May 2014 Ohio Gas & Oil Magazine - Southern Edition by Gannett NEO

Ohio MAY 2014 • www.ohiogo.com

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Table of Contents 4

Officials Monitor Road Use Agreements

Stronger Regulations For Drilling Near Faults

Drilling Case Attracts French Connection

Country Energy Fest

MWCD Assessments Cut In Half

MWCD Assessments Cut in Half

Kasichâ&#x20AC;&#x2122;s Budget Includes Funds for Safety

S&H Oilfield Services Caters to Industry

Shale Development Creating Water

Natural Gas Vehicle Could Earn Tax Break

Feel The Power

Happy Birthday Hydraulic Fracturing

Energy Coalition Hears About Clean Fuels Ohio

Steve Grose Contributes to Ddvancement of Industry

Speaker Outlines Changing Rules in Oil Industry

PUBLISHERS Andrew S. Dix

Judie Perkowski / Dix Communications

Jeff Saunders / Dix Communications

Marc Kovac / Dix Capital Bureau

Steve Huszai / Dix Communications

G.C. Dix II

David Dix

EXECUTIVE EDITORS Lance White

Roger DiPaolo

Ray Booth

Dr. Robert Chase, Dr. Paul Daniell, Ph.D., Dr. James Jeitler, Ph. D. Marc Kovac / Dix Capital Bureau

Rob Todor

Abby Armbruster / Dix Communications

REGIONAL EDITORS Kimberly Lewis

Judie Perkowski / Dix Communication

Rachel Sluss / Dix Communication

Judie Perkowski / Dix Communications

Race to the Courthouse

Bluegrass Pipeline Awards $160,000 in Grants

Sparta Steel Serves the Oil and Gas Industry

Stark Commissioner: Gas Projects in the Works

Erica Peterson

Cathryn Stanley

Bill Dannley / Landmand, Leasemap Ohio

Tesa Strasser / Dix Communications

Laurie Huffman / Dix Communications

Niki Wolfe

Judie Perkowski LAYOUT DESIGNER

ADVERTISING DIRECTORS ADVERTISING DIRECTORS Rhonda Geer

Ohio OCTOBER 2012 • www.ohiogo.com

40 Harry Newman

Jeff Kaplan

Janice Wyatt

Dumping Leads to Stiffer Penalties Being Proposed Marc Kovac / Dix Capital Bureau

Fracking Activist Wants Back on Driller’s Land

Belmont College Expands CDL Program

Mount Union Engineering Students Get Head Start

Court of Appeals Issues Landmark Ruling

Gateway Raises $58.5 Million for Royalty Interests

Marlington Oil and Gas Program Adapts to Industry

OU-Zanesville Studies Impact

Products Used for Plastic

Officials Report Progress in Ohio Oil Leak Cleanup

Pipeline Safety Stressed

Look to Skycasters for New Service

Energy Briefs

Shale-abration Celebrates Friends and Family

Voters Support Infrastructure Investments

Gas and Oil Boom Creates Movement in School

An Energy Producer’s Case for Fracking Rules

Union Members Backing Fracking

What Do I Need to Protect My Oil and Gas Interests

Kim Brenning

Peggy Murgatroyd

A FREE MONTHLY PUBLICATION

Michael Rubinkam / Associated Press

Amadeus Smith / Dix Communication

David Wigham / Attorney

Amadeus Smith / Dix Communications

Laurie Huffman / Dix Communications

Lisa Cornwell / Associated Press

Judie Perkowski / Dix Communications

Parker Perry / Dix Communications

Jeff Pezzano

COVERAGE AREA DIGITAL CONTENT MANAGER Brad Tansey

ART DIRECTOR Pete Kiko

John Lowe / Dix Communications

Chris Faulkner / Breitling Energy Corp.

Frank McClure / Attorney

Judie Perkowski Dix Communications

AMBRIDGE — Anyone who is concerned about the deteriorating condition of the roads and bridges in Guernsey County caused by gas and oil activity, should know that county officials have that covered. A mandatory Roadway Use and Maintenance Agreement required for all gas and oil companies who plan on doing business in the county, should alleviate some of those concerns, officials say. The RUMA was crafted in 2010 from a model agreement by Guernsey County Engineer Delmar George and Guernsey County Prosecutor Daniel Padden. Guernsey County Commissioners Ernest “Skip” Gardner, Tom Laughman, Dave Saft and George, said they understand people are somewhat apprehensive about all the truck and heavy equipment traffic and what is happening to roads. But that is the downside of having one of the richest shale plays in the country — everyone wants to be here. Before any drilling activity begins, an inspection by the gas and oil company’s engineer and George, when both agree to the condition of said roads, bridges and appurtenances and what needs to be upgraded or strengthened to accommodate drilling activity, a RUMA is signed by all parties. The agreement covers all county and township roads, and includes all of the operator’s (gas and oil company) subcontractors and/or service providers. All the gas and oil companies know, before they lift a shovel of dirt, that they are responsible for any and all damage that occurs on the roadways and bridges they will use during their drilling activity. The operator is also responsible for any repairs to railroad crossings it plans to traverse. After a joint inspection by the county engineer and the operator’s engineer, the operator must notify the railroad company 30 days before any drilling activity can begin. If the railroad company fails to respond to the operator’s notice of work needing to be performed, the railroad waives all rights it has under the RUMA with respect to the work speci-

fied in the notice. The RUMA also includes the use of a commercially recognized dust palliative to control airborne dust created and or contributed to by the operator, its contractors and/or agents. The agreement also requires the operator to post a bond or surety in the amount of $300,000 per mile, for each road they intend to use, and $100,000 for each bridge. All vehicles to be utilized by the operator must comply with legal size, load and weight limits in accordance with state law, and all non-conforming vehicles shall require proper local permits. Saft said there were three bridges that the oil and gas company decided did not meet the load requirement for its trucks and equipment, so they rebuilt the bridges. Two are in the northwestern part of the county, and one is in Cumberland. George said the bond or surety is like an insurance policy for the operator. There are many addendums or additional documents that apply to specific circumstances and to accommodate conditions of the property that will be used by the operator. “There are also different terms for completing the restoration. Some companies make repairs to bridges or roads as they happen, some wait until after the drilling activity is completed,” he said. “There are approximately 50 RUMAs in effect right now. But that does not mean there are 50 different gas and oil companies in Guernsey County. There are probably five companies active here right now.” George wanted to clear up what he called a “major misunderstanding ... The county does not get a penny, absolutely nothing for the highway department from the RUMA. The RUMAs are to make them (the operators) responsible. “There have been a few bumps in the road, so to speak, but the RUMAs are working out great.” According to the standard Guernsey County Road Use Management Agreement, “Following final inspection, the parties shall meet and all restoration resulting from the operator’s drilling activity shall be identified and thereafter completed by the

operator at the operatorâ&#x20AC;&#x2122;s expense. Following completion of all restoration work, the agreement shall be terminated ...â&#x20AC;? jperkowski@daily-jeff.com

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OLUMBUS — Ohio Department of Natural Resources (ODNR) Director James Zehringer announced in April new, stronger permit conditions for drilling near faults or areas of past seismic activity. The new policies are in response to recent seismic events in Poland Township (Mahoning County) that show a probable connection to hydraulic fracturing near a previously unknown microfault. New permits issued by ODNR for horizontal drilling within 3 miles of a known fault or area of seismic activity greater than a 2.0 magnitude would require companies to install sensitive seismic monitors. If those monitors detect a seismic event in excess of 1.0 magnitude, activities would pause while the cause is investigated. If the investigation reveals a probable connection to the hydraulic fracturing process, all well completion operations will be suspended. ODNR will develop new criteria and permit conditions for new applications in light of this change in policy. The department will also review previously issued permits that have not been drilled. “While we can never be 100 percent sure that drilling activities are connected to a seismic event, caution dictates that we take these new steps to protect human health, safety and the environment,” said Zehringer. “Not only will this reasonable course of action help to ensure public health and safety but it will also help us to expand our underground maps and provide more information about all types of seismicity in Ohio.” “ODNR’s directives are a sensible response to a serious issue that regulators across the country are closely examining,” said Gerry Baker, Associate Executive Director of the Interstate Oil and Gas Compact Commission. “IOGCC is pleased to work with Ohio and other states to share scientific data to better understand the nature of these occurrences.” “These additional standards add even more strength to Ohio’s already comprehensive regulatory program,” said Mike Paque, Executive Director of the Groundwater Protection Council. “State regulators are taking an aggressive lead in tackling tough and complicated oil and gas issues and ODNR is no exception.” More than 800 wells have been drilled in Ohio’s Utica and Marcellus shale play, including as many as 16,000 hydraulic fracturing stages from those wells. Regarding the seismic events in Poland Township, Mahoning County, ODNR geologists believe the sand and water injected into the well during the hydraulic fracturing pro-

cess may have increased pressure on an unknown microfault in the area. Further hydraulic fracturing at the site is suspended but the company will be permitted to recover resources from five of the previously drilled wells located on the pad. This is also expected to have the beneficial effect of reducing underground pressure and decreasing the likelihood of another seismic event. Under ODNR’s lead, Ohio has joined a consortium of state regulators dedicated to learning more about seismic activity, especially as it relates to oil and gas activity. The members of this consortium are currently working with the Interstate Oil and Gas Compact Commission and Groundwater Protection Council to share information and knowledge. The working group also hopes to draw upon current and future research to develop common procedures for how to monitor for seismic activity and respond if activity occurs. The Ohio Seismic Network, coordinated by ODNR and operated by various partners, began recording seismic events in 1999. Before that time, the recording of seismic events varied from distant machines and felt reports. Ohio has a history of seismic activity, and since the network has established, Ohio has experienced 109 events greater than 2.0 magnitude. Data from the Ohio Seismic Network will be used as part of our new application review process. A map of underground seismic faults and past seismic events is available at oilandgas.ohiodnr.gov.

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UNROE FALLS — The city’s oil and natural gas drilling case that has gone before the Ohio Supreme Court has garnered some international attention. Mayor Frank Larson, City Council President Jim Iona and Community and Economic Development Coordinator Anne DiCola met for nearly two hours at Lehner Community Center April 14 with Simon Babre, a French Republic sub-prefect from Istres, a city in southern France, about the issue. The meeting was arranged through Akron International Friendship, an organization dedicated to fostering international relations. Akron International Friendship Board member Susan Colville-Hall also attended the meeting. “They contacted me because I’ve done some things for the program,” Iona told City Council April 15, adding that he then contacted Larson to take part. Iona said Babre impressed him as smart and “inquisitive.” “The guy had a million questions,” he said. Babre, who speaks some English, and interpreter Gerard Lob said that they are on a fact-finding mission for the French government regarding gas drilling, particularly fracking, the controversial process by which water, sand and often chemicals are pumped underground at high pressure to crack shale and extract natural gas. It has been blamed for earthquakes, including in the Youngstown area, and concerns have been raised that chemicals could contaminate ground water. “It’s a big issue in France, too,” said Babre. “Fracking is forbidden, even for tests.” He said his government wants to gather as much information as it can about the issue in the United States. He and Lob said they have or are planning on speaking with a variety of people with different points of view, including industry and government officials, environmentalists and property owners. Lob said that to date, they had heard primarily from people on the pro-drilling and fracking side. “Up until now, we have heard everything is hunky dory, and everybody is going to make money,” he said. The city’s state high court case concerns local control versus state control of drilling in general. It began in March 2011 when Ravenna-based Beck Energy began preparing private residential property on Munroe Falls Avenue for drilling. City officials have said that drilling should not be allowed in residential areas, but should be confined to industrial areas and that municipalities should have home-rule rights in zoning matters. Beck Energy, however, said it had a drilling permit from the Ohio Department of Natural Resources, which has maintained that under state law, it has exclusive authority over drilling in the state. The high court heard oral arguments Feb. 26, and a decision is pending. In addressing the fracking issue, Larson said he has environmental concerns. “To be comfortable, I would have to see some very strong inde-

pendent studies that would say it would not contaminate our water supplies,” he said, adding “and air.” “We don’t know what chemicals are going in there,” said Iona. Both he and Larson said they are not opposed to the industry operating in the state, but believe that it should operate in some kind of middle ground. “I like my cars,” said Larson. “I like gasoline that’s reasonably priced. I like heating my house in the winter. But let’s use some common sense.” Larson said he has heard little comment either way on the drilling issue from city residents. “We’ve had some citizens express some interest in the issue,” he said. Colville-Hall said she believes Americans are often less interested in many issues and that there is an economic factor in drilling that can take precedent over other concerns. “Money talks here,” she said. “In France, we have demonstrations,” said Babre, referring to fracking in particular. He said his government feels it is important to gather as much information as possible. “And decide what to do” he said. History of Munroe Falls drilling case A case filed by the city of Munroe Falls concerning local control versus state control of drilling is pending before the Ohio Supreme Court. The city’s state high court case began in March 2011 when Ravenna-based Beck Energy began preparing private residential property on Munroe Falls Avenue for drilling. The city immediately issued a stop-work order because it had not issued a zoning permit allowing the drilling. The Summit County Court of Common Pleas sided with the city on the matter, but Beck Energy appealed to the Ninth District Court of Appeals. The appellate court partially overturned the Common Pleas decision, saying that city ordinances directed at developers in general could apply to drillers, but the city could not regulate drillers in particular. The city then filed an appeal with the Supreme Court in March 2013 and the court agreed to accept the case in June. The high court heard oral arguments Feb. 26 from both sides. City officials have said that drilling should not be allowed in residential areas, but should be confined to industrial areas and that municipalities should have home-rule rights in zoning matters. Beck Energy, however, said it had a drilling permit from the Ohio Department of Natural Resources, which has maintained that under state law, it has exclusive authority over drilling in the state. Company President Dave Beck said in February 2013 that it would be too onerous for drillers to have to follow a patchwork of local regulations and that the industry needs consistency provided under state law. “Our argument is that cities have the right to zone different areas of the municipality,” Larson told Babre.

