May 2018 | A Free Monthly Publication
UTICA REPORT CARD:
Ohio’s natural gas production at record levels
Natural Gas Plants Are “ABSOLUTELY THE FUTURE.”
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Table of Contents MAY 2018 G ROUP PUBLISHER Bill Albrecht
EXECUTIVE EDITORS Ray Booth rbooth@daily-jeff.com Rob Todor rtodor@the-review.com Ted Daniels tdaniels@the-daily-record.com
CONTENT CO ORDINATOR Emily Rumes
erumes@the-daily-record.com
“Ohio Gas & Oil” is a monthly publication. Copyright 2018.
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A Look Ahead Gas & Oil Events
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Utica Report Card: Ohio’s Natural Gas Production At Record Levels
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Natural Gas Plants Are “Absolutely the Future”
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Oil and Gas Company Eyes Drilling in North-Central Ohio
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Bennet Named to Federal Energy Office
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Ohio Appellate Court Clarifies Notice Requirements Under The 2006 Dormant Mineral Act
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Public Invited to Comment On Wayne National Forest’s Future
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Gubernatorial Candidate Tours Southeastern Ohio Fracking and Mining Sites
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Kinder Morgan: Still Work To Do On Utopia Pipeline
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Ohio Well Activity Chart
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Horizontal Drilling Activity Graph
On The Cover: Plant manager Peter Rigney stands in the gas turbine room at the Oregon Clean Energy Center near Toledo. The privately-owned plant uses cleaner-burning natural gas to fire three turbines to produce electricity. Here they say, “If you don’t like heights – don’t look down through the floor.” (Photo by Doral Chenoweth III/ Columbus Dispatch)
MAY 2018 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 Kim Brenning Kent, Ohio Office kbrenning@recordpub.com 330-298-2012 Janice Wyatt National Major Accounts Sales Manager jwyatt@recordpub.com 330-541-9450
L AYOUT DESIG NER Adam Arditi
aarditi@the-daily-record.com
A Division of GateHouse Media 212 E. Liberty St. Wooster, OH 44691 330-264-1125 editor@spectrumpubs.com. May 2018
A Look Ahead
Gas & Oil Events
May 5-6 May 6-8, 2018 May 17-19, 2018 IOGCC ANNUAL BUSINESS PETROLEUM HISTORY October 6-7 MEETING INSTITUTE’S 2018 OIL HISTORY November 3-4, 2018 Interstate Oil and Gas Compact SYMPOSIUM & FIELD TRIP Thursday, May 17: Registration/ Evening Reception Friday, May 18: Oral and Poster Oklahoma City, Oklahoma h t t p : // i o g c c . o k . g o v/g e n e r a l - Presentations Saturday, May 19: Field Trip information1 Marriott Research Park Hotel 480 S. Wakara Way, Salt Lake City, UT For registration & more information: STATE SCIENCE DAY Marilyn Black | 814-677-3152 | ext. 105 Columbus, Ohio mblack@oilregion.org www.ohiosci.org More info can be found online at OOGEEP.org/events/
2018 RESPONDING TO OILFIELD Commission’s Annual Meeting EMERGENCIES TRAINING Sheraton OKC Downtown Hotel Register for the May training at: http://events.r20.constantcontact. com/register/event?oeidk=a07ef6x9 dcu06d0bc49&llr=cgqj7zsab Also, find more info on dates and registration at: http://oogeep.org/ event/oogeep-firefighter-training-2/
May 2018
May 12, 2018
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Utica Report Card:
Ohio’s Natural Gas Production At Record Levels Shane Hoover | GateHouse Media Ohio NORTH CANTON OHIO has produced more natural gas than it uses since early 2015. Driven by prolific Utica Shale wells, the state produced a record 1.7 trillion cubic feet of natural gas last year. Much of the regional economic development around that production has been in the form of pipelines and processing facilities. Two interstate natural gas pipelines — Energy Transfer’s Rover project and the NEXUS Gas Transmission pipeline — cross Stark and neighboring counties. Marathon Petroleum also has built or acquired assets in the region to supply its Canton refinery with liquids from Utica Shale wells. Ohio’s industry boosters want to turn the state’s natural gas reserves into even more economic development, but are facing headwinds from Wall Street and Washington, D.C. Attendees of the fifth annual Utica Midstream conference on Wednesday heard updates on natural gas production, local pipeline projects and efforts to sell the Ohio River valley as the world’s next petrochemical hub. The Canton Regional Chamber of Commerce and ShaleDirectories.com presented the conference at Walsh University’s Barrette Center. PIPELINE PROGRESS The Rover project is partially operational and will carry 3.25 billion cubic feet of natural gas a day to customers in Canada and the United States when completed. But the project has run afoul of environmental regulators in Ohio and West Virginia and encountered delays, notably after spilling drilling fluid into a wetland next to the Tuscarawas River in Bethlehem Township last year. But as soon as Rover began partial operation of one of its two 42-inch diameter mainlines last year, producers started shipping gas to reach better markets, which opened space on other pipelines that producers were also eager to use, said Colette Breshears, a natural gas analyst with Genscape. Construction on NEXUS started in October, and work crews in Michigan have already started welding
