. These projects ensure continued safe operations at the dams.”
16
Gas & Oil
July 2014 Edition - Dix Communications
Playing
Southern Zone Edition
LEASE ‘POKER’
Bill Dannley Landman, Leasemap Ohio
W
OOSTER — You’d think it would be a no- established no one could compete. brainer. “Know when to fold ‘em...” A company takes an oil and gas lease on a On December 5, 2011 Chesapeake Energy showed its hand, inundating property. Now, if you remember my May column about the Stark County Recorder’s Office with a single filing of1,046 leases. constructive notice and the need to record, you’d expect The average number of leases recorded annually in Stark: about 1,000. them to immediately scamper on down to the courthouse and record. “We’ve never had that many documents filed at once in one day,” reRight? called Laura Steenrod, Chief Deputy Recorder of the Stark County ReThat depends. corder’s Office. Remember the old Kenny Rogers song “The Gambler?” It goes “Know “Know when to fold ‘em...” when to hold ‘em, know when to fold ‘em....” Well, that the dilemma oil Both companies played lease poker, and won big. and gas companies face when they take leases. But for some companies, holding leases doesn’t make sense. These I call it lease poker. producers record almost all their documents, if not immediately, in a timeWhen a company pursues a new prospect, they don’t make the decision ly fashion. Why the difference? by throwing a dart at a map or prowling around with a divining rod. CareSay a producer has been active in an area for years. Wells, tanks, inful geologic research goes into evaluating the area. Whether they employ frastructure for anyone to see. Their interest is obvious and self-evident. subsurface mapping, landstat imagery, SLAR imagery, geochemical anal- There’s no confidentiality to protect. ogy, seismic lines, all proven geologic methods, all incredibly expensive. They take a lease to augment their leasehold. Record ASAP. Before a title abstractor hits the courthouse or a landman knocks on a Or maybe a driller becomes aware of a tract of unleased land surroundsingle door, a sizable investment has already been made. ed by existing production. In the business, that is known as an “inside And the location of the new prospect is top secret. tract.” Very little acreage is available; no big leasing programs are posIf word leaks out that a major producer has begun leasing in a new sible. So once you pick up what you need, why not record? It just makes area, other companies --especially lease brokers-- will swarm in. Prices sense. per acre, landowner royalties will skyrocket. So confidentiality has to be So if a new company starts leasing in your area but nothing shows up in maintained for a long as possible. the courthouse, well, “Know when to hold ‘em...” And when those leases The need for secrecy runs counter to the need for constructive notice. get recorded... Recording leases clearly defines the area of the new prospect: the specific I think you can fill in the rest. tracts signed, their exact location and, sometimes, the terms and conditions offered. So companies only record once they hold a significant leasehold. Bill Dannley has worked in the oil and gas business for over Two examples of lease poker: Phillips Production and Chesapeake En- 35 years as both a title abstractor and petroleum landman. He is ergy. a partner in Leasemap Ohio, which specializes in lease takeoff About ten years ago I worked a leasing project along the southern borresearch and has over 400 Ohio townships on file. Bill can be der of New York State for Phillips Production, an old and well-respected reached at 330-262-0588. For more information visit oil and gas producer. The area contained some older Clinton production www.leasemapohio.com. with huge swaths of available acreage. The landowners hadn’t been apwww.spartasteel.com proached in years. Wide open spaces. & Equipment Corp. So I with about a dozen other leasemen hit the ground hard in the fall of STEEL SERVICE CENTER 2004, taking five-year leases at $5 per acre per year. The last thing Phillips • Rebar • Angle • Channel• HR Bars • CF Bars • Beams wanted to do was tip their hand by recording. So they didn’t • Tubing • Pipe • Deck Plate • Expanded Metal/Grating Know when to hold ‘em...” • Flat Sheets • HR Plate Galvanized Sheets • Stainless Steel Chesapeake did the same thing in 2011. Moving into Stark County and Aluminum Items as part of the Utica play, their landmen worked hard and silent, piling up • Shearing • Saw Cut leases but recording nothing. • Plate Burning • C.A.D. Burning Know when to hold ‘em...” Accepts all major credit cards Phillips didn’t record until the spring of 2005, when leases covering • Fast Delivery • Friendly Service • Dependable 9875 Chestnut Ave. SE, E. Sparta, OH 44626 50,000 acres plus suddenly showed up in the courthouse. More followed. The word got out. Other companies showed up, but Phillips was so well 330-866-9621 • 1-800-732-4272 • Fax 330-866-9625
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18
Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
Ohio Lt. Gov. visits drilling rig in guernsey county
Judie Perkowski Dix Communications
Q
UAKER CITY — It was her first time on a drill pad. Dressed in coveralls, steel-toe shoes and a hard hat, she could have been mistaken for an intrepid reporter. Ohio Lieutenant Governor Mary Taylor said she was excited to be one of the visitors to the J. Hall Drilling Pad, Rig 63, in Quaker City in early June. “I’ve had an opportunity to tour and visit a number of businesses tied to the shale industry across Ohio, but this was my first tour of a drilling pad and it as even more impressive than I imagined. What an exciting operation ... And to think there are so many others just like it across this region of the state — it’s greats news for the local economy, for the workers and for their families,” said Taylor. “Having these resources here in eastern and southeastern Ohio means more jobs, more investment and something positive for every community touched by this boom. It was equally important to see how seriously the industry is taking safety and regulations while working with the state to ensure this opportunity lives up to its potential in a way that protects our health, safety and the land.” Patrick McKinney, president and chief operating officer for Pennsylvania-based Rex Energy Corp., led the tour. “It was our pleasure to host the Lt. Governor on a rig tour and demonstrate to her how we are safely and responsibly developing the Utica Shale in Ohio. Rex Energy plans on operating in eastern Ohio for quite a long time, so any time an elected official has an interest in learning more about what we do, and more importantly how we doit, we’re always happy to accommodate. We thank the
Lt. Governor for her leadership in making Ohio an attractive state to invest capital and fostering a climate where companies like Rex can create jobs and spur economic growth across eastern Ohio,” said McKinney. After a safety briefing, McKinney began explaining the drilling operation and led the group up to a platform at the first level on the rig, and because the rig is stationed on a hill, the view of the countryside is fantastic. The rig is 150 feet from the ground up, called a triple rig, easily identified by the sections of pipe welded every 50 feet. “The company arrived at the site last month and began drilling about three weeks ago,” said Rick Harliss, Rex Energy drilling supervisor. “We are at a vertical depth of about 8,000 feet. We are approaching the curve, which means we will begin horizontal drilling.” The company anticipates the well will be in operation sometime this winter. In addition to explaining the drilling operation, McKinney elaborated on the company profile. “Rex currently has 21,000 net acres across the Utica Shale region — 16,000 acres in Carroll County — and continues to look for more opportunities to expand. The remainder of our net acreage is in Noble, Guernsey and Belmont counties. The company began operations in Guernsey County in 2013. “We have more than 300 employees across our operational footprint. We aim to hire locally whenever possible. In addition, we strive to hire and work with local contractors and sub-contractors,” he said.
Dix Communications - Gas & Oil
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July 2014 Edition
19
ocay owned since
Ohio Lt. Gov. visits Guernsey County to see drilling rig
1972
oil & Gas
“Rex Energy has partnered with two midstream companies to transport and process our natural gas. We use Blue Racer in our Warrior North acreage and MarkWest in our Warrior South acreage. We refer to this area as our Warrior North and South acreage. Both companies have been great to work with in Ohio.” Rex has a total of 26 wells in various stages of development in its Utica operating area. There are six wells planned for the J. Hall pad, and five wells planned for the J. Anderson pad, a short distance from the J. Hall pad. “I have been in the oil and gas industry since 1982, working in Texas, Oklahoma, the Rockies and California. What’s happening in the Appalachian Basin is by far the most exciting time in my career,” said McKinney.
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u Left: Patrick McKinney, president and chief operating officer
for Rex Energy Corp., explains a phase of the drilling process to Lt. Governor Mary Taylor on the J. Hall Rig 63 in Quaker City Thursday afternoon. It was Taylor’s first visit to a working drill rig in the Utica Shale Formation, which she said was “impressive.”
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July 2014 Edition - Dix Communications
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Dix Communications - Gas & Oil
July 2014 Edition
21
Although shelved, state's plan questioned by advocacy group Marc Kovac Dix Capital Bureau
C
10264759
OLUMBUS — An advocacy group continues drilling on state land is in the best interest of Ohioans.” But Democratic lawmakers continue to voice concern about to push for more details of a plan to allow horizontal drilling for oil and gas on state-owned public records showing the administration pursued a marketing lands that was developed by Gov. John Kasich’s ad- strategy for fracking on public lands. In a joint statement, Reps. Bob Hagan (D-Youngstown) and ministration and the Ohio Department of Natural ReNickie Antonio (D-Lakewood) offered, “These revelations further sources. The plan ultimately was shelved, and the governor says he no confirm that the governor’s office has been lying about how long they pursued plans to team up with the oil and gas industry in prolonger supports the idea. But Alison Auciello, Ohio Organizer for Food & Water Watch, moting fracking in state parks and fracking in general. How long said Thursday that emails and other documents show the adminis- can the state’s top official continue to be dishonest with taxpayers? The public deserves to know the full extent to which the governor tration pursued the plan longer than it initially indicated. And she questions whether parts of the strategy were implement- planned to push fracking in our state parks.” ed. “We feel that it’s pretty clear that the administration and the DeMarc Kovac is the Dix Capital Bureau Chief. Email him at partment of Natural Resources has misled us about how far and mkovac@dixcom.com or on Twitter at OhioCapitalBlog. about how deeply it planned to go on with this communications plan to promote fracking,” Auciello said. “It shows a lot of inconsistencies in what the administration is saying about the plan and some conflicts of interest. So we’re asking for the attorney general to conduct a full investigation into how far this plan actually went.” The ODNR plan came to light earlier this year as a result of a public records request from the liberal advocacy group ProgressOhio, environmentalists and newspaper reporters. The documents note intentions to “exercise state-owned drilling rights” at several state parks “in a way that maximizes benefits and safeguards for Ohioans, completely avoids park surface disturbance and minimizes forest surface disturbance....” A section of the plan titled, “Communication Problem to Solve,” states that “an initiative to proactively open state park and forest land to horizontal drilling/hydraulic fracturing will be met with zealous resistance by environmental activist opponents, who are skilled propagandists.” ODNR and the governor’s office have said it is not out of the ordinary for agencies to develop communications strategies for responding to criticism of policy decisions. ODNR also said the draft plan was never implemented. And Kasich said in February that he no longer supports fracking on stateowned parkland and forests. “Ohio doesn’t frack on state land, nor does it permit public colleges and universities to frack on their lands,” Bethany McCorkle, ODNR spokeswoman, said in a released statement. “The policy has been examined and considered and the decision was made not to do it, and that’s the policy for the foreseeable future. Out-of-state groups who really don’t know what’s going on in Ohio or understand how Ohio works frequently parachute in to try to advance their particular agendas, but the fact is that Ohio makes its decisions based on what’s best for Ohio, and in this case we don’t think
22
Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
Energy Briefs FRACKING FORUM SET FOR JULY 26 OUDONVILLE — A free public forum at the Loudonville Public Library, 122 E. Main St., will be held July 26 from 6:30-8:30 p.m. The focus will be on hydraulic fracturing and the toxic waste stream destined for communities across Ohio. The majority of fracking flowback waste is injected into the earth via Class 2 injection wells and enhanced recovery injection wells. The forum will consist of several presentations: — Fracking In Ohio — A basic overview of hydraulic fracturing and Ohio legislation presented by Melanie Houston, MS, Director of Water Policy & Environmental Health for the Ohio Environmental Council — Injection Wells 101 — Overview of Class 2 injection wells and threats posed to local communities presented by Brian Kunkemoeller, Conservation Manager of the Ohio Chapter of the Sierra Club. — Personal Impact Stories and Forum Closing Comments There will be a question and answer session during each segment of the forum. For more information contact Bill Baker, organizer, at 419-6124069.
