DECEMBER 2015 • A FREE MONTHLY PUBLICATION
Keystone Pipeline:
What’s next?
IN THIS ISSUE:
OOGA Oilfield EXPO Recap
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This month’s Cover Features OOGEEP Reps DECEMBER 2015 • A
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The Ohio Oil and Gas Energy Education Program features representatives Debbie Quakenbush, executive assistant / events coordinator, and Rhonda Reda, executive director, as this month’s cover feature. They play an integral role educating the public about the gas and oil industry throughout Ohio via speaking engagements, conferences, teacher workshops and firefighter training, and programs encouraging young people to study Science, Technology, Engineering and Math.
ICATION
Keystone Pipeline:
What’s next?
Ohio GAS & Oil UPCOMING EVENTS
IN THIS ISSUE:
OOGA Oilfield EXPO Recap
• December 17 – OOGA annual holiday membership reception, Newark • January 25-26, 2016 – SECO Annual Conference, Columbus. • March 16-18, 2016 – 2016 OOGA Winter Meeting, Hilton Columbus at Easton, 3900 Chagrin Dr., Columbus • April 26-27, 2016 – Ohio Valley Regional Oil & Gas Expo, St. Clairsville. • May 14, 2016 – State Science Day, Ohio State. • July 29-31, 2016 – Oil History Symposium, Casper, West Virginia.
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Gas & Oil
December 2015
Ohio Edition
Table of Contents 5
UPDATED DESIGN ON THE OHIO GAS & OIL WEBSITE
6
NEW ROBOTIC WELDER USED AT ZANE STATE
7
SCULPTURE DEDICATED AT ZANE STATE COLLEGE IN MEMORY OF ALUMNUS
8
PRESIDENT OBAMA REJECTS KEYSTONE PIPELINE, DRAWS REACTION FROM LEGISLATORS
11
MONROE STATOIL ENERGY FUND ANNOUNCES FINAL GRANT ROUND
13
THE ‘HIT PARADE’ OIL AND GAS INTERESTS!
16
OOGA TECHNICAL CONFERENCE, OILFIELD EXPO DRAWS CROWD
PUBLISHERS Andrew S. Dix ASDix@dixcom.com G.C. Dix II GCDixII@dixcom.com David Dix DEDix@dixcom.com
EXECUTIVE EDITORS Ray Booth RBooth@dixcom.com Roger DiPaolo RDipaolo@dixcom.com Rob Todor RTodor@dixcom.com Lance White LWhite@dixcom.com
18
PANEL RECOMMENDS FURTHER STUDY OF OHIO GAS/OIL TAX
21
SIX COUNTIES IN OHIO REACH CENTURY MARK FOR GAS AND OIL ACTIVITY
24
GAS AND OIL INDUSTRY, LEGISLATORS DISAPPOINTED ABOUT KEYSTONE PIPELINE REJECTION
28
CARROLL COUNTY SEES FIRST NATURAL GAS FUELING STATION
31
STUDY SHOWS ETHANOL REGULATIONS BAD FOR ENVIRONMENT COST OHIOANS MONEY
32
AGENCY PROJECTS MARKET TO REBALANCE BY 2020
REGIONAL EDITORS Judie Perkowski JPerkowski@dixcom.com Erica Peterson EPeterson@dixcom.com Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com
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ADVERTISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Jeff Kaplan Alliance & Minerva, Ohio Office JKaplan@the-review.com 330-821-1200 Mark Kraker Ashland, Ohio Office MKraker@times-gazette.com 419-281-0581 Jeff Pezzano VP Advertising Sales & Marketing Kent Ohio Office JPezzano@dixcom.com 330-541-9455 Diane K Ringer Kent, Ohio Offices DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450 DIGITAL MEDIA MANAGER
Brad Tansey BTansey@dixcom.com
33
lwest@the-daily-record.com
“Gas & Oil” is a monthly publication jointly produced by Dix Communications. Copyright 2015.
PANEL SIGNS OFF ON NATURAL GAS INCENTIVE FOR VEHICLES
33
LEGISLATION WOULD USE LEASE PAYMENTS TO LOWER INCOME TAX BILLS
34
EXAMPLES OF NEW PIG ENERGY’S PRODUCTS, LINERS DESIGNED TO CONTAIN FLUIDS FOR MULTIPLE OPERATIONS
36
NEW RULES AT PARKS FOR OIL, GAS DRILLING
36
OHIO SUPREME COURT DISMISSES DRILLING CASE AGAINST MUNROE FALLS
37
NEW STUDY EXAMINES POTENTIAL REGIONAL ECONOMIC DEVELOPMENT OPPORTUNITIES
38
UNION ADAPTING TO NEW TECHNOLOGY
39
REPORT ON WORLD ENERGY OUTLOOK
40
KINDER MORGAN DONATION TO PROVIDE WALKING TRAIL
41
OHIO SUPREME COURT IN ANOTHER SIGNIFICANT GAS & OIL DECISION
43
LEGALIZED FREEDOM WHY THE OIL EXPORT BAN?
44
NEW CRS REPORT HOW CORN ETHANOL MANDATES HAVE HURT OHIO’S ENVIRONMENT AND ECONOMY
46
API AND ANGA: TWO ENGERY TRADES TO COMBINE FORCES
47
SAFETY AND CAREER EXPO ATTRACTS MORE THAN 100 STUDENTS
LAYOUT DESIGNER Luke West
December 2015
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December 2015
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Updated design
for Gas & Oil Magazine website
G
as & Oil Magazine recently introduced a newly designed news website for its online users. Immediately upon visiting gasandoilmag.com, users will notice a fresh, clean look, along with an increased focus on photos and video display. Andrew S. Dix, publisher of Gas & Oil Magazine, said the company has been working on the redesign for the last 10 months. “We’ve spent a lot of time analyzing the digital media industry, and we feel we’ve come up with a good online product for our users,” Dix said. “We’re in a good position now to move quickly with new features to enhance our online user experience.” The website, built on responsive design technology, allows users to visit the site on a desktop, tablet or smartphone. Dix said the growth of mobile users fueled the company’s expansion in its mobile offerings. “Mobile is an area of immediate and future growth,” Dix said. “It is something we’ve noticed growing at a rapid race, and we want to help it grow even more.” The main navigation menu has changed from horizontal to vertical to allow users to freely visit the site and always have
top-level menu items no matter the location on the website. Along with a clean design, there is a concentrated effort to maximize our advertising opportunities throughout the entire website, thus enhancing the website’s overall user experience. “We plan to keep looking at areas of improvement regarding digital advertising,” Dix said. “We hope to make our website a well-rounded overall user experience.” One thing that isn’t changing is Gas & Oil Magazine’s commitment to industry news and information. Since the first issue of Gas & Oil Magazine, the monthly magazine and gasandoilmag.com have grown into a go-to destination for print readers and web users in the hydraulic fracturing, Utica and Marcellus Shale industries. Gas & Oil Magazine wishes to hear your feedback. Please let us know what you like or dislike about the newly designed website by sending an email to info@dixcom.com.
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Gas & Oil
Ohio Edition
December 2015
New robotic welder
used at Zane State
T
he Zane State College Cambridge campus has been installing new equipment in its High Bay Industrial Lab that will benefit students in the Welding and Fabrication program and the Industrial Systems Engineering Technology program. The
latest piece to be installed is a Lincoln Electric robotic welder. Students will now be able to learn to operate and program automated welding equipment in addition to manual welding. Four new welding booths, featuring new advanced process welders, are also
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being installed. Dual-head wire feeders are being added to several power sources in the lab, making the machines more versatile. The High Bay Industrial Lab has equipment for welding, fabrication and industrial systems, including a CNC plasma cutter and other machines. Combined with the new pieces, this equipment makes it possible for students in the Welding and Fabrication program and the Industrial Systems Engineering Technology program, to gain exposure to a wide variety of equipment. This is equipment they might encounter in their careers, giving them more
marketable skills. In addition to providing a better-prepared workforce for local industries. The funds for these improvements came from the $1 million Trade Adjustment Assistance Community College and Career Training grant Zane State College received in the fall of 2014. Zane State College was one in a consortium of 11 Ohio colleges that received funds through this grant. To learn more about the Welding and Fabrication program or the Industrial Systems Engineering Technology program, visit ZaneState.edu
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Deanna Duche, director of Welding Education at the Cambridge Campus of Zane State College, stands next to a Lincoln Electric Robotic Welder, the latest piece of equipment for the High Bay Industrial Lab at the college. Four new welding booths, featuring advanced process welders, are also being installed.
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Sculpture Dedicated at
December 2015
7
Beth Glass poses beside "Pumpjack,” a sculpture placed at the Zane State College Advanced Science and Technology Center, in honor of her late husband, Timothy Glass, who graduated from the college in 1981.
Zane State College in Memory of Alumnus established the scholarship through the Muskingum County Community Foundation for students in the Oil and Gas Engineering Technology Program at Zane State College. Dr. Chad Brown, president of Zane State, said the event focused on “the life and legacy of an alumnus and his contributions to his community. “Timothy Glass’s life was full of passion for his career in the oil and gas industry and for the education that provided him the opportunity. He often encouraged individuals to pursue a two-year degree. Tim’s work in gas and oil is just one example.” Zane State College, established in 1969, offers an accredited education at its campuses in Zanesville and Cambridge, Ohio. Zane State College’s over 40 twoyear programs provide an experience-based education for modern careers. Students
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ane State College unveiled a new sculpture on the grounds of the Advanced Science and Technology Center on the Zanesville campus. The sculpture, created by local artist Alan Cottrill and titled “Pumpjack,” was dedicated to the memory of alumnus Timothy Glass, a 1981 graduate of the college’s Petroleum Engineering Technology program. Glass was a big supporter of Zane State, and had a successful career in the oil and gas industry. He always believed that with a two-year degree, you could succeed in the career of your choice. Glass’s widow, Beth Glass, donated the sculpture to the college and was present at the unveiling. Mrs. Glass said that Tim not only worked in the oilfields, he started his own company, Bar G Oil and Gas, the name of one of the college’s scholarships. Glass
8
Gas & Oil
Ohio Edition
December 2015
President Obama rejects
Keystone Pipeline, draws reaction from legislators
By Bobby Warren – Dix Communications f t e r years o f continual debate about the merits and faults of the proposed Keystone XL pipeline, President Barack Obama rejected the project Nov. 6. During his announcement, Obama said the State Department determined the project, which would transport
crude oil from Canada through the heartland of the United States to ports in Texas, did not support this country’s national interests. TransCanada filed an application for the project in 2008, and it had been waiting ever since for an answer. It finally did. The president’s decision generated reaction from Ohio’s senators, representatives and of what they had to say: U.S. Senator Sherrod Brown, others connected with the oil and a Democrat, said, “We need gas industry. Here is a sampling energy policy that advances our national interests. I’m concerned that the Keystone pipeline could drive up gas prices in Ohio by bypassing Midwestern refineries. If my colleagues are serious about American infrastructure, we should focus on passing a Find the long-term transportation bill that perfect, puts Americans to work fixing unique gift for and building roads, bridges, Christmas or and buses with American-made that special steel, iron, and cement.” occasion U.S. Senator Rob Portman, a Republican, saw things differently. “I’m disappointed that the President has chosen to reject the Keystone pipeline, a Check out Ashton’s 5- & 10-Cent bipartisan, commonsense and Store, Bud’s Farm Toys, antique job-creating energy initiative,” stores, Dottie’s Crafts, All About the Portman said. “I would have House, Rae’s Jewelers, Canestraro’s hoped that the President could Russell Jewelers and more put politics aside and support this infrastructure project Ohio’s Best Kept Secret to create good-paying jobs, www.carrollcountyohio.com boost our economy, and help Call 877-727-0103 Like us on Facebook America become more energy Follow us on Twitter independent.”
