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Table of Contents

PUBLISHERS Andrew S. Dix

Utica Summit II Risks Must Be Managed

Give a Gift That Continues Forever

MWCD Cuts Assessments by Half

Highlighting the Shale Insight Conference

Ohioans Could be Paying Less for Winter Heating

Thorla-McKee Oil Festival Celebrates

Ohio Oil and Gas Associations Oilfield Expo

Ray Booth

Study: Shale Supply Chain to Generate Growth

Rob Todor

Legislator Pushes for CNG

Horizontal Drilling Will Improve, Not Hurt Health

Denver-Based Antero Resources Eyeing Region

28 31

G.C. Dix II

Laurie Huffman / Dix Communication

David Dix

State Senator Troy Balderson / Ohio 20th District

EXECUTIVE EDITORS Lance White

Amadeus Smith / Dix Communications

Roger DiPaolo

Kristen Spicker / Dix Communication

Paul Locher / Dix Communications Chris Faulkner

Rachel Sluss / Dix Communication

Natural Gas Pipeline Impacts Ashland County Dan Kubacki / Dix Communication

Ohio Supreme Court to Hear Undrilled Leases Cases David Wigham / Attorney

Energy Briefs

Group Pushing Disclosure of Well Chemicals

College Students Get Experience Surveying

Marc Kovac / Dix Capital Bureau

REGIONAL EDITORS Kimberly Lewis Erica Peterson Cathryn Stanley Niki Wolfe Judie Perkowski

Amadeus Smith / Dix Communications

Landmen: Human Side of the Industry Kristen Spicker / Dix Communication

Ethane Would Support 3 Large Cracker Plants Laurie Huffman / Dix Communication

LAYOUT DESIGNER

ADVERTISING DIRECTORS Kim Brenning

Rhonda Geer

Harry Newman

Jeff Kaplan

Ed Archibald

Jeff Pezzano

DIGITAL CONTENT MANAGER COVERAGE AREA Brad Tansey ART DIRECTOR Pete Kiko

LAYOUT DESIGNER Jenna Conaway

Ohio OCTOBER 2012 • www.ohiogo.com

A FREE MONTHLY PUBLICATION

Amerimar, Inc. Will Use Firestone Properties

Sarah Tipka is Teaching the ABC’s of Oil and Gas

Stark Commissioner Says Gas and Oil Welcome

Reseeding Over Pipeline

Beck Energy Files Complaint Against Munroe Falls

Company Says, ‘Gasoline has Met Its Match’

Ohio Shale Projects Worth $3.5 Billion

Marcellus to Continue Record Run

Propane Industry Forecasts Are Positive

Trust has to Go Both Ways

Gas and Oil 101

Hess Corp. Offers YSU Scholarships in STEM

Pink in Power: Doing Our Bit

Gulfport Awards Over $60,000 in Grants

Marietta College and Brouse McDowell Host Symposium

Studies Show No Link to Water Contamination

Energy Jobs Fair

Family Limited Partnerships and LLC’s

Sophie Kruse / Dix Communication

Judie Perkowski / Dix Communication Laurie Huffman / Dix Communication

Kevin Lynch / Dix Communication Kristen Spicker / Dix Communication Judie Perkowski / Dix Communication

Don Gadd / Landman

Kristen Spicker / Dix Communication David Hill / President, Ohio Oil and Gas Association United States Senator Rob Portman Frank McClure / Attorney

Christopher Guith Laurie Huffman Dix Communications

hristopher Guith, who leads the development of the Energy Institute’s policies related to oil and gas and nuclear energy for the U.S. Chamber of Commerce, said during a recent Utica Summit II event that while there is a lot of good news related to oil and gas development, there are also a few storm clouds forming on the horizon. Good news included the fact that the demand for energy in Asia, primarily China, will double between 2008 and 2035, and the U.S. is positioned well as it possesses tremendous domestic energy resources. Ninety percent of the world’s oil reserves are owned by national companies called the “big five”; the U.S. has 120 years of experience in drilling for natural gas and 206 in oil, plus 464 years in coal mining. Jobs supported by shale fueling in Ohio are estimated to grow from 38,000 in 2012 to 146,000 in 2020 and 267,000 in 2035. Economic growth due to shale fueling in Ohio is estimated to grow from $4.1 billion in 2012 to $17.9 billion in 2020 and $35.3 billion in 2035. “No one in Ohio government was expecting this type of revenue to be flowing in,” said Guith. “The industrial gas consumption has returned, and is now matching the electrical demand.” The shale revolution is spawning a manufacturing renaissance in iron/steel, resins, chemical manufacturing, plastics, agricultural chemicals, and many, many more industries, he also reported. Exports are becoming increasingly more important to the petrochemical industry. The costs of ethylene is now about one third here of what it costs in the rest of the world. And, of its trading partners, the U.S./Mexico/Canada block now has the cheapest electricity in the world. The number of workers is jumping up along with the tax revenue. The shale revolution is now estimated to put an additional $1,200 in disposable income into each household in America in the not too distant future. “So, even in Washington, they probably don’t have a real understanding of what’s flowing in as far as tax revenues are concerned,” said Guith. “But, there are still risks for North America and Ohio that could slow or disrupt oil and gas development.” One area of concern Guith oultined was the shut down of coal production, which he said may upset the apple cart by taking

some of the diversity away from the country’s energy resources, which will, in turn, raise prices for energy, overall. Of the 15 to 20 percent of the country’s coal fleets planned for shut down by 2015, a heavy concentration of these are in Ohio. “We will see energy costs increase because of this, and during the next cold snap, we could see natural gas prices go up by two thirds because coal was always utilized during very cold spells,” said Guith.

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Christopher Guith

He is also concerned about states, such as Colorado and others, which are passing legislature to ban hydraulic fracturing. In addition, the U.S. taking a leading role in environmental reform could also commit the country to things we are not ready for, he said. Guith also reported while the federal government won’t take over the role the ODNR has in regulating gas and oil, it could very well change the laws so the companies would have to answer to people in Columbus as well as in Washington, and that would add to the costs. And, while some don’t want to see exports, Guith pointed out the U.S. is producing so much domestic oil now some wells have had to be shut down because the infrastructure isn’t in place yet to handle it. He said the same thing could happen with natural gas, which would cause a stagnancy and lack of new jobs. “People don’t want to see us exporting, but, Washington just wants to see efficiency,” he explained. “We have natural resources in this country, and by us using them it will only benefit the rest of the world. Already, by us burning less oil, the cost has come down for the rest of the world...But, we have to take time to talk about the benefits. We can’t just sit back and think, okay, oil and gas is coming,” Guith concluded.

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iving back is nothing new in Guernsey County. Our community is full of citizens and organizations who give, help others, and make a difference. The ways we can make a difference, however, changed with the creation of the Guernsey County Foundation and increased oil and gas development across the county. Each development has significantly increased opportunities across Guernsey County. The Guernsey County Foundation was created with the Foundation for Appalachian Ohio to impact the community’s quality of life. With 32 funds and more than $4 million in assets, we have grown the resources available to our community while remaining committed to the belief that when individuals combine their time, talent, and resources to focus on a single goal, you see the Power of One. This Power means that gifts to The Guernsey County Foundation make a lasting difference, one that will impact generations across our county. While some reading this may not be familiar with the Guernsey County Foundation, community foundations aren’t new. This year marks the 100th anniversary of the nation’s very first community foundation in Cleveland and our neighboring counties like Muskingum and Coshocton have been benefiting from the ability to give locally for years. With the Guernsey County Foundation, we have joined their ranks. Though we are not celebrating a 100th anniversary, we know this is our time. With the development of oil and gas across our county, Guernsey County has an opportunity to invest the resources and wealth coming from our land into our county and its future. The funds created at the Guernsey County Foundation are tributes to families and loved ones. They fund citizens’ passions and create opportunities. Most importantly, they are sources of permanent support to our county’s nonprofits, communities, students, and leaders. The beauty of our community foundation is that it is here to help you give a gift whenever you are ready and to make sure your gift continues forever. All gifts to the Guernsey County Foundation are tax deductible so your gift remains in and for Guernsey County. We are here to help you create your legacy. As you think about your estate and what legacy you would like to leave behind for your family, friends, and community, consider leaving a stronger Guernsey County. It can all start with one gift.

It’s Guernsey County’s time to plan our legacy. Let’s make the legacy of oil and gas development in Guernsey County one of com10294180 passionate and smart giving. Let us be known as the generation who laid the foundation on which Guernsey County’s bright future was built. Together, we can turn each of our own legacies into one great legacy for Guernsey County. It’s the Power of One. One County. One Goal. One Legacy. To learn more about The Guernsey County Foundation and how you can make a difference with us, please visit www.guernseycountyfoundation.org.

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EW PHILADELPHIA, OH — Property owners will see assessments paid to the Muskingum Watershed Conservancy District cut in half beginning next year as the result of action taken by the board of directors during its recent regularly scheduled meeting in New Philadelphia. Members of the MWCD board approved a plan to provide for a 50 percent reduction in all assessment payments from property owners beginning in 2015 by using funds generated from the conservancy district’s recent oil and gas leases of its property in the Utica Shale development to cover project costs normally paid for by the assessment funds. MWCD officials also have pledged that they will continue to review periodic financial reports to determine if the reductions will be warranted in succeeding years or if further reductions could be enacted due to revenues produced from the oil and gas leases. “As we become more certain of revenue projections, our goal is to use these funds to systematically reduce the collection of the assessment, and eventually, suspend collection entirely,” said Richard Pryce, board president. The assessment reduction will result in an estimated $5.5 million overall cut in the amount collected by the MWCD in 2015. The conservancy district instead will use oil and gas funds to fill that gap and ensure that projects to protect and improve the system of reservoirs and dams constructed in the 1930s continue as planned. “Through the wise guidance of the MWCD’s Board of Direc-

tors, the oil and gas management on the district’s properties have permitted the MWCD to invest in our public-use facilities and recreational areas, and now it is possible to extend those benefits to the property owners in our watershed by enacting this 50 percent reduction in the assessment collection,” said John M. Hoopingarner, MWCD executive director/secretary. “It has been and will continue to be our goal to maximize the public benefits that have been created by the responsible stewardship of the MWCD’s natural resources.”

John M. Hoopingarner, MWCD executive director/secretary —

The approved assessment reduction also will mean that the owners of commercial and industrial parcels of property who pay the assessment will see an overall reduction of nearly $2.3 million in their property tax statements.

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ITTSBURGH, PA — By all accounts, the fourth annual SHALE INSIGHT™ conference was a tremendous success. Hosted in Pittsburgh, Pa. for the first time, the event – which drew nearly 2,000 attendees – featured key energy experts, leading executives and other thought-leaders, who focused on a broad range of issues associated with responsible, job-creating shale development. The conference offered technical breakout sessions and educational workshops (which all sold out) as well as a dedicated innovation showcase center. In addition, SHALE INSIGHT™ hosted a lineup of keynote speakers who highlighted the “transformational” benefits of shale development, which is “carrying the rest of the economy on its shoulders.” Speakers included nationally-syndicated talk show host, Sean Hannity; Fox’s The Five co-host and former White House press secretary, Dana Perino; former New Mexico governor, Bill Richardson; former and current Pa. governors Tom Ridge and Tom Corbett; as well as top industry executives from Chevron, XTO Energy, EQT and MarkWest. Here’s what they’re saying about SHALE INSIGHT™: “TRANSFORMATIONAL” IMPACT FOR OUR ECONOMY • Our Regional, National “Economy Needs Energy Development”: If there was a single theme threading the final speeches during the MSC’s conference, it was that economy needs energy development. The idea was central to talks given by Fox News pundit Sean Hannity, former Pennsylvania Gov. Tom Ridge and current Gov. Tom Corbett. … [Gov.] Corbett … also touted the natural gas industry’s growth in Pennsylvania. … Mr. Corbett stressed that he opposes a severance tax on the industry, and pointed to the state’s impact fee, which hasgenerated $630 million for the state. (Pittsburgh Post-Gazette, 9/26/14)