L
B
CHESAPEAKE ENERGY BOARD APPROVES SPINOFF KLAHOMA CITY (AP) — Chesapeake Energy Corp. said its board has approved a previously announced plan to spin
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COMPANY ENSURING COWS AREN’T HARMED ISMARCK, N.D. (AP) — An Oklahoma energy company says it has taken steps to ensure its facilities aren’t harmed by cows. North Dakota health officials say a cow may have rubbed against a tank valve on Tuesday, spilling about 20 barrels of natural gas condensate in western North Dakota. The site is owned by a subsidiary of Oneok Inc. based in Tulsa, Oklahoma. Officials say the cleanup is under way and booms have been put in tributary to the Little Missouri River as a precaution. Oneok says in a statement that the tank valve has been locked to prevent possible spills in the future.
off its oilfield services business into a separate, publicly traded company. The Oklahoma City-based oil and natural gas producer said Monday that the new company will be called Seventy Seven Energy Inc. To separate the companies, Chesapeake shareholders will receive one share of Seventy Seven Energy for every 14 shares of Chesapeake stock they own as of June 19. No fractional shares of Seventy Seven Energy will be issued. Instead shareholders entitled to one will receive cash instead. The distribution is expected to happen June 30, after the market closes. Seventy Seven Energy has applied to list its stock on the New York Stock Exchange under the symbol “SSE.” Trading is expected to begin on July 1. Seventy Seven Energy, based in Oklahoma City, provides drilling, hydraulic fracturing, oilfield rentals and other services to oil and gas producers. Chesapeake first announced in February that it was planning to spin off the business to streamline its operations. In May, the company said the move would cut about $1.1 billion of debt from its balance sheets. Shares of Chesapeake closed at $29.87 Friday. Its shares are up nearly 10 percent since the beginning of the year.
Dix Communications - Gas & Oil
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July 2014 Edition
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Gas & Oil
July 2014 Edition - Dix Communications
Southern Zone Edition
announces scholarship winners
O
OGEEP announces 2014 Energy Scholarship award winners In 2011, OOGEEP released its Economic Impact Study estimating over 200,000 jobs would be needed in Ohio’s oil and natural gas industry through 2015. At the time of the study’s release, there were 14,400 employed in related oil and gas industries in the state. According to the most recent report from the Ohio Department of Jobs and Family Services, there are now over 189,000 Ohioans employed by our industry. With growth in the development of Ohio’s 30 carbon-bearing formations, and the development of the Utica-Point Pleasant still in its early stages, these job numbers will continue to increase. In response to this growing demand, the Ohio Oil and Gas Energy Education Program and their scholarship Foundation have announced the 2014 Energy Scholarship Award winners. Through the program, a total of 45 students attending 19 different schools were awarded scholarships to pursue careers in the oil and natural gas industry. “The demand for a well-trained workforce has never been greater, and the opportunities for careers in energy have never been as abundant as they are today. By establishing these scholarship opportunities, we can not only reward these exceptional students, but ensure the continued success of Ohio’s oil and gas industry through fostering the education of our future energy leaders,” said Rhonda Reda, executive director of OOGEEP and the Foundation. To be eligible for the annual scholarship, students must have an energy career goal and are required to be either an Ohio resident or planning to attend an Ohio trade school, college or university. The students are judged on career goals, essays, letters of recommendation, academic achievement, awards or special recognitions, community service, and other outside activities. In Ohio and across the country, the oil and natural gas industry has placed great emphasis on the training and education of the next generation of energy workers. With average age of an oilfield worker at 55 years old, and the rapid growth of development across the state, this focus on training and education is imperative now, and in the years to come. OOGEEP and the Foundation stated these efforts have been a primary objective. “The education of this generation is essential to meet the growing need for energy resources in Ohio and all of the United States, and it drives our need to encourage more students to pursue careers
in the domestic energy fields. Today is the time to train and prepare our workforce to help discover, develop, and supply tomorrow’s energy resources, and supporting these outstanding young minds is a great start,” stated Scholarship Committee Chairman Frank Gonzalez, of GonzOil. Ohio Oil and Gas Energy Education Foundation 2014 Energy Scholarship Recipients: Belmont College: Matthew Yoder, Carrollton, OH. Hobart Institute of Welding Technology: Lance Busch, Napoleon, OH; Brandon Rahn, Dayton, OH; Gabriele Travis, Worcester, NY. Kent State University Stark: Nathan Haas, Alliance, OH. Malone University: Debra Harrington, Dellroy, OH; Josh Harley, Burbank, OH. Marietta College: Adam Stupak, Shadyside, OH; Cory Almady, Rocky River, OH; Joseph Pernell, Pataskala, OH; Trent Paul, Newark, OH; Carley Yontz, Woodsfield, OH; Joel Anderson, Dayton, OH; Eric Rothermel, Bridgeville, PA; Blair Wilson, Sidney, OH; Myles Shade, Lordstown, OH; Dakota West, Dennison, OH; Sheldon Mullet, Dundee, OH; Evan Hensel, Strasburg, OH; Jacob Markiewicz, Marietta, OH; John Moore, Fleming, OH; Kaitlin Pottmeyer, Fleming, OH; Erica Ohler, Wingett Run, OH; Abbey Tornes, Lowell, OH; Jason Long, New Martinsville, WV. North Central State College: Josh Widrick, Mansfield, OH. Pennsylvania State University: Zachary Black, Poland, OH. Stark State College: Thomas Holowecky, Avon, OH. The Ohio State University: Sean Harlan, Steubenville, OH. The Ohio State University’s Agricultural Technical Institute: Hunter Smith, Norwich, OH. The University of Akron: Madeline Lee, North Canton, OH; Stephen Callow, Girard, OH. University of Cincinnati: James Pike, Galena, OH. University of Mount Union: Emily Zbasnik, Minerva, OH; Ashley Haas, Alliance, OH. University of Pittsburgh: Jeffrey Schallick, Columbiana, OH. Virginia Tech: Connor O’Brien, Alliance, OH. West Virginia University: Derek Craig, Fairfield, OH; Alec Rufener, Mogadore, OH; Grant Stokes, Wooster, OH. Wheeling Jesuit University: Benjamin Standiford, Cambridge, OH. Youngstown State University: Haileh Ahmed, Canfield, OH. Zane State College: Levi Davis, Athens, OH; Jacob Altier, Glouster, OH; Joseph Zollars, Killbuck, OH.
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Gas & Oil
July 2014 Edition - Dix Communications
BILLIONS currently invested in Midstream activities
Southern Zone Edition
by three
leading
companies
Laurie Huffman Dix Communications
C
ANTON — A Midstream activity update was among the topics during a Utica II Summit held in June at Walsh University by the Stark County Regional Chamber of Commerce. A portion of the event was devoted to talks from representatives of three large Midstream companies,who provided updates on their company’s current assets and plans for the future. The investments outlined were astounding, and the consensus was “this is still only the beginning” with regard to gas and oil development in this area of the country. Presenters included Mark Butta, director of commercial services for EnLink Midstream, which is involved in many premium oil and gas plays in America, including the Utica. Butta said many people don’t understand the current development in Marcellus and Utica. “The well pads built today are the size of a Walmart parking lot. Utica is the Ohio River Valley’s number one asset,” he said. Butta explained his company has invested $80 million to date in Marcellus and Utica shale. Assets include 7,300 miles of gathering pipe, 12 processing plants, with another in construction, six fractionation plants, three underground storage facilities, 200-miles of oil pipe, rail and barge terminals, a trucking fleet, and 8 brine disposal wells. EnLink has plans to grow outof-region markets, establish a rolling pipeline via truck fleet to capture first barrels, and continue to develop a long-term strategy for pipeline and storage. Access Midstream’s Adam Beck, project manager, said the company owns and operates assets in nine states, totaling $8.3 billion. The company has a field office in North Canton, with 95 employees, and is investing $1.8 billion in the Utica through 2015. A total of 357 miles of pipe is already installed in Utica, 377 wells are connected, and the company is involved in two joint
ventures: Cardinal Gas Services and Utica East Ohio Midstream. Assets include Harrison Hub Processing, in Harrison County, and 2014 projects include an additional 148 miles of pipe, equaling a $400 million investment, plus an additional 19 compression units, equaling $125 million. Brent Breon, of Caiman Energy II’s Blue Racer Midstream, created in a partnership with Dominion, said the company estimates $30 billion in Midstream capital is required to develop the Utica shale, and the Northeast is expected to become a net supply zone over time. “Northeast production is a game changer. Production is meeting and exceeding demand. The wet Marcellus and Utica show strong returns and will drive Northeast production growth,” said Breon. Blue Racer Midstream is planning to construct a cryogenic processing plant, a processing complex, and begin construction of gas gathering pipelines. At this time, more than 900 construction workers are already laying pipeline in Ohio and West Virginia for Blue Racer Midstream, and more than 250 construction workers are building processing plants for the company in the same states. Blue Racer’s current assets include a Natrium I Fractionation Plant, in Monroe County; plus two processing facilities under construction, Berne I and II Cryogenic Processing, in Monroe County, and Natrium II Fractionation Plant, which is being built in Monroe County. The company is also currently in negotiations to support the following expansions: Berne III Cryogenic Processing; Lewis I, II, and III Cryogenic Processing; and Petersburg I and II Cryogenic Processing. Also, in anticipation of gathering pipe completion to bring condensate to Natrium, a marketing hub will also be created with storage, class I rail, and permitted barge capability.
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MIDSTREAM CONFERENCE
POINTS UP BUSINESS
POTENTIAL Thomas Doohan Dix Communications
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ORTH CANTON — Business potential — that was the message painted for gas and oil business men and women who attended the Midstream Ohio 2014 conference on June 11 at Walsh University. According to industry leaders, the gas and oil industry in Ohio is booming and along with high production of natural gas is an influx of construction business associated with laying down gas and oil infrastructure. Caimen Energy vice president of business development Brent Breon was one of the speakers at the conference and he said his company, a partnership between Blue Racer midstream and Dominion Gas, deals in this area of business which he said is called midstream. “It’s taking gas from the well head facility,” he said. “To a place natural gas can be sold.” Currently, Breon said Caimen Energy has 1,000 workers in Ohio and West Virginia building the infrastructure required to bring these products from well to market. From construction of pipelines, hotels and land acquisition, he said there is great potential for midstream companies like his, but for businesses doing the infrastructure construction. While there are plenty of job opportunities found within the midstream industry currently, he said the number is only expected to grow. Breon said this is particularly evident when you look at the 1000 workers Caimen Energy has working on some of its infrastructure at this moment. “(They) were really not building anything for us last year,” he said, explaining they are employing people in large quantities (in quickly.) The Midstream Ohio 2014 conference was put on by the Canton Regional Chamber of Commerce and Shale Directories as part of the Utica Capital Series. The chamber’s event and marketing manager Whitney Prather described Breon’s talk and those of his fellow speakers as “a series of updates.” With these updates, she said it was hoped an environment fostering relationships between business owners, major and minor, could be created and Ohio’s midstream industry potential could be reached.
“We want people to start talking and making connections,” Prather said. “And things to start happening.” While there is plenty of potential for businesses in the industry, she said it is a difficult one to get into. As a result the conference hosted a business panel aimed at educating those in attendance on how to be successful at winning bids. Filled with various experts in the field, the panel described how it can be difficult to break into this potential. “I don’t think anybody could come in and win it by luck alone,” panelist Joy Ruff of Dawood Engineering said. She advised them to stick to their niche and said “don’t over promise on what you can do.” Panelist Mike Garofalo of Beaver Excavating agreed and said it is important to have a plan and to keep it simple. “We put together a team, dedicated time and effort to this market. We built an early list of potential customers,”he said of when his company broke into the industry. “If you don’t pick out your prime customers, you’ll probably just get overwhelmed and get lost in the shuffle.” Joe Greco of Black Bear Energy Services said he came to the event because speakers Bent Breaon of Caiman Energy, Adam Beck of Access Midstream, Mark Butta of EnLink Midstream are some of big players in the midstream industry. “It gives me a feel for the companies’ needs.” Over a million homes... one address CutlerHomes.com
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Gas ANd Oil
Industry Professionals
Advise on
CONTRACT WORK
Amadeus Smith Dix Communications
T
he Canton Regional Chamber of Commerce’s Midstream Ohio 2014 event proved there are plenty of opportunities to get in on Ohio’s gas and oil boom. Adam Beck, a project manager at Access Midstream, said the company wants to connect with local vendors. “It’s been our goal from early on to try to gain as many local businesses as possible,” Beck said. Beck said the company will always take the time to hear what services local companies can provide, trying to maintain a balance between sticking with companies with which it currently works and starting contracts with outside companies. It’s all about staying competitive, he said. Dan Lorenz, founder and CEO of Joe Knows Energy, which is based in Columbus, said much of the competition has to do with getting the product to market quickly and safely. Companies are typically looking to get their product to market within three days, he said. A company seeking a contract also must know its strengths and limitations, said Joy Ruff, director of planning and community relations at Dawood Engineering, a company out of Harrisburg, Pennsylvania. Ruff said that while a company can’t sell a service it can’t provide, that company should find its niche and seek out companies looking for that service. “If you’re providing professional services or direct services, you need to understand what’s going to motivate the client,” Ruff said. The event itself provided representatives from vendors in Ohio, Pennsylvania and other states the opportunity to network with the leading gas and oil companies working in Ohio. Currently, there is a big push for midstream development. Midstream is the processing, transportation and storage of gas and oil. “You’ve got probably $4 million to $6 million to $7 million in a hole in the ground,” said Mark Butta of EnLink Midstream. “So once that well is drilled, we want to try to get that well into produc-
tion as rapidly as possible. And once that well is in production, you want to make sure it’s producing consistently.” Enlink Midstream is planning to build a 46-mile condensate gathering system. Butta said the company doesn’t have its own pipeline construction crew, and the gathering system construction will be contracted out. A report from the Ohio Oil and Gas Association shows that oil production had more than doubled from 2012 to 2013. Production grew from 4.9 million barrels to 9.7 million 42-gallon barrels in that time. The report also shows that Stark County has the third most wells drilled in the state with 39. Carroll County has the most with 113. Cristiane Schmenk of Bricker & Eckler, a law firm based in Columbus, said these figures and figures from other national reports show production will continue to increase in the coming years, which will create more jobs. Schmenk served as director of the Ohio Development Services Agency under Gov. John Kasich. “A lot of businesses are seeing that this is real, and they are opening new shops, they’re expanding what they have, and they’re adding many more employees,” Schmenk said.