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U.S. Rep. Bob Gibbs, a Lakeville Republican, said, “We can and must be doing more to jumpstart our economy and create more opportunities for Ohioans and Americans everywhere. Thanks to our abundant domestic energy resources, our country is in a position to strengthen our energy security. This includes building the Keystone XL pipeline, which will lead to increased energy independence and the creation of thousands of jobs. “Something that President Obama and I agree on is that we need an energy strategy for our future. The Keystone XL pipeline is a critical element of that strategy. However, the president continues to stand in the way of its construction. “I was proud to vote to approve construction of the Keystone pipeline. After more than six years of delay, it is time to put politics aside and build the pipeline.” Story Continued on Page 10
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December 2015
Continued from page 8
Keystone Pipeline, draws reaction from legislators
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U.S. Rep. Jim Renacci, a Wadsworth Republican, said, “Politics again gets in the way of good policy. The biggest issue with this decision is the oil will still be transported, primarily by truck and rail, which is not only less environmentally friendly than a pipeline, but also could be more dangerous. The construction of the Keystone Pipeline would, in the short-term, lead to the creation of thousands of jobs, and in the long-term, strengthen our energy security. I am disappointed by the administration’s decision not to build the Keystone Pipeline, but look forward to working with my colleagues in an effort to provide an all of the above solution to our nation’s energy needs.” Sean McGarvey, president of North America’s Building Trades Unions, said between 2009 and 2013 more than 8,000 miles of oil transmission pipelines have been built across the United States. And by last year, that number increased to 12,000 miles of pipeline being constructed. “In other words, we have built
the equivalent of ten Keystone XL pipelines since 2009 and the White House has not uttered one single word about those projects,” McGarvey said. “... Yet, despite this administration’s own findings that the Keystone project will result in the creation of 40,000 jobs as well as significant economic benefits to our country without impacting the environment, President Obama has chosen to place politics over substantive policy that only serves to advance the agenda of well-funded radical environmentalists.” Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, said, “By rejecting the Keystone Pipeline, the Obama administration is content on letting the resources of our allies remain in the ground while continuing to encourage outside energy imports from countries like Venezuela. The impacts are injurious to the United states, faltering thousands of domestic jobs and burdening Americans with higher energy prices.”
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December 2015
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Monroe Statoil Energy Fund T
he Statoil Monroe County Energy Fund at the Foundation for Appalachian Ohio announced its third round of grant recipients, and encourage organizations to apply for future grants. All applications submitted before Dec. 7, 2015, will be reviewed before the end of the calendar year. Typical grant awards range from $500 to $5,000. The Statoil Monroe County Energy Fund focuses on projects that increase quality of life, create access to opportunities, or identify and implement a solution for a community need or issue. Statoil welcomes projects that focus on STEM (Science, Technology, Engineering and Math) education or workforce and economic development. Additional details regarding funding priorities can be found
announces final grant round
on the grant application. The Statoil Monroe County Energy Fund was created in 2014 to support nonprofit organizations serving the citizens of Monroe County, Ohio, where Statoil operates. Tax-exempt organizations, as well as those organizations and initiatives partnering with a tax-exempt fiscal agent, serving Monroe County are invited to apply by visiting the Statoil Monroe County Energy Fund webpage at www. AppalachianOhio.org/Statoil. The Statoil Monroe County Energy Fund also announced the third round of 2015 grant recipients. During this third round, the Statoil Monroe County Energy Fund awarded funds to three projects benefitting the citizens of Monroe County. Story Continued on Next Page
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Ohio Edition
December 2015
Continued from page 11
Monroe Statoil Energy Fund announces final grant round
R
ecent recipients include: • The American Red Cross received a grant to conduct Home Fire Preparedness and Disaster Response and Prevention Education. The program will bring fire prevention education materials to residents along with resources to keep fire alarms up to date. • The Higher Education and Learning Partnership (HELP) received support for their Annual Autumn College and Career Fair event for students and families in the Switzerland of Ohio School District. The event will feature
representatives from colleges, careers, and the military who will provide attendees with information for students, parents, and adult learners. • West Virginia University’s Children’s Hospital was a recipient for the NICView cameras in the NICU program, which will help to facilitate parent-newborn bonding. Each year, around 630 newborns spend time in the WVU Children’s Hospital NICU including patients and families from Monroe County. For these children and their families, physical separation makes bonding difficult, so by helping families to see their
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child, bonding can occur over long distances. Additionally, the Statoil Monroe County Energy Fund was a sponsor of the Second Annual Monroe County Fall Festival Oct. 10 -11. To download the Statoil Monroe County Energy Fund application online, or to learn more about the Fund, visit www.AppalachianOhio. org/Statoil, or contact the Foundation for Appalachian Ohio at (740) 753-1111. About the Foundation for Appalachian Ohio The Foundation for Appalachian Ohio (FAO) is a regional community foundation serving the 32 counties of Appalachian Ohio. A 501(c)(3) public charity, the Foundation creates opportunities for Appalachian
Ohio’s citizens and communities by inspiring and supporting philanthropy. For more information about FAO, visit www.AppalachianOhio. org. Statoil is an international energy company with operations in 37 countries. Building on more than 40 years of experience from oil and gas production on the Norwegian continental shelf, we are committed to accommodating the world’s energy needs in a responsible manner, applying technology and creating innovative business solutions. The company is headquartered in Stavanger, Norway, with approximately 23,000 employees worldwide and is listed on the New York and Oslo stock exchanges.
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December 2015
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The ‘Hit Parade’ Oil and Gas Interests!
W
her creditors. This is known in my world as a lifetime protective trust. In addition to amending her own plan, mom can use the limited power of appointment that dad gave her to change dad’s estate plan and leave dad’s money in the same way that dad would have, in an asset protection trust, and provide that the change take place only after mom’s death. Story Continued on Next Page
MINERALS // LEASES
10179445
Frank A. McClure, JD, grandchildren’s chatter has distracted her. Nothing unusual! Then the worst happens AEP - Counsellor at Law - she hits a shuttle bus pulling out of the hen thinking Holiday Inn with 9 litigation lawyers who about this just attended a seminar on personal injury month’s article, cases, all of whom get out of the bus holding I began to think about some of the things their necks. Suppose some of’ them actually my clients and people in general worry were hurt, and really couldn’t go back to about. This question holds true whether or work. In today’s world we can certainly not oil and gas interests are in the person’s imagine that any judgment entered by a estate. That one question would be how will jury could easily exceed the liability limits I make sure that my family and loved ones on the automobile insurance policy. are taken care of after dad and/or mom are Their daughter would have a hard gone. The “Hit Parade” is one way that we time protecting her own assets from can talk about how to control your assets the plaintiff’s, but mom and dad have after your death! more choices with Clients ask how we can do that? the money that As the old adage goes, “Hope for the they provide their best and plan for the worst,” but sometimes children in their disasters happen too late to adopt remedies. estate plans. During Fortunately, estate planning lawyers can their lives the parents counsel you, our clients, about providing can adjust their own for change over time through periodic plans to keep up with updating of their planning documents, the change. After and after one spouse dies, through the dad dies he has no use of what is known as “limited power flexibility, but in his appointment.” So I use what I call the “Hit plan he can provide Parade” story to illustrate the benefits and some room for mom operation of this option to my clients. I to make adjustments. generally assume that dad will die before What would dad mom (mortality tables support this). For do? Faced with the as long as mom outlives dad, she will see prospect of leaving many changes in their family, and she will the inheritance to his want to adapt both her own estate plan and daughter’s creditors, also her deceased husband’s plan to keep dad would probably up with the challenges in their children’s leave the bequest lives. For example: instead in a protected Their child hits a bus. Imagine this scene; trust that made his their grandchildren miss the school bus, money available to and their adult daughter rushes to drive their daughter for them to school. She started late, rainy her genuine needs weather has made the roads slick, and the but kept it away from
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Gas & Oil
December 2015
Ohio Edition
Continued from page 19
The ‘Hit Parade’ Oil and Gas Interests!
T
heir child hits a tree. Serious trauma from an accident, whether with a car or falling from a horse, can leave the injured person in such a disabled state that few families have the resources for rehabilitation or nursing home expenses. Younger adults rarely purchase disability or long term care insurance, and this kind of catastrophe can quickly deplete their assets. Fortunately, Medicaid will cover the expenses of those who qualify but not before a required “spend-down” of their assets first. An inheritance going to the injured family member will simply delay qualification for public benefits without helping those who depend on them. What would dad do? During his lifetime dad would have probably amended his estate plan to provide for the child so that the child could have received his inheritance in the form of a “Special Needs Trust”. With good legal counseling in designing his estate plan, dad can give mom the same flexibility to make adjustments in dad’s plan after his death to take care of the injured child and the child’s family without disqualifying the child from Medicaid. Again, in addition to amending her own plan, mom can use the limited power of
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appointment that dad gave her to change dad’s estate plan and leave dad’s money in the same way as he would have, in a “special needs trust”, and provide that change take place only after mom’s death. Their child hits the skids. Every family has or knows of some younger adult whose promise and potential has disappeared through substance abuse or victimization in a cult. Whatever the cause, the entire family suffers with the addict, both from their own sense of loss, and their helplessness to bring their child or sibling back to a functional during their lifetime. What would dad do? Dad would probably amend his estate plan to provide for the son to receive his inheritance in an “incentive” trust, to pay for the rehabilitation and give the child clear standards to qualify for the legacy. With good legal counseling in the estate planning design, dad can give mom the same flexibility to make adjustments in dad’s plan after his death to care for the addicted child and the child’s family. In addition to amending her own plan, mom can use the limited power of appointment that dad gave her to change dad’s estate plan and leave dad’s money in the same way as dad would have, in an “incentive” trust, and provide that the change take place only after mom’s death. Their child hits the lottery! Not every hit on the Hit Parade is negative! Sometimes even positive events can require changes to an estate plan. For millions of people playing the lottery brings
Gas & Oil
8 www.GasandOilMag.com Gas & Oil August 2015
Ohio Edition December 2015
15
innocent amusement with the remote leave dad’s money in the same way as dad benefit with flexibility in an estate plan 34th Annual Celebration possibility of sudden wealth. What if the would have, in a “generation-skipping” after the death of one spouse, so that the 2015 adult child’s number comes up and he trust, and provide that the change take survivor can adjust their joint legacy to has more than enough to take care of place only after morn’s death. the new realities. It is important for clients his family’s needs and then some? What One spouse may outlive another long to understand the need for flexibility, and if this new found wealth is from a lease enough to see major developments in their their estate planning lawyer should show on your child’s real estate, which now children’s lives, and the whole family will them how to achieve it. The “limited has a producing well on it? Adding an power of appointment” offers clients a way inheritance to the child’s new fortune of providing for unexpected challenges mostly benefits the I.R.S. by increasing the in their beneficiaries’ lives, but they will estate tax payable by the grandchildren have this option only if they know about when their parent dies. What would it. That is why it is important for people dad do? During his lifetime dad would to ask questions of their estate planning or probably amend his estate plan to provide advisors. Without some education, how for theToll grandchildren to receive the son’s will you ever know what you can and Free inheritance in a “generation-skipping” cannot do? Ask questions. Remember trust, to keep the largest amount of it is your estate and it doesn’t belong to money in the bloodline. With good legal any one else! Also remember that you counseling in the estate planning design, know about 80% of the law generally, but CRAFTS OF DISTINCTION dad can give mom the same flexibility to unfortunately it is the 20% you don’t know At Great Trail Festival Grounds • State Route 43 Instant noise/dust make adjustments in dad’s plan after reduction his that will do you in! If you would like more 12 month forandyour sites death to account for the privacy new wealth information about flexible estate planning ★ Two Big Weekends ★ Calladjustments. for a planting quote today! make practical In addition to protect your oil and gas interests or to to amending her own plan, mom can use review my 30 past articles Aug. 29, andconcerning asset the limited power of appointment that dad protection and estate www.smithevergreen.com Sept. 5, 6 & 7planning, please go gave her to change dad’s estate plan and to www.fmcclurelaw.com.
