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OOGEEP 2016
Oilfield Emergencies Training
T
he Ohio Oil and Gas Energy Education Program Oilfield Emergencies Workshops begin April 9, 10 at the Wayne County Fire & Rescue training facility in Applecreek.
Responding to oilfield emergencies can be challenging. This workshop teaches commonly used practices, references and standards. The workshop suggest methods which the attendee may find useful in implementing applicable codes. After completion of the two-day training, each participant will receive a certificate of attendance, an “Oilfield Emergency Response Training Program patch, a class photo and OOGEEP Responding to Oilfield Emergencies Field Guide. Reciprocating patches are greatly appreciated.
Classroom instructors are Charlie Dixon, director of OOGEEP Safety and Workforce; Brent Gates, New Concord, OH, fire chief; and Rhonda Reda, OOGEEP executive director.
Each participant will also receive documentation for up For information about participation requirements and to 12 CEU contact credit hours. The CEU credits must be equipment, registration and cancellation policy and approved by each department’s fire chief in accordance overnight accommodations, contact any of the above. with State Fire Training regulations. Workshop Agenda includes: Responding to potential drilling emergencies; responding to potential production site emergencies; evaluating the emergency; and response resources. To register: Online at oogeep.org/events. Download PDF then email to dquackenbush@oogeep.org; fax to (740) 587-0408, or mail to OOGEEP, P?.O. Box 187, Granville, OH 43023, or call OOGEEP at (740) 587-0410.
Connolly, Hillyer, & Ong, Inc.
Dates for training: April 9-10; May 14-15; Sept. 17-18, Oct. 22-23. There is no cost for Ohio emergency responders, the course is funded by OOGEEP and Ohio’s natural gas and crude oil producers, and endorsed by the Ohio Society of Fire Service Instructors, Ohio Fire & emergency Service Foundation and the Ohio Fire Chiefs Association.
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Cost for out-of-state emergency responders is $750 per person.
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(740) 922-4161 • (740) 922-2229 Fax 139 E. Main St., P.O. Box 71 • Newcomerstown, Ohio 43832 CA-10406011
To register: Online at oogeep.org/events. Download PDF then email to dquackenbush@oogeep.org; fax to(740) 587-0408, or mail to OOGEEP, P?.O. Box 187, Granville, OH 43023, or call OOGEEP at (740) 587-0410.
(740) 498-5196 • (740) 498-5197 Fax hillyerlaw@hillyerlawoffice.com OhioGas&Oil
1
Table of Contents MARCH 2016
1
OOGEEP 2016 Oilfield Emergencies Training
5
Facts & Figures, Show the Impactof Low Oil Prices
6
Tax Revenues Increase 340% In Monroe County, Thanks to Shale
David Dix DEDix@dixcom.com
8
Ohio Supreme Court Avoids Ruling On Whether Lower Court Improperly Extended Leases
EXECUTIVE EDITORS
10
2
Utica & Marcellus Regions show Largest Growth, According to EIA
11
Understanding Mandatory Pooling What is Mandatory Pooling?
12
Ohio Supreme Court Rules Against Landowners in Beck Energy Lease Validity Cases
15
Dominion Buying Questar for about 4.4 Billion
16
Four ‘Cracker’ Plants proposed by Multi-National Firms Are In Limbo...
19
OOGA Official Gives Update on Industry
20
Why are Gas Prices Falling So Much?
22
OOGEEP Announces Training Dates
OhioGas&Oil
PUBLISHERS Andrew S. Dix ASDix@dixcom.com G.C. Dix II GCDixII@dixcom.com
Ray Booth RBooth@dixcom.com Roger DiPaolo RDipaolo@dixcom.com Rob Todor RTodor@dixcom.com Lance White LWhite@dixcom.com
RE G IO NAL E DIT O RS Judie Perkowski JPerkowski@dixcom.com Erica Peterson EPeterson@dixcom.com Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com
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Table of Contents MARCH 2016 ADVER TISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Jeff Kaplan Alliance & Minerva, Ohio Offices 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
24
A Recap of 2015 – What’s Next?
26
Avoiding Living Trust Scams, While Protecting Your Oil & Gas Interests
28
NEXUS Submits Application to FERC
30
Utopia East Construction Expected in Fall 2016
32
Opportunities: Company President Talks to Students
Diane K Ringer Kent, Ohio Office DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450
DIGITAL MEDIA MANAGER Brad Tansey BTansey@dixcom.com
L AYOUT D E SIG NE R Luke West
lwest@the-daily-record.com
“Gas & Oil” is a monthly publication jointly produced by Dix Communications. Copyright 2016. GasandOilMag.com
On The Cover: Energy in Depth
According to the Drilling Productivity Report released by the U.S. Energy Information Administration, the Marcellus and Utica regions have shown the most growth of any shale plays in the United States. Story on Page 10.
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Facts & Figures,
Show the Impact of Low Oil Prices
T
From Associated Press he impact of sharply lower oil prices is being felt around the globe. Oil-dependent countries are trying to mend busted budgets. Oil companies are cutting production and workers. While consumers in some countries enjoy lower gas prices, elsewhere consumers are paying higher food prices due to declines in the local currency.
one-sixth of the comparable price for the UK, one-quarter that of China or onehalf of Iran. — One oil analyst estimated that an initial public offering of 20 percent of Saudi Aramco would fetch $200 billion. Exxon’s total market cap is $309 billion.
Iraq
— Production grew by 650,000 barrels a day in 2015, second largest growth behind the U.S., according to the Some facts and figures to explain the International Energy Agency. — Oil revenues make up nearly 95 regional impact: percent of Iraq’s budget. It’s looking at a deficit of over 24 trillion dinars (about United States — The government estimates U.S. $20.5 billion) for 2016. production will fall to an average 8.7 million barrels a day this year from 9.4 Iran — In 2011, prior to U.S. sanctions, Iran’s million in 2015. — Oil-dependent states are hit hard. crude oil exports were 2.6 million barrels North Dakota faces a $1 billion budget a day. Exports dropped to 1.4 million shortfall. Alaska’s gap is an estimated barrels a day in 2014. — The volume of daily trading on the $3.5 billion. — Gasoline is expected to average just Tehran Stock Exchange has increased $2.03 a gallon this year, down from from $40 million to $133 million since $2.43, according to the Energy the lifting of most Western sanctions. Department.
Canada
— At least 40,000 direct and 100,000 indirect oil jobs have been lost, according to a conservative estimate by the Canadian Association of Petroleum Producers. — Canada’s new Liberal government has promised a stimulus package and is likely to run a larger deficit than the $10 billion previously announced.
Saudi Arabia
— Saudi Arabia hiked the price of higher-octane gasoline to 0.9 riyals (24 cents) from 0.6 riyals (16 cents). According to IEA, the new price is still
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Europe/Russia
barrel. The lower the prices, the faster producers will close them down. — India’s costs for imported crude have dropped by more than two-thirds since early 2014. The IEA expects demand in India to rise 5.7 percent this year to 4.2 million barrels a day.
Africa
— In Nigeria, the naira currency has crashed from around 160 to the dollar a year ago to 300 to the dollar. — In Angola, the staple crop, millet, cost more than 250 kwanzas ($1.60) per kilogram (2.2 pounds) in late January, compared to a price of 100 kwanzas (65c) a month earlier, reported Jornal de Angola.
