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Industry Creates Opportunities
For Women, Minorities
W
omen and minorities will fill an exceptional number of the nearly 1.9 million job opportunities projected in the oil and natural gas and petrochemical industries by 2035, according to a new IHS report, Minority and Female Employment in the Oil & Natural Gas and Petrochemical Industries 2015-2035, sponsored by API.
“The oil and natural gas industry pays wages significantly higher than the national average and can provide tremendous career opportunities for woman and minorites” — Jack Gerard, API President & CEO
projected to be hired by the industry, more than half are expected to fill management and professional occupations. API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. More than 650 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 30 million Americans.
“These careers can help shrink the income inequality gap without spending a dime of taxpayer money.” Of the industries’ new job opportunities, 707,000 positions — 38 percent of the total — are projected to be held by African American and Hispanic workers, according to the report. Women are estimated to fill 290,000 of those jobs.
Of the 1.9 million new job opportunities, 57 percent are projected to be in blue-collar occupations and 32 percent are projected to be in management and professional fields. African American and Hispanic workers are projected to account for close to 25 percent of new hires in management, business and financial jobs through 2035. Of the women GasandOilMag.com
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“We have the natural resources and the technology to continue to be a global energy superpower that will provide major economic and national security benefits,” Gerard said. “But we need to abandon backward energy policies, like restricted access to federal lands, the rejection of infrastructure modernization projects and the Renewable Fuel Standard, that are anti-consumer and raise costs. With smart energy policies and leadership, we can help millions of workers, ranging from Americans with high school degrees and post-secondary training to those with post-graduate degrees. These new high paying jobs have the potential to be a strong tool in reversing the trends of poverty.”
OhioGas&Oil
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Table of Contents APRIL 2016
1
Industry Creates Opportunities For Women, Minorities
5
Energy Coalition gets a lesson in Naturally Occurring Radiation
6
Study Confirms No Link Between Fracking, Well Contamination
7
Oil, Natural Gas Production Continues Its Upward Trend
8
2
Shale: The Good, The Bad and The Future
10
Tax Revenues Increase 340% In Monroe County, Thanks to Shale
12
Dominion East Ohio’s Customers Will Pay Less For Natural Gas This Year
15
Pipeline Award Given to Marietta Professor
16
Ohio Shale a Tsunami of Ethane
19
Gas Compressor Association Donates to Zane State
20
Legislators Discuss Oil & Gas Development In The Ohio Valley
23
Save Gas & Oil Interests in the event of A Contested Divorce
OhioGas&Oil
PUBLISHERS Andrew S. Dix ASDix@dixcom.com G.C. Dix II GCDixII@dixcom.com David Dix DEDix@dixcom.com
EXECUTIVE EDITORS Ray Booth RBooth@dixcom.com Roger DiPaolo RDipaolo@dixcom.com Rob Todor RTodor@dixcom.com Lance White LWhite@dixcom.com
RE G IO NAL E DIT O RS Judie Perkowski JPerkowski@dixcom.com Erica Peterson EPeterson@dixcom.com Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com
GasandOilMag.com
Table of Contents APRIL 2016 ADVER TISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Jeff Kaplan Alliance & Minerva, Ohio Offices JKaplan@the-review.com 330-821-1200 Mark Kraker Ashland, Ohio Office MKraker@times-gazette.com 419-281-0581 Jeff Pezzano VP Advertising Sales & Marketing Kent, Ohio Office JPezzano@dixcom.com 330-541-9455
25
Ravenna Oil To Expand
26
Pipeline Safety Meetings in Cambridge, Zanesville
29
Gas Line Explosions Bring New Safety Proposal
30
OOGA Conference Highlights Local Gas/Oil Industry
32
2015 Year in Review
Diane K Ringer Kent, Ohio Office DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450
DIGITAL MEDIA MANAGER Brad Tansey BTansey@dixcom.com
L AYOUT D E SIG NE R Luke West
lwest@the-daily-record.com
On The Cover: A Shale Tsunami
New study out of Cleveland State University touts huge opportunities that still exists in Ohio’s shale industry: predict job growth and economic opportunity. Story on Page 16 “Gas & Oil” is a monthly publication jointly produced by Dix Communications. Copyright 2016. GasandOilMag.com
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Energy Coalition gets a lesson in
Naturally Occurring Radiation Judie Perkowski • Dix Communications
A
demonstration by Kevin Kosko at the Guernsey Energy Coalition meeting on March 3 identified a higher reading of radiation in ordinary products used daily in households around the country, than actual TENORM — Technically Enhanced Naturally Occurring Radioactive Material — in a plastic container held by Kosko. The reading on the meter was noticeably higher on a glazed stoneware plate, and a mantle used to light a camping lantern, than on the actual TENORM. Kosko, vice president of compliance and regulatory affairs at Shale Mountain Resources, was guest speaker at the monthly Guernsey Energy Coalition meeting at the Southgate Hotel in Cambridge Thursday morning.
granite countertops, it’s in bananas, it’s in and Health Administration and the U.S. Brazil nuts, concrete, almost everything you Department of Transportation. can think of. It comes from the Earth. Kosko closed his presentation stating, “It is “Sources of NORM are isotopes that important for all industries to communicate contribute to natural radiation, and can be with the public. Not knowing and divided into those materials which come understanding what is going on creates a from the ground. But terrestrial (outer space), false perception and hysteria. sources contribute the vast majority, and those which are produced as a result of the “It is important to hold industry events, like interaction of atmospheric gases with cosmic this meeting, to let the public know what we rays. NORM is not regulated, by anyone, are doing ... To be responsible. To educate because it is everywhere and it is naturally people and to make sure we go above and occurring.” beyond to prevent damaging the Earth, the air, the water and the industry’s reputation. “TENORM is another story. It is Technically Not knowing and understanding what is Enhanced Naturally Occurring Radioactive going on creates a false perception and Material,” he said. “What it means is that hysteria.” man has taken it out of the ground and did something to it to concentrate it. It is a result Kosko has been in the business of cleaning of human activities such as manufacturing, up nuclear sites and eradicating waste for 30 mineral extraction, or water processing. It is years. regulated by the state, in Ohio it is the ODNR. Each state has its own regulations, and they The meeting was moderated by Jo Sexton, are constantly changing, making them more president and CEO of the Cambridge Area restrictive. And, regulations are costly in Chamber of Commerce, who initiated the time and money. Coalition meetings in 2011.
Kosko’s PowerPoint spoke to attendees about the difference between NORM and TENORM, relative to drilling waste at a well site, where it comes from, how dangerous it is, how it is regulated and by whom. “The oil and gas industry creates TENORM, but so do a lot of other “We are an all-inclusive company dealing industries. Major industrial with waste material from fracking and sectors that generate TENORM radiation in the oilfields,” said Kosko. “My are mining. presentation is about the facts, myths and regulations for the gas and oil industry in energy production and waste Ohio, Pennsylvania and West Virginia. The water treatment. But there are rules are becoming more stringent over many others. It is not to be taken environmental concerns. The Ohio lightly. We need to be responsible Department of Natural Resources, the to the environment and to protect agency in Ohio that regulates the gas and oil workers in these environments.” industry, said changes to the regulations will be promulgated shortly.” In addition to the ODNR, other agencies involved in regulating “First of all NORM, or Naturally Occurring TENORM are Ohio Department Radioactive Material, is everywhere, in of Health, Ohio Environmental everything, including us. It’s in wood, it’s in Protection Agency, Ohio Safety
GasandOilMag.com
Kevin Kosko, l, vice president of Stone Mountain Resources, demonstrates the degree of radiation emitting from everyday products with a hand-held meter, compared to TENORM, Technically Enhanced Naturally Occurring Radioactive Material, to Fred Badertscher, owner of Buckeye Water Service in New Concord; and Jo Sexton, president of the Cambridge Area Chamber of Commerce, at the Guernsey Energy Coalition meeting Thursday at the Southgate Hotel in Cambridge.
