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Gas & Oil
May 2015
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Gas & Oil
Ohio Edition
May 2015
Table of Contents 4
FERC TO STUDY IMPACT
7
FINANCING CLOSED FOR ENERGY PROJECT
8
WOMEN IN ENERGY SUMMIT
11
OPINION: TAXATION OUT OF CONTROL
12
APPLYING THE STATUTE OF LIMITATIONS
15
LAW FIRM TO REPRESENT BARNESVILLE
16
SOURCE WATER PROTECTION PLAN
EXECUTIVE EDITORS
19
SHALE-ABRATION COMING MAY 10
Ray Booth RBooth@dixcom.com
20
DONATION FOR FIREFIGHTER TRAINING
23
LAWMAKERS SUPPORTING CNG CARS
24
WOMEN CAN SUCCEED IN ROLES
27
OOGEEP TEACHER WORKSHOPS
28
ASSET PROTECTION
31
OOGEEP NEW LEADERSHIP
32
WORKERS NEED TO PROTECT HEARING
PUBLISHERS Andrew S. Dix ASDix@dixcom.com G.C. Dix II GCDixII@dixcom.com David Dix DEDix@dixcom.com
Rob Todor RTodor@dixcom.com Lance White LWhite@dixcom.com Roger DiPaolo RDipaolo@dixcom.com
REGIONAL EDITORS Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com Judie Perkowski JPerkowski@dixcom.com Kimberly Lewis KLewis@dixcom.com Erica Peterson EPeterson@dixcom.com
Gas & Oil
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May 2015
ADVERTISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Jeff Kaplan Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200 Rhonda Geer Wooster & Holmes, Ohio Offices RGeer@dixcom.com 330-287-1653 Harry Newman Kent, Ohio Offices HNewman@dixcom.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450 Jeff Pezzano VP Advertising Sales & Marketing Kent Ohio Office JPezzano@dixcom.com 330-541-9455
35
THERE’S MORE TO DO
36
ROVER PIPELINE READY TO ROLL
38
COALITION OPPOSES SEVERANCE TAX
41
WHAT’S OLD IS NEW AGAIN
45
PROTECTING UTILITY LINES
46
BELMONT COUNTY NAMED FINAL CANDIDATE
48
REMINDERVILLE HEATS UP
51
OIL PRICES SLOWS DRILLING
53
UTICA SHALE PRODUCING STRONG RESULTS
54
FEDERAL FRACKING RULES ROLLED OUT
56
BUREAU COMMENT ON TAX
58
ENRICHMENT FUND
60
UPCOMING EVENTS
62
NORTHEAST RESISTS MORE PIPELINES
64
ENERGY BRIEFS
DIGITAL MEDIA MANAGER
Brad Tansey BTansey@dixcom.com
ART DIRECTOR Pete Kiko PKiko@the-daily-record.com
LAYOUT DESIGNER Elizabeth Horne
EHorne@the-daily-record.com
“Gas & Oil” is a monthly publication jointly produced by Dix Communications. Copyright 2015.
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Gas & Oil
May 2015
Ohio Edition
FERC to study Nexus environmental impact Thomas Doohan Dix Communications
W
OOSTER, OH -- The route of the proposed Nexus pipeline is not a done deal, as the Federal Energy Regulatory Commission filed a notice of intent to prepare an Environmental Impact Study for the Nexus Gas Transmission project. According to the notice filed in April, the study, which also will look at the Texas Eastern Appalachian Lease Project, will investigate the environmental impacts of the pipeline. Once complete, it states, the EIS “will be used by the Commission in its decision-making process to determine whether the NEXUS and TEAL Projects are in the public convenience and necessity.” The notice states the study will investigate the impact on soils, water resources, vegetation, wildlife and a number of other categories. The notice reported some concerns already have been identified. The notice comes just over two weeks after the city of Green filed a series of documents with the FERC, requesting the commission and the pipeline developers, Spectra Energy, to consider an alternative route. In a letter signed by city representatives, it was suggested the pipeline be placed farther south, following the route of the Rover pipeline across the southern portion of Wayne County. As the pipeline approaches the western boarder of the county, it will separate from Rover and head north, cutting into Medina County in the northwest corner. “We make this request based upon the principles of minimizing the impact of the proposed pipeline to both human and the environment features,” the letter states, noting potential impacts on wetlands, abandoned mines, parks and water systems serving schools and residential structures would be impacted. “We are not just trying to push this into another community’s backyard.” The concerns raised by Green and noted by FERC also are ones in the minds of municipalities in Wayne County. The 42-inch pipeline would run for about 6.12 miles in Chippewa Township and grazes the northern part of Doylestown. Both entities have passed resolutions supporting a reroute.
Doylestown council passed a resolution in March in opposition to the pipeline. Councilman Tony Lindeman said the route would damage economic development as it passes through a 68-acre parcel slated for business and highway development. All the documents filed with FERC are significant, Ohio Farm Bureau Director of Energy, Utility and Local Government Police Dale Arnold said, as they dictate the pipeline’s score in each of the categories involved in the EIS. It is all about points, he said. FERC can make recommendations about the route or deny the application if the scores reveal a negative impact on the environment. As such, Arnold suggested landowners work with FERC and the developers, describing how their testimonies can effect change. “We’ve seen literally hundreds, if not thousands, of minor, if not major, changes in course,” he said. If Nexus reroutes following Green’s recommendation, the city’s concerns would be addressed along with those of the municipalities in northeast Wayne County. However, such a reroute would not be without environmental impacts of its own. With plenty of agricultural land along the path of the alternative route, Wayne County OSU Extension educator Rory Lewandowski said such a move could have a negative impact on agriculture. For no-till fields, he said, the soil disruption would be significant and take years for the benefits of the tillage practice to return. As a result, he said, there would be “long term impacts on yields.” “Soil compaction is definitely a concern,” Lewandowski added, describing how the heavy machinery used for pipeline construction could decrease yield in subsequent planting. Additionally, he said the pipeline could change the way water flows off the land, either increasing flow or causing pooling. Reporter Thomas Doohan can be reached at 330-287-1635 or tdoohan@the-daily-record.com.
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May 2015
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May 2015
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Financing of $899 Million closed for Carroll County energy project Sara Klein Dix Communications
A
dvanced Power announced on April 7 that it has successfully closed an $899 million project financing for construction of the Carroll County Energy project. The company is working with financial partners TIAACREF, Chubu Electric Power Company, Ullico and Prudential Capital Group, providing $411 million in equity commitments, and BNP Paribas, Credit Agricole and eight other commercial banks providing $488 million in senior secured credit facilities. Located in northeastern Ohio, Carroll County Energy will be a 700-megawatt combined-cycle natural gas electric generating facility that will sell energy, capacity and ancillary services into the PJM market. Advanced Power has stated that the location of the power plant in Washington Township is “an important competitive advantage of Carroll County Energy.” The project is proximate to the Utica and Marcellus natural gas production as well as to AEP’s 345 kV transmission lines and Kinder Morgan’s Tennessee Gas Pipeline system. “Today’s financial closing is a major milestone for Carroll County Energy,” said Carroll County Energy project manager Jonathan Winslow. “We are pleased for the Carroll County community at large and Carrollton schools as we move forward with this project and begin to contribute to the local economy, employment and energy picture. “Site work has begun and we remain on track to put Carroll County Energy online by the end of 2017. We truly appreciate the support and professionalism of the local schools, village, township and state government, regulators and project partners,” Winslow added. The facility will feature two GE 7F.05 gas turbines and a D602 steam turbine, which have the capacity to generate electricity for approximately 750,000 homes. Bechtel is building the project under a turnkey construction contract. EthosEnergy will operate the facility and Advanced Power will remain as the construction and asset manager. “The project has received strong support from Carroll County and other key stakeholders in Ohio,” said Advanced Power CEO Thomas Spang. “From the beginning it was the project’s goal to work closely with the community and to bring
in the strongest partners in the industry -- this milestone demonstrates the success of that strategy.” Carroll County Energy is one of a number of projects Advanced Power is developing in the U.S. and Europe. “We are pleased to take part in another significant energy project as part of our growing relationship with Advanced Power,” said Marietta Moshiashvili, managing director and head of natural resources and infrastructure originations at TIAA-CREF. “As we pursue a steady, diversified stream of returns on behalf of our investors, this project represents exactly the type of opportunity our dedicated energy infrastructure team actively seeks out,” said Mario Maselli, senior director within the energy & infrastructure investments team at TIAA-CREF. “A strong management team, consistent long term returns and a positive economic impact are important criteria in our investment decision making process,” Maselli remarked. Approximately 700 construction jobs will be created during peak construction of the facility as well as 20 to 30 permanent jobs during operation. Advanced Power has stated that the project will also provide electric generation capacity in a region that has experienced “significant facility retirements.” BNP Paribas (left lead, administrative agent) and Credit Agricole Corporate and Investment Bank (right lead, syndication agent, hedge coordinator) served as coordinating lead arrangers and joint bookrunners in forming a syndicate of 10 financial institutions to finance the project. Whitehall Capital served as the sponsor’s financial advisor. Morgan Lewis & Bockius served as project counsel. Advanced Power is a privately owned company established in 2000 to develop independent power projects in North America and Europe. Advanced Power’s management team has led more than 9,400 MW of generating project development. Majority-owned by senior management, Advanced Power has offices in Boston and London and is headquartered in Zug, Switzerland.
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Gas & Oil
May 2015
Ohio Edition
Women in Energy Summit held at Zane State Judie Perkowski Dix Communications
C
AMBRIDGE, OH -- There is more than one reason the “Women in Energy Summit” garnered so much attention — women, in general — have not taken advantage of the opportunities in the energy industry because working in gas and oil was always “a guy thing.” Secondly, women of all ages want more information about what is out there for them. And, many of the women who are currently employed in the industry are getting ready to hang up their hard hats. The Summit, hosted by Congressman Bill Johnson (R-Marietta), at Zane State College EPIC Center in Cambridge on April 17, was exactly their cup of tea. The event was focused primarily on the future generation of women who will have access to a plethora of jobs and careers in the gas and oil industry. Johnson said, “I want to make sure you know that there are many opportunities here in Ohio for you. The gas and oil industry has just begun to tap into our resources. We want you to know we are becoming the nation’s and the world’s most prolific energy producers, and we want you to be a part of it. To have a choice of the many jobs and careers that are available. And, we want you to prosper right here in your home towns.” Approximately 144 women, including 50 female Cambridge Middle and High School students,. and 20 young women from Buckeye Trail High School, took advantage of a free highly charged dose of inspiration, motivation and education from 12 women who have earned the right to give advice on how to get a job, or have a career in the gas and oil industry. Jo Sexton, president and CEO of the Cambridge Area Chamber of Commerce and moderator of the event, welcomed LeeAnn Johnson, wife of the Congressman, who said we need to remind women in communities everywhere that relative to employment, “this is not your grandfathers’ oil and gas industry.
