Ohio Gas & Oil Magazine March 2019 by Gannett NEO

March 2019

A Free Monthly Publication

PIPELINE TO FINANCE $18 MILLION ROCKET CENTER

OIL & GAS LEASES

YIELD RECORD-BREAKING REVENUE IN THIS ISSUE: THEY ARE WATCHING US! â&#x20AC;&#x201C; guest editorial

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OhioGas&Oil

Table of Contents MARCH 2019

A Look Ahead Gas & Oil Events

G ROUP PUBLISHER

Pipeline Money to Finance $18 Million Rocket Center at Conotton Valley

Oil and Gas Leases Yield RecordBreaking Revenue from Less BLM Land

They Are Watching Us! Guest Editorial

Bill Albrecht

EXECUTIVE EDITORS Ray Booth rbooth@daily-jeff.com Ted Daniels tdaniels@the-daily-record.com

CONTENT CO ORDINATOR Doris Sigg

dsigg@the-daily-record.com

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AEP Files Complaint over Proposed Power Plant

Rover Spill Lawsuit Moves Slowly Through Court

Cabot Drilling 4th Exploratory Well West of Perrysville

Ohio Appellate Court Limits the MTA and the DMA in Mineral Rights Dispute

Engineering Faculty Member Receives $1 Million in Grants to Remediate Carbon Dioxide and Ethane

Marathon Petroleum turns to Marietta College Students for Advice

Ohio Well Activity

Horizontal Drilling Activity Graph

On The Cover:

Beginning this summer, Conotton Valley Union Local Schools will start construction on a new $18 million Rocket Center which will be the envy of surrounding communities. The 80,000-square-foot facility will house a gymnasium, eight-lane indoor competition pool, six-lane bowling alley, daycare center, senior center, a walking track, fitness equipment, a cafe and health clinic due to the Rover pipeline property tax.

MARCH 2019 ADVER TISING John Kridelbaugh Cambridge, Ohio Office jkridelbaugh@daily-jeff.com 740-439-3531 Kelly Gearhart Wooster & Holmes, and Ashland, Ohio Offices kgearhart@the-daily-record.com 330-287-1653 419-281-0581 Mindy Cannon Alliance & Minerva, Ohio Offices mcannon@the-review.com 330-821-1200 Nancy Whitehead Kent, Ohio Office nwhithead@recordpub.com 330-541-9449

L AYOUT DESIG NER Phil Luks

pluks@recordpub.com

A Division of GateHouse Media Ohio 212 E. Liberty St. Wooster, OH 44691 330-264-1125 editor@spectrumpubs.com. MARCH 2019

A Look Ahead

Gas & Oil Events MARCH 6, 2019

dors exhibiting products and services pertinent to the industry will BWC SAFETY CONGRESS participate in the trade show portion of the event. The Annual MeetOIL AND GAS COMMITTEE ing is the principal business meeting SESSIONS, of the Association and the premier March 6, 2019. Greater Columbus Convention Cen- networking event of the year. A sampling of this annual gathering ter Columbus, Ohio includes: • Business Sessions • Breakout Sessions • Trade Show OHIO SAFETY CONGRESS & • Networking Receptions EXPO 2019, March 6-8, 2019. Greater Columbus Convention Center Columbus, Ohio WOMEN IN ENERGY NATIONAL Attend the 2019 Ohio Safety Congress CONFERENCE, & Expo (OSC19), where YOU can connect with thousands of resourc- Wednesday, March 27 - Friday, March 29, 2019. Gaylord Rockies es under one roof. Last year, more than 8,000 rep- Resort & Convention Center resentatives from Ohio busi- 6700 N. Gaylord Rockies Boulevard nesses and government attended Aurora, CO 80019 USA. For more this FREE safety congress, the larg- info, visit www.womensenergynetest and longest-running regional work.org occupational safety, health and workers’ compensation conference in the U.S.

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March 6 - March 8, 2019. Hilton Columbus at Easton, 3900 Chagrin Drive, Columbus, Ohio 43219 Contact: Deneen Welker dwelker@ooga.org 614-824-3901 Online registration is available until: 3/4/2019 Exhibitor Inquiries: Georgette McElroy gmcelroy@ooga.org Join us March 6-8 in Columbus for the Ohio Oil and Gas Association’s 72nd Annual Meeting. This event brings together top state and national industry leaders who will discuss current issues impacting the Ohio oil and gas industry. In addition to the business sessions, ven-

MARCH 2019

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OhioGas&Oil

Pipeline Money to Finance

$18 Million Rocket Center at Conotton Valley JON BAKER | The Times-Reporter GateHouse Media Ohio

Conotton Valley Union Local Schools won’t be known as Forgotten Valley much longer. Beginning this summer, the district will start construction on a new $18 million Rocket Center which will be the envy of surrounding communities. The 80,000-square-foot facility will house a gymnasium, eight-lane indoor competition pool, six-lane bowling alley, daycare center, senior center, a walking track, fitness equipment, a cafe, and health clinic.