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SHALEDIRECTORIES.COM DISCUSSES TRANSPORT
METHODS IN OPERATION WHILE MIDSTREAM IS CONSTRUCTED
Laurie Huffman Dix Communications
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u
ANTON —“Rolling pipeline” is a new trend to keep products moving for shortterm growth while gas and oil development companies are waiting for midstream infrastructure to be put in place. A talk by Joe Barone, of Shaledirectories.com, presented during the Utica II summit held in June at Stark County’s Walsh University, indicated companies have begun transporting products by rail, barge, and also by truck to existing assets in the Gulf Coast and to market. “Why are more companies not trucking the products?” Barone mused. “Because the industry has been in favor all along of not putting more trucks on the road, for safety reasons. But, while there are plans in place for long-term, rolling pipelines are being used in the short-term.” Barone also discussed what midstream means, and where the industry is headed from here. He indicated since natural gas prices are so cheap in the U.S. now, DOW Chemical Company told its out of the U.S. clients they had to start being competitive, or they would build all their future plants in North America. Other changes due to the emerging industry include the reactivation of Black Run Rail Terminal, in Frazeysburg, which is the first rail line to offer transport of light oil condensate Shale products. Black Run is a short freight railroad that connects with other rail companies in Columbus, Wheeling and Lake Erie. The Above: Joe Barone spoke at the Utica II Summit held at Walsh University in June. terminal also offers storage facilities and frac waste disposal and it has access on both sides of the Ohio River, in Ohio and West Virginia with a barge dock and brine disposal injection wells near RX SERIES 66+ HP 330-343-5708 the river edge. TIER 4 Engine “The Ohio River Valley is adding to its assets, with a barge Power Shuttle terminal, rail terminal, product storage facilities, and 2,500 miles Clutch of unused right-of-way,” Barone said. “It is well positioned in Utica and Western Marcellus. It has established rolling pipeline via truck fleet and new pipe is being laid. There are 12 natural gas processing plants and one in construction, four fracination plants, 7,300 miles of gas gathering and transmission lines.” Shaledirectories.com was launched in February 2010 and is currently recognized as the #1 online directory that connects 5219 Deis Hill Dover 44622 member businesses with the oil and gas industry.
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API launches shale workforce website Marc Kovac Dix Capital Bureau
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OLUMBUS — An industry group has launched a new website that includes information on training programs and job openings in eastern Ohio’s emerging shale oilfields. The American Petroleum Institute’s www.oilgasworkforce.com includes links to degree and certificate programs at Ohio colleges and energy organizations, plus listings of companies that are hiring. “The rapid expansion of energy production in Ohio and across the country has created hundreds of thousands of jobs, which pay wages significantly higher than the national average,” Chris Zeigler, executive director of API’s Ohio offices, said in a released statement. “According to the latest figures from the Ohio Department of Jobs and Family Services, oil and gas industry jobs in Ohio pay over 60 percent more than all other industry jobs. Our goal was to create a resource that will expand the reach of our industry to help us keep pace with our industry’s evergrowing need for talent driven by the North American energy renaissance.” “The website is another tool building on API’s worldwide leadership in standards, training and certification to strengthen the next generation of oil and natural gas development and the industry workforce,” said John Modine, API vice president of Global Industry Services in a conference call with reporters. “Our goal is to create a resource to help meet our nation’s ever-growing need for a workforce that can help us realize our energy potential
for the future.” A recent report by IHS predicts an additional 1.3 million new career opportunities in the oil and natural gas industry by 2030, and a 2013 Energy Information Administration study estimates that job growth has been 40-times higher in the oil and natural gas industry compared to the economy as a whole. “The 21st century energy revolution has made the United States the largest producer of oil and natural gas in the world, and we are on track to become the largest producer of crude within a few years,” Modine said. “The rapid expansion of energy production in our country has created hundreds of thousands of job opportunities at a level of pay significantly higher than the national average.” Modine said the new website offers both English and Spanish versions and builds on existing recruiting initiatives by API and companies to reach veterans’ groups, labor unions, African American and Hispanic communities, and colleges and universities. While international in scope, the new website includes specific information about the Ohio Oil and Gas Energy and Education Program; other education programs at a dozen Ohio schools, including Youngstown State University, Zane State College and Stark State College; and Ohio-specific job openings. Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.
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ASSET PROTECTION: BUILDING THE MOAT AROUND YOUR OIL AND GAS CASTLE!
Frank McClure Attorney
O
ver my years of counselling clients, I have found that the topic of asset protection is not one that many people know much about. Most are truly surprised when I tell them that asset protection should always be integrated into their estate planning needs. “Why have I not heard about this in the past?” they ask. The number one answer is that their advisors did not take the time to explain asset protection enough to find out if it was an important goal of the client. That being said, let’s take a little time and delve into Asset Protection. Technically, Asset Protection planning is the process of organizing your assets and affairs In Advance to guard against risks to which the assets would otherwise be subject. In Advance means exactly what it says. Not after the assets are attacked, not when the assets will be attacked, but In Advance of any threat. Another way of defining Asset Protection is to state what it is not. Asset protection does not operate under the concept of hiding assets, but it works in general to protect the assets from being attacked and taken. A hidden asset may be found, but a protected asset is more secure and will not be taken. This becomes even more relevant when one realizes that the planning involves transferring assets from a less protected form of ownership to a more protected form of ownership. Therefore, establishing a protection plan after the assets have been attacked just won’t work.
Another way to define Asset Protection is that it is but one component of an integrated Estate Plan. The other two components are Estate Planning and Financial Planning. Asset Protection Planning may be viewed as part of the lifetime side of Estate Planning. One of the most feared forms of attack on one’s assets is that of a lawsuit. People believe that everyone around them is “lawsuit happy” and is always looking to find some reason to sue them and take their assets. You read in the news continually or see on TV that someone has sued someone else over what appears, in many instances, to be a frivolous matter. In fact in 2009, there were approximately 300 million Americans and 103 million lawsuits filed. There are concerns that there are so many malpractice suits filed against doctors that physician malpractice insurance has reached such high levels that the doctors are no longer able to practice. Yes, there do seem to be more and more suits filed for the right and wrong reasons. It is not only the wealthy who are affected. It affects anyone who has property they wish to protect. The only difference between the best asset protection for one individual as compared to another is not necessarily how much money they have, but how much they want to protect it and to what extent they want to do so. This is what you, as the client, must decide with the help of an attorney. When looking to what level a person wishes to use to protect their assets, it is important to always use the lowest possible level
Dix Communications - Gas & Oil
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ASSET PROTECTION: BUILDING THE MOAT AROUND YOUR OIL AND GAS CASTLE of protection capable of protecting your assets. The idea is very easy to visualize by thinking about your home. Your assets in your home are much more protected than if they were outside with no walls and roof to protect them. We could build the house out of stone instead of wood and this would increase our level of protection. What if we built a high wooden fence around the house, this would definitely increase our protection. What if the fence was made of stone? What if we even went a step further and built a moat around the stone walls? I think you get the point. You don’t need what you don’t need. As I have stressed before in these articles, it is important to find an advisor who will spend the time with you to determine what you want and need and to educate you to make informed decisions about your future and the use of asset protection planning. Remember it is you who will have to decide what planning you need to protect your family, your assets, and your future from the predators of this world. The attorney will draft the documents for you after you make the decisions. If you wish to find out more about protecting your assets, including your oil and gas interests please go to our website at www.fmcclurelaw.com.
THE 7 THREATS TO YOUR FAMILY SECURITY Join us for a FREE, educational workshop to learn the importance of having an estate plan. Frank McClure & Associates 1009 Steubenville Ave. Cambridge, Ohio 43725
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(740) 432-7844 (740) 432-7844
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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES
1. Carroll County 413 2. Harrison County 241 3. Monroe County 129 4. Belmont County 124 5. Noble County 108 6. Guernsey County 107 7. Columbiana County 103 8. Jefferson County 42 9. Mahoning County 30 10. Tuscarawas County 17 11. Portage County 15 Trumbull County 15 12. Stark County 13 13. Washington County 11 14. Coshocton County 5 15. Holmes County 3 Morgan County 3 Muskingum County 3 16. Knox County 2 17. Ashland County 1 Astabula County 1 Geauga County 1 Medina County 1 Wayne County 1 WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGED SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 06/25/14
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Employment outlook for women, minorities strong Sophie Kruse Dix Communications
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ANTON — As the gas and oil industry grows, the employment outlook for minority groups and women is projected to be higher than ever, and there are more opportunities for the groups. These were the main topics at the “Energize Ohio: A Community Conversation about Energy, Opportunities and Workforce Readiness” summit in Canton on June 10. The summit focused on employment outlook in the gas and oil industry for minorities and women and was sponsored by American Association of Blacks in Energy, Hispanics in Energy, U.S. Department of Energy Minories in Energy Intiative and the American Petroleum Institute. “Women are gaining, but not fast enough,” said J. Michael Treviño, advisor to American Petroleum Institute. Treviño presented the IHS study “Minority and Female Employment in the Oil & Gas and Petrochemical Industries.” Currently, women in the industry are primarily found in jobs like office and administration support, sales, service and management, but the bulk of jobs that will soon be available are more blue collar replacements for those in the industry retiring. According to a summary of the IHS study, “there is significant potential for female blue collar employment if interest and training were direct toward women to increase female participation in those areas.” The main findings of the study were that over 955,000 job opportunities would come by 2020 and nearly 1.3 million by 2030. 32% of the total jobs, 408,000, are projected for African-American and Hispanic workers through 2030 and female employment
is projected to account 185,000 of the total job opportunities through 2030. African-American and Hispanic workers are also projected to make up nearly 20% of new hires for business, financial and management jobs. The IHS report also projects that there will be a wide variety of jobs available that require a broad spectrum of education, from a high school diploma, post-secondary training to a doctorate degree. However, for these projections to be accurate, there must be many changes within the industry. Science, technology, engineering and mathematics education must greatly improve at the primary and secondary school levels for women and minorities. There must also be higher graduation rates for these two groups. “It’s extremely difficult starting as a female in our industry,” said Rhonda Reda, executive director of Ohio Oil and Gas Energy Education Program, which works extensively to provide resources for Ohio teachers, including how to make the material they teach relevant to the real world, so that students could see the link between what they’re learning and what they could be doing. Pastor M. LaMont Miles of Mt. Olive Baptist Church in Canton stressed the importance of getting the message to youth that these opportunities are available. “They don’t know this is available to them,” said Miles. “When opportunity knocks, they have to be ready to open the door.” Miles, who works with many children in the Canton area, hopes that the opportunities can be conveyed more to them so they realize the potential.