“We need to start talking, to renew enthusiasm about the many opportunities available, not only to men, but women as well,” she said. Sexton is also one of the women who has opened the door to women to learn more about the industry through the Guernsey Energy Coalition meetings she initiated in 2011, at the very beginning of the Utica shale boom in Guernsey County. Jackie Stewart of Energy in Depth, Ohio, told her story of how and why she got where she is today, gave an informative primer on the drilling process, described the role of gas and oil in products we count on and use every day, and of the $8 billion investments by gas and oil companies in Ohio. The first of three panel discussions about “Opportunities in Manufacturing and the Skilled Trades” was presented by Nancy Hanlon, the first female to join the International Union of Operating Engineers, Local 18, who has worked in construction for 36 years. Patti (the pipefitter) Ferri, a member of the Plumbers and Pipefitters Union Local 495, and Anita Warden, a supervisor at Detroit Diesel; all said their mentors were teachers, instructors, family members and people who they worked for and with. In any non-traditional occupation, women almost always will be put in a situation that will test their ability to ignore or overcome comments about their looks, the way they dress and their job. All three said you have to develop “soft skills.” Show up for work on time, every day, show an interest in learning more about the job, do your job and have a “thick skin and ignore the remarks.” The panel on “Opportunities in STEM and Energy Careers,” introduced Nicole Staka of the Council of Smaller Enterprises, an advocate for small business owners. COSE is a division of the Greater Cleveland Partnership, and an organization that coordinates activities and provides resources for small businesses in the Greater Cleveland area. It is the larg-
www.GasandOilMag.com
est regional small business group in the United States. Rebecca Heimlich of American Petroleum Institute, Ohio Energy Division, said she wanted to be a lawyer, but after all the schooling and passing the bar exam, she realized being a lawyer was not for her. She joined API four years ago when API created the position of campaign manager for speaking to grass roots organizations about the gas and oil industry. Gtretchen Addington is an environmental and safety specialist for Eclipse Resources, and Leeanne Meyer is a vice president of environmental, health and safety compliance for MarkWest Energy Partners. All four panelists’ education in science, technology, engineering and math allowed them to attain management positions in the energy related companies. The third panel discussion on “Recruiting Women for Today’s Energy Careers” focused on where to find the resources to help you determine what kind of job you are looking for, what qualifications you need to apply and what information you need before arrive for an interview. Ready to help you find out what you need to do to become successful, was Sue Thomas-Sikora, assistant director of OhioMeansJobs, who said when you register an account with OMJ, the site will help create an employment plan, build a resume, and more. Rachel Todd, intervention specialist at Cambridge High School, said she has resources to advise you on where to find information about whatever kind of job you want, what skills are required, and helps you decide what is right for you. Samantha Goodhart, who is graduating from Zane State next month with an associate’s degree in the schools’ Oil and Gas Engineering Technology Program, said her mentors were family members and 4-H leaders. To wrap up the event, Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Program and Foundation, recounted her experiences as one of the first women in her field to reach executive level. She said you have to earn respect and not expect special treatment. You have to show everyone you belong in that position. Reda’s passion for educating the public about the industry has catapulted OOGEEP to the premier source of reliable gas and oil industry information. She also talked about the necessity of educating future generations of industry specialists in fields directly connected to STEM (science, technology, engineering and math). She said the United States ranking in STEM fields leaves much to be desired. “We are 52nd in the world ... We need young people to get involved ... To assume leadership roles, especially young women.” Reda said OOGEEP will announce their annual scholarship awards next month. OOGEEP also donated the table favors — hard hats for every attendee. jperkowski@daily-jeff.com
Gas & Oil
May 2015
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Above: The Women in Energy Summit at the Zane State College EPIC Center, Friday, was hosted by Congressman Bill Johnson. From l to r, Michael Whitson, dean of Cambridge campus; LeeAnn Johnson, wife of the Congressman who gave opening remarks at the event; Cong. Johnson; Jo Sexton, president and CEO of the Cambridge Area Chamber of Commerce and moderator of the Summit; and Dr. Chad Brown, provost, executive vice president of Zane State College. Left: Students from the Cambridge City School District were among those taking part in the “Women in Energy Summit” at the Zane State EPIC Center Friday morning.
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OPINION:
Taxation Out of Control Mark Overholt President, Tiger Energy LLC
I
t appears that Governor Kasich has hit on a surefire way to reduce state income taxes for thousands of Ohioans --eliminate their jobs. The prime “beneficiaries” of this tough love tax treatment would be the quarter million or so men and women whose jobs are supported by Ohio’s oil and gas production industry. With the $1.5 billion oil and natural gas severance tax proposed as part of the Governor’s budget, many of those jobs will be put in jeopardy as energy producers leave Ohio for more hospitable states. Billions more in tax hikes on sales and commercial activity will lead businesses to invest less in their workforces. Jobless workers left behind would have no paychecks and therefore no deductions for the state income tax. How’s that for direct action? Of course, those laid off workers would at least temporarily be collecting state unemployment benefits, but let the state accountants handle that problem. OK, enough satire. Like most business people, I appreciate the Governor’s determination to lower Ohio’s state income tax to encourage business growth and job creation. Unfortunately, the energy, sales and commercial activities taxes intended to compensate for an income tax cut will have just the opposite effect. This is no time to be making it more costly to harvest natural gas and oil in Ohio. Our producers here are feeling the global downturn in energy prices, a downturn which is partially the result of their own success. The revolutionary expansion of U.S. energy production enabled by horizontal drilling and “fracking” techniques has created a market glut and pushed prices down. That’s created a welcome drop in gasoline prices over the last year. Ohio manufacturers have gotten a boost from already low natural gas prices dropping for the last several years. While that’s all good news, the bad news is that companies producing oil and gas are pressured to cut costs to offset lower prices. The size of the severance tax proposed by the
Governor is an invitation for Ohio businesses to shut down their operations here and move elsewhere. Elsewhere could be as close as West Virginia or as far away as North Dakota. Ohio can’t afford to play hard to get when it comes to energy or manufacturing. There are too many competing locations in other states. And we’re already seeing some producers pulling up stakes. As recently as December we had a record 59 rigs operating in the Utica Shale. By March, more than third of them had left Ohio. Adding massive taxes on state businesses could only accelerate the exodus of companies from Ohio, along with the jobs that go with them. At the end of the day it’s also an issue of fairness. One industry should not be singled out. Does the Governor wish to single out attorneys, pharmaceutical manufacturers, or any other specific industry with a specialized tax? This sort of thinking has led to broken tax policy at the state and federal level. Let’s hope cooler heads prevail and tax-grabbing politicians don’t ruin a great industry for Ohio. Mark Overholt is president of Tiger General LLC, a Medina based company selling specialized trucks for oilfield production.
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May 2015
Ohio Edition
APPLYING THE STATUTE OF LIMITATIONS TO DORMANT MINERAL ACT CASES David J. Wigham Attorney
O
hio’s Dormant Mineral Act (“ODMA”) has become a touchstone in the battle between reserved mineral owners and surface owners in southeast Ohio vying for ownership of mineral rights that can be leased for lucrative bonuses and royalties paid by Utica shale producers. There is considerable ambiguity in the ODMA, and there have been scores of lower court rulings interpreting it, which are inconsistent and contradictory. Currently, there are at least eleven cases pending before the Ohio Supreme Court, which has caused many lower courts to stay their ODMA dockets pending rulings by the high court. The latest tactic by mineral owners attempting to avoid a statutory abandonment of their mineral interests is to assert the 21-year statute of limitation found at Ohio Revised Code § 2305.04. This statute states that an action to recover title to or possession of real estate must be brought within 21 years after the case of action arose. In the context of ODMA cases, mineral owners are arguing that the surface owners’ lawsuits should have been filed within 21 years of the statutory abandonment of the mineral rights. The viability of this argument is questionable, as noted by the Court of Appeals for the Seventh Appellate District, which is the court of appeals hearing the majority of ODMA cases. In Tribett v. Shepherd, 2014-Ohio-4320, the Seventh District Court of Appeals held that the 1989 ODMA did not require action by the landowner to have a mineral interest deemed abandoned. Thus, the Seventh District has already suggested that R.C. §2305.04 does not apply to cases brought under the 1989 ODMA, because the landowner is not attempting to recover title to the minerals, but is merely removing the cloud placed on the title to the mineral by a former mineral owner’s assertions that it still owns the minerals.
The Seventh District’s statement in Tribett is consistent with case law from the other appellate districts in Ohio, all of which state that: (1) the statute of limitations does not run against individuals who are already in sole possession of their property, and (2) the statute of limitations does not begin to run until someone asserts an inconsistent right to the property. These rulings are intended to prevent persons such as reserved mineral interests from sitting back and waiting to see if anyone will challenge their potentially defective title claims to the minerals while the Ohio courts have held that this is exactly what a party in possession may do. Ohio law does not require one in possession, such as a surface owner, to filing lawsuits in the off chance that someone else may challenge their title. Courts have also recognized a distinction between statutes which apply automatically by operation of law and those where an application must be made in order to take advantage of the benefits offered by the statute. Where property is transferred automatically by operation of law such an automatic ODMA abandonment, i.e., no further act is required to accomplish the transfer,, any statute of limitations argument based upon the premise that the person receiving the property did nothing to affirmatively assert ownership over the property must fail. A ministerial action to effectuate formally what already has occurred by operation of law (including a hearing designed to allow a litigant to dispute the underlying facts which would lead to an automatic forfeiture, thereby affording due process rights) cannot be avoided by invoking a statute of limitations. The Seventh District in Tribett and other cases has already held that, under the 1989 DMA, minerals vest automatically in the landowner by operation of law without any application to the courts to achieve that result. As the Court has stated, this proceeding is meant to “formalize” what has already occurred by operation of law by establishing that the events necessary
Gas & Oil
www.GasandOilMag.com
May 2015
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Hot and Cold
to trigger automatic vesting were in place. These proceedings are designed to allow mineral owners an opportunity to establish that the events which would lead to automatic abandonment under the ODMA had yet to occur. Despite this trend, there is one recent opinion from the Guernsey County Common Pleas Court, known as the Weekender, Ltd. v. Gary F. Greegor, Case No. 13-OG-224, which did apply the 21-year statute of limitations in a 1989 ODMA case. The Weekender case has been appealed to the Fifth District Court of Appeals. These recent legal developments illustrate the volatile nature of the current state of Ohio case law interpreting the ODMA, and the risks involved when analyzing when and how to proceed with and defend abandonment actions. Surface and mineral owners should seek counsel from experienced oil and gas attorneys who are knowledgeable and up to date on the current changes in Ohio’s oil and gas law.