Larson also said he believes there should be local control since local safety forces would be the first responders in an emergency, such as an explosion at a drilling operation in Geauga County. “My problem is what if the technology isn’t good enough,” he said.

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Lynch was nominated for the Breakthrough Video of the Year for “Cowboys and Angels” at the CMT Music Awards in 2013. In addition, he received American Country Awards nominations for Single of the Year: New Artist and Music Video of the Year: New Artist for “Cowboys and Angels.” “I’m a workaholic,” he says. “I was getting paid to write songs, so that’s what I did. That’s just the guy I am, if I’m not doing something I get bored, so I was trying to write the best record possible and decided to just get after it as hard as I can.” Opening for Lynch is Clark Manson, who is known for his combination of classic rock swag and mid-western country charm that creates contagious excitement. Manson, a native of Covington, Ohio, is sponsored by Jägermeister. He released his first debut album in November, “Running with the Night,” which quickly climbed the iTunes charts, peaking at 30 on the day of its release. “Running with the Night” also checked in at number five on the Billboard “Heatseekers” chart in November, and has received much recognition all around the world by some of Manson’s 33,000 Twitter followers and fans. Since the album release, Manson has swamped the ticket-booths, and selling out a number of shows.

roken Bow recording artist Dustin Lynch will headline Country Energy Fest.

roken Bow recording artist Dustin Lynch will headline Country Energy Fest Saturday, May 31, at the Carroll County Fairgrounds in Carrollton. Lynch, who belts out such songs as “She Cranks My Tractor” and the ballad “Cowboys and Angels,” has made a name for himself as a singer-songwriter and is anticipated to wow the local community with his storytelling abilities at his Country Energy Fest performance. “We’re excited to bring Dustin Lynch to Carroll County,” said Amy Rutledge, Carroll County Chamber of Commerce director and Country Energy Fest Committee member. “His talent is unprecedented and he’s a great fit for our community.” Country Energy Fest is more than just a country concert. Activities for the entire family begin at 11 a.m. Join Country Energy Fest for awarding-winning and mouth-watering ribs, an antique tractor show, car show, motorcycle show and much more. For a complete list of festival activities, see www.countryenergyfest.com. Ticket prices start at $15. Grandstand seating is $15 and $20. Track tickets, which are standing room only, are $25 and $35. “The committee has priced tickets so that everyone in the community, regardless of income level, can attend the show,” said Rutledge. “Country Energy Fest is a way that the community can help themselves build a better future, bringing revenue and entertainment to Carrollton.” GPS Oil and Safety Store, Carrollton, is now selling Dustin Lynch tickets for the May 31 Country Energy Fest concert. Tickets can be purchased seven days a week at the GPS Oil & Gas Safety Store, 7 a.m.–8 p.m., Monday through Friday, and 10 a.m.–6 p.m., Saturday and Sunday. Tickets are also available online at www.countryenergyfest.com or from the Carroll County Fairgrounds the first and third Saturdays of each month, 10 a.m.–3 p.m., and the fourth Tuesday of each month, 4–7 p.m., at 106 Kensington Road NE, Carrollton. GPS Oil and Gas Safety Store, located behind Autozone on state Route 43, signed on as one of Country Energy Fest’s biggest sponsors. In addition to its sponsorship, the store has been a hiding location for Country Energy Fest’s social-media giveaways. GPS Oil and Gas Safety Store offer a huge selection of fashion clothing and workwear from Wrangler and Carhartt. The store also carries brands including, Carhartt FR, Wranger FR, Benchmark FR, Rasco FR, Justin Boots, Muck Boots, Ariat Boots and a full line of PPE. Country Energy Fest is more than just a country concert. Activities for the entire family begin at 11 a.m. Join Country Energy Fest for awarding winning and mouth-watering ribs, an antique tractor show, car show, motorcycle show and much more. Bookmark www. countryenergyfest.com and follow it on Facebook and Twitter for complete festival information and exclusive giveaways. Contact 330627-2300 for more information. Dustin Lynch, a native of Tullahoma, Tenn., signed with Broken Bow Records after spending time at Nashville’s famous Bluebird Café honing his songwriting craft. In his youth, Lynch was influenced by country singers Alan Jackson, Garth Brooks and Clint Black.

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roperty owners will see their assessments paid to the Muskingum Watershed Conservancy District cut in half beginning next year. Members of the MWCD Board of Directors have approved a plan to provide for a 50-percent reduction in all assessment payments from property owners beginning in 2015 by using funds generated from the conservancy district’s recent oil-and-gas leases of its property in the Utica Shale development to cover project costs normally paid for by the assessment funds. MWCD officials also said during a meeting Friday, April 18, at New Philadelphia that they will continue to review periodic financial reports to determine if the reductions will be warranted in succeeding years or if further reductions could be enacted due to revenues produced from the oil-and-gas leases. “Through the wise guidance of the MWCD’s Board of Directors, the oil-and-gas management on the district’s properties have permitted the MWCD to invest in our public-use facilities and recreational areas, and now it is possible to extend those benefits to the property owners in our watershed by enacting this 50-percent reduction in the assessment collection,” said John M. Hoopingarner, MWCD executive director/secretary. “It has been and will continue to be our goal to maximize the public benefits that have been created by the responsible stewardship of the MWCD’s natural resources.” The assessment reduction will result in an estimated $5.5-million overall cut in the amount of assessments collected in 2015 by the MWCD. The conservancy district instead will use oil and gas funds to fill that gap and ensure that projects to protect and improve the system of reservoirs and dams constructed in the 1930s continue as planned. The approved assessment reduction also will mean that the owners of commercial and industrial parcels of property who pay the assessment will see an overall reduction of nearly $2.3 million in their property tax statements next year. The MWCD collects about $11 million annually in assessments from property owners in the Muskingum River Watershed. Hoopingarner said the MWCD has committed about $350 million over the next two decades for its obligations related to upgrades and maintenance for the system of reservoirs and dams in the Muskingum River Watershed and for updates to its recreational facilities. With that in mind, routine financial reviews will be very important and any major cuts in oil-and-gas revenues could result in corresponding assessment adjustments, he said.. MWCD officials previously briefed some of the region’s legislators and business leaders about the assessment reduction plan, and have received a very favorable response and feedback. The assessment reduction was part of a two-part strategy the MWCD staff discussed with board members during the meeting.

Hoopingarner said that the MWCD is developing a watershed project funding program that will involve establishment of a revolving loan fund that also will use the MWCD’s oil-and-gas revenues as its startup funds. “What we envision overall is to work with an appropriate agency to establish the fund for access by the local township, municipal and county governments and other agencies in the MWCD region for important projects to promote and protect water quality and flood reduction,” Hoopingarner said. “The MWCD recognizes the ever-increasing need for these projects in order to protect and enhance the quality of life and economy of Eastern Ohio.” MWCD officials expect to prepare a complete plan for the funding program for review and consideration by the board in upcoming months. During the meeting, the board also approved its fourth largeacre lease for Utica Shale development by voting to enter into an agreement with Antero Resources of Colorado for more than 6,300 acres of MWCD property at Piedmont Reservoir in Belmont and Harrison counties. According to the terms of the lease, the MWCD will receive a signing bonus of $15,000 per acre plus a share of 20 percent of the royalties from the production of the lease. Another 300 acres of the Piedmont property is being finalized and will be added to the lease later. MWCD officials said they expect up to two well pads to be located on MWCD property according to the terms of the lease at Piedmont, with other well pads located on adjacent properties. They also stressed the environmental safeguards built into the lease and said that many of the lease’s stipulations were developed through input from a public meeting held about the lease process in January at St. Clairsville. The MWCD has managed oil-and-gas leases on its properties for its entire 80-year history as a part of its overall natural resources stewardship program. Oil-and-gas leases developed by the conservancy district have served as a model for other owners of public property considering strategies for management of leases that provide for revenues to enhance public benefit and services while ensuring the highest level of environmental protections. The MWCD has entered into three leases for Utica Shale development for its property at Clendening Reservoir in Harrison County in 2011, at Leesville Reservoir in Carroll County in 2012 and at Seneca Reservoir in Guernsey and Noble counties in 2013. A lease for MWCD property at Piedmont Reservoir in Belmont and Harrison counties is expected to be considered for approval during the board’s meeting. To date, the MWCD has earned $77.8 million in signing bonuses for the leases it has entered into and about $3 million in royalty revenue. The funds have been used to pay down the MWCD’s debt, improve public access and to begin planning and work on a

$160-million plan to upgrade the MWCD’s recreational facilities, including its lake parks, campgrounds and marinas that it operates. Last year, the board directed MWCD staff to review the annual assessment paid by the owners of nearly 500,000 parcels of properties in the MWCD’s 18-county region for consideration of any adjustments in the amount collected based on income received from the MWCD’s oil-and-gas leases. The assessment, which has not been adjusted since it originally was levied in 2009, must be approved and reviewed annually by the board of directors. Assessments are collected through landowners’ county property tax statements, and the funds legally must be used to pay for projects and programs that protect the operation of the system of 16 dams and reservoirs that were constructed nearly 80 years ago for flood reduction and water conservation benefits in the Muskingum River Watershed. Nearly 95 percent of all property owners subject to the assessment pay the minimum annual amount of $12 per year. The MWCD serves as the federally required local cost-share sponsor for the work that has been identified at several of the system’s dams owned and operated by the U.S. Army Corps of Engineers. Projects are under way at both Dover and Bolivar dams in northern Tuscarawas County and others are planned. The entire project plan at the dams is projected to cost more than $600 million and the MWCD share is estimated to be up to $137 million. In addition, the MWCD has spent assessment funds on shoreline stabilization projects at the MWCD lakes, planning for dredging of the lakes that will begin later this year, grant funding for area

communities for projects that encourage flood reduction and water quality improvements and other programs. Assessment revenues by law cannot be used to pay for projects that enhance or improve the MWCD’s recreational programs and facilities, and all expenditures must be covered by guidelines stipulated in the Amendment to the Official Plan of the MWCD that was approved in 2005 by the Conservancy Court and the board of directors. The MWCD collects assessments from owners of property in all or portions of the following counties: Ashland, Belmont, Carroll, Coshocton, Guernsey, Harrison, Holmes, Knox, Licking, Morgan, Muskingum, Noble, Richland, Stark, Summit, Tuscarawas, Washington and Wayne. The MWCD, a political subdivision of the state, was organized in 1933 to develop and implement a plan to reduce flooding and conserve water for beneficial public uses in the Muskingum River Watershed, the largest wholly contained watershed in Ohio. Since their construction, the 16 reservoirs and dams in the MWCD region have been credited for saving an estimated $10.7 billion worth of potential property damage from flooding, according to the federal government, as well as providing popular recreational opportunities that bolster the region’s economy. A significant portion of the reservoirs are managed by the MWCD and the dams are managed for flood-risk management by the federal U.S. Army Corps of Engineers. For more information about the MWCD, see www.mwcd.org and follow the MWCD on Facebook and Twitter.