OhioGas&Oil
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Study Confirms No Link Between
Fracking, Well Contamination I
Mike Chadsey • Ohio Oil & Gas Association n early February, the 23 water wells in five counties, it was Concerned Citizens of reported that natural gas development Carroll County held has had no effect on the water quality. a public meeting in Amy spoke with the local Times the Village of Carrollton to Reporter (Dover-New Philadelphia) reveal the results of a three-year long after the meeting and said: study conducted in order to determine if natural gas drilling has had an effect “The good news is that our study did Small that the residents did a have on the quality of water coming from the not document that fracking was directly problem with biogenic methane but not thermogenic. She did a great job wells in Carroll County. linked to water contamination.” during her presentation explaining the The Ohio Oil and Gas Association, This was not an unexpected result difference and how they could test for national group Energy In Depth and considering the many studies the 2 in her lab back on campus. other industry folks have attended the which have previously come to the meetings over the years to listen to the same conclusion, including the US Let’s take a look back at the previous guest speakers, talk with the media and Environmental Protection Agency. comment about funding. It was made see the concerns over what is happening Having been to many forums like clear that the study has run out of money in the area. this over the last few years, one never for testing and promotion of the results, knows how the reactions to positive but they are still looking for additional On this particular night, the guest results will be received. It was shortly funding sources. On the same point speaker was a Dr. Amy Townsend- after Dr. Townsend-Small released that during the question and answer session, Small a geologist from the University of statement that a pin drop on the carpet someone from the audience asked if the Cincinnati. Amy and her team had been would have been overheard. The silence university was going to publicize the in the area over the past three years was so obvious that even the leader of results of the study, Dr. Townsend-Small has this to say: testing private water wells to determine the group, Paul Feezel said: if thermogenic methane was present “I’m really sad to say this but some of (the kind of methane found in natural “You all are very quiet tonight.” our funders, the groups that had given gas). The project was funded from two foundations providing grants; one was I am sure the residents were happy to us funding in the past, were a little the Deer Creek Foundation in St. Louis hear the great news but one did get the disappointed in our results. They feel and the other was the Alice Weston impression that they were somehow that fracking is scary and so they were foundation from Cincinnati. They have disappointed. We are sure the residents hoping our data could point to a reason since cut off funding but more on that in these counties will stay vigilant but to ban it.” in a minute. The idea of the study was to since the water well testing results have take baseline water well testing before been conducted and verified by an I guess in this case, good news will travel much, or in some instances any drilling outside source perhaps they won’t be slow, but at the end of the evening after had taken place in the area near the as skeptical of information letting them all of the talk, debate and questions, the water wells. know that oil and gas development can facts remain the same, water in Carroll County and the surrounding areas have happen safely in their community. not been negatively impacted by natural Over the course of the study, which included taking almost 200 samples from It was clear from Dr. Townsend- gas development.
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OhioGas&Oil
GasandOilMag.com
Oil, Natural Gas Production
Continues Its Upward Trend
D
uring the fourth quarter of 2015, Ohio’s horizontal shale wells produced 6,249,116 barrels of oil and 302,505,428 Mcf (303 billion cubic feet) of natural gas, according to figures released by the Ohio Department of Natural Resources.
The ODNR quarterly report lists 1,265 wells, 1,230 of which reported production. Thirty-five wells reported no production. Of the 1,230 wells reporting production results:
The production totals for the fourth quarter of 2015 increased over the third quarter of 2015 as oil increased by 10 percent while gas increased by almost 25 percent.
• The average amount of gas produced was 245,939 Mcf.
Quarterly production in 2015 also shows a fourth quarter horizontal shale well production increase of more than 75 percent for oil and 80 percent for gas from 2014’s fourth quarter totals.
• The average amount of oil produced was 5,081 bbls.
• The average number of fourth quarter days in production was 83. All horizontal production reports can be accessed at: oilandgas.ohiodnr.gov/production. Ohio law does not require the separate reporting of Natural Gas Liquids (NGL) or condensate. Oil and gas reporting totals listed on the report include NGLs and condensate. Over a million homes... one address
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Shale: The Good, The Bad and The Future
G
Mike Jacoby • APEG Vice President of Business Development o o d economically attractive run out of storage capacity by news. shale play in the country the spring of this year. T h e because of the resource Ut ica quality, improved production The natural gas liquids Shale, the techniques, cost reductions prevalent in the Utica Shale hydrocarbon-rich rock and proximity to markets for were once a competitive formation that underlies the gas. advantage. In 2015, NGL much of eastern Ohio, over-abundance and the experienced more production Bad news. Plunging extra cost of processing growth in 2015 than any other commodity prices and shipping NGLs meant U.S. shale play. Daily natural overshadowed everything companies often avoid gas production from the Utica else in 2015, wreaking havoc drilling wells in the “wet” exceeded three billion cubic in the oil and gas sector. windows, typically western feet, according to the Energy Supply outstripped demand Utica, opting instead for the information Administration. and mild weather drove “dry” gas window in eastern spot prices to 16-year lows. Ohio where drilling can be The Ohio Department of The 2015 average spot price Natural Resources reported at Louisiana’s Henry Hub 371 new well permits and was $2.61 per million British 408 new producing wells in Thermal Unit, a 41 percent 2015. The top five counties drop over the 2014 average. for permits were Belmont, Monroe, Harrison, Carroll Drilling rigs were laid down and Noble counties. across the country, including Ohio, where ODNR reported The Utica and larger a drop from 49 to 15 rigs over Marcellus Shale to the east 2015. accounted for 85 percent of U.S. natural gas production Gas inventories witnessed growth in the last four more injections and fewer years. Analysts believe the withdrawals, leading analysts Utica is perhaps the most to speculate the U.S. “may”
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NGLs used for fuel and petrochemical feedstocks. Gas-fired power plant developers are actively scouting Ohio. Midstream companies are considering value-added NGL petrochemical projects.
The Thai company selected Appalachian Ohio for this project because of an abundant, low-cost ethane supply, a large, unique river site, industrial infrastructure, multiple logistic assets, and a skilled regional work force.
Most exciting in 2015 was PTT Global Chemical’s announcement it would undertake Front-End Engineering and Design for what could become a $5 billion ethane cracker. The project being planned for a roughly 500-acre site near Dilles Bottom in Belmont County would convert ethane into ethylene and a variety of ethylene derivatives, creating hundreds of jobs.
PTT has optioned property and is preparing permit applications in conjunction with its FEED engineering. The FEED work will likely cost $100 million. a final investment decision is expected in early 2017. Contact : mjacoby@apeg.com Contact : mjacoby@apeg.com (Thanks to the Appalachian Partnership for Economic Growth for allowing the article to be re-printed.)
