June 2020
A Free Monthly Publication
GIVING THANKS TO OHIO’S EDUCATORS
OHIO’S OIL & NATURAL GAS INDUSTRY DEMONSTRATES ITS COMMITMENT TO THE ENVIRONMENT IN THIS ISSUE: PAYING FOR COVID-19…ARE YOU READY? - GUEST EDITORIAL
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NEWS. BUSINESS. TECHNOLOGY. ALLIANCE Mindy Cannon 330.821.1200
CAMBRIDGE Mindy Cannon 330.821.1200
OHIO’S GAS & OIL INDUSTRY RAVENNA Bill Albrecht 330.996.3782
WOOSTER Aaron Bass 330.264.1125
CALL YOUR LOCAL OHIO GAS & OIL SALES REP. TODAY
Table of Contents JUNE 2020 G ROUP PUBLISHER Bill Albrecht
EXECUTIVE EDITOR Beth Bailey bbailey@daily-jeff.com
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A Look Ahead Gas & Oil Events
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Giving Thanks to Ohio’s Educators
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Ohio’s Oil & Natural Gas Industry Demonstrates its Commitment to the Environment
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EIA reports First Triple-digit Net Natural Gas Storage Injection since October 2019
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Paying for COVID-19…Are YOU ready? - Guest Editorial
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MEET ANDREW CASPER: Director of Regulatory Affairs at OOGA
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Four Reasons why U.S. Natural Gas has Endured this Pandemic
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U.S. Power Sector sees Impressive Carbon Emission Reductions amid Natural Gas growth
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Ohio Supreme Court to Rule on Additional MTA Questions Involving Severed Oil and Gas Rights
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Ohio Well Activity
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Horizontal Drilling Activity Graph
On The Cover:
As many aspects of our life have taken a new shape or form in the last several months, learning, too, adjusted quickly. Teachers across the country have risen to the challenge and found new, creative ways to stay connected to ensure their students’ learning process is as little disrupted as possible. In honor of National Teachers Appreciation Week, we’d like to recognize and thank Ohio educators for instilling knowledge and character in the young minds and hearts of students, especially during these difficult times.
JUNE 2020
JUNE 2020 ADVER TISING Mindy Cannon Cambridge, Ohio Office mcannon@the-review.com 330-821-1200 Aaron Bass Wooster & Holmes, and Ashland, Ohio Offices abass@gatehousemedia.com 330-264-1125 419-281-0581 Mindy Cannon Alliance & Minerva, Ohio Offices mcannon@the-review.com 330-821-1200 Bill Albrecht Akron & Kent, Ohio Offices balbrecht@gatehousemedia.com
L AYOUT DESIG NER Phil Luks
pluks@recordpub.com
212 E. Liberty St. Wooster, OH 44691 330-264-1125 “Ohio Gas & Oil” is a monthly publication. © GANNETT Co. Inc. 2020
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A Look Ahead
Gas & Oil Events DUE TO THE COVID-19 PANDEMIC, MANY EVENTS HAVE BEEN CANCELED OR POSTPONED. PLEASE CHECK WITH THE EVENT COORDINATOR(S) FOR NEW DATES AND TIMES.
JUNE 26, 2020
SOOGA - 2020 SPRING GOLF Lakeside Golf Course Beverly, OH
JULY 13-14, 2020
OOGEEP GEOLOGY TEACHER WORKSHOP
Schoenbrunn Conference Center, New Philadelphia, Ohio This workshop is free for Ohio teachers, thanks to Ohio’s natural gas and oil producers! Early registration is encouraged because this workshop is limited to only 40 participants and will fill up quickly! No “walk-in” registrations are permitted. In the event you must cancel your registration, please let us know at least 14 days PRIOR to the workshop so that we can promptly fill your position with someone on the wait list. *An optional Ashland University graduate credit is available. The workshop is worth one graduate credit hour (14.5 contact hours) and the fee must be paid by credit card or check made out to Ashland University at the time of the workshop. This graduate credit will be granted upon completion of all requirements. Additional information will be provided at the workshop.