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and burying pipeline, said Erika Young, a business development project director with Enbridge, the Canadian company partnering with DTE Energy to build the pipeline. Locally, workers have been clearing trees and building work areas for NEXUS, which should be in service by the end of the third quarter. When completed, the 36inch diameter pipeline will carry 1.5 billion cubic feet of natural gas a day to markets in Ohio, Michigan and Canada. Rover and NEXUS shipping natural gas should help to relieve the regional surplus, raise prices and spur more drilling, Breshears said. DRILLING UPDATE According to the Ohio Department of Natural Resources, 2,349 horizontal shale wells have been drilled in Ohio, most of them in the Utica Shale, and 1,894 were producing as of Saturday. There are 23 rigs drilling in Ohio, less than half the number in late 2014 and early 2015. Richard Simmers, chief of ODNR’s Division of Oil and Gas Resources Management, said he didn’t expect the number of rigs to increase much, even if more wells are drilled. Companies drill wells more efficiently now than they used to, often putting multiple wells on a single pad. One pad in the state has 28 wells on it and room for more, Simmers said.
“That’s a good thing. That means these industries are staying in our state and in the Appalachian Basin.” –Richard Simmers | Chief of ODNR’s Division of Oil and Gas Resources Management May 2018
PITCHES AND HEADWINDS Shell, the global energy giant, is building a cracker plant next to the Ohio River in Monaca, Pennsylvania. The petrochemical plant will take ethane from shale wells and turn it into chemicals used to make plastics. PTT Global Chemical, a Thai company, is exploring a similar project on the Ohio River in Belmont County, but has yet to commit. Building a petrochemical industry along the river in Ohio, Pennsylvania and West Virginia could generate 100,000 jobs, said Jerry James, president of Artex Oil and an advocate for Shale Crescent USA, a group pitching the region. The tri-state area produces more natural gas than Texas and is the third largest natural gas producer in the world behind the rest of the United States and Russia, he said. The Ohio River valley also is within a day’s drive of half the U.S. population.
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“As long as something lands in one of the three states, we’re all going to benefit,” James said. But the idea of a petrochemical hub in the Appalachian Basin has doubters among investors and White House officials, said Bryce Custer, a real estate agent with NAI Spring and NAI Ohio River Corridor. Custer said skeptics have asked why the industry would spend billions of dollars on new plants in the region when pipelines can be built for less to take ethane and natural gas to existing plants on the Gulf Coast. Custer said companies are looking for building sites, industrial facilities, retail space and office buildings in Artex Oil President Jerry James pegs the value of the area’s natural eastern Ohio and West Virginia’s northern panhandle as they wait to see if PTT Global Chemical builds its gas production at the top of the charts during the Utica Midstream cracker. conference in April at Walsh University’s Barrette Center. (Photo A good part of the audience indicated by a show of by Ray Steward/CantonRep.com) hands their belief that PTT would build, but Custer said he thought the odds were even. “I am still very, very concerned,” Custer said, “so we Drillers also are going deeper and longer with their have to continue to make a compelling case to PTT wells than they did five years ago. Early Utica wells that this is the place to be.” typically went down 7,000 feet vertically and 5,000 feet laterally. Reach Shane at 330-580-8338 or shane.hoover@ Now, companies are going 10,000 feet vertically and cantonrep.com laterally for 14,000 feet, and some drillers are drilling On Twitter: @shooverREP laterals of more than 20,000 feet, Simmers said. Since early 2015, Ohio has produced more natural gas than it consumed, but heavy industry is starting to use more natural gas. Simmers said he doesn’t see the state going back to being a natural gas importer, but the construction of 10 gas-burning electric power plants in the state, along with multi-billion-dollar petrochemical plants in the region, would shrink the surplus. “That’s a good thing,” Simmers said. “That means these industries are staying in our state and in the Appalachian Basin.”