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Gas & Oil
Ohio Edition
December 2015
OOGA Technical Conference,
Oilfield Expo draws crowd
Mike Cramer, organizer, l, and Michael Bertolone, business representative, for Local 18 of the International Union of Operating Engineers, regular Platinum sponsors of the Ohio Oil and Gas Association’s Technical Conference and Oilfield Expo. This year’s event was held at the Pritchard Laughlin Civic Center in Cambridge for the first time, which Bertolone said was great, plenty of room , very nice facility, reasonable cost and shorter driving distance.”
Judie Perkowski - Dix Vice President Shawn Bennett, kicked off Communications the conference Wednesday morning by encouraging the industry faithful to be he Ohio Oil and aware of the unscrupulous tactics of those Gas Association who try to stop oil and gas production by welcomed more forming “community rights” groups to than 50 exhibitors and hundreds of force lawsuits, which over the years have attendees to its annual Technical failed, except in regions where there never Conference and Oilfield Expo Nov. 4, was any drilling, there is no drilling and 5, at its new venue in Guernsey County, will never see any drilling. the heart of one of the industry’s favorite But, for the next two days, enjoy the parking places in southeastern Ohio. conference’s ambiance, meet new people The Pritchard Laughlin Civic Center and old acquaintances, listen to A-list in Cambridge, home to many top speakers, relax and have a good time. notch events, provided ample space to Bennett, who is from Cambridge, said accommodate the businesses, associations he was more than pleased to have the and organizations, all part of the industry conference in his backyard, and also to that has been the catalyst for economic showcase the facility. activity in Appalachia for the past four The scheduled speakers spoke briefly years, and hopefully beyond. on a variety of topics in their chosen field An added measure of comfort — of expertise, including the enormous the beautiful blue skies and perfect responsibility of the Ohio Department temperature for both days, ordered by of Natural Resources, improvements in the City of Cambridge especially for the safety procedures and training programs event. Opening remarks by OOGA Senior for gas and oil workers and first responders,
T
a primer on how to mitigate the risk of anthropogenic earthquakes commonly known as “frackquakes,” well site events, nine new proposed rules designed to change, alter, improve or accelerate the processes attached to waste water management, secondary containment, treatment and recycling, well spacing and more, all related to House Bill 64. In addition to an emergency management
Megan Norman, l, assistant manager and April McCort, manager, of Oil & Gas Safety Supply, based in Washington, Pa., were one of the new exhibitors at the Ohio Oil and Gas Association Technical Conference and Oilfield Expo. The company was formed in 2012 and also has an office in St. Clairsville and was one of five Gold Sponsors of the event. For more information about the company, visit www. oilandgassafetysupply.com
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December 2015
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The Ohio Oil and Gas Energy Education Program (OOGEEP) representatives Debbie Quackenbush, executive assistant/ events coordinator, l, and Rhonda Reda, executive director, play an integral role educating the public about the gas and oil industry throughout Ohio via speaking engagements, conferences, teacher workshops and firefighter training, and programs encouraging young people to study Science, Technology, Engineering and Math.
website, one of the first of its kind in the country, is making its debut. Of particular interest was a presentation about federal leasing and oil and gas development in the Wayne National Forest, by Richard Jones, the land and minerals program manager of the agency’s supervisors office. The Forest is 244,240 acres of public land with a fragmented ownership pattern in 12 southeastern Ohio counties with a mix of federal and private mineral rights. Attendees learned about the submission process of Expressions of Interest and the Forest Service’s role in the leasing process. The final presentation on Thursday by Jackie Stewart, state director of strategic communications for Energy in Depth, who explained how “Crisis Communications and Protecting Your Reputational Brand,” should be a priority, before an incident occurs. “During a crisis, protecting your reputation is paramount. In an age when everyone is a reporter, it is vital to understand ways to protect your company and prepare in advance should an incident occur. Learn how to control your story and give out information you want to be read by the public,” she said. Stewart also eluded to an article about Renewable Fuel Standards and ethanol mandates. Washington-imposed mandates that have forced increasing volumes of corn ethanol to be added to Ohio’s and our nation’s fuel supply have produced an additional 1.92 million metric tons of CO2 emissions in Ohio alone since 2005, the emissions equivalent of adding nearly 400,000 cars to the road in a single year spewing harmful emissions.
The Buckeye Water Supply truck in the foreground, is one of many vehicles owned and operated by Fred Badertscher in New Concord. The truck and other heavy equipment was part of the outside exhibition at the Ohio Oil and Gas Association’s Technical Conference and Oilfield Expo, Nov, 4,5 at the Pritchard Laughlin Civic Center.
That is just one of the key findings of a new Ohio-focused report issued by the Center for Regulatory Solutions, a project of the Small Business and Entrepreneurship Council. The report is being released in Ohio as a series of new television ads spotlighting the failures of the RFS, and will continue to run across the state during the month of November. Look for the entire article online at jackie. stewart@centerforregulatorysolutions.org/
Mark your 2016 calendar for the OOGA Winter Meeting at the Hilton Columbus at Easton, March 16-18. For the 69th year, OOGA brings together the top industry leaders from Ohio and the nation, to provide the most current state of the oil and gas industry in business sessions and trade show. The Winter Meeting is the principle business meeting of the Association, the premier networking event of the year.
18
Gas & Oil
Ohio Edition
December 2015
Panel recommends further study of Ohio gas/oil tax 30 June 1, 2011 30 June 1, 2011
Marc Kovac - Dix Capital new 2020 Tax Policy Study Commission, Bureau who was also involved in the development of the severance tax report. “We want to be lawmaker panel cautious. We want to make sure we take care r e c o m m e n d e d of Ohio, but we want to make sure that we further studies don’t kill the industry.” of Ohio’s tax rates on oil and gas produced Sen. Bob Peterson (R-Sabina), the other via horizontal hydraulic fracturing, citing co-chairman of the group, added, “The volatile commodity prices among the industry’s in severe distress economically. reasons for delayed action on a rate increase. Now is probably not a good time to increase The informal working group of a new tax the tax....” policy study commission also said any future McClain and Peterson released the increase in taxes on fuels produced via severance tax report in late October fracking should include triggers to account during the initial meeting of the tax policy for dropping commodity prices. commission, which was formed as part of “We are in a historical economic situation the biennial budget bill earlier this year to with the industry because of what’s going on undertake a longer-term study of Ohio’s tax in Saudi Arabia...,” said Rep. Jeff McClain laws. Implementation of a flat income tax rate (R-Upper Sandusky), co-chairman of the is among the issues that will be considered.
A
Phone 3302766508 Th Phone 3302766508 T An antidrug group in New York distr The severance tax report was developed An antidrug group in New York dis pencils to school kids with the antidru by an informal working group, created as pencils to school kids with the antidru Too Cool to Do Drugs. part of the same budget bill. Too Cool to Do Drugs. It started out okay, but got worse It started out okay, butJune got worse Republican legislative leaders said in when the kids actually used the pencils. A when the kids actually used the pencils. cils were worn down and sharpened, th that a report outlining a potential severance cils were worn down and sharpened, t agreement wouldchanged to: Cool to Do Drugs. Then: Do be issued on Oct. 1; changed to: Cool to Do Drugs. Then: D
the report released Thursday, however, When you give honest advice, hav recommends further consideration of the When you give honest advice, hav out the door. out the door. issue. Here’s what Dave Barry The 56-page document outlines says the he w Here’s what Dave Barry says he w someone fell asleep at a meeting: methods other states use to tax oil and gas someone fell asleep at a meeting: “Have everybody leave the room, the produced via fracking. “Have everybody leave the room, th group of total strangers, from right off “Ohio’s total taxand have them sit around the sleeping burden on the oil and gas group of total strangers, from right o and have them sit around the sleeping industry is as low or lower as any other states stare at him until he wakes up. Then h stare at him until he wakes up. Then them say to him, in a very somber vo that have a severance tax,” Peterson said. them say to him, in a very somber v “So we’re low.” your plan is very, very risky, but you’v your plan is very, very risky, but you’ no choice but to try it. I only hope, for Lawmakers also acknowledge a need to no choice but to try it. I only hope, fo that you know what . . . you’re gettin that you know what . . . you’re getti update Ohio severance tax rates and related into.’ Then they should file quietly from into.’ Then they should file quietly from policies. Hoses
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other tax rates. Gov. John Kasich, who has been pushing for an increase in the severance tax for several years, voiced disappointment in the study late Thursday. “The result of the commission’s report is disappointing,” the governor said in a released statement. “Our proposal is reasonable and will continue Ohio’s competitive advantage over other oil and gas states. Make no mistake, our fight to get Ohioans the income tax cut they deserve will continue.” But the executive vice president of the Ohio Oil and Gas Association voiced support for the recommendations Thursday. Story Continued on Next Page
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Thursday’s report notes the oil and gas industry is “under financial duress” due to natural market forces. As such, “the legislative members of the informal working group suggest consideration of a trigger or a slow phase-in of a reformed severance tax. Given those provisions, Ohio should not expect to see a new revenue stream materialize overnight until market conditions improve.” The report added, “This is another reason why continuing the discussion of severance tax reform is prudent.” The report concluded that any increased severance tax should be comparable to rates in states, and increased collections should be directed to local governments in communities where fracking activities are under way and leveraged to lower income tax or
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Gas & Oil
Ohio Edition
December 2015
Ohio gas/oil tax “W
e support the Oil and Gas Severance Tax Workgroup’s recognition of the fact that our industry is in the middle of the most severe downturn in the last 30 years and increasing the severance tax now would exacerbate an already dire situation,” Shawn Bennett said in a released statement. “OPEC continues to manipulate the market in an effort to stifle the industry’s ability to continue investing in development, and we face an increasingly unpredictable and costly regulatory system at the federal level. Increasing regulations or taxes at this time would have a significant negative impact on the workers, landowners, businesses and industries throughout the state related to oil and gas development.” State Rep. Jack Cera (D-Bellaire), who served on the working group that developed the report, voiced support for the panel’s recommendation that part of the proceeds of any severance tax increase be directed to eastern Ohio communities. “I especially appreciate and support the recommendation that some revenue from any increase in the severance tax should go toward helping local communities in the shale region,” he said in a released statement. “These communities are directly impacted by the increase in drilling activity, and I believe a significant portion
of the severance tax should go to investing in local infrastructure and basic services. ... Any increase in severance tax revenue should be used to support the shale communities and build infrastructure that can help the oil and gas and related industries in eastern Ohio continue to grow.” Mark your 2016 calendar for the OOGA Winter Meeting at the Hilton Columbus at Easton, March 16-18. For the 69th year, OOGA brings together the top industry leaders from Ohio and the nation, to provide the most current state of the oil and gas industry in business sessions and trade show. The Winter Meeting is the principle business meeting of the Association, the premier networking event of the year.