Hilton Columbus at Easton 3900 Chagrin Drive, Columbus, Ohio 43219 The 2020 Connections to Education Conference is where careertechnical educators and partners gather to exchange time, resources, strategies, solutions and more. Over three days of learning, growing and finding inspiration, attendees are equipped with a year’s worth of support in their daily responsibilities as leaders in education.
SEPTEMBER 11, 2020 OOGA REGION I & II GOLF OUTING
Wooster Country Club 1251 Oak Hill Rd Wooster, Ohio 44691
SEPTEMBER 24, 2020 SOOGA ANNUAL TRADE SHOW Broughton’s Community Building Marietta, OH 45750
OCTOBER 3-4, 2020
FIELD EMERGENCIES TRAINING
INSTRUCTORS Lead Fire Instructor: Chief Brent Gates, New Concord Fire Department – Ohio Certified Fire Instructor – Adjunct Instructor Ohio Fire Academy – Board of Directors, Ohio Fire Chiefs’ Association – President, Southeast Fire Chiefs’ Association – More than 40 years experience in emergency response and fire education Other Instructors: Includes a team of 15+ state certified fire instructors, emergency responders and industry experts with more than 500 years of combined experience in the oil and gas industry and/ or fire service. TRAINING LOCATION Wayne County Fire & Rescue Regional Training Facility 2311 South Millborne Road, Apple Creek, OH 44606 www.oogeep.org
OOGEEP RESPONDING TO OIL-
JULY 14, 2020
OOGA SUMMER MEETING
The Glenmoor Country Club 4191 Glenmoor Rd NW Canton, Ohio 44718
JULY 27 – 29, 2020
OHIO ACTE’S 2020 CONNECTIONS TO EDUCATION CONFERENCE
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JUNE 2020
Giving Thanks
to Ohio’s Educators Ohio Oil and Gas Energy Education Program As many aspects of our life have taken a new shape or form in the last several months, learning, too, adjusted quickly. Teachers across the country have risen to the challenge and found new, creative ways to stay connected to ensure their students’ learning process is as little disrupted as possible. In honor of National Teachers Appreciation Week, we’d like to recognize and thank Ohio educators for instilling knowledge and character in the young minds and hearts of students, especially during these difficult times. It’s been two months since K-12 schools closed their doors, but teachers and students are developing and implementing creative and resourceful strategies to bring classrooms to students’ homes. Teachers are turning to technology and tools to deliver lessons and post assignments through videoconference platforms, upload pre-recorded lectures on online learning websites, emails – all of which have become vital in distance learning. They’re also relying on available online resources to prepare for lessons. Recognizing the benefits and importance of STEM education, OOGEEP has revamped materials typically reserved for teachers and schools and made them accessible on our online VIRTUAL CLASSROOMS.
concepts to their surroundings and everyday life. STEM and GEOLOGY Curriculum & Labs include interactive lessons that teach students about Earth’s natural resources and the technology used to leverage them for daily use, help students grasp technical concepts about the basics of geology and minerals. This program encourages and challenges students to make real-world connections and each lesson includes a series of additional MATERIALS such as reading, videos, and additional activity books, placemat, word search. Parents and caregivers have become de facto homeschooling teachers when schools had to close. Distance learning presents its own set of unique challenge and complications, such as access to laptops and the Internet, not to mention implementing it during a pandemic, which creates a toll on teachers’ and students’ mental and physical health. OOGEEP hopes to help alleviate some of these challenges using our resources and what we do best. Classrooms provide a unique space and a sanctuary for students to learn and grow. This pandemic might have temporarily taken away the physical space, but teachers’ and students’ bonds has grown even stronger and they are reshaping education. While social distance has changed the usual ways for us to say “thank you” to teachers, their compassion and service are celebrated every day. ges using our resources and what we do best. Classrooms provide a unique space and a sanctuary for students to learn and grow. This pandemic might have temporarily taken away the physical space, but teachers’ and students’ bonds has grown even stronger and they are reshaping education. While social distance has changed the usual ways for us to say “thank you” to teachers, their compassion Materials cover subjects like chemistry, earth science, and service are celebrated every day. geology and physics, built for students in middleand high-school levels but can be easily adapted for younger ages. Our teacher curriculums meet state and national science standards and have been downloaded hundreds of times by teachers, parents, and students across the state. OOGEEP’s best-in-class program emphasizes on hands-on learning experience and includes a variety of at-home science experiments, which can be done using simple supplies. Help students connect these STEM