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Natural Gas Plants Are
“ABSOLUTELY THE FUTURE” Dan Gearino and Doral Chenoweth III | The Columbus Dispatch THE PAST AND PRESENT, at least in terms of how Ohio generates electricity, can be found within a few miles along the shores of Lake Erie. Pressed up to the edge of the water is the Bay Shore Plant, a coal-fired power plant owned by a subsidiary of Akron-based FirstEnergy that rarely runs and is scheduled to be closed by 2020. Sitting two miles inland is the Oregon Clean Energy Center, a natural-gas-fired power plant that opened last summer and is running most days. It’s owned by Clean Energy Future of Massachusetts, a company that focuses exclusively on building and operating these types of plants. “We are the next iteration of technology,” said Peter Rigney, the plant manager, referring to how the gas
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plant takes up less space, has fewer employees and generates less waste than coal or nuclear plants. Oregon Clean Energy is part of a building boom, one of 11 natural-gas plants built, under construction or in some phase of development in Ohio. Investors are spending billions of dollars on plants that will take advantage of the region’s inexpensive and plentiful natural gas. People who manage the electricity grid are trying to figure out the risks of increasing reliance on natural gas as old coal and nuclear units are closing or likely to close. At the same time, the people behind this slate of projects tend to downplay the risks and say natural gas will remain plentiful and inexpensive. DON’T LOOK DOWN Wearing a hardhat and safety glasses, Rigney gives a tour of a complex that is at once sprawling — covering 30 acres — while also much smaller than an equivalent coal or nuclear unit. The plant has capacity of 900 megawatts, which can provide for the needs of more than 750,000 houses, according to Clean Energy Future. The inside of the plant looks like the set of a sci-fi movie, with big open spaces nearly devoid of people. The floors are concrete and metal, including lots of metal grate floors, catwalks and open metal stairways. If you don’t like heights, don’t look down through the floor. This is a “combined-cycle” gas plant, a term that refers to a two-part system. First, the plant uses natural gas to spin a turbine and make electricity. A separate system captures the excess heat and uses it to make steam to run a generator that makes additional electricity. When Rigney says his plant is the future, he means it is built to work in a regional power grid that will get an increasing share of electricity from wind, solar and other intermittent sources. Until there is large-scale
“We are the next iteration of technology.” – Peter Rigney | Plant Manager, Oregon Clean Energy Center May 2018
technology to store wind and solar power for later use, the grid will need a fleet of plants that can kick in to meet demand at times when the wind isn’t blowing or the sun isn’t shining. Natural-gas plants are capable of ramping up in a matter of minutes and also are able to adjust their output during the day, which means they work well in combination with other sources. Also, there are benefits for the environment. While natural gas is a fossil fuel that contains pollutants, it burns much more cleanly than coal. In Ohio, where gas plants are coming online and coal plants closing, there is already a notable improvement in air quality. But there are risks as the grid shifts to rely more on natural gas — both for energy companies and consumers. Energy-industry veterans need only look back about 20 years to see another surge in gas plants that quickly proved a bad idea, leading to a wave of business failures and stalled projects as gas prices rose so much that they made the plants less competitive with other fuels. The question today is whether the fundamentals have changed so much – with a seemingly endless supply of gas from domestic shale deposits – that a new set of rules applies. “Everyone talks about how inexpensive natural gas is going to be, but if you look at the late 1990s, everyone was saying the same thing,” said David Littell, a former Maine utility regulator and now a principal at the
Plant manager Peter Rigney stands in the gas turbine room at the Oregon Clean Energy Center near Toledo. The privately-owned plant uses cleaner-burning natural gas to fire three turbines to produce electricity. (Photo by Doral Chenoweth III/Columbus Dispatch)
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Regulatory Assistance Project, a nonprofit group that advises utility regulators. “There’s a history of people being wrong on natural gas,” he said. At the same time, William Siderwicz, the chief executive of Clean Energy Future, says the risk of a gas price spike is so low that “no one spends a minute thinking about it.” Like Littell, he speaks with the expertise of decades in and around the energy business. There also is a broader risk when natural gas is serving as the country’s main fuel for home heating and for power plants to make electricity. The economy would be vulnerable to disruptions in the gas supply because of weather, such as a very cold winter that could create high demand, or natural disasters, such as tornadoes, that could damage supply lines. This is the risk that helped to inspire the Trump administration’s recent plan, since rejected by regulators, that would have provided incentives for coal and nuclear plants because those sites have weeks of fuel on site. A QUIET BOOM What is it like to live near a gas plant? Dan Steingraber, 60, lives about a mile from the Oregon plant and runs