Concept - Southwest Perspective, view toward Community Center and Event entry plaza

Work is expected to take between 14 and 18 months. “This will be the center of the community now,” Superintendent Todd Herman said. “It doesn’t matter what your age, whether you’re 2 or 102, there’s something for you to do here. We’re awful excited about that.” The facility won’t cost taxpayers a dime... in fact, they’ll be paying less. Money for the project comes from the public utility property tax being levied on the Rover Pipeline, which crosses 15 miles of the Conotton Valley district. The district will receive $3 million this year and $4.4 million next year. Then the tax will go down about 2 percent to 2.5 percent a year. Herman esti-

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mates that Conotton Valley will be receiving money for the next 40 years. And in a move that no other school district in the area could afford, Conotton Valley is eliminating two levies. “We’re letting an emergency levy go, which is just over $500,000 a year, and a permanent im-

“The facility won’t cost taxpayers a dime... in fact, they’ll be paying less” provement levy go, which is $140,000 a year,” the superintendent said. “Both of those will fall off after 2019.” The owner of a house valued at $100,000 will see a $200 a year drop in property taxes. The daycare center, which will be operated by Conotton Valley staff, will help meet the needs of the district. “We’ve found that we’re getting kids that are coming to preschool behind,” he said. “So if we provide daycare, we can help educate them and reduce that gap of students coming to preschool behind.” The medical facility will be about 6,000 square feet, and Herman said district officials hope it will provide primary care and stat care. He noted that residents are about 20 minutes from any kind of medical facility. “So we’re hoping that we can entice one of the Rocket continued on page 5

MARCH 2019

Rocket continued from page 4

going to close. In the early 2000s, there were a lot medical partners to come in,” he said. “With rural of tough times. But one of the things that never medicine, it’s important.” wavered was the support of the community. We Conotton Valley is also in talks with the Bower- wanted to do something that could benefit our kids and the community, a way to give back.”

“I want our kids to have everything that any other school has, and more”

MARCH 2019

Conotton Valley Athletic Director Dave DiDonato shows where the new complex will be located. (TimesReporter.com / Jim Cummings)

WO-10667401

ston library to open a branch library in the Rocket Center. The new center will be separate from the school for security reasons. With ample funds, the district has been able to start Project Lead the Way for its students, with new courses in architecture and engineering. Work is progressing on a greenhouse for a new horticulture class, and Conotton Valley has introduced a middle school communications class, with the goal of opening a student-run radio station. The district has built new softball and baseball fields and will be putting turf on its football field this summer. Land has been purchased for additional parking. “I want our kids to have everything that any other school has, and more,” Herman said. He anticipates that the number of students attending Conotton Valley will increase through open enrollment, but the district plans to put limits on that number to maintain the small-school feel. The district currently has an enrollment of approximately 450 student for all grades, according to Herman. The OHSAA lists the high school enrollment at 108 students. The district held a public meeting on Jan. 31 to inform residents about the project. The financial picture at Conotton Valley hasn’t always been so rosy. “There were some lean years for sure,” Herman said. “Even when I was in school in the ‘80s, you always heard the rumor that Conotton Valley was

OhioGas&Oil

Oil and Gas Leases

Yield Record-Breaking Revenue from Less BLM Land LINDSAY MACKINSON | Energy In Depth

U.S. Department of Interior’s Bureau of Land Management announced FY2018 revenue from oil and gas sales and the results are staggering: its state offices shattered prior records, generating $1.1 billion from oil and gas leasing, without expanding acreage. The previous record was set in 2008, when BLM leased more than 2.6 million acres for oil and gas production and grossed approximately $408 million in revenue. Last year BLM leased fewer than 1.5 million acres. Contrary to Activist Narratives Despite activist attempts to paint BLM leasing under the Trump administration as a wild west

free-for-all, the number of new acres leased has fallen off since 2012. In other words, BLM’s revenue is skyrocketing without the government parceling off “all” our federal acreage. In fact, BLM tripled its revenue from 2008, while decreasing the number of acres leased by more than 40 percent. In addition, the United States continues to decrease the total acreage leased for oil and gas development. From 2008-2017, aggregate leased land decreased by more than 45 percent