JUNE 2020
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OHIO’S OIL & NATURAL GAS INDUSTRY DEMONSTRATES ITS COMMITMENT TO THE ENVIRONMENT NICOLE JACOBS | EnergyInDepth the [oil and natural gas] industry, the regulators, and the community. Other states are told to look at Ohio as an example of what to do right.” And for Ohio, there’s more to celebrate this Earth Day as the Buckeye State leads the nation in car-
“Going above and beyond regulations is our goal, and natural gas is the key. ” Ohio’s oil and natural gas industry has proven to be a leader in reducing carbon emissions and protecting the environment – a fact that resonated in various events that took place across the state for Earth Day’s 50th anniversary. Participants during a panel discussion hosted by the Ohio Oil & Gas Energy Education Program and the Ohio Oil & Gas Association took a break from planting trees across the state to hear from landowners, regulators, and oil and natural gas industry representatives on the steps being taken to protect and improve Ohio’s environment. As the panel’s moderator, OOGGEEP spokeswoman Kennedy Copeland, said: “We’re here to celebrate the significant strides we’ve taken to achieve global climate goals. But more importantly, we’re here to proudly recognize that the increasing use of natural gas is a prime reason for these triumphs.” Collaboration is the key to these successes, as the Ohio Department of Natural Resource’s Adam Schroeder said: “Personally, I look at it as a three-way partnership:
bon emission reductions. Between 2005 and 2017, Ohio emissions declined by 67 million metric tons (a 24 percent decrease) despite natural gas production and consumption increasing by 1,974 percent and 63.5 percent, respectively. This is a point echoed by Dr. Bob Chase of Marietta College’s Department of Petroleum Engineering and Geology: “It’s pretty spectacular what’s occurred. Natural gas production is up, and emissions of methane have dropped. It’s largely because of the commitment companies operating in the Appalachian Basin have made to the environment.” Dr. Chase went on to commend the industry’s efforts in protecting the environment. From an operator’s standpoint, Ohio’s oil and natural gas industry is subject to some of the toughest and most rigorous environmental regulations. But for producers like Ascent Resources, regulatory compliance is only the beginning, as Ascent Resources’ Environmental, Health and Safety Director Bob Adams said: “Going above and beyond regulations is our goal, and natural gas is the key.” Environment continued on page 5
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Environment continued from page 4
Natural gas and oil development is viewed as an Larry Cain shared his story as a local farmer and economic savior at the regional level. Elected of- landowner, describing the benefits – both at the ficials, regional operators, and landowners work consumer and community level – that arise when the three collaborate: “Natural gas has truly been a blessing for this area. It’s made our farm more efficient and stronger. We worked very closely with [the oil and gas industry] to make sure we were able to keep farming on our family farm. Later this year, we’ll produce hay right up against the pad. These two industries can co-exist.” From the audience, Harrison County’s Director of Economic Development, Nick Homrighausen, said it’s worth noting how well the industry has worked with the Ohio EPA on the permitting of important petrochemical projects such as the anticipated PTTGC facility in Belmont County. The webinar served as a reminder that environmental success and a growing economy go hand in hand when natural gas is utilized. Through community, industry, and governmental efforts, Ohio’s economic standpoint can be elevated while maintaining a healthy and safe environment for future in tandem to determine the best outcome for the generations. community and establish clear guidelines to best achieve those goals.