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his own real-estate appraisal business. He sees the plant when he drives by it, but doesn’t see, hear or smell it from his house. He likes that the power plant is there because it means jobs and investment for the region, he said. The plant employed hundreds of construction workers while it was being built. The regular staff is about 25, with most functions handled through automation. Oregon, located just east of Toledo, has a large industrial area. It has a BP fuel refinery and the FirstEnergy coal plant, both of which have much larger footprints than the gas plant. The industrial history of the community is another reason that there has been almost no local opposition to Oregon Clean Energy. “I grew up in East Toledo, so we’ve always had refineries,” Steinbraber said. “People say, ‘What’s that smell?’ and if you grew up in East Toledo, you say, ‘It smells like money, it smells like jobs.’” Oregon Clean Energy was the first of new gas plants to open in Ohio, with operators flipping the switch last June. It was followed in January by Carroll County Energy, just outside of Carrollton, developed by Advanced Power, a Swiss company with U.S. offices in Boston. Two more plants are under construction and likely to open this year: Middletown Energy Center in the city of the same name, developed by NTE Energy of Florida; and Lordstown Energy Center in the YoungstownWarren area, developed by Clean Energy Future. Next come projects that are more speculative. Those developers are aiming to open in 2020 or later. At the bottom of the list is a plant near Circleville, being developed by NTE Energy. The company has done work to prepare to file for a state permit but has not done so. Tim Eves, senior vice president of development for the company, said the project is on hold in part because of some short-term factors. The larger point is that not every announced project will be built, based on examples from previous building booms, said John Moore, who writes about environmental issues related to the power grid for the Natural Resources Defense Council. “None of these developers want to be the last one playing musical chairs before the (electricity) prices get so low that they can’t make money,” he said, referring to how low prices could result from having more power plants than the market needs. In Oregon, Rigney says his plant, and others like it, can succeed in the market because they have high output relative to the costs to operate. Amid ups and downs in electricity and natural-gas prices, he thinks the plant is well-positioned to compete. “This is absolutely the future,” he said. dgearino@dispatch.com @dangearino
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Oil and Gas Company
Eyes Drilling in North-Central Ohio Shane Hoover | GateHouse Media Ohio CABOT OIL & GAS is getting ready to drill test wells in Ashland and surrounding counties in north-central Ohio. “We’ve got a really neat group of geologists who think they see something in Ohio,” said George Stark, a Cabot spokesman based in Pittsburgh. “They see something, and we want to go touch it.” Cabot is looking for natural gas and oil a hundred miles northwest of the Utica Shale play’s core in eastern Ohio. The Houston-based company has filed paperwork with the Ohio Department of Natural Resources for two well pads in Ashland County, and plans to drill up to five test wells in an area that includes parts of Richland, Knox, Wayne and Holmes counties. “You don’t want one test to be the smile face or the frown face,” Stark said. “You need more data.” Stark will talk about Cabot at the fifth annual Utica Midstream Conference Wednesday at the Barrette Center at Walsh University. The Canton Regional Chamber of Commerce and ShaleDirectories.com are presenting the conference. EXPLORED BEFORE During the early days of Utica exploration, Devon Energy drilled a few wells in the area Cabot is targeting, but moved on. Cabot is planning to explore below the Utica Shale, Stark said. Paperwork filed with ODNR indicates the company is targeting the Rome and Knox formations, but Stark declined to be specific. The agency has yet to issue the company a drilling permit. The company plans to drill vertical wells and take samples that will show the ratio of oil to natural gas and the pressure and thickness of the rock, factors that determine whether it makes economic sense to drill more wells, Stark said. Cabot has obtained the right to drill vertical wells into rock formations 3,000 to 4,000 feet beneath a natural gas storage field owned by Columbia Gas 10 OhioGas&Oil
Transmission, but Cabot still needs to get horizontaldrilling rights from surface landowners. Casings around the wells will isolate the wellbore from the storage field and any other formations that aren’t the target of the well, Stark said. If Cabot’s exploration pays off, Canton, the selfstyled Utica Capital, could find itself in a strategic spot between two drilling plays. “Whether it’s Mansfield or Canton, I think there are opportunities from the supply chain, from the manufacturers, from lower gas costs, from more opportunities for the workforce,” Stark said. PENNSYLVANIA RECORD For the past 10 years, Cabot has been drilling Marcellus Shale horizontal wells in Pennsylvania’s Susquehanna County. Cabot was producing natural gas from 561 horizontal wells at the end of 2017, and has another 3,000
Cabot Oil & Gas has plants to drill two well pads in Ashland County and plans to drill up to five test wells in an area that includes parts of Richland, Knox, Wayne and Holmes counties. (Photo by Scott Heckel/CantoRep.com)
May 2018
“Whether it’s Mansfield or Canton, I think there are opportunities from the supply chain, from the manufacturers, from lower gas costs, from more opportunities for the workforce.” – George Stark | Spokesman, Cabot Oil & Gas undrilled Marcellus locations among its 172,000 acres in northeast Pennsylvania, according to the company’s latest investor presentation. The company plans to drill approximately 85 wells in the Marcellus Shale this year.