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OLUMBUS — A couple of projects included in Gov. John Kasich’s $2.4 billion two-year capital budget proposal spotlight eastern Ohio’s emerging shale oilfields. Funding is included in the plan for a new training initiative for oilfield workers and others in Trumbull County and for new equipment to train firefighters in responding to natural gas emergencies. A total of $250,000 was included in the capital budget for a proposed Technology Belt Oil and Gas Learning Center, an effort of Eastern Gateway Community College, local developers and others. The group had sought about $1.5 million for the project. Marc Ciccarelli, director of work force and community outreach at the college, said the proposed capital outlay isn’t enough to guarantee the project will come to fruition. But plans call for the conversion of a former military site in Lordstown into an educational campus to provide classes and job training for area residents. Ciccarelli said the parcel is well suited for training oil and gas workers and others in welding and other industrial arts. “It would be ideal for some type of industrial training center, along with traditional-type college classes,” he said. Ciccarelli said backers would meet in coming weeks to discuss the future of the project, with plans to seek out other funding sources to complete renovations and purchase equipment and furnishings. “We have a really good idea, and we have a really good place, but for it to come to fruition, we need like six or seven times more than we have,” he said. “We’re going to try to reach out to these other

sources and see if they can contribute.” The capital budget also includes $250,000 for an expanded natural gas fire training area at the Ohio Fire Academy in suburban Columbus. The funds would pay for a new natural gas line, control tower and multiple training aids that simulate different emergencies. The grounds already have a natural gas area, said Michael Duchesne, a spokesman for the state fire marshal, but the capital funding will provide additional training opportunities for emergency crews working in eastern Ohio. “As the industry grows, we want to grow with it in the fields of training,” he said in a released statement. Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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OOSTER — Even though the shale gas boom has never quite got off the ground in Wayne County, the oil and gas industry has an established group of locally-based companies to cater to the area’s producers. Gary Staggs and his Wooster-based business, S&H Oilfield Services, is one such company. Staggs, who said he did some work for the companies speculating in the region, has a dedicated customer base with local Wayne County producers. And will still be around when he predicts those companies in eastern and southern Ohio come back in a generation or so. Staggs did do some work for Devon Energy when there was speculation in the area for shale drilling. But Staggs said the county didn’t produce to that company’s expectations. Generally east of Interstate 77, Staggs said, is where the big shale play has been. But he predicted once those areas run their course, Wayne and other counties may see those companies return. According to statistics from the Ohio Department of Natural Resources, the top three counties for horizontal drilling activity (based on sites) are Carroll, Columbiana, and Harrison counties, all near the Pennsylvania border. “Eventually, they will play out the easy money,” he said, “and I think they’ll work their way back… once we have better technol-

ogy to remove the oil and gas from the shale formation here in this area.” But that doesn’t really matter to Staggs as he will still keep his focus on Wayne and the five-county area around him. He added the local oil and gas companies here not will continue to be here for the next 50-70 years. And he plans to stay with them too. Roughly 35 years ago when Staggs was fresh out of school and looking for a job, the oil and gas industry in Wayne County provided him a good job. That was until 1989 when he formed his own company with his partner (who he has since bought out). “The business has grown,” Staggs said of S&H Oilfield Services. “I started as a single truck by myself… as the business grew, I had to too.” Today, S&H Oilfield Services boasts roughly 25 trucks and 10 full-time employees who provide everything from excavating services at drilling pads to servicing equipment after sites are up and running. Most of what S&H does these days, Staggs admitted, is provide service to equipment at established sites for long-time customers. When Staggs first formed his business, he said he worked with several local producers and with a water and brine truck. “I guess they liked the levee of service we gave,” Staggs said. And his company then kept adding equipment until it “grew what it is today.” Today, S&H does work with mostly the big-time local produc-

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ers, such as Ken Miller Oil, J.R. Smail, Franklin Gas and Oil, and others throughout Wayne County and northeast Ohio. “I’m very fortunate to have loyal customers of me and my company,” Staggs said. “I’m not going to turn my back on them to work with the big companies… I see (S&H Oilfield) maintaining our current level to provide the services we do.” And he didn’t predict much would change for his business until those companies come back to Wayne County, if they ever do. Reporter Steve Huszai can be reached at 330-287-1645 or shuszai@the-daily-record.com. He is @GeneralSmithie on Twitter.

u u

Dr. Robert Chase Department of Petroleum Engineering & Geology, Marietta College Dr. Paul Daniell, Ph.D., Chemical Engineering, Marietta College Dr. James Jeitler, Ph.D., Chemistry, Marietta College

great deal of concern has been expressed about the volumes of water being used in hydraulic fracturing (fracing) treatments being employed on horizontal wells in the Utica Shale in Ohio. It is a fact that companies use an average of 5 million gallons of water in a typical frac treatment that might utilize as many as 40 stages of perforating and fracturing along a horizontal well extending 5,000 to 7,000 feet into the shale. The fact of the matter is that such a treatment generates far more water than is utilized in the process. How so, one might ask? One simply has to look at the volume of natural gas that is expected to be produced from a typical Utica Shale well and ultimately consumed in the processes of heat or electricity generation. When pipeline quality natural gas (primarily methane) is burned, there is a basic chemical reaction that occurs according to the equation below. CH4 + 2O2 --> CO2 + 2H2O In laymenâ&#x20AC;&#x2122;s terms, this says that one molecule of methane reacts with 2 molecules of oxygen to generate one molecule of carbon dioxide and 2 molecules of water. This combustion reaction can be translated into volumes of gas burned and volumes of

water generated. People who use natural gas for home heating know that the standard unit by which they buy natural gas is the â&#x20AC;&#x153;Mcfâ&#x20AC;? which stands for 1,000 cubic feet of gas at standard conditions of 60oF and 14.7 psia. Without going through the tedious unit conversions and mathematics, suffice it to say that burning 1 Mcf of natural gas or methane will result in the generation of 11.1 gallons of water. This water leaves our furnaces in the form of steam that can be seen clearly on a cold winter day as it exits vent pipes and chimneys on our homes. It is even more evident on power plants that use huge cooling towers in the process of burning much larger volumes of natural gas in the process of generating electricity. A typical horizontal Utica Shale well completed with a multistage hydraulic fracturing treatment utilizing an average of 5 million gallons of water is expected to produce around 10 billion cubic feet of natural gas over its lifetime. Ten billion cubic feet of gas is the equivalent of 10 million Mcf of gas. Since each Mcf of gas burned generates 11.1 gallons of water, burning 10 million Mcf of gas will ultimately release approximately 111 million gallons of water into the hydrologic cycle of the planet. This represents over a ten-fold increase over the amount of water used in the fracing process.

So while a Utica Shale well will use an average of 5 million gallons of water to produce the natural gas coming from the Utica Shale formation, in the end there will be net gain of over 100 million gallons of water returned to the hydraulic cycle throughout the life of the well. Hopefully this will provide some insight to those who are concerned that oil and gas development is depleting water from hydrologic cycle.

Space for Lease: Hannibal Professional Center, 52634 Main St. (SR536) Hannibal,OH 43931 Located within a hot spot of the Utica and Marcellus Shale Formations, the Hannibal Professional Center is located at 52634 Main St., Hannibal,OH 43931 on SR536 just 1/2 mile from SR7on the Ohio River in Monroe County, Ohio, less than 1 mile from the New Martinsville, WV Bridge. This location is 3 miles from the Hannibal Industrial Park which offers rail service and barge services. Approximately 5,800 SF available. Flexible space for office, retail or light manufacturing uses. Ample parking is available. Five large open rooms that could be built to suit. One Office suite consisting of 2 private offices (option for 3rd private office), reception area, restroom and walk-in fireproof wall safe ready to move-in. Outparcels available. High speed internet available. Beautiful views of the Ohio River. Banquet facilities available for conferences, training, etc., 24 hrs fitness center to open May-June 2014 on site. Lease Rates & terms are negotiable. Contract (740)213-3568

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OLUMBUS — The Ohio House OK’d legislation in late March that would provide tax breaks for the purchase of vehicles that run on compression natural gas. House Bill 336, which passed on a vote of 89-0 and heads to the Ohio Senate for further consideration, could prompt local governments, businesses and consumers to buy new vehicles or convert existing fleets to tap fuels being produce in eastern Ohio’s emerging shale oilfields. Rep. Sean O’Brien (D-Brookfield), a primary co-sponsor of the bill, called HB 336 “:sound alternative fuel legislation, which will put us on track to be a leader in alternative fuels. Passage of this bill will bring Ohio energy independence, enabling our residents to pay less at the pump and thereby putting more money back into their pockets, reducing fuel costs for fleet and truck owners, lowering costs to do business here in Ohio, protecting the environment by greatly reducing carbon emissions and greenhouse gases and it will create thousands of jobs....” Among other provisions, the legislation would provide tax credits of up to $5,000 for light vehicles and $25,000 for heavy vehicles to cover new purchases or conversions. The bill also would provide $16 million for grants to local gov-

ernments and nonprofit groups wanting to convert their existing vehicle fleets to run on compressed natural gas. HB 336 would provide sales tax credits up to $500 for the purchase of electric vehicles. And it would phase-in motor fuel tax collections on compressed natural gas over a five-year period, starting at 7 cents per gallon equivalent and eventually increasing to the 28 cents per gallon charged for conventional vehicle fuel. The incentives would end after five years. Reps. Dave Hall (R-Milllersburg), the other primary co-sponsor of the bill, said the legislation would promote the use of energy being produced in Ohio instead of fuel supplies coming from outside the country. “When we had a Middle East crisis in the ‘70s, there was an opportunity, and we looked at compressed natural gas and a few other opportunities. Nothing happened,” Hall said. “... We’re going to spur this on.” Rep. Nick Barborak (D-Lisbon) added, “Natural gas is abundant, it’s domestic, it burns cleaner than gasoline... it’s cheaper.” Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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PPLE CREEK — Local hydraulics company Yoder Hydraulics has been a source of power for nearly 16 years. Yoder Hydraulics in Apple Creek was started in 1998 by Andrew Yoder. His aim was to meet local Amish people’s demand for power in the growing woodworking industry. It was a natural fit for Yoder, who has always enjoyed working with mechanical things, and anything involving building, designing or engineering. He has been involved with manufacturing all of his life. After almost 16 years in the field, Yoder said he works with many processing plants such as Gerber Poultry and construction companies like Weaver Custom Homes. “There are probably very few businesses locally that I don’t deal with,” Yoder said. In 2001, the business moved into its 6,400 square foot facility located on Dover Road between Apple Creek and Mount Eaton. The business then began fabricating its own power units and equipment. This quickly expanded into machining and building custom hydraulics cylinders, which eventually led to testing and servicing the equipment. The business customizes every power unit and hydraulic cylinder it builds. It has partnered with manufacturers in order to bring its cus-

tomers certain brands, such as Ingersoll-Rand Compressors, Vickers Pumps and Motors, Kawasaki Pumps and Motors, Funk Modular Pump Drives, S&H Series Char-Lynn Hydraulic Motos and Parker Hoses & Fittings. Now, with a staff of over 12 people, including some of his children, Yoder Hydraulics serves the sawmill and oil and gas industries, as well as agricultural and industrial mobile equipment and wet lines. “We work for anybody,” Yoder said, noting the business makes an effort to give good service. “We’re fortunate we’re always busy.” While about 80 percent of their clientele is local, Yoder Hydraulics also serves customers in about eight states, plus Canada, with customers being both commercial and residential. The business will repair and test valving, hydraulic cylinders, pumps and motors and can test and repair most brands of hydraulic cylinders in-house. Yoder Hydraulics also accepts walk-ins. It carries a large stock of replacement parts for a variety of makes of pumps and motors, as well as seals and packing. It also sells and installs generators and electrical controls. aarmbruster@the-daily-record.com.

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ASHINGTON — With birthday cards and a social media campaign, the American Petroleum Institute celebrated the 65th birthday of the technology that has spurred an energy revolution in America: hydraulic fracturing or fracking. “Americans have long been energy pioneers, from the 1800s when the first wells were drilled to today,” said API Director of Upstream and Industry Operations Erik Milito. “As part of that history, on March 17, 1949, we developed the technology to safely unlock shale and other tight formations, and now the U.S. is the world’s largest producer of oil and natural gas.” The birthday cards feature a black and white photo of one of the world’s first commercially fractured wells located in Duncan, Okla. Despite the 1940’s theme, API is commemorating the occasion on a distinctly modern platform — the Internet. Digital birthday cards will connect readers to a blog with more information on the history and success of hydraulic fracturing, which has been used on over a million wells nationwide and already accounts for the majority of U.S. natural gas production.

“Thanks to fracking, we can produce more energy, with a smaller environmental footprint, changing America’s energy trajectory from scarcity to abundance,” said Milito. “This is a birthday worth celebrating.” In 2012, unconventional resource development utilizing hydraulic fracturing increased disposable income by an average of $1,200 per household, supported 2.1 million American jobs, and contributed $284 billion to the U.S. GDP, according to a study by IHS. By 2025, IHS reports that unconventional drilling will support 3.9 million jobs, including 515,000 positions in manufacturing. API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. API’s more than 580 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 20 million Americans.