… This year, based on mid-year data from DEP, Spigelmyer said operators will produce more than 4 trillion cubic feet of natural gas in Pennsylvania alone, which will amount to about 20 percent of the annual U.S. supply. … “We’re all laser focused on ensuring government policies encourage, rather than discourage, investment into the commonwealth, which is crucial to maximizing local job creation, tax and fee revenues, along with expanded natural gas production and use.” … Randy Cleveland, president of XTO Energy, spoke about the responsibilities, policies and people needed to keep the industry successful. “We must continue to focus on our responsibility and highest commitment to operate in a safe and secure manner while being good environmental stewards,” he said. (Butler Eagle, 9/25/14) • Economist Steven Moore: Shale is Carrying the Economy on its Shoulders: Stephen Moore believes the U.S. economy would still be in the midst of the Great Recession of 2008-09 if natural gas companies did not advance horizontal drilling and fracking techniques. “How in the world can you be against fracking,” Moore, chief economist for the Heritage Foundation think tank, said Wednesday during the during the Shale Insight 2014 conference. “This is the industry that is, quite literally, carrying the rest of the economy on its shoulders,” he said. “Without these incredible innovations in the energy industry, there would be no economic recovery.” (Wheeling News-Register, 9/25/14) • “An Incredible Energy Economy Right Now”: “Without the energy boom in West Virginia, Pennsylvania and Ohio, there would not be an economic boom,” said Stephen Moore, chief economist of the Heritage Foundation. “This is an incredible energy economy right now.” The MSC-backed conference, now in its fourth year, brings together nearly 2,000 national — and international — industry executives, policymakers and technical experts under one roof to discuss the latest developments and opportunities brought about by shale. … Moore, who previously wrote on the economy and public policy for the Wall Street Journal, said he is bullish on the economy, saying that utility rates are half what they were in 2008, during the economic recession and prior to Barack Obama being elected to his first term. (Beaver County Times, 9/25/14)

• Conference Highlights “Transformational Shale Development”: The MSC on Wednesday kicked off the two-day Shale Insight 2014 conference, which is a forum for industry leaders to share knowledge to improve the development of shale. … “It’s important to take a step back and recognize how transformational shale gas development has been for this region over the past 10 years and the scale and scope of shale’s potential forgenerations to come,” [MSC president Dave Spigelmyer] said. According to • Economist Credits U.S. Shale with Economic Recovery: EIA, Spigelmyer said operators are producing more than 16 bil- The Heritage Foundation’s chief economist Stephen Moore kicked lion cubic feet of natural gas per day from the Marcellus Shale off this year’s Shale Insight conference in Pittsburgh by telling an

audience that without advances in the onshore oil and gas indus- estimated that the shale strata has 370 trillion cubic feet in remaintry there would be no economic recovery in the U.S. … “You ing resources. With the neighboring Utica Shale strata still in the can’t get a feel for the kind of recovery we’ve had in this country early stages of development, Semple said theAppalachian Basin is without understanding what’s happening in the industry you all poised for more growth. … “This is an opportunity we simply have are involved in … Without these incredible innovations that have to get right,” he said. “We must be good stewards of our environhappened in the energy industry — there would be no economic ment and be responsive to communities.” (Washington Observerrecovery. This is an incredibly energy-dependent economy right Reporter, 9/25/14) now.” The U.S. Census Bureau said in March the mining, quarrying and oil and gas extraction sector was among the fastest-growing • XTO Energy President Underscores Importance of Opsectorsbetween 2007 and 2012 … Employment across the sec- erational Transparency: Randy J. Cleveland, president of XTO tor increased by 23% to 903,841 jobs during the five-year period, Energy, the ExxonMobil subsidiary that is the nation’s largest gas while revenues jumped by 34% to $555 billion in the same period. producer, encouraged the industry to step up outreach with local The oil and gas industry alone employed about 192,000 people na- communities. “If you look across the country, in areas where we are tionwide, according to the report … The report also said payrolls welcomed vs. areas where we see resistance, local engagement is the grew 60% to hit $15.4 billion. (Natural Gas Intelligence, 9/24/14) common thread,” he said. “Where it’s strong, we thrive. And where it’s weaker, we have difficulty.” (Philadelphia Inquirer, 9/24/14) • Allegheny Co. Exec. Rich Fitzgerald: “Shale Key to Pittsburgh’s Renaissance, Resurgence”: This is the fourth annual In- A BRIGHT FUTURE FOR OUR REGION, NATION sight, and first conducted outside Philadelphia. It is organized by • “Panel supports exporting liquefied natural gas”: As to the North Fayette Township-based MSC, which supports oil and gas question of whether exporting liquefied natural gas is a good idea, exploration companies and their supply chain partners in Marcellus the answer is yes, it is, according to participants in a panel discusShale, the world’s largest natural gas deposit. … Allegheny County sion at the Marcellus Shale Coalition’s Shale Insight conference. Executive Rich Fitzgerald, who helped bring natural gas drilling to There is a market for LNG in Japan, said Kazuyuki Onose, senior Pittsburgh International Airport and Deer Lakes Park, got a charge vice president at Sumitomo Corp. of Americas. He said the Fukufrom the audience when he compared the region’s energy environ- shima nuclear disaster has forced the country to rely more heavily ment to a topic that is electric: the Pirates’ clinching of a playoff on natural gas, which it already is exporting at high prices. And berth 10 hours earlier. “The Pirates struggled for 20 years, kind of also, it would end a gas pricing system linked to crude oil prices. like Pittsburgh. Well, the Pirates are doing well and so is Pittsburgh. Exporting would create jobs domestically and boost tax revenues, We’re seeing a Pittsburgh renaissance, a Pittsburgh resurgence, and said Bruce McKay, managing director for federal affairs at Dominshale gas is a key to that.” (Washington Observer-Reporter, 9/24/14) ion. … Exporting would have a marginal impact on domestic prices, said James Balaschak, a principal with Deloitte LLP’s energy SAFE, TIGHTLY-REGULATED DEVELOPMENT and resource practice. … And overall it’s simply a great opportu• Pa. Gov. Tom Ridge: “Look to Energy Security for a Safer nity, and one that could help alter the course of other international Future”: Former Secretary of Homeland Security Tom Ridge issues, said Michael Krancer, former secretary of the Pennsylvania challenged attendees at the MSC’s Shale Insight conference to con- Department of Transportation and now chair of the energy industry sider the security of the country’s energy infrastructure. … Real team at Blank Rome. (Pittsburgh Business Times, 9/24/14) energy security, he said, is being both unreliant on others for this country’s energy needs and keeping the energy infrastructure safe. • Fluid Recovery Services Leads Session On Water Sourc(Pittsburgh Business Times, 9/25/14) ing At Shale Insight: Fluid Recovery Services (FRS) will have a prominent role in the Shale Insight 2014 conference program. • MSC Board Members: This is an Opportunity We Need to The company will sponsor a session on Water Sourcing: An Update Get Right: EQT President and CEO David Porges told the group on Water Resources Acquisition within the Basin … A Marcellus earlier Thursday that the industry must continue to go above and Shale Coalition conference, Shale Insight 2014 offers participants beyond compliance with state and federal regulations if it hopes to the opportunity to connect and interact with industry-leading CEOs, make communities comfortable with the drilling process. … The elected officials and thought leaders, all of whom play a critical need to “get it right” was also a theme of Frank Semple, chair- role in crafting the public policy and technical landscape that deman, president and CEO of midstream operator MarkWest Energy fine shale gas development around the world. (Release, 9/24/14) Partners. Semple … said the Marcellus region is a game-changer in terms of its production potential. “If the Marcellus were a coun• Chevron Drives, Invests in Continuous Innovation: There try, it would be among the top 10 gas producers in the world,” he are at least three major avenues of innovation at Chevron. There said, noting that the U.S. Energy Information Administration has are the traditional research and development centers — the energy

giant has four — that still play a large role in moving technology forward. … The California-based company’s venture capital arm has five active funds, and has invested in more than 75 companies to date. Another 35 or so are in its portfolio. From hundreds of annual pitches, Chevron usually picks about five each year. Mr. Anbarci spoke Tuesday at the Marcellus Shale Coaltion’s Shale Insight conference at the David L. Lawrence Convention Center, Downtown. … He spoke at a technology showcase sponsored by Ben Franklin Shale Gas Innovation and Commercialization Center on the first day of the conference held by the MSC. … If there’s one theme for companies looking for the Chevron’s backing today, it’s ideas focused on improving operational performance. (Pittsburgh Post-Gazette, 9/23/14) • XTO Energy President Reinforces Importance of Sound Policy: Sound government policy, a commitment to operating responsibility and an investment in people are key to keeping the momentum of the shale gas boom, said XTO Energy President Randy Cleveland Wednesday at the MSC’s Shale Insight conference. Cleveland said that in terms of policy, Pa. needs to have a tax structure that provides adequate resources to the communities in which it operates. He also said the industry must collaborate with educational institutions to create more opportunities for young people to receive technical training, given a shortage of people who have expertise in areas such as welding and pipe fitting. … “We need to make sure energy development is regulated effectively,” he said. (Pittsburgh Business Times, 9/24/14) • SHALE INSIGHT™ 2014 “Showcases Pittsburgh’s Role in Energy Economy”: The MSC’s annual Shale Insight conference formally got underway Wednesday morning at Pittsburgh’s David L. Lawrence Convention Center. In opening remarks, coalition president David Spigelmyer said the coalition is glad to bring the conference to Pittsburgh — in years past, it has been held in Philadelphia. “We’re thrilled to showcase the city of Pittsburgh,” he said. Conference attendees also were welcomed by Allegheny Co. Executive Rich Fitzgerald, who said the energy industry has helped to drive Pittsburgh’s renaissance. He said the challenge now will be to use the area’s energy resources to attract more manufacturers and to find more ways to use natural gas as a feedstock. Also speaking Wednesday morning was Stephen Moore, chief economist for the Heritage Foundation. Moore said the energy boom is a tribute to American ingenuity and its entrepreneurial spirit. … “This is an incredibly energy-dependent economy right now,” he said. (Pittsburgh Business Times, 9/24/14) • MSC Highlights Benefits of the Impact Fee Tax: Shale drillers must overcome image problems and attempts to raise taxes if they want to seize an opportunity to make Pennsylvania a long-

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term energy hub, executives and analysts said during a gathering in Pittsburgh on SPECIALTY EXHAUST Wednesday. … Maintain- YOUR SPECIALTY EXHAUST SOURCE ing success in the nation’s fastest-growing natural gas play requires good tax policies, corporate responsibility and workforce development, Cleveland, the head of the nation’s largest natural gas producer, said earlier in a speech at the annual Shale Insight conference at the David L. Lawrence Convention Center. … “The disinformation and propaganda machine against what you do 10299657 740-732-5551 is frightening,” said Stephen Moore. (Pittsburgh Tribune- www.actionspecialtyexhaust.com 514 North St. • Caldwell, OH Review, 9/24/14)

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he U.S. Energy Information Administration (EIA) expects higher prices this winter for consumers using natural gas to heat their homes. But Ohioans could be paying less than consumers living in other parts of the country. Much of the country east of the Rocky Mountains experienced record low temperatures last winter, and those temperatures led to significant depletion of stored natural gas. Spring came with speculations of high prices for the following winter due to the depletion. However, according to a report from the EIA, growing gas production and record storage injection brought 2014-2015 winters futures prices from almost $5/MMBtu in April to near $4/ MMBtu this fall. Frank Gonzalez, Secretary-Treasurer for GonzOil in Canton, Ohio, said the bounce-back is partly due to a cooler summer this year. “That reduced the amount of natural gas burned by the electric generators to meet peak A/C demand - there really wasn’t any. So that enabled greater than expected natural gas storage injections all summer long,” Gonzalez said in an email. Shawn Bennett, senior vice president of the Ohio Oil & Gas Association, said gas and oil companies in Ohio have seen a boom in natural gas production, which has brought storage levels back to capacity. “We are actually paying less for gas in Ohio and Pennsylvania because of the glut of natural gas coming out of the Marcellus and Utica,” Bennett said. Ohioans can expect continued depression of gas prices, he said. The economic impact of the Utica and Marcellus, at least for consumers, has only recently started. “The effects of the shale gas are just now being felt,” Gonzalez said. “It took a long time to build the infrastructure required to separate the oil, gas and liquids but those plants are coming on line now.” Consumption, weather, the amount of gas in storage and possible disruptions in production all play into the price of natural gas, Bennett said. Exports could, too. Bennett said Ohio’s gas and oil producers are looking to expand

the market to the South, Midwest and as far east as Washington D.C.. He said with the amount of natural gas production in the state, there aren’t enough consumers in the current market. Operators are looking specifically at Cove Point, a Dominion terminal in Maryland which recently got federal approval on exporting liquefied natural gas, given its proximity to the Utica and Marcellus. Bennett said broadening the market, opening it to exports, won’t have much of an effect on gas prices for Ohio consumers, that it will simply get Ohio companies back to the national average for money generated from sales. “Our operators will be able to achieve value in a more balanced market while helping to mitigate the negative basis for the gas they sell in this region,” Bennett said.