“Responsible production of domestic energy keeps energy prices low for American families and businesses, reduces our dependence on foreign oil, creates American jobs, and generates billions of dollars in revenue to the Federal Treasury.” from 47,242,495 to 25,742,991 acres. EID research shows less than 10 percent of lands in the Mountain States region are actually leased for oil and gas development. Brian Steed, BLM’s Deputy Director for Policy and Programs, attributed the accomplishments to technology and innovation, saying: “This was a historic year for oil and gas, and clearly illustrates what is possible when public lands are put to work using innovation, best science, and best practices. Our sound energy policy continues to ensure reliable, safe, abundant, and affordable energy for all Americans, without Leases continued on page 7

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MARCH 2019

Leases continued from page 6

putting unnecessary burdens on industry.” New Mexico Leads the Way BLM’s New Mexico office contributed the most to last year’s record, generating approximately $972 million in revenue during one lease sale alone, more than doubling BLM’s total revenue from oil and gas lease sales in 2017. The September sale also broke the record for the highestpriced single parcel of land. These staggering results reflect industry’s optimism for the immense potential in the Permian Basin. In December, the U.S. Geological Survey revealed the “largest continuous oil and gas resource ever assessed” lies in the Permian Basin, with an estimated potential for extracting more than 46 billion barrels of oil, 281 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids. The leases have broad implications for state economies. BLM estimates $500 million of the revenue will go directly back to states, helping to fund key community benefits like hospitals and public schools. In New Mexico, the oil and gas industry provides more than 90 percent of school

capital investment. BLM’s estimates don’t even account for the tax royalties from oil and natural gas produced on the lease, which fill state coffers and fund necessary institutions and infrastructure. Conclusion BLM’s record shattering year is indicative of a thriving oil and gas industry contributing to our economy, energy security, and American jobs. In 2017, a year that generated a fraction of 2018’s revenue, oil and gas development supported 84,000 jobs and contributed $59.6 billion to the U.S. economy. Acting Interior Secretary David Bernhardt said it best: “Responsible production of domestic energy keeps energy prices low for American families and businesses, reduces our dependence on foreign oil, creates American jobs, and generates billions of dollars in revenue to the Federal Treasury.”

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OhioGas&Oil

They Are Watching Us! Guest Editorial GREG KOZERA | Shale Crescent USA

On Wednesday evening, I was giving a Shale Crescent USA presentation to a group in St. Clairsville, Ohio. It was 4 PM and the sun was shining brightly and my car thermometer said, “-1°”. The wind chill was -16°. The last time I can recall it being that cold during the day I was either in Michigan or Minnesota. The building we were in was toasty warm and heated with natural gas. Unfortunately, I don’t have natural gas in my home even though we live on top of a large natural gas storage field. Our house was built in the 1980’s when we were “running out of natural gas” and it was unavailable. Fortunately, our electricity comes from coal and the John Amos Power Plant. My wife, Lynnda, was toasty warm. We will pay for it next month when the electric bill comes. We are very fortunate to live where we do. If we lived in a state that wants us to be dependent on wind and solar, we would have been cold and dark in these temperatures. Our wood fireplace would be working hard to barely heat a couple of rooms. What little electricity we got would be expensive like in California where they pay $0.25 per kilowatt- hour. I am thankful for the abundant natural gas and coal we have in our region. Recently Shale Crescent USA met with an Asian company that is making plans to expand here. They are in the final stages of site selection and are looking at sites in Ohio and West Virginia. When our 2- hour meeting finished, they made two important comments. Their boss remarked months ago when they first suggested coming to the Shale Crescent USA, “Why haven’t I heard about this region before.” Fortunately, using our information, they were able to educate him and convince him this was the place to expand. The second comment they made was, “Do you know that you are the only people marketing this region as far as we have seen?” We met with a large petrochemical company this week that is considering expanding in “The Crescent”. They were convinced about our natural gas and feed stock advantages. They under-

OhioGas&Oil

Greg Kozera, daughter and son in-law.

stand our proximity to markets. They also asked a great question, “What is your vision for 2030 years from today. If Shale Crescent USA is a second Petrochemical Hub. What will have happened.” Their question was about infrastructure development. They are concerned about things like highways, railroads, pipelines and the Storage Hub. We don’t need to have them built in order for them to expand here. They do want to make sure our region is thinking about infrastructure and developing plans. This company knows other companies will need to know about the advantages of the Shale Crescent USA and come here in order to justify full infrastructure development. They went so far as to do a detailed analysis of our print and social media marketing to see if we were capable of creating the needed awareness. They want to make sure we can attract more companies and were pleasantly surprised to find that we are reaching the world. They located 277 online and print stories “Shale Crescent USA” which were mentioned in with engagement in the thousands. Our IHSMarkit Study in March 2018, story in Chemical Week Magazine in June and the US Department of Energy Storage Hub report that came out in December citing our IHSMarkit Study, all got a lot of media attention and engagement. This didn’t count things like the Bloomberg TV Interview in June and Comcast TV Interview in December Crescent continued on page 9