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Gas & Oil
www.GasandOilMag.com
December 2015
21
Six counties in Ohio reach
century mark for gas and oil activity Shawn Bennett – Energy in Depth Ohio
O
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 liquidsrich 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. Story Continued on page 23
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December 2015
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Continued from page 21
Century Mark in Ohio C olumbiana 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, Cambridge, Ohio
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Gas & Oil
Ohio Edition
December 2015
Gas and oil industry, legislators disappointed about
Keystone Pipeline rejection Judie Perkowski Communications
T
-
Dix
he Obama administration rejected TransCanada’s application to build the Keystone XL pipeline, saying the project would not reduce gas prices for U.S. consumers. “The State Department has decided that the Keystone XL pipeline will not serve the national interests of the United States. I agree with that decision,” President Barack Obama said Friday, Nov. 6.
The Keystone XL proposal (phases 3, 4) has faced fierce criticism from environmentalists and some members of Congress, and now President Obama has killed, for the seventh time, any chance of the pipeline’s completion in the foreseeable future. The Keystone XL Pipeline system could transport synthetic crude oil from the oil sands of Alberta, Canada, and crude oil from the northern U.S. primarily to refineries on the Gulf Coast of Texas. Two phases of the project are in operation, a third, from Oklahoma to Texas is under construction, and the fourth is waiting for U.S. government approval, which is now dead in
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the water. In its Supplemental Environmental Impact Statement released in 2013, the U.S. Department of State Bureau of Oceans and International Environmental and Scientific Affairs, stated that after a number of changes to the pipeline there would be no significant impacts to most resources along the proposed [pipeline] route. In response to the State Bureau’s report in January 2014, which neither recommended acceptance nor rejection, it was reported that media officials opposing the pipeline recommended that President Obama should reject the project. Which he did. Story Continued on Next Page
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December 2015
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26
Gas & Oil
Ohio Edition
December 2015
Continued from page 24
Keystone pipeline rejection
I
f and when the project is approved, the Keystone pipeline system will consist of the 2,151-mile pipeline (phases 1 and 2) and the proposed 1,661mile Keystone Gulf Coast Expansion Project (phases 3 and 4). Gas and oil industry leaders and many lawmakers share their disappointment and frustration with TransCanada — owners and operators of the Keystone XL Pipeline — over President Obama’s rejection of the pipeline. By all accounts, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure. The question is, how long will TransCanada wait for the U.S. to secure a “yes” vote on the pipeline when China is waiting in the wings. Here are some of the comments made since Obama’s announcement about the pipeline on Nov. 6: • President Obama’s Keystone rejection is an assault against American workers WASHINGTON, November 6, 2015 — API President and CEO Jack Gerard said the president’s rejection of the Keystone XL pipeline is a clear example of politics coming before the interests of U.S. workers and consumers. “It’s ironic that the administration would strike a deal to allow Iranian crude onto the global market while refusing to give our closest ally, Canada, access to U.S. refineries,” said Gerard. “This decision will
cost thousands of jobs and is an assault to American workers. It’s politics at its worst. “Unfortunately for the majority of Americans who have said they want the jobs and economic benefits Keystone XL represents, the White House has placed political calculations above sound science. Seven years of review have determined the project is safe and environmentally sound, yet the administration has turned its back on Canada with this decision, and on U.S. energy security as well.” • Obama’s decision puts U.S.-Canada relations simmering on the back burner “By rejecting the Keystone Pipeline, the Obama administration is content on letting the resources of our allies remain in the ground while continuing to encourage outside energy imports from countries like Venezuela. The impacts are injurious to the United States, faltering thousands of domestic jobs and burdening Americans with higher energy prices.” Shawn Bennett, Senior Vice President, Ohio Oil and Gas Association • Obama: Keystone XL pipeline offers no benefit for the U.S. The Obama administration rejected TransCanada’s application to build the Keystone XL pipeline, saying the project would not reduce gas prices for U.S. consumers. “TransCanada and its shippers remain absolutely committed to building this important energy infrastructure project,” said TransCanada President and
CEO Russ Girling. (Oil & Gas Journal 11/6), Bangor Daily News (Maine/Reuters 11/6), The Examiner (Washington, D.C. 11/6) Girling said that development of oil sands will expand regardless of whether the crude oil is exported to the U.S. or to Asian markets. He has described the Keystone as a routine pipeline noting that TransCanada has been building similar pipelines in the U.S. for more than 50 years, and that there are more than 50 improvements above standard requirements demanded by U.S. regulators making it “the safest pipeline ever built.” • President should put politics aside for the good of the country “I’m disappointed that the President has chosen to reject the Keystone pipeline, a bipartisan, commonsense, and job-creating energy initiative. I would have hoped that the President could put politics aside and support this infrastructure project to create good-paying jobs, boost our economy, and help America become more energy independent.” ~ U.S. Senator Rob Portman (R-OH) • Keystone XL review suspension request by TransCanada denied by State Dept. TransCanada’s request for the State Department to suspend its review of the Keystone XL pipeline proposal has been rejected. With a delay, the decision could have been postponed until after a new president is in office. Rejecting the proposed
Gas & Oil
www.GasandOilMag.com
December 2015
27
pipeline would be a mistake, said American Petroleum Institute Executive Vice President for Government Affairs Louis Finkel. The economic benefits including billions of investment dollars and thousands of jobs “that could be made building Keystone remain out of reach because this president refuses to make the right decision,” he said. (The Kansas City Star /The Associated Press 11/04) • Keystone XL decision by ‘Obama Administration puts politics over policy.’ “President Obama today made a decision that we all expected: He ignored the majority of the American people and rejected this job-creating measure. Once again, he put partisan politics ahead of doing what’s in the American people’s best interest. In doing so, he rejected tens of thousands of direct and indirect jobs, lower energy prices, and an opportunity to take America one step closer to energy independence. One environmental impact study after another determined that construction of the pipeline poses little risk to the environment, but these results apparently mattered very little. Nor did the will of both the U.S. House and U.S. Senate, both of whom have passed legislation authorizing construction of Keystone XL. “The lights may be on at the White House today, but no one is home. I’m surprised it took the Obama Administration so long to do the wrong thing here; we’ve seen time and again over the last seven years how this Administration puts politics over policy. In this case, the decision was purely political and ideological. It’s a shame, and the real losers are the American people. ~ Congressman Bill Johnson (R-Marietta)
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28
Gas & Oil
Ohio Edition
December 2015
Carroll County sees first
natural gas fueling station By Sara Klein - Minerva Bureau Staff Writer he first compressed natural gas vehicle fueling station in Carroll County has opened for business. County commissioners, board members from Carrollton Exempted Village Schools, and local businesses joined representatives from American Natural on Tuesday for a grand opening ceremony in front of the station at 203 Scio Road S.W. near Carrollton. Plans for the CNG station were included in a larger proposal that earned the school district an Ohio Department of Education Straight A grant award, which funded construction of the district’s nearby POWER education center. The school district and Pittsburgh-based
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energy company American Natural held a groundbreaking for the station in May, with construction beginning soon after. Founded in 2011, American Natural owns gas, diesel and CNG fueling stations as well as a wholesale petroleum fuel distribution fleet. Carrollton Schools Director of Programs Ed Robinson explained that Carrollton Schools owns the station and American Natural, which will coordinate the transportation of fuel to the station, is managing the station’s operations and profits. Robinson said Carrollton Schools plans to fuel its new fleet of buses at the station in a financial partnership with American Natural starting this spring. The new frontengine buses are being manufactured
specially to operate on natural gas fuel, Robinson stated. “Those aren’t off the assembly line yet,” he said. “They’re expected to come off the line in 2016, and we plan to purchase some as soon as that happens.” Ohio-based Kimble Companies, which operates recycling and trash disposal vehicles in Carroll County, is also converting its fleet to compressed natural gas. Two of the company’s recycling trucks were on display at the fueling station during the grand opening, and the company reported at a recent meeting of the Carrollton Village Council that it plans to use its first CNG-fueled truck in the village in the coming weeks. Carrollton school officials have also
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December 2015
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Kimble Companies, an Ohio-based company, displayed two of its compressed-natural-gas-fueled vehicles at the Carrollton Schools POWER CNG fueling station on Scio Road during the Nov. 17 grand opening of the station.
Carrollton Schools Program Director Ed Robinson (from left), American Natural Executive Vice President Andrea Feinstein, Carrollton Schools Superintendent David Quattrochi, and American Natural founder and CEO Jennifer Pomerantz spoke to a gathering of county officials, school board members and local business representatives during the Nov. 17 grand opening of the school district’s compressed natural gas fueling station outside of Carrollton.
stated that the CNG station will be a key component of education for its students. “We had the opportunity through a Straight A grant to make this a reality,” said Superintendent David Quattrochi. “Our goal is to bring this ... down the road into the classroom.” According to school officials, the district is working with American Natural and Alternative Fuel Vehicle International to develop training sessions regarding CNG fueling and safety. Courses will be open to students through the POWER Center as well as to
the general public. Student-based lessons are also being incorporated into existing curriculum such as science and economics courses. The district conducted professional development training to educate local first responders, businesses and the district’s bus maintenance staff about CNG fuel this past January, according to Robinson. Andrea Feinstein, executive vice president, regulatory and chief marketing officer of American Natural, stated that workshops for the public will offer information about how to safely fuel CNG
vehicles and which vehicles can use natural gas as well as the environmental benefits of using the fuel. “It’s an incredible opportunity not only for the school district but also for the community to have access to this fuel. (It’s) clean burning and locally sourced,” stated Feinstein. “This is a game-changer, not just environmentally, but in terms of education. It’s an exciting time,” commented American Natural founder and CEO Jennifer Pomerantz.