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ALDWELL, OH — The Thorla-McKee Oil Festival battled chilly weather and rain but organizers were still pleased with the event. Despite periods of sunny weather earlier in the day, the festival shut down early due to rain. However, during the few sunny moments, people milled around the Thorla-McKee Park and enjoyed stopping to check out all the vendors. “Things went great,” said Jill McCartney, executive director of the Noble County Chamber of Commerce and Tourism Bureau. “We had a couple hundred folks there throughout the day. Our sponsors were very pleased.” McCartney isn’t letting the dreary weather keep her from looking forward. The Chamber plans on continuing the Thorla-McKee Festival next year and making it an annual event. “[We’re] not certain if we will continue with the date we used this year,” McCartney explained. “We are looking into that now.” The Thorla-McKee Festival celebrated the 200th anniversary of Silas Thorla and Robert McKee’s accidental creation of the first oil well in North America. With the resurgence of the oil and gas industries in Noble County, the festival aimed to educate locals

about the their ties to the industry. The festival featured industry vendors, food and drink, a park dedication and educational children’s games based off the oil and gas industry. It also provided the Chamber with a chance to show off the Thorla-McKee Park’s new look. Volunteers spent the summer cleaning and renovating the park for its 200th anniversary. Ruined wood from the BZ&C Railroad caboose was replaced and repainted, an educational kiosk was installed and a new Ohio historical marker replaced the one that previously laid flat on the ground. Other renovations included new park benches and picnic tables, a restored flag station and tree trimming. “We had some amazing volunteers that helped out before, during and after the festival—I could not have made this happen without them,” McCartney stated. Although the festival was a few days ago, she already has a few ideas for next year. “Add more entertainment, [which] will be done differently and add a few more vendors,” McCartney explained. “And of course the biggest change, order better weather.”

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OLUMBUS, OH — The Ohio Oil and Gas Association (OOGA) is hosting its 4th Annual Oilfield Expo and Technical Conference at Cleveland’s I-X Center December 3 - 4. Ohio’s premier oil and gas industry event, OOGA’s Oilfield Expo offers training sessions, technical workshops, industry expert panels and 50,000 square feet of trade show floor. New features for the 2014 Expo include the Oilfield Celebration Reception, a networking event that will be held on the trade show floor, and the Technical Conference, which includes a featured presentation about applying the technique of horizontal drilling for use in conventional oil and gas wells. “This is our fourth year hosting the Oilfield Expo and I believe this is our best one yet,” said Tom Stewart, executive vice presi-

dent of OOGA. “The event is a prime opportunity for oil and gas professionals to make new contacts, learn about technological advancements and emerging issues and hear from industry leaders. It’s also ideal for companies and individuals who want to learn about Ohio’s expanding energy sector.” For more information about OOGA’s 2014 Oilfield Expo and Technical Conference, visit http://ooga.org/expo/. About the Ohio Oil and Gas Association The Ohio Oil and Gas Association is a trade association with more than 3,300 members involved in the exploration, production and development of crude oil and natural gas resources within the state of Ohio. For more information, visit www.ooga.org.

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become better educated about Ohio’s energy production and the many advantages it offers. “We need to get the governor to move on it ( HB336),” said O’Brien, noting that currently the state is not effectively utilizing its own energy resources. “There’s an energy revolution going on right here in Ohio,” O’Brien said. “We can make enough power here for 100 years. It’s exciting what’s going on. We have to do this, but we have to do it right.” Reporter Paul Locher can be reached at 330-682-2055, or at plocher@the-daily-record.com.

RRVILLE – State Representative Sean J. O’Brien made a stop at the compressed natural gas station on Hostetler Road this week, seeking to drum up support for his House Bill 336 which promotes the use of CNG and other Ohio energy products. Traveling with Jason Phillips, policy director for Columbusbased Clean Fuels Ohio, Obrien is making a swing around Ohio which is taking him to energy facilities in Columbus, Dublin, Cincinnati, Dayton, Toledo and Orrville. O’Brien said that energy mined from the state’s productive Utica and Marcellus shale formations needs to be promoted as a “low cost fuel which offers consumers more bang for the buck.” O’Brien said that not only is Ohio-produced gas environmentally friendly and cheaper than imported oil – as evidenced by the posted price at the station showing it to be about $2 less per gallon – but it has the potential to stimulate job growth across the board in the Buckeye State. O’Brien wants to see more grants, tax breaks and incentives put into the hands of Ohio energy producers and support industries. At the CNG station, Phillips and O’Brien got a tour of its workings from Chuck Diehl, fleet manager for the Smith Dairy Products Co. which built the facility two years ago. Ostensibly the station was built to supply the dairy’s own trucks which are steadily undergoing a conversion to natural gas. But Smith’s decided to open the station to the public, and found it getting widespread use by such fleets as Kimble, Frito-Lay and Dillon Transport. Diehl said Smith’s is working toward converting its entire 400-vehicle truck fleet to natural gas by 2030. He said that in the past two years 26 of Smith’s trucks have undergone the CNC conversion, and that 12 new trucks factory built to run on natural gas will soon join the fleet. Diehl noted, however, that Smith’s no longer owns the fuel site, having sold it in June of IGS Energy of Columbus. He said the dairy decided to sell the station in order to free up capital to advance its primary interests. “IGS can take the station to a level that we never could,” Diehl said, adding that Smith’s wants to use money from the sale to purchase additional CNG-powered trucks. Diehl said under the arrangement, Smith’s manages the fuel site for IGS. O’Brien said that Ohio lawmakers as well as the public needs to

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niversity of Maryland researchers just concluded that hydraulic fracturing -- the process of shaking oil and gas free from below -- could endanger the health of nearby residents by exposing them to air and water pollution. This would certainly be cause for alarm, if true. But it’s not. The study doesn’t hold up to scrutiny. And its baseless claims could threaten a drilling technique that has actually lessened the harmful health impacts of the energy industry by reducing our reliance on coal. Maryland researchers largely base their research on flawed emissions data from the Colorado School of Public Health. The Colorado study -- which blames fracking for high levels of local benzene -- relies on air samples at well sites located within a mile of a major interstate. Vehicle exhaust is the largest source of benzene, but the Colorado research doesn’t even control for its share of emissions. What’s more, the Colorado data relies on unrealistic inputs. The researchers assumed it takes five years to develop a well, when it actually takes as few as six months. Industry experts from the Independent Petroleum Association of America estimate this assumption causes the study to inflate pollutant-exposure times by as much as 900 percent. Even Colorado’s own public health department has questioned this data. After conducting its own air quality monitoring near local fracking wells, the department found “concentrations of various compounds comparatively low and not likely to raise significant health issues of concern.” Yet Maryland researchers used this dataset, ignoring the growing body of research that shows fracking poses a very low threat to air quality. For instance, Pennsylvania’s Department of Environmental Protection monitored numerous fracking sites across the state and found that nearby levels of carbon monoxide, nitrogen dioxide, sulfur dioxide, and several other pollutants did not exceed federal air quality standards. Likewise, the Commission on Environmental Quality in Texas conducted a study on fracking in the Barnett Shale. Researchers

found “no immediate health concerns from air quality” and that “oil and gas operations do not cause harmful excess air emissions.” The Maryland study also claims that fracking exacerbates water pollution. But this has been thoroughly debunked. A landmark study from the U.S. Department of Energy found no evidence of water contamination from fracking in western Pennsylvania. Given this huge body of countervailing evidence, the University of Maryland’s findings are highly questionable. They also miss the bigger picture. The natural gas produced through fracking is helping America transition away from a dirtier fossil fuel: coal. Smog, soot, and greenhouse gas emissions from coal-fired power and manufacturing plants here in the United States, China, and around the world remain among the biggest environmental threats of our age. Thanks to fracking, we now have a cost-competitive and cleaner energy alternative. Natural gas produces significantly less smog and soot than burning coal. Indeed, the emergence of gas and decline of coal has reduced the American power sector’s annual sulfur dioxide and nitrogen oxide emissions by an estimated 40 percent. In Pennsylvania, over the half decade since fracking achieved widespread use, annual sulfur dioxide emissions from single, identifiable pollution sources have fallen 60 percent. Nitrogen oxides volumes have dropped 18 percent and volatile organic compounds by 17 percent. The fracking-enabled switch to natural gas reduced national greenhouse gas emissions, as well. Between 2005 and 2012, U.S. carbon dioxide emissions have fallen 12 percent. Researchers have every right to investigate the health impact of fracking. But sounding a false alarm could do serious damage. Fracking is helping to wean our country off environmentally-unfriendly energy like coal. This practice is improving, not hurting, public health. Chris Faulkner is chief executive officer of Breitling Energy Corporation and author of the recent book, “The Fracking Truth.” He is also the producer of the documentary, “Breaking Free: The Shale Rock Revolution.”

Rachel Sluss Dix Communications

he independent exploration and production company Antero Resources based in Denver sees value and opportunity in the region. The company’s August update shows promising numbers for possible drilling sites within the Utica Shale region of Ohio, West Virginia and Pennsylvania. Antero predicts there are up to 835 Utica shale drill sites on its land, and after combining possible drilling locations in Ohio, West Virginia and Pennsylvania, there are a possible 5,011 locations. At 22- operating rigs, Antero is the most active driller in Appalachia and has a 94 percent organic production growth for 2Q 2014 over 2Q 2013. The company is the most active Marcellus Shale driller with 15 rigs and the second most active Utica Shale driller with seven rigs.

—

Chairman and CEO Paul Rady

The company prides itself in being “Shale Pioneers” and has had outstanding success as an independent exploration and production company, owning 493,000 in the region. It had a hand in moving and drilling over 600 horizontal shale wells in the Barnett, Woodford, Marcellus and Utica shales. “Our strategy is to continue to consolidate and block up our areas of operations,” Chairman and CEO Paul Rady said in a press release from the company. “We added 35,000 net acres in the core of the liquids-rich Marcellus and Utica Shale plays during the first half of 2014. This added approximately 151 new drilling locations and increased the working interest percentage and planned lateral lengths associated with numerous existing

locations resulting in the addition of 2.0 Tcfe of 3P reserves with a $1.5 billion PV-10 value assuming mid-year 2014 SEC prices.” “We believe the leasing opportunities we capture due to our concentrated acreage position and our sizable land organization are a distinct competitive advantage that continually adds significant value to our company,” Rady said. Twenty-seven percent of the company’s capital budget of $3.7 billion will cover Utica shale while the rest will cover Marcellus shale.

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shland County is in the sights of Energy Transfer Rover Pipeline, which aims to build an 800-mile natural gas pipeline that will carve through the middle of the county on its path across the state. A detailed map of the project on Energy Transfer’s website projects the pipeline will enter Ashland County from Wayne County south of County Road 30A and cross County Road 30A to the north of Jeromesville. The pipeline continues west parallel to existing gas pipelines and parallel to County Road 1754 before crossing Interstate 71 and U.S. 42 into Richland County around Township Road 1455. At this point, Energy Transfer has submitted a prefiling request with the Federal Energy Regulatory Commission, and is ironing out the details to submit the final application in January 2015, according to company media relations specialist Vicki Granado. “Between prefiling and the final application, it’s a work in prog-

ress,” Granado said. “Back in June, we sent letters to landowners along the initial proposed route. Simultaneously, we’ve scheduled open houses, and in the past several months, we’ve also been talking to landowners. There’s a group of people who are dedicated to answering questions and getting permission from landowners to conduct surveys of the land.” Since Energy Transfer submitted the prefiling request with FERC in June, company representatives have conducted numerous open houses in communities along the proposed route of the pipeline, although none currently are upcoming in northcentral Ohio. Although the latest map of the route is quite detailed, the route is not final. “Ideally, we’re looking for the most efficient route that’s least impactful,” Granado said. “We look for less-populated areas. I believe the latest stat is 80 percent of the main line will be under agriculture land or parallel to existing pipelines. But it’s not set in stone.

