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Gas & Oil

November 2013 Edition - Dix Communications

Table of Contents 4

Zane State’s New Training Center

Surges Lessens Unemployment John Lowe / Dix Communications

Tip of the Iceburg

Drilling Down - Part 4 of 4 part Series

Pipeline Has Secured Land

Road Agreement

Moving Forward, In Limited Fashion

We Have A Lot of Growing To Do

Utica Shale Joint Venture

Asset Protection

Looking For a Big Payday

Chesapeake Energy Restructuring

Powerup School Challenge

First Ohio Well

OOGEEP Coordinates Education

Shift of Industry to Ohio

Favede Representing Ohio at Shale Conference

Judie Perkowski / Dix Communications

Laurie Huffman / Dix Communications Dylan Lovan / Associated Press

Cathryn Stanley / Dix Communications Laurie Huffman / Dix Communications

Cathryn Stanley / Dix Communications

Frank McClure / Attorney

Lisa Loos / Dix Communications Laurie Huffman / Dix Communications

Lisa Loos / Dix Communications

Linda Hall / Dix Communications Laurie Huffman / Dix Communications

Southern Zone Edition

PUBLISHERS Andrew S. Dix Northern/ Southern Zone ASDix@dixcom.com G.C. Dix II Southern Zone GCDixII@dixcom.com David Dix Northern Zone DEDix@dixcom.com

EXECUTIVE EDITORS Ray Booth Southern Zone RBooth@dixcom.com Rob Todor Southern Zone RTodor@dixcom.com Lance White Northern Zone LWhite@dixcom.com Roger DiPaolo Northern Zone RDipaolo@dixcom.com

REGIONAL EDITORS Cathryn Stanley Southern Zone CStanley@dixcom.com Niki Wolfe Southern Zone NWolfe@dixcom.com Judie Perkowski Southern Zone JPerkowski@dixcom.com Kimberly Lewis Northern Zone KLewis@dixcom.com Erica Peterson Northern Zone EPeterson@dixcom.com

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COVERAGE AREA OTTAWA

MARION

ARE UNION DELAWARE GN

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LICKING FRANKLIN LIN

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PERRY

ROSS

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HARRISON

MONROE

WASHINGTON ATHENS

MEIGS

NORTHERN ZONE SOUTHERN ZONE PIKE

JACKSON

Energy Council Reaches Agreement

Welding Binds Education, Industry Together

Budget Provision Helps Officials Track Industry

Willbros Donates Grill to Sheriff

Kent Professor Studies Gas/Oil Industry

New Program to Help Train

Suit Filed Over Sale of MWCD Water

Litigator Speaks at Buckeye STEPS Meeting

50th Anniversary

Keeping it Green

The Language of Oil and Gas

Clean Fuels Ohio Hosts Natural Gas Vehicle Learning Event

EQT Manager Offers Advice for Job Seekers

Halliburton Bringing Jobs to Muskingum Co.

Devco Donates Shirts to School

Hartley Co. Ponders CNG Options

Chuck Keiper / Northeast Ohio Public Energy Council Alison Stewart / Dix Communications

Marc Kovac / Dix Capital Bureau Thomas Clapper / Dix Communications

Judie Perkowski / Dix Communications

Judie Perkowski / Dix Communication

Bobby Warren / Dix Communications

Daniel Plumley / Attorney

Judie Perkowski / Dix Communication

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Judie Perkowski / Dix Communication

Gas & Oil

November 2013 Edition - Dix Communications

Southern Zone Edition

Zane State’s new Education/Training Center taking shape, adding new classes Judie Perkowski Dix Communications

f you haven’t been to the Zane State College campus in Cambridge lately, take a drive down 209 to Brick Church Road just to admire the ongoing construction of the 37,000 square-foot addition to the facility, connected by a skywalk to the college’s Willett Pratt Training Center. The new Education and Training Center will open for classes in January 2014. The college’s main campus in Zanesville is also benefiting from the “Building a Vibrant Community Campaign” with similar improvements including an Advanced Science Technology Center. To add to the college’s innovative Oil and Gas Engineering Technology Program, the outdoor land lab on the Cambridge campus, is by all accounts, the first of its kind in the state of Ohio to offer students a hands-on experience with oilfield equipment and machinery, most of it donated by local businesses and several oil and gas companies. All the excitement doesn’t end at the physical structures on both campuses, it is what is going to happen inside those structures that is the real reason for their existence — enabling students to learn and/or improve skills for long-term employment in a high energy industry. New developments in oil and gas education at Zane State Cambridge Campus: • Advanced Production course taught by Paul Paslay, oil/ gas engineering instructor, is a new course that will be offered in the spring semester in 2014. The course will cover a number of well optimization topics that students have not seen before, increasing their knowledge of what will be the longest-lived segment of the oil and gas industry. The course will include topics relevant to this area, such as hydraulic fracturing design, well completion, an artificial lift system, secondary and tertiary production and the difference between wet and dry gas production. Paslay said the plan is still in development and will be ready for the spring semester. • Classroom technology: The college received a grant from

Dominion East Ohio to acquire a natural gas compressor for classroom instruction in the oil /gas program. The college is working with ACI Services, Inc., and Ariel Corp. to obtain and create a cutaway view of the internal elements of a natural gas compressor. • Commercial Driver License Program: The first class will begin in late October. College officials are working with local job centers to help potential students obtain financial assistance to help pay tuition. Buckeye Water Service is loaning a rig to assist students in stationary safety checks and systems training; and Putnam in Zanesville donated a trailer for tractor/trailer connection training. Classes start every month, register now by calling (740) 5881207 or (800) 686-8324, or online at CDL@ZaneState.edu. • Oil/gas Land Lab, second phase, taught by Robert Stonerock, oil and gas engineering technology instructor, focuses on “pigging.” PIGS are Pipeline Inspection Gauges. One type of PIG has brushes attached for cleaning out pipelines, another type of PIG is called a “smart” PIG, which shoots through pipeline looking for leaks, wear, damage or any malfunction. A PIG launcher is installed to place a PIG in a pipeline; a PIG receiver or catcher is a short section of pipe connected to the pipeline to capture a PIG. Stonerock said the launcher will be installed after engineering problems are solved. The PIG is made by an Oklahomabased company, T.D. Williamson, who donated two PIGs to the school. He said the college’s new acquisitions, courses and programs should bolster attendance. There are currently 14 students enrolled in the two-year oil and gas program, ranging in age from early 20s to 62. Stonerock said he receives phone calls “daily,” from people connected to the oil and gas industry, looking for people (students) who have acquired some knowledge in a particular field to be able to actually work in an oil field, or in some capacity in the industry.

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Robert Stonerock, r, oil and gas engineering technology instructor and project innovator at Zane State College, holds a small PIG and the plastic tubing which will be used to demonstrate the PIGs purpose in the oil and gas industry, to students enrolled in the college’s Oil and Gas Engineering Technology Program. PIG is an acronym for Pipeline Inspection Gauge. Paul Paslay, l, also an oil and gas engineering technology instructor at Zane State, will teach a new course on advanced production in the oil and gas industry, one of the classes which will be held in the college’s new Education and Training Center when it opens in January 2014.

“That is a real problem. You would hope these students would want to stay and earn a two-year degree, but many of them are anxious for a job, and if one is offered, they jump at the chance, especially the men who have families to feed ... And, you can’t blame them,” said Stonerock. But, the jobs are not limited to men. Stonerock said he has one woman in the program, who along with another student will graduate from the baccalaureate program in December. Students have also benefited from membership in the Zane State Chapter of the Society of Petroleum Engineers recently enacted on the Cambridge campus, sponsored by the Chevron Corporation. For more information about the Oil and Gas Engineering Technology Program, call Zane State Cambridge Campus at 740-432-6568, or Zanesville Campus at (740) 454-2501.

November 2013 Edition

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November 2013 Edition

Industry surges lessens unemployment John Lowe Dix Communications

AMBRIDGE — Credit the gas and oil industry for easing the unemployment rate in Guernsey County. According to information released by the Cambridge-Guernsey County Community Improvement Corporation, the industry is largely responsible for reducing the unemployment rate by nearly half from its rate at the beginning of 2010. “We know that just eight of these companies have committed to or generated 1,165 jobs,” CIC Executive Director Norm Blanchard said. “That makes it safe to estimate that, altogether, the 30 organizations have provided more than 2,000 jobs.” Blanchard agreed that some of those jobs are filled by “imported” workers. “But local hiring also has been brisk,” he said. “Guernsey County’s unemployment rate has fallen from a high of 14.7 percent in January 2010 to 7.8 percent in July of this year.” Leading the hiring has been companies such as Energy Con-

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struction Management and GoFrac. However, the CIC has assisted more than 30 well service companies in selecting sites locally for their businesses. Each of those companies have created from 10 to 40 jobs, Blanchard said. “The influx of energy industry workers — along with increased disposable income by our local population — has spiked tax revenues,” he said. “That, in turn, has allowed the county government to restore funding to previously undersupported county agencies. It also has enabled the commissioners to institute new funding initiatives to support the Sheriff’s Office and other vital industries.” The energy industry has paid millions of dollars to county residents in lease and royalty fees, Blanchard said. “Those in the industry advise us weekly that we have not even begun to feel the impending impact.” jlowe@daily-jeff.com

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Gas & Oil

November 2013 Edition - Dix Communications

Tip Of The

Southern Zone Edition

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AMBRIDGE — Unless you do not have a mailbox, you have probably been inundated with post cards and letters telling you it is time to compare your monthly AEP electric charges with those offered by First Energy. Similar promotions are also appearing throughout Ohio offering a choice of energy providers. “Welcome to the 21st Century,” said Dale Arnold, director of Energy, Utility and Local Government Policy at the Ohio Farm Bureau Federation. “We are starting to see the tip of the iceberg, what’s coming down the line, in regard to energy options in the not-too-distant future.” Arnold, guest speaker at the Guernsey Energy Coalition October meeting at the Southgate Hotel in Cambridge, was introduced by Jo, Sexton, president of the Cambridge Area Chamber of Commerce and sponsor of the monthly event. The days of accepting a bill from the electric company or provider to get us from Point A, the actual energy source (coal, natural gas, etc); to Point B, the actual electricity provider (AEP, First Energy, etc.), are on the brink of coming to an end ... in less than a decade, at the very least. Arnold says the only way we are actually involved in the process of determining how much electricity we need or want, and who will be the provider, is by flipping the switch to the ON position. “The onus is on us — the consumers — farmers, businesses, big and small educational institutions and individuals,” he said. “We are all going to be involved in determining our energy needs, and who is going to be our energy provider.” According to Arnold, energy costs are second only to labor costs for many farms and businesses. Residential consumers are also looking for ways to lower their energy bills. “Energy costs are determined by risk management policies. In order to control costs consumers must be given a ‘tool box’ of information to understand the policies, programs and strategies that can help control electricity costs,” he said. “Energy generation, infrastructure and transmission are all being restructured to be more efficient and to lower costs. Everything is happening at a rapid pace, efficiently, economically and environmentally, all at the same time. Rules and regulations are

changing to include technology advancements. And not just because of gas and oil development. Wind and solar power are also increasing their presence in certain markets. “Northwestern and central Ohio is the center of wind technology ... And, the largest solar development in Ohio is between Cincinnati and Dayton. And shale ... shale has literally taken over my life. “Pipeline development [midstream operations], which includes capacity and transmission systems are being restructured. “Power grids are being re-configured to control the loss of energy by slowing down the supply at off-peak usage times and increasing availability during peak usage times. AEP’s two-way digital readers will replace old, analog readers, and they are coming soon to Cambridge. “Your farm or business is unique in regards to energy needs. Choice and inter-connection options (such as aggregations) provide consumers opportunities to generate savings and cost control,” said Arnold. “Smaller consumers (business and individuals) can join aggregated pools to maximize savings.” Community based aggregations have been legal in Ohio since 1999. “Successful aggregations are established through an educational process that involves technological, environmental and social issues. Education and outreach is the key,” he said. “Don’t be in a hurry to make a decision, or to sign up with a provider. You have plenty of time to research and formulate questions for any provider or program to answer.” Some of the questions you should ask before signing on with any program or service provider: Does your utility offer customers a program choice; is the program approved by the Public Utilities Commission of Ohio and approved by a Certified Retail Electric Service provider; does the program offered have a contract cancellation clause, and/or “switching” fees; what is the duration of the contract and is there an opt-out clause; is the contract renewable; who is sponsoring the program, local government, or is it endorsed by business; what additional benefits does the program provide; do they do audits; who has negotiating power, and what