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Energy Coalition goes to quarterly meetings Judie Perkowski Dix Communications
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AMBRIDGE — On the cusp of a three-year journey to educate the public about the impending gas and oil boom in eastern Ohio that took most by surprise, Jo Sexton, president of the Cambridge Area Chamber of Commerce, said, the first Guernsey Energy Coalition meeting held in June 2011 was the catalyst for a venue that provided an array of gas and oil industryrelated speakers who shared their knowledge and insight of the transformation that was about to occur in southeastern Ohio. “We are now at the point where the meetings will held quarterly. The next meeting of the Energy Coalition will be Sept. 4,” she said. Sexton also commented on the “Friends and Family Fest — Shale-abration” last month. “We are pleased with the outcome, but next year we will not have any rain!” The first speaker at the podium at the June 5 meeting was Bill Bussey, superintendent of Mid-East Career and Technology Centers, who said workforce development through partnerships with business, industry and associated schools is crucial for students. “Students need hands-on experience outside the classroom ... To be able to learn at an actual workplace, in addition to their academic studies. The pre-apprenticeship program gives students an opportunity to complete various welding certifications, which can potentially lead them to becoming a second-year journeyman at the end of their senior year in high school,” he said. Shannon Kenily, coordinator of business partnerships and placement at MECTC, said five students selected for the MECTC Welding Technology Program, experienced hands-on training in the lab at the school’s Zanesville Campus, and also at the lab built especially for the program at Pioneer Pipe, Inc., in Marietta. Partnerships between business and schools are beneficial to students and the industry.”
“Two of the five graduating students are here today, Kameron Rayner and Zachery Miller, both just graduated from Caldwell High School,” said Kenily. “And both are on a path to success.” Matthew Hilverding, chief operating officer and chief financial officer for the Pioneer Group, said partnerships with three educational facilities was initiated because of a need for welders to work in the gas and oil industry. “Our pool of qualified welders was pretty much depleted in a very short time,” he said. “We talked to several schools about this program. Mid-East Career and Tech Center signed on last year. Our plan was that there would be no more than six students for each instructor. In addition to their academic studies, students spent three hours every day in a specially built lab where they studied and practiced welding procedures they would have to know when applying for a job. “The results were amazing. At the end of the year the students became second-year apprentices. They learned and met all the requirements for seven welding tests, in addition to earning their high school diploma, completing 1,000 hours of training and passing a work ethic appraisal.” Hilversing said his company “is a small part of the program, the schools pick the students and set up the program. We are happy to say that more than 30 students have successfully completed the program and are on their way to a great career. “It is a win, win, win situation for the students, schools and the companies to produce highly qualified potential employees.” Sexton introduced Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Program, who was also the first person connected to the gas and oil industry who spoke at the fledgling Coalition meeting in 2011. OOGEEP is a non-profit statewide education and public outreach program funded the by gas and oil industry to educate the
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Energy Coalition goes to quarterly meetings public about the physiology, geology, technology, education and opportunities in the industry. Reda took the opportunity to compare statistics from the OOGEEP 2011 Economic Impact Study to documented statistics for the first quarter of 2014. “Which many people said were totally unrealistic,” she said. In 2011, Ohio had 64,000 conventional wells in formations other than the Utica or Marcellus that produced 4.9 million barrels of crude oil and 73 billion cubic feet of natural gas. In the fourth quarter of 2013 (October through Dec. 31), 352 unconventional shale wells produced 1.4 million barrels of crude oil and 42.12 billion cubic fee of natural gas. The study also projected investment in Ohio to ramp up to $14 billion by 2015. Actual investment since 2011, as of March 31, 2014 is $19 billion. “There are many wells drilled, stimulated with pipelines available, that are now waiting for processing facilities. We have to remember we are still in the exploration and development stage with upstream and midstream operations. “In 2012, jobs in the gas and oil industry were estimated to be 22,297. Estimates for 2014 — 178,000. Actual figures from the Ohio Department of Jobs and Family Services for December of 2013: 169,000 jobs in the gas and oil industry.
u Left: Jo Sexton, r, president of the Cambridge Area Chamber
of Commerce, welcomed guests and guest speakers to the Guernsey Energy Coalition meeting June 5 at the Southgate Hotel. From l to r, Matthew Hilverding, chief operating officer and chief financial officer for The Pioneer Group; Bill Bussey, superintendent of Mid-East Career and Technology Centers; Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Program; Dave Irvin, MECTC welding instructor; Kameron Rayner, graduate of the pre-apprenticeship program at MECTC and Caldwell High School; Shannon Kenily, coordinator of business partnerships and placement at MECTC; Zachery Miller, also a graduate of the preapprenticeship program at MECTC and Caldwell High School; and Jo Sexton.
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Study indicates big savings for Ohio schools
Across the U.S., unconventional oil and natural gas production saved U.S. schools an average of 9.3 percent on electricity and 21.3 percent on natural gas, for a total of $1.2 billion, the approximate cost to employ 14,246 full-time teachers, according to the report. America’s state and local governments saved an additional 9.5 percent on electricity and 21.6 percent on natural gas, for a total of $720 million, or the cost to employ about 10,995 government workers. API-Ohio is a division of API, which represents all segments of America’s oil and natural gas industry. Its more than 600 members produce, process and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy.
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new study shows America’s shale energy revolution is saving millions of dollars for Ohio school districts and other government offices, said American Petroleum Institute Ohio Executive Director Chris Zeigler. “The oil and natural gas revolution isn’t just supporting manufacturers, it’s helping to keep costs down for Ohio schools and government offices,” said Zeigler. “School districts in our state saved $60 million on energy last year, enough to employ 700 teachers. During the same period, state and local taxpayers in Ohio saved another $10 million on other government spending. The economic benefits resulting from new advances in U.S. energy production are making a huge difference.” The study by IHS Global Insight estimated energy savings during the 2012-2013 fiscal year from unconventional oil and natural gas production ─ resources generally unlocked from shale deposits and other tight formations using hydraulic fracturing and horizontal drilling. In total, Ohio public elementary and secondary school districts saved approximately 8.4 percent on electricity and 28.7 percent on natural gas, for a total of $60 million. State and local governments saved an estimated $10.2 million, or the cost to employ about 158 government workers. A one-page summary of the study findings is available from API. “America is now the world’s top producer of natural gas, and this has helped push down the cost of keeping our students warm and local governments running,” said Zeigler. “For Ohio taxpayers, these energy savings can mean more efficient spending on education and local services.”
159 WEST HIGH AVENUE NEW PHILADELPHIA, OH 44663
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Selling your mineral rights? Ethan Vessels Attorney
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here is nothing wrong with selling your mineral rights. In fact, I encourage it: (1) for the right price and (2) under the right circumstances. For heaven’s sake, GET AN ATTORNEY TO HELP. Too many landowners do not understand the difference between leasing and selling. Remember that leasing means you own, and will keep, your minerals. You are granting the indefinite right to produce to the lessee, and you get royalties in return. You hope those royalties will be enormous. If the lease ends, you can lease the land again to a different producer. If you sell your minerals, they are gone forever. Large investors are now buying landowner’s mineral rights, with the belief that the future royalties will be huge. So, if you sell, your right to royalties is gone—you are selling your royalties. You have only one question: is the amount offered enough for me to risk the possible greater returns from the royalties in the future? There are many unknowns. When will my property be drilled: next year, five years from now, or ever? If they do drill, how high can my royalties be? Can the well sustain production for a long time? Will the price of gas and oil hold? No one really knows the answers to these questions. Even the producers, as sophisticated as they are, do not know. The purchaser of your mineral rights takes all the risk and must be sure that your property will generate more than purchase price in royalties over the years. In fact, it must generate well more than that to account for the time-value of money and the risk involved. Even half that amount may be worth shifting the risk to the investor. Do not assume that those investors know more than you do. A lot of these “smart guys” also bought mortgage backed securities in the early 2000’s. But…get the best price! Too many landowners are signing without shopping. People who would otherwise clip coupons to save 25 cents on eggs will sign a contract for hundreds of thousands of dollars, without really knowing the value of their minerals. Worse yet, landowners who could otherwise lease (i.e., their land is not held by an existing lease) have been selling their mineral rights without first getting a lease. This is throwing money away. After you sell, you cannot lease. The mineral owner will. The mineral owner will get the lease bonus and not you. Get help if you want to sell your minerals. Your advocate can, and should, help find the highest price available. He or she can also help untangle legal snares that may arise when you do attempt
to sell, such as adverse claims to the mineral rights. Your attorney may even discover that you can first lease your land, and then sell your minerals later. Disclaimer. As with all articles on legal issues, this article is intended for educational and informational purposes. The reader should not rely on this article as a substitute for actual legal advice regarding his or her particular case. You should consult an attorney regarding the specifics of your situation. Ethan Vessels is an attorney in Marietta, Ohio with the firm of Fields, Dehmlow & Vessels, LLC. He is an NBTA Certified Civil Trial Advocate. His firm is actively representing landowners throughout East and Southeast Ohio. He is the author of Oil & Gas Leasing, What Landowners in Ohio Need to Know. Visit www.fieldsdehmlow.com for more information.
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46
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July 2014 Edition - Dix Communications
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Helping with the heavy lifting
u
Above: Nick Campbell, a rigger for Capital City Crane, checks out this 100-foot-long evaporator used in the oil and gas industry. The unit, which weighs some 180,000 pounds, was being prepared to be loaded onto a truck on June 4 from a Caldwell site. It was to be transported from there to a Lewisville gas facility. Two large cranes were set to lift the evaporator.
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Carroll County The place to Relax, Refresh, Rejuvenate!
Ashton’s
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U.S. Well Services moving to Uhrichsville
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HRICHSVILLE — About 80 jobs related to the oil and gas industry in the Utica Shale region are headed to Uhrichsville, with the potential for another 50 jobs. U.S. Well Services has signed a lease for the former Parts Mart building and property at 159 N. Wardell St. The facility, just off Trenton Avenue and U.S. Route 36, was selected after USWS looked at several sites. USWS is an oilfield services provider of well stimulation services to the upstream oil and gas industry, according to its website. The company is involved in high-pressure fracturing in oil and natural gas basins in Ohio, Pennsylvania and West Virginia. There will be about 10 office positions and 70 field jobs, said Dean Fullerton, corporate human resources director for USWS. “We’re extremely pleased to be coming to Ohio, and we’re excited about the prospects for ourselves and the local community, ” Fullerton said Wednesday. “We expect to be operating in early June. We’re moving quickly. We’ve been working on this for a couple of months.” He said USWS has been in business for just over two years, with its corporate offices in Houston. Ohio will be its third district office. The other two are in Janelew, West Virginia, and Williamsport, Pennsylvania. “We’ve had good success,” he said. “We’re very focused on cus-
tomer satisfaction.” Fullerton said that the potential for 50 more field jobs depends on getting additional contracts. He doesn’t expect many more office job openings. Uhrichsville Mayor Terry Culbertson said he’s “certainly hoping” there will be local hiring as well as an economic ripple effect involving renting residences and purchasing groceries, fuel and supplies. The property is within the city and employees will pay Uhrichsville’s 1.75 percent income tax, but there’s no estimate for how much revenue will be generated, he said. The two-year lease includes a clause for successive two-year options after the initial two years. Wick Hartung, co-owner and broker, and agent Weslee Heiser of Putman Properties in Canton, arranged the lease on behalf of clientt Potsdamer Plus, which owns the roughly 60,000-square-foot building on 18 acres. Discussions have been conducted with area officials and personnel from the Ohio Department of Transportation District 11, Ohio Development Services Agency, Ohio Mid-Eastern Governments Association and engineering firm W.E. Quicksall & Associates in New Philadelphia regarding upgrades necessary for improving access to and from the property.
OHIO WELL ACTIVITY
by the numbers
MARCELLUS SHALE
17 5 11 0 11 0 0 44
Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits
UTICA SHALE
4 4 1 Wells Permitted 153 Wells Drilling 284 Wells Drilled 0 Not Drilled 4 67 Wells Producing 0 Inactive 0 Plugged 1345 Total Horizontal Permits
Data as of 06/25/14 Source: Ohio Department of Natural Resources
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Workshops aim to educate teachers in the workings of the oil and gas industry
www.OhioGO.com
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Sophie Kruse Dix Communications
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hanks to some free, statewide educational programs, Ohio teachers are able to add some new skills to their teaching arsenal. Ohio Oil and Gas Energy Education Program (OOGEEP), an education program that promotes public awareness of the gas and oil industry, has put on these teacher workshops since the program’s inception 16 years ago. “We were really seeing a lack of really good science education as it relates to the oil and gas industry,” said Rhonda Reda, the executive director of OOGEEP. “The goal of our board of directors is to work with the education community on their science curriculum.” The curriculum has been created and is continued to be revised by a group of educators to keep it relevant with the changing education standards and also keeping up with industry demands. “We’re really looking for high quality, professional development,” said Jeanne Gogolski, a former teacher who now works to develop the curriculum with OOGEEP. “We give [teachers] ideas, background, content and great, fun and interesting activities to get this information to the students … Industry and education should be collaborating. Kids need to have accurate information about what’s going on … We think the best way to do this is to connect industry and education so they’re getting the right information about all these topics.” At the workshops, teachers have hands-on experiments, guest speakers and activities. They also get the opportunity to tour an oil field. Teachers are then able to receive a graduate credit at Ashland University for attending the workshop. At the end of the workshop, attendees receive a box of materials worth $125 to use in their classrooms, that allows them to recreate things they experienced at the workshops with their students. One of the underlying goals is to give students a real-world connection. Teachers will be able to connect what they’re required to teach in the classroom to an industry where there are numerous opportunities awaiting students when they finish school. This connection is made through education in STEM fields: science, technology, engineering and mathematics. “We’re giving them context for the learning that’s happening. That becomes memorable for students,” said Gogolski. “There are plenty of jobs available to [them], whether it’s coming out of high school with a little training all the way to getting a Ph.D. They require skills in STEM, which is an important focus in Ohio education.” Another large emphasis at the workshops is how to attract students to pursue a career in the field. “One of our concerns was that we did not have young kids pursuing careers in the oil and gas industry,” Reda said. Since the start of the workshops, more than 2,600 teachers from all 88 counties in Ohio have come through the program, and the workshops constantly being filled to maximum capacity. The programs are completely free for the teachers, and are funded through the crude gas and oil industry. A nickel is received for each barrel of oil sold, and a penny is received for each MCF sold. The next teacher workshop will be July 30 and 31 at the R.G. Drage Career Technical Center, 2800 Richville Dr. SW, Massillon.