— European oil demand rose to an average 14.4 million barrels a day in 2015, up from 14.1 million barrels a day in 2014, according to the IEA. Demand is forecast to be flat this year. — The International Monetary Fund forecast in November that the Russian economy would shrink by 0.6 percent in 2016. Since then, oil has dropped almost Latin America another 40 percent. — In Brazil, the state-owned oil company has trimmed its spending forecast by 25 Asia percent for the 2015-2019 period. — Oil production in China was forecast to fall 0.7 percent this year, even before — The International Monetary Fund the latest price declines. Older Chinese predicts that inflation in Venezuela will wells require up to $40 to produce one surpass 700 percent in 2016
OhioGas&Oil
5
American Natural brings choice
to the Future of Fuel Story by Sara Klein Last year Carroll County saw its first compressed natural gas fueling station open for business with a ribbon-cutting ceremony on Carrollton Exempted Village Schools property just outside of Carrollton. The school district had included the CNG station in a larger proposal that earned the district an Ohio Department of Education Straight A grant award in 2014 to build a new educational center nearby. School administrators formed partnerships with contractors and builders for the new educational center, but they needed a different partner to transform the fueling station from a plan in a proposal to a bricks-andmortar reality. Pittsburgh-based energy company American Natural stepped up, and in only seven months the company progressed from a May groundbreaking for the station to a November ribbon-cutting. Founded in 2011, American Natural owns gas, diesel and CNG fueling stations as well as a wholesale petroleum fuel distribution fleet. The company now has more than 100 employees in offices spanning from Western Pennsylvania and Ohio to New York City.
she became an investment manager and ideas about the energy industry specializing in the industry. while managing energy, power and infrastructure portfolios at Diamondback That interest led her from an investment Capital, which she had joined after management career with Sandell Asset managing portfolios specializing in the Management and Bank of America to power sector for DB wirn, Angelo Gordon positions at JP Morgan-Highbridge, and Millennium Partners. where she founded and managed the firm’s Global Natural Resources “Jennifer approached me at the infancy of strategy, and later at Surveyor Capital, the company’s conceptual beginnings,” where she managed energy and Feinstein said. “...She knew me quite infrastructure funds. well from the perspective of what my viewpoints on things were and had a As gasoline prices bounced from high to strong idea that her vision for American low over the years, Pomerantz decided to Natural would be one that would resonate apply her knowledge about the energy with me. And in fact it did.” industry to a concept that would offer solutions to fueling challenges caused by The concept of offering multiple fuels volatile fuel prices. is not only at the heart of American Natural’s business strategy but also, “When the natural gas industry Feinstein indicated, guides the company’s experienced its technology shift and mission. the automotive and engine industry innovated to a point where customers Offering consumers the ability to choose could affordably use compressed natural compressed natural gas for their vehicles gas in vehicles, I was inspired to provide is a key element of American Natural’s a choice of fuel to all types of customers in multi-fuel strategy and one on which the a high quality, convenient environment.” company has focused much of its effort.
Pomerantz’s idea was to create fueling stations that would accommodate a range of customers by giving them the option to use diesel, gasoline or compressed natural gas. She noted that, in keeping with her desire to offer different types of fuel, she wanted to build stations that Jennifer Pomerantz, CEO and board of also offered fuel for the human body in directors chairman, is American Natural’s the form of freshly prepared foods and founder, and Andrea Feinstein, executive high quality beverages. vice president and chief marketing officer, is a member of the team that joined with Inspired, Pomerantz networked to build Pomerantz to build the company from the a team of colleagues who would become ground up. the founders of American Natural.
Feinstein said to date the company has constructed all of its stations in regions where natural gas is part of the natural landscape. “It’s as much about the locally sourced fuel as it is about the excitement and awareness of those communities about the resource itself and the desire...of those regions to be part of the demand,” Feinstein commented.
Why natural gas? Feinstein said the fuel offers a number of advantages that work for many different types of customers starting Pomerantz said her interest in energy At the time same, Feinstein had with its lower impact on the environment. began at an early age years before been gaining her own knowledge 6
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States,” said Feinstein.
into different communities. This spring the company will achieve another “I absolutely think that adds to the milestone of growth as it opens its 13th environmental footprint of one fuel fuel station just outside of Pittsburgh. versus the other,” she commented. Pomerantz and Feinstein said a major Another advantage that Feinstein and customer at the new station will be Pitt Pomerantz said natural gas offers is its Ohio, a company that encompasses supply price, which, unlike petroleum, remains chain, ground, lower-than-truckload (LTL) and truckload transportation. relatively stable over time. The next frontier for American Natural and CNG is attracting the drivers of passenger cars, a goal that American Natural sees happening in the future despite current delays.
“We’ve got a number of additional development projects in the works... on the heels of that station that I’m very excited to bring to market over the next year or so,” said Feinstein.
“This is not a technology that needs to be invented. There are lots of passenger vehicles in lots of other countries that run on CNG from manufacturers that we’re “It has a meaningful reduction in all familiar with,” said Feinstein. overall GHTs (greenhouse gases and particulates). It is a very meaningful step For now, however, American Natural forward in terms of the environmental is working to grow its presence in the footprint of a fleet-base in the United energy industry as its expands its reach
“I am very proud and feel very fortunate to have a great and growing mix of stakeholders for American Natural,” Pomerantz commented. “Our internal team takes a tremendous amount of pride in their work from branding, operations and customer service.”
AL-10065808
Jennifer Pomerantz (left), CEO and founder of American Natural, and Andrea Feinstein, executive vice president and chief marketing officer, celebrated the opening of the company’s CNG fueling station just outside of Carrollton in Carroll County, Ohio. Founded in 2011, American Natural has established 12 fueling stations in communities from western Pennsylvania to eastern Ohio and is scheduled to begin construction on a new station outside of Pittsburgh this spring.
GasandOilMag.com
OhioGas&Oil
7
Ohio Supreme Court Avoids Ruling
On Whether Lower Court Improperly Extended Leases
O
Andrew P. Lycans • Attorney n in order to hold the lease. The producer can continue to make delay rental payments (thereby holding the oil and January 21, 2016, gas rights) only until the final the Supreme Court of Ohio year of the primary term. The decided the consolidated failure to make such delay cases of Hupp v. Beck Energy rental payments in any year Corp. and State ex rel. would lead to the expiration of Claugus Family Farm, L.P. the lease pursuant to its own v. Seventh District Court of terms. Similarly, according Appeals. In Hupp, the Court to the Court, the failure to unanimously held that the obtain actual production of widely used Form G&T (83) oil or gas before the end of lease is not an unenforceable the final year of the primary “no term” lease because it has term would also lead to the a defined primary term. For termination of the lease. mineral owners who signed such a lease, one of the most In Claugus, the Supreme important parts of the opinion Court was asked to decide was the Court’s discussion of whether the lower appellate when delay rentals were to court was required to be paid under the lease. The provide notice to mineral Court noted that the lease owners of the Hupp class requires that a well must be action lawsuit’s existence drilled within 12 months. before issuing an order which If no well is commenced would negatively affect the during the first year of the property rights of “absent” lease, a delay rental must be class members, i.e., mineral paid beginning in year two owners bound by a Form Over a million homes... one address
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the Court refused to further toll the leases because of questions about the constitutionality of doing so.
G&T (83) lease who were not specifically named as plaintiffs in the Hupp case. A divided Court avoided answering this question when the majority held that mineral owners who became aware of the Seventh District’s order tolling the leases while the case was still pending before the Seventh District could have sought to intervene and challenge the order there. This procedural ruling leaves unresolved the issue of whether the tolling order violates the constitutional rights of mineral owners.
Ultimately, the Seventh District’s tolling order was in place for 2 years and 119 days. Thus, mineral owners who had at least 2 years and 119 days remaining on their leases when the tolling order was issued will arguably remain under contract with Beck Energy for 2 years and 119 beyond the expiration date identified in the recorded oil and gas lease. (If the mineral owner had less than 2 years and 119 days remaining on the lease when the tolling order was issued, the tolling order purports to extend the lease by the amount of time remaining on the lease at that time.)