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November 2013 Edition

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November 2013 Edition

Drilling DOWN

ODNR ADdresses Part 4 of 4 part series Laurie Huffman Dix Communications

he public’s concern about possible wa- designed for this type of waste disposal. ter contamination resulting from Ohio’s Maps of the locations of Class II Injection Wells are found underground injection well operations is on the ODNR website, at www.ohiodnr.gov. something the Department of Natural Resources Also, anyone with a question about injection well disposal is takes seriously. Public meetings are held periodically to ad- invited to send an email to oilandgas@dnr.state.oh.us. dress these concerns, and during one such meeting in Portage County Tom Tomastik, a geologist for the DNR’s division of Oil and Gas Resources Management, spoke on the subject. He said Ohio law regulates Class I, hazardous waste, and Class II injection wells, which are used by the oil and gas industry. “In Ohio, Class II Injection Well sites have three layers of steel casing to protect the water,” said Tomastik. In addition, he said Class II sites require, by state regulations, continuous monitoring of the maximum surface injection pressure. Surface injection pressure is set by a formula, and can be adjusted. Also, unannounced inspections are conducted on these sites every 11 to 12 weeks or more. CenturyNationalBank.com “These regular inspections are used to check injection pres740.454.2521 sures and the integrity of the of the injection well, and to look for pipeline leaks,” said Tomastik.“Failures of injection wells is typically in the tubing area. But, the tubing is still surrounded by multiple layers of steel casing and cement. So, there is no threat to the water.” The ODNR states the natural gas and drilling process creates oilfield wastes, often called brine, that are composed of fracturing fluid or flowback. As defined by the U.S. EPA, only oilfield wastes may be transported from drilling sites and injected into Class II deep injection wells, which are specifically

“In Ohio, Class II Injection Well sites have three layers of steel casing to protect the water,” – Tom Tomastik

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November 2013 Edition - Dix Communications

Dylan Lovan Associated Press are involved in allowing a pressurized hazardous materials pipeline to be installed on your property,” Fitzgerald said. Fitzgerald said signing an easement deal could have tax implications and may affect a property owner’s mortgage agreement and insurance. Last month, state officials declared during a hearing before a legislative committee that the pipeline builders would not be allowed to invoke eminent domain law if certain landowners along the proposed route are unwilling to cooperate. Company officials maintained that businesses do have the authority to use the law to obtain right of way if necessary. The company has said the easement deals would be onetime payments to landowners.

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OUISVILLE, Ky. (AP) — A company planning to build a natural gas pipeline in Kentucky says it has secured land-use deals in parts of nine counties along the pipeline’s proposed path. Officials with the Bluegrass Pipeline say they have reached easement agreements with private landowners in nine of the 13 counties along the proposed route. The entire 500-mile pipeline route also stretches through Ohio and Pennsylvania. A spokesman for the Williams Co. of Oklahoma, one of the energy firms behind the project, said he did not know how many miles of the proposed route in Kentucky have been secured. The path would bypass two properties owned by Roman Catholic communities in central Kentucky. Last month, the company said it would stay well north of the 780-acre tract in Marion County owned by the Sisters of Loretto. Williams spokesman Tom Droege said Tuesday that the company is looking for a route around the 2,500-acre property owned by the Abbey of Gethsemani in Nelson County. Droege said the monks who live at the abbey have refused to allow surveyors on their land. “We’ve respected their wishes and pursued other routes,” Droege said. The company is expecting to spend $30 million to $50 million on the 50-foot wide easements purchases in Kentucky, according to an informational letter from Williams Co. manager Rob Hawksworth that was given to The Associated Press. The company is also currently securing easements in Ohio, Droege said. The sisters in Marion County have joined environmental groups and local residents in opposing the project, which would build a 24-inch thick underground pipeline to carry natural gas liquids from the northeast to an existing connection in Kentucky that runs to the Gulf of Mexico. The liquids are a byproduct of the natural gas refining process that is used to make consumer products such as plastics and carpet. Tom Fitzgerald, director of the Kentucky Resource Council, an environmental lobbying group, said landowners who are considering an easement deal should consult an attorney first. “You will inevitably regret it if you sign on the dotted line before you have a chance to consider a number of issues that

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November 2013 Edition - Dix Communications

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November 2013 Edition

Cathryn Stanley Dix Communications

ARNESVILLE — Damage to village streets and private sidewalks from heavy load truck traffic through Barnesville prompted a discussion about re-visiting the possibility of implementing road use agreements. At the Oct. 7 Barnesville Village Council meeting, Administrator Roger Deal informed council about a recent incident in which a driver hauling a large load caused extensive damage to a sidewalk at the intersection of SR 800 and Leatherwood Pike. Deal said the driver, who was from Texas, had become lost while following a convoy of trucks down 800 South, headed to Summerfield. When Deal questioned why the trucks were coming through Barnesville, he learned that the Ohio Department of Transportation has been routing drivers through the village due to weight limits on state route and interstate bridges. Deal said he had been previously unaware of ODOT’s “looping” of traffic through the village. Deal said a copy of the full police report from the incident would be sent to ODOT and the trucking company. He said another company that was sending three loads through Barnesville on a Tuesday had called ahead on Monday and sent a scout to make sure the trucks could navigate the route. Deal said the village would work with the caller to make sure they could proceed. “It [truck traffic] is definitely becoming a problem,” Deal said. Village Economic Development Director Bill Knox said

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perhaps it was time to re-visit the idea of implementing a road use agreement that council discussed approximately 18 months ago. “Some communities are profiting to the tune of thousands of dollars to repair their streets,” Knox said. Knox said the village had worked with a county employee to develop a road use agreement. Former mayor Tom Michelli noted that Harrison County had a road use agreement. Knox suggested that the street, alley and sidewalk committee meet to discuss the matter. Councilman Tony Johnson said that at the time of the previous discussion, council was more concerned about the weight of the vehicles. Knox said the size of the loads was now also a concern.

“It [truck traffic] is definitely becoming a problem.” – Roger Deal Councilman Terry McCort noted that when oil and gas companies first began coming to the area, Belmont County Port Authority Director Larry Merry had suggested that “before and after” pictures be taken of village streets to help document the damage.

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Gas & Oil

November 2013 Edition - Dix Communications

Moving Forward, In limited Fashion

Laurie Huffman Dix Communications

ouisville’s city manager, Tom Ault, met with officials from Chesapeake Energy on Oct. 9 regarding the Utica field office that is currently under construction between Route 44 and Beck Avenue. Ault noted the project is moving forward, but he said the original plans included an office building, maintenance facility and a sand trans-load center. Chesapeake had also predicted another facility would be built at the location to house some of their support industries. So, far, only the office building, is being constructed. “They plan to have the office building complete in February or March, and to occupy it in March or April. But, like any plan, that is subject to change,” said Ault. “So far, the office building is the only thing being constructed. We don’t know what is happening with the other original plans.” However, Ault pointed out the reorganization at Chesapeake Energy is to be complete within a month, and he estimates another couple of months beyond that will be needed to get new plans in place or reconfirm original plans. “So, it will probably be the first of the year before we find anything out for sure. That is what we estimate,” said Ault. In 2012, Chesapeake Energy purchased 291 acres of land comprising the Beck Industrial Park, an area the city of Louisville had developed. Chesapeake stated at that time the plans were to construct facilities for its Utica shale operations on the site. The office building under construction is a five-story structure. What else will end up at the location is still a question for Louisville officials. The other big question for Louisville is how many jobs the completion of the office building, or the larger Utica Shale Operations site, will bring. “That is also something we still don’t know,” Ault closed.

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November 2013 Edition - Dix Communications

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Cathryn Stanley Dix Communications

ARNESVILLE — Reducing fuel costs, emissions and America’s dependence upon foreign oil were some of the reasons presented for using the area’s abundant natural gas reserves to fuel vehicles and the local economy. Joe Stenger, President of J.W. Stenger Trucking in Barnesville led a discussion on natural gas conversion on Tuesday, Oct. 15 in Barnesville at Annie K’s Restaurant. Attending the meeting were owner/operators for Stenger, Barnesville Exempted Village Schools Superintendent Randy Lucas and bus mechanic John Weiss, Barnesville Mayor Ron Bischof, Belmont Mills, Jerrold L. Hutton, Ph.D., director of gaseous fuels transportation partnership of CleanFuelsOhio based in Columbus, Kevin Krober, senior vice president of American Natural of Pittsburgh, Pennsylvania, a representative of Mack Trucks in Wheeling and a representative of Transfit Upload LLC from New Jersey. “Southeastern Ohio has the most to benefit from this,” Stenger said.”This is important for the generations to come.” Stenger said that beyond the money savings and environmental benefits of natural gas conversion, for him it was a national security issue as well. He said he was motivated to make the switch because of his son serving in Afghanistan and learning that the war is being fought for oil. “We need to, as a country, wean ourselves from our dependency on foreign oil,” Stenger said. Hutton said the United States spent $30 billion in June, 2013 on foreign oil. He said that figure did not include military spending on oil. Hutton said foreign oil dominate the U.S. foreign trade deficit. “Small groups like this are how this process begins,” Stenger told those gathered. He said Hutton had a “tremendous drive to change energy usage to natural gas.” He said CleanFuelsOhio is responsible for getting grant money and spreading the word for alternative fuels. Hutton has been in the fuel business for 35 years, visiting 45 different countries. CleanFuelsOhio is funded by the United States Department of Energy and members such as Stenger Trucking. Founded in 1997, CleanFuelsOhio is the largest of the 87 Clean Cities in the U.S. CleanFuelsOhio also utilizes grants from the Environmental Protection Agency. Hutton said other countries have been much more active in seeking alternative fuel sources. Hutton spoke about the importance of the Uttica and Mar-

cellus shale plays. He said the U.S. is now exporting natural gas instead of importing it because of the abundance of natural gas in the shale plays. Hutton said the natural gas industry reinvested $238 million in Ohio. “We are just getting started,” Hutton said. “We have a lot of growing to do because we have an established fuel source, but the infrastructure needs to be developed.” Stenger added, “Natural gas is coming. Ten years from now, we will see something totally different.” He continued, “The American people are tired of foreign oil dependency. There is literally a battle cry.” He said refuge is the fastest growing business for natural gas conversion. CFO has also worked with COTA which will be completing switching to natural gas powered public transportation buses within the next 10 years. Hutton said natural gas is an inherently clean fuel being the gas with the lowest amount of carbon. Natural gas is safe, does not leak into ground water and engines powered by natural gas run more quietly. Hutton said there are three types of natural gas engines: dedicated NGV, using natural gas only; bi-fuel, which uses either natural gas or diesel, one at a time and dual fuel, which uses both at the same time. Hutton said major car companies such as Honda, Ford and General Motors are involved in the development of this technology. He also spoke about the different fuel station options. Smith Dairy in Orville, Ohio has a natural gas station for their trucks and there is a public access SARTA station in Canton, Ohio. A graphic showing the fueling stations in Ohio can be viewed on the CleanFuelsOhio website at www.CleanFuelsOhio.org. Kevin Krober, Senior Vice President of American Natural also spoke. He said the company, which is a member of CleanFuelsOhio and other Clean Cities, said the company is “actively exploring a natural gas station site in Belmont County.” He said the company builds public access stations, such as the one they have in Pittsburugh. He said there is a greater demand for class 8 access in this area. Krober predicted that the “pureness of condensate, a by-product of liquid gas, will come into play within the year.” Krober said natural gas production has drastically reduced the cost of fuel as the cost to extract it from the ground has also reduced.