“Natural gas has truly been a blessing for this area. It’s made our farm more efficient and stronger. ”
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EIA Reports First Triple-digit Net
Natural Gas Storage Injection since October 2019 U.S. Energy Information Administration In EIA’s Weekly Natural Gas Storage Report (WNGSR) published on May 7, 2020, EIA reported a net injection for the Lower 48 states of 109 billion cubic feet (Bcf)—the biggest net injection since September 27, 2019. The net injection was 35 Bcf more than the typical injection for this particular week, on average, for the past five years (2015-2019). The overall surplus of working natural gas inventory compared with the fiveyear average is now 395 Bcf. Milder weather in the continental United States contributed to reduced natural gas demand and supported increased week-over-week net natural gas storage injections. Continued sharp increases in the South Central storage region anchored this increase. This week’s South Central net injection of 48 Bcf was the third biggest net injection in the region reported by EIA since the five region estimates of inventories and weekly changes became available going back to 2010. Lower 48 states’ net natural gas storage activity for week number 18 by EIA storage region since 2015
tions into underground natural gas storage tend to be high in May because of the availability of working natural gas capacity and reduced, shoulder season natural gas load levels. There were no 100 Bcf injection weeks in 2012 and 2016 during the aftermath of warm winters that contributed to high seasonal stocks as winter ended and moderated the need for summer injections. Weekly natural gas inventory change since 2010 according to week of the year billion cubic feet
billion cubic feet
Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report.
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Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report. Note: The five-year average in this chart is based on average weekly activity for week 18 of the year for the years 2015 through 2019.
JUNE 2020
Paying for COVID-19 …Are YOU Ready? Guest Editorial
GREG KOZERA | Learned Leadership LLC My physical therapists have done an incredible job taking me from a wheelchair to running again. I’m running a virtual 5K with my daughter in May. The focus for me is going the distance for the first time since October, not speed. At my PT session on Wednesday, I overheard the remarks one of the other patients made to his therapist. “We shouldn’t be buying gloves, masks and ventilators from China. We should be making them here in the USA and providing American jobs.” It sounded like me talking. I wonder if he heard one of my radio shows? (There was only one other patient since elective surgeries have been stopped for over a
“As leaders, we know blaming others doesn’t help us. Leaders take responsibility for their situation”
has been estimated at $10- $12 Trillion. These losses are bigger than money. Behind them are real people. When we leave home confinement we don’t have to go very far to see the faces of those impacted. Unless you are one of those rare individuals that carried the virus here from China, you had no control over COVID-19 coming to the United States. We can blame Chinese leaders of any number of other people for our current situation. As leaders, we know blaming others doesn’t help us. Leaders take responsibility for their situation and then take control of those things they can control. What can we control? We can control our attitude, our actions and our thinking. Here are some facts that may help. Paying continued on page 8
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month as part of COVID-19 restrictions.) I smiled and said, “You are spot on.” Our economy is starting to open up again slowly. We have already seen a $6 Trillion stimulus package and more is on the way. In the last 6 weeks, over 30 million people have lost their jobs. They are no longer paying taxes and have filed for unemployment. Thousands of small businesses have had to shut down many may not reopen. Loss of value to publicly traded companies and privately-owned companies OhioGas&Oil
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Paying continued from page 7
Shale Crescent USA did a little research. We learned the US Government has data on imports. In the last twenty-five years, we have imported over $7 Trillion in manufactured goods from China. WE purchased those products. Many of those products were made by American companies who moved to China because of perceived cheaper manufacturing costs. Let’s assume we purchased our Chinese products 25% cheaper than US products. (that is a high estimate) Based on $7 Trillion in imports we saved $2.25 Trillion over 25 years. These savings came at a cost of thousands of US high wage manufacturing jobs, products and services those workers would have been able to purchase with those high wages and the taxes they would have paid. Now we are looking at an $18 Trillion bill for the virus we will all be paying. Where are we going to get that kind of money? How can we bring our economy back? The best way I can think of is from new high wage