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“We’re doing surveys almost daily, but between now and filing the application, it’s a work in progress. It’s not a final route until we file.” The 42-inch diameter main line, which includes the section that runs through Ashland County, currently is estimated to stretch 409 miles between Cadiz and Defiance. The entire project will transport natural gas from the Marcellus and Utica shale formations

—

Vicki Granado, Energy Transfer

and forecasted needs of Utica and Marcellus,” Granado said. “To get to that natural gas, you need pipelines. We won’t own the gas; I tell people we’re like a highway. From point A to B and beyond, we offer shippers more lines to get gas to the market hubs.” Energy Transfer currently projects the pipeline will be approved by FERC in the fourth quarter of 2015, with construction on the line beginning in January 2016. Natural gas could be flowing between the pipeline’s origin in West Virginia and Defiance by December 2016 and the remainder line into Michigan by June 2017. Granado said the discussions with landowners have been positive so far. Although Energy Transfer has wrapped its project open house stage, Granado said around the time of application, FERC representatives will begin scheduling public meetings to address resident concerns before the body makes its ruling. “There’s always a lot of opinions when you’re talking about energy as a whole and infrastructure,” Granado said. “A lot of people are very supportive of this, but there are people who would like to see another option. But underground pipelines are the safest and most efficient way to transport natural gas.”

in Ohio, Pennsylvania and West Virginia through Ohio north into Michigan and even into Ontario, Canada. “We’ve got infrastructure, but not enough to meet the immediate

Dan Kubacki can be reached at 419-281-0581, ext. 237, or at dkubacki@times-gazette.com.

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andowners in Monroe County who signed oil and gas leases with Beck Energy over the last decade should be aware of a potentially significant case pending before the Ohio Supreme Court. The issue involves an order issued by the Ohio Court of Appeals for the Seventh District in a case captioned Hupp v. Beck Energy Corp, that tolled all undrilled Beck Energy leases in Monroe County beginning on October 1, 2012 and continuing “during the pendency of all appeals in this Court, in the event of a timely notice of an appeal to the Ohio Supreme Court, until the Ohio Supreme Court accepts or declines jurisdiction” (the “Tolling Order”). In the Hupp Case, the trial court had held that the standard Form G&T (83) lease used by Beck Energy were void because they violated Ohio’s public policy. The Tolling Order prevents any Form G&T (83) lease anywhere in the state from expiring pursuant to its own terms while the courts determine whether the leases are void. In the event that the leases are found not to be void, the Tolling Order would add years to the leases in question. While the Seventh District recently found the leases to be valid (thereby overturning the trial court decision), that decision may still be appealed to the Ohio Supreme Court. Thus, the Tolling Order remains in effect. The Tolling Order did not specifically identify the affected properties, and the Court did not arrange for landowners who signed such leases to received notice, even though it affected the property rights of landowners across the state. In Monroe County alone, mineral owners stand to lose millions of dollars. The question before the Supreme Court is whether the Tolling Order violated the due process rights of such landowners. Had the Tolling Order not been issued, absent drilling and the production of oil or gas in paying quantities, Beck Energy leases in Monroe County would have continued to run in their primary ten-year term, and many would have already expired, thus freeing up vast amounts of acreage to be leased by the landowners, who would then be entitled to lucrative signing bonuses and royalties from Utica producers. The Claugus Family, one of the affected Monroe County landowners whose Beck Energy lease would have expired but for the Tolling Order, filed a complaint in the Ohio Supreme Court, seeking a writ of mandamus and prohibition to have the Tolling Order declared unenforceable as to Claugus Family. On September 3,

2014, the Supreme Court agreed to hear the case and requested further briefing. All briefs are to be filed by the end of October, and the Supreme Court will likely issue a ruling within the next six months or so. If the Claugus Family prevails and the Supreme Court rules that the Tolling Order is unenforceable as to Claugus, similarly-situated Monroe County landowners with expired or soon-to-expire undrilled Beck Energy leases should be able to file lawsuits seeking a court order declaring that the Tolling Order is unenforceable as to them as well, thereby allowing them to sign a new lease following the expiration of the primary term listed on the face of the lease. Since the standard Form G&T (83) lease contains a 10-year primary term, those undrilled leases which would otherwise have expired on or after October 1, 2012 could be ruled to be of no effect. If you are a landowner in Monroe County who signed an oil and gas lease with Beck Energy that is yet undrilled, it is highly recommended that you contact an experienced oil and gas attorney to advise you as to your due process rights and to monitor the proceedings as to the Tolling Order before the Ohio Supreme Court to see if it is declared unenforceable. This ruling may allow such landowners to file suit to have their Beck Energy lease voided. David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with more than 20 years of experience in the industry. He is also the current chairman of the Natural Resources Committee of the Ohio State Bar Association.

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MARYLAND SEES LITTLE RISK TO WATER FROM HYDRAULIC FRACTURING AGERSTOWN, Md. (AP) — Maryland environmental regulators see little risk of water contamination from hydraulic fracturing for natural gas in far western Maryland. A draft report (http://bit.ly/1ujFFp7 ) released Friday for public comment ranks the risks associated with water contamination mostly low, and in some cases moderate. It says state regulations are sufficient to protect sources of drinking water supplies, but there is an elevated risk of harm to aquatic life under certain conditions during times of drought. The report says some of the greatest risks posed by gas drilling involve traffic congestion, accidents and road damage. But the report says those risks can be managed by traffic-flow planning. The report by the departments of the environment and natural resources is open for public comment through Nov. 3.

US PREDICTS LOWER HEATING BILLS THIS WINTER EW YORK (AP) - It probably won’t cost as much to stay warm this winter because a repeat of the deep freeze that kept much of the nation shivering last winter is so unlikely. The Energy Department’s annual prediction of winter heating costs released Tuesday says that Americans won’t have to crank up the heat as much, so they’ll pay less for energy. Demand for some fuels last year sent prices skyrocketing. The Energy Department predicts that natural gas customers will see bills fall for the October-to-March heating season to $649, from $680 last year. Electric customers will pay $938, down from $955. Heating oil customers will pay $1,992 on average, $362 less than last year. Propane customers in the Midwest will pay $1,500, a savings of $767.

Wednesday at the Laramie campus. The simulator was funded with a $1 million gift from WPX Energy that was matched by the state. It is located at the UW Energy Innovation Center. The facility introduces students and industry personnel to realistic real-time simulations of normal and extra-normal drilling and well-control operations. It also expands UW College of Engineering and Applied Science course offerings and eventually will offer professional well control certifications for drillers. WPX Energy is a Tulsa, Oklahoma-based energy company specializing in the production of natural gas, natural gas liquids and oil with operations and interests in Wyoming and elsewhere. DRILLERS USING MORE SAND, WATER FOR W.VA. WELLS OUNDSVILLE, W.Va. (AP) - Energy companies are using more water and sand to extract natural gas from the Marcellus shale in Marshall and Ohio counties. A new report by research firm Wood Mackenzie says companies working in what’s called the “wet gas window” of the two counties are using up to 10 million gallons of water for each project. They’re also using 13 million pounds of sand. That’s up from about 4 million gallons of water and 1 million pounds of sand a few years ago. West Virginia Oil and Natural Gas Association executive director Corky Demarco says companies are extending horizontal lateral drilling farther into the Marcellus shale. He tells The Intelligencer and Wheeling News-Register (http://bit.ly/Zc0yaf ) that this calls for more sand and water.

IS DRILLING UNDER OHIO RIVER W.VA.’S MONEY MAKER? HARLESTON, W.Va. (AP) - West Virginia is ready to let companies drill for oil and natural gas deep beneath 14 UW DEDICATES NEW DRILLING SIMULATION LAB miles of the Ohio River. ARAMIE, Wyo. (AP) - University of Wyoming students State commerce officials have taken bids on the northern West now have a special teaching laboratory to learn about oil and Virginia section of the river, which serves as a natural border with gas drilling rigs. Ohio. UW and WPX Energy dedicated the new drilling simulator on Triad Hunter submitted a bid for 14 miles. It proposes paying the

LIQUEFIED NATURAL GAS FACILITY IN MD. AUTHORIZED ASHINGTON (AP) - The Federal Energy Regulatory Commission has authorized Dominion Resources to build a liquefied natural gas facility in southern Maryland. The agency said in a news release posted Monday on its website that Dominion can build the facility in Calvert County. The $3.8 billion project will be constructed at its existing Cove Point terminal on the Chesapeake Bay. Numerous environmental groups had objected to Dominion’s proposal, claiming the project would hurt the bay and increase air pollution.

OIL BOOM WIDENS WAGE GAP BETWEEN THE SEXES ISMARCK, N.D. (AP) - North Dakota’s unprecedented oil bonanza has boosted the state’s median household income to record levels. But state demographer Kevin Iverson says the male-dominated energy industry also is widening the wage gap between men and women. U.S. Census data show the median earnings of North Dakota men who worked full-time, year-round climbed to $49,231 in 2013. That’s about $3,000 more than in 2012. The median earnings for North Dakota women increased only about $100 during that time to $34,549. Data show North Dakota’s median household income rose to $55,759 last year, up from $54,647 in 2012. Iverson says workers in North Dakota’s oil and natural gas industry earned an average salary of more than $111,000 last year.

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Marc Kovac Dix Capital Bureau COLUMBUS — An environmental and consumer advocacy group wants lawmakers and Gov. John Kasich to change state law to require more disclosure of chemicals used in horizontal hydraulic fracturing. The Ohio Citizen Action Education Fund cited a well fire in Monroe County earlier this year as evidence for increased disclosure, saying emergency responders did not know the types or locations of chemicals in the incident. In a report released Wednesday, the group said 50,000-plus gallons of chemicals were washed off the site, and some 70,000 fish were killed as a result. “Rather than proactively arming first responders with information, Ohio has systematically ensured fracking chemical secrecy to protect the industry from liability,” said Melissa English, co-author of the report. She added, “We and many others have sounded the alarm for than two years about the need for better fracking chemical disclosure. ... I ask, must someone die before Ohio recognizes that the current system does not work?” Ohio Citizen Action wants the state to require disclosure of chemicals to emergency responders before they are brought onto well sites. Absent legislative action, the group wants the State Emergency Response Commission and first responders to push for more disclosure. “The lack of knowledge of what chemicals were on site [at the Monroe County well] almost certainly contributed to not knowing the best ways to deal with chemical fires,” said Nathan Rutz, another co-author of the report. “There’s no way of knowing, but perhaps if the fire departments had known exactly what was on site, where and in what volumes before the fire happened, maybe we wouldn’t have seen the 70,000 fish killed or the fire continuing to burn for nine days.” Legislation requiring greater disclosure is pending in both the Ohio House and Senate (Rep. Bob Hagan, a Youngstown Democrat, is the primary sponsor in the former). HB 42 would require drillers to provide full details of chemi-

cals used in fracking to the Ohio Department of Natural Resources, which would insert the information into a database accessible by firefighters and other emergency responders dealing with chemical spills and accidents. But the Republican-controlled chambers have given no indications that the bills will move this session. The Ohio Oil and Gas Association said Wednesday that emergency responders already have access to information about chemicals used in the industry. “The Ohio Oil and Gas Association and our members believe that first responders should have access to a list of materials on site when responding to emergencies,” Shawn Bennett, the association’s senior vice president, said in a released statement. “Currently, through federal regulation, safety data sheets of all chemicals onsite is mandatory and available in order to keep our first responders safe.” Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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ivil engineering students at the University of Mount Union have been getting first-hand experience in surveying. Hans Tritico, an assistant professor in the civil engineering department, was looking for a project that would get students out in the field. He found one with the Alliance Community Soccer Club (ACSC). Taylor Cline, Hannah Suder and Derek Sullivan, all junior civil engineering majors, started the multi-year project of developing two under-10 (the size of fields used by soccer players younger than 10 years old) soccer fields by surveying the area. Sullivan, 20, said with preliminary measurements the group determined that the space wasn’t large enough for an under-14 field, which is the size of a high school soccer field. After placing stakes to represent corners and getting preliminary measurements of lengths and angles, the group recorded more specific measurements. Suder said they used gps to mark 400 points in the space to get

a more accurate measurement. They logged the measurements into AutoCAD, a standard computer program used in engineering, design and drafting. The project has given the students an opportunity to interface with clients, which is an important part of all engineering fields, Tritico said. The client, ACSC, was looking to create an under-14 field. However, the space didn’t allow for a field of that size. The group showed the client the two under-10 fields that would fit but also presented another option. “We explained to them they would have to clear more of the area for an under-14 field, but that it would cost more money,” Cline said. In addition to taking measurements, the group surveyed the area to make sure there was proper drainage. Surveying land takes place in several engineering projects, Tritico said. Surveying a space is a necessary step in putting down a well pad for drilling for gas and oil. “The first question is what’s here, what’s available,” he said.