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“This area is in the sweet spot of the Uttica shale deposit,” Krober said, adding that there is growing interest to finance the needed infrastructure. Stenger, who started the business in 1991 and currently operates a fleet of 50 trucks said he picked dual fuel as the solution for his company. He has already converted two of his fleet vehicle to CNG and has received a grant through the Ohio EPA to convert 15 more. He may also incorporate a few dedicated natural gas engines in the future. He has been working closely with EcoDual for the past year to develop, demonstrate and achieve Environmental Protection Agency OUL approval. He has conducted multiple cross country trips with no risk of being stranded without CNG and no loss of power when pulling 80,000 pounds. He is currently installing 10 additional systems. The EcoDual dual fuel system uses compression ignition with up to 85 percent natural gas, 100 percent diesel on start an if natural gas runs out, advanced electronic controls continuously adjust, OEM ECU operates normally with no changes. His fleet averages 5.2 miles per gallon and averages 125,000 miles per year per truck, requiring him to buy 1. 2 million gallons of diesel a year, representing 50 percent of his operating costs an increase from 25 percent in 2000. In the next 25 years, the retail price to the consumer for CNG/LNG is not expected to change while the diesel fuel retail price is projected to increase by over 150 percent. Depending upon the fuel cost differential, the use of natural gas provides up to 40 percent operating fuel cost savings. Stenger said he will recoup his investment within one year for the next 10 trucks installed with the EcoDual system. Natural gas is $1.85 -$1.90 per gallon, 50 percent cheaper than diesel per gallon, representing a total savings of 25 percent on his fuel bill. Stenger told his owner/operators that it “ is a huge up front investment, but it is like giving yourself a raise. It is a long term investment.” Stenger said natural gas is cleaner, resulting in a longer engine life and cleaner environment. “I would rather run cleaner fuel in the first place, then have to clean the air afterward,” Stenger said.

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Hutton compared the switch from diesel to natural gas to switching from horse and buggy to gasoline. Stenger added that the switch from gasoline to diesel fueled trucks was also met with opposition in the trucking industry at the time and took over a decade to fully implement. Hutton spoke at a BEVSD Board of Eduction meeting several months ago. Superintendent Lucas said the district was looking into the possibility of a grant to convert some of the district’s school buses to using natural gas, but currently no gas-powered school vehicles that have the look of school buses are available. Hutton said the development is market-driven and he believed a new, suitable engine would be available in 2015. Hutton said a dual fuel system would not be feasible for school buses because they are in constant use during the school year, then sit idle for over two months each summer. He said there are natural-gas powered school buses in use in other parts of the country. He also talked about other fuel sources including anarobic digestion. He said CleanFuelsOhio worked with the quasar energy group to recently open a fuel station in Morrow County, Ohio that produces methane from anarobic digestion. He said Germany, for example, is looking at building digestors and is moving to replace all nuclear energy with digestors, wind and solar energy.

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PARTNERING WITH MINERAL OWNERS IN THE UTICA SHALE Noble County • Eastern Guernsey County • Western Belmont County • Harrison County

FLATIRON ENERGY PARTNERS, LLC (Flatiron) has signicant capital allocated to the acquisition of mineral and royalty rights in the above mentioned counties in the Utica Shale. Generally, we prefer to buy a portion of a mineral owner’s interest (i.e. 50%). We are not a broker or “ipper”. We are not buying oil and gas leases. Given below, are a few reasons why a mineral owner may want to consider a partial sale of their mineral and royalty rights:

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PARTNERING TOGETHER - With Flatiron as an investor in a mineral estate, a land owner can have assurance that a large group of professional oil and gas “eyes” will be on all aspects of what occurs with future drilling, development, unitizations, the sale of commodities and other issues that transpire in the development of shale wells. By selling a portion of your minerals to Flatiron, one takes on a professional oil and gas partner. REDUCING RISK - By selling a portion of non-producing minerals, an owner can hedge against the possibility of their area not being developed or an uneconomic well being drilled on their property. This way, an owner can assure themselves of a substantial payday and still keep the upside in the event that successful wells are drilled in the future. DELAYS IN DEVELOPMENT – As a mineral owner, one does not have control of the timing of the development of shale wells. Typically, oil and gas leases give exploration companies 3, 5 or in some cases, up to 10 years in which to begin drilling. For owners that would prefer to capitalize on their minerals today to use proceeds to invest or enjoy elsewhere, selling a portion may be a good option. If you are interested in this opportunity, please contact us for an offer. We have an acquisition team in the area and are able to meet in person to discuss our process. • • • • •

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La se

OVER — Red Hill Development announces that it has entered into a joint venture with American Energy-Utica, LLC (“AEU”) for the development of a portion of Red Hill’s Utica Shale acreage located in Eastern Guernsey and Western Harrison County. Red Hill Development was founded in 1975 by the Kimble family of Dover with various family members playing key roles in management of the company over the years. Red Hill continues to be operated by the Kimble family today producing aver 600 shallow and deep wells on its leaseholds located primarily in Tuscarowas, Coshocton, Harrison, and Guernsey counties of Ohio. American Energy-Utica, LLC is an affiliate of American Energy Partners, LP, which is a private campany formed by former Chesopeoke Energy CEO Aubrey McClendon. McClendon recently mode headlines relative to his raising in excess of $1.6 billion dollars to fund Utica Shale development. “The joint venture will enhance our ability to fully and expeditiously develop our acreage in Harrison and Guernsey Counties while we continue to explore opportunities for development of our additional holdings in the region,” said Keith B. Kimble, manager of RHDK Oil & Gas, LLC dba Red Hill Development. “We’ve spent a great deal of time and energy studying the Utica Shale and the best available technologies to use in order to effectively develop the Utica. We have a lot of history drilling through the Utica and know it can be challenging and will require tremendous amount of capital. The family has explored all options so that we could provide the best opportunity for expeditious, safe and productive development of our leases.” Red Hill Development spent the last few years working with various banks and private equity groups to finance drill-

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ing operations, and negotiating with midstream companies for transportation and processing options. According to Kimble, “After all of our due diligence the best fit for rapid, safe and productive development was a joint venture relationship. Aubrey’s ability to raise money for development, and his experience in horizontal drilling in general and the Utica Shale in particular, were a perfect fit for Red Hill Development.“ The AEU-Red Hill Joint Venture plans to begin immediately applying for Utica well permits and commencing construction on well sites as early as October of this year, with the first well to be spud before the end of 2013. Plans for additional drilling activity are being developed for 2014 through 2016. As a co-venturer, Red Hill Development will maintain a significant ownership position in its Utica leaseholds included in the Joint Venture, and will be involved in future investment and drilling operations alongside AEU.

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November 2013 Edition - Dix Communications

Southern Zone Edition

Frank A. McClure Attorney

hen I was thinking about what I would write about this month I thought I should review and clarify what asset protection is and what it is not. This may be concerning your bonus money, if that is where you are in the leasing process or it may be protecting your royalty interests. So with that in mind let’s begin with what asset protection is: Asset Protection simply is any strategy, tool or action taken or implemented to protect, preserve or enhance one’s assets or those of or for a beneficiary(s). I will use the analogy that I have used before which is that asset protection in some ways can be considered similar to building a structure around a treasure that you own. What might you do with your treasure? You might put it into a chest for safe keeping. Then you might put a lock on the chest. Then you might put the chest into a vault. Then you might build a castle around your vault. Then you might put a moat around the castle. Hopefully this will give you a great picture in your mind as to what asset protection planning is. All we are doing is adding additional barriers and protections to protect your treasure (your assets). Each level is another obstacle which the creditor must find a way to get through or around to get to your treasure. By using proven, simple techniques and strategies you can create different levels of protection for your assets. If that is what asset protection means, then what does it not mean? Here are some of what asset protection isn’t: 1. Asset protection is not just for the wealthy or for high net worth earners; it is for all wage earners and individuals with any type or form or amount of assets which they may wish to protect or preserve; 2. Asset protection is not always about elaborate tax and legal structures; in fact, some of the most effective asset protection strategies are the least complicated, most fundamental and least expensive; 3. Asset protection is not about always avoiding taxes or avoiding governmental reporting requirements; in fact many asset protection strategies are both tax neutral; and may result in increased tax reporting requirements; 4. Asset protection is not about concealing assets from creditors or hiding assets from the U.S. government; it’s about following the proper reporting procedures that are required by U.S. law; 5. Asset protection is not always about “going offshore to

exotic tropical locations,” but, instead, it may be about reviewing which one of the 50 states offers the best case law and state statutory law for asset protection; and Ohio now as of this year has one of the best asset protection statutes; 6. Asset protection is not about circumventing the law or doing something illegal, or being involved in secret strategies or cookie cutter asset protection promotion schemes; it’s about properly interpreting and following the law. When reviewing asset protection and your needs concerning your oil and gas bonus money or royalty interests, it is important to remember what it is and it is not. It is also important to seek out an attorney who deals in this area of the law. Like estate planning this is a very specialized area and you need to be talking to someone who concentrates their law practice in this area. If you would like more information about asset protection and estate planning or to review my past articles concerning asset protection, please go to www.fmcclurelaw.com.

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Caldwell Looking for Big Payday Lisa Loos Dix Communications

ALDWELL — Caldwell Village Council members have announced they expect to close on the lease of 338 acres of property near Caldwell Lake for gas and oil development, and could take delivery of a $1 million-plus lease check. “I’m not sure it’s the full amount or how much it will be,” said Councilman Freddie Powell. “We’re looking at 1 million three hundred thousand (dollars).” Powell has spearheaded the leasing effort. Council signed the non-drill lease contract with Pioneer Land and Mineral Resource LLC, Marietta, in April. The company reportedly offered the village $4,500 an acre and 19 percent of royalties.

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November 2013 Edition - Dix Communications

Laurie Huffman Dix Communications

able on our website for one year. On July 3, Chesapeake announced the execution of agreements to sell assets in the Northern Eagle Ford Shale and Haynesville Shale to EXCO Operating Company, LP a subsidiary of EXCO Resources, Inc., for proceeds of approximately $1 billion. The transactions are expected to close in the 2013 third quarter. On Aug. 1, Chesapeake reported financial and operational results for the 2013 second quarter. Key information related to the quarter is as follows: Adjusted net income per fully diluted share of $0.51, compared to $0.06 in the 2012 second quarter; daily production rises of 44 percent over the past year, and total daily production increases of 7 percent. Chesapeake also reported net income available to common stockholders of $457 million, or $0.66 per fully diluted share.