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David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with nearly 25 years of industry experience. He is also the current chairman of the Natural Resources Committee of the Ohio State Bar Association.
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Columbus law firm to represent Barnesville in Gulfport suit Cathryn Stanley Dix Communications
B
ARNESVILLE — Village leaders have called in outside help in a legal case of “David versus Goliath” that has garnered national and international attention from the media and environmental advocates. Following a short executive session at an early April meeting of Barnesville Village Council, the Columbus law firm of Barnes and Thornburg, LLP was hired to represent Barnesville in a suit filed by Oklahomabased Gulfport Energy over the right to draw water from the Slope Creek Reservoir. Prior to entering executive session, Mayor Dale Bunting announced that some of the money the village has generated from the sale of water from the reservoir, previously earmarked for an estimated $3 million dollar project to install a new, larger line from Slope Creek to the village’s water treatment plant, will now be diverted to paying for legal representation. “By now, I’m sure everyone knows we are being sued by Gulfport,” Bunting said, noting national attention to the lawsuit. “We were going to use that money for the Slope Creek water line. Now some of that money will be going toward attorney fees. That’s where the money will be coming from. I’m just sharing that information.” Following the unanimous vote to hire Barnes and Thornburg, Village Solicitor Marlin Harper said he would contact the firm to get an understanding of the billing. “Whatever it is, let’s get started,” Harper said. He said he would also contact all other firms that expressed interest in representing the village to inform them of council’s decision to hire Barnes and Thornburg. The suit was filed March 5, 2015 in U.S. District Court for the Southern District of Ohio. Gulfport’s attorney O. Judson Schaef cites an Aug. 17, 2012 water use agreement between the village and the company to purchase water from the reservoir for $10 per 1,000 gallons. The Water Use Agreement states: “Grantor [the Village of Barnesville] shall have the right to limit or restrict Grantee’s use of raw water whenever Grantor, in its sole discretion, deems necessary for the health and safety of area residents and businesses.”
A month after signing the water use agreement with Gulfport, the village entered a lease contract with Denver-based Antero Resources for $5,700 per acre and 20 percent production royalties. In May of 2013, the village signed a water-use agreement with Antero to withdraw water from the reservoir at a rate of $3.75 per $1,000 gallons. The Gulfport complaint cites a “potential loss of millions of dollars” if Gulfport does not receive assurances to its (priority over Antero) right to withdraw water from the reservoir for use in fracking operations at planned well sites on villageowned property near the reservoir. Slope Creek is the largest of the three Barnesville reservoirs, representing 82% of the drinking water for thousands of people, in Barnesville, Quaker City, and the Switzerland of Ohio Water District, which includes Somerton, Malaga, Jerusalem, and Beallsville. In December of 2014, the Concerned Barnesville Area Residents (CBAR) presented Gulfport with a petition containing 2,300 signatures, asking the company to relocate well pads away from the reservoir. Village officials also met with Gulfport officials to attempt to have them move the well pads outside the Slope Creek watershed.
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Gas & Oil
May 2015
Ohio Edition
Source water protection plan unveiled in Barnesville Cathryn Stanley Dix Communications
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ARNESVILLE, OH -- Approximately 100 people attended a public meeting on Thursday, April 9 at the Library Annex in Barnesville unveiling a draft version of a Source Water Protection Plan for the Village of Barnesville. An overview of the plan was given by Steven Saines, Ohio Environmental Protection Agency hydrogeologist. Over the course of five meetings beginning in the autumn of 2014, the Village of Barnesville, with the input of residents, OEPA, the Ohio Department of Natural Resources, Belmont Soil and Water Conservation District, Concerned Barnesville Area Residents, Antero Resources and Gulfport Energy, began working on a Source Water Protection Plan to better protect the village’s drinking water reservoirs from future contamination or degradation. Barnesville operates a community public water system directly serving a population of approximately 6,500 people. The Barnesville water system also serves two satellite systems with finished water: Switzerland of Ohio (population 2,500) and Quaker City (population 875). An additional small system (Village of Fairview) may also be added in 2016. The current combined population served by the Barnesville water system is approximately 9, 875. The surface waters used by the Barnesville water plant include Barnesville Reservoir #1, Barnesville Reservoir #2 and Barnesville Reservoir #3 (also known as the Slope Creek Reservoir). The treatment capacity of the Village of Barnesville water plant is approximately 2.5 million gallons per day. Normal production and average usage is about 1.1 million gallons per day. Estimated raw water storage is approximately 885 million gallons; possibly 840 million gallons of that total storage can be withdrawn by the water
system for public use. This storage capacity will allow for 976 days (2.67 years) of un-interrupted use by Barnesville customers prior to depletion. Estimated “treated” water storage is 1.3 million gallons (based on 770,000 and 550,000 gallon storage tank capacity). The storage alone allows for 1.5 days of normal consumption by the system. The Village of Barnesville believes the rapidly developing oil and gas industry in the area increases the potential for accidental spills of petroleum or production related products to the environment. The plan includes a number of protective strategies which anticipate spillage. Once a release occurs, there are steps the community will take to minimize impacts to the local water supply. In order to reduce the potential for spillage or releases to the environment, this plan also commits to monitor and track the locations of active oil and gas wells within the village reservoir watersheds, their ancillary pipelines, and truck transportation routes to and from oil/gas infrastructure. There are procedures to ensure that when/if a release occurs within the three reservoir watersheds, emergency responders will notify village administration and water plant staff immediately. Prior to the completion of this source water protection plan, water plant staff initiated baseline sampling for the kinds of chemical constituents associated with the production of oil and gas activity on the drinking water quality of the village’s reservoirs. The Implementation Plan includes maintaining up to date inventory of well permits issued within the village drinking water reservoir watersheds through ODNR, maintaining up to date maps of existing and proposed oil and gas pipelines in the Barnesville area, and updating contact information with emergency responders. The plan also recommends requesting increased dam inspections by ODNR for the village’s reservoirs based on the
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density of shale-gas development and or/seismic activity in or neat reservoir watersheds. Saines said that Gulfport and Antero representatives have been invited to the SWPP meetings. He said that verbally, Gulfport said they had not decided yet whether or not they would locate well pads within the watershed. If well pads are located within the watershed, the plan calls for requesting a meeting with Gulfport and ODNR, requesting well pad design and communication modifications as per AEP-Utica St. Clairsville well pad design. The plan also calls for possible independent review of well pad operation, surface casing installation and or casing integrity testing, as well as evaluation of ground water monitoring, and confirming the posting/availability of MSDS sheets for materials used/stored at oil/gas facilities within the watershed. Most in attendance seemed to agree that the plan did not go far enough. “This doesn’t seem like much of a protection plan,” CBAR member David Castle said. “If you go forward and allow a potentially dangerous situation to occur, it doesn’t seem like protection.” He continued, “It doesn’t seem like you should allow well pads in the water shed.” He used the analogy of allowing a sick person to infect healthy people. “I can understand that people would want to prohibit or restrict those activities in the watershed,” Saines said. “The problem is we can’t prohibit activities on privately-owned land.” Saines said that when it comes to public water sources, contamination happens all over Ohio. “We don’t have laws against all those types of contamination. It is outside the scope of the SWPP to prohibit all potential sources of contamination. “If there is spill and the water is contaminated, what happens then,” Castle asked. Saines said he could not predict such an event but there would be a contingency plan if a spill reached the reservoirs. In answer to a question from CBAR member and Slope Creek area resident Jill Hunkler about ODNR’s oversight, Saines said ODNR was not a co-signer of the plan, but were stakeholders and representatives have attended plan meetings. He said OEPA communicates with ODNR when needed across the state. “Who has the final say over the plan,” Hunkler asked. Saines said the village does and part of the meeting is about generating additional ideas for the plan before it is finalized, which he expected to take one to tow more meetings.. “It is the village of Barnesville that has to implement the plan,” Saines said. “I speak for the concerned that we would like to have no pads within the watershed added to the plan,” Hunkler said. “That is not an unreasonable request.” “It is the absolute minimum to request no pads in the watershed considering there are documented cases of contamination from failed wells,” said CBAR member John Morgan. He said those failures increase with the age of wells and cited
Gas & Oil
May 2015
17
problems now occurring in Pennsylvania. “Ohio is more poorly regulated than Pennsylvania. We are setting ourselves up for a potential disaster.” Morgan continued, “Even if the plan has no enforcement, it doesn’t mean the plan shouldn’t state what we would like to have happen.” Hunkler asked if such a request or declaration to prohibit fracking within the watershed could be made part of the plan. She addressed Mayor Dale Bunting, Administrator Roger Deal, and those village council members in attendance asking if they understood the community’s concerns and were willing to address them. “That’s why we are here this evening,” Bunting replied. Bunting and Saines said they would address including a statement in the plan requesting the avoidance of any oil and gas facilities within the three watersheds. Saines invited Hunkler and others to attend the next plan draft meeting. Hunkler also addressed the pending lawsuit against the village by Gulfport Energy and its potential impact on water withdrawals from the reservoir. “Once the suit is settled we would need to reevaluate the plan if there is a major change in the operation of the watershed,” Saines said. “There has been a lot of good input. I knew there would be,” he concluded.
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Ohio Edition
May 2015
OOGEEP gets donation for firefighter training
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OLUMBUS — Providing another example of the oil and gas industry’s commitment to Ohio, PDC Energy Inc. donated $20,000 recently, to the Ohio Oil and Gas Energy Education Program for the organization’s training program. OOGEEP is funded by Ohio’s crude oil and natural gas producers and PDC’s gift was made in addition to the company’s annual funding. OOGEEP regularly holds teacher-training workshops in order to educate teachers about Science, Technology, Engineering and Math (STEM) principles at use in the modern oil and gas industry. The organization also educates first responders about potential incidents in the oilfield and trains firefighters how to address these rare occurrences. “Our company believes this type of education is critical for our industry and future generations,” said Nathan Anderson, Asset Director for PDC Energy Inc. “We applaud OOGEEP for it’s efforts and hope our donation will allow the organization to do even more good work.” “Ohio’s oil and gas industry consistently gives back to our state and the people who live and work here,” said Rhonda Reda, OOGEEP Executive Director. “PDC Energy’s donation will allow us to showcase our STEM curriculum to more teachers and in turn excite the next generation of students. It will also allow us to ensure more firefighters receive valuable training. This gift will have a positive impact on Ohioans for years to come.” OOGEEP’s training workshops are offered free of charge courtesy of Ohio’s oil and gas producers. OOGEEP’s first responder training includes classroom lessons and hands-on field demonstrations. During the teacher trainings, organizers walk teachers step by step through OOGEEP’s curriculum, including demonstrations of multiple hands-on science labs. The sessions also include guest industry speakers and field visits to nearby oil and gas sites. Teachers can also earn continuing education units and optional graduate credits. All teachers received graphic organizers, internet activities, career connections, STEM-curriculum, classroom supplies and material kits to take back to their students. More information about OOGEEP’s teacher workshops, including dates and locations, is available at oogeep. org/teachers-students.