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ARIETTA, OH — With landowners constantly hearing about billion-dollar oil and gas projects and large corporations, it can be hard for them to see the human side of the industry. That’s where landmen step in. Richard Daily, landman and member of the American Association of Professional Landmen, spoke at the Marietta College and Brouse McDowell Oil and Gas Symposium on Oct. 16 about the role of landmen and how they are often responsible for giving gas and oil companies a human face. The simple definition of a landman is a consultant in the oil and gas industry. Taking it a step further, Daily stated that a landman represents the oil and gas companies to the landowner and engages in negotiating mineral rights and business. However, defining what a landman does is even more difficult. “To sum it up, a land worker does everything geologists and engineers don’t want to do,” Daily joked. In reality, landmen do landwork, which, according to Daily, includes determining and negotiating mineral rights, reviewing the states of titles, negotiating agreements and managing rights and/or obligations. “Landmen represent the human side of the industry,” he said. “We deal with people.” Which can be for better or for worse. “Inevitably, something goes wrong and it’s the landman that has to deal with it,” Daily said. “You can tell every contractor that walks on a drill site, ‘Do not touch that tree.’ You can post a sign ‘Do not touch this tree.’ You can hang ribbon all over that tree, but lo and behold one morning you walk out and that tree is in the pit. The landman is the guy that gets to make the call, gets to go to the landowner and say, ‘We’re sorry, we’re going to make it right.’” Because a landman is typically a landowner’s first contact with oil and gas companies, Daily stressed it was important for landmen to be able to put themselves in the landowners’ shoes. However, landmen don’t just work with the public, they work with engineers, geologists, and anyone else involved in an oil and

gas project. “Any time people are involved a landman is there,” Daily explained. “We’re kind of the glue that holds everything together.” Because landmen play an integral role in the industry, the AAPL created a code of ethics to ensure that landmen protect members of the public against fraud, misrepresentation and unethical practices. “The landman needs to see the whole picture so we can negotiate a deal that’s going to be acceptable,” Daily stated. “Whether it’s for a landowner or another company that we’re trying to buy a lease from.” Even though most people in the oil and gas industry have to move from city to city, Daily explained it’s still important that a landman’s new town is still where they live, so they need to treat everyone like their grandma. “The last thing you want is for someone to come down on you when you’re trying to eat at a restaurant because you didn’t keep your word,” he added. As the oil and gas industry has grown and changed, so had a landman’s duties. While landmen from 30 years ago had all the job’s responsibilities, most landmen today specialize in a specific area, such as takeoff abstractions, agreement specialists, permitting agents and more. However, Daily still argued that it is best to be a wellrounded landman. With technology constantly evolving in the gas and oil industry has evolved so has the landmen do their jobs. Daily cited iCloud, spreadsheets, PDF files, databases and GIS mapping as key tools that help landmen be successful at work. “The landman needs to be able to adjust and embrace technology because technology makes the job cost less, which makes our clients and employers more money,” he said. But there is always one duty of the landmen that will never change. “The most important job the landman has is representing the oil and gas industry in a positive, fair and ethical manner,” said Daily.

Laurie Huffman Dix Communications

acreage leased for the purpose. Gulfport consistently comes in at second place in Utica drilling, with five others alternating in their positions between third and seventh, but remaining permanent players in the game: Rex Energy, Antero, Hess, HG Energy, and PDC Energy.

new study conducted by Cleveland State University indicates enough ethane is estimated to be produced to support three large cracker plants in the Appalachian Region — and, just as importantly, current plans for plant construction specifically target Ohio, Pennsylvania and West Virginia. The information was brought forward during a Utica Summit II, held in mid-October at Stark State College, in Canton. Ethane cracker plants would be a tremendous boon to the area in terms of further manufacturing development. An ethane cracker facility creates ethylene, a compound used in the manufacture of plastic. Some estimates predict between 400 to 600 jobs in each cracker plant, with another 2,000 plus in indirect jobs and more than 8,000 additional jobs in the ripple effect that would follow with downstream manufacturers who rely on ethane and other products that will be created at the plants. Huge economic benefits to the Appalachian Basin region were projected when the plans for a cracker plant to be built by Odenbrecht/Brazkem across the River in Parkersburg, West Virginia, were released. So, one can only imagine the impact the smaller cracker plant now planned for possible construction by Appalachian Resins Inc. in Salem Township, located in Monroe County, Ohio, will have on the state and the region. There is another large facility slated to be built in Pittsburgh, Pa., by Shell Oil Company, which would round things out by placing a large cracker plant in each of the three states that are part of Marcellus and Utica natural gas production, Ohio, Pennsylvania and West Virginia. But, you can’t count your eggs before you get the chickens. While three “crackers” are planned in the region, Iryna Lendel, Ph.D., assistant director of the Center for Economic Development at Cleveland State University, warned it is not late enough in the game for any one of the three to walk away from the planned projects. “But, the burning question as to whether there will be enough ethane production in the region to support three large cracker plants has been answered. And, that answer is yes,” said Lendel. The large players in Utica shale production are also already in the state of Ohio, Lendel also reported during the summit. She indicated there are seven companies that are estimated to remain as constants. Chesapeake Energy, which has done 80 percent of the Utica shale drilling, thus far, is consistently positioned first in the industry as far as production, but fourth in terms of total

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KRON, OH -- In 2012, Amerimar, Inc. secured a one-year option to buy the former Firestone offices and tire plant and the Greystone Hall building in order for office space related to the oil and gas industry. The company seeked $40 million in tax credits and Akron City Council approved historic designations to the buildings, allowing them to be eligible for $40 million in tax credits. This was a $5 million investment for the company. Currently, these properties are still under contract. The Firestone property was planned to be used for administrative, engineering and research job offices all linked to the oil and gas drilling in the Utica shale formation. “We’re actively soliciting tenants,” said James Loveman, a director at Amerimar Realty. “If gas and oil companies are interested, we’d love to have them.” The former Firestone properties are a 1.3 million square foot property, located at 1200 Firestone Parkway and 1301 South Main Street in Akron.

—

specializes in “the successful repositioning and redevelopment of real estate assets include hotels, office buildings, apartment communities, retail facilities and mixed use properties.” The tax credits are designed to jumpstart the rehabilitation of these historic properties. This project also involves refurbishing Greystone and building a seven-story hotel adjacent to it. The Greystone property dates back to 1917. Greystone Hall is located at 103 S. High Street. Loveman said that they’re still evaluating their plans for the hotel.

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According to Loveman, the company is starting to begin the first phase of redevelopment on the triangle building of the property. “We’re really excited to begin,” he said. Currently, there are no tenants related to the shale industry. “It’s tough to say what’s happening with the industry,” Loveman said. “It definitely raises some questions.” Amerimar is a realty company located out of Philadelphia that

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Judie Perkowski Dix Communications

s an elementary school teacher, Sarah Tipka’s summer vacations were usually divided between relaxing with friends and supplementary course work and obligations. “While I was teaching in Indiana, before the oil patch, I would travel some and enjoy leisure activities (lunches, movies) with my teacher friends, attend classes and teacher’s conventions. I was president of our local classroom teacher’s association (Pike Classroom Teacher’s Association), Pike Township schools, in Indianapolis, and I was on the local classroom teacher’s association collective bargaining committee. We met a lot during the summer months,” said Sarah. She says thoroughly enjoyed teaching young minds, but was intrigued by the oil and gas business. Sarah was a dedicated elementary teacher in Indiana for 21 years until she met Alan Tipka, who hired Sarah to work parttime securing leases for his father, William N. Tipka’s oil and

gas company. William Tipka was a wildcatter who founded the independent W.N.T. operating in the 1960s. Sarah’s introduction into the industry was the beginning of her influence, passion and innate ability to understand the importance of educating the public about a complex industry. “Mr. Tipka was a great teacher. I learned a lot from him. The more I learned the more, the more I wanted to learn. It was very exciting,” she said. “I learned from other people and from attending workshops and conferences and talking to people in the industry. And, whatever I learned I shared with others,” she said. While Sarah was immersing herself in the industry, her future husband, Alan Tipka, gave up a career in accounting to join his father in the family business, and two years later, in 1983, formed A.W. Tipka Oil & Gas, Inc. Sarah and Alan were married in 1989. She retired from teaching children and devoted herself to learning and teaching others about the industry as a full time landman for her husband’s company.

Since 1985, when she joined the Ohio Oil and Gas Association and the Association of Desk and Derrick Club, she has established herself as one of the industry’s pioneer educators, representing the industry to hundreds of professionals, speaking at workshops, classrooms and conferences and everywhere in between. “I have a background in teaching, but always had the desire to learn about the industry. In a sense I’m still teaching,” she said, “It’s important to educate teachers about the industry, so they can create an interest in our youngsters, the future leaders of the oil and gas industry.” OOGA and ADDC’s purpose is to promote the educational and professional development of individuals employed in or affiliated with the petroleum, energy, and allied industries. In 1995, she became a member of OOGA’s Public Relations Committee, where she remains an active member and was recently elected to OOGA’s Board of Trustees. She served four terms as president of ADDC and nine years as a board member for OOGA’s educational sector, the Ohio Oil and Gas Energy Education Program, then as OOGEEP’s Student Education chairperson as an ex-offico member. OOGEEP was founded in 1998 and has been Sarah’s podium for heading up workshops for teachers throughout Ohio, emphasizing STEM — Science, Technology, Engineering and Math classes — and their relevance to the energy industry. In 2007 she was the second recipient of the OOGA Oilfield Patriot Award, “presented to one person in the industry who by their service, has made significant contributions to protect, promote and advance the common interests of those engaged in all aspects of the Ohio crude oil and natural gas industry.” In 2010 she was re-appointed to the OOGEEP board. Although she admits to “slowing down a bit,” she said she still enjoys going out to the oilfields and watch the drilling. Sarah’s passion for learning, sharing and serving the oil and gas industry is evident in the many leadership roles she has assumed. Whether it is advocating for the industry at home, at the Ohio Statehouse or in Washington, she believes education is, was and always will be, the key to understanding the importance of oil and gas and how it has benefited other industries throughout the world.

WRANGLER FR

As a tribute to her hard work, dedication and education of the industry for more than 25 years, in March of 2011, Sarah was celebrated as a recipient of the award to the Ohio Oil and Gas Association’s Hall of Fame. OOGA’s honor to those who have made their own distinct contributions to the Ohio oil and gas industry. The concept of OOGA’s Hall of Fame was formed in 1987. Since then, 125 individuals have been inducted into the Ohio Oil and Gas Hall of Fame. The event has been held once every four years since 1994. Three women have been inducted in the organization’s Hall of Fame. Nancy Chiles Dix was the first in 2006, followed by Sarah Tipka in 2010 and Angela Howard in 2014. Sarah continues to be a strong political advocate and lobbies for OOGA endorsed candidates. She is also president of the Natural Energy Corp., an oil and gas investment firm, and serves on the board of directors for her condominium association at Marco Island, Fla. “It’s all about education. When people are better informed, it takes away their fear of the unknown,” she said. Sarah is a native Hoosier. She graduated from Syracuse High School in the small town of Syracuse, Ind., earned her bachelor of arts degree at Purdue University, followed by a trip up north where she earned her master’s degree at Michigan State. She also enjoys working with her staff at the home office in Dover. Sarah is as highly thought of by her staff as by her friends and colleagues. Studies have shown that employees who are happy where they work are the most dependable and loyal. Case in point. “There are three full-time employees and one part-time. They are wonderful people ... the backbone of the company. The person with the shortest time in our employment has been with us for 20 years,” she said. A.W. Tipka, Oil & Gas, Inc. also invests with other oil and gas companies and operates in Tuscarawas, Harrison, Guernsey, Stark and Medina counties, and is involved in Licking and Belmont counties, as well as West Virginia, Pennsylvania and Wyoming. JPerkowski@dixcom.com

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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 439 2. Harrison County 281 3. Belmont County 179 4. Monroe County 156 5. Guernsey County 142 6. Noble County 127 7. Columbiana County 107 8. Jefferson County 45 9. Mahoning County 30 10. Tuscarawas County 18 Washington County 17 11. Portage County 15 Trumbull County 15 12. Stark County 13 13. Coshocton County 5 14. Holmes County 3 Morgan County 3 Muskingum County 3 15. Knox County 2 16. 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 10/18/14

100

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UNROE FALLS — A Ravenna-based energy firm has filed a civil complaint claiming that the city has illegally interfered with efforts to clean up a small oil spill at a North River Road well the company operates. In its complaint, filed in Summit County Common Pleas Court Oct. 1, Beck Energy said the spill, which was less than three barrels, occurred in September. The company immediately contacted the Ohio Department of Natural Resources about the spill on private property at 60 North River Road because under state law, “ODNR has complete oversight of the remediation process.” According to the complaint and exhibits filed with it, the city issued a stop work order Sept. 12 because the city had not issued building or zoning permits to do work on the property. This was followed by two citations for violating the stop work order that Munroe Falls police issued to a Beck Energy employee at the site on Sept. 15 and 17. The employee has a pretrial in Stow Municipal Court on Oct. 27 on the zoning violation charges.