30
Gas & Oil
Ohio Edition
December 2015
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December 2015
31
Study shows ethanol regulations
bad for environment, cost Ohioans money A
study released by the Center for Regulatory Solutions published in Nov. 5th about the Renewable Fuel Standard saying the regulation has hurt the U.S. economy more than it has helped the environment. The Renewable Fuel Standard is a federal program that requires fuel sold in the U.S. to contain a minimum volume of renewable fuels like ethanol in order to lesson American dependence on foreign oil and help the U.S. economy by requiring an increase in the production of a product Americans can make. Ethanol burns cleaner than oil, meaning the regulation would also contribute to the betterment of the Environmental Protection Agency and President Barack Obama’s Clean Power Plan. The study released by the Center for Regulator Solutions (CRS), a project of the Small Business and Entrepreneurship Council, the increase in corn-based product has resulted in increased transportation costs in Ohio, directly impacting small businesses and their customers as well as increasing carbon dioxide and ozoneforming emissions in Ohio. The study said the lower energy content of ethanol relative to gasoline has cost $440 million in additional transportation fuel costs for Ohioans in 2014 alone. From 2005 to 2014 Ohioans paid more than $4 billion in additional fuel costs due to using ethanol-based fuel. Carbon Dioxide emissions have also increased by nearly 1.92 million metric tons in Ohio over that same time period, the equivalent to 398,000 cars. The study noted politicians that have criticized RFS including John Kasich. Local Representative Christina Hagan
said there is no doubt that the widespread use of ethanol has been negative on the Ohio economy. “At a minimum constituents have been negatively effected by having lower gas mileage produced from use of ethanol blends. Additionally it is reported that ethanol is detrimental to auto engines and may shorten the life of such or add to maintenance costs for our constituents,” she said in an email. She added that U.S. Biofuel policy needs to change by working to reduce and then eliminate Ohio taxpayer funded subsides. “It is a part of our responsibility to constantly revisit, review and redraft policy that phases out these types of issues by ensuring these issues take all facts, research and economic analysis into the equation when working toward a more balanced approach with what is good for both our economy and environment in service to our constituents. I will advocate
for change on this issue from my position as a State Legislator,” she said. In its conclusion the study said that the federal government is loosening its grip on ethanol regulations due to lobbyists and leaders have a chance to reform U.S. biofuel policy to “align with the nation’s new energy reality.” The Small Business and Entrepreneurship Council is funded by small businesses who want support in lessening government policy and restrictions on their companies. Raymond J. Keating, Cheif Economist at CRS said the biggest takeaway from the study is that politicians should not be deciding about what fuel source Americans should use, rather a free marketplace should be the deciding factor. “It isn’t up to or shouldn’t’ be up to the latest whims of politicians as to what energy sources we should be using. It’s up to the marketplace,” he said.
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Gas & Oil
December 2015
Agency projects
Ohio Edition
market to rebalance by 2020
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he International Energy Agency is projecting that the oil market will rebalance at $80 a barrel by the year 2020, with continuing increases in price for at least the next 20 years. In its World Energy Outlook report, the IEA predicted that oil prices, which are near $47 a barrel, will gradually rise as drilling capacity tightens. But, what is the on the horizon for the gas and oil industry and consumers in the next five or 10 years? The present climate of gas and oil upstream spending is down more than 20 percent since 2014 because of combined production of countries that are not members of the Organization of the Petroleum Exporting Countries — the United States, Japan and the European Union. OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Currently there are 12 member countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. As markets shrink the excess oil supply, efficiency policies become more conservative and alternative fuels become more popular, the U.S., the 28-member European Union and Japan will see a considerable drop in demand by approximately 10 million barrels a day by 2040. Output growth among OPEC producers is led by Iran and Iraq, but both countries face major challenges. The risk of instability in Iraq, weaknesses in infrastructure and institutions, and the need for Iran to secure technology and huge investments are obstacles that will not be overcome any time soon. An annual worldwide upstream gas and oil investment of approximately $630 billion — the total amount the industry
spent on average for the past five years — will be required to compensate for declining production at existing fields and to keep future output flat at today’s levels. The short investment cycle of tight oil and its ability to respond quickly to price changes is changing the way the oil market operates, but the intensity with the way tight oil is developed in the U.S., eventually pushes up costs. Although the traditional method for extracting oil and gas is still relevant today, non-traditional horizontal hydraulic fractured wells, although a very expensive startup, have proven its worth with far-reaching tentacles that extract hydrocarbons from places previously unreachable.
Economic production from tight oil formations requires the same hydraulic fracturing and often uses the same horizontal well technology used in the production of shale gas. It should not be confused with oil shale, which is shale rich in kerogen, or shale oil, which is oil produced from oil shales. The International Energy Agency recommends the term “light tight oil” for oil produced from shales, or other very low permeability formations. U.S. tight oil production stumbles in the short term, but resumes its ascent as prices recover, helped again by continued
improvements in technology and efficiency. But, as they say, what goes up must come down, and tight oil’s rise is again constrained by rising costs of production, and as operators deplete the “sweet spots” and move to less productive acreage. U.S. tight oil reaches a plateau in the early 2020s before edging toward a gradual decline. So, we should be concerned that a prolonged period of lower oil prices cannot be ruled out. Lower prices are not all good news for consumers. The economic benefits are counter-balanced by increasing reliance on the Middle East for imported crude oil and the risk of a sharp rebound in price if investment dries up. Concerns about gas supply security would also be heightened if prices stay too low to generate the necessary investment in supply. Lower oil prices alone do not have a large impact on the deployment of renewable energy technologies in the power sector, but only if policymakers remain steadfast in providing the necessary market rules, policies and subsidies. The outlook for biofuels is hit by cheaper conventional transport fuels, vehicles powered by electricity and natural gas and the incentive to invest in more efficient technologies. Low prices should give no cause for complacency on energy security, the IEA says. The International Energy Agency is an autonomous organization headquartered in France, which works to ensure reliable, affordable and clean energy for its 29 member countries and beyond. The IEA has four main areas of focus: energy security, economic development, environmental awareness and engagement worldwide. Story taken from the context of the October IEA’s World Energy Outlook report describing possible long term scenarios of the volatile oil market.
Gas & Oil
www.GasandOilMag.com
December 2015
Panel signs off on natural gas
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incentive for vehicles
By Marc Kovac - Dix Capital Bureau lawmaker panel has signed off on legislation creating tax incentives for the purchase or conversion of natural gas-run vehicles. The House Finance Committee, on a unanimous vote Nov. 18, approved HB 176, clearing the way for a potential floor vote by the full chamber. It’s the second time the House has reviewed the proposed law changes — a similar bill by the same sponsors was OK’d last session but stalled in the Ohio Senate. Reps. Sean O’Brien (D-Bazetta) and Dave Hall (R-Millersburg) are hoping for support from senators this time. “Other states are doing it,” O’Brien told the House Finance Committee Wednesday. “When you look at what’s going on across the country, Ohio is actually behind.” The bill would provide thousands of dollars in tax breaks to cover new vehicle purchases or conversions from conventional fuels to compressed natural gas. Another provision would provide a $500 sales tax break for those buying electric vehicles.
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The legislation also would earmark $16 million in annual grants to assist local governments and nonprofits in converting their existing vehicle fleets to compressed natural gas. Additional language would phase in, over 10 years, motor fuel taxes on compressed natural gas. A sunset provision would end the incentive and grant programs after five years. Other states have already implemented incentives for compressed natural gas vehicles, including Pennsylvania, West Virginia and Indiana. “With the discovery of major shale plays in North America combined with advancements in drilling to harvest these vast stores of natural gas and oil, Ohio and our nation are experiencing a major energy revolution,” O’Brien said in testimony submitted to the House Finance Committee. “Considering these shale plays have enough reserves to provide our nation’s needs for 100 years with cheap and reliable supplies, governments and the private sector must rethink their policies to capitalize on this energy boom.”
Legislation would use lease payments
to lower income tax bills
By Marc Kovac - Dix Capital Bureau portion of lease payments and royalties collected from oil and gas production on state lands would be used to decrease Ohioans’ income tax bills, under legislation being considered in the Ohio Senate. A goal of HB 23 would be leverage the growing payments into permanent income tax reductions in the future. “It’s not a long bill, but we see it as a path that could be helpful to us as a state as we go forward...,” Rep. Ron Amstutz (R-Wooster), primary sponsor, told the Senate’s Ways and Means Committee Wednesday. The legislation passed the Ohio House in May on a vote of 78-16 and awaits action in the Senate. Among other provisions, the bill would require one-third of the signing fees, rentals and royalty payments from oil and gas leases on state-owned sites be deposited in the state’s Income Tax
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Reduction Fund. The state budget director, in turn, would determine whether the resulting totals were enough to merit a temporary income tax cut or a permanent one. “What we have proposed here is, as this begins to flow, that a report be generated so that as we reach a certain point of significant flow into that fund, based on that information [lawmakers] can have the opportunity to consider a permanent tax reduction based on the revenue flow that we can perhaps rely on,” Amstutz said. Another third of related collections would be deposited into a “local royalty fund,” providing payments to local governments where leased lands are located. And a final third would go to the state agencies that own the land. An analysis of the bill by the Ohio Legislative Service Commission notes that no oil and gas leases on state lands yet exist — the governor has not appointed members to the panel that would review and approve any such agreements.
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Gas & Oil
Ohio Edition
December 2015
Examples of New Pig Energy’s products, liners
designed to contain fluids for multiple operations A
s oil and gas exploration increased in the Appalachian basin, New Pig Corporation recognized an opportunity for innovation. Because Pennsylvania regulations define a reportable spill as five gallons or more spilled directly to the ground, a number of operators started using impoundment liners on the working surface of the well sites. By the lining the surface of the well sites, the operators were providing secondary containment under the rigs, tanks, and equipment. Impoundment liners, however, were never designed to be walked on or driven on by heavy equipment. The plastic liners were smooth--leading to slip and fall incidents. Under equipment traffic, they cracked in the cold and were punctured and torn. In 2011, New Pig worked with operators and regulators on the performance issues of texture, toughness, and chemical compatibility to design the PIG® Well Pad Liner. The original 100-mil thick PIG® Well Pad Liner is a composite with a high coefficient of friction under wet or spill conditions. It is the first liner certified by the National Flooring and Safety Institute (NFSI) as a high traction work surface. The
multiple-layer polypropylene composite is strong enough to resist stone punctures and tire tearing while providing the needed chemical compatibility with oils, solvents and acids This combination of benefits earned the 100-mil liner Environmental Protection’s “New Product of the Year” award for 2011. In 2012, New Pig worked to extend the life of the liner
from one operation, such as air drilling only, to multiple operations. The 130-mil liner was designed to meet this need. The 130-mil thick liner can be installed for the air rig and then left in place for the fluid rig, completions and flowback operations. The 130-mil liner is more durable and puncture resistant than the original liner, while maintaining the same high-traction work surface. The
increase in durability allows operators to greatly reduce the number of rig mats used on site, which reduces the overall well site cost and the amount of liner being sent to the landfill. Once again, Environmental Protection named the PIG® Well Pad Liner – 130 mil as its “New Product of the Year” award winner for 2012. In 2012, well site secondary containment became required
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December 2015
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Energy looks forward to working with our industry partners as we continue to meet these new challenges head-on with innovative new products and service solutions. For more information on our locations or any of New Pig Energy’s products and services, call 855–PIG–LINER(744-5463), email pigliner@newpigenergy.com, or visit www.newpigenergy.com Located in the heart of the Appalachia Shale in central Pennsylvania, New Pig Energy has worked closely with shale efforts to develop the PIG® Well Pad Liner and other unique drive-over berm and containment products. Our goals are to meet strict environmental requirements for well pads and to create safe, contained worksites for incident-free operations. With multiple warehouse locations in PA and WY, the PIG® Well Pad Liner is available for immediate delivery or pickup for all of your shale containment needs. New Pig Energy – Secondary Containment from the Leak & Spill Experts.