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estructuring at Chesapeake Energy Corporation following the removal of Aubrey McClendon from the board and his position as CEO of the company is just about complete, industry officials believe. Some of the changes made will mainly affect the stockholders. Others will be noticed by the communities in this area. Once Robert Douglas Lawler took the Chesapeake helm, he eliminated local public relations positions around the country, as the more conservative Lawler is quoted as saying that can be handled from Chesapeake headquarters in Oklahoma City. This action took Pete Kenworthy and Ken Fuller, two spokespersons the people in Northeastern Ohio were accustomed to seeing around their towns, out of the picture. Lawler also announced the office of the chairman position would be discontinued. Archie W. Dunham, Steven C. Dixon and Domenic J. Dell’Osso Jr. continue to serve in their roles as non-executive chairman of the board, executive vice president of operations and geosciences and chief operating officer, and executive vice president and chief financial officer, respectively. Lawler, a 46-year-old who had been the senior vice president of International and Deepwater Operations at Anadarko Petroleum, officially joined Chesapeake as CEO and a member of the Board of Directors over the summer. Lawler is a petroleum engineer with 25 years of experience in the upstream exploration and production industry. He has served in increasingly senior leadership roles at Anadarko, the second-largest independent upstream company in the U.S. with a $45 billion market capitalization. He also has a proven track record as an oil and gas executive, with significant expertise in asset development, operations management and engineering as well as experience in corporate and strategic planning. Lawler has stated Chesapeake Energy has an unparalleled asset portfolio, focused management team and very talented and dedicated employees. “There is significant value in Chesapeake’s asset base and the growth potential of the company is tremendous,” he also announced. Chesapeake is scheduled to release its 2013 third quarter operational update and financial results before the market opens on Nov. 6, via conference call. The conference call will be webcast live on Chesapeake’s website at www.chk.com in the “Events” subsection of the “Investors” section of the company’s website. The webcast of the conference will be avail-

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November 2013 Edition - Dix Communications

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November 2013 Edition

CONSOL Energy kicks off PowerUp school challenge

ITTSBURGH — CONSOL Energy kicked off its PowerUp challenge Wednesday with Caldwell, Shenandoah, Beallsville, Monroe Central and River high schools in eastern Ohio, and several in southwestern Pennsylvania at CONSOL Energy Center. Through PowerUp, CONSOL Energy is providing schools across the region an opportunity to showcase their school spirit, learn about energy and win $20,000. CONSOL Energy brought together school district officials on Oct. 16 to kick off the PowerUp challenge and watch the Pittsburgh Penguins practice. “CONSOL Energy has supported schools within our operating area for many years. The PowerUp challenge is an extension of that commitment,” said Laural Ziemba, CONSOL Energy’s director of community relations. “Through this new initiative, which has a substantial social media component, we hope to establish new channels of communication with students, their families and educators, while at the same time supplying two hardworking schools with a deserving financial boost.” In addition to various contests throughout the school year, CONSOL Energy is making a $20,000 investment in education by awarding one school district in each state (Ohio and Pennsylvania) the top prize. Through a new microsite, CONSOLPowerUp.com, students and the public are encouraged to vote for their school and learn about how coal and natural gas power the region, and explore potential careers in the fast growing energy industry. “This program is a homerun for all schools,” said Mark Ziengenfuss, manager of program development at the Challenge Program. CONSOL PowerUp is a new initiative of CONSOL Ener-

gy’s community investment program, with a common goal of supporting civic and student organizations and activities that benefiting the entire community. Education is at the core of building a new generation of leaders and CONSOL Energy is committed to fostering educational initiatives in the areas where its employees live, work and raise their families. Any individual with a valid email address can participate by visiting the site and voting. The school in each state who receives the most votes will be awarded $10,000 in May 2014. Throughout the school year, students can log on to CONSOLPowerUp.com and view the leaderboard, which will keep a running tally of all votes. CONSOL Energy Inc. is a Pittsburgh-based producer of coal and natural gas. It has 12 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.5 billion tons. The company’s premium Appalachian coals are sold worldwide to electricity generators and steelmakers. In natural gas, CONSOL has transformed itself from a pureplay coal bed methane producer to a full-fledged exploration and production company. The company is a leading producer in the Marcellus Shale, has an active exploration program in the Utica Shale and has proved natural gas reserves of over 3.5 trillion cubic feet. Operational safety is the company’s top core value and CONSOL boasts a record of almost two times better than the industry average for underground bituminous coal mines. In 2011, the company recorded its best safety record since it was founded in 1860. CONSOL Energy is a member of the Standard & Poor’s 500 Equity Index and the Fortune 500. Additional information about CONSOL Energy can be found at its website: ConsolEnergy.com.

Gas & Oil

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November 2013 Edition - Dix Communications

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November 2013 Edition

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Gas & Oil

November 2013 Edition - Dix Communications

Southern Zone Edition

Salt makers drilled first Ohio well Lisa Loos Dix Communications

ALDWELL — In 1814 Silas Thorla and Robert McKee drilled a salt well in Olive Township, Noble County. The well struck not only the intended brine but also gas and oil, giving rival to Col. Edwin L. Drake’s discovery of oil in Titusville, Pa., in 1859, and putting Noble County on the map as being the first well in existence in the United States and probably in North America. Noble County Historical Society operates and maintains several sites including the First Oil Well in North America, junction of Route 78 and Route 564, here, in Noble County. The oil well site is open to the public year-round. It should be noted the preserved site is a second well drilled by Thorla and McKee in 1816 not far from the first. The 1814 well was destroyed when Route 78 was made. The land on which the property sits is owned by the Noble County commissioners. The late Dr. Sherman Smith, a longtime physician who had an interest in promoting Noble County, served for a time as chairman of the county department of tourism. Dr. Smith was primary in the preservation of the ThorlaMcKee oil well , and in 1991 he helped get the site nominated and later included on the National Register of Historic Places. That same year fence was placed around the well to protect it and the parking lot was stoned. Private donations along with those from various oil well companies helped fund that work. In 1992, an Ohio Historical Marker was erected at the Thorla-McKee well site. It too was paid for with donations. The site is listed in directories of the Ohio and national historical societies as well. Due to lack of funds the site was never fully developed and the plans for a museum and renovation of a nearby railroad car located on the original roadbed of the BZ&C narrow gauge railroad have literally fallen apart. The Ohio Historical Marker sign was knocked to the ground, where it remains. The key to developing the site is simple. Local officials need to work with the gas and oil companies and show them where “it” all began. And then get some donations. And take Dr. Smith’s preservation effort’s further.

Today Noble County is a hotbed of gas and oil production. Independent exploration and production companies have moved here to acquire NGLs and oil. MarkWest Utica EMG LLC is building a 200-MMcfd cryogenic gas plant at its Seneca processing complex in Noble County. It will support rapidly growing drilling by Antero Resources, Gulfport Energy Corp., and other producers in the southern Utica shale, the company reported. Route 78 has been closed numerous times in the past months so that equipment larger than one lane of highway could be moved to MarkWest’s cooling plant construction site in Summerfield. Traffic on Route 78 has increased tenfold as the result of gas and oil activity — and it’s all within a bird’seye view of the Thorla-McKee well site. What if MarkWest donated the funds to build a museum? “Seneca Oil” — the magical black salve that Thorla reportedly peddled as a medicinal cure for rheumatism, sprains and bruises — could be bottled and sold. Next year will mark the 200th anniversary of the First Oil Well in North America. It is the perfect time for Thorla and McKee to be remembered in Noble County. Lisa Loos is the Noble County writer. E-mail her at lloos@ daily-jeff.com or follow her on Twitter at LisaLoosDJ.

Intact is the original hollow sycamore log casing of the 1816 salt well drilled by Silas Thorla and Robert McKee in Olive Township, Noble County.

Dix Communications - Gas & Oil

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November 2013 Edition

Salt makers drilled first Ohio well

A railroad car is located nearby on the original roadbed of the narrow A cage protects the oil well which sporadically emits gas and bubbles gauge railroad. The donated train car either needs repaired or removed black oil and salt water. Decking around the well casing needs replaced and the interior of the cage cleaned up. The Thorla-McKee well was from the site. drilled with a spring pole — a method where the drill is lifted with a rope, after the fashion of a pump. A spring pole model also is at the site.

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Gas & Oil

Southern Zone Edition

November 2013 Edition - Dix Communications

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 338 2. Harrison County 139 3. Columbiana County 90 4. Monroe County 72 5. Noble County 67 6. Guernsey County 60 7. Belmont County 55 8. Jefferson County 38 9. Mahoning County 28 10. Portage County 15 11. Tuscarawas County 14 Trumbull County 14 12. Stark County 13 13. Washington County 9 14. Coshocton County 5 15. 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 10/19/13

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Dix Communications - Gas & Oil

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November 2013 Edition

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Gas & Oil

November 2013 Edition - Dix Communications

Southern Zone Edition

OOGEEP coordinates education opportunities Linda Hall Dix Communications As it stands now, oil and gas field employees are coming to Ohio from other states to work in the industry because Ohio doesn’t have a sufficient number of trained personnel, Grosjean said. Bill Bennett, Cedar Valley Energy, Wooster, affirmed the benefit to people and the state as a whole of “training workers for fairly high paying jobs.” The industry, along with providing “good wages for people working in the oil fields,” offers opportunities for advancement, Bennett said. “There are many, many people in our industry,” he said, who progressed from laborers in the field to owners of their own small oil companies. “I’m one of them,” Bennett said. “I’m the president of the company. It can be done.” Industry employees earn a good living from the beginning, Bennett said, adding, “There is a career field if they want it.” OOGEEP focuses on “bridging science and industry,” Reda said. “OOGEEP is working hard to develop a trained workforce for the expanding oil and gas industry,” said Sarah Tipka, an OOGEEP board member, education committee chair and oil and gas producer from A.W. Tipka Oil and Gas, Inc., in an August 2013 statement for OOGEEP. Tipka labeled teacher workshops as “an invaluable tool that allows the industry to work with teachers and their students who may one day help develop, produce and supply our domestic energy needs.”

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OOSTER — The Ohio Oil and Gas Energy Education Program is working with students, teachers and leaders in the oil and gas industry to prepare employees in an area experiencing “huge demand,” said OOGEEP’s executive director, Rhonda Reda. OOGEEP prioritizes “assisting schools with their science curriculum,” said Reda, who pointed out schools in Ohio have “fallen behind,” as reflected in students’ academic scores. “Without a doubt,” she said, boosting science curriculum and holding teacher workshops to engage instructors in the oil and gas industry are tied to work force development. If teachers, and as a result, their students, can get excited about geology or engineering, they can pursue available careers in the industry, Reda said. In fact, she said, “all of our programs are funded by Ohio’s oil and gas producers,” including KENOIL, Buckeye Oil Producing Co., Franklin Gas & Oil Co., LLC, J. R. Smail, Inc., and Cedar Valley Energy. “We do not utilize any tax dollars,” Reda said. “We’re trying to reach the younger generation about the importance (of oil and gas) in our country,” said Ron Grosjean, an OOGEEP board member from KENOIL, Inc. in Wooster. “This industry has been here for 200 years,” Grosjean said, “and has been the livelihood for a lot of people.” “This country cannot survive without oil and gas,” he said, while at the same time respecting the role of wind and solar energy. While some adults “can’t see over what they think is the bad part (of the oil and gas industry),” Grosjean said, students as young as fifth- and sixth-grade are comprehending its significance. “There are many types of jobs this industry generates,” Grosjean said, such as geologists and engineers. But there are also people needed to build a road to the sites being drilled, drill the wells, construct pipelines and tend the wells, to name a few. In “try(ing) to create jobs in our area,” Grosjean said, OOGEEP offers 25 scholarships every year to young people “working toward oil field-related careers.”