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OhioGas&Oil
9
Tax Revenues Increase
340% In Monroe County, Thanks to Shale
J
Jackie Stewart • Energy in Depth ust two years ago, the Appalachian region in Ohio suffered one of the most devastating job losses of 2013: the Ormet aluminum smelting plant in Monroe County, located along the Ohio River closed, leaving 1,000 people out of work in Ohio and West Virginia. If the job losses weren’t bad enough, the closure
also meant that millions in tax revenues the plant. As Brian told reporters in would also be lost. But then along came 2013, “that crushed me.” Other local the development of Ohio’s Utica Shale. displaced workers reported how they were “devastated” and concerned that Thanks to natural gas development in the the county would be left in peril such as area, Monroe County has had an over 340 Ronald Jackson, who told reporters, percent increase in tax revenue, which has not only filled the void left by the “This is devastating. This county will be plant closure, but has also brought back become a welfare County.” hope to the community that had been shattered two years ago. Today, natural Mr. Jackson may have been correct back gas development has been said to be the in 2013, but the county did not realize this “lifeline” for Monroe County. prediction, thanks to shale development. Tax revenues increased from $1.5 million in FY2010 to a whopping $6.8 million in FY2015. The tax loss from Ormet, during the same period of time, would have created a $4.5 million deficit from the county budget. Instead, the oil and natural gas industry not only covered that loss but added supplementary millions, as is evident by the county sales tax records. Unless you live and work in Ohio, it’s hard to imagine the positive transformational change that has occurred in many of the state’s poorest counties. Reports cited international trade regulations as the cause for the closure of the Ormet plant, which resulted in 1,000 local jobs going over to China. Monroe County was a poster child of shipping jobs overseas. Heart wrenching stories emerged, like Brian Howell, a 27-year old father of toddlers who recounted the pain he felt when forced to explain to his young daughter that he was unable to purchase her a toy, due to his recent layoff from
10 OhioGas&Oil
In stark contrast, today, the industrial park which is only a few miles from the closed Ormet plant shows signs of life, with new business and corporate offices. The industrial park was even renamed “Monroe County’s Energy Campus” and has received high honors from the Eastern Ohio Development Alliance (EODA) as the emerging area to conduct business in the region. With a flurry of new pipelines, staggering production of natural gas, and access to road, rail, and barge, Clarington, Ohio (located in the Monroe County) is on pace to set the standard for natural gas prices. Indeed, Clarington may in fact become the new Henry Hub within the next few years. Take a look at what the industrial park looks like today and what local folks are saying about the emerging natural gas industry, which is bringing this county back to life. The Monroe County Auditor Pandora Newhart said, “The oil and gas is a real shot in the arm for us. “
GasandOilMag.com
Monroe County Commissioner Mick Schumacker recently told EID,
“It’s hard to imagine what would have happened to Monroe County had the oil and gas industry not started to develop when it did.” — Mick Schumacker often try to completely misrepresent the true impact of shale development to local communities, like Monroe County. The fact is, this Ohio county has been completely bailed out because of the oil and natural gas industry. With staggering natural gas production, it’s safe to say that As EID continues to highlight, out-of- this good news will only continue to be state and foreign anti-fracking groups “pretty amazing”. circumvent that situation entirely. We hope that with the new pipelines coming in and potential for greater development in our industrial park that we can see a rebirth in our county. The timing has been a real blessing for us all.”
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When our largest employer, Ormet, laid off thousands of workers, the oil and gas jobs allowed our residents and workforce to move right into alternative employment without being forced to leave home and uproot their families. Additionally, our county budget and funding for our schools would have been devastated, but thanks to shale, we were able to
GasandOilMag.com
OhioGas&Oil 11
Dominion East Ohio’s Customers
Will Pay Less For Natural Gas This Year A detailed look at how lower natural gas places could play a role in coal and nuclear power
P
Jacob Runnels • Dix Communications rices for less than that NYMEX national drilling technology made the development of the Marcellus market price.” and Utica shale formations Durbin said Dominion’s RPA economically feasible,” he said. with horizontal Dominion East experienced a reduction because “Basically Ohio’s Standard Choice Offer there is more natural gas being drilling, producers are able to (SCO) rates dropped after the produced but the demand hasn’t [extract more efficiently] with Public Utilities Commission seen a corresponding change. He one drill shaft; they’re able to of Ohio (PUCO) approved the said it’s also because methods move the drill pipe out multiple natural gas supplier auction’s of extraction have been greatly wells from a single shaft rather results. improved during the shale than having to drill an individual energy revolution, improving shaft for each individual well.” The natural gas supplier’s auction the way horizontal drilling is Durbin said the Marcellus and is conducted every year by the implemented. Utica shale formations are in PUCO and it helps determine what suppliers pay to “deliver “The development of horizontal Appalachian states, such as Ohio, natural gas from the production area to Dominion’s service area,” according to PUCO’s website. The retail price adjustment (RPA) determined in the auction resulted in a 7-cent drop from the original 2-cent adjustment, which will affect the New York Mercantile Exchange (NYMEX) price and subsequently affect SCO prices for a year.
West Virginia and Pennsylvania. He said this puts natural gas at an advantage over other fuels such as crude oil because nearly 95 percent of natural gas is produced in America, unlike how crude oil is more of a “global commodity.” FirstEnergy spokesman Doug Colafella said there is “a glut of natural gas out there” which is increasing supply, while there is a lower demand because the warmer winter Ohio experienced. He said because of
“By participating in the auction, suppliers are willing to supply natural gas at that NYMEX market price minus the 5 cents than the retail price adjustment that was determined in the auction,” said Neil Durbin, senior communications specialist for Dominion East Ohio. “Our SCO customers are going to be getting their natural gas for a nickel 12 OhioGas&Oil
GasandOilMag.com
this, natural gas is becoming increasingly According to the OOGA’s website, horizontal drilling involves “diverging the drill bore” to more popular to utilize as a fuel source. create more pathways to “intersect the oil “We have a pretty high gas inventory right and natural gas reservoir at a specific entry now,” he said. “It’s driving down the price of point.” OOGA also states horizontal drilling electricity, it’s driving down the production can produce the “energy of 32 oil or natural and it’s driving down the cost to produce gas wells” compared to vertical drilling. electricity, thus the prices that customers pay From 2006 to 2016, Dominion East’s average have been dropping.” price of natural gas went from $10.33 to $2.11 Shawn Bennett, the executive vice per mcf, which means it experienced a nearly president of the Ohio Oil and Gas 80 percent drop. The highest price for natural Association (OOGA), said the increased gas was in 2008, where it was $14.55 per mcf, energy production from the changes in and as of March, 2016, the price is at $1.73 horizontal drilling is making the process per mcf, which is its lowest price in all of “more productive and more cost effective.” Dominion East’s recorded data.
it “difficult if not impossible” to build new coal-fired energy generation plants, as well as nuclear power plants being expensive to create.
The Future of Coal and Nuclear Power
Colafella said while natural gas is the cheaper alternative to coal, FirstEnergy doesn’t foresee energy producers abandoning coal and nuclear power, but they will no longer be the predominant energy sources as they “have been challenged by the lower natural gas prices.” He said coal in particular is facing challenges concerning environmental
“It was something that was started off where the refinements had to be made to make it universally used within the industry,” he said. Producers “really tested [the new refinements to horizontal drilling] out on the Barnett Shale in Texas and once they really got it to work that’s when you started to see it being implemented in other places. It has really become the future for oil and gas development.”
With the price of natural gas for Dominion East at its lowest, Durbin said natural gas is being seen as the “more attractive alternative for energy generation” compared to coal or nuclear power generation. He said environmental regulations have made
Bennett said it’s important for a company to consider the business decision of switching over from coal to natural gas in light of more restrictive environmental regulations. “Whether it’s nuclear, coal, natural gas, oil, renewable [energies], solar and hydro [electricity], it’s all about having a mix to make sure everything is complementary to each other,” he said. “If you use it, you should produce it.”
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regulations and “carbon rules going forward.” “The price of natural gas has always had some impact on electricity prices, but now more than ever,” Colafella said. “We’re seeing less coal-fired generation and more [natural gas] units coming online.”
predominant fuel for producing electricity going forward… [but] we would be afraid to put all of our eggs in one basket.”
However, he said FirstEnergy believes it’s in the public interest to keep these methods of energy production relevant to preserve “fuel diversity.”
Colafella said FirstEnergy owns both of the nuclear power plants in Ohio—which are the Davis-Besse Nuclear Power Station in Oak Harbor and the Perry Nuclear Plant in Perry. FirstEnergy also owns two coal-fired generation plants in Ohio—which are the Bay Shore Plant in Oregon (Ohio) and the W.H. Sammis Plant in Stratton.