Stark said Cabot has spent almost $5 billion in Susquehanna on wages, supply purchases, equipment rentals, well drilling and pipeline construction. Landowners in Susquehanna and a neighboring county have earned more than $1.5 billion in royalties and signing bonuses, according to the company. With success have come problems, particularly in the community of Dimock, Pa., where residents complained of methane in their drinking wells after Cabot started drilling. More than a dozen families sued, and the last of the cases settled in September after almost a decade of legal battles. Cabot maintained it didn’t cause the gas migration, and Stark said the company now does more testing for methane at the surface before drilling wells. In December, the Pennsylvania Department of Environmental Protection issued a $99,000 penalty against the company for excess emission of natural gas, and failing to submit reports on time. Stark characterized the penalty as stemming from a paperwork issue. Reach Shane at 330-580-8338 or shane.hoover@ cantonrep.com On Twitter: @shooverREP
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Bennet Named To Federal Energy Office THE DEPARTMENT OF ENERGY’S OFFICE of Fossil Energy has announced the appointment of Shawn Bennett as deputy assistant secretary for Oil and Natural Gas. As deputy assistant secretary for Oil and Natural Gas, Bennett will administer oil and gas programs including research and development, analysis, and natural gas regulation. Bennett has more than a decade of experience in public affairs and government relations in the coal and the oil and gas industries. Most recently, he served as executive vice president for the Ohio Oil and Gas Association, a non-profit trade association that is dedicated to representing Ohio oil and gas producers. The organization represents over 2,000 members in all aspects of the exploration, production, and development of crude oil and natural gas resources in Ohio. His role at OOGA included overseeing all federal and state legislative and regulatory activities in Columbus and Washington, D.C.
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Ohio Appellate Court Clarifies Notice Requirements
Under The 2006 Dormant Mineral Act David J. Wigham | Attorney NEARLY 18 MONTHS AFTER the Ohio Supreme Court issued a series of sweeping decisions interpreting Ohio’s Dormant Mineral Act, led by Corban v. Chesapeake Exploration, LLC, 2016Ohio-5796, the Ohio Court of Appeals for the Seventh Appellate District issued a ruling on March 5, 2018 that clarified questions left unanswered by Corban centering around the notice standard of the 2006 version of Ohio’s Dormant Mineral Act found at O.R.C. 5301.56 (“2006 DMA”). In Shilts v. Beardmore, 2018-Ohio-863, the Court of Appeals examined a surface owner’s attempts to comply with the 2006 DMA notice provisions required to abandon a reserved oil and gas interest created in 1914. Under the 2006 DMA, a surface owner must first “serve notice by certified mail, return receipt requested, to each holder or each holder’s successors or assignees, at the last known address of each, of the owner’s intent to declare the mineral interest abandoned.” If notice “cannot be completed” through certified mail, the surface owner may publish a notice of abandonment in a newspaper of general circulation in the county where the minerals are located. The Shilts Court ruled that the surface owner was not required to first attempt to serve mineral holders by certified mail “when a reasonable search fails to reveal the addresses or even the names of the potential heirs that must be served.” In the Shilts case, the surface owner attempted to locate the heirs of the holder of the 1914 mineral interest by conducting, (1) a public records search (including a search of the probate records of Monroe County), (2) an online search, (3) a title search of the deed chain of title, and (4) a search of the Ohio Department of Natural Resources website. Despite these searches, the surface owner was unable to locate any heirs. Rejecting a “whatever it takes” approach urged by the mineral holders, the Court of Appeals adopted a “reasonable diligence” standard, finding that the surface owner took “reasonable efforts” to locate the heirs but was unable to do so. Therefore, the surface owner was not required to attempt certified mail service upon the heirs and notice by publication was appropriate. As a result, the Court affirmed the trial court’s ruling that the May 2018
1914 reservation was abandoned under the 2006 DMA and vested in the surface owner. While this ruling may at first glance seem rather mundane, it must be viewed in its proper context to appreciate its significance. Prior to Corban, surface owners often did not rely upon the 2006 DMA to abandon mineral interests, and when they did, the 2006 DMA notice standard was frequently not followed. A common belief at the time was that the 1989 DMA and its automatic abandonment provisions, not the 2006 DMA, applied to the abandonment of reserved mineral interests that pre-dated the 2006 DMA. Moreover, many surface owners did not want to serve notices of abandonment under the 2006 Story continues on page 14