manufacturing jobs created by making products here that we are currently buying overseas from places like China, starting with masks, gloves, gowns, medical equipment and medications (currently 80% come from China). High wage manufacturing jobs create jobs in many sectors from restaurants, housing, auto and other products people purchase. We lost our energy advantage starting in the 1970s to OPEC. Until 2010 we were dependent OPEC for our oil and were preparing to purchase natural gas from them. Asia had cheap labor and we were both getting our energy from the same place (OPEC). Manufacturing jobs began leaving the USA for Asia creating the “Rust Belt”. The World has changed again. We now have economic abundant energy. Asian nations must get their energy from OPEC, Russia or the USA. Labor is still cheaper in Asia but now the USA has advanced manufacturing (Robotics, remote control, AI) automating many processes and reducing our labor cost. Manufacturing jobs today are now high-tech jobs. The Boston Consulting Group said in 2018, “China, the world’s biggest exporter, has also seen significant change. A once –enormous cost advantage over the US has been eroding for years, largely because of double-digit annual increases in wages that far outpaced productivity growth, a strengthening currency, and relatively high energy costs.” It is now cheaper to manufacture here in the Shale Crescent USA, especially for products that will be sold here. Our advanced manufacturing off sets countries like China’s labor advantage. We have cheaper energy and feed stock costs. We are located in the middle of the largest economy in the world, the eastern United States and eastern Canada. Asian countries already recognize this advantage and are starting to move manufacturing here to make products that will be sold in the USA and will create high wage jobs in
the Shale Crescent USA. We are currently working with Asian companies who want to locate and manufacture here. Will US companies figure this out? The US companies with the greatest advantage are those already here. They can expand and adapt to make products that are currently being made in places like China. We need to do our part. I’m now looking at where my medications come from and asking for products made in the USA. I own two Subaru Outbacks from a Japanese company made in the USA. Retailers are sensitive to their customers especially now. We need to make our preferences for US made products known. At the grocery store I look for produce grown in the USA. I feel safer with the US Department of Agriculture. I know the products for my vitamins are grown here and they are manufactured here. Manufacturers are now looking at Regional instead of Global supply chains. We can’t control what has already happened. As leaders, we can control what we do about it. Now is our time. We can change the future. Thoughts to ponder. © 2020 Learned Leadership LLC
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MEET ANDREW CASPER: DIRECTOR OF REGULATORY AFFAIRS AT OOGA BRAD MILLER | Membership Director, Ohio Oil & Gas Association The Ohio Oil & Gas Association consensus-based positions to legal, is happy to announce the hiring of regulatory and policy initiatives. Andrew Casper as the Director of “I’m excited to join OOGA’s exLegal & Regulatory Affairs. ceptional team and I look forward Andrew will manage regulatoto navigating the myriad of regulary and technical matters with key tory issues facing our diverse memagencies, such as the Ohio Departbership,” Casper said. ment of Natural Resources and the In Colorado, he was on the front Ohio Environmental Protection lines of several regulatory battles, Agency. He will serve as the Assoincluding groundbreaking rulemakciation’s main point of contact beings such as the hydraulic fracturtween OOGA’s diverse membership ing disclosure rules, setbacks and and these agencies on all regulaurban area mitigation measures, tory issues impacting the industry. air quality standards, local control, “I’m thrilled to welcome Andrew water quality sampling and flowline to OOGA and I know his knowledge construction, among others. He also and many years of experience will worked on storage tank guidelines, be a tremendous asset to our Assowhich received the U.S. EPA’s Clean ciation,” said OOGA President Matt Air Excellence Award. Hammond. “It is important that our Prior to COGA, Andrew worked Andrew Casper: Director of Regulatory members have someone they can in the financial sector and was emAffairs at OOGA depend on to help tackle the many ployed by a national bank and lender. complex regulatory issues facing our industry.” He earned a B.A. from the University of Maryland, a Andrew joined the OOGA team in early April, after J.D. from the University of Baltimore and an M.S. from serving as the Director of Legal & Regulatory Affairs the University of Denver. at the Colorado Oil & Gas Association (COGA). In nine Originally from Maryland, Andrew moved from Colyears with COGA, he promoted the responsible de- orado to Ohio with his wife (a native Buckeye) and his velopment, production and use of oil and natural gas two-year-old son. Outside of oil and gas, he is an avid by advocating for a stable regulatory environment hockey fan and enjoys pretty much anything involving with agencies and relevant stakeholders, facilitating the great outdoors. member committees and developing and advancing