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November 2013 Edition

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Gas & Oil

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November 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

November 2013 Edition

Laurie Huffman Dix Communications

s everyone following the gas and oil industry knows, pipeline is needed in Ohio to get these products to market. The good news is, there is essential pipeline on the way. Pennant Midstream, a newly-named and joined venture between NiSource Inc. (the parent company of Columbia Gas) and Hilcorp Energy Company, is building a pipeline for natural gas liquids that is estimated to cost $60 million. And, equally exciting news is the fact that piping natural gas and gas liquids to the plants that will get them ready to market is starting to bring companies to this area. Pennant recently announced the 12-inch natural gas liquids pipeline will connect a cryogenic processing plant in New Middletown, in Mahoning County, to a facility near Kensington, in Columbiana County. It will have an initial capacity to deliver about 90,000 barrels a day. Pennant expects the new pipeline to be completed by July 2014. “The construction of new infrastructure is critical to unlocking the potential of the Utica Shale play in Ohio,” Jimmy Staton, Columbia Pipeline Group and NiSource Midstream Services CEO, said in a press release. “This partnership will not only provide a key link in that infrastructure, it will provide economic-related benefits for companies and residents of Ohio and the Appalachian basin.” The pipe will take natural gas developed in the Northwestern part of Pennsylvania and Northern Ohio to a cryogenic facility being built now in Springfield Township, according to a report from Shawn Bennett, field director at Energy in Depth. From there, the pipeline grade gas will be separated and the type we use to heat our homes will be transmitted. The other natural gas liquids will be piped to the Utica East fracinator plant in Scio, and that’s where the other valuable natural gas liquids will be separated. “Utica Shale is valuable because it contains natural gas liquids, such as ethane, propane, butane, pentane. Ethane is used in making plastics, and it is very sought after in that industry. In fact, all four of these liquids are sought after in chemical and plastics manufacturing,” said Bennett. “Propane and ethan are the most common, but all are used.” The new Pennant pipeline will help get these liquids to Scio, and from there, they can get to market. “Currently, the petro chemical industries are located mainly in the Gulf region, in

Louisiana and Texas, for instance. We hope to see that change once these products are here and ready to market,” Bennett said. Bennett noted a dynamic shift is taking place with petro chemical companies starting to come to Pennsylvania and Ohio. Some companies in the Middle East, who moved operations there to be near the feed stock of natural gas liquids they require, are now looking to come here, because we have an abundant feed stock of natural gas liquids for their operations. “The American Chemistry Council and the National Association of Manufacturers are very excited about what they are seeing in Marcellus and Utica,” said Bennett. “Both because of the low cost energy source it represents, and because of the feed stock it provides to bring companies back to the U.S. to set up operations.”

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Gas & Oil

November 2013 Edition - Dix Communications

Southern Zone Edition

Favede representing Ohio at shale conference

ELMONT Co. — Belmont County Commissioner Ginny Favede was selected to represent Ohio on behalf of the Ohio County Commissioners Association for the National Association of Counties as a participant at a “County Leader Retreat: Shale Energy Solutions.” The retreat was for county leaders in regions that are experiencing shale energy development. Commissioner Favede was recommended as a key player in this topic, as she has been a guest speaker at numerous Shale Industry forums and regularly hosts the surrounding eight counties in her region on shale industry and the effects on their counties. Shale bearing rock formations are widespread throughout much of the United States. New drilling and recovery technologies are accessing massive new energy reserves from shale formations throughout much of the United States. The scale and potential duration of this development is a game changer for numerous regions throughout the nation. America’s county governments are on the front lines of this development and there is a clear and growing need for a smart, robust and timely assistance that will allow county leaders to make decisions, optimize the shale energy opportunity and manage the challenges. This County Leader Retreat was to bring together county leaders from communities that are deeply involved in shale energy extraction, and those that are in the early stages of assessing these opportunities. The purpose of the retreat is threefold: to share firsthand experiences, best practices and policies among counties in shale country; to discuss the development of a proposed NACo-sponsored Shale Energy Resource Center and a peer network of counties experiencing shale energy development; and to outline a plan for delivering general and customized technical assistance to county leaders. To answer these questions, the retreat is structured as a series of roundtables. Each roundtable will explore different types of relationships counties can cultivate with public and private entities to achieve the best community outcomes. Each roundtable will consist of a contextual overview and case study. Items for discussion include: How county leaders can collaborate with federal and state agencies to influence policy making and regulate development; How county leaders can partner with energy companies to achieve common community and economic development goals; What is the county role in addressing local needs and services related to shale energy development, such as roads, land use and zoning policies, and emergency management.

“I am thrilled to have the opportunity to further Belmont County and Ohio’s ability to take advantage of the economic opportunities being presented to us by the shale energy industry,” said Favede. “I work every day to make my county is successful and to provide employment opportunities to our residents. The oil and gas industry has brought a unique opportunity to our region. It is my duty as an elected official to gather as much information as possible to allow our area to capitalize as effectively as possible.” Favede will assist in the formation of a proposed NACo Shale Energy Resource Center to provide assistance to county leaders. Ginny Favede is currently serving in her second term as Belmont County Commissioner. Favede is a graduate of The Ohio State University, where she earned a BA in political science. Favede serves as a member of the County Commissioners Association of Ohio (CCAO) Board of Directors. She was recently appointed to a second term on the National Economic Development Committee of the National Association of Counties (NACo). Favede is a member of the CCAO Deferred Compensation Committee, Co- Chair of the Taxation and Finance Committee and previously served on the General Government and Operations Committee and Economic Development and Infrastructure Committee. She is a 2010 graduate of The National Association of Counties County Leadership Institute and a graduate of the Ohio Municipal League Municipal Training Academy. Favede is also a member of the following: Belmont County Transportation Improvement District, Belmont County Planning Commission, Ohio Mid-Eastern Governments Association and Eastern Ohio Development Alliance.

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Dix Communications - Gas & Oil

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November 2013 Edition

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November 2013 Edition - Dix Communications

Energy Council Reaches Agreement to Provide Natural Gas Chuck Keiper Northeast Ohio Public Energy Council

AVENNA — Hundreds of thousands of Northeastern Ohio residents and businesses soon will be able to benefit from the state’s shale gas boom. The Northeast Ohio Public Energy Council (NOPEC) has reached a new six-year agreement to supply natural gas to its natural gas customers in Northeastern Ohio, which will be less expensive than purchasing out- of-state gas that has much higher gas transportation costs. NOPEC has about 270,000 natural gas customers in 10 counties in Northeastern Ohio. “NOPEC is pleased to help Northeast Ohio residents and businesses cut their heating bills for years to come,” said Joe Migliorini, chairman of NOPEC’s Board of Directors. “We’ve all heard and read about Ohio’s extensive shale gas deposits, but this agreement allows Northeast Ohioans to capitalize on

this great local resource. NOPEC expects to purchase a large amount of Ohio natural gas at a significant savings which will be contractually passed along to our customers.” The six year pact between NOPEC and NextEra Energy Services, Ohio LLC will mean an estimated savings of 50 to 60 cents per thousand cubic feet because of lower costs compared to today’s delivered gas prices. Additional savings may also be realized by using more Ohio gas, with total potential savings estimated to be as much as a total of $1 per Mcf, based on expected Ohio gas production trends. At this time, it is not possible to project exact savings as gas prices fluctuate constantly. With the new agreement between NOPEC and NESO – which does not take effect until March 2014 -- there will certainly be significant cost advantages by buying local gas. The new agreement could see up to $25

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Dix Communications - Gas & Oil

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November 2013 Edition

Energy Council Reaches Agreement to Provide Natural Gas million in savings annually for NOPEC’s customers – which could total up to $150 million over the term of the agreement. Chuck Keiper, NOPEC executive director, said the new agreement supports economic growth in Northeastern Ohio. “NOPEC is very excited to be able to look at the resources available in our region in a new way and put together a programmatic way for our customers and communities to benefit while at the Same time supporting jobs and economic growth within our state,” Keiper said. “NOPEC has been working on changing this paradigm for our customers for many months. The staff and the board of directors have very diligently and thoughtfully examined what is happening in the market in order to construct what we believe to be a true value-add and real savings opportunity for the people we serve,” he added. NESO will replace Virginia-based Dominion Energy Solutions as the endorsed supplier of gas to NOPEC’s natural gas aggregation customers. The Dominion East Ohio and Columbia Gas of Ohio distribution utilities will continue to deliver gas within their respective service areas and will also continue to provide customers with their monthly bills so that the change will be seamless for NOPEC customers. Since its inception in 2000, non-profit NOPEC— the nation’s largest retail public energy aggregation — has used bulk-buying strategies to cut Northeast Ohio’s utility costs by

more than $200 million. NOPEC provides low-cost electricity and gas to a total of 750,000 customers — including an estimated 270,000 natural gas customers — in 10 Northeast Ohio counties. The concept of public aggregation is a simple one. Aggregation allows consumers to pool together their usage into one large buying group, offering consumers choice and the opportunity to lower the cost of the generation portion of their utility bill. NOPEC members enjoy the advantage of bulk buying power, professional expertise and consumer advocacy on their behalf. NOPEC is governed by a General Assembly, formed from one representative from each member community. The representatives for each county then elect one person to serve on the 10-member NOPEC Board of Directors. No taxpayer funds are used. For more information, go to www.nopecinfo.org. NextEra Energy, Inc. (NYSE: NEE) is a leading clean energy company with revenues of approximately $14.3 billion and nearly 15,000 employees in 26 states and Canada as of year-end 2012. For more information about NextEra Energy companies, visit these websites: www.NextEraEnergy.com, www.FPL.com, www.NextEraEnergyResources.com.

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Welding binds education, industry together Alison Stewart Dix Communications

KRON — The Dominion Foundation has recently donated $20,000 grants to the engineering department of select schools, including The University of Akron. According to Sarah Steidl, Director of Marketing and Communication for the Engineering Department at the university, the $20,000 grant will go toward the Steel Bridge Team’s welding project. Students are currently in the process of constructing a bridge for the annual regional competition. According to Steel Bridge Captain Katie Kitner, a senior at the university, the team begins bridge construction every December, to be ready for the March competition. “Right now we are going through welding training sessions,” said Kitner. “Some of our seniors will be leaving this year so it is important for them to train the underclassmen before they go.” The grant from Dominion will go toward welding and building supplies. Welding is a process which involves melting pieces of metal and adding a filler material to link them together as they cool down to form a finished sculpture. Derek Hauff, a junior at the university, said this can be danOver a million homes... one address

gerous. “You should not stare at the light that is produced,” said Hauff. “Being exposed to the light for too long without proper gear can result in sunburn.” “Every August, we receive a list of rules for the upcoming competition,” said Kitner. “This year the bridge will be 19 feet long and two feet and four inches tall.” The bridge must be able to hold 2,500 pounds without deflecting more than three inches, to pass through to the next round. Once the bridge deflects past two inches, points are deducted. The bridge is also tested by loading it with weight and pulling the bridge to the side. The bridge can only move one inch to stay in the competition. There are a total of five categories in the competition. Disqualifications and penalties can occur. The score is based on how efficient and heavy the bridge is. According to Kitner, the students have already begun their bridge design. The steel is donated from ITS every year. The students are currently waiting for the parts to arrive. In the meantime, they are drafting standard drawings in 3d in order to prepare. Hauff has been providing welding lessons for underclass-

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men. “Right now we are going over basics for the new people,” said Hauff. “They need to get used to welding different thicknesses of metal from different angles in difficult situations.” The weldings are tested before the bridge is welded together to make sure they do not break under pressure said Hauff. Rich Vineyard, a freshman at the university, has been undergoing welding training sessions. “I like the design aspect and putting things together,” said Vineyard. “My advisor informed me about the Steel Bridge Team and so far my first semester hasn’t been too bad.” There will be a variety of schools in the region who will be competing against one another at the 2014 regional competition in Pittsburgh. The event will be held at Carnegie Mellon. Every year students submit requests to have the national competition held at their campus. According to Steidl, the national competition will be at The University of Akron in May of 2014. The Dominion Foundation, the philanthropic arm of Dominion Resources, Dominion East Ohio’s parent company, is dedicated to improving the physical, social and economic well being of the communities served by Dominion companies. Dominion and the Foundation annually award more than $20 million to causes that protect the environment, promote education and help meet basic human needs. “Dominion East Ohio has a long and proud tradition of providing natural gas services throughout the state,” Jeff Murphy, Managing Director, Commercial Operations, said. “We were an active participant in the first Appalachian natural gas boom of the early 1900s and are now providing competitive, reliable gathering, transportation and processing services for Ohio producers in the new, 21st century natural gas boom. Ohio’s colleges and universities also provide an essential service to the natural gas renaissance. They are equipping our area workforce to maximize the economic benefits and to ensure effective stewardship of these new energy supplies. Potentially even more significant, the talented innovators that study at Ohio’s colleges today will contribute to the growth of the manufacturing, transportation and service sectors made possible by affordable, abundant, local energy.”