Above: Local gas and oil producers, PDC Energy, presented a check for $20,000 to the Ohio Oil and Gas Energy Education Program at the Ohio Oil and Gas Association’s Winter Meeting in Columbus. The check was for the organization’s Firefighter Training Program. From l to r, Eric Smith, chairman-OOGEEP Board of Directors; Celesta Miracle, vice president of government relations-PDC Energy; Rhonda Reda, OOGEEP executive Director; Susan Fakharzadeh, community relations manager-PDC Energy; Orval “O.B.” Baldwin, vice president Land-PDC Energy; Nathan Anderson, asset director-PDC Energy; Marty Miller, vice chairmanOOGEEP Board of Directors.
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May 2015
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Lawmakers supporting CNG cars
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ILLERSBURG — Ohio lawmakers are taking another stab at legislation that would make it easier for Ohioans to buy cars that run on compressed natural gas, or CNG. Millersburg Republican Dave Hall said a bill, previously passed unanimously by the Ohio House, is expected to be reintroduced mid-April. The prior bill, sponsored by Hall and Democrat Sean O’Brien, died in the Senate. The bill would give tax incentives for people who wanted to buy a CNG car or convert their current vehicle to run on CNG, according to Hall, who said it provides an opportunity to “grow alternative fuel use in Ohio.” “Compressed Natural Gas — or CNG — comes from the Marcellus and Utica shale deposits located deep beneath our feet. When captured, this resource can be used to heat our homes and power our factories, and compressing it allows us to fuel our cars and trucks,” according to Hall’s prior testimony promoting the bill. If passed, it would provide tax breaks for individuals using CNG and credits for businesses interested in establishing the necessary infrastructure to support it, including the creation of stations to supply the CNG to consumers. He said the tax incentives would continue for five years, the time necessary to make real the improvements to support the full value of the plan. Beyond that, he said, he envisions the tax breaks will “go away.” “The problem in Ohio is trying to get it to market
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or having a market for it. This will help,” he said. Additionally, Hall said he is hearing talk from major auto manufacturers about bringing CNG vehicles into their fleet, which would put them direct into consumers’ hands without after-market modifications. There are several long-term gains. “Gas prices may be low right now, but the cost of CNG is still a lot cheaper per gallon than gasoline,” said Hall, noting that, cost aside, “It’s also clean-burning and doubles the engine life.” As previously introduced, the bill would create tax incentives for buying vehicles that use CNG or converting existing vehicles that are petroleum-fueled. It would also begin a five-year phase-in for a motor fuel tax on CNG that would be comparable to the current tax on gas and diesel. Incentives would be funded by existing oil and gas taxes in Ohio, and therefore would not require new revenue streams, according to Hall. “Ohio has an enormous opportunity present in shale — an opportunity which many states can only dream of having. But unlike our friends to the east, west and south, we aren’t fully harnessing the potential of natural gas after it has been developed,” Hall testified, noting, the bill will help to “greatly improve Ohio’s existing alternative fuels policy, and has the right mix of incentives to spark investment. Passing this policy sends a clear message to car owners and companies everywhere: Ohio is CNG-friendly.”
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May 2015
Ohio Edition
Women Can Succeed in Non-Traditional Roles
Judie Perkowski Dix Communications
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AMBRIDGE, OH -- Deanna Duche is an instructor in an occupation that is traditionally and primarily occupied by the male species. But times they are a-changin.’ Duche is the Director of Welding Education CWI/CWE, at Zane State College in Cambridge, and she couldn’t be happier. In 2001, Duche was hired when the college began to offer the Oil and Gas Energy Technology Program. Although the program was initiated long before the gas and oil boom began in late 2011, welders have always been in demand. The discovery of gas and oil in southeastern Ohio magnified their importance. “Now, as soon as a student learns the basics, a gas and oil company is knocking on the door — literally,” said Duche. “I get calls on a weekly basis asking for students who have learned the basics of welding. They hire them, then offer them on-the-job training to enhance their skills.” Duche said she learned how to weld when she was a student at Meadowbrook High School in the FFA program. She incorporated welding into carpentry, something she enjoyed but never really thought about it as a career. After graduation from MHS, she enrolled at Ohio State University, earned a bachelor’s degree and graduated with a master’s degree in animal science. After managing a horse farm for a number of years, she decided that it was time for a career change and enrolled at Belmont Technical College, earning an associate degree in welding and fabrication. When an opening for the position of welding instructor at Zane State was announced, Duche knew she had found a home. She is a certified welding instructor and a certified welding educator, credentialed by the American Welding Society, the organization that writes the welding codes. She said working in a traditional male occupation was never a concern. “I just don’t think about it,” she said. “If you make a big deal about it, they [the men] will, too. They will test you, but if you don’t react, they get over it.” Duche said that since she has been at the college, there are usually five or six females in the classes, in the beginning, with a roster from 25 to 65 students. Currently there are two female students. In addition to Duche, two of the four instructors at the college are women, Cindy Monciviaz and Roberta Maxwell, who share classes with Dan Laudermilt and Ed Miller.
“Our enrollment is down right now because of the jobs that are available, some in the oil and gas industry, a lot in manufacturing. When companies find out the students have reached a certain point where they know the basics, they hire them ... They are a very hot commodity. And that is too bad, because a degree is for down the road advancement. A degree gives you a better chance to move up in rank. Depending on where and when you work, the prevailing starting wage is from $16 to $20 per hour. With two years of post secondary education and six to 12 months on the job, you can make $150,000 a year. The most successful welders today are pipeliners.” Second-year students can elect to take pipe welding courses where they have the opportunity to practice qualification testing for API or ASME pipe welding procedures. Duche added that the American Welders Society predicts a real shortage of welders in the next few years. The average age for a skilled welder is 56, the average age of new welders entering the field is 20-something. Newbies will have to learn very quickly to acquire the skills needed to be able to replace retired workers. She said there is a definite misconception about welding. It is not always a dirty job where you crawl into a pit or lie in a ditch. There are many welding-related opportunities including weld technician or inspector. Zane State received a grant to develop the welding curriculum to include classes in Computer Numerical Control (CNC), AutoCAD, industrial maintenance and welding. Students enrolled in the welding degree or one-year certificate are required to take a course in AutoCAD and blueprint reading, as well as CNC Plasma cutting. “It is true that welding is a skill you can teach yourself, but when you do that you have the knack without the knowledge. You don’t understand why things work, what welding does ... There is a lot more to it than just the actual welding. Many other jobs can include welding, such as carpentry and mechanics,” said Duche. “Get the education and the training you need to compete in any skilled trade.” According to Zane State’s web site, students have an opportunity to begin a career in welding and fabrication. Openings in this field are varied and growing due to the oil and gas industry and the number of older workers retiring. During the start of the second year, students have the opportunity to put their welding and cutting skills together with their blueprint reading knowledge to build a project of their own. Internships in the welding field may be arranged with local employers. For more information, call Zane State at (740) 432-6568. JPerkowski@dixcom.com
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May 2015
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Above: Director of Welding Education Deanna Duche, r, and welding instructor Roberta Maxwell, l, explains a welding technique to Cheyenne Pheil, a student in the welding and fabrication program at Zane State College in Cambridge.
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Ohio Edition
May 2015
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OOGEEP announces teacher workshops G
RANVILLE —The Ohio Oil and Gas Energy Education Program has selected locations for its 2015 summer teacher workshops. Marietta College will hold a workshop June 18, 19, while Youngstown State University will welcome teachers July 27, 28. These workshops draw educators from around Ohio seeking to learn more about Science, Technology, Engineering and Math (STEM) principles at use in the state’s crude oil and natural gas industry. Both Marietta College and Youngstown State University are recognized as leaders in preparing today’s students for careers in Ohio’s oil and gas industry and related fields. OOGEEP has hosted more than 2,700 teachers representing all of Ohio’s 88 counties at these teacher workshops. “It’s hard to find two better places in Ohio to host our teacher workshops than Marietta College and YSU,” said OOGEEP Executive Director Rhonda Reda. “Today’s students need STEM education and these teachers are volunteering their time to learn new and interesting ways to showcase these principles to their students. We can’t wait to meet another fantastic group of teachers and get to work learning from one another.” “Marietta College is excited to once again welcome teachers from around the state to our campus,” said Dr. Bob Chase, chair of the Department of Petroleum Engineering and Geology. “STEM education is crucial for all students today, especially those pursuing careers in the oil and gas industry. These workshops are a tremendous opportunity to share that message with Ohio educators.” “Workshops such as this one are a great complement to what we’re doing at Youngstown State University,” said Dr. Jeffrey Dick, chair of the Geological and Environmental Sciences Department at YSU. “STEM education is crucial for all young people and to share that message with teachers is an invaluable experience that we’re excited to be a part of.” OOGEEP recently introduced a revamped curriculum titled “STEM Lessons in Oil and Gas Energy Education” that demonstrates how STEM can be used to learn about geology, engineering and chemistry, among other areas. The curriculum meets all state and national science standards and is adaptable to grades K-12. It includes experiments that demonstrate
Gas & Oil
May 2015
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how biotic material is transformed into hydrocarbons; explain the principles of geologic time and rock cycles; help students understand how sound waves are used to map geologic formations underground; how math and engineering plays a key role in developing and producing local energy; and how chemistry and petrochemicals are refined and processed into familiar products such as plastics, soaps, medicines, synthetic fibers and rubber. OOGEEP regularly holds teacher workshops to educate teachers about the crude oil and natural gas industry and the STEM principles at work. During the workshop, organizers walk teachers step-by-step through OOGEEP’s curriculum, including demonstrations of multiple hands-on science labs. The sessions also include guest industry speakers and field visits to active oil and gas industry sites in the region. “OOGEEP provided a great opportunity to learn more about Ohio’s energy resources,” said Shirly Singree, recent workshop graduate. “I’m now better equipped to bring this information back to our schools to educate our students and community. Teachers earn continuing education units and an optional graduate credit by attending the workshop. Through the generosity of Ohio’s oil and gas producers, there is no cost for teachers to attend, and all will receive graphic organizers, internet activities, career connections, curriculums, classroom supplies and material kits to take back to their classroom and students. For more information and to sign up for the training, please visit oogeep.org/teachers-students. The Ohio Oil & Gas Energy Education Program (OOGEEP) is a nonprofit organization responsible for public outreach on behalf of Ohio’s natural gas and crude oil industry. The mission of OOGEEP is to facilitate educational, scholarship and safety programs, and to promote public awareness about the industry and its positive impact on the economy. For more information, visit oogeep.org. Editor’s Note: The curriculum can be found at oogeep.org/teachers-students/curriculum/formation. Video testimonials from teachers who attended the program are available in the uploads section at youtube.com/oogeep1. Photographs from previous workshops are available upon request.