However, the Court may have offered some insight on this issue when it refused to further toll the Form G&T (83) leases. The Seventh District’s tolling order expired when the Supreme Court accepted jurisdiction over the case on January 28, 2015. Beck Energy had asked the Court to further toll the leases until the Supreme Court issued its final opinion. The Court refused that request without elaborating as to its reasons. It is possible (perhaps even likely) that
The Supreme Court’s decision not to resolve the constitutional issue leaves unclear the effect of the Seventh District’s tolling order. Serious constitutional issues were raised regarding the enforceability of the
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tolling order. Landowners who were unaware of the tolling order until after September 26, 2014 (when the Seventh District issued its decision in the Hupp case) would be in a particularly strong position to challenge the constitutionality of the tolling order. Even landowners who became aware of the tolling order prior to September 26, 2014, may still be able to argue that they are not bound by a tolling order issued in violation of their constitutional rights. Thus, future litigation is likely and it is possible that the Supreme Court will have the opportunity to determine in a future case whether the tolling order is enforceable against mineral owners who were not personally named as plaintiffs in the Hupp litigation or otherwise provided notice. Andrew P. Lycans is a member of Critchfield, Critchfield and Johnston, Ltd., a law firm with extensive experience in all aspects of the oil and gas industry which has been representing landowners, producers, drillers, service providers, and others in the industry for over 75 years.
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Utica & Marcellus Regions show
Largest Growth, According to EIA Sophie Kruse • Dix Communications
A
ccording to the Drilling Produc t iv it y Report released by the U.S. Energy Information Administration, the Marcellus and Utica regions have shown the most growth of any shale plays in the United States.
The Utica region saw natural gas production increase 18-fold from January 2013 to July 2015, ending in 2.6 billion cubic feet per day.
For the Marcellus Shale region, natural gas production grew from 6.3 billion cubic feet per day in January 2012 to 16.5 billion cubic feet per day in July 2015. New well gas production crew from 3.2 million cubic feet per day in January 2012 to 8.3 million cubic feet per day in July 2015.
According to the EIA, the report “uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil and natural gas wells to provide estimated changes in oil and natural gas production for seven key regions.”
The EIA says that the increase in these regions is due to “ongoing improvements in precision and efficiency of horizontal drilling and hydraulic fracturing.”
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Understanding Mandatory Pooling
What is Mandatory Pooling?
A
ccording to information from the Ohio Department of Natural Resources, mandatory pooling may be requested when an operator is unable to acquire the leases to meet the necessary acreage and/or distance requirements when applying for a drilling permit. Mandatory pooling is created by section 1509.27 of the Ohio Revised Code and has been in effect since October 15, 1965. A mandatory pooling order can be applied for if a tract of a land is of insufficient size or shape to meet the requirements for drilling a well and the applicant has been unable to form a drilling unit on a just and equitable basis. There must be no obvious alternate location whereby mandatory pooling would not be necessary and the operator must have assembled the majority (90 percent or higher is recommended) of the unit with lessors that want to have a well drilled. When the Division of Oil and Gas Resources Management (DOGRM) receives an application for mandatory pooling: • A geologist reviews the application for completeness. Special attention is given to make sure the operator has verbally contacted the unleased party either by telephone or in person in an effort to obtain a lease from them.
Fountain Square complex in Columbus. Notification of the hearing will be mailed to any affected landowner in the proposed drilling unit; • Staff members from the DOGRM will conduct the hearing. At the hearing both the applicant and any affected landowner will present testimony in support of or in opposition to the mandatory pooling request. A court reporter will be present to record the hearing proceedings; • After the hearing, the chief will confer with his staff and review the request for mandatory pooling. If the chief determines that mandatory pooling is necessary to protect correlative rights and to provide for the effective development, use and conservation of oil and gas, a mandatory pooling order will be issued approving the application and a drilling permit will be issued to the applicant; • If the chief determines that mandatory pooling is not necessary, the application will be denied by order. • Upon receipt of the Chief’s Order, any affected party has 30 days to appeal the order to the Oil and Gas Commission.
• The affected landowners are notified by DOGRM that an application has been filed and that they have the right to a hearing; • If no hearing is requested after thirty days from the date that notification was sent to the landowners, the chief, if satisfied that the application is proper in form and that mandatory pooling is necessary to protect correlative rights and to provide effective development, use and conservation of oil and gas, shall issue a drilling permit and a mandatory pooling order; • If a landowner elects to have a hearing, DOGRM will schedule the hearing for a date and time at the ODNR GasandOilMag.com
OhioGas&Oil 11
Ohio Supreme Court Rules Against
Landowners in Beck Energy Lease Validity Cases David J. Wigham • Attorney n January based on the Form G&T (83) 21, 2016, lease. These leases generally the Ohio contained standard lease terms Supreme Court at the time, including a ten-year issued a decision primary term, a 12.5% royalty, affecting the mineral rights and a delay rental ranging from of hundreds of landowners in $1-$5 per acre per year. Ohio who leased with Beck Energy: State ex rel. Claugus While these lease terms seemed Family Farm, L.P. v. Seventh reasonable at the time, once the Dist. Court of Appeals. The Utica Shale boom hit southeast decision actually resolved two Ohio, landowners soon realized cases that the Ohio Supreme the lease terms were well below Court consolidated on appeal, fair market value. Watching Hustack v. Beck Energy Corp., many of their neighbors enter an appeal from a decision of into new leases with 17%-20% the Seventh District Court royalties and signing bonus of Appeals, and State ex rel. payments of $5,000-$7,000 per Claugus Family Farm, L.P. v. acre for a five-year primary term, Seventh Dist. Court of Appeals, landowners understandably a mandamus action in which regretted leasing with Beck. the Seventh District Court of Appeals was sued for issuing This situation left landowners a tolling order in the Hustack with two options: Either wait case while it was on appeal. until their Beck lease expired, or try to sue Beck to get out of The Court’s ruling declared the lease. Both options carried Beck’s leases to be valid and risk: Landowners deciding to binding. To make matters worse, wait faced the possibility that the Court also refused to void the their lands would be developed Seventh District’s tolling order and then indefinitely held by which extended most undrilled production in the secondary Beck leases for an additional 849 lease term. Conversely, if a days (nearly two year and four landowner sued Beck and lost, months), thereby affecting the Beck would likely succeed in rights of Beck landowners who obtaining a court order tolling never even received notice of the (or stopping) the running of the tolling order. primary term of the landowner’s lease for the duration of As a matter of background, in litigation (effectively extending the mid-2000’s, Beck went on a the primary term for a period of lease-signing spree in southeast time equal to the duration of the Ohio, signing hundreds of Ohio litigation). landowners to oil and gas leases
O
12 OhioGas&Oil
Considering the small number of rigs in the field, the large number of landowners with Beck leases, and the relatively low chance of success in suing Beck during the primary term, it was no surprise that most landowners chose to wait out the primary term of the Beck leases. However, a small group of landowners decided to sue Beck in Monroe County Common Pleas Court, seeking to have their leases declared invalid. The next series of events turned this case, eventually captioned Hustack, et al., v. Beck Energy Corporation, into a legal nightmare for most landowners holding undrilled Beck leases, through no fault of their own.
As a result of this ruling, all landowners with undrilled Beck leases were bound to the proceedings in Hustack, all without their consent and without notice that they were even a party. In effect, these landowners, all of whom chose to wait out the primary term of their Beck leases, were now subject to the risk of having the primary term of their leases tolled from running.
At first, the risk of these landowners facing a judicial lease extension was prospective. First, if the Beck leases were declared invalid on appeal, it would not matter if the primary term of the Beck Leases was To start with, much to everyone’s extended. Second, the trial court surprise, the plaintiffs who limited its tolling order to apply sued Beck obtained a favorable only to the plaintiff landowners. trial court ruling that the Beck leases were no-term leases and Eventually, Beck appealed therefore invalid. Furthermore, the trial court’s decisions to the attorneys for the plaintiffs the Ohio Court of Appeals, were successful in obtaining a Seventh Appellate District. On class certification that included appeal, not only was Beck able all the landowners, even those to successfully argue to the who chose not to sue Beck (and Seventh District that the trial who were waiting for their court had erred in declaring the Beck leases invalid, but Beck also leases with Beck to expire). GasandOilMag.com
obtained a modification of the lower court’s tolling order to include not only the named plaintiff landowners but all the landowners with undrilled Beck lease who chose not to sue, including those who never even received notice of the lawsuit. As a result, the primary term of all undrilled Beck leases that had not expired as of October 1, 2012 was extended until the Seventh District made its final ruling.
the appellate case -- and the Seven District had jurisdiction (or ability) to issue a tolling order affecting the whole class. The Seven District went so far as to point out that, at the time the motion to dismiss was filed, that appeal had not ended and, as a result, Claugus could still intervene in that appeal.