November 2013 Edition

Welding binds education, industry together

Photos /Robert J. Lucas Above: Derek Hauff of West Salem and Rich Vineyard of Cuyahoga Falls check out the welds. The University of Akron engineering students are constructing a bridge for a competition in March. Left: Rich Vineyard of Cuyahoga Falls and & Derek Hauff of West Salem, engineering students at The University of Akron, are pictured welding. They are constructing a bridge for a competition in March.

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November 2013 Edition

2013 Dickens Themed Weekends & Events

Marc Kovac Dix Capital Bureau

OLUMBUS — The Ohio Department of Natural Resources and state taxation officials will be keeping closer tabs on oil and gas production, thanks to a provision buried in the biennial state budget that took effect recently. Language included in Gov. John Kasich’s original version of the budget and passed by lawmakers without changes enables ODNR and the Ohio Department of Taxation to share information that formerly was confidential to the individual state agencies. Taxation spokesman Gary Gudmundson said the budget provision allows his department to provide details from tax returns of oil and gas producers, showing how much they paid in severance taxes. ODNR can use that information to see if it’s in line with results reported by producers. ODNR, in turn, can provide production information to tax officials, who can check to see if they line up with taxes paid by producers. According to Mark Bruce, an ODNR spokesman, the agencies formerly were prohibited from sharing the confidential tax information. “The change allows ODNR personnel to gather and then disclose pertinent information to ensure the appropriate people or companies are held accountable if violations occur,” 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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November 2013 Edition - Dix Communications

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Willbros donates grill to

sheriff’s office

Thomas Clapper Dix Communications

illbros Group, Incorporated, who recently branched into Carrollton, donated a custom-made grill to the Carroll County Sheriff’s Department Sept. 20. Sheriff Dale Williams was on site for the delivery, along with Willbros management and fabricators who created the grill. “We are doing this as a token of our appreciation to the citizens of Carrollton and the Sheriff’s Department,” said Project Manager of Willbros Sam Samudio. “We really appreciate it,” said Sheriff Williams. “It is something we will use for a yearly cookout we plan to start sometime next year. It is not only for the Sheriff’s Department, but also for county employees as well.” Those on site for the delivery were Project Manager Sam Samudio, Fabrication Foreman and builder David Campbell, Superintendent Tim Johnson, Security Manager Sy Alli, and others who were at the donation.

The grill itself is a dark black color with gold trim reminiscent of the Stark County Sheriff emblem. The legs have the Sheriff emblem on one side and the Willbros logo on the other. The smoke stack of the smoker/grill combo is adorned with a fabricated cowboy hat on top to serve as the lid. It started off with a sketch by an employee that builder Campbell brought to life. “I am surprised by the size and the details on the grill,” said Sheriff Williams. “We are truly thankful that they took the time to do this for us.” The grill took about three weeks of occasional labor to complete and has never been done on that scale before at Willbros. Willbros is a contractor who specializes in oil, gas, and power industries infrastructure and has built about 100 miles of steel pipeline installation so far and has an office in Carrollton. Their main office is between Mechanicstown and Salineville.

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Dix Communications Photo / Thomas Clapper Above: Willbros Superintendent Tim Johnson elaborates as Carroll County Sheriff Dale Williams examines the features of the grill donated by Willbros on Sept. 20. Left: The black and gold trimmed grill donated to the Carroll County Sheriffâ&#x20AC;&#x2122;s Department by Willbros took around three weeks of side labor and has many distinguishing features, such as the cowboy hat on the smokestack and the Carroll County Sheriff and Willbros logo on the legs.

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ENT — For Brian Lutz, Ph.D., a native of Lordstown, Ohio, what started out as a curiosity while working on his family farm has led him to where he is now: asking critical research questions on fracking and shale gas issues that can affect millions of people in his home state. Growing up on the farm, Lutz spent summers applying nitrogen to cornfields. “I was always stunned at how much it took and always wondered where it went and how it affected the environment,” Lutz said. Lutz now studies how humans alter the chemistry of their environment as an assistant professor of biogeochemistry in the Department of Biological Sciences at Kent State University. Hired in November 2012, his most recent research has focused on the environmental challenges and domestic energy benefits of shale gas production compared to conventional gas production and mountaintop coal mining. Study Yields Surprising Results Lutz and colleagues from Duke University just released a study of hydraulically fractured natural gas wells, which are often perceived as inordinately wastewater intensive. In fact, the study published in the journal Water Resources Research shows that these wells are actually producing three times less wastewater per unit of gas recovered than conventional wells. “That surprised us, given the popular perception that hydraulic fracturing creates disproportionate amounts of wastewater,” Lutz said. “But it’s a double-edged sword. On one hand, shale gas production generates less wastewater per unit of gas. On the other hand, because of the massive size of the Marcellus resource, the overall volume of water that now has to be transported and treated is immense. It’s likely going to become the defining challenge for shale gas development in this part of the world.” Lutz argues that if the challenge becomes constraining natural gas production to an acceptable volume of wastewater, the logical conclusion may be to constrain conventional production prior to shale gas production. “That turns our perception of what regulation should potentially do on its head,” he said. “This is the reality of increasing domestic natural gas production,” said Martin Doyle, professor of river science at

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Duke University’s Nicholas School of the Environment and co-author of the study. “There are significant tradeoffs and environmental impacts whether you rely on conventional gas or shale gas.” The researchers analyzed gas production and wastewater generation for 2,189 gas wells in Pennsylvania, using publicly available data reported by industry to the state’s Department of Environmental Protection, in compliance with state law. They conducted their analysis with no external funding. In hydraulic fracturing, large volumes of water, sand and chemicals are injected deep underground into gas wells at high pressure to crack open shale rock and extract its embedded natural gas. As the pace of shale gas production grows, so too have concerns about groundwater contamination and what to do with all the wastewater. Adopting New Technologies and Approaches “Our traditional method for getting rid of this wastewater is to inject it back underground, but much of the geology throughout this region is not suitable for underground injection,” Lutz said. Lutz and Doyle argue that we need to come up with novel technological and logistical solutions for wastewater management, including better ways to recycle and treat the waste onsite or move it to places where it can be safely disposed, both of which are happening rapidly. “Opponents have targeted hydraulic fracturing as posing heightened risks, but many of the same environmental challenges presented by shale gas production would exist if we were expanding conventional gas production,” Lutz added. “We have to accept the reality that any effort to substantially boost domestic energy production will present environmental costs.” Water has long been Ohio’s greatest natural resource, and many believe that the state’s economy and the health and welfare of Ohioans hinges on access to clean water. The ability to recover gas from the enormous reserves in shale formations promises to have an important impact on the economy of Ohio. “Because hydraulic fracturing produces vast quantities of wastewater, there is an immediate need to adopt new technologies and approaches to dealing with the impact of this

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production on our state’s water resources,” said James Blank, Ph.D., interim dean of the College of Arts and Sciences at Kent State. Additional Fracking Research Needed Kent State has emerged as a center of excellence in the issues related to the ecology and sustainability of our land and aquatic environments. “Dr. Lutz has joined a large group of researchers across multiple disciplines that are focused on issues related to hydraulic fracturing,” Blank said. “Their approaches range from the biology and ecology of Ohio’s natural environments, to the biogeochemistry of aquatic environments, to the political and sociological impact on Ohio and its citizens.” “There is still a lot of research that needs to be done to better understand the environmental impacts of shale gas development,” Lutz said. “But any method that we use for harvesting fossil energy from the earth is going to have an environmental footprint, and these new methods that are changing energy production in the U.S. are not wholly good or bad. They have advantages and disadvantages against conventional methods.” Lutz and his colleagues are now working to develop a framework that will allow comparisons to be made between the environmental impacts of hydraulic fracturing and shale gas development to mountaintop removal coal mining. “Having grown up here in Northeast Ohio, I recognized that this is an ideal landscape for understanding human activities and impacts on the environment,” Lutz said. “We’re situated between coal mining in the Appalachians and hydraulic fracturing in the Northeast. The role that these important resources will have in America’s energy future will depend on our ability to understand their environmental costs and to be able to weigh tradeoffs among them.” Lutz earned a Bachelor of Science degree in biology in 2005 at the College of Wooster and completed a doctorate in biogeochemistry at Duke University in 2011. He resides in Edinburg, Ohio, with his wife, Dory, and two daughters, ages 4 and 2.

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Judie Perkowski Dix Communications CAMBRIDGE — Presenting an update on the OhioMeansJobs Workforce Development Revolving Loan Program, Joe Greco, president of the Buckeye STEPS Network in Ohio said, at the organization’s bi-monthly meeting, “business is the driving force of the initiative, which is still in the preliminary stage ... It’s all about being proactive.” Buckeye STEPS is modeled after the national STEPS program focusing on Service, Transmission, Exploration, Production, Safety network. STEPS is a social network that allows those working in the energy field to pro-actively engage with each other, covering a variety of industry-related topics. The Workforce Development Loan Program was established by the passage of Senate Bill 1, to assist with job growth and advancement through training and retraining. Funds will be awarded to a learning institution that will use the money to award loans to participants in the program. In other words, funds will be used to provide loans to individuals to cover their education or training costs. Preference will be given to schools that have partnered with businesses that will pay back all or part of the participant’s

Southern Zone Edition

Jason Wilson, director of the Ohio Governor’s Ofﬁce of Appalachia Development Services, attended the October Buckeye STEPS meeting at Zane State College to discuss Gov. John Kasich’s interest in pro-actively engaging with STEPS and its safety awareness initiatives. From l to r: Professor Jeff Daniels of Ohio State University, Tim Snodgrass of Zane State University, Jason Wilson and Joe Greco, president of Buckeye STEPS.

loan, or that have provided funds for the training program. There are other factors that are also considered when awarding funds. Contact Zane State College at the Cambridge or Zanesville campus, or Ohio State University for more information. After addressing the Buckeye STEPS board of directors for committee reports, Greco introduced guest speaker Samuel Johnson, director of Consol Energy Water Division. Johnson emphasized Consol’s core values of safety, compliance and continuous improvement with production and cost as its priorities. “We work toward continuous improvement, but our core values will never change,” he said. “In 2012, Consol Energy created its Water Division to meet our biggest challenge of cleaning up water for re-use,” said Johnson. “All operations need water, it is essential to our business, but it is also a liability and it is expensive.

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“We treat approximately 33 billion gallons of water a year at our 103 water treatment facilities. “ It takes about five million gallons of water to drill one well in the Utica or Marcellus shale ... Where are you going to find the water? This is an opportunity for industry to stop depending on ground water and re-use industrial waste water. We want to turn wastewater into a re-useable commodity. Other commodities, once you use it, it’s gone. Water is unique, it can be cleaned. Johnson said Consol’s goal is to focus on minimizing impacts of local water resources, maximize recycling of frack or flowback water, and be in the forefront of re-purposing treated mine water. “We want to provide and sell recycled water. It’s a new business. We are not completely there yet, but we are on our way,” he said. A surprise visitor to the meeting was Jason Wilson, director of the Ohio Governor’s Office of Appalachia Development Services, who said he is traveling around the Appalachian counties to help educate the public about support from the governor’s office for the gas and oil industry, with a “show and tell” video he shot recently at a drilling site. He said it was very enlightening. “I think that by actually being on a drilling site, I could learn

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Suit filed over sale of MWCD water meeting to discuss suggestions from the public for the lease was held in October 2012 at Senecaville. The MWCD will defend itself in this lawsuit while maintaining its focus on its primary mission of serving as responsible stewards dedicated to providing the benefits of flood reduction, conservation and recreation in the Muskingum River Watershed.” The lawsuit also seeks a ruling on whether the conservancy district has violated the terms of the deed which gave federal land to the MWCD for public stewardship, and whether the Ohio Department of Natural Resources has a legal responsibility to consider environmental effects likely to be caused from fracking. The plaintiffs provided the conservancy district and ODNR copies of a hydro-geological study of Seneca Lake which they said concludes that the lake water is at unusual risk from pollution due to a legacy of unrecorded drilled gas and oil wells in the lake bed. A further risk is posed by a buried coal mine adjacent to Seneca Lake next to the dam, the Harpers said. The lawsuit also names the Ohio Department of Natural Resources and Antero Resources Appalachian as defendants.