by PA Act 13 of 2012 for both drilling and hydraulic fracturing operations-- leading New Pig Corporation to focus a dedicated effort on the oil and gas industry. A new subsidiary, New Pig Energy, was founded on January 1, 2013. In 2013, the new subsidiary worked to reduce the radiant heat from liners during the summer months, especially during completions operations. Changing the color of the fibers in top layers of the PIG® Well Pad liners reduced the surface temperature by 10o to 15o F, reducing heat stress on workers. For the third straight year, Environmental Protection honored New Pig Energy with a “New Product of the Year” award. For the past two years, New Pig Energy has continued improve on their products and expand their services. The company has grown to include locations in Altoona, Tyrone and West Mayfield, Pa. and a warehouse in Wyoming. New innovations in site clean-up technology, introduced in 2014, have changed the way liners can be prepped for recycling or disposal. The custom machinery used by New Pig Energy has helped operators reduce the number of waste receptacle needed by up to 50%, greatly reducing disposal costs. In July of 2015, New Pig Energy engineered another option in secondary containment with the introduction of the PIG® Dual Surface Liner – 40 mil. The newest product is still well pad tough with the same NFSI-certified high-traction work surface. It is, however, lightweight with low liquid absorption — making it great for folding and moving from site to site. The unconventional oil and gas industry continues to evolve and change. Additional environmental regulations, changes in the market and new drilling/completions practices have added new levels of complexity to the industry landscape. New Pig
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Gas & Oil
Ohio Edition
December 2015
New rules at parks for oil, gas drilling By Sophie Kruse - Dix Communications he National Park Service recently released a series of updated regulations for the non-federal oil and gas operators in the park system. According to Jeremy Barnum, a public affairs specialist with NPS, the original regulations were put into effect on Dec. 8, 1978 and haven’t been updated. “The proposed updates will improve the National Park Service’s ability to protect park resources, the values for which each park was created, and protect the visitors from potential adverse impacts associated with non-federal oil and gas operations located within parks of the national park system,” he said. “The proposed rule would also make the regulations consistent with existing policies and practices, and update the format to improve clarity and simplify
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application and compliance for oil and gas operators and our employees.” The proposal aims at recovering “the full cost of reclamation resulting from oil and gas development and includes updates to make the regulations consistent with existing policies and practices,” along with updating the format to increase clarity and simplify the compliance and application for operators in the oil and gas industry and for National Park Service employees. Finally, it would eliminate two regulatory provisions that exempt around 60 percent of the operations of oil and gas within the national park system. These regulations will bring existing gas and oil operations up to National Park Service standards. This will protect water quality and quantity, air quality, night skies, natural sounds, health and safety of visitors and employees, fish, wildlife and habitat, and meet spill protection and reclamation standards.
According to Barnum, gas and oil operations in the national parks are rare and not a standard characteristic — rather, an exception. There are currently 98 operators conducting 534 operations in 12 out of 408 parks in the national park system. Of these, 319 are exempt from regulations. “We have a fundamental responsibility to conserve park resources for the enjoyment of future generations and the changes we’ve proposed will clarify the process for oil and gas development in the small group of parks where current operations exist, and for parks who may manage operations in the future,” said National Park Service Director Jonathan B. Jarvis in a press release. The National Park Service prepared a cost-benefit analysis for the regulations, and estimates that the annual cost to operators will be $1,650 per well. The 60-day public comment period on the proposed regulations will be completed at the end of December.
OHio SUPREME COURT DISMISSES DRILLING CASE AGAINST MUNROE FALLS By Jeff Saunders - Dix Communications he city may have won the latest round in a battle to exert control over oil and gas drilling within its boundaries, but what that victory means is unclear. The Ohio Supreme Court on Nov. 10 dismissed a case that Ravenna-based Beck Energy Corp. filed last June asking that the court order Munroe Falls to remove zoning ordinances that the city cited in ordering that Beck stop working on a planned well. Beck attorney Scott Zurakowski and Munroe Falls Law Director Jack Morrison did not return calls seeking comment for comment. According to court records, the case stemmed from a stop work order the city issued for a well Beck was preparing to drill on a portion of the Sonoco paper mill property because that land is zoned R-4 residential, a district under which wells are not
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allowed under city ordinances. Under city zoning codes, wells are only allowed, conditionally, in I-1 industrial districts, which total about 32 of the city’s more than 1,700 acres, according to court documents. Beck argues that under state law, the regulation of wells is under the jurisdiction of the Ohio Department of Natural Resources, not municipalities. “The Home Rule Amendment of the Ohio Constitution, Article XVIII, Section 3, does not allow Munroe Falls to enact a zoning ordinance that discriminates against, unfairly impedes, and obstructs oil and gas activities and production operations that the state of Ohio expressly permits and regulates under [Ohio Revised Code] Chapter 1509,” states Beck’s June 19 filing. Beck also contends that the high court itself previously confirmed this in an earlier opinion. In its response to Beck’s argument, the city maintained that in the previous case, the question of
whether municipalities can decide where wells can be located was not resolved. The previous 4-3 Ohio Supreme Court decision last February ruled that the state has “sole and exclusive authority” over regulation of oil and gas wells and it resulted in the city removing ordinances on its books regulating drilling operations because the decision made them unenforceable. However, while part of the majority on the decision, Justice Terrence O’Donnell separately wrote that the opinion does not address local land use ordinances. Beck and the city have been fighting in court over local control since 2011, first in Summit County Court of Common Pleas, then the Ninth District Court of Appeals and finally the high court. The city has argued that the issue is one of home rule while Beck contends that it would be too onerous for drillers to have to follow numerous local ordinances.
Gas & Oil
www.GasandOilMag.com
December 2015
37
New study examines
potential regional economic development opportunities
By Sophie Kruse Dix Communications n e w report o n the economic development opportunities offered by Ohio shale shows that shale development may present new business and job opportunities beyond traditional exploration and production activities, such as drilling and producing new wells. Additional jobs and economic opportunity may also exist in: • Midstream oil and gas activities, such as transportation, storage and processing. • New downstream activities, including use of natural gas in power generation, refining operations and compounding, as well as distribution and conversion of petrochemicals into commercial plastics products. The study, conducted in three parts, was prepared collaboratively by the Center for Economic Development and the Energy Policy Center at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. Commissioned by the Regional Economic Competitiveness Strategy (RECS) Shale Committee with support from the Economic Growth
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Foundation and JobsOhio, the report provides economic development professionals, businesses and workforce agencies with a better idea of the opportunities for growth in Ohio’s upstream, midstream and downstream industries related to shale development. “The intent of the research team is to provide current and transparent data in one place showing the wide range of opportunities that shale hydrocarbons may present to Ohio,” said Iryna V. Lendel, Ph.D., co-author of the report and associate director of the Center for Economic Development at CSU. Andrew R. Thomas, report co-author and executive-inresidence at CSU’s Energy Policy Center, said the study
also suggests that additional benefits could be realized from resources mined in Ohio but deployed regionally. “Ohio should be more than just an extractive economy in which minerals are taken out of the ground and shipped elsewhere to create wealth,” Thomas said. “There could be opportunities to manufacture products here from local resources, employing a local workforce and building a supply chain here.” The report is available in its entirety at www.csuohio. edu /urba n /re searc h /sh a le reports in three parts: Mapping the Opportunities for Shale Development in Ohio, Economics of Utica Shale in Ohio: Supply Chain Analysis and Economics of Utica Shale
in Ohio: Workforce Analysis. Data was acquired through a review of Ohio Department of Natural Resources, industry and company data; conference presentations; and personal interviews. About Cleveland State University Founded in 1964, Cleveland State University is a public research institution that provides a dynamic setting for Engaged Learning. With 17,000-plus students, nine colleges and more than 150 academic programs, CSU was again chosen for 2016 as one of America’s best universities by U.S. News & World Report. Find more information at www. csuohio.edu.