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Four Reasons Why U.S. Natural Gas has Endured this Pandemic JOEL ACOSTA | EnergyInDepth Good news is on the horizon for U.S. natural gas ing this pandemic and will continue to be a valued despite the market challenges brought on by the resource: COVID-19 pandemic, according to experts from the # LNG infrastructure was built for the long run Baker Institute for Energy Studies. LNG developments have ramped up in the The center approached the future of the global past decade as part of a significant effort to export surplus U.S. natural gas production. However, the COVID-related slowdown in natural gas demand has raised questions around whether wide-scale cancellations of LNG projects could be an increasing trend. Although a similar situation happened in the 1980s, where LNG (import) facilities were mothballed due to crashing natural gas prices, Steven Miles, nonresident fellow at the Baker Institute thinks otherwise: “A multibillion-dollar LNG facility is an asset not going to waste. It is like gas in the ground. It’s going to stay there until prices rise enough to justify its exploitation. And even while shutting in, the LNG plant will continue having an impact in global markets and prices”. Although the domestic natural gas market might face certain growth constraints in the upcoming months due to overall lower demand, it will benefit from having the established infrastructure to continue shipping gas abroad once activity resumes. # O ther countries benefit from affordable U.S. natural gas Unlike crude oil and gasoline, the natural gas market is not as integrated globally yet. However, the global natural gas market is undergoing a rapid transformation in part due to several LNG projects coming online. This is particularly true for Eastern Europe, which has benefited directly from U.S. LNG’s global expansion as it sheds its dependence on Russian gas. Ana Mikulska, nonresident fellow at the Baker Institute agrees on this: “With the shale revolution and advances in technatural gas market in its most recent webinar, with nology and with the boom in the LNG market, the experts Kenneth Medlock, Steven Miles and Anna natural gas market has become more interconnectMikulska reinforcing that natural gas demand will ed, much more liquid. And the region has undercontinue to grow and confirming that U.S. natural stood that this is a way in which it can transform gas is, broadly, in a privileged and robust position itself and become more like the Western part of Eucompared to other energy sources. rope where Russia is not as dominant”. Here are four reasons discussed on the webinar for Four continued on page 11 why U.S. natural gas has proven more resilient dur-
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“With the shale revolution and advances in technology and with the boom in the LNG market, the natural gas market has become more interconnected”
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Four continued from page 10
New U.S. LNG contracts have reduced natural gas prices in Lithuania and Poland by 25 percent and 20 percent, respectively, according to the experts. # U.S. LNG has helped reshape the global gas market into a more competitive one In addition to providing more affordable natural gas prices, U.S. LNG has contributed to the transformation of the global market in more profound ways. For instance, regional trade clusters have disintegrated amid new competition from U.S. LNG, which has impacted the general dynamics of the market because of the flexible nature of LNG contracts as compared to traditional pipeline movement. According to Mikulska, increased natural gas supply from U.S. LNG – which was imported into Europe at record levels during this year’s first quarter – played a significant role in minimizing both the economic and geopolitical influence of specific cartels “U.S. LNG that is flowing into the region [Eastern Europe] creates this opportunity to arbitrage. Not necessarily physical flows, but the ability to deliver gas, specific amounts of gas to a region, that provides this credible threat to any single supplier that could otherwise be dominant in the region.”
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U.S. natural gas storage has helped in balancing the markets The fact that natural gas storage in North America is generally commercial provides much more flexibility to the industry compared to other regions. Greater U.S. storage capacity is also a direct result of natural gas market pricing, incentivizing the industry to generate the mechanisms needed to operate properly. According to Kenneth Medlock, senior director for the Center for Energy Studies: “We are not running out of natural gas storage like we are in oil. There is still room for product storage but it hasn’t been needed”. As a result, compared to other countries’ storage capacity, particularly in Europe and Asia, U.S. storage capacity has played a key role in limiting price volatility and stabilizing the markets.