Undeterred, Claugus responded to this motion to dismiss by arguing that, under the circumstances, a motion to intervene would be pointless. This argument appeared to meet with initial success as the Seventh District’s motion to dismiss was ultimately denied and the mandamus action, entitled State ex. Rel. Claugus Family Farm, L.P. v. Seventh District Court of Appeals, et al., Instead of moving to intervene in the went forward and was consolidated with Hustack appeal, Claugus decided to file an the appeal in Hustack. original action with the Supreme Court of Ohio, which essentially sued the Seventh On January 21, 2016, the Ohio Supreme District for its modification of the tolling Court decided two primary issues in the order. In response, the Seventh District filed consolidated case: (1) whether the Seventh a motion to dismiss, claiming that an original District had erred in determining that the action was inappropriate since Claugus had Beck Leases were valid, (2) whether Claugus’ an adequate remedy at law -- intervening in Story continued on page 14
WO-10441980
Furthermore, once the Seventh District made its ruling, the parties in that appeal, Beck and the plaintiff landowners, jointly stipulated to an extension of the tolling order of all the Beck leases until the Ohio Supreme Court accepted review of the Seventh District decision. In effect, the plaintiff landowners (who had practically no hope of avoiding their leases being tolled) consented to an order tolling the leases of all the landowners who chose not to sue Beck. While plaintiff landowners appealed the Seventh District’s lease validity holding to the Supreme Court of Ohio, no party in Hustack appealed the holding that class certification was proper.
Again, this all happened without legal notice to the landowners who chose not to sue, with the exception of at least one landowner, Claugus Family Farms, who had actual notice of the proceedings and the expansion of the trial court’s tolling order. As an interested party, Claugus could have attempted to intervene in the appeal before the Seventh District. If granted, this motion to intervene would have provided Claugus with a voice in the appellate proceedings and would have allowed it to seek a modification of the Seventh District’s expanded tolling order. It would also have given Claugus the opportunity to appeal the Seven District to the Ohio Supreme Court.
GasandOilMag.com
OhioGas&Oil 13
Story continued from page 13
writ for mandamus should be granted (which would have voided the modified tolling order as to Claugus). The Court was asked to also rule on Beck Energy’s motion to (yet again) extend the tolling order, this time from the date the Ohio Supreme Court accepted review of Hustack on January 28, 2015 until the date the Court issues its decision in the consolidated case. As expected, the Court unanimously affirmed the decision of the Seventh District finding that the Beck leases were valid, relying in part on the provision stating that the lease would last for a term of ten years “and so much longer thereafter as oil and gas or their constituents are produced or are capable of being produced on the premises in paying quantities, in the judgment of the Lessee” required the Lessee to drill a producing well within the primary lease term in order to hold the lease.
Claugus. The Court found that such relief was not warranted because Claugus could have intervened in the appeal of the Hustack case before the Seventh District after the tolling order was issued, but chose not to. The Court based its holding on the very grounds that the Seventh District had argued in its motion to dismiss. As a result of this failure, Claugus had failed to meet the burden of establishing that it had no other remedy at law. In essence, Claugus lost because it failed to follow the right process. Finally, and significantly, the Court refused to toll the primary term of undrilled Beck Energy leases in Monroe County from January 28, 2015, to the date of the Court’s decision, meaning that the ten-year primary term of these undrilled leases began to run again on January 28, 2015.
While these two cases are procedurally complex, the effect of this decision is straightforward: Landowners who signed Form G&T (83) leases with Beck Energy in Monroe County are still bound to those leases. However, if the primary term of these leases expired on or after October 1, 2012, that primary term has now been automatically extended for an additional 849 days (nearly two years and four months). Affected Monroe County landowners should review their undrilled Beck Energy leases and make note of the new expiration date. Once that date passes without drilling operations being conducted, these landowners likely will have a claim that their undrilled lease has expired and may pursue more lucrative leases with other producers. Landowners are urged to retain the services of an experienced oil and gas attorney to guide them through the process. David J. Wigham is a second-generation Ohio oil and gas attorney at the law firm of Roetzel & Andress, with nearly 25 years of experience in the industry. He maintains offices in Akron and Wooster, Ohio and can be reached at 330-762-7969.
Next, the Court also denied the relief sought in the mandamus action by
and agged ility! b d n a fac All s heated a n i ored
st
14 OhioGas&Oil
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Michelle
GasandOilMag.com
Dominion Buying
Questar for about 4.4 Billion
D
o m i n i o n R e s o u r c e s will spend approxi mately $4.4 billion to acquire Questar in a big reach to the West for the East Coast energy company. Dominion is a power producer in the mid-Atlantic region. Questar is in the Rockies and a principal source of gas supply to Western states. There was a rush of deals last year among energy companies who are bulking up with demand weak and energy prices plunging. That includes utilities, which are increasingly switching from coal to natural gas, as they seek more control over their cost input. Last year Duke Energy Corp.,
a major power provider in the Southeast, spent almost $5 billion to acquire Piedmont Natural Gas Co. Dominion, with Questar, would serve about 4.8 million electric and gas customer accounts in seven states and would operate more than 15,500 miles of natural gas transmission, gathering and The transaction is targeted to close by the end of the storage pipelines. year, according to Richmond, Dominion Questar shareholders will Virginia-based receive $25 per share, a Resources Inc. The deal still 23 percent premium to its needs approval from Questar Friday closing price of $20.39. shareholders and clearance The deal also includes the from the Federal Trade assumption of Questar’s Commission. outstanding debt.
The companies said that, if needed, they will file for review and approval from the Utah Public Service Commission and the Wyoming Public Service Commission and will give information about the transaction to the Idaho Public Utilities Commission.
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OhioGas&Oil 15
Four 'Cracker' Plants proposed by
Multi-National Firms Are In Limbo...
Judie Perkowski • Dix Communications
C
ambridge -- Jason Hamman opened his presentation at the Guernsey Energy Coalition’s meeting on Feb. 4 by asking the (multi) million dollar question: Is even one of the four proposed ethane cracker plants actually going to happen in Ohio, Pennsylvania or West Virginia?
morning at the Southgate Hotel in plants, in this or any other related story is billion (s), we passed millions quite some Cambridge. time ago.] Jo Sexton, president of the Cambridge Area Chamber of Commerce and Appalachian Resins CEO James Cutler, moderator for the event, welcomed said in September 2014 the company Hamman, president of The Hamman decided to move the location of the Consulting Group, based in Vermilion, planned cracker plant to Ohio because of and represents the Monroe County business and commercial reasons, and to accommodate a larger production facility. Economic Development Corporation.
Well, maybe. A cracker plant converts ethane, a by-product from Marcellus Shale and Utica Shale natural gas, into the widely used ethylene, a key component for the plastics industry.
According to Hamman, the smallest of the projects, Appalachian Resins, Inc., a $1 billion ethane cracker plant originally on target to be built in West Virginia, is on hold.
Although the Houston-based Appalachian Resins has agreed to lease about 50 acres of land in Salem Township, Ohio, to build its facility, the company confirmed the on-hold statement to the trade publication DownstreamToday.