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DMA and run the risk that a mineral holder would file a preservation affidavit in response. Finally, surface owners believed that it was a futile act to attempt certified mail service on mineral holders who were known to be deceased. After Corban, the 2006 DMA became the sole means by which a surface owner may abandon reserved mineral interests, and surface owners seeking to abandon mineral interests are required to follow the 2006 DMA notice provisions. After Corban, mineral holders also have a clear path to come forward to claim title to mineral interests that were previously believed to be automatically abandoned under the 1989 DMA. One of the hotly contested issues after Corban was whether surface owners had complied with the 2006 DMA requirement to first attempt to serve mineral holders by certified mail. Prior to Shilts, the validity of a surface owner’s abandonment could be challenged if there was no evidence of attempted certified mail service. Thus, surface owners who had already completed the 2006 DMA abandonment process prior to Corban were being asked to provide evidence of compliance with the 2006 DMA certified mail requirement. Indeed, producers who had previously relied upon recorded 2006 DMA abandonment affidavits and were paying royalties to surface owners on the basis of these affidavits began suspending royalties until surface owners could show compliance with the certified mail requirement. Additionally, mineral holders began coming forward after Corban to file 2006 DMA preservation affidavits and to challenge prior 2006 DMA abandonments because of alleged deficiencies in the notice procedure. Now, under Shilts, there is a “reasonable diligence” test by which a surface owner’s compliance with the 2006 DMA notice standard will be measured. Surface owners who can show that they exercised “reasonable diligence” to locate mineral holders and were unable to find them are more likely to prevail in lawsuits challenging their compliance with the 2006 DMA. It is also important to note that the “reasonable efforts” to locate heirs articulated by Shilts included an online search for heirs. Thus, it can be argued the Shilts case articulates a much higher standard of diligence than a search of the county records, which is the standard that many surface owners have utilized. The added requirement of an online search will most certainly lead to more challenges by mineral owners. There are many situations where mineral holders and their heirs can be easily located using common websites such as ancestry.com and findagrave.com. If heirs can be easily located via an internet search, then surface owners may encounter difficulty establishing that their efforts to locate heirs were “reasonably diligent.” 14 OhioGas&Oil
Also, prior to Corban, many surface owners made no effort to locate mineral holders, skipped the step of attempting certified mail service, and simply published a 2006 DMA notice of abandonment. In this situation, the surface owner will not have any evidence of “reasonable diligence” and will have to argue, after the fact, that had the surface owner attempted to search for heirs, the search would have been futile. However, surface owners who legitimately used “reasonable diligence” to locate heirs during the 2006 DMA abandonment process, but were unable to locate any heirs, will not be required to have attempted certified mail service on deceased mineral holders and their unknown heirs, and the Shilts court acknowledged that it would be absurd to require such an effort in futility. Another interesting issue raised by Shilts involves the evidence surface owners may need to use to establish that they used “reasonable diligence” in their attempt to locate heirs. The evidence relied upon in the Shilts case was an affidavit of the surface owner’s attorney. This will likely be a common occurrence in most 2006 DMA abandonment cases, because surface owners typically relied on legal counsel to research and prepare the necessary 2006 DMA abandonment documents. If this is the case, attorneys may be witnesses and could be required to disclose their files and provide testimony in support of showing compliance with the “reasonable diligence” standard. This gives rise to the question about whether counsel may continue to represent the surface owner if their testimony will be central to whether their client used “reasonable efforts” when, in fact, it was the attorney who attempted to locate heirs on behalf of the client. The Shilts case demonstrates that the legal battles in Ohio courts over ownership of valuable mineral rights are far from over. Surface owners and mineral owners still have an array of potential statutory and common law claims to assert when seeking to claim or reclaim ownership of severed mineral rights. The law in this area evolves seemingly every day. The Shilts case illustrates the complexity of the legal issues and highlights the importance of retaining experienced oil and gas counsel to advise clients with regard to the ownership of mineral interests. David J. Wigham is a second-generation Ohio oil and gas attorney with more than 25 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.