MARCH 2019

Crescent continued from page 8

that went global. They were also aware of both of those events. Currently we are in the process of using this awareness to set up meetings at this year’s World Petrochemical Conference (WPC) in San Antonio, TX in March. We plan to tell the World about our new Study 2.0. Awareness from marketing is what creates sales opportunities. Be proud. Our future isn’t behind us. It is ahead of us. Working together we can make it a brilliant future for us and generations that will follow. It happens by what we all do day by day.

WE KNOW

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© 2019 Shale Crescent USA Greg Kozera is the Director of Marketing and Sales for Shale Crescent USA www.shalecrescentusa.com . He has over 40 years of experience in the energy industry. Greg is a leadership expert with a Masters in Environmental Engineering and the author of four books and numerous published articles.

MARCH 2019

MAGAZINE OHIO’S GAS & OIL INDUSTRY NEWS. BUSINESS. TECHNOLOGY.

CALL YOUR LOCAL OHIO GAS & OIL SALES REP. TODAY SEE PAGE 3 FOR MORE INFO

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AEP

files complaint over proposed power plant JOHN LOWE | GateHouse Ohio

Groundbreaking for the proposed Guernsey Power Station, most recently scheduled for March, has been rescheduled for April, Norm Blanchard, executive director of the Cambridge-Guernsey County Community Improvement Corporation, said on Friday afternoon. Everything except approval from American Electric Power is in place for the construction project to begin. However, AEP has filed a complaint with the Federal Energy Regulatory Commission, said Blanchard. Blanchard learned of the complaint from the project developers who were keeping him informed of the status of the proposed project. “AEP filed a complaint with FERC,” he said. “They believe the site is not suitable because of the underground mines and possible flood plain issues.” The project plan calls for developers to fund construction of a switching station which would connect the output from the plant to the existing AEP transmission line. Once the switching station is completed, however, it would become the property and responsibility of AEP. In its complaint, AEP expressed concerns about the switching station because of the mines and the possibility of flooding. “Engineers who have done this for years said [the mines] are not a problem,” Blanchard said. “First of all, they’re down 120 feet deep, so there probably wouldn’t be a problem even if they did nothing [to mitigate the situation]. “But they’re not taking any chances. They’re going to grout the mines and they’re going to make sure it’s safe. The engineers have looked at all possible matters that could arise.” Grouting involves pumping concrete into the ground to fill the mines beneath the site of the plant. 10 OhioGas&Oil

Also, plans for the switching station call for it to be constructed outside of the flood plain boundaries, Blanchard said. The commission will rule on the AEP complaint in mid-February. Meanwhile, developers are powering ahead, optimistic that the complaint will be overruled, Blanchard said. The Guernsey Power Station is a proposed 1,650 megawatt, natural gas fired plant that developers say would produce enough electricity to power 1.5 million homes.

MARCH 2019

Rover Spill Lawsuit

moves slowly through court SHANE HOOVER | GateHouse Ohio

More than a year after Ohio’s Attorney General sued Rover Pipeline for polluting a Stark County wetland and other alleged environmental violations, the parties continue to fight over whether a local court should hear the case. The state has said Rover Pipeline and six subcontractors broke various regulations involving the release of storm water, drilling fluid or water used in pressure-testing the 713-mile-long interstate natural gas pipeline. Rover Pipeline and the subcontractors have argued that only the Federal Energy Regulatory Commission, not the Ohio Environmental Protection Agency, has the power to enforce environmental regulations on an interstate pipeline. There is no timetable for when the judge will make her ruling. Rover Pipeline, comprising two 42-inch-diameter mainlines, transports up to 3.25 billion cubic feet of natural gas per day from the Utica and Marcellus shale regions to users in the United States and Canada. Texas-base Energy Transfer owns the pipeline. Rover began partial operation in August 2017, and the last lateral pipelines that feed the system went on-line in November of last year. Locally, Rover’s mainlines cross Carroll, Tuscarawas, Stark and Wayne counties. State complaint The Attorney General first sued Rover in Stark County Common Pleas Court in November 2017, and has filed three amended complaints since then, the latest in July. The case is assigned to Judge Kristin G. Farmer. Subcontractors named in the lawsuit are Pretec Directional Drilling, Laney Directional Drilling, Atlas Trenchless, Mears Group and B&T Directional Drilling. The lawsuit alleged violations in more than a dozen counties across the state involving the discharge of sediment-laden stormwater, leaks and MARCH 2019