“As the cost of one type of fuel increases, [energy producers] can turn to other fuel sources to keep prices in check and that has been a long-time industry practice,” he said when describing fuel diversity. “Natural gas will be the
With the coal and nuclear power plants taking an economic hit in Ohio, FirstEnergy submitted an electric security plan to the PUCO, which according to the PUCO’s website, involves the company entering a 15-year power purchase agreement
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to charge more for energy but reimburse customers with tax credits. (www.puco.ohio.gov/ puco/index.cfm/be-informed/ consumer-topics/firstenergy-selectric-security-plan/#sthash. dKeDzVUx.dpbs) Colafella said it’s an agreement that will “help preserve” FirstEnergy’s power plants. Colafella said customers are “likely to see a charge on their bill for the first three years of the plan.” “As power prices rise as projected and those plants become more competitive, all the proceeds from those plants will go back to our customers in the form of credits,” he said. “We believe over the longterm, our customers will save money through this plan and our projections say they’ll save about half a billion dollars over the eight-year term.”
the PUCO, stating FirstEnergy’s plan as being a way to “subsidize plants that [they] claim are no longer cost-effective to operate” and is considered a “corporate bailout.” For now, Ohioans, namely Dominion East customers, can enjoy low natural gas prices, but the lower prices will have an effect on coal and nuclear energy in the future. For everywhere else, however, Bennett said there are other sources of energy available in other areas, so the philosophy of fuel diversity can still be achieved in other states where natural gas isn’t as cheap. Email: jrunnels@recordpub.com Phone: 330-541-4185
BAGGED SAND He said this plan will help keep these plants viable in the longterm and protect fuel diversity. If the plan with the PUCO doesn’t go through, Colafella said FirstEnergy hopes natural gas prices will rise, but he knows it won’t “happen in a long while.” “We have not come out and said we’re going to close those plants if we don’t get this plan,” he said. “But clearly, they’re facing challenges and, if we don’t get the plan approved, we will have to take a close look into determine what our next steps are to keep these facilities operating.” There are movements, such as Fight the Hikes! (www. fightthehikes.com/issue/) led by Darr Farms, LLC; 21284 TR 257; Newcomerstown, OH 43832 the Alliance for Energy Contact Pam Mizer forChoice information (AEC), that are 740-498-5400 campaigning against FirstEnergy’s proposal to
GasandOilMag.com
Pipeline Award
Given to Marietta Professor
T
he Ohio Oil & Gas Energy Education Program recently awarded Marietta College Emeritus Professor Dr. Robert W. Chase the 2016 Ohio Oil and Gas Energy Education Program Pipeline Award for his numerous positive contributions to Ohio and the state’s oil and gas industry.
developed to energize and transport our world into a cleaner, safer and abundant future,” said Marty Miller, Chair of the OOGEEP Board of Directors and Senior Vice President of Operations at Alliance Petroleum Corporation.
“Dr. Chase has helped train a generation of oilfield workers while serving as an Dr. Chase served as head of the world- advocate for our industry. We are fortunate renowned Edwy R. Brown Department to have benefited from his hard work for so of Petroleum Engineering and Geology many years.” at Marietta College for 37 years. As department head, Dr. Chase was “Our industry and OOGEEP couldn’t responsible for the recruitment, education have a better champion that Dr. Chase,” and training of more than 1,000 students said Rhonda Reda, OOGEEP Executive who went on to become petroleum Director. “Bob has been involved with engineers, a critical career in the oil and our organization from the beginning, gas industry. Many students were Ohio helping to train teachers and students. residents and went on to work for Ohio oil We’ve presented at dozens of public events and gas producers and companies around together, both working to help Ohioans the world. understand the vital importance of the oil and gas industry. We are grateful for his Dr. Chase has worked closely with OOGEEP work and honored to present him with the since the organization’s inception in 1998. ‘Pipeline Award.’” He played an active role in OOGEEP’s teacher workshops, held every summer Dr. Chase holds Bachelors, Masters at Marietta College; recruited students to and Doctoral degrees in Petroleum apply for OOGEEP’s annual scholarship; Engineering from Pennsylvania State presented at more than 100 public events University. He is a registered Professional across Ohio; and provided his expertise on Engineer in Ohio. He was chair and OOGEEP’s Economic Impact Committee. benedum professor of the Edwy R. Brown Department of Petroleum Engineering and “It’s an honor to receive this award from Geology at Marietta College from 1978Ohio’s oil and gas industry and OOGEEP,” 2015. Dr. Chase previously served on the said Dr. Chase. “The career opportunities faculty of West Virginia University, and in all phases of the oil and gas industry has served as a consultant to numerous oil and the economic benefits to our citizens and gas companies, government agencies and the State are immense. I have spent my and professional agencies and is an author entire career trying to give my students and of more than 15 technical papers and Ohioans a better understanding of how we presentations. can safely produce oil and gas and protect the environment all while benefitting He holds a patent on a particular method of Ohio’s economy. I enjoyed every moment stimulating underground rock formations. of my 37 years teaching at Marietta College He has held numerous positions with the and will continue to be a positive voice for Society of Professional Engineers and our industry as long as I am able.” as a member of the board of directors. He served on the Ohio Department of “Because of great educators like Bob Natural Resources’s Ohio Oil and Gas Chase, the minds of our youth are being Commission as well as numerous business GasandOilMag.com
Dr. Robert W. Chase, r, speaking after receiving the Pipeline Award from Marty Miller, Chair of the Ohio Oil and Gas Energy Education Program Board of Directors and Senior Vice President of Operations, Alliance Petroleum Corporation. The presentation was made at the Ohio Oil and Gas Association Winter Meeting in Columbus, March 18. and community boards in Marietta. He has received multiple awards including the Marietta College Honorary Alumnus Award, Society of Professional Engineers International Distinguished Service Award and C. Drew Stahl Distinguished Achievement Award in Petroleum and Natural Gas Engineering from Penn State. Dr. Chase is the fourth recipient of the OOGEEP Pipeline Award following New Concord Fire Chief Brent Gates (2015); Cambridge Daily-Jeffersonian Reporter Judie Perkowski (2014) and Upper Arlington High School Teacher Jane Hunt (2014). The Pipeline Award recognizes an individual, not employed in the oil and gas industry, who has made a positive impact on the industry and the state. For more information, visit www.oogeep.org, or contact Mark Bruce, OOGEEP Communications Director at (740) 587-0410 or mbruce@oogeep.org
OhioGas&Oil 15
Ohio Shale a
Tsunami of Ethane
A
new study by Cleveland State University has calculated and quantified the transformation of Ohio’s Appalachian region into an energy exporter and a hot location prospect for petrochemical processors.
Utica shale is full of natural gas and natural gas liquids, both offering huge opportunities for new manufacturing in the region.
Even with current low commodity prices for gas and oil, the opportunity is The key is what’s coming out of the 1,119 immense. wells currently producing in the eastern Appalachian Partnership counties. The “The lull is giving the companies building 16 OhioGas&Oil
pipelines a chance to catch up. A lack of pipeline takeaway capacity remains a reason for depressed prices in the Appalachian basin.” said Mike Jacoby, APEG’s director of shale energy. Pipelines to the Gulf Coast Because the Utica shale is so prolific, pipeline construction is happening at a furious pace. Thousands more GasandOilMag.com
miles of pipeline are under construction.