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periodically inspected by the U.S. Department of Transportation. “Propane is another great option, a by-product of natural gas extracted from Utica Shale,” Spofforth said. “It is the least expensive option ... a very inexpensive fuel gas. I would like to see more propane filling stations with public access. It is stored as a liquid in above-ground tanks and is considered generally safer than gasoline.” Spofforth wrapped up his presentation with a video of Ohio success stories with CNG and propane powered vehicles, highlighted with testimonials by the Franklin County Board of Developmental Disabilities whose director said they made the switch initially because of the high cost of gasoline. Now, school buses are fueled by propane and the testimonials said the agency “couldn’t be happier.” He said the initial conversion cost was surpassed in fuel savings and a cleaner environment. For more information about the Clean Fuels Ohio program, visit the website www.cleanfuelsohio.org or call the Columbus office at (614) 884-7336. jperkowski@daily-jeff.com

AMBRIDGE — When the idea of using compressed natural gas to fuel vehicles was introduced more than 80 years ago, it was barely a footnote in the gas and oil annals. It wasn’t until the energy crisis in the late 1960s and early ’70s that natural gas as a fuel for vehicles gained any attention. Speaking at the April Guernsey Energy Coalition meeting, Sam Spofforth, executive director of Clean Fuels Ohio, said America is finally waking up to the advantages of natural gas vehicles. The monthly meeting, sponsored by the Cambridge Area Chamber of Commerce, is held at the Southgate Hotel in Cambridge. “We have a wide range of energy resources and transportation technology in Ohio,” said Spofforth. “Our organization’s (CleanFuelsOhio) next step is to partner with local governments and businesses to take advantage of our natural gas reserves here in Ohio, educate the public about the advantages of natural gas, with the end result of reducing our dependence on oil.” Ohio Green Fleets is a certification program that focuses on local governments and businesses which have a fleet of vehicles that usually run from morning to night, and even longer. “Vehicles in motion most of the time are the best fit for natural gas,” Spofforth said. “Our focus is on greening fleets across the state and educating the public and decision-makers about responsible and sustainable transportation option,. There are 140 public and private organizations that have begun the process of earning Green Fleet certifications.” Although the organization’s primary function is education, Clean Fuels Ohio Driving Force Fleet advisors will help vehicle owners figure out how to make the transition from gasoline to biodiesel, compressed natural gas or propane-driven vehicles. The program addresses how to reduce fuel consumption, how driver behavior is a major factor in work-related accidents, a breakdown on biodiesel and natural gas vehicle maintenance and operational benefits. CFO also offers Drive Electric Ohio and Ohio NGV partnerships. “Natural gas vehicle technology is a proven, reliable and mature application,” Spofforth said. “It uses domestic fuel, maintenance costs are equal or less than gasoline or diesel-powered vehicles. NGVs are quiet, 80 to 90 percent lower decibels than diesel, and natural gas is abundant and American. There are 12 million-plus CNG vehicles in the world, but only 120,000 in use in the U.S. Currently, the best prospects for converting to CNGs are school buses, taxis and delivery trucks because of their continuous use. “Consisting mostly of methane (CH4), compressed natural gas is clean, odorless, colorless and tasteless. It’s extracted from natural gas wells or in conjunction with crude oil production. It is the same source of energy used for furnaces, stoves and home appliances. It is also very safe, it has a very high ignition temperature, and, it doesn’t contaminate ground water. Expanding the numbers of CNG fueling stations would also help increase of CNG vehicles on U.S. roads.” Reported incidents of CNG bus fires are related to engine failures, not the use of natural gas. Natural gas buses have onboard gas detectors and other safety devices, such as tank safety valves that only allow fuel flow when the engine is on. Also, the tanks must be

Sam Spofforth, executive director of Clean Fuels Ohio and guest speaker at the Guernsey Energy Coalition meeting, was welcomed by Jo Sexton, president of the Cambridge Area Chamber of Commerce, to the monthly gathering at the Southgate Hotel in Cambridge. Sexton said it was the organization’s 34th consecutive meeting since a potential gas and oil boom for southeastern Ohio was predicted in 2011. Spofforth and Sexton posed for this photo in front of his CNG fueled vehicle in February.

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NIONTOWN — “The oil and gas association is probably one of the key reasons why we have such a wonderful and successful industry in the state of Ohio,” said Steve Grose, a partner at the Uniontown-based Concord Park Energy. “I can’t say more about that organization in their huge efforts to do what is right for the state of Ohio.” The Ohio Oil and Gas Association (OOGA) named Grose a Hall of Fame inductee March 6, 2014, in Columbus. The association honored its class of 2014 Hall of Fame Inductees at its annual Winter Meeting. Industry peers nominate inductees, and OOGA’s executive committee selects them every four years. Those inducted have made positive contributions to the advancement of the industry. Grose has witnessed revolutionary advancements in the industry and has helped build upon these positive changes. Grose pursued his interest in working on drilling rigs and scavenging for oil and gas when he took a Petroleum Engineering course at Marietta College in the 1970’s. He said there were few colleges that offered the course and he felt it was a great opportunity. Over the span of 30 years in the industry, Grose held a number of positions in the industry such as technical committee

chairperson and he ran through a number of executive committee chairs. Eventually, he became president of the Ohio Oil and Gas Association in 1999 and 2000. Through all his contributions and volunteer work, Grose won the 2011 Oilfield Patriot Award. “The reason I did all those things was for my own benefit and for my companies benefit because they would have a front row seat to any things that would impact our company from a political standpoint or a technical standpoint or whatever standpoint there might be,” Grose said. Grose started a small company in Uniontown in 2010 called Concord Park Energy. The company participates in wells that are put together by a third party operator. Grose said the company also consults on some oil and gas activities and is involved in lease acquisition and resale. Prior to starting his own company at Concord Park Energy, Grose was Senior Vice President at Range Resources Corporation for the Appalachian Division. The company operated about 10,000 wells in the states of Pa., Ohio, W. Va., N.Y., and Mich. “We grew that company to what it was based on our ability to do acquisitions and to drill oil and gas wells and to exploit

the acreage and opportunities that we had,â&#x20AC;? Grose said. Range Resources Corporation was the first company to ever frack oil and gas wells in Marcellus Shale resulting in thousands of wells today, Grose said.Â He explained George Mitchell, founder of Mitchell Energy & Development Corporation, was the first to discover that oil and gas could be extracted from Barnett Shale in the Fort Worth Basin.Â â&#x20AC;&#x153;And then what we did is, at range, we applied the same concepts to the Marcellus Shale, and then we had actually spent close to $200 million as a corporation before we actually figured it out to where we knew how to do it,â&#x20AC;? Grose said.Â In finding new ways to frack shale, Grose said the industry has extended the possibility of obtaining cheaper energy. However, he said every time drilling occurs, production declines greatly within a year or two years.Â â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;re not going to go out and find a new Sad Arabia every year, but youâ&#x20AC;&#x2122;re going to have to find a whole bunch of little ones that sort of make up for Saudi Arabia,â&#x20AC;? Grose said. â&#x20AC;&#x153;The Appalachian Basin Marcellus shale is probably considered to be one of those opportunities.â&#x20AC;? He said there is interest in finding renewable energy resources; however, those opportunities are often economically inefficient. The industry estimates there is 100-year supply, he said. â&#x20AC;&#x153;The individuals selected for the Hall of Fame are passionate about and committed to Ohioâ&#x20AC;&#x2122;s oil and gas industry,â&#x20AC;? said David R. Hill, OOGA president. â&#x20AC;&#x153;We thank them for their unwavering support and congratulate them for achieving the industryâ&#x20AC;&#x2122;s highest honor in Ohio.â&#x20AC;?

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So in Ohio, being a “race” state under R.C. 5301.09, XXX Oil and Gas has the valid lease. Farmer Brown may be in hot water with ABC Drilling -- especially if he accepts the delay rental payment -- but that doesn’t change the respective legal status of ABC and XXX. Until it’s recorded, it isn’t a valid lease. In other words, as regards oil and gas leases, he (or she) who gets to the courthouse first, wins in Ohio. So any sensible oil and gas company will literally race to the courthouse once the lease is signed and notarized. Right? Probably not. And the explanation of that will be the subject of my next column. So, dear reader, I again leave you in suspense. Just remember, constructive notice and race notice do matter. And, if you’re an Ohio landowner, it ain’t a lease ‘til it hits the courthouse. Bill Dannley has worked in the oil and gas business for over 35 years as both a title abstractor and petroleum landman. He is a partner in Leasemap Ohio, which specializes in lease takeoff research and has over 400 Ohio townships on file. Bill can be reached at 330-262-0588. For more information visit www.leasemapohio.com.

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OOSTER — Over the last several months I have waxed extensively -- and possibly ad nauseum -- about recorder’s offices and the public record. However, there is one basic question I have not addressed: Why do oil and gas companies bother to record at all? An oil and gas lease is a contract, binding on both Lessor and Lessee. It’s enforceable; violations of its provisions can land either party in court. Legal remedies can force the party in breach to perform as required, pay damages, forfeit their rights, etc. So why record? Because of a legal nicety know as “constructive notice.” In simple English, recording a document notifies the world of your interest in a property. Whether it be deed, mortgage, lien, easement or oil and gas lease, when you record, you are posting the legal equivalent of a “No Trespassing” sign. It’s public notice as to your legal interest. If there are any conflicting claims out there, you’ve just told them to stay off your property. However, what happens when two documents, say two oil and gas leases, show up in the public record in the same recorder’s office on the same property. Which one is valid? That result depends on where you’re at. State laws on constructive notice broadly fall into three categories: notice, race-notice and race. Without going too deeply into irrelevant details, Ohio is a race-notice state -- with a serious twist. To give you some idea as to how this works, take this example: Farmer Brown owns 100 acres in any of the 50 states. He is approached by ABC Drilling and signs an oil and gas lease on April 1. One week later, Farmer Brown is approached by XXX Oil and Gas. XXX offers him twice as much money. Farmer Brown signs a lease with XXX on April 8. ABC Drilling, not being aware of the subsequent XXX Oil and Gas lease, takes its sweet time and records on April 9. XXX, for whatever reason, bolts to the courthouse and records on April 8. Who has the valid lease? In notice and race-notice states, XXX Oil and Gas would have the valid lease because, regardless of the earlier ABC Drilling lease, XXX got to the courthouse first. However, if Farmer Brown told XXX Oil and Gas about the existing ABC lease, ABC Drilling would have the good lease because XXX was not a “bona fide” party; XXX had not acted in good faith. In a race state, XXX Oil and Gas would have the valid lease. Good faith be damned. So in Ohio, being a race-notice state, ABC Drilling would be sitting pretty, yes? No. That is because of a Ohio statute, R.C. 5301.09, which states, “[No] such lease or license shall be valid until it is filed for record, except as between the parties thereto, unless the person claiming thereunder is in actual and open possession.” Under this statute, as regards oil and gas leases, Ohio is a race state.

ULSA, Okla. — Bluegrass Pipeline recently awarded grants totaling more than $160,000 to 43 organizations in Ohio and Kentucky to fund projects that directly benefit counties traversed by the pipeline project. These grants are in addition to those awarded earlier this year. During the second cycle of the Bluegrass Pipeline Community Grant Program, grants were awarded in March to 22 organizations in Ohio to fund a variety of projects ranging from school safety projects and food shelter assistance to critical equipment for first responders and new tornado sirens. The following area organizations in Ohio received funds during this second cycle of the grant program: • Salt Fork Ruff Riders (Guernsey County) – Salt Fork Horse Camp Playground • Cambridge Fire Department (Guernsey County) – Fire Hose Replacement Program • Beallsville Volunteer Fire Dept. (Monroe County) – Firehouse Backup Generator Project • Fieldhouse Foundation (Muskingum County) – Handicapped Accessible Restroom Renovation • Muskingum County Soil & Water Conservation District – Kids Conservation Camp • Seneca Township (Noble County) – EMS & Fire Protection “When you have towns with defunct tornado sirens and fire departments with outdated fire hoses, it’s clear that the need is very real,” said Wendell Hunt, local outreach business partner for Bluegrass Pipeline. “Our goal is fund causes that directly benefit the community and we believe we’ve done that with this long list of worthy project. We know the important role these organizations and initiatives play in Ohio and we’re proud to support them.” To date, Bluegrass Pipeline has awarded 67 grants totaling more than $339,000 in counties along the project route. There are several opportunities in 2014 to apply for grants. To learn more about the application guidelines or to apply, go to: http://bluegrasspipeline.com/ community-grants Projects funded by the Bluegrass Community Grant Program should provide community benefits, with specific emphasis for projects impacting: • First Responders / Emergency & Safety Preparedness; • Youth or senior services; • Education programs; • Economic development; • Enhancement of open spaces and park land for recreation; • Enrichment of wildlife habitat; • Promotion of environmental education; • Preservation of wetlands and wildlife habitat. Questions about the program should be sent to grants@bluegrasspipeline.com. The proposed Bluegrass Pipeline would transport natural gas liquids (NGLs) such as propane, butane, ethane and natural gasoline, which are used in home heating and cooking, motor fuels, plastics production and industrial energy. More than half of the proposed 1,100 mile route will consist of existing pipeline that will be converted to become part of Bluegrass Pipeline. Two experienced pipeline companies, Williams and Boardwalk Pipeline Partners, are working together on the project, which is in the early stages of development. In addition to gathering input from the

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AST SPARTA. — The boom of the oil-and-gas industry in Carroll and surrounding counties has brought hundreds of workers to the area with little knowledge of business resources for their specific projects. Sparta Steel in East Sparta has stepped up and provided individualized service to accommodate the economic growth of the area. Great service is nothing new for this company founded in 1949 by Kenneth Rainsburg. Service is what sets it apart from other steel service centers which is why its slogan is “Steel is our product. Service is our business”. Services offered by Sparta Steel include shearing, CAD burning and drawing, forming, plate burning , saw cutting, galvanizing and fabricating. They sell galvanized,stainless, aluminum and bronze sheeting, as well as pipe and plate steel. The sheeting can be cut to size. Rebar, angle iron and I-beams for new construction are also avail-

able. They specialize in carbon steel, but also offer aluminum and stainless per request. Just about any steel product or service is available at this location. Part of the company’s strength is the diversified customer base. They are more than pleased to extend that base to facilitate the needs of oil-and-gas producers, who sometimes “need it now!” Safety is a number one priority at Sparta Steel. “Each of our employees’ number one job is to go home safely to their families at the end of the day,” said President Morris Rainsburg. Tina Cappello, secretary/treasurer of Spata Steel, refers to their 40 employees as family. Her father, David Rainsburg, a Magnolia resident, retired from this company two years ago. He and his wife, Teresa, still help out occasionally at the family company when needed. Their fleet of about 20 trucks makes deliveries to job sites and businesses in a 100-mile radius of their location, including the tristate area of Ohio, Pennsylvania and West Virginia. Vice President

Billy Rainsburg expressed their pride in keeping the vehicles looking great. “We are thankful they can all be parked inside at night. Some of them are old, but paid for. They are traveling billboards for our company.” In the last year, Sparta Steel has invested $300,000 into the business in the form of an addition to a warehouse building and the purchase of a new plasma steel cutting machine. This huge machine cuts steel up to five inches thick into high definition programmed shapes. The Sparta Steel complex now includes five large buildings and two smaller structures, one of which is a break room for employees. The company is supportive of the community they live in, especially opportunities in the field of education, which they consider a high priority. Kenneth Rainsburg founded this business shortly after returning from serving in WWII and his son, Dave, joined him in the business in 1969 after serving in Vietnam. Morris, Dave’s brother, came on board at Sparta Steel in 1970. Morris and his wife, Jean, live in Magnolia and have two grown daughters, Angela and Kathy. They have two granddaughters and a grandson to be born soon. Billy Rainsburg, a U.S. Air Force veteran and Dave’s son, has two children, Ethan, age 13, and Emerson, age 11. Tina Cappello and her husband, Joe, have a daughter, Izabella. Reflecting on the long-time success of the business, President Morris Rainsburg, son of the founder, states he considers himself “very blessed.” For more information on Sparta Steel, see www.spartasteel.com.