spills of clay-based drilling fluid or the release of water used to pressure-test the pipeline. The biggest spill happened in April 2017 when millions of gallons of clay-based drilling fluid leaked into a Bethlehem Township wetland while workers bored a path for one of the mainlines beneath the Tuscarawas River. Workers later dumped the drilling fluid – tainted with diesel fuel — in quarries near water wells used by private residences and by the Canton Water Department and Aqua Ohio. Rover removed the waste from the quarries, and testing showed no contamination of water wells, according to Ohio EPA. The state has asked the court to order Rover Pipeline to comply with Ohio EPA’s orders and pay a civil penalty of up to $10,000 per day for each violation, as well as reimburse the Ohio EPA and pay the cost of the court action. Toss it out? Rover and its co-defendants have said the state’s lawsuit should be thrown out. The companies contend they had permits for the various discharges and releases cited by the state. The final written arguments on the motions to dismiss were filed in November. “Those discharges are inevitable and foreseeable, which is why the parties planned for them in this construction project, just as they do in similar projects,” Rover’s attorneys wrote in court filings late last year. The companies also have argued that federal law gives FERC, not state agencies, the authority to enforce environmental laws in this situation. “It is well-settled that, where Congress has vested a federal agency with exclusive jurisdiction, a state court lacks subject matter jurisdiction to hear claims that second-guess that agency’s decisions,” attorneys for Pretec wrote.

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Cabot Drilling

4th Exploratory Well West of Perrysville DYLAN SAMS | GateHouse Ohio

The Woods 1 pad is located on the 4110 block of Ohio 95 west of Perrysville — just across the county line in Richland County’s Monroe Township.

At most of the Cabot Oil and Gas well pad locations, it appears things have shut down for the winter. But on Ohio 95 at a site near Malabar Farms, drilling rig crews are busy. It has been a year since the Houston-based oil and gas company started its search for natural gas and oil in Ashland, Richland, Holmes and Knox counties. Its latest exploratory site is the Woods 1 pad, located on the 4110 block of Ohio 95 just across the county line in Richland County’s Monroe Township. The other three sites are all in Ashland County — Kamenik 1 in Green Township, Loder 1 in Mohican Township and Yeater 1 in Vermillion Township. An initial application for the Woods pad was filed by the company in 2017, and paperwork was formally accepted by the Ohio Department of Natural Resources in November 2018. George Stark, director of external affairs, has said the company plans to pursue building a fifth well pad in the Loudonville area, but where is not certain. “If we proceed, that is the area we have in mind,” Stark said. “But, that could change.” An application was filed by Cabot for two locations south of Loudonville off County Road 529 — one in Hanover Township and a second farther south and across from the Holmes County line. Stark said the company is still evaluating ground 12 OhioGas&Oil

samples taken by drilling vertically and then horizontally in the original three well pads, using the process of hydraulic fracturing, commonly known as fracking. Fracking releases gas and oil by breaking rock with a highly pressurized mixture of water and sand, combined with a small percentage of chemicals. The fourth well pad, on Ohio 95, is in the process of being vertically drilled before the horizontal drilling begins, Stark said. When drilling might begin on a fifth exploratory well has yet to be determined, Stark said. “It is taking time, and right now we are still in the initial phase of drilling (well) four and utilizing data to tell us what we have so we can understand of what is in front of us,” Stark said. Cabot is drilling through a Columbia Gas storage field and into a rock layer known as Knox Dolomite, which sits between 4,000 feet and 5,400 feet deep in Ashland, Holmes and Wayne counties, according to information from the Ohio Geological Survey. The company company is not saying what it has discovered from its drilling at the Kamenik, Loder or Yeater sites. “They taught us some things,” Stark said. And, the exploratory process continues.

Cabot Oil and Gas has a drilling rig positioned at the Woods 1 Well Pad on Ohio 95 in Monroe Township in Richland County. It is the fourth well pad drilled for the company’s search for natural gas and oil.