The complaint seeks an injunction ordering that the city cease its actions, stating that ODNR issued permits for the company to operate the well in 2008 and that the city’s actions are in violation of “ODNR’s sole and exclusive authority” under state law. The company is also seeking a declaratory judgement from the court declaring that “any and all work” the company is conducting at the site is lawful and proper.” Phone calls to Mayor Frank Larson and Beck Energy attorney Scott Zurakowski were not returned by press time. The city and Beck Energy have already locked horns over who has authority over wells drilled in the city in civil cases filed in common pleas court and in the Ninth District Court of Appeals in connection with a planned well on private Munroe Falls Avenue property. Last year, the city filed an appeal in the Ohio Supreme Court challenging ODNR’s authority. The high court heard oral arguments last February, but has yet to issue a ruling. Email: jsaunders@recordpub.com

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'GASOLINE HAS MET ITS MATCH'

Kevin Lynch Dix Communications

ILMOT — Just as the company slogan says, “Gasoline has finally met its match.” CNG Pitstop is a conversion professional, turning gas-guzzling vehicles into fuel efficient, clean bi-fuel machines. CNG stands for compressed natural gas. Merle Miller and Lucas Miller teamed up with CNG Pitstop of Orem, Utah, to open CNG Pitstop on U.S. Route 250, about a half-mile east of Wilmot, in July. “I’ve been doing research on this for maybe the past eight months and seeing if there was an opportunity to work with somebody that was much more knowledgeable than I am,” Merle Miller said. “Gary Yeates of CNG Pitstop in Utah and I got connected and we immediately struck up a rapport. We struck up a deal to have everything we do collaborated with Utah.” Yeates is an ASE alternative fuels certified technician and certified tank inspector. He came to Ohio and trained and certified Lucas Miller, who Merle Miller calls the mechanical brains of the business. He does 100 percent of the installs locally. “Dwain Schlabach and Larry Keim own Buckeye CNG at Bunker Hill on County Road 207 in Millersburg,” Merle Miller said. “Dwain wanted me to sell the fuel for him, and go talk to businesses. He talked to me three or four times over the past few years about CNG, and my wife and I started praying about it, and I thought maybe the time was right.”

They opened the business in July and have had little chance to take a breath. Merle Miller says CNG Pitstop installs the EuropeGas kit, but can work on any kit. Yeates believes the EuropeGas kit is the best on the market. It is made in Poland. In Europe, where gas is as high as $7 to $9 a gallon, cars are being converted at a 30 percent rate as opposed to only 3 percent in the United States. “There are a lot of things that make this kit superior to the other kits,” Merle Miller said. “You can get low-end, middle-of-the road or high-end of just about anything, and that is no different with CNG kits. Some of the kits we’ll see come in will lose their tune when the battery is dead. “The engine may sputter, or it may not start the way it should. Some kits will idle on gasoline, rather than CNG. Some kits will kick back to gasoline after they run over a certain RPM because their regulator can’t handle a certain load. “Our kits don’t have that problem,” Merle Miller said. “I’ve pulled a 14-foot trailer with my vent rack and bucket and lower deck behind this pickup all on CNG up and down the Walnut Creek hills. Typically there is little difference in fuel mileage, for a vehicle that runs good on gasoline, there is virtually no difference in fuel mileage. “For gasoline vehicles, there is a slight power loss,” he continued. “My Tundra has about a 5 to 7 percent power loss. Very

'GASOLINE HAS MET ITS MATCH' tive fuels because gasoline is everywhere. But as gasoline prices continue to climb, I thought the timing was right to open the garage here.” Reporter Kevin Lynch can be reached at 330-674-5676 or klynch@the-daily-record.com. u

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minimal. Unless you have a load on it, you can barely tell the difference. If I am just driving down the road, you can barely feel any difference. “We stand behind this kit for three years,” Merle Miller added. Lucas Miller explained how bi-fuel works. The original gasoline system in the vehicle is left untouched. Nozzles are drilled and tapped into the intake manifold of the vehicle. Hoses connect to a CNG injector. CNG moves from the tank through a regulator to the injectors. “We drill nozzles into the intake and install those, and we have a separate injector rail for natural gas,” Lucas Miller explained. “That is run by a regulator. This brings it from 3600 psi back in the tank to about 30 or 40 psi through high and low-pressure filters. These filters clean out any debris from the gas. “We’re not running (natural) gas and gasoline in simultaneously. It’s either one or the other. There is a switch in the car that indicates the gas level and to make sure the converter is on,” he continued. “You have the flexibility to switch back and forth while driving.” He pointed to three or four key benefits for converting to a compressed natural gas engine. First off is reduced cost in fuel. It is cheaper. “You can get natural gas for anywhere from $1.85 to $2.19 a gallon,” Miller said. There are several CNG fueling stations around Wayne and Holmes counties, including Wooster, Orrville and Millersburg, as well as Coshocton and Canton. There will be a new CNG station in Holmesville soon. It is significantly cleaner with lower carbon emissions. Another benefit is it will increase engine life,” Merle Miller said. “The car engine runs so much cleaner on CNG than on gasoline.” Lucas Miller pointed out natural gas is a domestic fuel, which cuts down on the reliance on foreign oil. “It is helping to keep our money here in America, rather than sending it overseas and supporting OPEC,” Lucas Miller said. It is not all sunshine and roses, however. “There are two downsides to CNG. One, is the initial cost,” Merle Miller said. “The kits range anywhere from $5,000 to $7,500, depending on the kit. In which case, we offer two financing options.” The second downside is the space. “The tank has to go somewhere,” Merle Miller said. “Whether it goes in the truck bed, or spare tire tanks or behind the seats or under the body of a van and in a car, it goes in the trunk. The tank would go in the hatchback in SUVs.” He says depending upon the amount a person drives and which kit is used, owners generally start seeing the benefits of converting to CNG anywhere from one to two years. “I am new to the business but am very passionate about it,” Merle Miller added. “We as a nation seem very content to drive on regular gasoline, without really looking elsewhere for alterna-

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OLUMBUS -— A report published by Bricker & Eckler LLP revealed that in the past six months, $3.5 billion worth of shale projects have been announced by oil and gas companies. The Columbus law firm’s third edition of the “Shale Economic Development Overview” features a comprehensive list of more than 120 Ohio shale gas and oil projects that total approximately $22.3 billion in investments since 2010. The report noted that since its first edition in October 2013, the shale industry in Ohio has almost doubled its investments and grown by nearly $9 billion. However, Bricker & Eckler creates the report from verifying local and national press releases, so there is no guarantee that a project will even leave the drawing board. Also, the report includes projects that don’t disclose cost estimates, which can reach more than $1 billion per project. One trend noted in the overview was that the majority of gas and oil projects focused on infrastructure and processing facilities. The projects reflect Ohio’s high-producing shale wells, many of which are unable to transport gas and oil as fast as it’s produced.

A project with EnLink Midstream Partners LP and EnLink Midstream LLC involves the construction of six natural gas compression and condensate stabilization facilities and a 45-mile condensate pipeline in Noble, Belmont and Guernsey counties. The pipeline will carry condensate to connect with another 200 miles of existing pipeline. The project has an investment estimation of $250 million. Another large project is Columbia Pipeline Group Company’s 160-mile pipeline, Leach Xpress. The natural gas pipeline will increase Columbia’s gas delivery by 1.5 billion cubic feet of gas per day and travel through eastern Ohio and the West Virginia panhandle. Supported by agreements with Range Resources, Noble Energy and Kaiser Marketing Appalachian and American Energy Utica, the project is estimated to create $1.75 billion in investments. Monroe Appalachian Resins Inc. has a $1 billion ethane cracker plant planned for construction in Monroe County near Clarington. The project could be completed as early as 2018 and would employ 150 to 200 workers while processing an estimated 18,000 barrels of ethane a day.

OHIO WELL ACTIVITY

by the numbers

MARCELLUS SHALE

17 0 16 0 11 0 0 44

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

438 248 267 0 6 07 0 0 1560

UTICA SHALE

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

Data as of 10/18/14 Source: Ohio Department of Natural Resources

RECORD RUN M

arcellus Shale production is expected to continue its record-setting levels this month, according to the U.S. Energy Information Administration (EIA) monthly drilling report. The formation produced 15.8 billion cubic feet per day in October, only three months after first breaking the 15 bcf/d production mark in July. With a projected increase of 217 million cubic feet per day, the EIA estimates the Marcellus Shale formation will produce another record-setting 16 bcf/d in October. According to the report, new wells coming online in the Marcellus Shale are estimated to produce 7,946 thousand cubic

feet/day, an increase of 39 thousand cubic feet/day, month-overmonth. The Marcellus is highest-producing region among the Bakken, Eagle Ford, Permian, Haynesville, Niobrara and Utica plays tracked by the EIA. The agency previously citied and “increasing precision and efficiency of horizontal drilling and hydraulic fracturing” as the primary driver in new growth in production. The increase in production rates is an encouraging trend in the Marcellus, the nation’s largest producing shale gas basin that produces nearly 40% of domestic shale gas production.

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check-off program established, operated, and funded by the propane industry. PERC leads safety and training efforts among propane retailers and consumers and drives technology development to expand adoption of propane as a clean, domestic, and affordable energy source. PERC programs benefit a variety of industries including fleet vehicle management, landscaping, residential and commercial building, agriculture, and material handling. For more information, visit propanecouncil.org.

10213603

Don Gadd Landman

the case of the producer, I have told them time and again that in order to get everyone to be happy and work to make this a play they will have to go out and fix or restore some of that confidence that the landowner has had in them in the past. Leaving things to the courts, or as one guy said, the bootstrappers from the Division of Oil and Gas will not resolve the underlying problem which is trust. Confidence and working in the same direction begins with it and after many years of just coexisting it’s time to build that trust. It is in all our interests. Getting back to my Amish friend, he is considering selling half of his minerals. Hedging his bet I guess. At least it is a start. However, as he said, the money had to be right. I got his attention. Now, how is that for being a fair Englishman?