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TARK CO. — A couple of big projects in the works in Stark County at this time could continue to put the area on the map when it comes to the gas and oil industry, said Stark County Commissioner Richard Regula, who was keynote speaker at a recent Consumers National Bank seminar called Sowing the Seeds of Change. One jewel in the making Regula mentioned was a simulated oil and gas rig that is being built by Stark State College, in Canton, which took over the building where Chesapeake Energy had its offices until it relocated to Louisville. The rig will actually be constructed in an outdoor site near the building, which will also make it viewable by the many people utilizing the SARTA bus station. It will be used for training students that are enrolled in one of the college’s many gas and oil courses of study. The second big project Regula discussed is still in the “hopeful” stage. Stark County is embarking on the largest public works project in its history with the upgrade of its wastewater plant in Canton, which will cost $90 million. “Stark’s going to have the largest membrane technology wastewater plant in the world,” said Regula. And with frac wastewater being such an issue, he said he talked to a man from Japan who is involved in the project about modifying it so it can clean up frack water. That conversation has made its way to Stark State College, he said, but the outcome is still unclear. “I don’t know yet if it’s possible, but it’s my dream to put technology in place and put frack water through the plant that can be released as clean water back into the environment,” admitted Regula. Regula also gave the audience an update on the $80 million extension of U.S. Route 30 in East Canton that he and many other state officials are seeking the funding to complete. While he would

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like to see the entire project completed, which would cost $900 million and would extend Route 30 from where it ends now at Trump Road, in East Canton, to Route 11, in Lisbon, near the Pennsylvania border, he said, at this time, he is confident only that the East Canton leg will be completed. “We need infrastructure in place. We need to invest part of the severance tax Gov. (John) Kasich wants to charge the oil and gas companies back into this region,” Regula said. “Route 30 and Route 172 can’t handle the traffic that will be coming into that area.” Regula said he is also talking now with congressmen in Ohio and Pennsylvania to try to get the two states to work together on the funding to complete Route 30 because it will be of such great value to both in terms of economic development. And, as he pointed out after the seminar, he feels the two states should work on Marcellus and Utica as a joint project.

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OLUMBUS — A Youngstown-area dump- that due process is maintained... We want to make sure that ing incident was part of the impetus behind any proposal out there takes into consideration that.” stiffer penalties for violations of the state’s Marc Kovac is the Dix Capital Bureau Chief. Email him at oil and gas regulations proposed as part of Gov. mkovac@dixcom.com or on Twitter at OhioCapitalBlog. John Kasich’s mid-biennium budget package. The provisions are included in now-separate legislation, Agricultural & House Bill 490, that had a first hearing this week before the Industrial Ohio House’s agriculture committee. Service & Repair “[The Ohio Department of Natural Resources] constantly reviews our laws and regulations to ensure they offer the Hydraulic Cylinders • Mobile Wet Lines maximum protection of public health, safety and the environHoses & Fittings • Machining & Fabrication ment, but the illegal actions of Ben Lupo and associates were a factor in the development of these updates,” Mark Bruce, an Custom Designed Diesel Powered Hydraulic Units ODNR spokesman, said in a released statement. “We work Testing, Diagnostics & Repair of Cylinders Pumps & Motors to ensure we have the tools necessary to hold companies and people accountable should they choose to violate Ohio law.” 12317 Dover Road • Apple Creek, Ohio 44606 ODNR permanently revoked the operating licenses of two Phone: 330-857-0001 • Fax: 330-857-2446 companies owned by Lupo after employees were caught dumping tens of thousands of gallons of oilfield waste into a yhydraulics@pcfreemail.com storm sewer. Lupo pleaded guilty last month to related charges and awaits sentencing. HB 490 would expand ODNR’s authority to revoke or suspend drilling and related activities of those who break the state’s environmental regulations. The legislation also would tighten requirements for transporting brine and increase potential prison time and civil penalties for violations. Bruce said the changes would help the state keep closer tabs on individuals or companies that have broken oil and gas laws in the past. “If an operator has a questionable history, that history should be considered as part of the review for any new permit, applicant or transportation certificate,” he said. “If an operator chooses to break the law, ODNR should have the strongest language possible that allows the agency to immediately shut down operations that endanger public health or safety. Companies and employees who choose to break Ohio law will be held accountable for their actions and this strengthened law provides ODNR multiple avenues to accomplish this charge.” Tom Stewart, executive vice president of the Ohio Oil and Gas Association, said his group is somewhat supportive of the proposed law changes, so long as his “members rights are protected.” “We appreciate the concern of ODNR that they would have adequate tools to prosecute people who willfully and egregiously violate Ohio and federal law and pollute the environment,” he said. “We want to see those people prosecuted as much as anybody else out there.” He added, “We’re always concerned about due process and 10222644

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USQUEHANNA COUNTY, PA — A high-profile antifracking activist who often gives tours of natural gas drilling sites in northeastern Pennsylvania’s Marcellus Shale region asked a judge Monday for relief from an order barring her from stepping foot on more than 300 square miles of land owned or leased by one of the state’s leading natural gas drillers. Vera Scroggins said the injunction, in place since October, has effectively prevented her from traveling to her favorite grocery store, eye doctor, hospital, restaurants, businesses and friends’ homes because all of them have leased land to Cabot Oil & Gas Corp. Her attorneys asked Susquehanna County Judge Kenneth Seamans to lift or modify his order. A ruling could come this week. “It’s tough to try to figure out, where can I stand? Where can I walk?” Scroggins said after the hearing in Montrose. “I never used to have to think about that. It’s not a pleasant thing to endure.” A company spokesman said Cabot is only interested in preventing the activist from trespassing on its active drilling sites and contended that Scroggins, who’s used to attracting media attention, is simply out for more publicity. Scroggins regularly gives bus tours to politicians, community groups, and anti-fracking celebrities such as Yoko Ono, Sean Lennon and Susan Sarandon, showing them drilling sites, pipelines, compressor stations and other signs of Pennsylvania’s burgeoning gas industry and introducing them to residents who say they’ve been harmed. She often posts videos of natural gas production sites online. Cabot said it sought the order because Scroggins habitually trespassed onto its land, putting herself and her guests in harm’s way, distracting employees from their work and interfering with natural gas production. Each time, Scroggins was ordered to leave or escorted off the property and told not to come back, but she refuses to stay away, the company said. Seamans’ order bars Scroggins from entering property “owned and/or leased by Cabot ... including but not limited to well sites, well pads and access roads.” That accounts for nearly 40 percent of Susquehanna County’s land mass. Scroggins said she’s spent hours in the county courthouse trying to figure out where she can and can’t go. “Somebody like Vera is indispensable in trying to monitor what is going on up in Susquehanna County,” said one of her lawyers, Vic Walczak of the American Civil Liberties Union of Pennsylvania. “And when you get an injunction of the type that Cabot secured last October, you’re essentially putting her out of business. You’re preventing her from being able to engage in this timeless function of citizen activist.”

Cabot spokesman George Stark said the company has told Scroggins and her lawyers repeatedly since January that Cabot has no interest in Scroggins’ choice of grocery store or hospital. “The focus has been on our active work sites,” he said. “The incidents were escalating and the amount of people she was bringing and putting in harm’s way was increasing. ... We had to take an action. We had asked her in the past to not trespass. She did not listen.” Cabot told the judge it is willing to modify the injunction to specify that Scroggins isn’t permitted to intrude on well sites, access roads, staging areas and other places where the company is active. Scroggins’ attorneys object to Cabot’s proposed 150-foot setback requirement.

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T. CLAIRSVILLE — In an effort to meet the area’s need for skilled, licensed commercial drivers, Belmont College is expanding its Commercial Driver’s License program. CDL training is now available in Woodsfield, Ohio, New Martinsville, W.Va., and Wheeling, W.Va., in addition to a Cadiz, Ohio, training location. “With the increase of oil and gas development in our area, the need for licensed truck drivers is growing,” said Robert Guentter Jr., director of Workforce and Economic Development at Belmont College. “Having four locations in the region is intended to increase access and convenience for those interested in a CDL career.” The four-week program offers a comprehensive curriculum to prepare students to pass the CDL exam. With classes beginning every Monday, students in the region will receive their CDL permit, background check, ODOT physical, 160 hours of classroom and on-the-road training, CDL driving exam with truck provided, and lifetime job placement assistance. In addition to the core CDL training, students interested in a CDL career are encouraged to take Belmont College’s First AidCPR, SafeLand Safety Training, and the Introduction to Oil & Gas Industry class. For information about the CDL program or any other short-term Workforce training, call Belmont College at 740-699-3869 or visit website at belmontcollege.edu.

Robert Guentter Jr., l, director of Workforce and Economic Development; Doug Edwards, Training Manager, Belmont College Truck Driving Academy; and Dr. Joseph Nocera, r, Community Education & Professional Development Program coordinator.

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10212361

10247208

Amadeus Smith Dix Communication

tudents in the University of Mount Union’s civil engineering program are already out in the field. Waseem Khalifa, a lecturer in the engineering department, leads a class focused on going through the process of developing a hydraulic fracturing site. “It is designed so students can see the project from inception,” Khalifa said. Determining the type of project the class would focus on was relatively easy. Khalifa said the choice was made to focus on “fracking” due to the oil and gas industry’s current growth. The industry also has a large presence in this part of the state. In addition to the benefits of studying a process done in a growing industry, he said, students are also able to gain field experience in all aspects of civil engineering with a “fracking” project. Partnering with CESO, a civil engineering, architecture and surveying firm based in Dayton, the class designed a well pad, which acts as a sort of bridge for access to a drilling spot. They worked on

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three related components at one of the company’s drilling sites in Carroll County as well. CESO has full-service offices in Canton and Columbus. Students have been going through all stages of site development, including preliminary surveying and design. “We surveyed the site for the topography of the area and got a feel for site access points,” Khalifa said. When determining site development, students had to adhere to industry and government regulations. Khalifa said students, in addition to the well pad, designed the access road, which links “the township road to the pad.” That township road is used as a haul road to transport materials, and students had to determine what improvements needed to be made to the road for it to be usable. They also had to design the detention pond, which is used to safely collect and drain water from “fracking” sites. Khalifa said the class acts as a culmination of everything the students have learned throughout their college careers and is a good starting point to make the transition into their careers.

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*Information is based on a P&I payment of $1,266 per month for a 30-year conventional fixed rate mortgage at a rate of 4.50% (4.625% APY) and a loan amount of $250,000. **Information is based on a P&I payment of $1,266 per month for a 30-year conventional fixed rate mortgage at a rate of 5.50% (5.750% APY) and loan amount of $223,000. These payments do not include taxes and insurance – actual payment will be greater to include amounts for these items. Examples assume credit scores above 760, a 20% down payment, and a rate lock of 60 days. Rates are subject to change without notice. The actual mortgage product that you qualify for will depend upon verification of the value of the home, your credit score and other considerations. This information is deemed to be reliable but not guaranteed. †Price per square foot subject to change by building territory. We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin.