“The low prices created a pause in new drilling, but the current wells are still producing record setting amounts of gas and oil.” — Mike Jacoby But filling every existing and planned pipeline to capacity won’t come close to depleting the supply of ethane-rich NGLs. According to one of the study’s authors, Andrew Thomas, executive-in-residence at the Cleveland State Energy Policy Center, the researchers looked extensively at the volume of oil and gas produced and moved every day through the system. They considered decline rates for wells, production and price history and other information impacting the throughput and found Ohio is about to see an “ethane tsunami.” “Production is expected to increase from 1.5 billion cubic feet daily in 2014 to about 4.75 bcf/d by 2020 and half of that gas will be “wet” (full of ethane),” said Thomas. “Industry estimates for the Ohio’s ethane production (Utica and Marcellus) are around 638 thousand barrels a day by 2020. “Even if current and planned pipelines take away all they
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can carry, nearly 200,000 barrels of ethane a day likely will be available in 2020.” Ethane Cracker Plant Available ethane is what is attracting the interest of petrochemical processors who are considering building ethane cracker plants in the region. The savings for ethane transportation, along with the savings of shipping polyethylene (processed from ethane) from the Gulf Coast back to the Midwest is projected to be about $100 million a year for each ethane cracker built. If four cracker plants were constructed in the area they could process about onethird of the available ethane projected for 2020, said Thomas. Electricity Production The challenge with extractive resources (coal, minerals, gas and oil) is capturing the most value possible, including creating jobs from the resource, before it leaves the region. Using the Utica’s abundant natural gas to produce electricity is the other big opportunity.
of natural gas electricity. Workforce Implications The Cleveland State study also examined the long-term implications of shale on the workforce concluding that an array of jobs will need to be filled. Although tens of thousands of jobs were created by drilling, most were not filled by Ohioans. In drilling-related phases, jobs requiring higher education include geologists, engineers, electricians, equipment operators, chemists and environmental and GIS specialists. Midstream oil and gas and their supply-chain companies require office workers, truck drivers, seismic technicians, leasing agents, heavy equipment operators, pipefitters and foremen.
The largest number of projected jobs will come when a cracker plant is built and chemical and plastics manufactures, both domestic and foreign, locate near it to take advantage of proximity to ethylene and polyethylene feedstocks. Projections are for thousands of construction workers and hundreds of plant employees. The three-part study was commissioned by the Regional Economic Competitiveness Strategy Shale Committee with support from the Economic Growth Foundation and JobsOhio and prepared by the Center for Economic Development and the Energy Policy Center at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. The full report is available on the APEG website: apeg.com
“Our first natural gas-toelectric power generating plant resulting from the shale boom is being built by Advanced Power AG, in Carroll County,” said Jacoby. “It’s an $899 million construction project and will produce 700-megawatts of power, enough to power 700,000 homes.” Manufacturers, who can use as much power as a small city, also benefit from the low cost
OhioGas&Oil 17
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Gas Compressor Association
Donates to Zane State
Norm Shade, center l, former president of the Gas Compressor Association, presents a check for $8,000 to Dr. Chad Brown center r, president of Zane State College, for the school’s oil and gas programs. From l to r, students Morgan Kuhn, Janessa Flood, Paul Paslay, instructor; Norm Shade, Dr. Brown, Robert Stonerock, instructor; students Spencer Morrison and Tyler Sealover.
T
he Gas Compressor Association recently donated help the industry. Zane State College is one GCA’s seven $8,000 to Zane State College for its Oil and Gas partner colleges and the only partner college in Ohio. Engineering Technology program, Gas Compression Engineering Technology program, and oil and gas certificates. This is the fourth successive year GCA has 740-439-7777 donated to Zane State College.
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“This donation will be very beneficial to the College’s oil and gas programs,” said Dr. Chad Brown, president of Zane State College. “Because of the technical nature of these programs, funds are always needed for equipment and maintenance. The generosity of the Gas Compressor Association helps these programs maintain their academic excellence.”
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Norm Shade, retired president of GCA, knows that donating to education helps the oil and gas industry, too. “The industry has a need for training and new workers to fill open positions,” Shade says. “The GasCompressor Association donates to Zane State College because of the Oil and Gas Engineering Technology program they offer and because of their gas compressor education, programs that provide great training for careers.”
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Legislators Discuss
Oil & Gas Development In The Ohio Valley
“W
Cathryn Stanley • Dix Communications
h o would have ever guessed 10 years ago that you would have this many people sitting in an auditorium talking about oil and gas royalty ownership and how to take advantage of the opportunities that we have right here in this region,” U.S. Congressman Bill Johnson told those attending an informational event at Barnesville High School hosted by The National Association of Royalty Owners. “Folks it’s a game-changer for us, and the journey has just begun. Things are a little bit down right now. You don’t have to tell me that. I know that and I share your concerns about that... We’re going to get through this because if you look at what’s happened across our state, those counties that have shale play in them, they’ve seen unemployment drop by as much as 66 percent. In fact the unemployment drop in those shale counties is what has dropped the unemployment rate across the state, and so it is a full court press to make sure that policies coming out of Columbus and Washington, D.C. don’t get in the way.”
to being passed in the Senate that has already been passed in the house that would require the Department of Energy to put a stop clock on the permitting of liquid natural gas exports.
“That is a very, very big deal if we don’t play in the liquid natural gas market exports arena on the international level.” — Congressman Bill Johnson
He said America recently lifted a 40-year ban on the exportation of crude oil. “Over the last 50 years, mostly over the last 10 to 15 years, technology has shown us that we have got more oil and gas reserves than anybody else in the world. We do not need to be beholden to OPEC, Iran, Venezuela or anybody else for our energy resources. We’ve got the wherewithal to be the world’s leading energy producer. By getting involved in the global markets for oil, we will be the ones in a few years sitting at the head of the table determining the rules of engagement for the international and global energy markets. We won’t be facing the problem we have today where OPEC refuses to manage its production, driving up the glut of oil on the international scene and thereby putting our producers on the side line.
Johnson said he sits on the Energy and Commerce Commission, the Commission with the largest jurisdiction in the House of Representatives. “I work for you on that committee and my job is to make sure that those policies enable this momentum to keep going,” Johnson said. Johnson said he had legislation close 20 OhioGas&Oil
GasandOilMag.com
“There’s a lot of things we are doing policy wise in Washington to try to create an energy advantage for America. Johnson also talked about the Power Act that he introduced that would address gas and oil royalties on federal-owned lands such as Wayne National Forest where the revenue goes to the federal government, without benefitting local schools and infrastructure. His legislature would give 20 percent of that revenue from federal land back to the county where the lands are located to be used for education and infrastructure projects. State Representative Andy Thompson (95th district) said he, too was enthusiastic about lifting the energy ban.
The small business owner from Marietta is in his third term and represents Harrison, Carroll and Noble counties, and parts of Washington and Belmont counties. “I really am conscious of the impacts on every day folks who are property owners, in this case royalty owners. In many cases you were land rich, but cash poor until this recent development. It is encouraging to have this opportunity, but at the same time I’m concerned about the beating that the coal industry has taken. We [Johnson also] want to simultaneously be aware of the coal industry. So many jobs around here depend upon coal so we would like to see coal continue to be successful.”
Thompson said he opposes raising the severance tax on royalty owners. “If you recall, the tax was really intended to pay for the regulatory structure that we have so that ODNR would have the resources that they need to go out there and hire the staff that they need so we can continue to operate things in a safe and effective and ultimately beneficial way,” he said. He said ODNR had two functions - a safety and environmental function and an economic development component. Thompson said that “generally they have done a pretty good job in balancing those responsibilities”, but welcomed input from those attending on their experiences. One member of the audience addressed well pad placement, specifically referring to the
Village of Barnesville’s lease with Gulfport and their location of two well pads in the Slope Creek Reservoir. “We’re trying to lay the groundwork for a safe, productive climate. Local revenues have increased a lot,” Thompson said. He said that barring the slow down, revenues in his district , Belmont, Noble, Washington and Harrison counties have “made a profound impact” that he thinks will continue. Thompson also addressed the issue of orphan wells. “They continue to be out there and one of the ways that I think we can help the oil and gas industry as we go forward and they have a slow down, is to Story continued on page 22
CA-10448312
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employ those workers to deal with these wells.” “There are thousands of orphan wells out there and every time the severance taxes come up, the rationale has been ‘well we need to take care of those orphan wells,’” he said. “One of the things I want to do as your representative is make sure we actually are doing something about those orphan wells. I know the funds have been collected. They reside with ODNR right now and I, in all sincerity, haven’t seen a lot of evidence that orphan wells have been addressed . I think with the slow down right now we have time to catch our breath and hopefully do something significant on the orphan wells and get them addressed,” he said vowing to work to make ODNR accountable.