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Six counties in Ohio reach century mark Shawn Bennett Energy in Depth - Ohio
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hio has issued 1,312 Utica Shale permits since 2011. Continued development has led to a decline in unemployment throughout the shale producing counties, with sales tax revenues continuing to increase. Oil and gas related investment has reached over $18 billion and is growing throughout the entire state. It’s clear that the Utica is transitioning from the exploration phase to the development phase. Today, there are 904 wells developed with 467 of those connected to pipelines and in production. Of the more than 1,300 permits, there are seven counties where the majority of development is taking place, with six counties now over the 100 permit mark. Chesapeake Energy remains the clear leader in terms of development with 652 permits, but as activity continues, many other companies are shifting more of their focus to the Utica. Carroll County continues to lead Ohio in Utica Shale development — with no stopping in sight. Carroll has 408 permits dedicated to the county, with 323 wells developed with 223 producing Utica wells. Chesapeake and Rex Energy also continue to have great success in the county and remain committed to keeping Carroll County the number one permitted county in the Utica. Harrison County has 234 permits allotted for the county. There have been 111 wells developed with 61 producing Utica wells in the county. There has been a lot of focus on the county since two years ago when Gulfport Energy began hitting high producing wells; since then, companies like Chesapeake, Hess, Chevron, Eclipse and American Energy Partners have begun to focus their attention on this high producing liquids-rich county. According to the fourth quarter production report, issued by the Ohio Department of Natural Resources (ODNR), Harrison County represented six of the top ten oil producing wells in the state. Noble County is one of three counties that just surpassed the 100 permit mark this month. Noble has 108 Utica permits, 59 wells developed 34 producing Utica wells in the county. The majority of the permits held in this county are by CONSOL and Antero Resources. By having high producing wells in both the wet and dry gas region of the Utica, this county will remain a strong focus for operators in the region. Belmont County, the second of the three counties surpassing the 100 permit mark this month, has 105 Utica permits in the county. Thirty-seven wells have been developed with 23 producing and tied into pipelines. Belmont is home to three of the
top ten producing natural gas producing wells in the state during the fourth quarter. Gulfport, Hess, Rice and XTO Energy are also active in the county. Guernsey County, the third county to reach the 100 permit milestone this month, has 104 Utica permits with 38 wells developed and 32 wells producing. The county is home to three of the highest producing oil wells in ODNR’s fourth quarter production report. Eclipse Resources, Gulfport, PDC, Rex Energy, American Energy Partners, EQT, Carrizo, Chesapeake, Hess are all currently active in the county. Columbiana County, one of the earliest counties to see a lot of shale development, currently stands at 103 permits. They have now developed 57 wells with 12 producing Utica Shale wells. Chesapeake, Hilcorp and Atlas Noble are all active in the county. Monroe County has yet to hit the 100 permit club, but it is only a matter of time until development in that county reaches that milestone, especially since Monroe is home to the top five highest producing wells in the Utica. Currently, the county has 88 Utica permits with 31 wells developed and 17 wells producing. Antero, XTO, EdgeMarc, Triad Hunter and HG Energy are all currently active in the county. Utica Shale development is really taking shape throughout eastern Ohio. While the counties with over 100 permits are where operators are clearly focusing their attention, there are also Washington, Jefferson and Monroe counties, which are also looking very promising moving forward. All of this activity means more Ohio jobs, increased economic opportunity and low-cost energy for families across the state. shawn@energyindepth.org
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ENERGY BILL FREEZES MANDATES FOR TWO YEARS Marc Kovac Dix Capital Bureau
ensure low-cost, low-emission electricity for families and busiOLUMBUS — Gov. John Kasich has add- nesses and that the state is investing in a future that employs a ed his signature to much-debated legislation diversity of clean energy resources. SB 310 takes us in the wrong freezing renewable energy and efficiency direction.” mandates for two years, pending a review by a new Marc Kovac is the Dix Capital Bureau Chief. Email him at study committee. mkovac@dixcom.com or on Twitter at OhioCapitalBlog. The move came behind closed doors and after numerous environmental and other groups sent letters to the governor urging him to veto the legislation. Kasich offered no formal comment Friday on his decision to sign the bill. His spokesman, Rob Nichols, said only that the governor supports the legislation. Senate Bill 310 stemmed from law changes enacted about six years ago requiring power companies to generate a certain percentage of their energy from renewable sources and to institute efficiency initiatives. Utilities are allowed to pass the costs of meeting the mandates onto their customers. Among other provisions, SB 310 freezes renewable energy and efficiency benchmarks for the next two years and creates a study committee that will have to offer recommendations for future energy-related law changes by September 2015. Absent subsequent legislative action, the renewable energy and efficiency mandates in current law would restart in 2017. Backers of the bill say existing standards are higher than those in place in other states and will lead to higher energy bills for businesses and consumers. But opponents said the bill would reverse course on green energy advancements that are needed to protect the environment We’ll give you a hint: Think Solar. and hurt manufacturers of wind turbines and solar panels and other related green industries. Call Now 1-866-349-4217 “We have an obligation to protect current and future generations from the harm and costs associated with climate change and toxic air pollution emitted by coal-fired power plants,” representatives from five Ohio environmental groups wrote in a letter to the governor urging him to veto the legislation. “Additionally, we have an obligation to ensure that Ohio’s policies are designed to Call Now! 1-866-349-4217
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H&S Side Discharge Manure Spreaders EnvironmEntal ComplianCE SErviCES, inC. ECS is a pioneering, employee-owned environmental consulting and compliance services firm. Our solutions for the shale industry include: Contact us today! Jeff Lawson 231 Springside drive, Suite 207 Akron, Oh 44333 (330) 576-6069 jlawson@ecsconsult.com www.ecsconsult.com
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Mid-year evaluation for gas and oil industry Judie Perkowski Dix Communications
S
everal gas and oil companies were asked to submit a mid-year evaluation of their company’s operation in the Utica or Marcellus Shale in eastern Ohio to the OhioGAS&OIL magazine. Where are they operating, what counties, and are they planning to stay or move on. For the companies that did not respond, information about basic activity was gleaned from the Ohio Department of Natural Resources Division of Oil and Gas Management from January 31, 2011 through June 7, 2014. From Ashland to Wayne counties and 19 others in eastern and southeastern Ohio, more than 1,300 Utica Shale permits have been issued, of which 904 wells have been drilled since 2009. Twenty-one counties in eastern Ohio have attracted the attention of 31 GAS&OIL companies. From those with the largest footprints, such as Chesapeake and Gulfport, to smaller companies like Brammer Engineering and BEUSA Energy, newcomers to Utica Shale development. Companies that have staked a claim in the Utica Shale: • Flatiron Energy Partners, LLC, Dallas, Texas Flatiron Energy Partners was very successful in its efforts on purchasing oil and gas mineral rights over the past year in eastern Ohio. The company invested capital across 130 separate transactions and acquired approximately 5,800 net mineral acres in fee ownership primarily in Harrison, Belmont, Guernsey, Noble and Monroe counties in Ohio. Flatiron is upstream because they now own mineral rights that the operators will be drilling on and under. The company has moved all operations at the St. Clairsville office back to Dallas, as they have finished their current buying program. They are still very active in all aspects of the assets they own in Ohio and West Virginia and are excited about the bright future the Utica/Point Pleasant and Marcellus Shale formations have in eastern Ohio. ~ Austin Eudaly, vice president of acquisitions for Flatiron Energy • Rex Energy, State College, Pa. Rex currently has 21,000 net acres across the Utica Shale region with 16,000 net acres in Carroll County, and continues to look for more opportunities to expand. The remainder of acreage is in Noble, Guernsey and Belmont counties.
Rex began operating in Ohio in 2012 focusing on Carroll, Guernsey, Noble and Belmont counties with operations in Guernsey County in 2013. Rex has over 300 employees working within its operation. The company said they aim to hiring locally whenever possible, in addition to hiring local contractors. Rex Energy has 11 permitted and five producing wells in Guernsey County for a total of 26 wells in various stages of development in its Utica operating area. There are 16 wells in production, one currently being developed in Quaker City, three drilled that are awaiting completion; and six wells waiting for pipeline infrastructure. Six wells are planned for the J. Hall Pad in Quaker City expected to be in operation sometime this winter. Rex also recognizes the importance of helping the community in various ways. Among many of its contributions to organizations throughout the county, Rex was proud to donate nearly $10,000 at the Carroll County Fair Livestock Auction for future farmers. For the local high school, Rex Energy purchased IPads to help advance and enrich educational opportunities for local students. Rex was also honored with the opportunity to help provide equipment and uniforms to the Carroll County Special Olympics team. ~ Patrick McKinney, president and chief operating officer for Rex Energy • Chesapeake Energy, Oklahoma City, Ok. Chesapeake has oil and gas activity in Carroll, Columbiana, Geauga, Guernsey, Harrison, Jefferson, Portage, Stark and Tuscarawas counties. Activity in Carroll County: Permitted, 59; drilling, 27; drilled, 93; producing, 202. Columbiana County: Permitted, 36; drilling, 2; drilled, 30; producing, 31. Geauga County: Permitted, 1. Guernsey County: Permitted, 3; drilled, 2; producing, 1. Harrison County: Permitted, 43; drilled, 24; drilling, 17; producing, 21. Jefferson County: Permitted, 20; drilled, 14; drilling, 1; producing, 8. Portage County: Permitted, 3; drilled, 2. Stark County: Permitted, 5; drilled, 4; producing, 1.
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Mid-year evaluation for gas and oil industry ing, 5. Jefferson County: Drilling 1; producing, 4. Of the 21 counties in eastern and southeastern Ohio with gas and oil activity, Guernsey County leads the pack with 13 gas and oil companies in some stage of operation: Chesapeake, Anadarko, Gulfport, PDC Energy, Enervest, Devon, Hess, Carizzo, EQT, RE Gas Development, Eclipse, Rex Energy and American Energy Utica.