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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 397 2. Harrison County 213 3. Belmont County 106 4.Columbiana County 102 5. Monroe County 96 6. Noble County 92 7. Guernsey County 90 8. Jefferson County 41 9. Mahoning County 30 10. Tuscarawas County 16 11. Portage County 15 Trumbull County 15 12. Stark County 13 13. Washington County 10 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 WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGED SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 4/19/14

100

125

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David Wigham Attorney

OOSTER — Ohio’s Seventh District Court of Appeals hears appeals from most of the counties that are experiencing rapid Utica development, including Mahoning, Columbiana, Jefferson, Carroll, Belmont, Harrison, Monroe and Noble Counties. On April 3, 2014, the Seventh District issued its much anticipated ruling in Walker v. Noon, 2014-Ohio-1499. In the appeal, the Court was asked to resolve conflicting lower court rulings regarding the interpretation of Ohio’s Dormant Mineral Act, found at R.C. § 5301.56 (“DMA”). The DMA was originally enacted in 1989 and amended in 2006. Its purpose is to eliminate “dormant” mineral interests, which have not been used in many years and impede oil and gas development. The 1989 DMA provides that, where the severed mineral interest owner (who has no claim to anything other than the minerals under a property) has not acted in one of five specified ways to use the minerals and has not filed a claim expressing a continued interest in the mineral in the preceding 20 years, the severed mineral interest will be deemed abandoned, and return to the current surface owner. The 1989 DMA is self-executing, meaning that the severed minerals in question will be automatically deemed abandoned, without any action on the part of the surface owner, if no activity related to the minerals has occurred. In 2006, the DMA was amended, and a notice requirement was added. Under the 2006 DMA, surface owners must first file and serve a notice of abandonment upon the severed mineral owner. Although the DMA was originally enacted in 1989, the act was largely ignored until Utica producers began paying lucrative bonuses and royalties. At that point, many people claimed ownership of minerals that had originally been severed by their grandparents or even great-grandparents, even where no apparent interest had been displayed in those minerals over the ensuing decades. Accordingly, the DMA has become central to the disposition of literally hundreds of oil and gas lawsuits between such severed mineral owners and surface owners. Many of trial court rulings interpreting the DMA have been inconsistent and contradictory. Thus, this Walker decision helps to clarify some of the significant unresolved DMA issues. The primary issue to be decided in Walker v. Noon was whether the 1989 DMA remains relevant in lawsuits filed after the amendment to the 2006 amendment. In doing so, the Court had to decide whether the 1989 was self-executing (meaning that the surface owners need not take any action in order to claim mineral abandoned under the act) and whether the 2006 amendment was retroactive, which would require surface owners to take certain steps in order to claim abandoned minerals. The Court of Appeals held that the 1989 Act was indeed self-executing, meaning that, where nothing had been done with the minerals in the previous 20 years, the mineral automatically returned to the surface owner. (Taking into account a three year grace period designed to protect the rights of severed mineral interest owners under the 1989 act, many of severed mineral interests vested in the surface owner as of March 22, 1992.) The Court went on to hold that the 2006 amendment

could not be applied retroactively, and did not affect abandonments which occurred prior to June 30, 2006, the effective date of the amendment. For procedural reasons, the Court refused to decide whether the self-executing nature of the 1989 could create constitutional issues, but several cases now pending before the Court raise that same issue. The Walker ruling is a major victory for surface owners attempting to recover ownership of mineral rights that were abandoned and therefore vested in the surface owner prior to the amendment of the DMA in 2006. It gives surface owners a sword to use against alleged severed mineral interest owners and may swing the balance in many pending cases. More importantly, this ruling provides clarity to Utica producers seeking to lease acreage; producers will now know who likely owns the minerals and who does not. David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with more than 20 years of experience in the industry. He is also the current chairman of the Natural Resources Committee of the Ohio State Bar Association.

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ARROLLTON — Gateway Royalty II, LLC (Gateway II) announced on March 25 that it has raised $58.5 million in capital through a private offering. The capital will be used to acquire oil and gas royalty interests in the developing horizontal Utica Shale oil and gas play located in southeastern Ohio in Washington, Noble, Guernsey, Monroe, Belmont, Harrison, Carroll and Columbiana Counties. The principals of Gateway II have previously invested approximately $35.0 million through Gateway Royalty, LLC (Gateway) and have secured oil and gas royalty interests under approximately 20,000 acres in the Utica Shale. The newly raised capital will allow Gateway II to continue Gateway’s policy of acquiring a diversified portfolio of oil and gas royalty interests without incurring any debt. Chris Oldham, president of Gateway II, said, “Gateway Royalty provides the mineral owner an opportunity to sell a portion of his or her royalty for cash today thereby creating instant liquidity for many personal reasons which may

include getting out of debt, sending kids to college, paying medical bills, estate planning, asset diversification or providing working capital for their business.” Oldham said, “Gateway II has the “cash in the bank” and will close a royalty purchase as soon as the mineral owner’s title has been confirmed and is clear of any outstanding encumbrances, which usually takes 30 to 90 days depending on title issues.” Doug Green, vice president of Gateway II, said, “Over the last 20 months, Gateway has provided options to many families in eastern Ohio. Gateway II’s financial strength will allow us to pay mineral owners quickly, without seeking outside financing.” Gateway II’s counsel is Vorys, Sater, Seymour and Pease LLP, located in Columbus, and Sprouse Shrader Smith PLLC, located in Amarillo, Texas. For information, visit the website at http://www.gatewayroyaltyllc.com.

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earing the end of its third year, Marlington High School’s oil and gas program will continue to evolve as the industry grows and changes. “The program is developing an advisory committee that will help in determining the best pathways for students to build currently needed skill-sets,” said Jeff Shipman, who teaches the class. The class is based, naturally, in math and science, but it specifically pushes career training. Students in the class, in addition to classroom work, are able to get hands-on experience on school grounds, including waterways and wooded areas. And, they earn college credit, as the program partners with Stark State College. But with the current growth of the industry, especially in this region of Ohio, Shipman said educators are constantly looking for ways to change the program to adapt to industry needs. In fact, the class has had several visits from leaders in education and the oil and gas industry. “Industry experts have visited our school program and have given positive comments on the development of the curriculum,” Shipman said. “At this time, state educators and industry experts have given their time to further the standards for our program.” Industry leaders from the private sector and representatives from government agencies, such as the Environmental Protection Agency and the Ohio Department of Natural Resources, often visit the class to give the students more insight into industry practices and regulations. This class of students will be the first to go through the entire

two-year program. And as the program is young, Shipman said, there is little data on the career paths of past graduates who had taken the class. However, there are plans in the works to start tracking graduates’ college and career paths. This, Shipman said, will help educators develop the program even further. Shipman said constant adaptation and growth of the program is necessary to prepare students for the industry, which is suffering a shortage in workforce. And better education means a stronger workforce for an industry competing in a global market. “We must continue to integrate school curriculum and provide hands on learning experiences so our students are either prepared for job opportunities or continue their education at a post-secondary institution,” he said.

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ANESVILLE â&#x20AC;&#x201D; Commercial Aspects of Energy Development, a course designed to help participants become familiar with oil and gas exploration and the global market for energy, will be offered at Ohio University Zanesville during summer semester 2014. The course curriculum is designed to include information about the energy boom in the region. Participants will discuss issues related to the sale, acquisition and resale of mineral rights and related issues of cash flow from sales of rights and royalties. In addition the course content will

include discussion of the broader political and economic environment in which these activities are taking place. While the class is designed for Applied Management students, Schor is extending registration to anyone who is interested. The blended course will meet on Monday evenings May 12; June 2, 16 and 30; July 14 and 28 and Aug. 4, with a blended format using BlackBoard. For more information contact Schor atSchor@ohio.edu or call 740-699-2488.

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Laurie Huffman Dix Communications

TARK CO. -- The Columbus law firm of Bricker and Eckler recently identified $19 billion invested in this region during the last couple of years, according to information presented by Paul Boulier, vice president of business attraction for Team NEO, which focuses on bringing jobs and manufacturing into Northeast Ohio. Boulier gave a talk at Glenmoor Country Club, in Stark County, during a recent event sponsored by the Regional Chamber of Commerce. He said the information will, hopefully, spark dialogue and generate ideas for economic development. Boulier discussed the many products shale gas yields, including economical electrical power; fuels; and wet gas chemicals used in manufacturing and by plastics companies. “The value that is being unlocked from chemical and plastics derived from shale gas has transformed our global competitive position,” said Boulier. “But, we do have competition, because shale deposits can be found in countries around the world, including China.” Boulier said the U.S. has an advantage over China because it has been drilling for gas and oil for so long there is already good infrastructure, making us an “early mover” of these products. Other advantages in Ohio include the fact that it already ranks 1st, 2nd, or 3rd in almost all categories of manufacturing, it is well-positioned to leverage resources from shale gas, and 50 percent of the U.S. consumers are within a 500 mile radius of here. Ohio is also seeing the cost of power dropping. What can this mean? Nova, a Canadian company that is the world’s largest supplier of methanol, recently shut down its two plants that were located in Chili and is moving them to Louisianna. In addition, between 1999 and 2006, 40 percent of the ammonia production in this country was shut down; but, now, projects are in the works to start some of them back up in Indiana. But, Ohio is also not being left out. Of the new chemical industry’s capital investment from shale, which as of February, consisted of 148 projects and $100 billion in potential capital investment between 2010 and 2020, 78 percent will be in the gulf coast, which has been a hub for chemical plants; but, 8 percent will be in the Midwest and 13 percent in the Ohio Valley. Fifty five percent will be in bulk petrochemicals, 22 percent in plastic resins, 14 percent in fertilizers, 4 percent

in inorganic chemicals, and 5 percent in other products. How will the $100 billion be spent? Thirty eight percent will go into the construction of equipment and piping; 28 percent will be spent in major process equipment, such as pumps, heat exchangers, pressure vessels, etc.; 10 percent will go into building construction; 9 percent into engineering services; 8 percent into process instrumentation; 5 percent into piping and valves; and 4 percent into electrical. This investment is up from 97 projects planned in March of 2013, and $72 billion planned in investment, and 53 percent of the investment is by firms outside of the U.S. “By 2023, additional output from $100 billion in capital investment will generate $81 billion in new chemical industry shipments. This is an ongoing, permanent upward shift in shipments,” said Boulier. “The magnitude of some of these changes is mind boggling. “But, we must be act, Boulier stressed. “What it’s going to take is people like you all — understanding and helping to get some things going,” he said. “The fact that it’s complicated makes it easy to just sit and wait. But, the sad thing is, if we do not get involved these companies will go elsewhere.”

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INCINNATI (AP) — Cleanup crews expect to spend about another week vacuuming oil from the ground and water where thousands of gallons of crude leaked from a pipeline into a southwest Ohio nature preserve, officials said Tuesday. Workers have also been excavating soil near the break since the leak was noticed last week in the Oak Glen Nature Preserve west of Cincinnati. Federal officials estimate more than 20,000 gallons — about 500 barrels — spilled into an intermittent stream and an acre-sized marshy area that forms a pond in wet weather. The next phase will focus on removing any residual oil in the soil under and around the creek and pond, plus long-term monitoring of soil, water and air quality in the 374-acre preserve, said Capt. Steve Conn, of the Colerain Township Fire Department. “Probably less than 10 percent of the preserve has been impacted,” Conn said. A spokesman for Sunoco Logistics, the primary owner of the pipeline that was repaired and reopened Sunday, said Tuesday that there is no exact timetable for completion of the next phase, but it could take months. “We won’t leave until the job is done,” Sunoco Logistics spokesman Jeff Shields said. The company is paying for cleanup of the leak that officials have said came from a 5-inch crack in the 20-inch diameter pipeline, but Shields had no estimate of the costs so far. As of Tuesday, officials said the amount of oil/water mix collected remained unchanged from 35,000 gallons, with some 17,000 gallons of that being crude oil. Sunoco Logistics shut off the stretch of the Mid-Valley Pipeline Co. system from Hebron, Ky., to Lima, Ohio, early March 18 after a leak was confirmed. Investigators with the Department of Transportation’s Pipeline Hazardous Materials Safety Administration are working to determine what caused the crack.

Conn knew of no previous problems with the pipeline in the more than 20 years he has worked with the fire department. The pipeline dates back to 1950. Investigators from the safety administration, which regulates interstate pipelines, have said the pipeline’s operator is required to inspect it at least once every five years, with federal inspectors checking inspection records to ensure compliance. Federal records show 39 previous incidents since 2006 along the pipeline system that runs about 1,000 miles from Texas to Michigan. The safety administration earlier had no immediate information on any previous problems in the preserve section and didn’t immediately return calls Tuesday. The EPA on Tuesday referred calls to the administration. An official with the Ohio Environmental Council said the leak renews concerns over pipeline risks. “It seems that the industry and regulators are forever minimizing pipeline risks,” said Jack Shaner, the advocacy group’s deputy director. “First they tell us these pipelines can’t leak, then they tell us it’s only a small spill and now this.” He said there needs to be increased inspections, enforcement and accountability. Officials said any need for changes would be part of the investigation and ongoing discussion with the safety administration, but Shields said the company has “met or exceeded” all requirements. No problems have been detected with air quality or local water wells, but at least 13 small creatures —including crayfish, frogs and salamanders — contaminated with oil had died and more than 20 were being cleaned and cared for until they could be released back into the wild, said Bob Mason, stewardship manager for the Great Parks of Hamilton County system, which owns the preserve. Mason said he expects to find more dead creatures in the stream as cleanup continues.