May 2018
Public Invited to Comment On
Wayne National Forest’s Future Marion Renault | GateHouse Media Ohio IN APRIL, THE U.S. FOREST SERVICE initiated the year long process of updating long-term plans for the Wayne National Forest. The guide will act as a road map for wildlife, recreation and industry in Ohio’s only national forest during the next one to two decades. The revised plan will balance forest issues such as invasive and endangered species, climate change, local economies and air, soil and water quality, Forest Supervisor Tony Scardina said. “The goal of forest planning is to find the middle of all these different interests. We’ve got to find some sweet spot,” Scardina said at a public meeting in Canal Winchester on Wednesday. “Our goal is not to make any one person happy.” Spanning about 245,000 acres in southeast Ohio, the Wayne covers more land than all of Ohio’s state forests combined. The revised forest plan would spell out, for example, how much of its white oak could be harvested and under what conditions. The updated version will reflect ecological and social changes underway in the Wayne since 2006, when the last management plan was finalized, such as new scientific research on wildlife or the surge of popularity of allterrain vehicles in the forest. “I can’t overemphasize how important this revision is going to be,” said Nathan Johnson, public lands director for the Ohio Environmental Council. “It determines pretty much everything top to bottom ... and applies for 20 years or longer. It really is a generational event.” At a public meeting last month, attendees questioned Scardina about everything from future climate change impacts to the inclusion of Native American tribes and abutting property owners in the revision process, which could take two to three years. Many also voiced concern about how the document might curb or encourage future oil and gas development in the Wayne. Since December 2016, the Bureau of Land Management has netted about $8 million in bids for oil and gas leasing across 2,700 acres of the Wayne — prompting protests and an ongoing lawsuit filed by a group of environmental organizations in 2017. Unlike national parks, industrial development, such as mining and logging, is permitted in national forests. In recent years, advocates for the Wayne and other wild spaces have called on officials to prioritize the use of public forests as wildlife refuges and carbon sponges — not sites for fossil fuel extraction. The current plan limits pipeline buildup in the forest, May 2018
which poses “serious hurdles” to oil and gas development there, Johnson said. At the meeting, Scardina said that the Wayne’s plan revision was triggered by the state’s decision to update its own overarching forest management plan by 2020. “I think that’s a legitimate reason,” Johnson said. “But at the same time, I think it has to be said that oil and gas pressure is a driving force too.” Through the end of summer, the public can weigh in on the Wayne’s management plan by submitting an email questionnaire or comments to the forest service at WaynePlanRevision@fs.fed.us. “These are your public lands and getting your voice heard is an important part of this process,” said plan revision team leader Lori Swiderski. “We want to hear what the public has to say and start taking action. It’s pretty much an open invitation.” mrenault@dispatch.com @MarionRenault on Twitter.
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Gubernatorial Candidate
Tours Southeastern Ohio Fracking and Mining Sites The Columbus Dispatch A MARCH 9 FOSSIL FUEL EXTRACTION TOUR of Southeastern Ohio, guided by area residents included Dennis Kucinich, candidate for governor, who requested the tour to gain a firsthand look at oil and gas development in the area. The tour also offered the candidate an opportunity to speak with local residents who have been affected by fracking. Many fracking and coal mining sites were visited in Belmont, Noble, Monroe and Guernsey Counties including the Exxon-owned XTO Schnegg well site near Powhatan Point that exploded February 15th and was recently capped after leaking for 23 days. The tour was organized by Columbus Community Bill of Rights, Ohio Allies, and Guernsey County Citizens Support on Drilling Issues. The tour was led by Jill Hunkler of the Barnesville area and Kerri Bond of the Senecaville area. Both have been negatively affected by the oil and gas infrastructure near their homes and were glad to share their stories with those on the tour. Kucinich said, “I talked to a woman who lives in this area and she told me there was a chemical film on their homes, cars, and on their land. They don’t want to grow any food this year because they’re worried there could be poison in the soil.” Residents also expressed their concern to Kucinich regarding the potentially negative health impacts from the lengthy exposure of toxins from the leaking well. Witnessing the many water lines servicing frack pads throughout the countryside, Kucinich stated: “Fracking uses enormous amounts of water. On average, it takes 11,000,000 gallons of water to frack one well. When you consider that in some of these counties they’re building thousands of wells, that means not millions, but billions of gallons of fresh water will be permanently contami-