MARCH 2019

Ohio Appellate Court Limits

the MTA and the DMA in Mineral Rights Dispute David J. Wigham | Attorney

On February 6, 2019, the Seventh District Court of Appeals issued its decision in a closely-followed case known as Miller v. Mellott, 2019-Ohio-504. This case was an appeal from the Monroe County Common Pleas Court, which had previously ruled that Ohio’s Marketable Title Act (the “MTA”) could not be applied to extinguish mineral interests because it was in conflict with the more specific provisions of the Ohio Dormant Mineral Act (the “DMA”). Before Miller v. Mellott was decided, however, on December 13, 2018, the Supreme Court of Ohio, in Blackstone v. Moore, 2018Ohio-4959, issued an opinion that applied the MTA to a dispute over the validity of an oil and gas royalty interest. Interestingly, the Supreme Court did not expressly state that the MTA applies to mineral interest because the issue was not before it to consider. Relying on the implied precedent in the Blakestone case, the Seventh District Court of Appeals in Miller v. Mellott held that both the MTA and DMA apply to mineral interests, and therefore, the trial court erred in holding that the MTA did not apply. In a surprise twist, however, the court of appeals affirmed the trial court’s decision using completely different grounds that were never briefed or argued by either parMARCH 2019

ty to the appeal. The court also affirmed the trial court’s ruling that, because the surface owners failed to introduce evidence of their attempts to locate the mineral owners, they failed to comply with the notice provisions of the DMA. Thus, the trial court’s decision in favor of the mineral owners was affirmed. The facts in Miller v. Mellott are not unlike hundreds of other disputes between surface owners and mineral owners throughout Southeastern Ohio. The Millers were the surface owners who owned approximately 70 acres in Monroe County, Ohio. The mineral owners, the Mellots, derived their interest from a deed dated May 8, 1947, in which the grantors, Elbert and Anna Mellott, reserved all oil and gas rights. The Millers filed suit against the Mellott heirs, claiming that the Mellotts’ reserved oil and gas rights were extinguished by the MTA, or in the alternative, were abandoned under the DMA. In general, the MTA automatically extinguishes property interests created prior to a landowner’s chain of title to property, if the landowner has an unbroken chain of title for more than 40-years after the prior property interest was created, and there were no specific references to the prior interest in the landowner’s chain of title. Conversely, the DMA deems a mineral interest abandoned

only after a surface owner serves a notice of abandonment on the mineral holders and the mineral owners do not timely respond by filing a preservation of their mineral interest. Since the MTA automatically extinguishes mineral interests while the DMA requires the surface owner to first give notice and gives the mineral owner an opportunity to preserve, the MTA is viewed as more favorable to surface owners, if it applies to mineral interests; hence the interest in the Miller v. Mellott case. Regarding the MTA analysis, the Miller v. Mellott Court noted that the surface owners’ root of title deed (from which the 40year extinguishment period was measured) was a warranty deed in which there was a general reservation of all “oil and gas in and under said real estate.” Applying the MTA, the court of appeals held that the surface owners’ root of title was not a proper root of title because “it does not contain a fee simple title, free and clear of any such oil and gas exception and reservation.” Id. at ¶ 28. In other words, the original deed in which the surface owners were claiming to be their root of title deed to the property did not transfer the oil and gas rights to them. For this reason, the Millers could not establish a proper root of title and the 40-year exCourt continued on page 14

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Court continued from page 13

tinguishment period never ran. Although, the trial court ruled that the MTA did not apply, the court of appeals still affirmed the trial court’s decision for a different reason. Regarding the DMA, the issue on appeal was whether the Millers complied with the notice requirement of the DMA by publishing its notice of abandonment, rather than first attempting to serve it on the Mellotts by certified mail. Under the DMA, a surface owner seeking to abandon severed mineral interests must first serve a notice of its intent to abandon the minerals via certified mail. If certified mail service cannot be completed, the surface owner may publish its notice of abandonment in the local newspaper. The Seventh District Court of Appeals has issued two recent rul-

ings that set forth when a surface owner may publish its notice of abandonment, rather than serving it via certified mail. In Shilts v. Beardmore, 2018-Ohio-863, the court of appeals held that surface owners must use “reasonable diligence” in attempting to locate heirs before they can skip the certified mail requirement and serve publication. And then in Sharp v. Miller, 2018-Ohio-4740, the Court ruled that there is no “bright-line rule” as to what efforts constitute “reasonable due diligence” and a surface owner’s reasonable diligence will be determined on a case-by-case basis. Id. at ¶ 17. Turning back to Miller v. Mellott, the court then determined that, because the Millers failed to submit any evidence of their efforts undertaken to identify the names and addresses of Mellott heirs,

the Millers failed to comply with the DMA notice requirements, and therefore the Millers’ abandonment notice was legally ineffective. Thus, according to Miller v. Mellott, the burden of proof is on the surface owner to demonstrate compliance with the DMA. Miller v. Mellott is the first decision by the Seventh District Court of Appeals (which covers Monroe, Noble, Belmont, Jefferson, Harrison, Carroll, Columbiana and Mahoning Counties) that applies both the MTA and the DMA to determine whether a mineral interest is terminated. Miller v. Mellott limited the application of the MTA to those cases where the surface owner can establish a clear root of title deed that will start the 40-year extinguishment period. If there is no deed in the Miller continued on page 15