Judie Perkowski Dix Communications

AMBRIDGE -- Pipelines are critical infrastructures in the United States. More than 2.4 million miles of pipeline provide 65 percent of our nation’s energy, which equates to approximately two million barrels of liquid product used daily and 21 trillion cubic feet of natural gas used annually. As the course of pipelines crisscross Ohio, it is important for anyone who is excavating, constructing or drilling to know where the pipelines are located, how deep underground and what product is being transported. For folks not involved in any gas and oil operation, the danger lies in digging into the ground for an addition to a house, erecting a flagpole, planting a tree, or any activity that requires breaking the surface of the ground. As the saying goes, “An ounce of prevention is worth a pound of cure.” The answer lies in one of many Pipeline Safety Awareness & Emergency Response programs presented free of charge. A total of 21 towns and cities around Ohio host the two-hour event on a Monday, Tuesday, Wednesday or Thursday. The Cambridge presentation of the program at the Pritchard Laughlin Civic Center earlier this month, attracted more than 200 participants. The program includes a free meal, either breakfast, lunch or dinner, depending on the time of the program, paid for by local pipeline and gas distribution companies. It also allows for two in-service continuing education units (CEUs). “Pipeline companies are required to hold safety awareness meetings to increase knowledge of safe digging, damage prevention to

underground utilities, and immediate response to pipeline emergencies,” said Sam Jerideau, program instructor for Paradigm Liaison Services. “Paradigm provides public awareness solutions to pipeline, transmission, gathering and distribution operators nationwide.” Highlights of the program provided important information about the purpose and reliability of pipelines, safety initiatives, type of products carried by pipelines, leak recognition and response, pressure hazards and emergency response basics. • Purpose and scope of the program was to identify responsibility and resources of government organizations who may respond to a pipeline emergency; acquaint officials with the operators’ ability in responding to a pipeline emergency; identify types of pipeline emergencies which require notifying emergency officials; and describes how operators and officials can engage in mutual assistance to minimize hazards to life or property. • Pipeline systems include: gathering lines where pipeline markers or clear rights-of-way may not be present; transmission lines where pressure, diameters and products vary; and distribution lines which are usually service lines found in residential areas. • PIMMA/NPMS — Pipeline Information Management Mapping Application is for additional information. It means you can find the location of pipelines. The National Pipeline Mapping System requires transmission pipeline and Liquid Natural Gas plant facility operators to submit mapping information and to update their submissions annually. Distribution and gathering lines are not included in the NPMS.

• Call the national one-call dialing number — 811 — before you dig. Visit www.call811.com for details. The mechanical equipment used to unplug sewer pipes can easily be punctured and lead to the dangerous release of natural gas. If you are having trouble with your sewer or think there is a blockage, make sure the natural gas utility serving your area is notified. • The U.S. Dept. of Transportation require the use of signs to indicate the location of underground pipelines. Markers are also posted along the pipeline right of way. There may be multiple markers in a single right of way, or have multiple pipelines in a single right of way. Markers tell what product is running through the pipeline, what company owns it, and an emergency contact number. Markers do not show exact location, indicate depth or pipeline pressure. • There is no set depth for pipelines, because depth is not constant. Erosion causes a change in depth, even at three feet. • Signs with only a number(s) indicates the number of miles of the pipeline, at that particular mark or spot. Other areas covered were explosive limits vs. percent of gas in the air; high consequences area, highly volatile liquids and underground storage facilities, and damage prevention. The Ohio Utilities Protection Service is the call before you dig notification center for the state of Ohio. It is a communication link between those who own and operate underground utility facilities

and those who plan on excavating the land. The OUPS is a free service, nonprofit that operates 24/7, 365 days a year. Things to remember: Call 811 or (800) 362-2764 for a remote ticket entry, either i-dig or e-dig, online at www.oups.org or O.U.P.S. mobile app. For more information about the Pipeline Safety Awareness & Emergency Response Programs, visit www.pdigm.com.

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KRON -- “Over the last couple years, our biggest growth market has been oil and gas,” James ‘Skip’ Anderson, director of sales and marketing, said about Skycasters, a satellite Internet service provider in

Akron. Skycasters has recently turned its eye to the gas and oil industry in Ohio. Because of the remoteness that some oil rigs find themselves working in, Anderson said that his company can offer important solutions. “The current setup of the oil and gas industry, with the way it has expanded exponentially in the last several years, we are able to put these rigs up above their new drilling techniques and at the rate of where they are finding these new plants they are building their structures in locations with little to no infrastructure with no power or phone. There is no cable. They are building rapidly and utilities can’t catch up,” Anderson said. “These sites need Internet access for email and other things like as they are drilling they are sending real time data back to their headquarters. That information needs to be able to flow back and forth,” Skycasters provides customize solutions for customers who can not get a signal for internet. Anderson said his company focuses on four major markets: disaster recovery, business continuity, remote businesses and gas and oil. Because of the recent boom, gas and oil is rapidly becoming the main consumer. Anderson said that it is exciting because he feels that the company has more potential in the industry. “We just scratched the surface. There are so many different aspects in the service area in the oil and gas industry that as we grow we are learning. We are trying to learn as much about their business as we can so we can find way to help our business. If it means Internet access to the rigs or for the employees, giving them the options they need to make their business successful is important to us,” he said. Anderson said that breaking into the industry was not necessarily hard, but recognized early that it was important

to gain trust. He says that the company’s retention rate is high when it comes to oil and gas customers because they are loyal to people who get the job done. Anderson feels that Skycasters has done that. “I think it was a little challenging initially because you have to earn their business. These guys are coming out here and they are moving so quickly and they have systems that they are used to from back home … They are not familiar with us as a company. We have to work pretty hard to earn their business. But once we earn it they very rarely leave. Our oil and gas customers rarely leave because we do what we say we are going to do,” Anderson said. Skycasters sells both goods and services. Along with providing the equipment so that a rig can receive internet, it also provides the internet service. The company can go and install the equipment too, but Anderson said that most of his business that relates to gas and oil send people to Akron to take classes. Skycasters offers training to become certified by the FCC to point their own antennas. The antennas that are used are complicated because they are both receiving and transmitting signals. Anderson said that if the antenna is pointed an inch off where it should be, it could mean the difference between hundreds of miles. Skycasters is another example of an company that is not in the gas and oil industry by nature but is profiting from it. To ensure they keep their place inside the industry, they are attending trade shows across the country. Not only do they want to promote their business, Anderson said that Skycasters employees are trying to learn everything they can about the business so they can provide solutions. “It gives us an exposure to their market. So we take the time to talk to them to learn their business. We don’t just try to sell them ours. We need to understand what they are doing and how they are doing it to make sure we have a method and our systems will interact properly and give them what they need when they need it most,” Anderson said.

CHESAPEAKE TO SPIN OFF SUBSIDIARY KLAHOMA CITY – Chesapeake Energy Corporation (NYSE:CHK) has announced plans to spin off its wholly owned subsidiary, Chesapeake Oilfield Operating, L.L.C. (COO), to Chesapeake Energy Corporation shareholders. COO currently conducts the operations of Chesapeake’s oilfield services division, Chesapeake Oilfield Services (COS). Immediately before completion of the possible spin-off, COO will convert into a corporation and change its name to Seventy Seven Energy Inc. The plan is available at sec.gov and cosus.com. Shareholders who want more complete information regarding the possible spin-off of COO, including the potential benefits and risks associated with the transaction, should consult the Form 10, which may be revised or updated in the future. Chesapeake intends for the spin-off to be tax-free to its shareholders for U.S. federal income tax purposes, other than with respect to any cash received in lieu of fractional shares. To that end, Chesapeake has obtained a private letter ruling from the Internal Revenue Service and expects to obtain an opinion of tax counsel regarding the tax treatment of the spin-off.

PICKENS TEAMS WITH ENGINE MAKER ASPER, Wyo. (AP) - T. Boone Pickens is teaming up with a family-run Wyoming business hoping to become the nation’s largest maker of natural gas engines for drilling rigs. The Texas millionaire’s energy hedge fund, BP Capital, is partnering with Casper-based Moser Energy Systems to create a new company - Mesa Natural Gas Solutions. The Casper Star-Tribune reports that Moser will continue making the engines and Pickens’ fund will promote them. Pickens joined Moser executives in announcing the joint venture

Wednesday at its new building in Evansville. He says 95 percent of drilling rigs are powered by diesel engines but Moser’s engines are a cheaper and cleaner domestic alternative. Moser’s engines convert raw natural gas from oil drilling sites into fuel for the engines, eliminating the need to haul diesel to the sites. OKLAHOMA GIVING ASSISTANCE TO FORMER SAN DRIDGE CEO KLAHOMA CITY (AP) - The Oklahoma City Economic Development Trust is considering $1.45 million in incentives for Tapstone Energy as the company plans to establish a new headquarters in Bricktown. The company now employs 35 people. The new headquarters would create 150 new jobs over the next five years. According to The Oklahoman newspaper, the new jobs would pay an average annual salary of more than $146,000. An application for the funds estimates that the new headquarters would have a total economic impact of more than $100 million. The oil and natural gas company was founded by Tom Ward, former SandRidge Energy Inc. CEO and co-founder of Chesapeake Energy Corp.

FORMER EPA OFFICIAL: FRACKING TRANSPARENCY VITAL IDDLETON, Wis. (AP) - Controversies over the fracking process may be inevitable, a former administrator with the U.S. Environmental Protection Agency acknowledged recently, but Wisconsin can protect its place as the leading supplier of sand for the nation’s fracking boom as long as the state has strong regulations, maintains maximum transparency and responds quickly to neighbors’ concerns.

J. Winston Porter, an energy consultant and fracking proponent, held the No. 2 spot at the EPA under presidents Ronald Reagan and George Bush from 1985 to 1989. He spoke at a business convention in Middleton last week, where he said that even if fracking controversies are inevitable, they can be minimized. “I don’t think sand, per se, is terribly dangerous,” Porter said. “But it’s still mining. If you go to my backyard acreage and you dig giant holes and just leave them there, it’s not good. So it’s going to need to be looked at.” Sand mining has expanded in western Wisconsin along with the boom in hydraulic fracturing, or fracking. The process involves extracting oil and natural gas by using a high-pressure slurry of sand, water and chemicals. Wisconsin’s sand grains are prized for their hardness and spherical shape. Winston said the best way to keep the peace is for state regulators and fracking companies to maintain a policy of maximum openness, the Wisconsin State Journal reported (http://bit.ly/1i7cjzT). Sand-mining operations also need to respond quickly to nuisance issues, he said. That could include avoiding neighbor complaints by keeping noise, dust and traffic levels under control.

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AMBRIDGE -- Everyone is welcome to celebrate eastern Ohio’s natural resources at the Cambridge Area Chamber of Commerce premier event of the year, the Friends and Family Fest — A Shale-abration — at the Guernsey Çounty Fairgrounds, from 9 a.m. to 7 p.m. Saturday, May 10. FREE admission, food vendors and fun, games and entertainment for all ages. The first major event in Guernsey County where the public will be able to get first-hand information from major players in the gas and oil industry such as EQT Corp., Eclipse Resources, Union of Operating Engineers International, American Energy Partners, OKKI Energy, Carrizo, Buckeye Water Service and Albert’s Spray Solutions. Food vendors are encouraged to line up a spot for this huge oneday event. All food vendors will have access to water and electric hook-ups. The entire family can visit the Ohio Oil and Gas Energy Education Program’s MEET-U (Mobile Education Training Unit) to learn more about Ohio’s energy history, development and modern uses of energy. OOGEEP is a non-profit statewide education and public outreach program created in 1998 to provide insight and information through a variety of programs about gas and oil, the most exciting

phenomena to happen in Appalachia in decades. In addition to OOGEEP, Energy in Depth Ohio, Ohio Oil & Gas Association and the Southeastern Ohio Oil and Gas Association will be there to help celebrate and explain oil and gas development and dispel myths and rumors. Exhibitors will be on hand with informational handouts and company representatives to answer your questions. Local, regional and national sponsors include Buckeye Well Site Services, Muskingum Watershed Conservancy District, Salt Fork State Park, Century National Bank, Cambridge Guernsey County Visitors and Convention Bureau, Wampum Hardware Co. and Business Technical Services. Platinum, Gold, Silver and Bronze sponsorships still available. Media partners, who are working hard to promote the event, include Ohio GAS&OIL magazine, The Daily & Sunday Jeffersonian, WWKC105 Kickin’ Country radio, Shaledirectories.com. AVC Communications, For more information, call the Chamber office at (740) 439-6688 or visit infocambridgeohiochamber.com or www.cambridgeohiochamber.com. The Cambridge Area Chamber of Commerce is at 607 Wheeling Ave., Cambridge.