Hamman was guest speaker at the [The dollar amount used to identify the Guernsey Energy Coalition Thursday estimated cost for any of the four cracker And then there was another reported
16 OhioGas&Oil
GasandOilMag.com
scenario that Appalachian Resins plans to start operating the facility in early 2019 to process about 18,000 barrels per day of ethane into ethylene and polyethylene. It’s another wait-and-see because of the volatile gas and oil industry. “Then we have the Brazilian firms Braskem and Odebrecht who confirmed they are re-evaluating Project ASCENT, the major plastics and petrochemicals project they proposed for Parkersburg, W.Va., because of the current energy scenario,” said Hamman. “Project ASCENT will be re-evaluated and a final investment decision on the project will require more diligence,” said a company spokesperson. “The $4 billion project stands for Appalachian Shale Cracker Enterprise. If the plant is built, it would be operated by Braskem America.” Then in June 2015, a major problem: Marcelo Odebrecht, the president and CEO of Braskem and Odebrecht was arrested, along with others, after Brazilian officials alleged he was part of a plot that stole billions of dollars from the state-run oil company Petrobras. The delay of the Braskem/ Odebrecht project comes almost simultaneously with PTT Global Chemical of Thailand and Marubeni Corp. of Japan, announcing that they’re one step closer to finalizing a similar project for Belmont County, not far from
GasandOilMag.com
Parkersburg. Officials with PTT and Marubeni on April 22 confirmed that Belmont County is a finalist for the project. Even though PTT has already approved $100 million for engineering and design specifications, they said a final “investment” of approximately $5 billion will be announced “sometime between 2016 and 2017,” said Hamman. The one project that seems to have the most momentum is Shell’s bid to enhance Pennsylvania’s resume with a cracker plant. “On March 15, 2012, Shell announced Pennsylvania had won the “cracker sweepstakes,” naming a site near Monaca in Beaver County, as the possible future location for the petrochemical plant,” said Hamman. “Shell seems to be moving forward. They have already committed $69 million to relocate the water intake site and demolition of current structures on the property they purchased in Beaver County, is evident.” At least four similar projects have been proposed for shalerich regions of Ohio, West Virginia and Pennsylvania in recent years, but none have begun construction. “Of course the PTT Global project in Belmont County is the largest. It is a two to three-year project, with perhaps thousands of jobs that could encourage other related businesses to settle in the region. But any of the four
Jason Hamman, guest speaker at the Guernsey Energy Coalition meeting Thursday at the Southgate Hotel in Cambridge, was introduced by Jo Sexton, l, president of the Cambridge Area Chamber of Commerce. Other guests were Joy Padgett, seated, l, outreach coordinator for the Ohio Environmental Protection Agency, and Betsy Anderson, organization director of the Ohio Farm Bureau, sponsor of February meeting. projects would have a massive impact on the tri-state area ... a real game changer,” he said. “We are all hoping they will come to fruition.”
provided 300 jobs, including fabrication work for the oil and gas industry,” he said. “There is still room available for more businesses.”
He also said that an available workforce is very important. Many of the jobs at a cracker plant require a skilled workforce with deep manufacturing experience. Hamman also spoke about the Hannibal Industrial Park, which he said is a real success story for Monroe County.
Another site of 49 acres of Monroe County Port Authority underdeveloped property is available for businesses to fill spaces that can offer multi-modal transportation — rail, barge and highway — abundant utilities, a strong local economy and a network of strategic partners. There are also tax incentives.
“The key to the 80 to 90 percent occupancy in the park is the re-activation of the rail line and its 3,000 rail cars. They (city and county officials) have created an energy campus with 20 businesses, which has
For more information about the Hannibal Industrial Park or the Monroe County Port Authority property, contact Hamman at (440) 292-5326, or go to www.hammanconsulting. com.
OhioGas&Oil 17
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18 OhioGas&Oil
GasandOilMag.com
OOGA Official
Gives Update on Industry
T
Judie Perkowski • Dix Communications he quarterly exploration and development. board meeting of the Eastern Ohio “We have about 13 rigs operating in the D e v e l o p m e n t Utica, last year we had 59. In Guernsey Alliance drew a “record County we had three, now we have attendance for a board zero.” meeting,” said EODA Executive Director Jim Schoch. Approximately He said production is going on in 100 EODA board members and friends Belmont, Harrison, Monroe, Jefferson met at the historic Bryan Place in and Carroll counties. What does that Zanesville Feb. 12. mean? Because the volume of natural gas is so great, even with lower prices “This has been an excellent year. We you can still make a profit. now have 136 members, a 70 percent increase since last year,” said Schoch. In the long run, Bennett said if there “And, we anticipate more growth.” ever was a silver lining, it is pipelines. You have to get your product to market Secretary Dorothy Skowrunski who and pipelines are the answer. presented the minutes from the last meeting, said, “it was the best year we Other speakers at the meeting included have ever had.” a presentation by Mary Kaufmann and Victor Thorne of Pillar Technology, Shawn Bennett, executive vice president who helped to pave the way for supply of the Ohio Oil and Gas Association, chain entrepreneurial management in presented a brief update on the status the food industry, where there is a huge of the oil and gas industry. opportunity in the private and public sector. “There is a bit of good news. At a Padgett, representing the presentation about a recent study Joy of ground water contamination in Environmental Protection Agency Carroll County — the most heavily Office of Outreach and Customer drilled county in eastern Ohio — by Support, said there is a door of researchers from the University of opportunity for you to do something Cincinnati released a couple of weeks in your community. The Office of OCS ago, showed that there was zero reaches out to Ohio communities and contamination of ground water from businesses and connects them to the hydraulic fracturing. Now you would environmental assistance they need in think this was good news, but one of securing recycling and litter prevention the researchers said that because they grants, training events, compliance didn’t get the results they expected, deadlines and coordinating outreach to specific industries and communities, they lost their funding.” in addition to helping communities He went on the say we are in a lull and businesses access compliance, period. Gas prices are at the lowest they technical and financial resources. For have been in years, less than $2 a gallon more information, go to outreach.defa@ for gas and oil is selling for about $28 epa.ohio.gov. a barrel, not much motivation for GasandOilMag.com
There were short presentations by Bret Allphin of Buckeye Hills and Jeannette Wierzbicki of OMEGA, Mike Jacoby and Ed Looman of Appalachian Partnership for Economic Growth and Megan Wanczak of the Foundation for Appalachian Ohio and an update by Schoch on the Don Myers and Dale Hileman Legacy Funds. “We will offer grants up to $600 from the Myers Fund. We have to wait a year before we can start offering grants from the Dale Hileman Fund,” he said. The board of directors also invited nominations for the EODA Excellence In Small or Emerging Business Award. Nominee must be in the 16-county EODA region and employ no more than 150 workers. Dealine for nominations is March 18. Questions? Call Ed Tester (740) 260-4284, or Executive Director Jim Schoch at (740) 432-7902. Memberships for 2016 are now due. Checks should be made out to Kent State University at Tuscarawas, New Philadelphia. The board is also planning the annual meeting for April 29 at the Carlilsle Hotel in Walnut Creek.
OhioGas&Oil 19
Why are Gas Prices Falling So Much? A detailed look into how gas prices are playing their part in a boom and bust cycle
P
Jacob Runnels • Dix Communications rices for both around the world are cutting back on crude oil and drilling “until the market balances gasoline at the out.” He said producers are taking the pump are at their “necessary decisions” by cutting back lowest in years due to a production now to deal with the lower surplus in supply. prices and leveled demand. From information obtained from the U.S. Energy Information Administration (EIA)’s website, crude oil and gas prices had been rising since 2003 but have been dropping since 2013. According to the American Petroleum Institute (API), the world’s demand for oil increased for years and even “peaking at 87 million barrels per day in 2007,” but there was an economic slowdown in 2009 and “rebounding in 2010.”
“It’s not immediate,” Zeigler said. “When you see changes in global crude oil supply and prices, that does have an impact on the downstream side of things in terms of gasoline and diesel prices.”
“Right now, global crude oil supply is outpacing demand,” said Chris Zeigler, executive director of the Ohio API and a member of the Ohio Lobbying Association. “As a result, you’re seeing domestic gasoline prices being lower.”