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was up visiting my favorite tinsmith last week, an Amish man by the name of Yoder (go figure). He has done several projects for me on the ductwork for the homes I have been renovating. Does really good work and he is as fastidious about his work as I am mine. He informed me that he had read my article last month and we began the conversation again on the selling of his minerals. He was not as energetic about it this time as he was a couple of months ago. This was ok by me, as I was only giving him options to explore. He is one of the many landowners who had an old lease on him at twelve and a half percent royalty and had not received any of the large bonus money that had been going around in the gold rush of the last several years. Now, he had a different dilemma. A well had been staked and he had not heard anything from the company on what was going on. We talked for several minutes, as he finished his project for me. I thought of several other conversations I have had with some of the small producers (Ohio guys) who had problems of their own with landowners, attorneys, State inspectors, and people coming out of the woodwork. You would think that the State flag had a hammer and sickle on it the way the way these producers complained about the heavy handed way they were being treated especially in the areas where every acre was precious for these new wells. To a man, they thought that big money was talking and even though they had scratched and clawed to stay alive all these years they were being hammered for in some cases made up paperwork reasons. As you can see, both sides have their reasons for not trusting what is going on out there. And, in many cases, this is spilling over into the courts of each county to decide issues as to whether old leases are valid and in force, whether the royalty should be increased, and size of unitization clauses. I am so glad I am not a judge right now. I believe many of these will be settled only after appeals and perhaps going as far as the Ohio Supreme Court. Its contracts law 101, but there is big money and both sides recognize that. So, what can be done? I recommended to my friend Yoder and the oil and gas guys I have been talking to, that they need to talk to the other side. Sure, the guy you may talk to at the ground level may not be the guy who now owns the deep rights, but they most likely can get you in touch with who can settle with you. And, in

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GAS AND OIL 101 Q

. What is natural gas and crude oil (collectively known as “Petroleum”)? A. The petroleum we use today was formed from the remains of tiny marine organisms over a vast period of time. These dead marine and plant organisms piled up forming layers on the sea floor. They were gradually buried deeper and deeper as sediments accumulated on top of them. Then bacteria, heat and pressure acted on these remains over millions of years to form a liquid (crude oil) or a vapor (natural gas). Once formed, natural gas and crude oil migrated into permeable rocks with lots of pore spaces where it can accumulate. These rocks are known as reservoir rocks. Natural gas and crude oil stops migrating when it reaches a layer of impermeable rock, through which it cannot pass. This is known as a trap or cap rock.

development lease will include access to the surface of the land for drilling and operating the well. A non-development lease is for use of the subsurface minerals only. Both leases share in the landowner royalty of the well, but a non-development lessors typically does not receive free natural gas. Q. Will there be any changes to my lease if the operator sells the well to another producer? A. The terms of the original lease agreement applies. However, most leases have a clause that makes them binding on any successor company. The same applies should the lessor sell his property.

Q. How long does it take to drill a well? A. Most Ohio wells can be drilled with rotary rig in 10 days Q. Could a natural gas and crude oil well devalue my prop- or less. Cable tool wells may take up to a month or more. After erty? drilling, it may take several weeks to complete the well for proA. There is no evidence that a natural gas and crude oil well duction. Reclamation work should take place shortly thereafter, will negatively impact the value of your property. On the con- and may depend on applicable seasonal weather conditions. trary, the royalty revenues and potential free natural gas, if applicable, may enhance a property’s worth. Many landowners will Q. Is drilling a well noisy and disruptive? promote these economic and energy benefits when selling their A. While the well is being drilled, the rig must run 24 hours property. It is also reasonable to request screening and fencing of a day, seven days a week. There could be noise from the equipthe well and tanks for aesthetic and safety purposes. ment, light from the rig at night, and some temporary dust or mud from the well site. Once the drilling is completed, there will Q. Does my property have the geological potential for natu- be some daylight-only operations to put the well into production, ral gas or crude oil? Once the site has been restored, the area is essentially returned A. If there are wells in the vicinity of where you live, there’s back to normal. a good chance that the geological potential could exist on your property. You can check with a local natural gas and crude oil Q. Could my water well be harmed? producer to discuss the possibility of leasing your property for A. Each drilling application is examined on an individual bapotential development of these natural resources. sis by trained technical staff at Ohio Department of Natural Resources, Division of Mineral Resources Management (DMRM) Q. Who are the reputable companies drilling for natural to identify the deepest source of underground drinking water. A gas and crude oil in Ohio? casing plan is then designed to protect the aquifers. Steel casA. Talk with your neighbors to see if they have had wells ing is installed in the well and cemented under the supervision drilled on their property. Are they receiving their royalties in a of highly trained industry experts as well as inspectors from timely manner? Have the well sites been reclaimed and being DMRM. In the rare instance that a water supply should become maintained? Tank batteries areas should be trimmed, painted contaminated or diminished as a result of drilling, Ohio law reand properly identified with signage identifying the well by lease quires that the Operator of the well replace the water supply. name/well number, permit number, well owner and an emergency contact number. Q. What if my neighbors lease their property and I don’t want to? Q. What are the different types of leases? A. Ohio has spacing requirements, unlike many other states, A. Leases can be either development or non-development. A that protects the correlative mineral rights of property owners. In

locally owned since

GAS AND OIL 101

OIL & GAS

the case that your property is needed to complete a drilling unit (typically 20, 40 or 80 acres), and you elect not to lease, there is a provision in Ohio law that allows the producing company to apply for a mandatory pooling order to meet state spacing regulations, and to provide the majority of the landowners in the proposed unit the right to development their minerals. If approved, the mandatory pooling includes your property in the unit and you receive your proportionate share of the landowner royalty as though you had leased, but there is no lease agreement between you and the company. Simply put, it is mandatory compensation. Historically, less than 2% of drilling applications request mandatory pooling consideration. The picture shown with this section illustrates well activity in Ohio prior to spacing requirements in the early 1900’s. Without mandatory pooling, there would be no spacing requirements

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Q. What rights do I have as surface owner if someone else owns the minerals? A. The lease agreement defines the conditions that apply between the company and the mineral interest owner. Any other conditions relative to surface activity (i.e., location approval of wells, roads, tanks, damages, etc.) also have to be declared in the lease. Unless specifically declared otherwise, the interest of the mineral owner takes precedence over the surface occupant in cases of mineral severance.

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Mathematics, accepted the $8,000 gift to launch the Hess Corp. Scholarship. “Quality engineers are the future of our industry’s workforce and this scholarship is an investment in our youth and future,” said Rob Williams, manager of operations at Hess, in a prepared statement. Hess Corp., headquartered in New York City, has 90,000 acres of Utica Shale operations in eastern Ohio, a portion of which is a 50-50 joint venture with Consol Energy Inc., and operates in the four counties where recipients of the scholarship must reside. u

OUNGSTOWN, OH —The Hess Corp., a global energy company, has established a scholarship for engineering students at Youngstown State University, the university recently announced. The scholarship is available to residents of Jefferson, Harrison, Belmont and Guernsey counties. However, the scholarships are not for just engineering, they are intended for anyone pursuing a degree in the STEM College, which includes engineering. The scholarship is intended to encourage and support students pursuing a degree in civil, mechanical, systems, electrical and construction engineering and is open to nontraditional students and displaced workers who return to college to regain employment. Interim Provost Martin Abraham and Greg Sturrus, interim dean of the College of Science, Technology, Engineering and

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ctober is National Breast Cancer Awareness Month, an annual campaign designed to raise awareness of a disease that is the second most common cancer in women worldwide. For the second consecutive year, Baker Hughes Inc. is doing its part to help the Susan G. Komen organization in its mission to end breast cancer forever. On Sunday, October 26 during the final Pittsburgh Steelers “pink-out game”, Baker Hughes Chairman and CEO Martin Craighead will present a check to Nancy Brinker, the founder of Susan G. Komen, for the sum of $100,000 to aid in the effort. In addition to the donation, Baker Hughes will paint and distribute 1,000 pink drill bits worldwide as part of its “Doing Our Bit for the Cure” program. According to the company, the pink bits “serve as a reminder of the importance of supporting research, treatment, screening, and education to help find the cures for this disease, which claims a life every 60 seconds. “The research, education, and lifesaving community programs funded by Susan G. Komen over the past 30 years have made a significant impact in the fight against breast cancer, and we are

privileged to sponsor such important efforts,” said Craighead. “As someone who has been impacted by this life-altering disease, I understand the importance of Komen’s ongoing research, education, support services and global programs, not only to those fighting the disease, but also to their loved ones, friends, and colleagues.” Last October, the company distributed 500 pink drill bits, and it continues to serve as a sponsor of the Susan B. Komen “Race for the Cure” 5K in Houston. For Bill Debo, Baker Hughes’ director of drill bits-North America, the fight to end breast cancer carries a personal weight. Debo lost his mother to breast cancer when he was just 17 years old. “If it helps someone’s girlfriend, wife, sister, daughter, it’s well worth the cause,” Debo said. “I’m very proud of Baker Hughes for stepping up and doing this and promoting awareness for Susan G. Komen,” Debo said. “This is something I’m very close to.” Headquartered in Dallas, Komen is a nonprofit organization that works to end breast cancer through a nationwide network

Affiliates and active partnerships in more than 30 countries around the world. Komen’s investments have helped reduce breast cancer mortality rates by 33 percent since 1991. The organization has invested more than USD 2.5 billion in research and lifesaving community programs since inception in 1982.

To learn more about breast cancer, or to contribute to the Susan G. Komen’s effort to fight for the cure, please visit http:// www.komen.org For more information on how Baker Hughes supports Komen’s mission to end breast cancer forever, visit: www.bakerhughes.com/doingourbit.

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AMBRIDGE, OH -- Gulfport Energy celebrated its first grant awards from the Gulfport Energy Fund Wednesday at the Guernsey County Senior Citizens Center. CEO and President of Gulfport Energy Mike Moore was joined by grantees from seven projects serving the Guernsey County area by creating educational opportunities. In celebration of the newly-established Gulfport Energy Fund’s more than $60,000 in grant awards, Moore visited with grantees in Guernsey County to congratulate them on the work they are doing to support education in the community. “These first grants mark an important milestone for the Gulfport Energy Fund,” said Mike Moore, CEO and President of Gulfport Energy. “With these grants, we celebrate the difference grantees like those we recognize today in Guernsey County are making in education. We also look forward to how Gulfport can support other nonprofits, schools, and communities through our next round of grants.” Moore was joined by grantees from the Breaking Free Therapeutic Riding Center, the Area Agency on Aging 9, Cambridge City Schools, the Guernsey County Senior Citizens Center, the Buckeye Trail Elementary and Middle School, the Cambridge Middle School, the Dickens Victorian Village of Cambridge, the East Guernsey Local School District, and the Children’s Dyslexia Center of Southeastern Ohio. • The Breaking Free Therapeutic Riding Center is a therapeutic equestrian program designed to meet physical, psychological, and cognitive goals of children with disabilities. They will use their $900 grant for their Project Friends Club. The Club educates local children about children with disabilities and pairs students with their special needs peers for literacy and reading time prior to equine therapy. • Project MORE (Mentoring in Ohio for Reading Excellence) is a collaborative effort between the Area Agency on Aging 9, Cambridge City Schools, and the Guernsey County Senior Citizens Center. The $5,725 grant will support senior citizens and

others from the community in providing one-on-one reading assistance to third graders in an effort to improve their reading and performance on Ohio’s testing and the Third Grade Reading initiative. • The Odyssey Stars project will use a $4,136 grant to provide test translator software that will sync with the current computerbased testing system to create individualized learning goals, assignments, and activities in line with the Common Core State Standards at Buckeye Trail Elementary and Middle School. • Cambridge Middle School was awarded an $8,174 grant to support the Making an Impact through Literacy project. The school will use a popular novel to address two social issues, teen suicide and drinking and driving as part of their eighth grade literacy studies. Grant funds will fund 25 computers and a cart to assist in research on these important issues and to create Public Service Announcements as part of the project for the community at large.

Mike Moore, CEO and President of Gulfport Energy —

• Through a $1,495 grant to support the Educational Side of Dickens, the Dickens Victorian Village of Cambridge will provide educational materials to teachers for use before field trips, send the Dickens character, the Queen, to visit the elementary schools, and support a local elementary school’s anti-bullying performance by the Columbus Children’s Theater.

• The East Guernsey Local School District’s $3,625 grant is supporting a unique focus on middle school and high school remedial reading services through “Read 180,” a robust, researchbased reading remediation program. Grant funds will be used for a computer station and student/teacher conference area. • The Children’s Dyslexia Center of Southeastern Ohio provides one-on-one services to children with dyslexia in a multicounty area at no cost to families. The Center will use its $4,058 grant to fund 112 tutoring sessions for children in the region. • A $500 grant was awarded to the Living Word Outdoor Drama to be support their educational puppet production that teaches morals through the arts. • The Ohio Valley Education Service Center was awarded a $1,820 grant to provide three science field trips for residents of the Oakview Juvenile Residential Center so they can learn more about science, life skills, and team building. • The Watt Center will use its $1,028 grant to purchase tables, easels and more supplies to assist in offering art classes to students of all ages. The Gulfport Energy Fund was established at the Foundation for Appalachian Ohio to support communities where Gulfport operates. The Fund was created to provide grants to educational

organizations on a bi-annual basis to address specific areas of investment essential to ensuring and sustaining a high quality of life. In addition to the grants awarded in Guernsey County, 8 other organizations serving Belmont, Harrison, and Monroe counties were awarded grants to help them in supporting their various educational programs. For additional information on the Gulfport Energy Fund and to learn more about the grantees, please visit www.AppalachianOhio.org/Gulfport or call FAO at 740.753.1111.