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OLUMBUS — Strong bipartisan majorities of registered Ohio voters support increased investment in energy infrastructure, according to a new poll that API-Ohio is unveiling as part of a campaign highlighting the voices of Americans. “Today’s poll shows strong majorities of Ohio voters support more domestic oil and natural gas development, regardless of party affiliation,” said Christian Zeigler, executive director of API-Ohio, “Forward-looking policies that allow the United States to capitalize on its bright energy future are imperative for this nation to realize its job creation and economic potential. “The people of Ohio get it; America’s economic future, the availability of affordable and reliable energy, depends on the policies created today.” The American Petroleum Institute (API) and API-Ohio will use social media, advertising and API’s grassroots resources of more than 24 million Americans to communicate the importance of America’s energy future to members of Congress, the administration and elected officials at every level of government. The state-wide telephone poll, conducted for API by Harris Poll among 600 registered Ohio voters also found that: 90 percent of registered Ohio voters agree that increased production of domestic oil and natural gas resources could lead to more jobs in the U.S. 89 percent say that increased development of the country’s

energy infrastructure is good for American consumers. 87 percent say increased production of domestic oil and natural gas resources could help stimulate the economy. 79 percent say that producing more domestic oil and natural gas could benefit federal and state budgets through lease payments, royalty fees and other sources of revenue. API-Ohio is a division of API, which represents all segments of America’s oil and natural gas industry. Its more than 600 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy.

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“We’re having more English-as-a-second-language students,” YESVILLE — The gas and oil industry resurgence in Guernsey County has made it- Caldwell said. “We’re becoming more diverse. It’s exciting self felt in the buildings of the Rolling Hills times. We appreciate the gas and oil industry and we hope they Local School District, school officials reported on find Rolling Hills as a home base at some point.” March 20. jlowe@daily-jeff.com “Since the beginning of the school year, we have had 51 admissions and 46 [students] move out,” Secrest Elementary Principal Jim Bakos said. “That’s a lot of movement. It’s the most I’ve seen in my 41 years [as an educator].” The effects go beyond the classroom, said Dave Lashley, supervisor of buildings and grounds and of transportation. “As students move in and out, our bus routes are changing daily,” said Lashley, adding that drivers have been adjusting well. Superintendent Ryan Caldwell said the situation is not unique to Rolling Hills, but is manifesting in all of the districts in the county. “Sometimes it’s good. Sometimes it’s bad. But we’re students ahead of where we were last year,” he said. Many of the new students, because they are in families associated with the gas and oil industry, are transient, staying for perhaps a month and then moving on.

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alifornia recently established the most stringent energyextraction restrictions in the nation. As the CEO of a natural gas firm, you probably think I vigorously opposed these rules. You’d be wrong. In fact, California’s new law is a welcome step in the evolution of the American energy market. One of the biggest inhibitors of energy development in this country is regulatory uncertainty. By creating smart and streamlined rules, California has eliminated that uncertainty and established a sturdy legal foundation for future exploration and extraction. Other energy-rich states should follow suite and pass legislation of their own. Hydraulic fracturing -- “fracking” for short -- has enabled access to vast underground reserves of oil and gas that were once wholly unreachable. That’s huge for California, which is home to a 1,750-square-mile shale formation. Based on calculations by the Energy Information Administration, this formation alone could bear up to 64 percent of the United States’ shale oil reserves. But until energy development rules were clearly defined, California couldn’t meet its colossal potential. This new legislation opens up this remarkable resource for responsible exploration, setting an example for other energy-rich states. California will now require energy companies to obtain permits before fracking. Firms are also required to disclose what chemicals are used in the process, as well as what impact they’d have on the environment. Thanks to these forward-thinking rules, California could well become America’s biggest oil producer within the decade. And keep in mind that the United States overall is on track to become the biggest oil producer on the globe by 2015. Now that oil and gas can be properly harvested, the state tax revenue alone will likely add up to $4.5 billion. Meanwhile, shale development will add $10,000 to per-capita economic activity. Fracking will also create 2.8 million jobs by 2020, according to a recent estimate by the University of Southern California. And unlike Silicon Valley, these opportunities wouldn’t only be for high-skilled, highly educated people. Entry-level energy jobs can easily pay $80,000 a year or more, and they often require no more than a high school diploma. Other states can reap similar rewards by passing similar rules. Right now, fracking isn’t federally regulated, and state laws vary erratically. Kansas has no laws. Pennsylvania has strict ones. New York has imposed a temporary fracking moratorium.

Vermont and New Jersey outright forbid the practice. Would-be energy investors are scared off by these variant polices. And they’re justifiably wary about new regulations being based on a capricious public’s vague impressions of fracking rather than good science. California’s new law is all the more notable given the staunch opposition to fracking in the Golden State. More than half of all residents have reported they’re against expanding the practice, according to the Public Policy Institute of California. Opponents have typically cited environmental concerns. These fears have proven wildly unfounded. Take, for instance, the claim that fracking contaminates groundwater. Though it’s a popular complaint among green activists, none other than Lisa Jackson, the former head of the Environmental Protection Agency, was forced to concede to Congress that there are “no proven cases where the fracking

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process itself has contaminated groundwater.” Likewise, last April, U.S. Energy Secretary Ernest Moniz said he had “still not seen any evidence of fracking per se contaminating groundwater.” And a study last year from the U.S. Geological Survey reported “no significant effects on groundwater quality from shale gas development.” The much-demonized fracking fluid is often 99.95 percent water and sand. And the “chemicals” purportedly being pumped into the earth are positively harmless -- Halliburton’s CEO even drank fracking fluid at a recent Colorado Oil and Gas Association conference. Fears about air pollution as a direct result of fracking have also proven to be without scientific basis. New “completion” technology captures and controls 99 percent of the emissions from fracking sites. And when the University of Texas at Austin conducted the most comprehensive fracking-emissions study to date, collecting data from 190 sites, it found that the EPA had overstated methane leaks by about 20 percent in its most recent estimate. That estimate had already been revised downward from previous, higher calculations. California’s new energy law should serve as a regulatory blueprint for other states looking to reach their full energy potential. Without clear and predictable rules, states will continue to squander their natural resources -- and that’s an economic travesty.

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plaints about the number of local jobs. In 2010, one union leader told a Pennsylvania House Labor Relations Committee that local people had little or no success in getting work from the industry. And even now some powerful unions are withholding judgment. Anthony Montana, a spokesman for the United Steelworkers, declined to comment on how much drilling is helping that industry. But others say the trend toward more local jobs is clear. Mike Engbert of the Ohio Laborers District Council said that while some companies still use a lot of out-of-state labor, “Across the board, job gains have really shot up.” For some, the drilling-related work is a big improvement over low-wage service jobs. “I’ve probably worked 15 jobs, and none of them nearly as stable as this one, or nearly as interesting,” said Amy Dague, 38, of Wheeling, W.Va. She’s worked for a pipeline construction and maintenance company for a little more than a year. “It’s definitely changed the way I see my future. I see this as long-term employment,” Dague said. Some energy companies say they’re hap py with local workers, too. Matt Pitzarella, a spokesman for Range Resources of Fort Worth, Texas, wrote in an email: “We are in need of reliable, consistent, quality work at a reasonable price and the local trades have stepped up in a significant way.” Some environmental groups worry that what’s happening in the region is a repeat of the battle over the Keystone XL pipeline, when some major unions and green groups took opposite sides. Penn Environment has called for much stronger regulations and a ban on drilling in some areas, such as state forests. “I understand the dynamic at play. It feels fairly short-sighted,” Masur said of how workers and unions are embracing oil and gas drilling. “This could leave the same sort of legacy as coal.” He urged more investments - and thus jobs- in wind and solar power.

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ITTSBURGH (AP) — After early complaints that out-ofstate firms got the most jobs, some local construction trade workers and union members in Pennsylvania, Ohio and West Virginia say they’re now benefiting in a big way from the Marcellus and Utica Shale oil and gas boom. That vocal support from blue-collar workers complicates efforts by environmentalists to limit the drilling process known as fracking. “The shale became a lifesaver and a lifeline for a lot of working families,” said Dennis Martire, the mid-Atlantic regional manager for the Laborers’ International Union, or LIUNA, which represents workers in numerous construction trades. Martire said that as huge quantities of natural gas were extracted from the vast shale reserves over the last five years, union work on large pipeline jobs in Pennsylvania and West Virginia has increased significantly. In 2008, LIUNA members worked about 400,000 hours on such jobs; by 2012, that had risen to 5.7 million hours.Nationally, the Bureau of Labor Statistics says total employment in the nation’s oil and gas industry rose from about 120,000 in early 2004 to about 208,000 last month. Less than 10 percent of full-time oil and gas industry workers are represented by unions. Alex Paris, head of a Pittsburgh-area contracting firm founded by his grandfather in 1928, said many of the jobs in the early years of the boom went to out-of-state workers, perhaps because the biggest drilling firms come from Texas and Oklahoma. Now there’s been a shift to hiring local contractors that use union labor. “It has created more work for our business. There’s jobs here for the first time in many, many years. Legitimate, good-paying jobs,” Paris said of a region that was hit hard by the decline of the steel industry in the 1980s and ‘90s. The increasing use of union construction labor has given energy companies a powerful ally as drilling is debated in communities nationwide. Many Republicans have been pro-drilling, but now some unions traditionally associated with Democrats are using their political clout to urge politicians to reject bans on pipelines or drilling. For example, LIUNA has urged members of Congress to support liquefied natural gas exports and regional gas pipeline expansions, and union members plan to participate in a pro-drilling rally in Pennsylvania’s capital next month. “The unions are powerful and influential,” said David Masur, director of Penn Environment, which has been critical of the drilling boom. The Marcellus and Utica shale fields, rich in natural gas and oil, lie deep underneath large parts of Pennsylvania, Ohio and West Virginia, and more than 6,000 new wells have been drilled there over the last five years. In the early days of the shale drilling boom, there were com-

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Frank McClure Attorney

have had a number of clients ask me if insurance is enough to protect their real property interests and specifically their oil and gas interests. I agree that insurance should be your first line of defense, but is it enough? In many cases in order to achieve proper asset protection, insurance must be used in conjunction with a proper legal entity, such as a Limited Liability Company (LLC). The question becomes “does the insurance I have or what I can buy, sufficiently protect my assets?” The problem becomes holding title to the property personally; any lawsuit can make you personally liable. Not only is the real property interests at risk but so is every other asset that you own in your individual name at risk as well. Unfortunately, the legal system in our country is now viewed with a lottery mentality and new lawsuits are filed at a staggering rate of one new lawsuit every 1.5 seconds. It is no wonder that it takes an average of two years from the time the case is filed to reach the trial date. Now that you are sued personally, you have to hire an attorney out of your own pocket to cover the defense costs. There is a saying among defendants that goes “Even when you win, you lose.” Even if you have significant financial resources to cover the tens of thousands of dollars it will cost to defend the lawsuit, and even if the court enters a judgment on your behalf, it is still tens of thousands of dollars out of your pocket. Therefore 98% of all lawsuits filed end up settling before going to court. You as the defendant obviously want to minimize your loses so it often makes sense to settle because our nation’s juries are treating these cases like lotteries. What is the answer to all of this? I would suggest that the answer would be, implementing a proactive solution. At this point you should be asking what the proactive solution is. Remember if you hold all of your property in your individual name, you have everything to lose in a lawsuit. The first course of action is to immediately minimize risk exposure, which is minimized by transferring the titles of the most risky properties into a business entity that provides liability protection. These business entities include corporations, limited partnerships and limited liability companies (LLC), with the LLC being the main choice in more and more situations. Each of these entities have different levels of protection and different tax implications depending on the type of property the entity holds, but that discussion will have to wait for another day. The purpose of using a business entity is to contain the risk exposure inside of the business entity itself. The problem with holding assets personally is that there is no legal way for you to separate yourself from your risky property; therefore, any harm associated with the property can potentially risk all of your personal assets. If a business entity is properly created and maintained, there is a layer of separation between you, the person who owns the entity, and the activities of the business or property owned by it. Courts have been extremely reluctant to allow liability exposure from a business entity to attach to the personal assets of the owner of the entity. This level of protection has been maintained not only via state statutes but in court cases over the last two centuries. The government wants to promote businesses development and this is achieved by not making businesses owners personally liable for harms arising out of the business. There are cases where the “veil” is pierced by actions of comingling assets, fraud, gross negligence and failure to follow formalities, but as a whole the owners are well protected if the owners acted as reasonably prudent persons. So let’s try putting this all together. A business entity alone will not guarantee liability protection if the business does not operate in a reason-

ably prudent fashion. What is reasonably prudent for a business holding real property? First step is having adequate insurance. Just as individuals need to carry insurance, the business entity needs to also carry insurance to minimize its losses. Just as insurance is not a substitute for business entity, the business entity is not a substitute for insurance. There have been cases where the “veil” was pierced resulting in an injury on the business property because the business did not have insurance. You may be wondering “why even bother setting up a business entity, say an LLC, if a lawsuit can still occur?” Real property can never be protected from harms arising from the property itself. However, you the owner must be proactive to insure that the harm does not wipe out everything else that you own and have accumulated over the years. The use of a business entity in conjunction with insurance helps to insure that if the harm exceeds the insurance coverage, you the owner, only have that particular real property at risk and not all of your other personal assets as well! It is important to think this through with an attorney who concentrates their practice in the estate planning area with emphasis on asset protection. This may involve what I call the bubble in the box. The LLC is the bubble and an irrevocable trust (IRT) is the box. The LLC protects you from the risk of something happening with the property owned by it and the IRT protects the property from a judgment creditor attacking your property from outside the bubble. For more information about this and more, please go to our website at www.fmcclurelaw.com.

May 8th at 1:30 May 22nd at 1:30

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