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Tuscarawas County: Permitted, 4; drilled, 1. • Gulfport Energy Corporation, Oklahoma City, Ok. Gulfport has oil and gas well activity in Guernsey, Harrison and Monroe counties. Activity in Guernsey County: Permitted, 35; drilling, 15; drilled, 4; and producing, 12. Harrison County: Permitted, 9; drilling, 4; drilled, 2; producing, 22. Monroe County: 7 wells permitted. • CNX Gas Co., Canonsburg, Pa. CNX Gas Co. has gas and oil activity in Jefferson, Mahoning, Monroe, Noble, Portage, Trumbull and Tuscarawas. Jefferson County: Permitted, 1. Mahoning County: Permitted, 2; drilled, 1; producing, 3. Monroe County: Permitted, 11; drilled, 1. Noble County: Permitted, 5; drilling, 6; drilled, 8; producing, 10. Trumbull County, Permitted, 1. Tuscarawas County, Permitted, 1; producing, 2. • Antero Resources Corporation, Denver, Colo. Athough Antero is currently considered to be the most active operator in the Marcellus Shale, they, like everyone else, are no match for Cheaspeake’s dominance of parts of the Utica Shale. Antero has gas and oil activity in Monroe and Noble counties. Monroe County: Drilling, 7; drilled, 6; producing, 6. Noble County: Permitted, 22; drilling, 17; drilled, 12; producing, 17. *Antero also has one of the largest producing wells in eastern Ohio— called The Monster — in Monroe County. • American Energy Partners, Oklahoma Çity, OK. AEP has gas and oil activity in Guernsey and Harrison counties. Guernsey County: Permitted, 3; drilling, 5; drilled, 1. Harrison County: Permitted, 14; drilling, 7. • RE Gas Development LLC, Evans City, Pa. RE Gas Development’s gas and oil activity in Carroll, Guernsey and Noble counties. Carroll County: Permitted: 3; drilled, 9; producing, 7. Guernsey County: Permitted, 6; producing, 5. Noble County: Producing, 3. • PDC Energy, Denver, Colo. PDC Energy has gas and oil activity in Guernsey, Morgan and Washington counties. Guernsey County: Drilling 3; producing, 8. Morgan County: Drilling, 2; drilled 1. Washington County: Permitted, 1; producing, 4. • Hess Corporation, New York, NY Hess Corp. has gas and oil activity in Belmont, Guernsey, Harrison and Jefferson counties. Belmont County: Permitted, 5; drilling, 4; drilled, 4; producing, 4. Guernsey County: Producing, 3. Harrison County, Permitted, 14; drilling, 5; drilled, 9; produc-
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No export restrictions could boost Ohio’s economy Amadeus Smith Dix Communications
O
hio’s economy could see big boosts if it weren’t for those pesky oil export restrictions. According to an ICF International and EnSys Energy report, lifting the export ban could add up to 15,984 jobs by 2020. The state’s economy could increase by $2.68 billion in the same year. Chris Zeigler, executive director of API-Ohio, said Ohio has already seen economic benefits from the rapid growth in the state’s oil industry. The Ohio Department of Job and Family Services reported that core shale-related jobs grew 79 percent from 2011 to 2013. Zeigler said jobs and other economic stimuli could increase even more with the free trade of oil. “By lifting the restrictions on crude exports and allowing the market to thrive through free trade, Ohio could gain through higher production, more jobs, higher investment and greater energy security,” Zeigler said in an email. Current trade restrictions on oil in the U.S. stem from an oil embargo set against the U.S. by several Arab nations in 1973. Zeigler said there now, decades later, must be a discussion about lifting the ban and fully joining the global market in oil. “There needs to be an education with folks at the federal level,” Zeigler said. Rep. Christina Hagan, R-50th District, said lifting the ban will also help manufacturers and school districts save on energy costs. The increase in oil production in the past few years has already done so. Hagan, who serves on the Ohio House’s Agriculture and Natural Resources Committee, pointed specifically to the increased use of technology in schools. “I’d hate to see what costs were if we weren’t investing domestically,” she said. A study by IHS Global Insight showed that schools in Ohio saved $60 million on gas and electricity in fiscal year 2012-2013.
State and local governments saved more than $10 million, allowing taxpayer money to be used in other ways. Two years ago, while going door to door for her campaign, Hagan met several people who had just moved to Ohio for work in the oil industry. Considering the job growth that has come from the industry already, Hagan said, removing restrictions could be a “game changer.”
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he US will allow two companies to export unrefined oil for the first time in four decades, taking steps to break a ban on crude exports, The Wall Street Journal reported on June 24. The Commerce Department will permit the two Texas-based companies to export the ultra-light condensate, which has grown in supply on the back of the boom in fracking-based exploration and production of natural gas. “With relatively minimal processing, oil shipments could begin as early as August, according to one industry executive involved in the matter,” the Journal said. Pressure has been building for a year for the government to end the 1970s ban on exports, an energy security measure long seen crucial in a country heavily dependent on oil imports to meet domestic needs. But the surge in production from shale-based deposits in areas like North Dakota and Texas, made possible by advances in hydraulic fracturing technology, has sharply reduced the need for imports and created regional surpluses due to distribution bottlenecks. That has given rise to industry pressure to allow exports from areas like the Gulf of Mexico, even as the country imports crude through east coast ports. Some resistance has come from refiners and consumer advocates who fear that competing with export markets for the crude could drive up their prices, and eventually raise the cost of fuel to consumers. Still, despite pressure in Congress and from the industry, the ban on crude exports has not been lifted. The Commerce Department instead made a special ruling to allow the export of condensate on the grounds that it has been processed enough to qualify it for export, even if it has not been refined. The US already exports large volumes of refined oil products. The Journal said the two companies receiving permits to export condensate are Pioneer Natural Resources of Irving, Texas, and Enterprise Products Partners of Houston.
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Safety first for County Fire Protection Inc. Kristen Tomins Dix Communications
K
ENT --- For John Lubinski, president and founder of County Fire Protection Inc., safety is and always has been the top priority, especially in oil and gas refineries that his company services across Ohio. CFP offers different services to help people keep their buildings or facilities in compliance with current fire codes, such as fire alarms and extinguishers, back-flow prevention, fire pumps and special hazards prevention, like FM-200, Halon and CO2. Originally known as Summit County Fire Protection, CFP was founded in Kent in 1999 by Lubinski and has since opened locations in Toledo, Columbus and Cleveland due an increase in clients. CFP has been a recipient of the Weatherhead 100 award — an award given to fast-growing companies based on revenue-— every year since 2008. Some of CFP’s clients include BP, Marathon and Cedar Point — all of which are required to have specific fire and safety equipment on site. Lubinski said his company fulfills these requirements through the different services it provides and highly trained employees. In the oil and gas industry, he said, the focus has been on the safety and “stringent requirements” in place to enter and service these refineries. “We’re invested in safety when it comes to these refineries and making sure we know how to correctly work in these types of environments,” Lubinski said. He said by becoming a presence in refineries and facilities that work with oil or natural gas, he and CFP employees hope to further their own awareness in the oil and gas industry while also emphasizing the importance of safety and regulations in those settings. Employees at CFP undergo thorough background checks that include drug inspections and also complete site specific training, ladder safety training, confined space entry training and hazard communication training, among other safety training programs. “We hold ourselves to higher standards to be able to work [in refineries],” said Lubinski. “I can’t send just anyone in there.”
Lubinski described refineries as “potentially highly reactive areas,” which contributes to his company’s guarantee to strictly follow all state and local codes provided by the Occupational Safety and Health Administration, National Fire Protection Association and National Association of Fire Equipment Distribution. Without these codes and a duty to strictly abide by them, Lubinski said a worst-case scenario may range from gas emissions that pose potentially fatal threats to anyone working in the refinery, to dangerous fires and both major, and minor injuries to employees. Lubinski said that CFP employees also conduct unannounced quality control visits, ensuring refineries and other facilities are up to par with these codes and regulations as they’re installed. Because CFP employees may regularly be working around dangerous chemicals during their on-site service trips, such as the toxic gas hydrogen sulfide, monitors are worn at all times to detect levels of combustible gases. “Some of the chemicals and products we’re working around are colorless and odorless, which can put people in even more danger,” said Lubinski. “We want to make our service and their environment as safe as possible.” Lubinski said he also makes it a priority to be available to his customers, no matter what the circumstances may be, by utilizing a 24-hour, 365 days per year phone answering service to accommodate after-hour needs, or emergencies. In addition to Ohio, Lubinski said the company also services western Pennsylvania, West Virginia and some areas of Michigan.
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David Wigham Attorney
W
Southern Zone Edition
OHIO COURT OF APPEALS ISSUES ANOTHER IMPORTANT OIL AND GAS RULING
OOSTER — Ohio’s Seventh District Court of Appeals hears appeals from most of the counties that are experiencing rapid Utica development, including Mahoning, Columbiana, Jefferson, Carroll, Belmont, Harrison, Monroe and Noble Counties. On April 3, 2014, the Seventh District issued its much anticipated ruling in Walker v. Noon, 2014-Ohio-1499. In the appeal, the Court was asked to resolve conflicting lower court rulings regarding the interpretation of Ohio’s Dormant Mineral Act, found at R.C. § 5301.56 (“DMA”). On June 2, 2014, Ohio’s Seventh District Court of Appeals issued another significant ruling based on Ohio’s Dormant Mineral Act found at R.C. §5301.56 (“DMA”), in a case known as Schwartz v. Householder, 2014-Ohio-2359. This ruling expands upon and adds to the Seventh District’s benchmark ruling in Walker v. Noon, 2014-Ohio-1499 issued on April 3, 2014. The Schwartz decision represents another victory for surface owners attempting to recover ownership of severed minerals that were deemed abandoned prior to the amendment of the DMA in 2006. To recap the DMA, the statute was originally enacted in 1989 and then amended in 2006. Its purpose is to eliminate “dormant” mineral interests. The 1989 DMA provides where the severed mineral interest owner has not utilized its minerals as specified in the DMA for a period of 20 years, the mineral interests will be deemed abandoned and returned to the current surface owner. Importantly, the 1989 DMA is self-executing, meaning that the severed minerals in question will be automatically abandoned if no activity related to the minerals has occurred. The only subsequent action that surface owners need to take is to file a lawsuit to obtain a court order declaring the minerals to be abandoned under the DMA and returned to the surface owner. Under the 2006 DMA, surface owners must first file and serve a notice of abandonment on the severed mineral owner. Accordingly, the 1989 DMA has become central to the disposition of literally hundreds of oil and gas lawsuits between surface owners and severed mineral owners related to the Utica Shale development. In the Seventh District’s benchmark ruling of Walker v. Noon, the Court held that the 1989 DMA was indeed self-executing, meaning that where nothing had been done with the minerals in the previous 20 years, the minerals automatically return to the surface owner. The Walker Court also held that the 2006 DMA could not be applied retroactively and did not affect abandonments which had already occurred prior to June 30, 2006, the effective date of the amendment. Schwartz v. Householder expands upon the ruling in the Walk-
er decision in several ways that are important to surface owners. First, the Schwartz Court took the opportunity to clarify an earlier holding in Dodd v. Croskey 2013-Ohio-4257, and ruled that although Dodd did not address the 1989 DMA, there is no argument under Dodd that the 1989 DMA does not apply. Secondly Schwartz held that there is no conflict between the 1989 DMA and Ohio’s Marketable Title Act. In fact, the DMA is an amendment to the Marketable Title Act so mineral owners cannot argue that the Marketable Title Act applies instead of the DMA. Third, and most importantly, Schwartz held that a surface owner does not need to first implement the notice provisions of the 2006 DMA before proceeding with a legal action under the 1989 DMA. Finally, the Court took the opportunity to repudiate a lower court ruling known as Dahlgren v. Brown Farm Properties, Carroll County Common Pleas Court, Case No. 2013 CVH 274455, and also briefly addressed the DMA’s Constitutionality. The Schwartz ruling is yet another important ruling for surface owners who own property in the Utica and are attempting to recover ownership of minerals that were abandoned and therefore vested to them under the 1989 DMA. It further eliminates many defenses asserted by alleged severed mineral interest owners in these cases. Surface owners are reminded of the importance of bringing a legal action based on the DMA to clear off old mineral reservations so that the minerals beneath their property are marketable and so that the minerals can be leased and royalties received. David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with more than 20 years of experience in the industry. He is also the current chairman of the Natural Resources Committee of the Ohio State Bar Association.
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Williams Toyota Lift supports oil and gas industry businesses Tesa Strasser Dix Communications
E
Andrew has followed in his father’s footsteps joining the business in 1998 and is the now the general manager. A Sandy Valley High School graduate, he also has a degree from Kent State University in business management and accounting. He and his wife Dianne have two daughters, Estella, age 7 and Annika, age 5. The Williams family considers the East Sparta community their extended family and enjoy giving back to them often. Any community endeavour normally includes a contribution in some form from this business. About 30 people are employees of Williams Toyota Lift as salesmen, in the office or in the service or parts department. The building housing this business has been expanded several time. About 20 years ago an addition was built on to the original gas station facility to house a service bay and six months ago a 7,000 square foot addition was completed to hold the growing inventory. u
AST SPARTA — Williams Toyota Lift has been a valuable support to the frontline businesses in the oil and gas industry. This business started in a Sohio gas station building. Brothers Harold and Paul L. Williams opened the filling station in 1946 by as a work endeavor after serving in the military in WWII. Having worked with hydraulics in the US Air Force, Harold’s son, Paul R. Williams found a niche in the East Sparta family business that eventually evolved into a very successful business of its own. Williams Toyota Lift has been Northeastern Ohio’s leading supplier of new and used forklifts, lift trucks, pallet trucks, fork lift maintenance, forklift rentals, forklift tires and various other material handling solutions for over 40 years. Their goal is to offer full-service capabilities and provide efficient, effective solutions to maximize the customer’s bottom-line, while enhancing the productivity and safety of employees. Williams serves customers in 12 Ohio counties and has earned a Better Business Bureau Business Rating of A+. Paul R. Williams, more commonly known as “Red,” and his wife, Myra, have four children, Paula, of Wisconsin, Russell, of Boston, Wendy of Canton and Andrew of East Sparta.