“There’s a glut of Oil available and the perfect price of Oil in international markets has fallen”
Zeigler said there is a rising global supply of gasoline but demand has stayed the same since the 2000s. He said producers didn’t have the production levels back then, but now that U.S domestic production has increased, “our global crude oil supply is outpacing demand” and resulting in lower gasoline prices. He said crude oil producers and drillers 20 OhioGas&Oil
While Zeigler said the gas prices lowering are a response to stagnating oil demand, Eligo Energy CCO Mark Friedgan said oil producers are caught in the bust end of a boom and bust cycle.
in 2013 to $1.98 per gallon in 2016. This means the average price of a barrel of crude oil experienced nearly a 69 percent decrease in price and the average price of a gallon of gasoline experienced nearly a 45 percent decrease over three years. Friedgan said oil demand increased in the 2000s, most notably with China’s economy becoming more dependent on oil. During this time, he said “more prospecting was being done,” which resulting in the American shale industries producing more. Now, with the falling prices, Friedgan said “shale producers are having to do less [producing].” Additionally, he said this is resulting in large financial entities such as banks “renting tankers to store excess oil” and artificially lowering the rising supply to keep up with demand. He said the price of electricity is correlated to the price of natural gas because “a lot of peak production is done using natural gas.”
— Mark Friedgan “Natural gas has been in a falling National West Texas Intermediate (WTI) crude oil—a light grade oil—prices went from the average price of $97.91 per barrel in 2013 to $30.66 per barrel in 2016 and national gasoline retail prices went from the average price of $3.58 per gallon
price environment for a while, much longer than oil,” he said. “We’ve been in an overproduction of natural gas environment for longer than this oil shock and we take advantage of it.” With information obtained from the GasandOilMag.com
Natural Gas Intelligence (NGI), the average price of natural gas — from 2013 to 2015 — for the Marcellus and Utica shale formations went from $3.32 to $1.43 per unit, resulting in a nearly 57 percent drop in price per unit.
investments and derisk.” “When [producers pull out due to uncertainty], that causes an unwinding of the cycle,” he said. “Typically, people don’t cut back because they’re out of money; they cut back because they see that, if they don’t, they’re going to run out of money.”
However, Friedgan said smaller oil producers — those who have a lot of debt — have to keep pumping oil because they can’t afford to hold onto oil until prices rise again in the next oil cycle.
Friedgan said natural gas producers weren’t as prepared for the price shocks, as they were used to selling in a high-cost environment. However, shale producers are “becoming more efficient” at extracting natural gas.
“You’ve got big banks renting tankers holding oil off storages waiting for the oversupply to get used up,” he said. “[Producers and banks are] cutting employees, they’re cutting back on all forms of expenses because the reality is those who survive the bust will do well in the next cycle.”
“It’s really a question of how long-term of a play they were in,” he said. “If you think about the high cost producers like shale, they simply can’t operate if the prices are too low. Their entire business model was built on operating in a high-price environment so they have to shut those wells down if they want to survive.”
However, the fate of oil prices isn’t necessarily all doom and gloom, as Friedgan said the global oil market is simply experiencing “a short-term oversupply” and there have been instances of short-term access periods in the past. He said this kind of volatility in the market “caused a lot of uncertainty, and uncertainty causes people to curb
He said, in the end, producers have discovered their own “risk strategies,” such as companies that are in the business of “shorting oil.”
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OhioGas&Oil 21
OOGEEP Announces Training Dates
T
he Ohio Oil and Gas Energy Education Program is excited to announce registration is open for several of our wellattended and highly regarded trainings and workshops. Funded by Ohio’s oil and gas producers, OOGEEP offers a wide of range of programs that benefit Ohioans, especially industry workers, firefighters and teachers. Many of our trainings are held at no cost to Ohioans, demonstrating the industry’s and OOGEEP’s commitment to the state. 2016 First Responder Training OOGEEP’s nationally recognized and accredited firefighter training program returns for its 15th year in 2016. More than 1,350 first responders from departments across Ohio and several other states have attended these two-day training workshops. Utilizing a team of industry and fire service experts, OOGEEP’s workshops combine a mix of classroom and hands-on fire behavior labs to help first responders better understand the oil and gas industry, its common practices, potential emergencies that might occur and how best to respond to those rare events. Registration for the two-day workshops is available at oogeep.org. Classes are held at the Wayne County Fire and Rescue Training Facility in Applecreek. The workshop is FREE to attend for all Ohio firefighters! 22 OhioGas&Oil
Training dates: April 9, 10; April 30, May announced at later dates. 1; Sept. 17, 18; Oct. 22, 23 Registration for the two-day workshops is available at oogeep.org. Check 2016 Teacher Workshops More than 2,700 teachers from schools in the website regularly for updates on all of Ohio’s 88 counties have attended additional workshops to be held. The OOGEEP’s Science Teacher Workshops. workshop is FREE to attend for all Ohio Based on the average number of teachers. students placed in a teacher’s class each year, it’s estimated that approximately Two-day workshop dates: June 16, 17 at 11,000 Ohio students will be impacted the Lafayette Hotel in Marietta; July 12, by OOGEEP training from just one 13 at Stark State College, Canton. workshop. 2016Industry Training These innovative workshops draw The safety of the men and women full crowds and feature a recently who work and wish to work in Ohio’s revised science teacher curriculum, oil and gas industry continues to be a STEM Lessons in Oil and Gas Energy priority for OOGEEP. The organization Education. The revised curriculum and will continue to hold IADC RigPass/ labs demonstrate how oil and gas is SafeLand training sessions in 2016. formed, trapped, explored, developed, produced, refined and transformed OOGEEP’s Safety Training Committee into thousands of every-day products. comprised of experts representing the Attendees spend a classroom day entire spectrum of Ohio’s oil and gas learning about the industry, reviewing operators, is currently developing a the curriculum and demonstrating schedule of specialized and relevant experiments with other teachers. A training topics. Industry training second day features a field trip to sessions are held at no cost for employees oilfield sites in the region. Teachers of Ohio’s oil and gas producers. receive educational training credits and have an option to earn graduate credit. Additional OOGEEP — organized Educators also receive lab experiments, trainings and events of interest are material kits, graphic organizers, career tracked and added to OOGEEP’s events connections and a variety of additional calendar. Keep up to date by visiting materials. OOGEEP will hold two two- oogeep.org/events and following the day workshops in the summer of 2016; organization on Twitter and Facebook. additional one-day workshops will be GasandOilMag.com
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OhioGas&Oil 23
A Recap of 2015 – What’s Next?