Thompson also addressed leases of national and state lands, specifically the Muskingum Watershed. He said the money the received from royalties and the sale of water should be used to impact local residents through infrastructure improvements. “My suggestion to them would be ... how about sharing some of that revenue with local school districts?” State Senator Lou Gentile (D-Steubenville) said he always enjoys coming to Barnesville and has always been impressed with the community. “Things have changed dramatically here over the years. We’ve seen sort of a boom and bust cycle with the steel mills and the industry that at one time provided a lot of jobs and a
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lot of economic security. So we’ve gone through a lot of transition and that is why I’m very optimistic and very focused on how the oil and gas and this industry can benefit this region and revitalize our economic prosperity.” Gentile said that policy wise it was important to make sure that this area benefits from that prosperity. He referenced the governors proposal to take severance tax money and redistribute it across the state in the form of tax cuts. “I can only imagine if we proposed to take money from northwest Ohio and invest it into our communities, that there would be some objection to that,” Gentile said. He represents 10 counties, most of them where the oil and gas development is occurring. “Suddenly now we are on the radar throughout the state and throughout the nation, and so it is more incumbent upon us more than ever as legislators, as leaders, as business owners, as citizens, as a work force to make sure that we’re supporting advancing policies that will benefit every body around the community,”
saying he was glad royalty owners were organizing that day and that it was “very important and critical that there be transparency and uniformity when it come to these royalty statements.” Gentile went on to talk about the potential ethane cracker plant site in Dilles Bottom and said that Belmont County Commissioner Matt Coffland and Belmont County Port Authority Director Larry Merry (both of whom were present) were doing a good job bringing development to the county. “We remain optimistic about the future of the region, but I’m looking for balance and I think we have to make sure that we’re balancing this correctly and that the people in this region of the state and the economy of the region of this state is benefited by the oil and gas development.,” Gentile said. Gentile said he has pushed for work force development training and would like to see a reversal of the long ongoing trend of young people having to leave this region in order to find good paying jobs.
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Save Gas & Oil Interests in the event of
A Contested Divorce
S
Atty. Frank A. McClure ave gas & oil interests concern of families, who often enlist in the event of a lawyers to draft detailed prenuptial agreements spelling out what’s his and contested divorce hers before the wedding invitations One of the biggest are sent out. What about assets given concerns that I see day to day raised by after marriage, either though gifts or clients, especially concerning oil and inheritance? Attorneys are increasingly gas interests, is their concern about what trying other strategies - especially the happens to the property that my children creative use of trusts, which can be has or has been given by us if the IN- effective in sheltering assets a One of the LAW becomes the OUT-LAW. In other biggest concerns that I see day to day words, parents concerned about their raised by clients, especially concerning children and the possibility of DIVORCE! oil and gas interests, is their concern about what happens to the property I find that families and individuals are that my children has or has been given increasingly looking beyond prenuptial by us if the IN-LAW becomes the OUTagreements to shield property from LAW. In other words, parents concerned future divorce claims. The main goal is to about their children and the possibility of make sure inheritances, and other assets DIVORCE! accumulated before marriage and after marriage, are kept separate from marital I find that families and individuals are property, which a judge can divide up if increasingly looking beyond prenuptial agreements to shield property from a couple divorces. future divorce claims. The main goal is to Protecting property from the financial make sure inheritances, and other assets ravages of divorce has long been a key accumulated before marriage and after
marriage, are kept separate from marital property, which a judge can divide up if a couple divorces. Protecting property from the financial ravages of divorce has long been a key concern of families, who often enlist lawyers to draft detailed prenuptial agreements spelling out what’s his and hers before the wedding invitations are sent out. What about assets given after marriage, either though gifts or inheritance? Attorneys are increasingly trying other strategies - especially the creative use of trusts, which can be effective in sheltering assets a spouse has earned before the marriage and/or will inherit. Using multiple, premarital asset-protection techniques, including trusts and prenuptial agreements, can also be helpful if one of the strategies falls through. And since divorce judges have wide discretion in carving up property this can create a danger.
Story continued on page 24 GasandOilMag.com
OhioGas&Oil 23
Story continued from page 22
‘Belts and Suspenders’ Approach
One of the safest bets, if someone is getting married, is to combine assetprotection structures with prenuptial agreements - what lawyers call the “belts and suspenders” approach. While trusts may shield premarital assets or money that come from a spouse’s parents or grandparents, they may be less effective in dividing up property earned or acquired during marriage. Prenuptial agreements, in turn, spell 24 OhioGas&Oil
out exactly how assets, especially what’s obtained after marriage, should be divided in case of divorce or death. They also have the advantage of promoting open discussion among couples about finances. But prenuptial agreements might not hold up in court if drafted improperly or if the couple’s circumstances change greatly after being signed. Premarital planning tactics vary depending on whether the assets in question were generated by the bride or groom or their parents. If it’s the parents that have the property, advisers recommend that they leave gifts or inheritances to their children in “lifetime trusts”, rather than outright. In general, inherited property and gifts in “lifetime trusts”, even those received during marriage, are considered out of the marital estate. When parents transfer family property into “lifetime trusts”, that property is segregated into its own bucket (trust), clearly outlining what’s inherited or given and what’s not. By contrast, a gift or inheritance outright to the child deposited into a bank account runs the risk of being subject to division at divorce, if it’s commingled with marital assets such as a joint tax refund or even a paycheck.
What if you’re children are already married? There cannot be a prenuptial agreement. Again a “lifetime trust” will work, as long as it is fully discretionary which will keep the spouse from accessing it. What a great relief to parents who know
that at any time, the in-law can become the out-law. What if your children are already married and you now have oil and gas assets and are concerned with how you will protect these assets from the possibility of the in-law, becoming the out-law after you are no longer here? You now know that you can just do discretionary “lifetime trust” planning to protect your assets as you transfer them to your children and ultimately your grandchildren. It is important to find an attorney who concentrates their practice in the area of asset protection and estate planning. If you would like more information go to our website at www. fmcclurelaw.com.
Practicing in in the EstatePlanning; Planning; Practicing theareas areas of of Estate Family Law; Business Law; Law; Probate and Family Law; Business Probate and Oil&&Gas. Gas. Oil Call our office at (740) 432-7844 to make a reservation to attend a complimentary Estate Planning workshop.
April 14th at 1:30 p.m. April 28th at 1:30 p.m. May 12th at 1:30 p.m. Frank A. McClure Counsellor-At-Law Melissa M. Wilson Counsellor-At-Law CA-10449117
Parents of prospective brides and grooms often show the most interest in what are called “lifetime trusts”, because they don’t want to see family property dissipate because of divorce. Families have also grown more comfortable in with using trusts for tax planning and asset-protection purposes. Also, a growing number of states (including Ohio) have loosened their trust laws to allow trusts to last longer and be better shielded from creditors. A chief attraction of “lifetime trusts” is the fact that they can be set up without the knowledge of the child’s spouse or spouse to be. Many individuals choose to forgo a prenuptial agreement altogether, for fear that it will dim the romance and for them a trust is a good alternative.