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Gas & Oil
Ohio Edition
December 2015
Union Adapting
to new technology
By Michael Bertolone - International Union of Operating Engineers echnology has played a very important role in training programs for apprentices and journeymen. Technology has made the construction industry, specifically the heavy equipment side of it, faster, more efficient and safer. The International Union of Operating Engineers, Local 18, is always ready to adapt to new technology and pass it along to our members so they can be the fastest, most efficient and safest operators in the field. Here are a couple of examples of how technology is incorporated into training on heavy equipment. The full training schedule and list of classes can be found at www.local18training.com. 1. Virtual Training (simulators): We had the loader simulator in our booth at the Ohio Oil and Gas Association Technology Conference and Oilfield Expo frecently in Cambridge. Recognizing that learning the controls of a new machine is always the first step
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towards mastery of the machine, the Ohio progresses through the training modules. Operating Engineers Apprenticeship & 2. GPS Grade Control: This class is Training Fund has designed and produced designed for Operating Engineers in-house its own computer simulators. who have experience performing Built with “real” seats and controllers, finish work with manually controlled the simulators use state-of-the-art machines. The class uses Trimble’s software developed in Montreal, Canada. Machine Control Systems on graders, The training program offers introductory dozers and excavators. The class level training on mobile cranes, tower will also delve into using Global cranes, excavators, and machines for the Positioning Systems and Automated forestry industry. Mobile crane controls Total Station Controls. can be configured for any hydraulically 3. VAC-U-WORX: This class will operated crane with up to four levers so introduce you to the Vacuum pipe that even experienced crane operators lifter and the basic operation and can get “seat time” with controls they maintenance. During this class you are unfamiliar with. The tower crane will learn how to load and unload pipe module was developed with the help of trucks, rack pipe for a pipe yard, and Liebherr, International and simulates stripping pipe on a pipeline right-ofthe controls of the tower crane at the way. Pipeline terminology, vocabulary Richfield Training Center. The excavator and safety are also important part of software was developed in conjunction this class. This Vac-u-Worx machine with Caterpillar’s Equipment Training is an example of how Local 18 adapted Solutions Group and can be configured to the Oil and Gas industry, but added with Cat or John Deere controls. Also this course due to the oil and gas available is a Ditch Witch Directional boom we are experiencing. Drill Simulator. All of these programs have many, many exercises designed with increasing difficulty as the student
Gas & Oil
www.GasandOilMag.com
December 2015
39
Report on World Energy Outlook
T
he International Energy Agency is projecting that the oil market will rebalance at $80 a barrel by the year 2020, with continuing increases in price for at least the next 20 years. In its World Energy Outlook report, the IEA predicted that oil prices, which are near $47 a barrel, will gradually rise as drilling capacity tightens. But, what is the on the horizon for the gas and oil industry and consumers in the next five or 10 years? The present climate of gas and oil upstream spending is down more than 20 percent since 2014 because of combined production of countries that are not members of the Organization of the Petroleum Exporting Countries — the United States, Japan and the European Union. OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Currently there are 12 member countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. As markets shrink the excess
oil supply, efficiency policies become more conservative and alternative fuels become more popular, the U.S., the 28-member European Union and Japan will see a considerable drop in demand by approximately 10 million barrels a day by 2040. Output growth among OPEC producers is led by Iran and Iraq, but both countries face major challenges. The risk of instability in Iraq, weaknesses in infrastructure and institutions, and the need for Iran to secure technology and huge investments are obstacles that will not be overcome any time soon. An annual worldwide upstream gas and oil investment of approximately $630 billion — the total amount the industry spent on average for the past five years — will be required to compensate for declining production at existing fields and to keep future output flat at today’s levels. The short investment cycle of tight oil and its ability to respond quickly to price changes is changing the way the oil market operates, but the intensity with the way tight oil is developed in the U.S., eventually pushes up costs. Although the traditional method for extracting oil and gas is still relevant today, nontraditional horizontal hydraulic fractured wells, although a very expensive startup, have proven its worth with far-reaching tentacles that extract hydrocarbons from places previously unreachable. Economic production from tight oil formations requires the same hydraulic fracturing and often uses the same horizontal well technology used in the production of shale gas. It
should not be confused with oil shale, which is shale rich in kerogen, or shale oil, which is oil produced from oil shales. The International Energy Agency recommends the term “light tight oil” for oil produced from shales, or other very low permeability formations. U.S. tight oil production stumbles in the short term, but resumes its ascent as prices recover, helped again by continued improvements in technology and efficiency. But, as they say, what goes up must come down, and tight oil’s rise is again constrained by rising costs of production, and as operators deplete the “sweet spots” and move to less productive acreage. U.S. tight oil reaches a plateau in the early 2020s before edging toward a gradual decline. So, we should be concerned that a prolonged period of lower oil prices cannot be ruled out. Lower prices are not all good news for consumers. The economic benefits are counterbalanced by increasing reliance on the Middle East for imported crude oil and the risk of a sharp rebound in price if investment dries up. Concerns about gas supply security would also be
heightened if prices stay too low to generate the necessary investment in supply. Lower oil prices alone do not have a large impact on the deployment of renewable energy technologies in the power sector, but only if policymakers remain steadfast in providing the necessary market rules, policies and subsidies. The outlook for biofuels is hit by cheaper conventional transport fuels, vehicles powered by electricity and natural gas and the incentive to invest in more efficient technologies. Low prices should give no cause for complacency on energy security, the IEA says. The International Energy Agency is an autonomous organization headquartered in France, which works to ensure reliable, affordable and clean energy for its 29 member countries and beyond. The IEA has four main areas of focus: energy security, economic development, environmental awareness and engagement worldwide. Story taken from the context of the October IEA’s World Energy Outlook report describing possible long term scenarios of the volatile oil market.
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Ohio Edition
December 2015
Kinder Morgan Vice President of Public Affair Allen Fore (center) poses with representatives from East Union Township during a special meeting Monday. The pipeline company donated $20,000 to the township for the construction of a walking trail in the township park.
Kinder Morgan donation
to provide walking trail
By Thomas Doohan - Dix Communications ipeline development sometimes translates to community investment — a principle one Wayne County community now knows firsthand. East Union Township trustees accepted a $20,0000 donation from pipeline developer Kinder Morgan during a special meeting on Nov. 9 for use with the township’s East Union Park. The funds will be used to construct a paved walkway. East Union Park has been a part of the community for about 20 years, Fiscal Officer Valorie Lewis said. It is used by residents, the Apple Creek Youth Athletic Association and the Apple Creek Historical Society, which leases two acres. Trustee Joe Rabatin said the proposed walking path will be a welcome addition to the community. The trail, at 10 feet wide, will wind through the park for about a mile. “We’re very excited about it,” he said. “A lot of our community uses the sidewalks and crosses the roads.” Sue Orr, a park committee member, said
P
she was amazed by the generosity of Kinder Morgan. She said the addition of paved trails will bring a greater sense of community to the area. “Thank you, thank you, thank you from the bottom of (our) hearts,” she said. “I’m so thankful.” The money came with no strings beyond being used to build a trail, Rabatin said. Kinder Morgan will be permitted to put some signage along the trail. “I know you’ll put it to good use,” Kinder Morgan Vice President of Public Affairs Allen Fore said. Giving back to the community is something that is central to the Kinder Morgan identity, the vice president said. When the company brings a pipeline through an area, it sometimes reaches out to community leaders for ideas on how to do that well. When it came time to have that conversation with East Union officials, the topic of the walking trail was brought up. “It’s something that the local officials say is needed and wanted in the area,” Fore said. “Right now, their focus is on this trail and that is our focus, too.” Lewis said the $20,000 will pay for just a
portion of the trail. In total, the one-mile loop is expected to cost $86,000. Given $66,000 is still unaccounted for, Rabatin and the other trustees said they would like to launch a fundraising campaign. People who would like to donate money for the trail should contact the township at 330-698-0103. Lewis said the project will not use any general fund dollars. Construction of the trail is projected to begin in the spring, Trustee Blake Meier said. Orr Construction is going to donate labor and use of equipment. If the township does not have enough funds by spring, only a portion of the trail will be completed. Kinder Morgan is in the process of constructing the Utopia East Pipeline, which will begin in Harrison County, pass through East Union Township and go on to Fulton County. There it will hook up with an existing Kinder Morgan pipeline and move east toward Windsor, Ontario, Canada. The pipeline will carry 50,000 barrels of ethane and ethan-propane mixtures per day through a 12-inch pipe. Reporter Thomas Doohan can be reached at 330-287-1635 or tdoohan@the-dailyrecord.com.
Gas & Oil
www.GasandOilMag.com
December 2015
41
Ohio Supreme Court
in another significant gas & oil decision
By David J. Wigham Attorney he International Energy Agency is projecting that the oil market will rebalance at $80 a barrel by the year 2020, with continuing increases in price for at least the next 20 years. In its World Energy Outlook report, the IEA predicted that oil prices, which are near $47 a barrel, will gradually rise as drilling capacity tightens. But, what is the on the horizon for the gas and oil industry and consumers in the next five or 10 years? The present climate of gas and oil upstream spending is down more than 20 percent
alternative fuels become more popular, the U.S., the 28-member European Union and Japan will see a considerable drop in demand by approximately 10 million barrels a day by 2040. Output growth among OPEC producers is led by Iran and Iraq, but both countries face major challenges. The risk of instability in Iraq, weaknesses in infrastructure and institutions, and the need for Iran to secure technology and huge investments are obstacles that will not be overcome any time soon. An annual worldwide upstream gas and oil investment of approximately $630 billion —
the total amount the industry spent on average for the past five years — will be required to compensate for declining production at existing fields and to keep future output flat at today’s levels. The short investment cycle of tight oil and its ability to respond quickly to price changes is changing the way the oil market operates, but the intensity with the way tight oil is developed in the U.S., eventually pushes up costs. Story Continued on Next Page
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since 2014 because of combined production of countries that are not members of the Organization of the Petroleum Exporting Countries — the United States, Japan and the European Union. OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Currently there are 12 member countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. As markets shrink the excess oil supply, efficiency policies become more conservative and
42
Gas & Oil
December 2015
Ohio Edition
Continued from page 41
significant gas & oil decision
A
CA-10419016
lthough the traditional method for extracting oil and gas is still relevant today, non-traditional horizontal hydraulic fractured wells, although a very expensive startup, have proven its worth with far-reaching tentacles that extract hydrocarbons from places previously unreachable. Economic production from tight oil formations requires the same hydraulic fracturing and often uses the same horizontal well technology used in the production of shale gas. It should not be confused with oil shale, which is shale rich in kerogen, or shale oil, which is oil produced from oil shales. The International Energy Agency recommends the term “light tight oil” for oil produced from shales, or other very low permeability formations. U.S. tight oil production stumbles in
the short term, but resumes its ascent as prices recover, helped again by continued improvements in technology and efficiency. But, as they say, what goes up must come down, and tight oil’s rise is again constrained by rising costs of production, and as operators deplete the “sweet spots” and move to less productive acreage. U.S. tight oil reaches a plateau in the early 2020s before edging toward a gradual decline. So, we should be concerned that a prolonged period of lower oil prices cannot be ruled out. Lower prices are not all good news for consumers. The economic benefits are counter-balanced by increasing reliance d n on the Middle East ed a g g a b ! y d for imported crude t All san heated facili oil and the risk of in a d e r a sharp rebound in o t s price if investment dries up. Concerns about gas supply security would also be heightened if prices stay too low to generate the necessary investment in supply. Lower oil prices alone do not Michelle have a large impact on the deployment of renewable energy
technologies in the power sector, but only if policymakers remain steadfast in providing the necessary market rules, policies and subsidies. The outlook for biofuels is hit by cheaper conventional transport fuels, vehicles powered by electricity and natural gas and the incentive to invest in more efficient technologies. Low prices should give no cause for complacency on energy security, the IEA says. The International Energy Agency is an autonomous organization headquartered in France, which works to ensure reliable, affordable and clean energy for its 29 member countries and beyond. The IEA has four main areas of focus: energy security, economic development, environmental awareness and engagement worldwide. Story taken from the context of the October IEA’s World Energy Outlook report describing possible long term scenarios of the volatile oil market. David J. Wigham is a second generation oil and gas attorney practicing in Wooster, Ohio, with nearly 25 years of industry experience. He is also the immediate past chair of the Natural Resources Committee of the Ohio State Bar Association.
Gas & Oil
www.GasandOilMag.com
December 2015
43
Legalize Freedom:
Why the Oil Export Ban?