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Roetzel’s experienced Oil and Gas attorneys provide a wide array of legal services focused on landowner representation including: • Leasing and lease renewals, ratiﬁcations and amendments • Litigation, including: { Lack of production { Dormant Mineral Act { Marketable Title Act

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For additional information, contact Dave Wigham at dwigham@ralaw.com, Randy Moore at rmoore@ralaw.com, or Tim Pettorini at tpettorini@ralaw.com. RALAW.COM ROETZEL & ANDRESS, A LEGAL PROFESSIONAL ASSOCIATION

Gas & Oil Team Members Luke Palmer, Sara Fanning, Ben Fraifogl, Bret McNab and Pat Hanley

WO-10667391

14 OhioGas&Oil

MARCH 2019

Miller continued from page 14

surface owner’s chain of title that transfers oil and gas rights to the surface owner, the surface owner will likely not be able to rely on the MTA to extinguish a mineral owner’s oil and gas rights. In short, to say that Ohio law regarding the termination and preservation of mineral rights is in flux and evolving every day is an understatement. Even after the ruling in Miller v. Mellott, surface owners and severed mineral owners in Ohio continue to face significant hurdles under both the MTA and the DMA in disputes over ownership of valuable mineral interests. This uncertainty highlights the importance of retaining an experienced oil and gas attorney to advise clients with regard to the abandonment, preservation, and the ownership of mineral interests. David J. Wigham is a second-generation Ohio oil and gas attorney with more than 26 years of experience. He practices at the law firm of Roetzel & Andress and maintains offices in Akron and Wooster, Ohio. He can be reached at 330-762-7969, or dwigham@ralaw.com.

KEEP UP

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OHIO’S GAS & OIL INDUSTRY NEWS. BUSINESS. TECHNOLOGY.

CALL YOUR LOCAL OHIO GAS & OIL SALES REP. TODAY SEE PAGE 3 FOR MORE INFO

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OhioGas&Oil 15

Engineering Faculty Member Receives $1 Million in Grants to Remediate Carbon Dioxide and Ethane

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An Ohio University engineering faculty member has received $1 million to develop a novel laboratory-scale process to simultaneously convert two of the energy industry’s most problematic substances to manage – carbon dioxide and ethane -- into valuable products. With the support of $800,000 from the U.S. Department of Energy (DOE) and $200,000 from OHIO’s Russ College of Engineering and Technology, Professor of Mechanical Engineering Jason Trembly aims to transform ethane, which is found in wet shale gas, into liquid chemicals/fuels via first converting them into ethylene, and carbon dioxide found in industrial emissions into carbon monoxide. The result? High-value products for the chemical and energy sectors. The OHIO funds will support graduate students working on the project. The three-year cooperative agreement received from the DOE, Trembly said, was among a field of highly competitive proposals from well-established research universities and companies. “Being awarded this grant establishes Ohio University within a very competitive and innovative area of chemical process intensification,” said Trembly, who is also the director of the Institute for Sustainable Energy and the Environment within the Russ College of Engineering and Technology. In process intensification, chemical engineering principles are used to develop a substantially smaller, cleaner, safer and more energy efficient

16 OhioGas&Oil

technology. Currently, ethane and other substances contained in natural gas must first be separated before the primary natural gas component – methane – may be sold. This separation process requires a great deal of energy and represents a significant portion of ethane product costs, according to Trembly. What’s more, with so much ethane being produced as a by-product of shale gas extraction, the industry is experiencing a glut. Conversion facilities like ethane cracking plants, which are also energy intensive, are not available in ethane-rich regions – costing these areas tremendous economic development opportunities. Meanwhile, carbon dioxide, a greenhouse gas, is readily available from industrial flue gas emissions. Trembly’s project addresses the challenges faced by two major energy sectors with a modular electrochemical process based on a solid oxide electrolytic cell (SOEC) design. In the SOEC process, carbon dioxide is reduced via electrolysis into carbon monoxide, and the resulting oxygen ions are transported across a membrane where they selectively oxidize ethane into ethylene. Developing electrocatalytic materials that are both energy efficient and selective are a key focus of the project. At full scale, the system’s equipment would be about the size of a semi-trailer, allowing distributed, modular units to meet the demands of individual wells on-site, based on production levels. These smaller units would also represent a much lower initial investment as compared to large processing facilities, such as mid-stream separation and cracker plants. Not only does the process save energy for both industry and the environment, but it also keeps the ethane conversion process in Appalachia instead of the Gulf of Mexico, where cracker plants are more prevalent. “If successful, we’ll reduce the energy intensity associated with natural gas separations,” Trembly explained. “This will also enable the region to recover supply chain value that is currently being lost.”