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Gas & Oil
May 2015
Ohio Edition
WHAT DOES ASSET PROTECTION MEAN FOR
YOUR OIL & GAS INTERESTS? Frank McClure Attorney
I
thought it was time to go back and review why asset protection is so important in protecting your oil and gas interests as well as your other assets so that they are protected and secured for you, your family and your loved ones. But how do we do that? We do that by using one of the many different asset protection options, which can help you maintain control over your oil and mineral rights while preventing them from being considered a personal asset to be tapped if you end up in a civil lawsuit. You have worked hard as a steward of your land. You deserve to reap the benefit of its wealth above and below ground. Make sure you are able to keep as much of that wealth as is possible for yourself and your loved ones. First of all what is asset protection anyway? Asset protection is planning designed to shield your assets from the claims of creditors. You may be thinking, but I don’t have any creditors. That is the best time to do asset protection planning, when you have no creditors breathing down your neck! Also creditors take many forms and arise in many different ways and from many different situations. The creditor most people think of is the one who arises from an involvement in an auto accident with you and the accident is your fault. You may say but I have insurance. The problem is that the damages you caused, can be valued at more than the amount of your insurance coverage. There are many other possible creditors looming in your future from an ex-spouse (divorce) to the government, and every creditor in between. What effective asset protection planning will do is make the creditors’ access to your assets more difficult to accomplish! The goal of asset protection is not to make you “bulletproof” from creditor attack, but rather to make it much more difficult and expensive for the potential creditor to gain control of your assets. In other words, if a creditor (an example being a person who was involved in an auto accident with you), obtains a judgment against you, and attempts to take control of your assets to pay off his claim. Effective asset protection is designed to put you and the creditor on a more equal footing and to either stop the creditor in his tracks or to at a minimum allow for negotiations to settle the amount owed at a lower level. If the creditor and his attorney know that it may take
months or even years, to collect their claim and that the costs to the creditor will be substantial, the creditor may settle for a lower amount or the amount of the insurance alone, in satisfaction of the claim. The best way to think about this situation is to try and think of your assets as treasure you wish to protect. What might you do with your treasure? You might but it into a chest for safe keeping. Then you might put a lock on the chest. Then you might put the chest into a vault. Then you might build a castle around your vault. Then you might put a moat around the castle. Hopefully this will give you a clearer picture in your mind as to what asset protection planning is. All we are doing is adding addition barriers and protections to protect your treasure (your assets). Each level is another obstacle which the creditor must find a way to get through to get to your treasure. By using proven, simple techniques and strategies you can create different levels of protection for your assets. It may still be possible for a very determined creditor with very “deep pockets” to get though all the obstacles you have placed in their path, but the odds of success for the creditor get longer with each new obstacle in front of them. Hopefully this has given you a better insight into what asset protection than you did before. One the first things that seems to be asked after this discussion is completed, is why I would be concerned with this? One of the tenants of estate planning is distributing your assets to your loved ones. This may be money, real estate (oil and gas interests), and personal property that is important to you. Also, what if I told you that you could give these treasures to loved ones and have them protected from your loved ones creditors and predators. This could include the in-law that after your death becomes the outlaw. This can be done through the use of what is known as a lifetime protective trust for your loved. This is something you should definitely talk to you estate planning attorney about! If any of the above has hit a cord of interest with you, you should be talking with an attorney who concentrates in the area of estate planning, about asset protection and all your estate planning needs. If you need more information please either contact our office or go to our website at www.fmcclurelaw.com.
Gas & Oil
www.GasandOilMag.com
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May 2015
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Ohio Edition
May 2015
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Gas & Oil
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OOGEEP announces new leadership
G
RANVILLE — The Board of Directors of the Ohio Oil and Gas Energy Education Program recently elected Marty Miller as Chairman following the retirement of Eric Smith. Smith has served as chairman of OOGEEP and president of the Ohio Oil and Gas Energy Education Foundation since 2010. Miller has served as vice-chairman of the OOGEEP board of directors during the same period. Current OOGEEP board member Ron Whitmire, vice president and chief administrative officer for EnerVest, Ltd., was elected vice-chairman. Marty Miller is vice president of operations for Alliance Petroleum Corporation. He has 35 years experience in oil and gas exploration, production and development operations, has served on the OOGEEP board of directors since 2007 and chairs the OOGEEP Safety and Workforce Committee. He is also past president and board member of the Southeastern Ohio Oil and Gas Association. “I’m incredibly proud of the work OOGEEP does on behalf of Ohio’s oil and gas industry and look forward to growing those efforts,” said Miller. “Now, more than ever, Ohioans need to feel a connection to the industry that is responsible for so much from the products they use to the power that runs their lives. I will work tirelessly to continue the legacy of leadership set by people like Eric Smith; it’s a tall task but I’m excited to get to work.” Eric Smith is the president of Maric Drilling Company, H&S Operating Company and GHS Properties. He was elected chairman of the OOGEEP board of directors in 2010 and has served on the board since 2003. Smith was instrumental in creating and developing OOGEEP’s Emergency Response Training Program, which is now endorsed by the Ohio Fire Chiefs Association. Eric is a past member of the Ohio Oil and Gas Association’s board of trustees and executive committee; he also served as and chairman of the association’s technical committee. He’s an inductee into the OOGA Hall of Fame and in 2014 was named in Columbus Business First’s “Who’s Who in Energy.”
May 2015
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“OOGEEP is as strong as it’s ever been and I can’t wait to see what the future holds,” said Smith. “The organization has adapted along with the industry yet continues to fulfill its core mission of public outreach and education. Ohio’s oil and gas industry is better off because of OOGEEP’s valuable work and I’m honored to have been a part of those efforts for more than a decade.” “Ohio’s oil and gas producers are indebted to Eric Smith for his service to OOGEEP as board member and chairman,” said Rhonda Reda, OOGEEP executive director. “He oversaw a period of growth for our organization that will allow us to increase our education, outreach and training efforts. Marty Miller is the perfect person to lead OOGEEP into the future. His years of experience and expertise will be invaluable as OOGEEP moves forward on behalf of Ohio’s oil and gas industry.” Miller becomes OOGEEP’s fifth chairman following John Herron (1998-2000), Jerry James (2000-2007), David Hill (2007-2010) and Eric Smith (2010-2015). Above: Marty Miller, r, recognizes Eric Smith at the 2015 Ohio Oil and Gas Association Winter Meeting in Columbus.
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Gas & Oil
May 2015
Ohio Edition
Gas/oil workers need to protect their
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mployees working in the oil and gas industry should avoid or protect themselves from excessive noise exposure on the job. The need for properly fitted earplugs or earmuffs to block loud sounds is essential to protecting your hearing. This need is all too often recognized only in hindsight by workers. Occupational hearing conservation programs alert employees to the possibility of permanent damage caused by excessive noise. Annual hearing testing for employees is conducted for the purpose of identifying early stages of hearing loss and educating workers on prevention. At home or recreationally, earplugs or muffs should also be worn during activities involving excessive noise. This includes using lawn tractors, snow blowers, gasoline-powered string trimmers, chain saws, circular saws, shop vacuums, and firearms, to name only a few examples, as well as attending rock concerts. Earplugs and earmuffs work well, are inexpensive, and are readily available at most home improve-
ment centers. An alternative is to have custom earplugs made that exactly match the contours of the user’s ears. Regardless of whether hearing protection is over-the-counter or custom, the key is to actually use it. Difficulty understanding speech is the most frequently reported problem resulting from hearing loss. Especially problematic is understanding in noisy settings. Hearing loss can take away the ability to hear and distinguish between consonant sounds which makes it sound like people are mumbling or running their words together. For more information regarding noise induced hearing loss, to schedule a hearing evaluation or to schedule your company’s annual hearing testing contact Davison Audiology at (740) 6951058. Choose from one of our 5 convenient locations or request onsite company testing.
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Gas & Oil
www.GasandOilMag.com
May 2015
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Ohio Edition
May 2015
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Gas & Oil
www.GasandOilMag.com
May 2015
35
‘More is getting done; there’s more to do’
N
ELSONVILLE, OH — John Molinaro’s mission is to build prosperity in a 14,000 square mile region that stretches from Columbiana County in the northeast to Brown County in the southwest — the Appalachian Partnership for Economic Growth. At his office in Nelsonville, Molinaro, president and CEO of APEG, reflected on its accomplishments and challenges. He’s proud and optimistic. Companies are growing, wells are being drilled, and workers are learning new skills. And while more is getting done, there’s more to do. Q: What’s the latest on the region’s shale development? A: 2014 was a very good year for the industry. We had a lot of drilling activity. More wells are being completed and the new wells are doing substantially better than older ones in terms of output. The heart of the play is farther south than people had originally envisioned. The I-77 corridor south of I-70 has turned out to be more productive than the area north, where the play began. We’ve seen drilling activity happening as far south as Washington County. Wells in Monroe County are some of the most productive seen anywhere ever, and I mean that in a global sense. The 2014 production numbers are pretty outstanding. Q: You’ve called midstream capacity critical to shale development in eastern Ohio. Why is it so important? A: The midstream is the part of the energy processing industry between the well and the end user. In the APEG region, firms like Mark West and Blue Racer complete major facilities that help separate out the natural gas components, ethane and propane, for example. We also saw a lot of pipeline infrastructure go in during the year. The reason infrastructure is so important is because nobody wants to put $10 million or more into drilling a hole in the ground and then cap it and wait to get their product to market. Also, we had announcements about additional capacity that will be developed in the next few years. That should keep us on pace with or ahead of existing drilling activity. Q: What does the late-2014 major decrease in oil prices mean? A: We anticipate that 2015 will produce as much or more gas as 2014. Some will come from wells that have already been drilled but haven’t been completed. There will also be a lot of new drilling activity. So far the rig count in Ohio is down just slightly from what it was a year ago, less than 10%. Fortunately, the Utica shale play in eastern Ohio, and the Marcellus
that’s being drilled here as well, is among the most profitable plays in the entire country. Because of that – despite very low oil and gas prices – the companies drilling here are able to make a profit in this market. Those that have announced cutbacks tend to be companies that are very heavily exposed to shale plays in America that mostly produce oil. Q: Can you do anything to help the region’s shale development? A: Yes. We’re adding another staff position that’s focused on mid-stream and down-stream opportunities created by the shale drilling. We’re trying to capture more of the industries that use the products coming out of the ground, that’s what the new, full-time person will do. We’re very, very excited about having more resources to work on attracting investment to the region because it means jobs in the mid-stream and down-stream shale activity.