Above: ”Red” and Andrew Williams show off one of their fork lifts at Williams Toyota Lift in East Sparta. The business recently added on a 7,000 foot warehouse to facility that employs 30 people.
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Southern Zone Edition
July 2014 Edition - Dix Communications
OGEEP plans training program T
he Ohio Oil and Gas Energy Education Program is sponsoring a two-day safety training program at Zane State College, Cambridge Campus, Thursday, July 17 and Friday, July 18. Thursday, July 17 – half day sessions including driver safety, air monitoring, H2S refresher and hazard recognition. Friday, July 18 – Rig Pass Thursday and Friday morning workshop begins with registration at 7:30 a.m., sessions begins at 8 a.m. Choose either morning ( 8 a.m. to noon) or afternoon (1 to
Upcoming Events
5 p.m.) sessions on Thursday; one all-day session Friday is from 8 a.m. to 5 p.m. Cost is $75 for each Thursday sessions; $150 for Friday’s all day session. All registrations must be received in advance of any industry safety training workshop. No online registration. Zane State College is at 9900 Brick Church Road in Cambridge. Contact OOGEEP @ (740) 587-0410 for more information, or check your mail for a flyer.
September
6-7
OOGEEP September Firefighter Workshop, Wayne County Fire & Rescue Training Facility, 2311 South Milbourne Rd., Apple Creek 44606. Go to http://oogeep.org/event/oogeep-responding-to-oilfield-emergencies-training-workshop-3/ for registration information. 33rd Annual Probate Practice Seminar, Squaw Creek Country Club, Vienna, Ohio. Featured speaker is Jeff Kern: Shale Valuation Estates. For more information go to trumbullprobate.org
July
Ohio Gas Association 2014 Annual Meeting, Columbus Hilton at Easton. For more information go to www.ohiogasassoc.org.
October
July
Ohio Gas Association 2014 Market Conditions Conference, Columbus Hilton at Easton. For more information go to www.ohiogasassoc.org.
October
July
2014 Pig Roast, Equipment Show and Conference, Seven Springs Mountain Resort, Champion, Pa. For more information go to www.pioga.org.
October
July
OOGEEP Science Teacher Workshop, R.G. Drage Career Technical Center, 2800 Richville Drive SE, Massillon. Go to http://oogeep.org/event/oogeepscience-teacher-workshop-massillon-ohio/
November
August
OOGA Summer Meeting and Patriot Award Ceremony, Zanesville Country Club.
December
2014 Oilfield Expo, International Exhibition (IX) Center, Cleveland.
August
Tuscarawas Valley Desk and Derrick Club, 5:30 p.m. at Comfort Inn, Dover. For more information email mmonastra@atlasenergy.com or call 330-896-8510, ext. 242.
March
2015 OOGA Winter Meeting, Hilton Columbus at Easton.
14-15 15-16 22-23 30-31 4-5 13
4
11-12 14
1-2
2-4
11-13
OOGEEP October Firefighter Workshop, Wayne County Fire & Rescue Training Facility, 2311 South Milbourne Rd., Apple Creek 44606. Go to http://oogeep.org/event/ oogeep-responding-to-oilfield-emergencies-trainingworkshop-4/ for registration information. Utica Summit II, Kent State University at Stark, North Canton, 8 a.m.-2 p.m.
OOGEEP November Firefighter Workshop, Wayne County Fire & Rescue Training Facility, 2311 South Milbourne Rd., Apple Creek 44606. Go to http://oogeep.org/event/oogeep-responding-to-oilfield-emergencies-training-workshop-5/ for registration information.
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Dix Communications - Gas & Oil
July 2014 Edition
The Ohio Oil & Gas Energy Education Program Invites You To Our
Hazards: Eliminate Them Before They Eliminate You! Hydrogen Sulfide (H2S) Refresher / Safety H2S Trailer What’s in the Air? Or in Some Cases, What’s Not in the Air? Who is in the Driver’s Seat? International Association of Drilling Contractors (IADC) Rig Pass with SafeLand USA Training Community Room 9900 Brick Church Road Cambridge, Ohio 43725
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Southern Zone Edition
July 2014 Edition - Dix Communications
Scholarships, training available in gas, oil industry C Laurie Huffman Dix Communications
ANTON — Rhonda Reda, of Ohio Oil & Gas Education Program, was invited to speak at a Women in Energy Summit recently held in Mahoning County. Reda told the audience the state is pushing four-year degrees as a pathway to oil and gas opportunities, but since only 21 percent of high school graduates go all the way through college, there are also great opportunities in vocational schools that should not be overlooked. When Reda began in the oil and gas industry 27 years ago, she was outnumbered by the men in the field, and was often the only woman in the room. Over the years, she said she has earned the respect of the men in the field. And, now, there are a lot of opportunities for women. She pointed out one oil and gas company can work with as many as 1,000 vendors across the state. So, you don’t have to be in the Utica or Marcellus shale corridors to find work. “So much of our society is used to pressing a button to get results. But, oil and gas is not just about computer application. You need skills, and most jobs in the industry are going to be
hands-on,” Reda said. “My favorite applications are a hard hat and a pipe wrench. And, these jobs don’t change because of your location. They are the same across the state.” Reda said her organization works with schools across the state, advising the students if they want these jobs, they will have to be drug-free. She reported out of 100 applicants who recently applied for a job, 62 failed the drug test. On an average, 20 to 80 percent fail. She also advises students to load up on math and science courses because the industry is deep in technology and engineering, and at this time, the U.S. ranks 52nd across the world in these two core subjects. She further encourages young people not to listen to organizations that tell then if you take a two month training course they can get a job. “You cannot get a job in oil and gas with that amount of training. We call this two men in a truck training, and it’s not valid. We’re trying to shut these outfits down. If our employees are well trained, there won’t have to be injuries or environmental issues in the oil and gas industry.”
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Southern Zone Edition
July 2014 Edition - Dix Communications
Local law student earns OSBA honors for oil-and-gas paper
C
ARROLL CO. -- Tackling the burning legal dispute over government authority for gas-and-oil wells in Ohio, a law student with ties to Carroll County has won the Ohio State Bar Association’s 2014 Environmental Law Award. Erik Lange, the son of Dave and Linda Lange, of Malvern, and a third-year law student at Case Western Reserve University Law School, was in Columbus March 14 to accept the award and the $1,000 prize during the OSBA’s annual Environmental, Energy and Resources Law Seminar. Lange’s winning paper is titled, “Shale gas and state preemption of local regulations in Ohio: Beck Energy’s dispute with the city of Munroe Falls.” The paper examines the conflict between Ohio’s historic home-rule constitutional amendment of 1912 and Ohio House Bill 278, passed in 2004, to grant “sole and exclusive authority to regulate the permitting, location and spacing of oiland-gas wells production operations within the state.” In the Munroe Falls case, now before the Ohio Supreme Court, the city in Summit County issued a stop-work order after Beck Energy began drilling there in 2011 without first obtaining a rightof-way construction permit. City ordinances also require drilling permits and zoning certificates, neither of which were issued. Munroe Falls prevailed in the Summit County Court of Common Pleas, which prohibited the company from drilling unless it complied with city ordinances. Beck Energy appealed to the Ninth District Court of Appeals, which held that “the trial court abused its discretion” and ruled that city ordinances requiring a conditional-use permit conflict with Ohio law. Subsequently, the Ohio Supreme Court accepted the appeal for review from Munroe Falls, which argued that the case presents “a matter of great public interest” and “a substantial constitutional question.” According to Lange, the Supreme Court should find in favor of Ohio’s home-rule amendment for two reasons. First, he said, H.B. 278, Chapter 1509 in the Ohio Revised Code, “is not a general law because oil-and-gas drilling occurs only in half of the state.” Secondly, he said, “Ohio’s Constitution dictates that the state has not preempted local zoning powers specific to oil-and-gas drilling.” Noting that the strength of the 1912 amendment earned Ohio the distinction of “frequently being called the Home Rule State,” Lange said it “only allows state preemption of local laws when the state statute was a ‘general law’.” In granting the Ohio Department of Natural Resources supremacy over municipal laws regarding oil-and-gas drilling, Chapter 1509 is not a general law, he said.
Erik Lange
“A state statute purporting the preempt local control of oil and gas is not general, because state legislators from districts without oil or gas are able to have substantial effect on the preempting of local regulation of only non-constitutents,” he said. In fact, that is what happened as most supporters of H.B. 278 represented districts where no such drilling takes place. Lange said half of the state’s 88 counties “have no shale gas potential, and only 13 counties have strong shale-gas potential,” Carroll County being one of them. Hydraulic fracturing, or fracking, which has resulted in a shalegas boom in those Eastern Ohio counties, was projected to bring more than 40,000 jobs to the state by 2013 and almost 66,000 jobs by this year, according to proponents of the industry. Lange pointed out that other studies found that only about 2,000 new jobs have been added thus far. He referred to local groups, including one in Carroll County, which have organized in opposition to fracking based on concerns about drinking-water contamination, air pollution, harm to wildlife, and even earthquakes, one of which occurred in Youngstown in December 2011. A key precedent cited in Lange’s paper is the 2002 case, City of Canton v. State. In that case, the Ohio Supreme Court held that a state statute “which promoted affordable housing by taking away local power to zone out manufactured homes was not a general law.” The court said it did not have uniform application, because “the statute will effectively apply only in older areas of the state.” Similarly, Lange said, the law on gas-and-oil drilling applies only to limited areas of the state, like Carroll County, where the geological conditions support the industry. He noted that courts in other states, including New York and Pennsylvania, have determined that local zoning ordinances do not conflict with state regulatory schemes, “even if the power is utilized to effectively block drilling.” In conclusion, Lange said, “If municipal authority to enact landuse ordinances is ruled preempted once a driller has a state permit in hand, the setback for home rule will be significant. Could commentators still call Ohio the Home Rule State?” Lange earned a bachelor of science degree in civil engineering with high distinction from Ohio Northern University in 2007 and a master of science in civil engineering from the University of Toledo in 2010. He earned certification as a professional engineer by the National Council of Examiners for Engineering and Surveying in 2012. Currently the managing editor of the Case Western Reserve Law Review, he has accepted a position with Honigman Miller Schwartz and Cohn LLP, the largest law firm in Michigan.
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Plan would curb carbon dioxide emissions
Dina Cappiello, Josh Lederman Associated Press
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ASHINGTON (AP) — In a sweeping initiative to curb pollutants blamed for global warming, the Obama administration unveiled a plan in June aimed at cutting carbon dioxide emissions from power plants by nearly a third by 2030. But it delays the deadline for some states to begin complying until long after President Barack Obama leaves office. The 645-page plan, expected to be finalized next year, is a centerpiece of Obama’s efforts to deal with climate change and seeks to give the United States more leverage to prod other countries to act when negotiations on a new international treaty resume next year. Under the plan, carbon emissions are to be reduced 30 percent by 2030, compared to 2005 levels, in what would amount to one of the most significant U.S. actions on global warming. The proposal sets off a complex regulatory process, steeped in politics, in which the 50 states will each determine how to meet customized targets set by the Environmental Protection Agency, then submit those plans for approval. “This is not just about disappearing polar bears or melting ice caps,” said EPA Administrator Gina McCarthy. “This is about protecting our health and our homes. This is about protecting local economies and jobs.” Some states will be allowed to emit more pollutants and others less, leading to an overall, nationwide reduction of 30 percent. Many states that rely heavily on coal will be spared from cutting a full 30 percent. West Virginia, for example, must cut 19 percent by 2030 compared to what the state was emitting in 2012. Ohio’s target is 28 percent, while Kentucky and Wyoming will have to find ways to make 18 percent and 19 percent cuts. On the other extreme, New York has a 44 percent target, EPA figures show. But New York already has joined with other Northeast states to curb carbon dioxide from power plants, reducing the baseline figure from which cuts must be made. States like New York can get credit for actions they’ve already taken, lest they be punished for taking early action. Initially, Obama wanted each state to submit its plan by June 2016. But the draft proposal shows states could have until 2017 — and 2018, if they join with other states. That means even if the rules survive legal and other challenges, the dust won’t likely settle on this transformation until well into the next
administration, raising the possibility that political dynamics in either Congress or the White House could alter the rule’s course. Although Obama doesn’t need a vote in Congress to approve his plans, lawmakers in both the House and Senate have already vowed to try to block them — including Democratic Rep. Nick Rahall, who faces a difficult re-election this year in coal-dependent West Virginia. Scuttling the rules could be easier if Republicans take the Senate in November and then the White House in 2016. Another potential flash point: The plan relies heavily on governors agreeing to develop plans to meet the federal standard. If Republican governors refuse to go along, as was the case with Obama’s expansion of Medicaid, the EPA can create its own plan for a state. But the specifics of how EPA could force a state to comply with that plan remain murky. S. William Becker, who heads the National Association of Clean Air Agencies, said it was good that the rule will give states more time to develop strategies and will grant credit for previous steps to cut emissions. “Still, the regulatory and resource challenges that lie ahead are daunting,” Becker said. Power plants are the largest U.S. source of greenhouse gases, accounting for about a third of the annual emissions. EPA data show power plants have already reduced carbon dioxide emissions by nearly 13 percent since 2005, meaning they are about halfway to meeting the administration’s goal. The EPA projected that carrying out the plan will cost up to $8.8 billion annually in 2030, but the actual costs will depend heavily on how states choose to reach their targets. The administration argued that any costs to comply are far outweighed by savings in health expenses that the U.S. will realize thanks to reductions in other pollutants such as soot and smog that will accompany a shift away from dirtier fuels. Environmental groups hailed the proposal, praising both the climate effects and the public health benefits they said would follow. Former Vice President Al Gore, a prominent environmental advocate, called it “the most important step taken to combat the climate crisis in our country’s history.” But energy advocates sounded alarms, warning of economic drag. Senate Minority Leader Mitch McConnell, R-Ky., called the proposal “a dagger in the heart of the American middle class.”