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U.S. Power Sector
Sees Impressive Carbon Emission Reductions amid Natural Gas Growth NICOLE JACOBS | EnergyInDepth The United States’ power sector has decreased carbon emissions by 32.2 percent and its carbon intensity by an impressive 33.7 percent since 2005, according to Carnegie Mellon University’s Power Sector Carbon Index, which looks at the carbon intensity of electricity production broken out by fiscal quarter. As the power sector continues to make significant progress in reducing emissions, the use of natural gas for power generation has skyrocketed, highlighting the critical role the resource plays in helping to reduce emissions and meet climate targets. Making Progress Year-Over-Year CMU’s recently released Q4 2019 results showcase the immense progress that the industry has
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made in the last year alone. In Q4 of 2019, U.S. power plant emissions averaged 844 lbs. CO2 per MWh, down 11 percent from the same time frame in 2018. Meanwhile, natural gas was up by 12 percent compared to Q4 2018 and represented a staggering 39 percent of total power generation. The last quarter of 2019 was no anomaly. In Q3 of 2019, carbon intensity was down 7 percent over 2018 levels, while natural gas generation was up 7 percent. Examining the power sector’s performance over every quarter of 2019, EID found that the industry was able to decrease emissions by over 8 percent and reduce carbon intensity by over 7 percent from 2018. CMU Study Reinforces Correlation Between Natural Gas and Climate Progress CMU’s research builds on numerous data sets that reinforce the strong correlation between the growing use of natural gas and our continued success in reducing emissions. The Environmental Protection Agency’s most recent greenhouse gas inventory revealed that U.S. GHG emissions declined10 percent between 1990 and 2018, due in large part to “an increasing shift to use of less CO2-intensive natural gas for generating electricity,” even as GPD, population, and energy consumption have continued to rise. In addition, the top carbon emissions reducing states in the country, have also drastically increased their consumption of natural gas as a fuel source. In the end, natural gas is playing a key role in our ability to continue meeting climate targets. The United States now leads the world in reducing emissions and as IEA director Fatih Birol explained, “In the last 10 years, the emissions reductions in the United States has been the largest in the history of energy.”
JUNE 2020
OHIO SUPREME COURT TO RULE
Additional MTA Questions Involving Severed Oil and Gas Rights David J. Wigham | Attorney On April 28, 2020, the Supreme Court of Ohio accepted jurisdiction to hear an appeal in a case known as Erickson v. Morrison, Case No. 2020-0244, where the Court will decide more important issues involving the Marketable Title Act’s (“MTA”) application to severed oil and gas interests in Ohio. This appeal was accepted on the heels of the Ohio Supreme Court accepting an appeal on January 28, 2020 in West v. Bode, in which the Court will decide whether the MTA may be used to extinguish severed oil and gas interests or whether the Dormant Mineral Act (“DMA”) provides the exclusive remedy. These MTA cases are being closely followed due
to a recent surge in MTA lawsuits filed by surface owners seeking to terminate severed oil and gas interests. In general, the MTA automatically extinguishes property interests created prior to a landowner’s marketable record title to property if the landowner has an unbroken chain of title for more than forty (40) years after the prior interest was created and there is no “specific” reference to the prior interest in the landowner’s chain of title. In the context of an oil and gas interest, surface owners have been attempting to utilize the MTA to extinguish severed oil and gas interests, rather than relying on the DMA. The DMA requires surface owners to first notify mineral owners before seeking an abandonment of their minerals, and MTA continued on page 14
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OhioGas&Oil 13
MTA continued from page 13
also allows mineral owners to permanently preserve the interest. Erickson v. Morrison involved a fact pattern that is typical of most MTA cases involving severed oil and gas interests. In 1926, the Logans signed a warranty deed to convey a 139-acre parcel of property in Guernsey County, Ohio. This deed contained the following language, by which the Logans reserved the oil and gas rights to the property: “excepting and reserving therefrom coal, gas, and oil with the right of said first parties, their heirs and assigns, at any time to drill and operate for oil and gas and to mine all coal.” In 1941, the Logans sold this oil and gas interest to C.L. Ogle by mineral deed. The Ericksons are the heirs of C.L. Ogle. Between 1926 and 1975, the property was conveyed several times and each conveyance contained the above-quoted reservation language, without the Logans’ names being mentioned. The surface owners are the Morrisons. They took title to the property in 1978, and thereafter conveyed the property to themselves as joint tenants and then into a trust, and for each of these transfers, the Morrisons acknowledged that they did not own the oil and gas rights. In 2017, the Ericksons filed suit against the Morrisons, seeking to quiet their title to these severed oil and gas rights. The issue before the trial court was whether the language of this reservation was a “specific reference” to the original reservation, using the three-part test set forth in Blackstone v. Moore, 2018-Ohio-4959. Blackstone held that a “specific” reference in the chain of title to a prior reserved interest will preserve it from being extinguished under the MTA. Blackstone used a dictionary definition of a word “specific” to mean “characterized by precise formulation or accurate restriction (as in stating, describing, defining, reserving): free from such ambiguity as results from careless lack of precision or from omission of pertinent matter.” The trial court ruled in favor of the Ericksons, holding that the reserved mineral interest was specific and that the Morrisons had no interest in the oil and gas rights underlying the property. On appeal, the Fifth District Court of Appeals reversed the ruling of the trial court, holding that despite the fact that the reservation language was repeated throughout the chain of title to the Morrisons’ property, the Ericksons’ interest in the minerals was extinguished under the MTA because the reservation was not specific using the test set forth in Blackstone. The Court of Appeals specifically concluded that the interest was not specific because the name of the original reservists, the Logans, was not included or repeated in
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the references to the reservation within the deeds in the Morrisons’ chain of title. In Erickson v. Morrison, the Ohio Supreme Court accepted two propositions of law: 1. “The Marketable Title Act does not require that a reservation set forth the name of the person holding the interest in order to be specific and preserve the interest.” 2.