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Gas & Oil
May 2015
Ohio Edition
Rover Pipeline ready to roll in 2016 Judie Perkowski Dix Communications
C
AMBRIDGE, OH -- The Energy Transfer Rover Pipeline scenario continues to unfold with few surprises. Well, maybe one. Back in November 2014, Energy Transfer submitted the necessary paperwork to the Federal Energy Regulatory Commission to begin the lengthy application process for the proposed 803-mile natural gas Rover pipeline that would supply markets in the Midwest, Great Lakes and Gulf Coast regions, or for export to Canada. The Dallas-based company filed its final application with FERC in June of 2014 and is expecting approval by November 2015. Since then, the ET Rover pipeline’s route has been trimmed to 711 miles, said Gretchen Krueger, Energy Transfer community outreach coordinator, who spoke to a packed house at the Guernsey Energy Coalition meeting at the Zane State EPIC Center in Cambridge on April 2. Krueger was introduced by Cambridge Area Chamber of Commerce President and CEO Jo Sexton. “Our company strives to minimize its footprint,” said Krueger, who is part of several outreach teams sent by the company to counties where the pipeline will travel to inform communities of what to expect in the near future. Krueger said there are six less counties than the original plan included, in the pipeline’s route through Ohio, Michigan and into Canada. Regardless of the 93-mile stretch that has been cut from the project, there has been no mention of a cut to the $4.3 billion budget. Judging from the most recent information available from Krueger, no changes have been made in the Ohio route, but farther north is a different story. The original map traces the pipeline through nine Michigan counties before crossing the Canadian border to its final hub. The pipeline’s path on the new map shows the line going north through three counties in Michigan to Livingston County and then hooking up with the established Vector Pipeline, which will transfer the gas to its final destination at the Dawn Hub in Ontario. The company is in the process of distributing updated map books to libraries and county/city/township offices along the route. All entities should have them by early next week. “The Rover pipeline project is necessary because of the expanding Marcellus and Utica shale production, and because Gulf Coast production has declined 46 percent in the past five years,” said Krueger. “The Rover dual 42-inch side-by-side pipelines are required
to accommodate the capacity necessary to handle the volumes of natural gas and natural gas liquids contracted by shippers. Anything smaller will not be large enough to handle the volume. Sixty-eight percent of the gas will be delivered to the Midwest hub in Defiance; 32 percent to markets in Michigan and Canada. “The ET Rover Pipeline is “fully subscribed,” which means the company has 10 and 20-year contracts with oil and gas producers for each mile of the pipeline.” Construction on the Ohio pipeline is planned for early 2016, depending on the weather. The project should be complete and in-service by June 2017. Projected economic impact: approximately 4,500 to 6,500 positions in Ohio, exclusively unionized labor, with a projected $1 billion paid for labor to various contractors working on the pipeline; and approximately $124 million in direct payments to landowners for easements. Energy Transfer also plans on hiring 30 permanent employees to work at an office the company plans on building near Canton in 2016, specifically to run the Rover project. Krueger repeated that the company wants to be transparent about who they are and how they operate. As reported in the March GAS&OIL magazine by reporter Bobby Warren, ET Rover is “footing the bill for Columbusbased Land Stewards, a multi-disciplinary consulting group with a team of certified soil scientists, agricultural engineers, agronomists and conservation planners.” Officials at Energy Transfer said Land Stewards are necessary because 80 percent of the pipeline will run under agricultural land and parallel to existing pipelines, power lines and/ or roads. While some people living in affected communities are somewhat skeptical about the advocate for the landowners because Land Stewards might be considered “employees” of Energy Transfer, Land Stewards President Mark Wilson told members of the Federal Energy Regulatory Commission, that “the process would be fair,” and no ones knows this area better than they do, and no one could do a better job. “We live here. Our reputations are at stake,” said Wilson. Krueger said Land Stewards are local people who have a vested interest in making sure the landowners are well represented. The Rover Pipeline will contribute nearly $1 billion in direct spending to the U.S. economy. More than $70 million in goods and services already purchased in Ohio from local businesses, including compressors made by Ariel in Mount Vernon. jperkowski@daily-jeff.com
Gas & Oil
www.GasandOilMag.com
May 2015
37
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Gas & Oil
Ohio Edition
May 2015
Protect Ohio Jobs Coalition opposes severance tax hike L Judie Perkowski Dix Communications
ocal Ohio elected, business, labor and community leaders announced the formation of the Protect Ohio Jobs Coalition, a group dedicated to ensuring tax policies do not stop the growth of Ohio’s oil and natural gas industry, the Ohio businesses that support it and the Ohio jobs it creates in related industries. The Protect Ohio Jobs Coalition is a growing coalition of more than 40 local leaders opposing the severance tax increase proposed in House Bill 64. The coalition is concerned that this drastic tax increase on energy production would threaten Ohio jobs and investment and could drive up energy costs for Ohio families and businesses. The coalition will continue to recruit members in an effort to join forces and protect Ohio communities, families, jobs and businesses. The coalition offered the following comments: • “As Washington County Commissioners, it is our job to promote growth and opportunity for our community,” Washington County Commissioners President David A. White said. “The Utica Shale has presented the best opportunity for growth that we have seen in decades. The timing for a tax increase on natural gas production could not be worse for our region. We will see energy prices rise and jobs retreat. The Washington County Commissioners are opposing the severance tax increase in House Bill 64, and I ask our legislators at the state capitol to oppose this initiative as well.” • “Ohio as a whole, but certainly Eastern Ohio, has seen new businesses created, struggling businesses finding new opportunities and strong economic growth thanks to oil and natural
gas industry investments in the Utica Shale play,” Cambridge Area County Chamber of Commerce President and CEO Joanne (Jo) Sexton said. “Nearly 14,000 Ohio companies play a part in Utica Shale development, which is still new to our state. This industry is facing low commodity prices and must make tough choices about where and how to invest. We need to encourage the industry to stay in Ohio, not create tax policies that makes it more attractive to drill elsewhere. That is why the Cambridge Area County Chamber of Commerce opposes the proposed severance tax increase.” • “Skilled trade unions across Ohio are seeing more work as a result of the oil and natural gas industry,” Plumbers & Pipefitters Local 396 Business Manager Butch Taylor said. “The work being sought for these operations demands well-trained, skilled workers like those throughout the trades. Our Local and many others like ours are seeing more jobs and more opportunity to train Ohioans in skilled trades as a result of the industry’s investment in shale exploration in Ohio. The proposed severance tax increase could drive good-paying jobs for Ohio families out of the state.” • “Our business has increased production and added more employees by providing pipe and other products to oil and gas companies in Ohio,” Ken Miller Supply CEO Jack Miller said. “If these companies slow production, it will impact my business and our employees. The proposed drastic increase in severance tax, will certainly lead to a decrease in demand for the products we make. This will hurt my business, countless other Ohio businesses that have seen growth from the Utica Shale play and hard-working families. jperkowski@daily-jeff.com
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By Greg Parks Dix Communications Historic photos courtesy of the Ohio History Connection & EnergyFromShale.org
May 2015
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Gas & Oil
M
May 2015
any years ago in this neck of the woods, crude oil wasn’t thought of as “black gold” and folks weren’t anxiously awaiting the money spigot to turn on, as they are today. In fact, there was a time when oil was considered a pain in the posterior. In the early 1800s, an oil find was met with disinterest or dismay. Pioneers who settled here dug wells to find water or brine, a source of salt. They were disappointed when they found oil. According to the local history Stories of Guernsey County, Ohio by William G. Wolfe (published by the author in 1943), the oil industry in Guernsey County had its beginning shortly after the coming of the first settlers. An oily substance discovered on the waters of what is now the upper course of Wills Creek attracted their attention. Although, as afterwards learned, it was common petroleum that had oozed from the ground, it was called Seneca oil, because it was believed to be the same kind of oil as that found in New York and named for an Indian Tribe. The name Seneca was given the creek, and a town platted near the stream at a later date and was called Senecaville. The oil was collected by wringing it from blankets that had been spread on the surface of the creek. The crude oil was believed to possess medicinal qualities. Peddlers would procure a supply and canvas the pioneer homes, guaranteeing it to be a sure cure for rheumatic and other aches and pains. It was not until the sinking of a great well in 1859 by Col. Edwin Drake at Titusville, Pa., that any consideration was given the oil and gas possibilities of Guernsey County. Much excitement followed the Pennsylvania strike, and when the report reached some prospectors there that oil had floated on the waters of Seneca Creek and that some had been found here by drillers for salt, they came out to view the Guernsey County field. The Jeffersonian of April 5, 1861, quotes one of them, as follows: “I can see no reason why your county is not full of oil, in fact, I feel sure of it.” About this time oil also was found on Duck Creek in Noble County, and the excitement there rivaled that in Pennsylvania.