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OLUMBUS — Lea and Steve Harper, property owners near Seneca Lake in Guernsey County, have filed suit in Franklin County Common Pleas Court after two years of efforts to stop the Muskingum Watershed Conservancy District from leasing public land and selling public water for the gas and oil industry. The Harpers said the “final straw” came last February, when the conservancy district approved the lease of Seneca Lake, the third largest inland lake in Ohio, to Antero Resources for water to be used in the horizontal drilling process known as “fracking.” The Harpers said environmental organizations and concerned citizens organized to testify to the MWCD Conservancy Court which has a governing role over the MWCD staff and board, and said the Conservancy Court declined to hear the pleas of those organized to protest the conservancy district’s decisions. The Harper family has now petitioned for a declaratory judgment from the court asking for a determination of the legitimacy of the MWCD to engage in fracking. Darrin Lautenschleger, public affairs administrator for the MWCD, said, “While the MWCD has not been served yet with a copy of the lawsuit and cannot comment on its specific contents, the conservancy district stands firmly behind its record of environmental stewardship when it comes to oil and gas leasing. The MWCD has an 80-year history of leasing its properties for oil and gas extraction, has developed a lease that is considered to be a model for the safeguards and environmental protections of public property that are included in it, and at the same time has ensured that public access to its properties for outdoor recreation are not adversely affected. “In addition, the very lease that is the subject of this suit, regarding leasing of Seneca Reservoir, was developed through a very public process that included public meetings and comment periods about its contents prior to approval of the lease by the MWCD Board of Directors earlier this year. A public

Gas & Oil

November 2013 Edition - Dix Communications

Southern Zone Edition

Litigator speaks at Buckeye STEPS meeting about landowners’ vs. protestors’ rights

Karen Kahle

Judie Perkowski Dix Communications

ddressing an issue that is becoming more prevalent and troublesome for gas and oil companies and for property owners, Karen Kahle, litigator for the Columbus law office of Steptoe & Johnson, presented possible scenarios of “when uninvited visitors arrive at your well site, what are your rights and how do you protect them?” Kahle was introduced to the stand-room-only crowd at the October Buckeye STEPS meeting by Joe Greco, president of the organization. Buckeye STEPS members meet bi-monthly at the Willett Pratt Training Center on the Cambridge campus of Zane State College. STEPS is an acronym for Service, Transmission, Exploration, Production and Safety network, that promotes safety, health and environmental improvement in the exploration and production of oil and gas in Ohio. Kahle said that while oil and gas companies only lease the property from the landowner, their rights and the landowner’s rights should be well documented to prevent any confusion. “What are your property rights as a property owner vs. environmentalists or ‘protestors’ First Amendment rights?” said Kahle. “One of the reasons for many of the protests going on is because the National Institute for Occupational Safety and Health has been looking at the effects of diesel and silica emissions, particularly at well sites.” Studies have shown that breathing diesel and silica particulates can cause respiratory and cardiovascular disease and worsening of symptoms in people with asthma. Environmentalists stage protests, hoping to discourage property owners from allowing drilling on their land, claiming the gas/oil industry isn’t doing enough to control diesel and/or silica contamination at the well sites. “To help defuse misinformation, property owners need to educate themselves about their rights, the oil/gas company’s

rights and the protestors’ rights,” said Kahle. “The property owner sets the rules. Protestors do not own the property, but there is an easement, which is a right of use of the property by others. It is considered public property. Protestors know this and they know the law. “Property owners can ask for a temporary injunction or a restraining order against protestors for violating the law or for property damage,” said Kahle. “One way to avoid calling law enforcement is to maintain a good relationship with adjoining property owners and workers and law enforcement. Police cannot or will not arrest or interfere with any action where they is no sign of criminal activity. Peaceful, non-threatening protesting is not against the law. “Be knowledgeable about the company’s policies. Procedures need to be established and communicated to all persons who occupy (work) the property long before protestors arrive. The site superintendent should introduce him/herself to law enforcement at the very beginning of the project. They should also meet with the crew, and get an emergency number for whom to call if a situation occurs. “Designate one person on site to answer questions about basic information that will not reveal anything the company considers confidential. “You need help from the landowners to control or remove protestors. That language should be in the lease regarding criminal trespassing or menacing. “If you can show the protest is a serious threat that will cause irreparable harm to your employees or equipment, you may be able to get a temporary injunction or a temporary restraining order against the protestors. It all depends on the severity of the protestors’ plans,” she said. Karen Kahle’s practice is devoted to litigation, with a focus on products liability, energy, class actions, and mass torts. She heads the firm’s Class Action and Mass Tort Team.

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Dix Communications - Gas & Oil

November 2013 Edition

50th Anniversary

Eric and Martha

spend day promoting safety Bobby Warren Dix Communications

PPLE CREEK — Eric Smith, board chairman of the Ohio Oil and Gas Energy Education Program and owner of Maric Drilling, Mount Eaton, spent his 50th anniversary with his wife, Martha, at OOGEEP’s training facility, watching another round of firefighters learn how to battle oil field disasters. Smith, who lives in Winesburg, has been involved in drilling wells since 1975, and he started his company in 1995. An industry that has been relatively unchanged for nearly a century in Ohio has changed dramatically within the past few years, he said. Gas and oil companies were generally family businesses started by someone’s grandfather, and they were drilling in the Clinton and Berea sands. Then, along came horizontal drilling, hydraulic fracturing and a shale play that attracted big, multi-national producers, “almost putting the legacy producers out of business,” said Smith, who operates “a little drilling company.” Because of the big corporations coming in, it has not done much for production for small companies like Maric Drilling.

Dix Communications Photo / Bobby Warren Eric Smith, owner of Maric Drilling and board chairman of the Ohio Oil and Gas Energy Education Program, says the industry has been relatively unchanged for nearly a century, that is, until a few years ago with big producers coming into Ohio. Smith and his wife, Martha, spent their 50th wedding anniversary at the Wayne County Regional Fire Training Facility, Apple Creek, where OOGEEP conducts its oil ﬁeld training.

With natural gas prices low, it is not economical for legacy producers to drill for natural gas, Smith said. From Smith’s perspective, the large producers come in, produce a well and when production declines, they want to get out, sell it and have someone else come in. “This industry is always cyclical with its ups and downs,” he said. “What is different now is shale is so big, I see no ups for conventional producers.” While Smith and his wife were at the training facility, which is located in the Wayne County Regional Fire Training Facility, he commented how the entire facility is “fantastic, not just our part, but the whole campus.” OOGEEP has a great relationship with the leaders of the training facility, and they continue to help firefighters understand what happens when an oil tank catches on fire.

Gas & Oil

November 2013 Edition - Dix Communications

ALDWELL — Farmers who are negotiating easements across their property for shale oil and gas pipelines may want to consider including a clause about when the company should reseed their pastures, a forage expert with Ohio State University’s College of Food, Agricultural, and Environmental Sciences said. Reseeding at the wrong time of year, which appears to be happening frequently, often results in failure, he said. Farmers need to be aware of the impact that the construction, maintenance and long-term presence these pipelines can have on their property, particularly when it comes to reseeding pipeline right-of-way pasture and hay areas, said Clif Little, an educator with the college’s outreach arm, Ohio State University Extension. Little and Mark Sulc, an OSU Extension forage specialist, recently wrote a paper, distributed to county Extension educators across the state, that said farmers should be involved in decisions regarding reseeding of pipelines. The paper is online at http://belmont.osu.edu/news/shale-gas-resources-for-landowners. The difficult issue in reseeding these easements is that installation of the pipeline may occur at any time of year, and when installation is complete, reseeding of the area may occur at a time that is not ideal for forage establishment, they said. “We’re seeing a lot of pipelines going in across Ohio farmland and because farmers are hoping to get production off of that land the next year, the timing could impede pasture establishment,” Little said. “The issue is that the majority of pastures and hayfields in Ohio are composed of perennial coolseason grasses and legumes. “But reseeding of perennial cool-season grasses that occur

Southern Zone Edition

during late June thru July 31 and Sept. 15 thru Oct. 30 will likely result in the failed establishment of a perennial cool season forage. So farmers need to be aware of this, as it’s their farms and their production that is on the line.” The issue is that pipelines go in when the companies need the infrastructure to transport product, Little said. But the installation and resulting reseeding doesn’t always occur in the ideal time period. “While in most cases, the shale gas and oil companies are the ones doing the actual reseeding, farmers should try to make sure that they are in charge of the type of forages that are reseeded and if they can, also when the reseeding is to occur,” Little said. “This is good for the famer and the pipeline reclamation because both parties want the seeding to take and be successful the first time around.” During mid-summer, cool-season forages may not germinate, or if they do germinate they may die from heat and dry soil stress. And even if they do germinate and begin to grow they will not compete well with aggressive warm season annual weeds such as foxtail and ragweed, he said. For farmers who aren’t able to ensure a spring reseeding, the best approach for a late seeding involves performing all the preparatory agronomic practices during the summer and then planting the cool season-forages with annual forage at the proper time in August, Little said. That includes: preparing the soil for a proper seed bed; soil testing, applying and mixing in lime, starter nitrogen, phosphate and potassium; followed by seeding and mulching between Aug. 1 and Sept. 1, he said. The other problematic time to attempt to seed cool-season perennial forages is Sept. 15 thru Oct. 15, as cool-season pe-

Dix Communications - Gas & Oil

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November 2013 Edition

rennial forages will probably germinate but will not likely establish a root system that is developed enough to carry them through the winter, at least not before a killing freeze occurs, Little said. “To avoid this, farmers should plant by mid-August in northern Ohio and by Sept. 1 in southern Ohio,” he said. “If not, one alternative is to wait and plant the last week of October or anytime in November through early December and include a cool-season annual forage along with the perennial cool-season forages.” Little said that with the late planting, the intended goal is that cool-season perennial grasses not germinate until spring. “But it probably would be better to hold off seeding until early spring to avoid losses of seed viability or from washing of the seed during the winter months,” he said. “Either way, the soil will need to be protected somehow from erosion losses over the winter.” That could be achieved by planting annual forages such as cereal rye and oats to control erosion even in perennial mixtures, Little said. Other options growers can use include controlling weeds by mowing or using herbicides as soon as they Photo / Clif Little come in. Growers can find more information, including management Farmers who are negotiating easements across their property for shale oil and gas pipelines may want to consider including a clause about and selection tips, in the OSU Extension “Ohio Agronomy when the company should reseed their pastures. Guide, Bulletin 472” which can be purchased from any of the 88 OSU Extension offices statewide, Little said.