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“It is time for us be asking the question: What do we want, water or oil and gas? Why are we being put in a situation with energy policies, where we are told we have to sacrifice water?” – Dennis Kucinich | Gubernatorial Candidate nated and removed from the hydrologic cycle.” “This is happening right at the time when our water resources are increasingly scarce globally. It is time for us be asking the question: What do we want, water or oil and gas? Why are we being put in a situation with energy policies, where we are told we have to sacrifice water?” “The oil and gas industry is syphoning water out of reservoirs, rivers and streams and often paying a minimum, if anything at all, for the water. This water is the basis of life, but our lives are being put at risk for oil and gas here in southeastern Ohio.” Kucinich added. Mr. Kucinich was joined on the tour by his wife, Elizabeth and several reporters, including one from the Washington Post. Also participating was Dr. John Stolz, Director of Environmental Research and Education at Duquense University, who has sampled and analyzed water samples taken near oil and gas sites for six years in Pennsylvania. Dr. Stolz is the Scientific Lead, for The American Geophysical Union’s Thriving Earth Exchange(TEX) Project that has been launched in southeastern Ohio. Jill Hunkler will be the Community Lead in the TEX project. She and Dr. Stolz work together with the community to establish a low-cost and sustainable environmental monitoring program, in the face of shale development. Ted Auch of FracTracker Alliance, John Morgan of Raven Rocks, Greg Pace and Bill Lyons of Columbus Community Bill of Rights also took part in the tour. At the tour’s conclusion Mr. Kucinich said, “As Governor, I will fight to keep the big oil and gas companies from poisoning our children and families. Ohio lawmakers cannot continue to sweep these families’ human rights under the rug. Clean air and water are non-negotiable rights for ALL Ohioans.” Kucinich is a Democrat candidate for governor in the May 8 primary election. He is a former mayor of Cleveland, served as an Ohio State Senator, and was U.S. Representative for Ohio’s 10th Congressional District from 1997 to 2013. May 2018
Kinder Morgan:
Still Work To Do On Utopia Pipeline Shane Hoover | GateHouse Media Ohio KINDER MORGAN will work this summer to restore land and roads impacted by the construction of its Utopia pipeline. The pipeline started carrying ethane and propane to a chemical plant in Windsor, Ontario, in January, but winter weather kept the company from doing repairs, said Allen Fore, Kinder Morgan’s vice president of public affairs. Fore said Kinder Morgan wants to complete restoration work this summer, but “if there are problems with land attributable to our construction processes, if it takes longer than this summer, we’ll be there with the landowner to work through it.” Utopia is a 12-inch diameter pipeline that runs about 147 miles from Harrison County, in the heart of Ohio’s Utica Shale region, to Seneca County, where it connects to an existing pipeline. The $540 million pipeline crosses parts of Stark, Car-
roll, Tuscarawas and Wayne counties. The pipeline can carry 50,000 barrels of ethane or ethane-propane mixtures a day, and Kinder Morgan could expand Utopia’s capacity to 75,000 barrels per day by adding pump stations. By acquiring an existing pipeline in northwest Ohio, Kinder Morgan eliminated the need to build 75 miles of new pipeline for the Utopia project. Houston-based Kinder Morgan owns or operates approximately 85,000 miles of pipelines and 152 terminals in North America, including almost 1,000 miles of pipelines and four terminals in Ohio. Reach Shane at 330-580-8338 or shane.hoover@cantonrep.com On Twitter: @shooverREP
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OHIO WELL ACTIVITY by the numbers
MARCELLUS SHALE
17 Wells Permitted 5 Wells Drilling 7 Wells Drilled Not Drilled 23 Wells Producing Inactive Plugged 52 Total Horizontal Permits
489 149 284
UTICA SHALE
Wells Permitted Wells Drilling Wells Drilled Not Drilled 1 8 8 8 Wells Producing Inactive Plugged 2810 Total Horizontal Permits
Data as of 4/21/18 Source: Ohio Department of Natural Resources
Have an oil and gas issue? We can help. • Represented over 2,600 lessors, mineral owners, and landowners for leasing, sale of minerals, and pipeline right-of-ways. • With more than 100 years of combined oil and gas experience, our attorneys have been involved in over 200 litigation and arbitration cases involving breach of lease, fraud, underpayment of royalties, invalidity of lease, dormant mineral and marketable title issues, and mineral reservation interpretation. Contact one of the attorneys below to discuss your case: William G. Williams | bwilliams@kwgd.com Gregory W. Watts | gwatts@kwgd.com KWGD.com Toll Free at 877-876-9958 4775 Munson Street NW | Canton, Ohio 44718 | 330.497.0700 | Offices Throughout Ohio CJ-10596092
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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES
1. Belmont County 575 2. Carroll County 526 3. Monroe County 441 4. Harrison County 417 5. Guernsey County 224 6. Noble County 222 7. Jefferson County 170 8. Columbiana County 151 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 WE L SIT WELL SITES ITES IIN N VAR V VARIOUS A OU AR US SS STA STAGES: T GES GES: PERMITTED, PERMITTED E M T ED D, D DRILLING DRILLING, LLING, DRILLED, D I LE LED, ED D, COM COMPLETED, PLETED PL LET ETED PRODU PRODUCING PRODUCING, PR RODUCING O UCING I G PLUGGED LUGG SOUR SOURCE: S OUR RCE E O OHIO H O DEP DEPARTMENT RTMENT O OF NA NATURAL URAL RESOURCES S U E A AS SO OF 4 4/21/18 4/2
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May 2018
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