A
Judie Perkowski • Dix Communications recap of the stories i n the GAS&OIL magazine from January to December of 2015 that made us smile, angry, frustrated, and, for some, more money than they ever had in their life. These stories are some of the most talked about by the public and the industry. First quarter of 2015 — It was all about the jobs in the first quarter of 2015, Gov. Kasich’s plan for a severance tax, and Obama’s veto of the proposed Keystone Pipeline. January — Workforce Summit focused on jobs. Toby Mack, president and chief executive officer of Energy Equipment and Infrastructure Alliance, said the shale energy supply chain is comprised of more than 60 industries with more than 600,000 workers. U.S. Representative Bill Johnson, Ohio 6th District and a member of the U.S. House Committee on Energy and Commerce, said,” We play a pivotal role in America’s future. There are many projects coming our way that present great opportunities, with many jobs in oil fields, wells, pipelines, construction and dozens of other positions. We have to engage our young people in the conversation about careers, not just job, for men and women in the industry.” February — New energy taxes could jeopardize jobs! Ohio 24 OhioGas&Oil
and Pennsylvania are at the Second quarter of 2015 forefront of America’s shale focused on fracking-induced energy revolution. In earthquakes, water rights and experts predict the ‘best is yet Ohio, employment in core shale to come’ industries, such as pipeline construction and well drilling, April — Tremors shaking up increased 88 percent from 2011 well discussions. Companies to 2014. Those jobs paid $25,000 that pump massive amounts more annually than jobs in of salty oilfield waste into the other Ohio industries. Similar to ground are now required to Pennsylvania, the state’s public install seismic monitors to track school districts could employ Earth movement. People in 700 teachers with the $60 Mahoning Valley are tired of million in energy savings they earthquakes and expect public enjoyed due to the affordable officials to do everything in supply of shale energy their power to prevent future unlocked through hydraulic fracking-induced tremors. fracturing and horizontal drilling. Job creation, wages, American Water Management economic growth and taxpayer Services, Inc. says that two savings, every key economic seismic events, a magnitude 1.7 indicator has benefitted from tremor in July and a 2.1 a month shale energy development in alter, were minor and were not Ohio and Pennsylvania. felt by the general populace or big enough to cause damage. March — Keystone VETO The ultimate decision in this not a death blow. On Feb. 24, case will have repercussions for 2015, President Obama vetoes eastern Ohio’s fracking-related the bill Congress passed this activities. month forcing approval of the proposed Keystone XL Pipeline. May — Women can succeed in The bill, an effort by Congress to non-traditional roles; Consol override the State Department’s Energy using engines to cut protracted environmental fracking pump emissions review of the pipeline, would have authorized TransCanada Deanna Duche, one of the to build the $8 billion pipeline few women in Ohio to be a along 875 miles of U.S. soil certified welder and a certified from the Canadian border welding instructor. She is in Montana to Nebraska, also the director of welding where the oil would be piped education at Zane State College to refineries in Texas. After in Cambridge. She has been at postponing a final decision the college since 2001. Duche on the Keystone, the State said there are usually five or six Department has hinted that its women in the welding classes. decision could be forthcoming Duche said the skill is very sometime this year (2015) but its much in demand. As soon as a review of TransCanada’s permit student learns the basics, a gas and oil company is knocking on application is ongoing.
the door. Consol Energy has begun using new, cleaner burning engines to run its hydraulic fracturing pumps at natural gas well sites. The Pennsylvaniabased energy company said the diesel engines are supposed to cut harmful emissions by 36 percent. June — The third anniversary of the GAS&OIL magazine. Supply and demand. John Felmy, chief economist for the American Petroleum Institute said despite the success of the industry, growth in the U.S. depends on the fundamentals of supply and demand. 4 to 5 percent increase in supply has lead to a 40-50 percent decrease in price. The key is what came down fast can quickly reverse. Today, 49 of Ohio’s counties have over 50,000 producing wells, a statistic that was not valid five years ago. Third quarter of 2015 — Focus on pipelines, first hotel in Cadiz, courts rule against Community Bill of Rights. July — Negotiating pipelines projects: Dale Arnold of the Ohio Farm Bureau spoke with several township trustees at the invitation of the Wayne county Commissioners, to explain what they can expect as energy development in the U.S. changes to a decentralized system with relatively few entities to one with many players as more pipelines find their way through the county. The NEXUS pipeline is slated GasandOilMag.com
to cut across northeastern Chippewa Township. August — Industry spurs first hotel in Cadiz. Home to about 3,300 resident in Ohio’s Utica shale region, Cadiz is now also host to oil and gas workers and visitors who stay at the 81-room Microtel Inn & Suites. In the coming months, Cadiz will see its second hotel when a Days Inn & Suites opens. Cadiz and surrounding communities in Harrison County have seen some of the most active oil and gas drilling operations in Ohio.
advice. Like many booms money seemed to be flowing from endless streams, and lease money kept going up and up ... There comes a day when it ends and without warning all your hopes and dreams of big money seem dashed.
Fourth quarter of 2015— Thailand company to invest $100 M in Belmont County; Don Gadd: when endless stream of money ends; Wayne Co. rejects Rover pipeline.
Though this seems to be true currently, there is still activity going on in the oil patch. It is just transferred to the midstream part of the business. It’s crazy and it may be several years before it gets hot again, but it will.
October — PTT Global Chemical announced it has plans to build an ethane cracker plant in eastern Ohio. The $100 million investment is to start the engineering phase of the potential project. Landman and Byesville former Mayor Don Gadd gave some
November — Wayne County Commissioners filed a letter with the Federal Energy Regulatory Commission asked the agency to reject Energy Transfer’s proposed Rover Pipeline, saying the proposed route could hinder the county’s
economy and create safety concerns. FERC’s approval process is viewed as a court case and each filing counts as a piece of evidence for granting approval, denial or recommendations for how to improve. December — Six counties in Ohio reached the century mark for gas/oil activity. Carroll County continues to lead Ohio in Utica Shale development with Chessapeake number one with 408 permits, 323 wells developed and 223 producing. Harrison has 234 permits, 111 wells developed and 61 producing , followed by Noble, Belmont and Guernsey counties.
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September — Ohio Sec. of State invalidates ballot proposals. Ohio Secretary of State Jon Husted ruled on the questioned validity of county charter ballot proposals, certifying that they would NOT receive a place on the November
2015 election ballot. Husted said that provisions in each of the charters relating to oil and gas exploration represented an attempt to circumvent state law in the manner the courts have already found to be in violation of the Ohio Constitution.
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OhioGas&Oil 25
Avoiding Living Trust Scams,
While Protecting Your Oil & Gas Interests Atty. Frank A. McClure
P
eople work hard for their money, their Oil & Gas interests, and all their assets which they have accumulated during their lifetime. People want to have control over what happens in the event of their mental disability or death. By control, I mean that clients wish to determine what will happen to their assets and how they will give them to their loved ones. At the very least, people want to minimize and avoid potential hassles and headaches for their loved
ones. Good Estate Planning can take care of these goals, and many more! There are many different strategies to choose from to make sure that you have the control you wish in determining the use and distribution of your assets. To meet your wishes, the right strategy depends on your individual circumstance and your goals. In other words what is best for your friend or neighbor might not meet the needs and goals that you have.
Living Trust. A Living Trust can either be revocable or irrevocable. A Living Trust is not the same as a Living Will. A Living Will is a healthcare document and a Living Trust is a contract you make with an individual who is called a Trustee (the person who will take care of you and your assets). The Trustee can be you and/ or your loved one(s) or an independent person, or trust department. The Living Trust will allow you, upon your death, to pass your assets titled in your Trust’s One of the vehicles which can be used name as you wish without the need heavily in Estate Planning is known as the for Probate. Trusts have been used in
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England and in the United States under Common Law for many centuries. Since the 1970’s they have risen in prominence in the United States and they continue to be used heavily today. The increased availability of information through the internet, printed media, and television has allowed growth in the market place of Estate Planning and Living Trusts in particular. Below are some questionable sources readily available: 1. Companies that sell, “SelfHelp Living Trust” kits. These kits are usually not a very good idea because they are not tailor made to your individual needs and goals. These companies are pushing the idea that one trust document fits all. They also require the consumer to transfer (retitle) their assets to their trust they have created without any help. This is usually to be accomplished with limited instructions. GasandOilMag.com
As you can imagine, this can 3. What is the price? Or what create a mess. is the real price or cost? (As the old adage goes, “You get 2. Companies or individuals what you pay for!”) selling trusts to sell additional products such as Annuities or 4. Are the individuals involved Life Insurance. This is usually really trying to sell you some seen when an individual other product or products attempts to “hard sell” a beyond estate planning? consumer into doing a low cost trust, and then pushes 5. How will you get your the sale of annuities or life documents updated insurance. (maintained) and reviewed for necessary changes which 3. Companies or individuals need to be made in the future? who, through flyers and postcards, aggressively 6. Who will make the transfer advertise that if you attend (retitling) of your assets into their Living Trust seminar your Trust’s name? and act quickly, you get to take advantage of a “special 7. Who will do the settlement price.” of the Trust upon your death? Watch out for those 8. How much will the gimmicks. Here are some settlement or updating cost? types of things to search for: What are the fees? 1. Will I be counselled directly 9. Is the person presenting by an attorney through the the Trust information an planning process? attorney and will they be the person who will be drafting 2. How far away is the attorney the document? Ohio, like located if there is one? most states, requires that only
Attorneys can draft trusts for other people. There are very good Estate Planning Attorneys available throughout the State of Ohio who can help you. Make sure when dealing with your life long savings, your Oil & Gas interests, and your other hard earned assets that you take advantage of their skill and expertise. Remember that this is no different than what you would do with your physical health by seeing a doctor! Hopefully you will ask the questions that I have addressed in this article because it will definitely separate the wheat from the chaff! Remember it is your life and your assets, so be careful where you get advice. If you wish to find out more about estate planning and protecting your assets including your oil and gas interests, please contact our office or go to our website at www.fmcclurelaw.com.