Robert L. Bradley, Jr. - Institute for Energy Research he House recently passed legislation that prohibits the federal government from restricting crude-oil exports. In response, the White House stated that it “strongly opposes” this bill and demanded that Congress instead invest more in “wind, solar, energy efficiency, and other clean technologies.” Welcome to the religion of global warming where legalizing freedom for anything oil is verboten. Like so many supporters of oil-export restriction, President Obama is more interested in propping-up uneconomical renewable energy sources than sensible policies that benefit working Americans. Citing support for unworkable energy sources to defend the antiquated oil-export ban is unacceptable. Congress should ignore the White House and act immediately to lift the ban. In so doing, they can reduce gas prices, spur job growth, and allow Americans alike to enjoy the benefits of an open, consumer-driven, energy market. Since the implementation of the oil ban four decades ago, Congress has invested billions and billions of dollars into renewables. But, no surprise, the real energy success story emerged from the private sector. Gas prices have plummeted as American producers invest in innovative technology to access underground reserves. We recently overtook Saudi Arabia as the top oil producer on the globe and are on track to produce 9.4 million barrels of oil a day by the end of this year. Despite this game-changing development, the United States remains bound by a misguided policy established four decades ago. Today’s oil-ban proponents are mostly environmental extremists with highly suspect economic arguments. Activist groups like Oil Change International and Allied Alliance argues that lifting the ban will push energy firms to “find and produce
T
more oil.” This, they claim, in a refutation of economically sound reforms like lifting the oil supply-and-demand economics, will raise export ban. Nor should the president be able to prices. use renewables as an excuse to keep the ban in On the contrary, the Congressional place. Budget Office and the Energy Information Fortunately, it’s unlikely that the self-serving Administration alike have found that lifting arguments of environmentalists will win over the ban would result in cheaper oil. the general public. Gallup and Pew polls have Moreover, legalizing exports would further repeatedly found that most Americans are help an industry segment where more than more concerned about the tepid economy than 160,000 energy workers have been displaced. a warped brand of environmentalism. Domestic production would grow by 1.2 million Corporate responsibility should shift away barrels a day. Absent government-imposed from calculator cronyism toward principled limitations, the energy sector could continue to capitalism where free markets and free trade expand, and domestic investment would boom. are supported as a social good. It is high time to Unfortunately though, certain independent legalize freedom when it comes to energy, and refiners who are benefitting from the ban are there are few better places to start than with the also forcefully lobbying against repeal. exportation of American oil. Valero, the nation’s largest independent Robert L. Bradley Jr. is the founder and refiner, supports the ban. Their domestic CEO of the Institute for Energy Research. refineries benefit from artificially low crude-oil prices that result from the export ban, with the help of a special license from the Commerce Department. Valero and other similarly situated refiners are Obama’s best friends on the issue. They are also practicing cronyism at the expense of basic free trade. Radicals argue that lawmakers should couple a repeal of the export ban with a list of Left environmental goodies. But taxpayer Wooster Holmesville @ Underwood Motors giveaways for market330-262-2802 330-279-2800 330-345-1524 failing energy technologies shouldn’t www.autoworkscci.com be a precondition for
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44
Gas & Oil
Ohio Edition
December 2015
New CRS Report:
How corn ethanol mandates have hurt Ohio’s environment and economy W Jackie Stewart - Energy in Depth ashington-imposed mandates that have forced increasing volumes of corn ethanol to be added to Ohio’s and our nation’s fuel supply have produced an additional 1.92 million metric tons of Co2 emissions in Ohio alone since 2005, the emissions equivalent of adding nearly 400,000 cars to the road in a single year. That’s one of the key findings of a new Ohio-focused report being issued today by the Center for Regulatory Solutions, a project of the Small Business and Entrepreneurship Council. The report also includes the results of a survey that was recently conducted capturing the views and attitudes of Ohio voters. The poll finds that even without any information being provided, more Ohio respondents at the start of the poll were opposed to the Renewable Fuel Standards and expanded ethanol mandates than are supportive of them. And once introduced to several key facts about how ethanol has performed from environmental standpoint over the years, those who initially supported the RFS and corn ethanol immediately abandoned that position. The report is being released in Ohio as a series of new television ads spotlighting the failures of the RFS continue to run across the state during the month of November. “Our report puts the spotlight directly on the failures of Washington’s corn ethanol mandate on Ohio,” said Karen Kerrigan, president of CRS. “Supporters of corn ethanol promised economic and environmental gains from using corn in our fuel supply. Ten years later, we are left with broken promises and a lose-lose mandate for both the environment and the small businesses that power our economy. In fact, as this report highlights, the use of corn in our cars has made the environment worse, not better. No wonder environmentalists like Al Gore have called corn ethanol mandates a mistake. Now is the time to put aside a failed policy and repeal this costly Washington mandate.” In July 2005, Congress passed and President Bush signed the bipartisan Energy Policy Act, which
established the Renewable Fuels Standard. The RFS created a set of mandates, known as Renewable Volume Obligations, that require ever-increasing volumes of ethanol to be added to the nation’s fuel supply. Supporters of the ethanol mandate promised a cleaner environment, enhanced energy security, and greater economic support for domestic farmers and rural communities across the country. However, the targets set by Congress, which included a mandate for consumption of cellulosic ethanol, have proved elusive because converting cellulosic feedstock into usable energy is much more challenging than starch-based crops, like corn. Despite this setback, Environmental Protection Agency administrator Gina McCarthy — whose agency is responsible for implementing the RFS — is pledging to get the RFS mandate “back on track” and eventually align its targets with congressional mandates. As the report highlights, those now speaking out against the corn mandate include diverse voices from across the country, from environmental advocates to pro-business groups. In Ohio, Gov. Kasich recently stated the RFS “needs to be phased out” while Rep. Marcia Fudge (D-Ohio) and the Congressional Black Caucus have called for RFS targets to be eased because they have “resulted in higher prices for corn and higher prices for feed and food.” As far back as 2007, the Central Ohio chapter of the Sierra Club called corn ethanol a “bust” because of the amount of energy it takes to produce, the associated GHG emissions, and the land and water impacts of increased corn production. The CRS report spotlights research from the scientific community which has warned about the environmental impacts of corn ethanol since the mandate’s inception. In fact, these findings led the EPA’s inspector general to announce on Oct. 15 that it would conduct an investigation into EPA’s calculation of the life cycle environmental impacts of the RFS. The investigation follows years of media scrutiny of the RFS, which raised serious concerns about the impact of corn-ethanol mandates. In 2013, the Associated Press reported that the
rush to plant corn “wiped out millions of acres of conservation land, destroyed habitat and polluted water supplies.” In 2008, TIME magazine concluded that ethanol “increases global warming, destroys forests and inflates food prices.” Key findings contained in CRS’s analysis: • The lower energy content of ethanol relative to gasoline (ethanol has roughly two-thirds of the energy content of gasoline) resulted in $440 million in additional transportation fuel costs for Ohioans in 2014. From 2005 to 2014, Ohioans paid more than $4 billion total in additional fuel costs due to corn ethanol. CRS’s analysis shows these unnecessary energy expenditures resulted in $4.8 billion in lost GDP, $2.7 billion in lower labor income, and the equivalent of 5,500 lost jobs per year. • Corn ethanol production and consumption has added nearly 1.92 million metric tons of Co2 equivalent (Co2e) emissions in Ohio from 2005 to 2014 – equivalent to the emissions of 398,000 cars in a single year. • Corn ethanol production and consumption in Ohio has generated an additional 5,000 tons of volatile organic compounds and 28,000 tons of nitrogen oxides from 2005 to 2014. Both of which are precursor emissions that contribute to the production of ozone. • The life cycle water demands of producing corn ethanol in Ohio averaged more than 4.5 billion gallons per year from 2008 to 2014, or the equivalent of the yearly water consumption of more than 48,000 households. • The number of acres of land previously protected under Ohio’s Conservation Reserve Program have decreased by more than 20 percent from 2008 to 2014, while the total number of corn acres planted have increased. • More than 8,500 tons of cumulative soil erosion have been recorded in Ohio between 2005 and 2014 as a result of mandates that encourage additional volumes of corn to be grown. Contact Jackie Stewart at centerforregulatorysolutions.org
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Ohio Edition
API and ANGA:
Two energy trades to combine forces F
ollowing approval of both boards of directors, the American Petroleum Institute and America’s Natural Gas Alliance announced the two organizations will combine into a single trade association, effective January 1, 2016. The combined association will continue ANGA’s mission under API. “There is a natural synergy between our organizations,” said API CEO Jack Gerard. “As a single organization, the combined skills and capabilities bring an enhanced advocacy strength to natural gas market development – ANGA’s primary mission – and the combined association’s expanded membership will provide additional lift to API’s ongoing efforts on important public policy issues.” Under the agreement, ANGA’s mission to promote natural gas as a clean, affordable solution to America’s energy and environmental needs will be handled by a new Market Development Group at API, a team led by current ANGA President Marty Durbin. ANGA members who are not already members of API will become full members. “Marty will be essential to our continued, and now combined, efforts to advance natural gas market development and I am pleased to welcome him back to API in this new role,” said Gerard. “And we welcome ANGA members to full participation in API’s industry-wide activities.” API and ANGA have long collaborated to highlight environmental, job creation, energy security and consumer benefits from abundant and
affordable supplies of natural gas. “ANGA was founded in 2009 at the beginning of the shale energy revolution, and its members were visionary regarding the benefits natural gas would bring to our energy supply and our economy. Combining these two associations continues that vision by recognizing how best to organize for maximum effect,” said Marty Durbin, who will hold the title of Executive Director of Market Development under the combined association. “I look forward to combining forces to drive even greater utilization of abundant, clean burning and affordable natural gas.” API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. API’s more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 30 million Americans. Representing North America’s leading independent natural gas exploration and production companies, ANGA works with industry, government, and customer stakeholders to ensure the continued availability of natural gas and to promote the increased use of this abundant domestic resource for a clean and secure energy future.
www.GasandOilMag.com
Safety and Career Expo
Gas & Oil
December 2015
attracts more than 100 Students director of technical services for the Ohio BWC. Young worker safety is a focus for the Bureau of Workers Compensation, and Silkowski stressed need for safety training and following safe practices in order to prevent injuries. After lunch, Larry Triplett, executive director of the Muskingum County Business Incubator, delivered an interesting presentation illustrating how students could become “entrepreneurs.” There were a number of exercises in which the students (and several of their instructors) participated. The presentation engaged the students and helped them think of possibilities they might apply to their own lives and future careers. “This is a unique and very beneficial forum for young workers and an impressive agenda,” said Michelle Francisco, director of the Ohio BWC safety council programs. The Safety Council praised the presenters, businesses, school staff and students for attending the event. The council also thanked the staff at Zane State College for their help and hospitality. The Ohio Valley Educational Service Center assisted with planning and communications with the attending schools.
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ore than 100 students from Guernsey, Noble and Monroe counties attended the first-ever Safety and Career Expo at the Cambridge campus of Zane State College in late October. Sponsored by the Guernsey-Noble Safety Council, the expo was designed to introduce graduating seniors to various types of jobs as well as the safety requirements and cultures of seven local industries. Students signed up for the expo at their schools, with permission of their teachers, as a school activity. Students selected two “break-out” sessions of seven that were led by local businesses: Bi-Con (maintenance/ construction), Island Aseptics, Detroit Remanufacturing, Quanex (manufacturing), OGEEP (oil and gas), M&M Delivery (small business entrepreneur), and Southeastern Ohio Regional Medical Central, according to their interests. The presentations were informative and fun for the students. In addition, nearly 15 local businesses displayed information about their businesses in effort to acquaint students with additional opportunities. The students were encouraged to ask questions, and of course, there were plenty of “goodies” to take home. Following the breakout sessions, all students gathered in the community room to hear a presentation about the Ohio Bureau of Workers Compensation and information about safety for young workers, given by Bernie Silkowski,
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