MARCH 2019

Marathon Petroleum turns to

Marietta College students for advice

Fifth Street Consulting provides Findlay-based company with new ideas Marathon Petroleum Corporation is a well-established brand in Ohio and beyond, but the marketing organization recently turned to a team of Marietta College students to provide a fresh perspective on attracting new talent to the Findlay-based company. The company’s goal is to get noticed by students in a variety of business fields such as marketing, accounting and finance along with the traditional disciplines of engineering. Tammi Milner Weigand ‘90 is the Marketing Coordinating Staff Manager at Marathon. An accounting major, she first interviewed with Marathon on campus, but it was a follow-up visit to the corporate headquarters that convinced her Marathon was the place she wanted

to be. She’s still there more than 28 years later. Her story isn’t unique to Marathon, where the culture centers on nurturing employees and developing their different professional interests. The student-led team at Marietta College’s Fifth Street Consulting concluded that’s the message potential recruits need to hear. “At first, I looked at the company as one that is kind of old or stagnant,” said Melvin Shuler ‘19 (Columbus, Ohio), project development director for the Marathon project, and a senior marketing major at Marietta College. “They didn’t seem to be making innovative changes that you could see online. As time went on, I learned they were doing great things and realized we had a great opportunity to tell others what they are doing.” Advice continued on page 18

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Advice continued from page 17

The diverse group of students representing a variety of majors went to work to learn all they could about Marathon. They attended a career fair, conducted national surveys and campus focus groups and interviewed current Marathon employees about their experiences. The result is a comprehensive strategic plan for a campaign incorporating print and digital materials, a social media presence, and improvements to the company’s web site in a variety of areas. Geared toward students looking for internships and possible employment, the campaign encourages students to see Marathon as more than any single job, but rather the place to build a long-term career. It goes a step further by encouraging the company to spearhead volunteer activities with young people, sponsoring community events and reaching down into high schools to begin relationships. Shuler said working with Marathon was a bit intimidating at first. “We could see what they needed to do better, but we are just college students,” he said. A visit to corporate headquarters helped solidify the relationship and the students learned the company respected their opinions. “That’s when the intimidation factor went away.” Weigand sought the talents of Fifth Street after

learning about the program while attending a Marietta College leadership conference. She said the experience was positive for the students and the company. “We were really impressed with the students,” she said. “They conveyed they work with a lot of companies that don’t have the culture perspective employees seek, but we do. Simply put, they told us we need to do a better job of ‘selling’ it.” As a result of the students’ work, the marketing organization continues to reach out to other departments within the company such as corporate affairs and human resources to share the students’ ideas. Weigand said she wouldn’t hesitate to use Fifth Street Consulting again. The Marathon project is a strong illustration of what 5th Street Consulting is about, bringing students from a variety of disciplines together to achieve results. “Research is at the heart of what we do and there is a lot of rigor to our methods,” said Dr. Alane Sanders, Professor of Communication and faculty mentor for the group. “(Marathon) expected a lot from our team. They asked good questions, they were open to suggestions and they were good listeners. “They already knew areas that needed improvement,” Sanders said. “Our research can help their continued push for change.”

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OHIO WELL ACTIVITY by the numbers

UTICA SHALE

MARCELLUS SHALE 23 10 8 22

Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits

Data as of 2/2/19

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Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits

Source: Ohio Department of Natural Resources

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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Belmont County......... 616 2. Carroll County......... 526 3. Monroe County.........474 4. Harrison County....... 448 5. Guernsey County...... 260 6. Noble County.......... 223 7. Jefferson County........214 8. Columbiana County...159 9. Mahoning County....... 30 10. Washington County... 22 11. Tuscarawas County.... 20 12. Portage County........ 15 Trumbull County........ 15 13. Stark County............ 13 14. Coshocton County....... 5 15. Morgan County.......... 3 Muskingum County...... 3 Holmes County........... 3 16. Knox County.............. 2 17. Ashland County.......... 1 Astabula County......... 1 Geauga County.......... 1 Medina County........... 1 Wayne County............ 1 I VARIOUS SSTAGES: PERMITTED DRILLING, ,D WELL SITESS IN PLETED PRODUCING, PRODUCINGPLUGGED, PLUGGED DRILLED, COMPLETED, SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF D L A 2/2/19

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