OhioGas&Oil 27
NEXUS Submits
Application to FERC
T
process, NEXUS has evaluated more than 350 route variations, of which more than 230 have been implemented. The route is current as of August 2015 and is subject to change.
As part of the review, the Ohio Environmental Protection Agency held a public hearing Feb. 16 in Medina County on air permits for the compressor station in Guilford Township.
Spectra Energy, DTE Energy and other investors in the pipeline will continue to be responsive to stakeholder concerns throughout increased energy diversity, security and reliability across the regulatory review process. these regions. Specifically, the Construction of the pipeline and project will transport emerging related facilities cannot begin Appalachian shale gas supplies until authorization is received directly to consumers in northern from FERC and all necessary Ohio; southeastern Michigan; the permits and environmental Chicago Hub in Illinois; and the clearances have been obtained Dawn Hub in Ontario, Canada. from federal, state and local agencies. Construction is not scheduled to commence until the first quarter of 2017.
The Ohio EPA recommended approval of the air permits for the compressor station the grass roots group Sustainable Medina County and the Coalition to Reroute Nexus are fighting to deny. The ruling by the federal EPA is expected later this year. Construction on the 255-mile $4 billion pipeline project, which includes five compressor stations, is anticipated — by its operators — to begin January of 2017. The NEXUS project stakeholders encourages all interested persons to participate in the FERC process, and the permitting processes of other federal and state agencies. Based on stakeholder feedback and survey data collected throughout the FERC Pre-File 28 OhioGas&Oil
By expanding access to natural gas in these markets, NEXUS will provide consumers across the region with affordable, cleanerburning and domesticallyabundant natural gas to help meet the growing demand for cleaner power generation, industrial and commercial use, and home heating.
Additional pipeline transportation infrastructure is needed in Ohio, Michigan and Ontario, Canada to support the growing demand for cleanburning natural gas and to offset the decline in traditional western Canadian supplies. To meet this need, Nexus Gas Transmission has proposed to construct an approximately 255-mile interstate natural gas transmission pipeline to deliver 1.5 billion cubic feet per day of clean-burning natural gas from receipt points in eastern Ohio to existing pipeline system interconnects in southeastern Michigan. The lead developers for NEXUS have secured significant market interest in new natural gas supplies in Ohio, Michigan, Chicago and Ontario to provide
AL-10424237
he NEXUS Gas Transmission pipeline lead developers for the project, Spectra Energy and Michigan-based DTE Energy, recently submitted an Application for a Certificate of Public Convenience and Necessity to the Federal Energy Regulatory Commission. The FERC application initiates the agency’s formal environmental review of the project. During the application period, NEXUS will also seek review from numerous other federal and state agencies.
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OhioGas&Oil 29
Utopia East Construction
Expected in Fall 2016 T Thomas Doohan • Dix Communications
he Kinder Morgan Utopia East Pipeline Work on the project is able to move forward because the Project is on track and construction is pipeline has filed the necessary permits with the proper expected to begin later this year. regulatory authorities, namely the U.S. Army Corps of Engineers, Fore said. “There is a lot that goes into that.” The Utopia East Pipeline is a 12-inch line transporting ethane from Harrison County to Fulton County. Other agencies involved in regulating the Utopia East Pipeline, It will enter Wayne County in Paint Township, pass through and other intrastate pipelines like it, are the United States Salt Creek, Franklin, Wooster and Plain townships. It will exit Fish and Wildlife Service, the Advisory Council on Historic the county in Chester Township. Preservation, and the Ohio Department of Natural Resources, the Ohio Environmental Protection Agency and the Ohio State Most likely, the work on the pipeline will begin this fall, said Historic Preservation Office. The Federal Energy Regulatory Allen Fore, vice president of public affairs for Kinder Morgan. Commission does not serve as the regulatory authority as it is Initially, the work will consist of clearing the land above the an intrastate line. route. He said obstacles such as trees need to either be cut down or trimmed to make space for construction and ensure As the project moves forward, the company will continue to endangered species, such as the Indiana Bat, are cleared from have conversations with landowners and negotiate contracts for easements. Fore said at this point most of the landowners the area. along the way have signed easement contracts with the 30 OhioGas&Oil
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pipeline company, adding the landowners who are still negotiating are getting into “granular” level. Fore said conversations will likely be “ongoing” and “congruent with construction.”
Hydraulic Solution Center
Mitigation Agreement. The AIMA is a baseline document which lays out how the company will treat agricultural land and has been the key to the company’s positive track record.
As landowners speak with representatives from Kinder Morgan, Fore said the best thing to do is to engage in the conversation and to ask questions. He encouraged people to talk to landowners in areas where Kinder Morgan has installed new lines before.
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The company’s positive track record is not limited to interactions with individual land owners, however. Fore said Kinder Morgan is committed to investing in the communities its pipelines pass through. The company has a foundation set up specifically for that purpose. With those foundation “If you don’t understand, ask funds, the company has questions to those who have made investments in Wayne been there before,” Fore said, County. noting the company has a good track record of working On Feb. 10, the company with landowners and presented a check for $5,000 restoring land, particularly to Community Action Wayne in the context of agriculture, Medina. The funds will be to the way it was before used for various purposes, construction. “We’re proud of including facility needs at that.” its Lincoln Way Center and core services, which range After one of the company’s from Head Start program first meetings in Wayne to housing and economic County in July, Ohio Farm assistance initiatives. Bureau Director of Energy, Utility and Local Government “I think you’ll be happy with Policy Dale Arnold said he the investment you’ve made,” the Ohio Farm Bureau has CAW/M president and CEO worked with Kinder Morgan Melissa Pearce said. “Thanks in the past to establish best to this generous investment, practices for the restoration of we can reach more low the agricultural land. income residents in the communities we serve.” Through the conversations with the Ohio Farm Bureau, Reporter Thomas Doohan can be Fore said Kinder Morgan reached at 330-287-1635 or tdoohan@ the-daily-record.com. was able to develop its Agricultural Impact
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69th OOGA
Winter Meeting set for March 16-18
F
Judie Perkowski • Dix Communications or the 69th year, the Ohio Oil and Gas Association’s Winter Meeting at the Hilton Columbus at Easton 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 the trade show. The Winter Meeting is the principle business meeting of the Association, the premier networking event of the year. This annual gathering includes: Business Sessions, Trade Show, Updates on State and Federal Activities, Presidents Reception. Participate as an exhibitor, attendee or sponsor! Winter Meeting registration includes meeting materials, access to all business sessions, the trade show, and the following networking events: Membership Breakfast (Thursday, March 17), Presidents reception (Thursday, March 17), membership breakfast (Friday, March 18), membership luncheon (Friday, March 18). Attendee Registration Rates • Admission: Regular Registration (after 2/27/16) • Member $300, Non-Member $400, Student $75 • SPE Luncheon Online Registration: $50 On-Site Registration: $75
Ron Braucher, Owner
The SPE luncheon on Thursday, March 17, 2016 requires an additional registration fee. This can be paid online through pre-registration or on-site at the event.
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