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THE LANGUAGE OF

OIL AND GAS Daniel H. Plumley Critchfield, Critchfield & Johnston

Net Revenue Interest: the absolute ownership held in a lease. For example if a landowner retains a 15% royalty inven though it is English, the terminol- terest, a lease hound holds a 5% overriding royalty interest ogy of oil and gas leases is “foreign” to in the oil and gas developer has 100% working interest, the most people. As with many businesses, developer would have an 80% net revenue interest. to understand the business, you must first learn Net versus Gross: this relates to the calculation of the roythe language. Here are some of the common terms you will alty. A gross royalty is the amount paid on what is produced, encounter: and a net royalty is the amount paid after deductions for such Primary Term: the number of years the oil and gas devel- things as compression, dehydration, transportation, and market enhancement. It is customary for the landowner to seek a oper has to drill a well on the property. gross royalty calculation; however, it is becoming more comSecondary Term: once a well has been drilled, the second- mon for the landowner to share in certain post production ary term will last so long as the well is producing in paying costs particularly the cost of processing wet gas. quantities. Wet Gas: natural gas containing additional compounds that can be converted or “cracked” into butane, pentane, propane, Formation or Horizon: the geological formation in which and ethane. Wet gas is more valuable than dry gas. the well has been drilled e.g. Clinton, Marcellus, Utica.

Royalty: the percentage of production revenue retained by the landowner. This usually ranges from 12.5 to 20% and is not affected by the cost of drilling, completion or operation.

Dry Gas: is essentially just gas only containing methane.

Pugh Clause: a clause that forces the producer to release land (horizontal pugh) and formations (vertical pugh) that are Over Riding Royalty Interest: an interest held by a third not developed within the primary term of the lease. party that receives a share of the production revenue but does While the above terms are only a small sample of the lexinot share in the costs of drilling, completion or operation. con related to oil and gas leases, these are the most common Working Interest: percent of ownership that is paying for terms you will encounter. After learning the above you may not be fluent in the language, but you will at least be able to be the drilling completion and operation of a well. conversant. Good luck at your next social event where oil and Lease Hound: the person that is retained to acquire a lease gas is the topic of discussion! and often retains an overriding royalty interest for the serDaniel H. Plumley is a member at the law firm of Critchfield, vices performed. Critchfield & Johnston.

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November 2013 Edition

Clean Fuels Ohio hosts natural gas vehicle learning event L

OGAN — A group of local business owners, Hocking County employees and residents attended the Natural Gas Vehicle Lunch, Learn and Do on Thursday to learn about the benefits and possibilities of using natural gas in the area. Hocking College President Ron Erickson started the event by talking about Hocking College’s history of working with natural gas, especially at the Logan Campus. The Hocking College Energy Institute opened in 2009 and mostly worked with alternative energy sources, such as solar and water. “In 2011, everything seemed to change overnight,” Erickson said. “It was made both possible and profitable to reach deep into the Earth and the remains of ancient sea beds to extract oil and gas.” Erickson said he knows natural gas and hydraulic fracturing, or fracking, is controversial and needs a “tipping point,” when society starts to accept natural gas usage as normal. “There is a common ground where those who care about protecting the environment and those who care about economic progress can come together, put down their weapons and shake hands. And it is right here, it’s natural gas vehicles,” Erickson said. Jerry Hutton, director of gaseous fuels transportation partnership for Clean Fuels Ohio, which organized the event, explained how natural gas vehicles work and how they are being implemented in Ohio. He has worked in the natural gas industry for 40 years and said natural gas is starting to gain popularity in the country again. He added that showing natural gas is profitable is important. Hutton noted it can cut down on the amount of gasoline that is imported, creates jobs and also can reduce fuel costs. “I can take my converted Honda Civic for 300 miles on one fill, the cost being about $1.89 to $2.11 per gallon,” he said. Fuel stations are starting to be built throughout the state, but he said natural gas is commonly used for transport companies that have a fleet of trucks. Hutton said their comparable cost per gallon would be less because the natural gas would

come through its own pipeline. Hutton noted that natural gas vehicles can be filled in two ways. The first is a time-fill, which is done by plugging the vehicle into the station for about six to eight hours. The second is a fast-fill, which is pumped the same as at a gasoline station, and takes the same amount of time. Erickson said he wanted to address the “do” part of the Lunch, Learn and Do event and explained that most students who drop out of Hocking College do so because of financial and transportation issues. “A lot of our students never finish because their car breaks down or they can’t afford gas. What if we could help them?” Erickson said. Erickson said the college has the resources to convert cars to natural gas and create a public natural gas fill station, which could make them a small profit. Many attendants at the meeting asked about the possibility of converting school buses to natural gas. Hutton said it is very common for transit buses, but most school buses are choosing to switch to propane over natural gas. Hutton said the upfront cost of converting a bus to natural gas, which could be about $6,000, usually turns off school districts. But, he said the cost is an investment and will make up for itself after a few years.

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EQT MANAGER

Southern Zone Edition

OFFERS ADVICE FOR

JOB SEEKERS Judie Perkowski Dix Communications

“T

he more you learn, the more you earn,” an axiom, a self-evident or universally recognized truth. Something that should be drummed into the heads of children long before they reach high school. But, now more than ever, it’s never too late to learn a new skill. With high demand from employers and employees for jobs in the gas and oil industry, sometimes it’s a matter of education that stops job seekers from landing one of those high-paying jobs. Sometimes it’s just a matter of signing up for training classes to earn a certification, sometimes it takes more than just training — it takes a two, four or even six year degree program. And, what better place to ask about education or on-the-job training in the gas/oil industry than a company that has a stake in the Utica shale region. EQT Production has been a major player in the Appalachian Basin for more than 120 years. And, according to the EQT website, the company “employs, assigns and promotes employees based solely on their qualifications, abilities, and potential. The company provides equal opportunity in all employment-related activities and continually strives to improve our ability to recruit and develop qualified, diverse candidates,” During an interview with Linda Robertson, Manager, Media Relations at EQT Corporation, answered questions pertaining to employment and education. Q: What kind of training does EQT offer its current or new employees? Robertson: Field employees are required to take part in educational instruction through EQT’s training department, in addition to training they receive while on the job. Depending on the position, in particular, for well operators and pipeline

EQT employees enroll in training programs to advance their skills

operators Operator Qualification training is required. Of course, different positions require different training in all specialized programs. These programs are designed to improve the employee’s effectiveness in their specific position. Q: What jobs require more than a high school education? Robertson: EQT has an Education Assistance Program with 100 percent tuition reimbursement that offers employees incentive to seek out advanced degrees that will apply to their current position and help in future positions at EQT. The company also encourages employees to take part in course training designed to enhance and maintain specific certifications, such as those needed by CPAs. In general, for both field and office positions, EQT offers supervisory leadership training for individuals who manage people. For industry specific technical positions, such as engineers, landmen, etc., employees are encouraged to find specific training courses that are more tailed to their individual needs for their job. Q: What are the most sought-after or desirable jobs and what and how much formal educations is required: Robertson: Some of the most sought-after positions at EQT are for entry level engineers, geologists and landmen, all careers which require a college degree. Other sought-after positions are in the field: routsabouts and well operators, positions that require a high school or GED diploma. Also, EQT’s internship program is always in high demand. The program focuses on talent in land, engineering and geology. For job postings, visit EQT Corporation and click on the link “career opportunities,” or visit the Guernsey County Opportunity Center (also known as the One Stop), 324 Highland Ave., 740- 432-2381.

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November 2013 Edition - Dix Communications

Halliburton bringing jobs to

Muskingum-co.

ESTON, W.Va. (AP) — Halliburton announced this week that it’s pulling out of Lewis County and relocating all operations to its new facility in Zanesville. WBOY-TV says the company announced the final phases of the plan to employees this week and told them they would be offered positions in Ohio. Muskingum County Commissioner Jerry Lavy said he learned of the decision on Thursday morning. And while Muskingum County’s good fortune comes at the expense of the West Virginia community, those employees affected were offered the opportunity to relocate to the Zanesville facility or to other Halliburton facilities. Spokeswoman Susie McMichael wouldn’t say how many employees will be unemployed or how many plan to accept work at other Halliburton locations.

Some operations were shifted to Zanesville about three months ago. The cementing operation move on Tuesday completed the process. Lavy said the move is good for this region. “Any time there is going to be jobs created, that’s a plus for our community,” he said. “And they can draw (employees) from surrounding counties as well. So, it’s a plus for everybody. There are 100 plus acres out there, so there is a lot of room to expand.” Halliburton serves the oil and gas industry, and has other facilities in West Virginia. Founded in 1919, it employs more than 75,000 employees in 80 countries and is one of the world’s largest providers of products and services to the energy industry. (Dix Communications reporter John Lowe contributed to this story.)

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November 2013 Edition

Devco Donates Shirts to School

Dix Communications Photo / Michael Neilson South Elementary School students and staff gather outside the Cambridge school in appreciation of their snazzy new school shirts. Todd and Cassie Dever (in front on left and center), representing Devco Oil Inc., designed and paid for the shirts this year. Mr. Dever is chief operating ofďŹ cer at Devco, and Mrs. Dever is a reading recovery and reading teacher at South. Principal Linda Halterman says everyone at South is thrilled with the stand-out color and grateful to the folks at Devco for their generous support.

OHIO WELL ACTIVITY

by the numbers

MARCELLUS SHALE

17 3 8 0 7 0 0 35

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

UTICA SHALE 3 5 2 Wells Permitted 83 Wells Drilling 331 Wells Drilled 0 Not Drilled 1 6 9 Wells Producing 0 Inactive 0 Plugged 935 Total Horizontal Permits

Data as of 10/19/13 Source: Ohio Department of Natural Resources

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Dix Communications - Gas & Oil

November 2013 Edition

Hartley Co. ponders compressed

natural gas options Judie Perkowski Dix Communications

AMBRIDGE — Acknowledging rumors about converting one of the gas stations in Cambridge into a compressed natural gas station, Hartley Company President Doug Hartley said, “we are educating ourselves about compressed natural gas. We are unsure about public reaction to the whole idea of CNG-fueled vehicles. But, we are willing to take the proverbial ‘leap of faith’ and install a compressor and lines for CNG at the former BP station on Steubenville Avenue and Clark Street, which is currently leased as a used car lot. “When the lease is up this fall, our plan is to adapt the station to CNG, and eventually convert some of our (gasolinepowered) vehicles to run on CNG. With the price of compressed natural gas about half the cost of a comparable gallon of regular gasoline, offering CNG to fleets will be our target, and eventually make it accessible to all consumers.” When asked if the Utica Shale gas and oil boom has had an effect on the Hartley Company, he said they are going to re-open one of the BP stores in Harrison County that was closed several years ago. The store will be renamed to carry the Starfire brand. And there is more good news regarding employment at the Hartley Company. “We have created five new positions within the company and promoted four of our managers to a higher level,” said Hartley. Retail and wholesale gas is the company’s primary business, although they maintain a partnership with two area roofing companies, Saup-Hartley and Fleming-Hartley, referred to by Hartley as “sister” companies. In regards to the company’s bottom line, he said, “we have never seen anything like this in probably the 100-plus years since the business was founded. We cannot keep up with the demand (for gasoline) ... If people are smart they can benefit from all of this.”

Doug Hartley is the fifth generation to assume a leadership role in the family business, which includes his step-brother, Eric Johnson, a senior vice-president, and his sister, Sarah Allen, who resides in Texas and does computer work. The Hartley family entered into their first business venture in 1870 when W.H. Hartley and Sons opened a hardware store in Quaker City, which provided heating and roofing throughout the area. The rapid growth of the business lead to an expansion into Cambridge in the early 1900s. At the request of his son, Milton, Hartley added a 100-gallon tank in front of the store offering gasoline to customers for 12 cents a gallon, delivered to them in five-gallon cans. Since 1912 when the first Hartley gas station was opened at the corner of Wheeling Avenue and 12th Street, to the present day, the Hartley Company’s success has depended on the innate business acumen of family members to continue William Hartley’s legacy for future generations. The Hartley Company currently owns 49 convenient-gasoline stores in Ohio under the brand names of BP, Shell, Starfire and Gulf. jperkowski@daily-jeff.com Agricultural & Industrial Service & Repair

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