I recommend to my clients that they set up discretionary “lifetime trusts” for the child’s benefit. In such trusts, the trustee has the power to decide when any distributions are made, rather than having the trust automatically disburse assets when children reach certain ages. Because the trust, rather than the heir, legally holds the inheritance, the assets are much harder for divorcing spouses to reach.
1009 Steubenville Ave. Cambridge, OH www.fmcclurelaw.com GasandOilMag.com
Ravenna Oil
To Expand
R
Diane Smith • Dix Communications avenna Oil, a longtime and three bays for maintenance. business near A new entrance also will be Ravenna’s southern constructed along Prospect border, is moving Street. forward with plans to expand. Eventually, a future phase of the The city’s planning commission project will renovate the former in February approved site CarQuest auto parts building for plans for the first phase of the an HCAC sales area, as well as expansion to the five-acre site offices for the new staff. along Lake and South Prospect streets. Jed Wise, who runs the An estimated 17 to 30 employees business, said he hopes to move are expected to be added over forward with the project as soon the next year, Wise said. Superior as possible. operates gas stations under the name CountyWide Petroleum, Architect Ted Manfrass said and Ravenna Oil delivers gas the Wise family, which had and diesel fuel to those stations. owned the business for 85 years, The company also delivers merged with Superior Petroleum fuels, heating ventilation and air out of Pennsylvania. The new conditioning products, motor oil owner has invested more than and lubes and dust control. $1 million in the Ravenna site, adding eight new trucks and City Engineer Bob Finney noted petroleum trailers in the past six that the project, combined with months, and adding eight new work planned on Ravenna drivers with plans to hire more. Avenue, will create a “greener entrance” to the city. “They are busting at the seams,” he said. Contact this reporter at 330-2981139 or dsmith@recordpub.com The current project calls for Facebook: Diane Smith, Recorddemolishing two old buildings Courier Twitter: @DianeSmith_ on the site, as well as a house that RC fronts on Prospect Street. Two new storage buildings would be constructed, with 16 storage bays
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Pipeline Safety
Meetings in Cambridge, Zanesville The following objectives will be covered during the program. • Virtual incident exercise and discussion • Leak recognition and response • Product hazards and characteristics • Safety initiatives • Pipeline purpose and reliability • Defining high consequence area For information about the event in the other 19 cities and towns,throughout Ohio, call (877) 477-1162, or email PdigmContactUs@ pdigm.com To register online for a meeting and learn more about your local pipeline meeting sponsors, visit oh.pipeline-awareness.com.
L
ocal pipeline and gas distribution companies are hosting a pipeline safety and awareness program in Zanesville and Cambridge in April.
Connolly, Hillyer, & Ong, Inc.
Zanesville will have two meetings at the Knights of Columbus hall, 275 Sunrise Center Drive, Zanesville, at 7 a.m. and 5:30 p.m., Thursday, April 7. The Cambridge meeting will be at 5:30 p.m. Wednesday, April 13 at the Pritchard Laughlin Civic Center. 2033 Glenn Highway.
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This event, as in the past, will include a complimentary meal and incident exercise for First Responders.
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Quality First Responder training is essential in establishing the communication network needed to effectively manage an emergency situation. In an attempt to enhance these communications, local pipeline operators and gas distribution companies are providing First Responder training at no cost.
26 OhioGas&Oil
(740) 922-4161 • (740) 922-2229 Fax 139 E. Main St., P.O. Box 71 • Newcomerstown, Ohio 43832 CA-10406011
The meetings will last approximately 90 minutes and in certain areas, Continuing Education Credits will be awarded to First Responders in attendance.
201 N. Main St., P.O. Box 272 • Uhrichsville, Ohio 44683
(740) 498-5196 • (740) 498-5197 Fax hillyerlaw@hillyerlawoffice.com GasandOilMag.com
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Gas Line Explosions
Bring New Safety Proposal
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By Matthew Brown• Associated Press .S. officials moved The Associated Press has on March 17 to reported on the potential benefits strengthen safety of automatic valves, and safety rules for the nation’s regulators have urged making 300,000-mile network of natural them mandatory. But the gas gas transmission pipelines in industry has resisted, in part due response to numerous fiery to their potential high cost. accidents, including a 2010 California explosion that killed In the past two decades, the eight people and injured more government has recorded than 50. more than 2,000 accidents on gas transmission lines across The Department of the U.S., resulting in 46 deaths, Transportation proposal 181 injuries and $1.8 billion in would expand inspection and damages. repair rules to include lines in some rural areas and newly The AP obtained details on installed lines in burgeoning Thursday’s proposal in advance gas drilling fields. of its public release. Pressure-testing for leaks would be required on older lines that were previously exempt, such as the Pacific Gas and Electric Company pipe constructed in 1956 that broke and torched a residential neighborhood in San Bruno, California, six years ago. But the government is sidestepping for now action on emergency valves that can automatically shut down ruptured gas lines. That issue was highlighted by San Bruno, where a 30-inch-diameter pipeline buried beneath a suburban street continued spewing gas for 95 minutes after it broke, burning 38 homes, before a utility worker manually shut it down.
Transportation Secretary Anthony Foxx said it represents “commonsense measures” that are needed to handle a dramatic increase in domestic natural gas production in recent years. They would bring under federal regulation for the first time roughly 11,000 miles of “gathering lines” that transport fuel directly from the wellhead to storage areas, officials said. “The significant growth in the nation’s production, usage and commercialization of natural gas is placing unprecedented demands on the nation’s pipeline system,” Foxx said in a statement provided to the AP. The rules would extend pressuretesting to include lines built before 1970, a step the National Transportation Safety Board has long recommended.
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Some companies already have been testing older lines voluntarily, said Marie Therese Dominguez, administrator for the Transportation Department’s Pipeline and Hazardous Materials Safety Administration. But Dominguez said the agency has identified 7,400 miles of pipe that have never been assessed for problems.
gaps in government oversight of the industry. That includes expanding inspection and repair rules to include rural areas, where companies to date have been largely self-regulated.
But Carl Weimer with the Bellingham, Washington-based Pipeline Safety Trust said no requirement for automatic shut-off valves was a glaring “I really do think this is going to shortcoming. lead to a higher level of safety,” she said. “It’s going to reduce the “We saw in San Bruno, when number of incidents related to someone has to jump in a truck and drive through rush-hour gas transmission.” traffic to manually shut off a Don Santa, president of Interstate valve, how much longer that left Natural Gas Association of that blowtorch to blow into that America, said the industry neighborhood,” he said. group would look closely at the proposal to see if it is consistent Dominguez said the use of shut-off valves with a voluntary program its automatic remained a high priority for the members adopted in 2012. agency and would be addressed Pipeline safety advocates separately. She could not offer a said the proposal was long timeline. overdue and addresses major
In this Sept. 9, 2010, file photo, a massive fire following a pipeline explosion roars through a mostly residential neighborhood in San Bruno, Calif. U.S. officials are moving to strengthen natural gas pipeline safety rules following decades of fiery accidents including the 2010 California explosion that killed 8 people and injured more than 50. (AP Photo/Jeff Chiu, File) OhioGas&Oil 29
OOGA Conference Highlights
Local Gas/Oil Industry
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Judie Perkowski • Dix Communications he 69th annual Ohio Oil and Gas Association Winter Meeting this past week in Columbus was the usual extravaganza of exhibits of products and services relative to the oil and gas industry. It is OOGA’s platform to welcome its membership to listen to the organization’s top officials, oil and gas producers, legislators, attorneys, political analysts, community outreach personnel and government agencies’ representatives tuned into today’s economic and political climate. In addition to the 80-plus exhibitors promoting their connection to the industry. The three-day event allows big and small companies, veterans who have seen it all and “newbies” who are still learning to talk the talk, equal time to advertise their wares. More than a dozen speakers presented data combined with their years of experience to offer opinions on the future of the gas and oil industry.
meeting, “while the downward spiral of the price of crude oil is weighing heavy on everyone’s mind, it is of the utmost importance of every member of the organization to engage your legislators.” Hill quoted one of OOGA’s past presidents saying, “You should know the first and last name of all your elected officials. And even more importantly, they should know yours.” Hill added that for many in the industry, it is a chance to “reconnect with old friends and brag about their most recent big well. It is literally an old-fashioned homecoming.” Former Speaker of the House of Representatives Larry Householder and State Sen. Troy Balderson both made comments thanking attendees for their leadership, their dedication and strength in the midst of the oil crisis.