Ohio Edition
According to Wolfe, the excitement extended into Guernsey County, and drilling began in the area of Cumberland. The Jeffersonian, which kept its readers informed weekly as to the progress made in the drilling, reported in April 1861 that a well had reached a depth of 90 feet and a strike was expected at any time. Wells were drilled in 1861 at Cambridge, Old Washington, Middletown, Kimbolton and other places. As all were shallow wells, not much oil or gas was found. “For several reasons this first Guernsey County oil excitement died down in a few months,” Wolfe wrote. “The prospectors were not acquainted with the business. Holes were sunk in a haphazard way. The immense production in Pennsylvania had so lowered the price of oil that the industry ceased to be attractive, then the Civil War opened and diverted the attention of the people to other things.” Not until 10 years later was there a revival of interest in Guernsey County oil and gas. The following appeared in the Guernsey Times of Nov. 3, 1870. “Within three miles of Cambridge, in a direct line on the premises of David Sarchet Sr., is an inexhaustible salt well, from which constantly flows a stream of salt water several inches in diameter, and with it a large and constant supply of natural gas. We have the authority of a scientific gentleman from the East, who visited this well during the oil excitement here, for saying that there is an abundance of gas flowing from this well to light up a place much larger than Cambridge, and that it could easily be conducted here for that purpose at very great costs; and he expressed great surprise that steps had never been taken to utilize so valuable a production of nature. The subject is one that should sufficiently claim the attention of the city fathers as to cause them to make such investigation of the matter as to ascertain the feasibility of the plan.” But the city fathers did nothing, according to Wolfe, and the people of Cambridge continued to use the kerosene lamps. About 1885, oil and gas were found near Lima and Findlay, Ohio. The excitement resulting from these discoveries reached into Guernsey County. There still lingered the belief that oil and gas could be found here. Prospectors from Pennsylvania came into the county again, and began drilling in Senecaville. Seneca oil had never been forgotten. The drilling there was
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abandoned on account of a strong flow of salt water. Testing was done in other parts of the county. On the Hutton farm in Jackson Township a well was drilled that produced 21 barrels of oil a day. Three or four wells were sunk to the Berea sand at Quaker City in 1886-87, and some gas was found, which was utilized locally. About the same time a well near Kimbolton produced a moderate flow of gas. Three wells drilled in Cambridge Township prior to 1892 yielded gas in paying quantities. Oil was found at the edge of Senecaville in 1897, at a depth of 167 feet. Before 1900, the most productive gas field in Guernsey County was the Harmony field in Jackson Township. The Cambridge Light and Fuel Company had several wells there, some of which produced from 1,000,000 to 2,000,000 cubic feet a day. This was piped to Cambridge and Byesville. For several years following the oil and gas activities of the 1880s and 1890s, the interest for languished but never died. Some venturesome prospectors would lease land and sink wells and occasionally make strikes. Oil was found in Lore City and Monroe Township. The production was not large at either place. Guernsey County had its greatest gas boom during 1926-27. Drilling activities were most extensive in Knox, Adams and Westland townships, in which there were more than 100 heavy producing wells. One of the first of these was drilled in the
Gas & Oil
May 2015
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northwestern part of Knox Township by the Ohio Fuel Gas Company. The initial yield of this well was beyond the measuring capacity of any available instrument, according to Wolfe. However, it was claimed to be from 50,000,000 to 75,000,000 cubic feet a day. Immediately following this sensational strike, a number of companies began drilling and wells yielding from 2,000,000 to 30,000,000 cubic feet a day became numerous. The field was extended as the drilling advanced. By the close of 1927 fairly definite boundaries were established, showing it to be a strip about four miles wide and 25 miles long, extending from northeast to southwest. It not only included Knox, Adams and Westland townships, but extended to Jackson, Wheeling, Monroe and some other townships. A 12-inch distributing main was laid by the Ohio Fuel Gas Company and much of the product carried to points in Ohio, West Virginia, Pennsylvania and Michigan. Following the gas strikes, oil was found in the southern part of the territory. Some of the oil wells were said to yield from 50 to 300 barrels a day. At the close of 1927, there were about 40 wells producing oil in Jackson and Westland townships. This was sent to the refineries of Parkersburg, W.Va., through a main laid by the Buckeye Pipe Line Company. Much oil was found in Wheeling Township, and this, too, was piped to refineries.
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Gas & Oil
Ohio Edition
May 2015
TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES
1. Carroll County 476 2. Harrison County 341 3. Belmont County 238 4. Monroe County 206 5. Guernsey County 176 6. Noble County 164 7. Columbiana County 131 8. Jefferson County 57 9. Mahoning County 30 10. Tuscarawas County 20 11. Washington County 18 12. Portage County 15 Trumbull County 15 13. Stark County 13 14. Coshocton County 5 15. Holmes County 3 Morgan County 3 Muskingum County 3 16. Knox County 2 17. Ashland County 1 Astabula County 1 Geauga County 1 Medina County 1 Wayne County 1 WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGED SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 04/18/15
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Protecting utility lines Linda Hall Dix Communications OOSTER — With the arrival of spring and excavation projects – large and small – get underway, underground utility line safety must be a priority. “Any time you’re putting a shovel in the ground,” the utility lines must first be marked, said Lee Richards, public awareness & education supervisor for Ohio Utilities Protection Service, emphasizing that the rule is actually a state law. There is no depth measurement in the protocol, according to Richards. Anyone digging below the surface of the ground, even if it seems to be a shallow amount, must make the call. But the simple way to contact officials before digging is to merely dial 8-1-1. A person calling 8-1-1- in Pennsylvania will get a Pennsylvania contact; the same is true for Ohio or any other state. The 8-1-1 call center operates nationwide, Richards said. “Any time you do any digging in the state of Ohio,” she said, the person excavating on a large or small scale for a big project or a little one is required to call 48 hours ahead of time to get the utility lines marked. The Ohio Utilities Protection Service takes the information and notifies utility companies that are members, she said. Sub
W
sequently, the owner of the lines “does the marking of the lines.” It is a common misconception, according to Richards, that the Ohio Utilities Protection Service is responsible for marking the lines, but this is not accurate. Rather, the Protection Service is a link. “The owners of the utility lines mark their own lines,” after being contacted, she stressed. Information about the importance of making the 8-1-1 call is available on the Northeast Gas Association website, which urges homeowners against making “risky assumptions about whether or not they should get their utility lines marked.” Every digging job demands marking lines, “even small projects like planting trees and shrubs,” the website says, noting, “The depth of utility lines varies and there may be multiple utility lines in a common area.” Marking of lines is free and prevents disrupting service to entire neighborhoods or dangerous consequences such as injury from occurring. The “Call Before You Dig” 8-1-1 campaign has been spearheaded by Common Ground Alliance (CGA), an organization working with the industry to protect underground utility infrastructure and to promote public safety and the environment.
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Gas & Oil
Ohio Edition
May 2015
BELMONT COUNTY NAMED FINAL CANDIDATE FOR POSSIBLE PETROCHEMICAL FACILITY
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OLUMBUS — Today Governor John R. Kasich announced that PTT Global Chemical(PTTGC), Thailand’s largest integrated petrochemical and refining company, and its project partner, Marubeni Corporation, a Japan-based company, have selected a site in Belmont County, Ohio for the possible construction of a world-scale petrochemical complex, also known in the industry as an ethane cracker. With a site now selected, PTTGC and Marubeni will take the next 12-to-16 months to complete the detailed engineering design and permitting at the Ohio site. For nearly two years, PTTGC and Marubeni have considered project sites across the Utica and Marcellus shale region. JobsOhio, the private, non-profit corporation designed to drive job creation and capital investment in Ohio, has worked with the companies throughout this time and led the effort to move this project forward in Ohio. “Ohio is at the center of America’s new energy industry, and the smart companies want to come here to be part of the great things that are happening. We are one step closer to landing a new, multi-billion dollar investment in eastern Ohio, and that’s exciting news for our state, the region and Belmont County,” said Kasich. “There is more work ahead before final decisions on this project are made, but I know our Ohio team will do everything we can to bring it fruition. We are excited about the possibility of working with companies of the caliber of PTTGC Global and Marubeni. A project of this size can help lift the region forever.” If constructed, the ethane cracker would utilize ethane extracted from the region’s Marcellus and Utica Shale formations. The facility would then “crack” the ethane into ethylene, which is used as a basis for plastics and resins contained in everyday items such as food and product
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packaging, textiles and pharmaceuticals. “Working with JobsOhio and the state over the past two years has been a positive experience and we look forward to moving this project into the next phase,” said Dr. Kongkrapan Intarajang, Executive Vice President of International Business Relations for PTTGC. “While we have not yet made final decisions on this investment, we will continue to work with Governor Kasich, JobsOhio and all of the local partners in an effort to make our vision a reality.” John Minor, President and Chief Investment Officer of JobsOhio, added, “This project has been a truly collaborative effort, resulting in this good news for eastern Ohio and the state. JobsOhio’s David Mustine and Matt Cybulski played leading roles working with PTTGC and Marubeni along with our regional partner Appalachian Partnership for Economic Growth and local development partners. I thank them for playing such integral roles in advancing the project to this point. An ethane cracker in Belmont would facilitate additional investments in the growing shale and petrochemical industries, and with greater investments come more job opportunities for Ohioans. PTTGC and Marubeni are expected to make a final investment decision in 2016. Should the project move forward, construction of the ethane cracker facility would take an estimated three and a half years to complete
About PTT Global Chemical
PTT Global Chemical PCL conducts its business in the Petrochemical and Chemical Sectors. It was ranked in the Top 10 of the Dow Jones Sustainability Indices (DJSI) for the second consecutive year and was ranked twenty-second among world-leading petrochemical companies on the ICIS Top 100 Chemical Companies listing. The company has seven main business lines and currently has the pro-
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Marubeni Corporation was founded in 1858 and is headquartered in Tokyo, Japan. Through its local and international network, Marubeni Corporation provides products and services in a broad range of sectors, encompassing import and export as well as transactions in the Japanese market, related to food materials, food products, textiles, materials, pulp and paper, chemicals, energy, metals, machinery, finance logistics, information technology, infrastructure development and a range of other fields, including resources development and investments on a global level.
About JobsOhio
JobsOhio is a private, non-profit corporation designed to drive job creation and new capital investment in Ohio through business attraction, retention, and expansion efforts. Learn more at jobs-ohio.com.
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Gas & Oil
Ohio Edition
May 2015
Reminderville ‘heats up’ Andrew Rogers Dix Communications
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EMINDERVILLE, OH — The village of Reminderville, just to the northeast of Twinsburg, has found a way to heat itself up. The village, with a population of around 3,600 people, has been experiencing greater energy autonomy after an oil and natural gas well was installed there in an effort to earn revenue for the city and ease its dependence on bringing oil and gas in from outside the village. According to Sam Alonso, mayor of Reminderville, environmental consciousness was one of the most important factors that were considered as the plans to install the well were being developed. The village government consulted various government and industry professionals to be certain that the well was as “green” as possible. “We had an engineer from the Army Corps of Engineers come out, we had the State of Ohio’s EPA come out, and even an independent evaluator,” he said, “… just to make sure we didn’t disrupt anything [environmentally].” The producer who installed the well was able to design the site’s organization such that it could be further utilized for practices that are beneficial to the village in addition to the energy production, Alonso said. “They did a great job. The footprint they used to bring the equipment in has been turned into an area for a salt bin,” he said, “… which was something we needed to move anyway.”
The new energy well has economic advantages as well. According to Alonso, the well initially helped to pay for Reminderville’s new village hall building, back when oil and gas prices were much more expensive. “It raised significant money at first, because oil and gas were more expensive. Now, the prices are minimal in comparison. When [it] first started it was paying for the new village hall. “The most beneficial part of [this] well is the financial advantages, definitely,” Alonso said. “For example, we get a gas credit to heat the village hall and the fire station. Also, there have been no citizen complaints. They don’t really notice it is there aside from the storage tanks,” he said. “[This] well made it so that, in some cases, we won’t have to ask our constituents for more money.” Alonso noted that, due to the how transparent the process was, citizens didn’t feel like anything was being snuck into the village without their potential grievances being aired and, as a result, “hardly took notice to the installation.” This strategy seems to have worked for Alonso and Reminderville, as the well has produced more than just oil and natural gas — it has also produced economic benefits, energy independence, constituent trust, and logistical conveniences for things like the location of the village’s salt storage bins. All in all, Reminderville’s new well looks like it’s slick with support and effectiveness.