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ARIETTA, OH — Marietta College and Brouse McDowell law firm hosted an oil and gas symposium at the college Oct. 16 to discuss the industry’s growth and its effects on southeastern Ohio. With the college adding a land and energy management major to its curriculum this fall, the symposium was an excellent chance for students considering a new major to learn more about the industry. Keynote speaker Tom Stewart, executive vice president of the Ohio Oil and Gas Association, spoke about Ohio’s role the industry and current challenges it faces. To start, Stewart explained that it’s hard to understand the oil and gas industry without understanding Ohio’s history. Since 1860, more than 260,000 wells have been drilled in Ohio and produced “well over” a billion barrels of oil and gas. Fast forward to 2013 and Ohio continued to contribute to the industry, with every well producing at least 8 million barrels of oil or gas. The impact of the industry’s success in Ohio has become increasingly apparent with crude oil prices continuing to drop. During last winter’s polar vortex natural gas prices reached $100 per daily in the east coast. Ohio Dominion prices were $5 a day due to a steady and local supply. “[Because of the surplus] we’re turning pipes around to send gas and oil to the west, such as Chicago and Texas,” Stewart explained. With 33 states producing gas and oil, the United States has been able to lessen its reliance on foreign energy while creating more jobs at home. New technology and methods of extracting natural gas, the

U.S. has been the world’s largest natural gas producer in the world since 2010 and is now the world’s largest produce of gas and oil combined, beating Russia and Saudi Arabia. “[We’re] dramatically expanding the U.S. reserve in ways unimaginable 10 years ago,” Stewart said. However, the industry still has its struggles.

—

Tom Stewart

Though crude oil prices are low, the price of finding it is not. Stewart stated that even with new technology, the industry is still searching for less expensive ways to locate more affordable and quality crude oil. The gas and oil industry also faces a fair share of backlash from landowners and towns who don’t want anything to do with the industry. Stewart pointed out that while some towns aren’t interested in participating in the industry, they don’t mind accepting oil and gas produced through fracking or the lower crude oil prices. “It’s not about whether it’s right or wrong,” Stewart explained. “It’s about prosperity and energy.” Andy Thomas, executive-in-residence for Cleveland State Uni-

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versity’s Energy Policy Center, elaborated on Stewart’s lecture, focusing on the industry’s impact on the region’s economy. To show how quickly the industry grew, Thomas cited data from a study by Ohio Shale Coalition he helped compile in 2012 that projected approximately a $4.9 billion value would be added to Ohio’s gross domestic product with 1.5 billion cubic feet per day of natural gas produced and 65,000 jobs in the industry. “It was underestimated,” he explained. Using IMPLAN software, the study projected approximately 65,680 jobs overall with 28,100 associated with development, 5,700 in technology professional services, 6,300 in mixed services and 16,100 in personal services. “It clearly didn’t express the amount of jobs created,” Thomas stated. While the Ohio gas and oil workforce is growing rapidly, the amount of gas and oil produced is increasing event faster. Blue Racer Midstream reported that it’s currently producing 13Bcf/d of natural gas in the Utica and Marcellus regions, a far cry from Thomas’ study predicted two years ago. The company projected that by 2020 it will produce 20 Bcf/d. Another company, Wood Mackenzie, estimated similar numbers in 2020 with 18 Bcf/d. Thomas projected that with the recent shale boom, employment opportunities in southeast Ohio will be available for at least the next 10 to 20 years in various areas such as pipelines, treatment facilities, steel pipes, compressors and more. “And that’s a safe bet,” he added. The symposium also featured lectures from Rich Daily of the American Association of Professional Landmen and attorneys from Brouse McDowell. Topics of discussion included the human element of the industry, Ohio’s Dominant Mineral Act, environmental and compliance trends and intellectual property. The day wrapped with a Q&A session with lecturers and a cookout, which allowed students, professors and industry members to network.

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wo recently released studies have found the hydraulic fracturing process, commonly referred to as “fracking”, is not linked to potential groundwater contamination. The U.S. Department of Energy’s (DOE) National Energy Technology Laboratory (NETL) released its study, An Evaluation of Fracture Growth and Gas/Fluid Migration as Horizontal Marcellus Shale Gas Wells are Hydraulically Fractured in Greene County, Pennsylvania, on September 15 following twelve months of investigation. The monitoring program closely analyzed data from six “unconventional” Marcellus Shale wells developed using both horizontal drilling and hydraulic fracturing techniques. For the study, NETL researchers used four perfluorocarbon tracers detect possible migration of fluid and gas from the underlying hydraulically fractured Marcellus Shale wells. Testing was done throughout the year–long study, and included analysis of data collected two-months prior to development activity, and up to eight months after fracturing occurred. NETL has not found a link between the hydraulic fracturing process and migration. According to the study: Current findings are: 1) no evidence of gas migration from the Marcellus Shale; and 2) no evidence of brine migration from the Marcellus Shale. The DOE findings echo those of other studies, experts and regulators across the country in demonstrating a lack of connection between groundwater contamination and fracking, including the recently released Environmental Costs and Benefits of Fracking. Just as the DOE report concluded, the study, authored by seven environmental scientists and led by Stanford’s Robert Jackson (formerly of Duke University), also found no link between groundwater contamination or methane migration and hydraulic fracturing. The data collected for the study included samples of over 130 drinking wells in areas of two producing states - Texas and Pennsylvania - where groundwater contamination had been suspected. The findings, gathered over a two year period, appear to “rule out gas contamination by upward migration from depth through

overlaying geological strata triggered by horizontal drilling or hydraulic fracturing,” according to the researchers. Avner Vengosh, one of the study’s authors and a professor of geochemistry and water quality at Duke University, suggested the conclusions of the study could allay commonly misplaced fears regarding the fracturing process, and potential water contamination as a result of methane migration. “These results appear to rule out the possibility that methane has migrated up into drinking water aquifers because of horizontal drilling or hydraulic fracturing, as some people feared,” Mr. Vengosh stated. These findings contradict prior theories suggesting methane migration has been caused by fracturing and oil and gas development activities, including those previously offered by Jackson and Vengosh in a widely criticized Duke study released in 2011. The study appears in the Annual Review of Environment and Resources, Volume 39, was coauthored by J. William Carey of Los Alamos National Laboratory, Gabrielle Pétron of the U.S. National Oceanic and Atmospheric Administration, Francis O’Sullivan of MIT, Richard Davies of Newcastle University and Thomas Darrah of Ohio State University.

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ENERGY United States Senator Rob Portman

T. CLAIRSFILLE, OH -- In Belmont County in late September, I hosted an Energy Jobs Fair along with Belmont College and the Ohio Oil and Gas Association. Over thirty companies participated, and people from all over Eastern Ohio had an opportunity to connect with employers looking to fill energyrelated jobs. A lot of people I talked to had been laid off and were eager to get back in the workforce. Others were looking to get a better job that paid more or provided more certainty. I’ve already heard some success stories. The companies that came were looking for good workers with the skills they need to help expand their operations. For many of the job seekers, though, that is the problem. They want to work. They have the drive and the desire to go out and find new jobs, but they don’t have the training and qualifications that some of these employers were looking for. We call this problem the “skills gap.” This skills gap is one reason that we have 320,000 Ohioans looking for a job at the same time there are over 160,000 job openings in our state. And until we do something about that skills gap, too many of our friends and neighbors are going to be left behind. That’s why, in addition to the companies that came to the Jobs Fair, we invited entities that help train workers, including Belmont College but also community colleges and educational institutions from the region. Job seekers who didn’t have the skills

they need were able to be matched up with training institutions that can help them get those skills. Once again, I saw firsthand how the federal workforce training programs are falling short. The federal government has dozens of them, spread over nine different federal departments, spending over $15 billion of our tax dollars every year. It is a complicated, often redundant and inefficient arrangement, one that means the unemployed aren’t getting the training they need while some of the federal funds are being wasted. The American people—and our nation’s employers and job seekers—deserve better. Fortunately, help is on the way. I worked with Senator Michael Bennet, a Democrat from Colorado, on bipartisan legislation called the CAREER Act to improve our nation’s retraining programs, making them more effective and less inefficient. This issue cuts across party lines, and we were able to pass key provisions of our legislation recently in Congress. These provisions will create incentives that reward those job training providers whose programs produce measureable results in job placement and retention. They also reform training programs to match skills with the jobs available in the market. These provisions, which will take effect in 2015, will help. But we aren’t stopping there. I also want to ensure that young people have access to the skills they need to ensure they can find a job when they graduate from high school. I recently introduced the Creating Quality Technical Educators Act which would

ENERGY provide a stream of federal funds for recruiting and training high quality CTE or vocational teachers at no additional cost to taxpayers. These commonsense, bipartisan reforms will ensure federal funds are better spent, and they will help to bring down our stubbornly high unemployment rate. They will help employers find the highly-skilled workforce they need to grow and expand. Most importantly, they will empower men and women from all

over Ohio who want to build a better life for themselves and their families to take advantage of the good jobs that are waiting to be filled. And more of those jobs are coming. A recent study found that the oil and natural gas industry is expected to create 1.3 million new jobs by 2030. These are good jobs that will pay well above the average salary in Ohio.

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hen talking about asset protection concerning oil and gas interest two entities come to mind. The first is a Limited Liability Company and the second is a Family Limited Liability Partnership. The Family Limited Liability Partnership (FLP) has been around longer than the Limited Liability Company (LLC) but other than that they are very similar in what they do and how they do it. There are many different aspects of these two entities and I will discuss a few of the aspects that may be of interests to you. When talking about protecting assets from future creditors both FLPs and LLCs work well. If a family member has transferred properties to a FLP or LLC and they are unable to satisfy the claim of a future creditor, such a creditor has very limited remedies against the assets held in such a structure, which in Ohio is a charging order. A charging order means that the creditor can only get what would be paid out and can’t get to the asset. This limitation on remedies is what makes these entities an effective asset protective device. FLPs and LLCs can also simplify family transfers. This is important because it is often difficult to transfer undivided interests in multiple assets, such as real properties, securities held in investment accounts, and oil and gas interests, among various children, grandchildren or other loved ones of the person making the transfer. If these assets are placed in a FLP or LLC, the resulting limited partner units can be used as “family money” to conveniently gift or transfer the equivalent of undivided interests of all of the assets to family members. There are a number of great tax consequences, which should be looked into. These entities can also protect assets against failed marriages. Many individuals are worried about financial exposure in the event of a divorce involving their children and the possible passage of a substantial portion of the family assets to a second family. While other protective devices such as prenuptial or postnuptial agreements are often perceived as distasteful, the FLPs and LLCs could provide the necessary protection without even raising the issue. If the assets of a child consists of FLP or LLC units acquired by gift (before or during marriage) and, thus, constituting separate property of the child, the assets of the child can be protected from award to a divorcing spouse. Even if the divorce court were to award part of the limited partnership units to a divorcing spouse, a properly drafted FLP or LLC agreement would provide that involuntary transfers are subject to repurchase options, so that retention of family assets can be maintained by the family. These entities can also protect generation to generation retention of important family assets. Since well drafted FLP and LLC agreements will contain consent requirements and/or purchase option provisions on the attempted transfer of any partner (unit holder) of

his or her units, the assets can be effectually retained in the family for the duration of these entities. Retention of Younger Generation Initiative can also be something that parents are concerned about. An often expressed fear of the older generation is that a substantial transfer of assets too early can stifle the initiative of their children to produce through working. Since retention of management, including the power to make distributions to younger generation limited unit owners, is a fundamental feature of essentially all FLPs and LLCs, the older generation can completely control the cash flow to their children and encourage productive work habits. Because of space limitations I can’t possible explain all of the possibilities of using FLPs and LLCs to protect your assets here. I have attempted to give you a 30,000 foot overview of a couple of important aspects of planning with FLPs and LLCs to protect your assets, including your oil and gas interests. It is important that you plan these entities with the help of an attorney whos practices in this very specialized area. To learn more please go to our webpage at www.fmcclurelaw.com for more information.

Don’t miss out on our estate planning workshop and consultation. They’re both complimentary. Call today to reserve a seat! Protect your oil and gas interests October 30th at 1:30 pm November 6th at 1:30 pm November 20th at 1:30 pm 1009 Steubenville Ave. Cambridge, Ohio

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