A few highlights from the meeting:
• Shawn Bennett, OOGA executive vice president and chief executive officer of the association and its operations, and industry spokesperson in Columbus and Washington, D.C., spoke at the opening session of the meeting about the status of the industry and how it is weathering the industry’s worst downhill slide in 40 years. He said the pressure from the OPEC countries, especially the Saudis, in addition to the warm weather temperatures throughout the winter season, have caused the glut of oil and natural gas. But the people who have been in this business for a long time have been through this before and are cautiously optimistic that the commodity price will slowly climb to re-ignite exploration and production. He also noted the number of pipelines that are desperately needed to transfer the products to cracker plants, refineries and beyond. • James Crews, vice president at MarkWest Energy Partners, recently bought out by Marathon, said MarkWest has more than 1,000 miles of crude oil pipelines and processes 75 percent of the oil rich gas produced from the Marcellus and Utica plays. “We need more pipelines to be built. Some are in service, but we need more. Some of these projects are backed by producers who are in financial distress ... We have to work together.” • John Krohn of the U.S. Energy Information Administration said the ET Rover, Tennessee Gas Transmission, Leach X-press, Kinder Mark Bruce, director of communication and Ann Croce, visual communications, both experts on the Ohio Oil and Gas Energy Education Program, at the Morgan Utopia East and the Ohio-Louisiana Access pipelines have organization’s information area where attendees to the Ohio Oil and Gas been approved by the Federal Energy Regulation Commission, Association Winter Meeting can get information about OOGEEP and anything and should be in operation early in 2017. There is also a need to OOGA President David R. Hill said in his introduction to the else related to the exploration and production of hydrocarbons. 30 OhioGas&Oil
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and Foundation, said OOGEEP provides pertinent and quality education about industry safety. “Our presentations are about crucial ... about issues that effect the workforce and our companies.” Reda helped to form OOGEEP in 1997. OOGEEP’s nationally recognized and accredited firefighter training program will begin its 15th year in 2016. More than 1,350 first responders from fire departments from around Ohio and several other states have attended the workshops. More than 2,700 teachers from schools in all 88 Ohio counties have attended OOGEEP’s Science Teacher Workshops. This year one-day Industry Jeananne and Mike Chadsey, seated, and Lyndsey Kleven, r, man the table selling raffle tickets from two firearms. Mike is Safety Training Workshops will the director of public relations for the Ohio Oil and Gas Association; Jeananne is Mike’s wife, and Lyndsey is communications be available April 26 or April 27 coordinator for The Ohio Oil and Gas Association. at the Schoenbrunn Conference develop liquid natural gas the University of Cincinnati • John Stoley, a former rig Center in New Philadelphia. export transmission terminals, has posted the data from its manager on an offshore drilling Applicants can choose either two are under construction in 28-month study on hydraulic platform, told his story about date. fracturing and groundwater — how faulty safety beliefs ( I Texas and Maryland. but it has done so in the form have done this so many times, And, in spite of the downturn He said the biggest increase of a master’s thesis written by I know what I am doing) and in the industry, the industry is in natural gas demand is for a student who assisted the lead how workplace incidents are still supporting 50 scholarships gas power generation. Natural researchers — rather than in the preventable. Stoley said a huge to high school and college hook that swung out of control, students, which will be gas surpassed coal because it form of a scientific report. hit him in the head, put him in a announced in May. is cleaner and cheaper. Since 2012, 85 percent of U.S. shale The University has said that it coma for a month, and in rehab Dixon, OOGEEP gas production comes from the does plan to publish the study for two years to re-learn his Charlie Marcellus and Utica formation. in a scientific journal and it motor skills and how to speak safety and workforce director, said he is looking forward to should absolutely make good again. a collaborative effort to bring The EIA collects, analyzes on its word. However, in the and disseminates energy meantime, it’s worth noting He recounted what perceptions together a variety of oil and information and promotes that after 191 water samples, lead to the actions that caused gas producers and service and the first-ever stable isotope the catastrophic incident. trucking companies to put policy. analysis, and most importantly, Faulty safety beliefs and work together a two-day training • Jackie Stewart, FTI Consulting baseline testing, the 31 page behaviors are often enhanced workshop for more boots on the strategic communications master’s thesis explains that when we get away with them ground training. director and Energy in Depth- there was “no evidence for again and again. It is not “if,” Ohio state director, spoke about natural gas contamination from but “when” an accident will “I am looking forward to the University of Cincinnati’s shale oil and gas mining in any occur if you are not following planning more sessions and to make them available to more Groundwater Utica Study. of the sampled groundwater safety rules all the time. workers. We want to help the wells of our study.” The results She said after weeks of scrutiny, were so overwhelming that the • Rhonda Reda, executive industry promote our motto: media attention, and calls from study clearly reinforced these director of the Ohio Oil & Gas Tomorrow is your reward for energy Education Program being safe today.” groups and elected officials, findings at least five times.
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OhioGas&Oil 31
2015 Year in Review “The Utica Play in Ohio and western West Virginia is, by virtually all industry accounts, the most profitable shale play in the country. There’s a realization that this is the best place to be doing business in that industry at this time. Right now most of the drilling activity is going on in our dry gas window, where more pure methane and less natural gas liquids are produced. These are some of the highest producing wells ever drilled in the world. They are very lucrative wells.
“Its has been a very, very good year of outstanding growth for the organization,” said Molinaro. “We have rolled out a state-of-the-art website to help those who may be interested in development sites in our region. We have expanded our staff by more than a third.”
“We’re probably in a better position than anyone in America to weather the effects of the Saudi dumping on global energy prices.”
Asked what does his crystal ball show for 2016? Molinaro said, “Anybody who has an eye on the news is aware that the economic recovery has But, he also acknowledged that gotten very soft in America. it was quite the opposite for the gas and oil industry. “The big challenge in 2016 is going to be maintaining the “This has been a very tough momentum in job creation year for the exploration and and investment. There are production companies that fewer projects and fewer jobs have been working in shale out there right now. That’s because the Saudis have been going to be a challenge for dumping oil at such incredibly every economic development low prices,” he added. “That organization in the U.S. said, we saw an increase in We need to go in there and natural gas liquids coming out substantially up our game in of the ground in Ohio. We had terms of work we’re doing to a huge backlog of drilled wells meet our objectives.” that had been capped waiting for the collection pipeline (Thanks to the Appalachian Partnership for Economic Growth for allowing the infrastructure, so we will see article to be re-printed.) those wells coming on line. We will most likely sustain and exceed the levels of production of 2014 and 2015 through 2016 and possibly into 2017.
32 OhioGas&Oil
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ccording to John Molinaro, president and CEO of the Appalachian Partnership for Economic Growth, there are 28 counties to cover for JobsOhio and Manufacturing Extension Partnership, 14,000 square miles. Plus, 2015 brought a new contract with the Small Business Administration that added four additional counties stretching the APEG region to serve all 32 Ohio Appalachiandesignated counties.
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