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“If these rules are allowed to go into effect, the administration for all intents and purposes is creating America’s next energy crisis,” said Mike Duncan of the American Coalition for Clean Coal Electricity, which represents the coal industry. Options for states to meet the targets include making power plants more efficient, reducing the frequency at which coal-fired power plants supply power to the grid, and investing in more renewable, lowcarbon sources of energy. States could also enhance programs aimed at reducing demand by making households and businesses more energy-efficient. Each of those categories will have a separate target. Coal once supplied about half the nation’s electricity, but has dropped to 40 percent amid a boom in natural gas and renewable sources such as wind and solar. Although the new emissions cuts will further diminish coal’s role, the EPA predicted that it would remain a leading source of electricity in the U.S., providing more than 30 percent of the projected supply. Obama has already tackled the emissions from the nation’s cars and trucks, announcing rules to reduce carbon dioxide emissions by doubling fuel economy. That standard will reduce carbon dioxide by more than 2 billion tons over the lives of vehicles made in model years 2012-25. Reach Dina Cappiello at http://twitter.com/dinacappiello and Josh Lederman at http://twitter.com/joshledermanAP
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Chamber review says 'Shale-abration' a success Judie Perkowski Dix Communications
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LD WASHINGTON — A large crowd brightened an otherwise dreary day for the first “Shaleabration” held May 10 in Old Washington. An on-again off-again rain didn’t faze the 1,350 people who attended the much-touted “Shale-abration” at the Guernsey County Fairgrounds. “It was a steady stream of people,” said an elated Jo Sexton as she recounted the highlights of the day. “As usual, the Ohio Oil and Gas Energy Education Program is first and foremost in keeping the public informed about the gas and oil industry.” Known better as OOGEEP, the nonprofit industry funded program provides public awareness — for children and adults — of the local gas and oil through educational materials and workshops pertaining to the science and technology of exploration, development and production. “Many people were surprised that there was so much to learn about the gas and oil industry. People were anxious to talk to the experts who manned company booths handing out information and answering questions. The kids had fun at the fishing pond with their can poles donated by Big Brothers/Big Sisters, and learned what to do and what not to do when trying to catch a fish. “People appreciated the educational value of the event. The Meet-U Trailer, which explained Ohio’s gas and oil history and modern uses of energy, was very popular. “The Dock Dogs, The Whip Guy, who demonstrated some eye-poppin’ tricks, the ultimate Johnny Cash trib-
ute were wonderful and expensive. We wanted unique entertainment and thanks to all the sponsors we were able to deliver. “We are already planning next year’s event. It will still be a oneday event around the same time in May, and we are not going to have rain. We have some good suggestions for next year from those who answered a survey — like having more kids’ events. “A special thanks to all our Gold, Silver and Bronze sponsors, and especially our Platinum sponsors: EQT, International Union of Electrical Engineers, Eclipse Resources and American Energy Partners, who really made this all possible.” jperkowski@daily-jeff.com
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Out west, wells miss federal inspections
HOPE YEN, THOMAS PEIPERT Associated Press
N
EW CASTLE, Colo. (AP) — Four in 10 new oil and gas wells near national forests and fragile watersheds or otherwise identified as higher pollution risks escape federal inspection, unchecked by an agency struggling to keep pace with America’s drilling boom, according to an Associated Press review that shows wide state-by-state disparities in safety checks. Roughly half or more of wells on federal and Indian lands weren’t checked in Colorado, Utah and Wyoming, despite potential harm that has led to efforts in some communities to ban new drilling. In New Castle, a tiny Colorado River valley community, homeowners expressed chagrin at the large number of uninspected wells, many on federal land, that dot the steep hillsides and rocky landscape. Like elsewhere in the West, water is a precious commodity in this Colorado town, and some residents worry about the potential health hazards of any leaks from wells and drilling. “Nobody wants to live by an oil rig. We surely didn’t want to,” said Joann Jaramillo, 54. About 250 yards up the hill from Jaramillo’s home, on land that was a dormant gravel pit when she bought the house eight years ago, is an active drilling operation that operates every day from 7
a.m. until sometimes 10:30 p.m. Jaramillo said the drilling began about three years ago. Even if the wells were inspected, she questioned whether that would ensure their safety. She said many view the oil and gas industry as self-policing and nontransparent. “Who are they going to report to?” she asked. Government data obtained by the AP point to the Bureau of Land Management as so overwhelmed by a boom in a new drilling technique known as hydraulic fracturing, or fracking, that it has been unable to keep up with inspections of some of the highest priority wells. That’s an agency designation based on a greater need to protect against possible water contamination and other environmental and safety issues. Factors also include whether the well is near a high-pressure formation or whether the drill operator lacks a clear track record of service. “No one would have predicted the incredible boom of drilling on federal lands, and the number of wells we’ve been asked to process,” said the BLM’s deputy director, Linda Lance. Since fracking reached a height in 2009, about 90 percent of new wells on federal
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Out west, wells miss federal inspections
land are drilled by the process, which involves pumping huge volumes of water, sand and chemicals underground. “The current rate of inspections is simply not acceptable to us,” she said. The agency oversees 100,000 oil and gas wells on public lands, 3,486 of which received the high priority designation. According to BLM records for fiscal years 2009 to 2012, 1,400 of those high priority wells, spread across 13 states, were not federally inspected. Wyoming had the most, 632, or 45 percent. South Dakota had 1 out of 2 wells uninspected, and Pennsylvania had 1 out of 6. All the higher risk wells were inspected in six states — Alabama, Michigan, Mississippi, New York, Ohio and Texas. Many more wells are located on private lands, where state officials take the lead in ensuring they comply with environmental laws, with mixed results. Nationwide, there were nearly 500,000 producing gas wells in 2012, according to Energy Information Administration data. More than 1,800 new wells were being drilled in March alone. Dennis Willis, a former BLM field officer in Price, Utah, says he routinely provided input on oil leasing and drilling decisions on federal land before his retirement in 2009. He described a situation of chronic underfunding dating to at least the early 2000s, when BLM management made clear that issuing new permits would be a priority over other tasks, according to a 2002 memorandum from supervisors in Utah to field officers. At the time, fracking was becoming more widely used. “There certainly wasn’t a shortage of spills, leaks, pipeline failures and other problems,” said Willis, who now does consulting work for conservation and other groups. “It’s a disaster waiting to happen,” he said. In interviews, BLM officials acknowledged persistent problems in keeping up with inspections, but said they were not aware of any major safety issues to date arising from the uninspected wells. Lance said BLM field managers are making judgment calls to minimize the risk of potential harm to surrounding communities. The agency also is reviewing whether it needs to slow down the pace of permits to ensure public safety. Officials noted that money provided by Congress for oil and gas operations has declined since 2007. During that period, the number of wells drilled on federal and Indian lands has increased by roughly one-third. “We’re trying to do the best we can with limited resources,” Lance said. If approved by Congress, the BLM’s 2015 budget request of $150 million for oil and gas operations would allow the agency to conduct the bulk of its required inspections over three years, in part by collecting fees from oil and gas companies. Unlike past years, $48 million will be earmarked for inspections. The BLM made similar budget requests the last several years with little success. The BLM has sought to add inspectors, but that has proved challenging in places such as Utah, where most wells are drilled on federal land. While a petroleum engineer could get a starting salary of $90,000 in the private sector, the BLM typically pays $35,000.
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This year’s appropriations bill would allow the BLM to increase inspector salaries to around $44,000. The public concern is evident in Colorado, where increased drilling into suburban and rural areas has led community groups to push nearly a dozen oil and gas local control initiatives for the November ballot. Of the wells drilled from 2009-2012, the BLM designated more than 400 on federal and Indian lands in Colorado as high priority, the third highest behind Wyoming and North Dakota. More than 160 of Colorado’s uninspected high-priority wells are near New Castle, on the edge of the White River National Forest. Colorado Gov. John Hickenlooper has been seeking a legislative compromise that could satisfy concerns over health and safety impacts of fracking. Regulators contend that overall, water and air pollution problems from fracking are rare, but environmental groups and some scientists say there hasn’t been enough research on those issues. Jaramillo said residents in the canyon have mixed feelings about fracking. “The people that really like it are the people who are getting money out of it,” she said. “The people who don’t are really worried about — Is it going to ruin the water? Is it going to ruin the land? Is it going to ruin the air?” A neighbor, Kory Kipferl, owns a 10-acre property adjacent to federal land dotted with active wells on gravel pads. He said he’s accepted what he called a need for domestic drilling — but he’s concerned about the water table. “Once we start puncturing the water table, that could cause problems, whether you’re drilling for gas, oil, water, whatever,” Kipferl said. The BLM dataset is more extensive than what was reviewed recently by the Government Accountability Office, and filtered to remove duplicate well entries that yielded an overcount. In a recent report, auditors said the BLM needed to do a better job of coordinating with state regulators. In Pennsylvania, for instance, the one well that went uninspected by the BLM had been checked multiple times by the state. Still, it’s not clear how willing states are to take up the federal task. “To say that we’re going to start inspecting federal wells is just above and beyond what we could do,” said John Rogers, associate director of Utah’s Division of Oil, Gas and Mining, pointing to his small staff. He said companies will inspect their own equipment in order to protect their investment, so it’s likely that at least some of Utah’s 200-plus wells that weren’t inspected by BLM are checked by someone. “We’re certainly not going to second-guess people’s inspections,” Rogers said of the BLM. Yen reported from Washington. Associated Press writers Michelle Price in Salt Lake City and Kevin Begos in Pittsburgh contributed to this report. Follow Hope Yen on Twitter: http://twitter.com/hopeyen1
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Appalachian Oilfield Services agrees to pay workers overtime back wages
C
OLUMBUS — Appalachian Oilfield Services, LLC ,has agreed to pay 25 heavy equipment operators $129,802 in overtime back wages after an investigation by the U.S. Department of Labor’s Wage and Hour Division found the company was in violation of the Fair Labor Standards Act. At eastern Ohio drilling locations, the workers provided cleanup services and hauled away muck ejected from wells in the oil fracking process. “Companies that underpay their employees also undercut employers who obey the law and pay their workers lawfully required wages,” said George Victory, the Wage and Hour Division’s director in Columbus. “Failing to compensate employees properly for all hours worked is unacceptable. The Wage and Hour Division is committed to ensuring workers receive the pay they have rightfully earned.” An investigation conducted by the division’s Columbus District Office found that equipment operators were paid a flat daily rate for a 12-hour shift. When they worked in excess of 12 hours, they were paid an hourly rate. No overtime compensation was provided for hours worked in excess of 40 hours, in violation of the FLSA.
Appalachian Oilfield Services is a Lafayette, La.-based company that provides equipment and personnel specialized in fracking operations. The company also has an office in New Matamoras. The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. In general, hours worked includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees’ wages, hours worked and other conditions of employment be maintained. The law also prohibits employers from discharging or discriminating against an employee for filing a complaint or for cooperating with an investigation. For more information about federal wage laws, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (4879243). Information also is available at http://www.dol.gov/whd.
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