“A property holder’s fee simple interest is preserved under the Marketable Title Act where the party seeking relief under the Marketable Title Act had actual knowledge of the interest.”
Unless the Court reverses West v. Bode and rules that the MTA does not apply to extinguish severed oil and gas interests, the Ohio Supreme Court will decide these important issues in Erikson v. Morrison. A ruling in favor of the Eriksons will be beneficial to holders of severed oil and gas interests in that these severed interests will be more likely to be preserved and not extinguished. Conversely, a ruling in favor of the Morrisons will better enable surface owners to extinguish severed oil and gas interests where the reservists’ names were not included in the repetition of the interest in the chain of title. Either way, there will be intense interest in the outcome of this case as the Court’s ruling will undoubtedly result in a large shift in ownership of valuable mineral rights. In short, surface owners and severed mineral owners in Ohio continue to face significant hurdles under the MTA and the DMA when seeking to terminate or preserve ownership of valuable oil and gas interests. The two cases currently before the Supreme Court of Ohio, West v. Bode and Erickson v. Morrison, will impact the surface and mineral owners’ competing claims over these interests. Ohio law in this area is in flux and is evolving seemingly every day. This uncertainty highlights the importance of retaining an experienced oil and gas attorney to advise clients with regard to the extinguishment, preservation, and the ownership of severed oil and gas interests. David J. Wigham is a second-generation oil and gas attorney at the firm of Roetzel & Andress, with more than 28 years of experience in the industry. He maintains offices in Akron and Wooster, Ohio, and can be reached at 330-762-7969 or dwigham@ralaw.com.
JUNE 2020
OHIO WELL ACTIVITY by the numbers
UTICA SHALE
MARCELLUS SHALE 26 6 9 36
77
Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Other Total Horizontal Permits
Data as of 4/11/20
499 99 154 2481
3233
Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits
Source: Ohio Department of Natural Resources
(Due to technical issues retrieving data from ODNR, this chart was unable to be updated. We apologize for any inconvenience.)
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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES
1. Belmont County........ 689 2. Carroll County..........531 3. Harrison County........510 4. Monroe County........ 502 5. Guernsey County...... 280 6. Jefferson County.......275 7. Noble County.......... 227 8. Columbiana County...163 9. Mahoning County....... 29 10. Washington County... 21 11. Tuscarawas County.... 20 12. Portage County........ 15 Trumbull County........ 15 13. Stark County............ 12 14. Coshocton County....... 5 15. Muskingum County...... 4 16. Holmes County........... 3 17. Morgan County........... 2 Knox County.............. 2 18. Ashland County.......... 1 Astabula County......... 1 Geauga County.......... 1 Medina County........... 1 Wayne County............ 1
WELL SITES IN VARIOUS STAGES: PERMITTED DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGED, , D SI S SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 4/11/20 PLETED PRODUCING PLUGGED
25
100
200
300
400
500
600
700
(Due to technical issues retrieving data from ODNR, this chart was D L unable to be updated. A We apologize for any inconvenience.)
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JUNE 2020
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