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May 2015
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Decreased oil prices slows drilling D Chelsea Shar Dix Communications espite the recent fall in gas and oil prices, the Hydraulic Fracturing and drilling exploration of the Utica shale in Ohio is nowhere near stopping. That was the takeaway from six speakers at Utica Upstream, hosted by the Canton Regional Chamber of Commerce and the Shale Directories at Walsh University April 8. Speakers discussed the status of current oil drilling projects in the U.S., focusing on the Utica and Marcellus shale areas in eastern Ohio and western Pennsylvania. Most echoed the same thoughts that although the number of oil rigs being built in Ohio is lessening compared to the last few years, production will only increase as the U.S. rises to the number one natural gas producer in the world. In 2012 there were 371 permits issued to drill the Utica shale in Ohio. In 2015 the Ohio Department of Natural Resources estimates there will be around 600. That’s about 200 less than originally predicted. A slowdown in drilling does not mean a slowdown in production in the future, but it does mean the drilling companies are making spending cuts and holding off harvesting more product until the cost of oil goes up. Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, said the oil and gas industry has been too successful for it’s own good as the gas and oil economy has bottomed out. “Sometimes you are almost too successful. ... We have the product. We have one of the largest natural gas fields in the world between the Marcellus and the Utica. We need to find the end users to use this product because we are sitting on a gold mine,” he said. Bennett also explained that Carroll County, Columbiana County and Harrison County have been the highest Utica shale oil and gas producers in Ohio. Columbiana County is starting to drop and southern counties are taking its place.
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He explained the southern counties in Ohio have more pressurized reservoirs pumping millions of cubic feet per day. That return has caused gas and oil companies to gravitate toward drilling more in southern Ohio. Not only will production continue despite a decrease in drilling, but the oil wells will continue to produce for decades. Jeffrey Dick, professor and researcher at Youngstown State University, said production from Utica wells decreases by about 65 percent after the first year, but can continue to produce millions of cubic feet of gas and oil per year. He outlined the environmental issues that come with Hydraulic Fracturing and oil drilling. He said the biggest risk is water produced from the drilling sites potentially spilling while being transported. “The good thing is on land we can contain those spills and we have good regulatory agencies to help contain them,” he said. Dick was also part of a study group that observed the seismic activities in relation to a Youngstown injection well, helping to prove that it was the cause of earthquakes in the area. He reported that out of 30,000 Class 2 injection wells in the U.S., a dozen have been associated with seismic activity. The increased drilling for natural gas in the United States has put the United States ahead of any other country in natural gas production, even Russia. The gas and oil industry has been a lucrative one since it’s beginnings in the U.S. in the late 1800s. Journalist Rick Stouffer, senior energy editor for Shale Energy Business Briefing, concluded the Utica Upstream session by encouraging the audience that local Ohio governments will only benefit from the future of gas and oil in the are in the years to come. “There are a lot of projects coming which represent billions of dollars of capital expenditures which only helps municipalities in terms of monies being spent within municipalities.”
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May 2015
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May 2015
53
Utica Shale Producing
Strong Results Joe Massaro Energy In Depth, Pennsylvania
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ennsylvania’s Marcellus Shale broke production records last year when operators were able to pump four trillion cubic feet of natural gas from the formation. The continued success of Marcellus Shale development now has operators looking a few thousand feet deeper at Pennsylvania’s Utica Shale. Some of the first wells developed in Pennsylvania’s Utica Shale were Shell’s Gee and Neal wells located in Tioga County. The Neal well was brought online in February of last year and at peak was producing 26.5 million cubic feet of natural gas per day. According to a company release: “The Gee well was drilled over 100 miles to the northeast of the nearest horizontal Utica producer, and had an initial flowback rate of 11.2 million cubic feet of natural gas per day. Gee has been on production for nearly one year. Shell began production of the Neal well in February, with observed peak flowback rates of 26.5 million cubic feet of natural gas per day.” Other companies have also had good results tapping into the play as well. Range Resources developed its Utica shale well in the Southwestern part of the state where it achieved an average 24-hour rate of 59 million cubic feet of natural gas per day. Range’s well, the Sportsman’s Club #11H, is recorded as having the strongest 24-hour rate reported in the entire Marcellus/Utica area and is one of the most prolific onshore gas wells (based on the 24-hour production test) ever drilled in North America. According to Range Resources CEO Jeffrey Ventura: “Given our 400,000 net acre acreage position in the area, coupled with existing well control and 3-D seismic, we believe this translates into significant potential. Being able to drill additional Utica wells on the same locations as our Marcellus wells should further enhance our capital efficiency for many years to come.” One of the more recent wells developed in Pennsylvania’s Utica shale was by Seneca Resources an exploration and production subsidiary of National Fuel Gas Company.
The Tioga County well is located on state forest land and produces 22.7 million cubic feet of natural gas per day. According to Ronald J. Tanski, CEO of National Fuel Gas Company: “We are very pleased with the initial production results from our first Utica Shale well in Tioga County, Pa. This well, along with wells drilled by other operators in the area, have de-risked the Utica potential of our 10,000 acres on DCNR Tract 007. We estimate resource potential on this tract alone of approximately 1 trillion cubic feet. With these strong results in hand our team is evaluating options to develop this acreage in the next few years, depending on local gas prices and pipeline take-away capacity. We have additional Utica potential not only in Tioga County, but across much of our large Pennsylvania acreage position. Our next Utica exploration well is planned for fiscal 2016.” With the success of Pennsylvania’s Utica shale so far, other companies are looking to tap into the formation in the near future. One such company is Rice Energy which recently announced it would begin developing a well in the formation. During their earnings conference call, the company stated that the well would be about 2.5 miles deep and run horizontally for about 6,000 feet. According to the CEO, Daniel Rice IV: “While we expect the well to be pretty expensive, it’s going to be pretty exciting to see what we can do with this formation at these depths and pressures, and the best time to test an expensive deep well like this one is in the deflationary cost service environment like the one we’re in.” Production results for Rice Energy’s first Pennsylvania Utica Shale well are expected during the fourth quarter of 2015. Because of Pennsylvania’s incredible geology, operators have the ability to tap into multiple carbon-bearing formations, and it will continue to propel the United States towards energy independence for years to come. Joe Massaro is a spokesman for Energy in Depth, Pennsylvania
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Gas & Oil
Ohio Edition
May 2015
Federal fracking rules rolled out Sophie Kruse Dix Communications
O
n March 20, the Obama administration unveiled the first major federal regulations on fracking that have been in the works for four years. These regulations are expected to be the first in a series governing safety in fracking. It’s expected that the administration will also issue regulations to cut the release of methane from fracking wells. The regulations will take affect in June and allow governmental workers to inspect and validate the safety of concrete barriers that line fracking wells. The regulations will also set standards of safety for how companies can store used chemicals around well sites from fracking, as well as requiring companies to submit information to the Bureau of Land Management on well geography. The Bureau is part of the Interior Department. It will also require companies to disclose publicly the chemicals that are used in the fracking process within 30 days of completing operations on an industry-run website called FracFocus. The site also allows anyone to log on and see where sites have been drilled and the chemicals that were used. The new regulations are designed mainly to protect groundwater. The new federal rules will cover nearly 100,000 gas and oil wells on public lands. Before these regulations were released, the states had jurisdiction over state-owned and private land in the United States. Federal land produces 5 percent of oil and 11 percent of natural gas that is consumed in the US. Private and state-owned land won’t be required to follow the new federal standards. More than 90 percent of new land wells in the United States use fracking.
According to the Interior Department, the agency worked closely with oil and gas companies, environment groups and state authorizes to develop the new regulations — along with reviewing more than 1.5 million public comments. The Independent Petroleum Association of America has filed a lawsuit to challenge the regulations. They call them “a reaction to unsubstantiated concerns.” The Association claims that fracking has been a vital part in recovering the economy in America and that the regulations will negatively affect the growth. For states that regulate fracking, rules like this have already been in place and companies have been complying. Estimates say that new regulations would add $11,400 to the cost of fracking for each well. That ends up being less than one percent of the cost of drilling. Industry wide, the cost would be $32 million.
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Gas & Oil
Ohio Edition
May 2015
Nob l e C h a m b e r , B ureau comment on tax Jill McCartney Noble Co. Chamber of Commerce ALDWELL, OH — The Noble County Chamber of Commerce and Tourism Bureau, Caldwell, once again voted to oppose the governor’s severance tax proposal on the shale oil and gas industry in Ohio during the monthly Board of Director’s meeting. In a statement from the Chamber and Tourism Bureau, Jill McCartney, president of Chamber, said, “The board recognizes that Utica Shale development is in its infancy in Ohio and that it will take several years to determine the full economic opportunity in the shale formation. Ohio has been a business-friendly state and should continue to encourage gas and oil production, and not build barriers that would jeopardize that growth in this industry or any other industry. “The Appalachian region has experienced slow growth and high unemployment for many years. Drilling in the Utica Shale play could result in economic growth that has not been seen in decades. “There are over 30 shale developments in the United States and many more overseas. If we over-tax the industry in Ohio, we will not be able to compete with other areas where the taxes are lower. “We are not willing to risk this new opportunity. We have
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the chance to experience unparalleled economic change in a part of the state that lags behind in employment, income and other critical measures. “The increased job creation, business investment, supply chain growth, reinvigorated small businesses and larger local tax revenue that would result from major oil and gas production could forever change that. “Ohio can have capital investment, job growth and income tax cuts by allowing the natural course of the Utica Shale development to proceed unencumbered. The gas and oil companies already contribute to the local economy under current tax codes. “The increased revenue generated under the existing tax system can fund income-tax cuts without risking Ohio’s economic opportunity relative to the gas and oil activities. “The industry already contributes to Ad Valorem, Income Tax, Commercial Activity Tax and the Sales Tax. “States that have instituted severance taxes have experienced a decline in drilling activity after the tax went into effect. “We do not want that to happen in Ohio. We want to remain competitive. “Our top priority is economic development through shale oil and gas production.”
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May 2015
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Gas & Oil
May 2015
Ohio Edition
Royalties, lease income, part of enrichment fund
Heather Roberts Dix Communications
W
hen gas and oil companies started coming into Belmont County it was obvious that there would be some changes, some good and some bad. One organization that is trying to be a positive change within the community is the Smith-Goshen Rice Enrichment Fund (SGREF) group. The purpose of the fund is to provide grant-making support to nonprofit organizations that serve Belmont County. To do this the group relies on the charitable use of royalties and lease income, as well as donations from the public. The Smith-Goshen Rice Enrichment Fund wasn’t officially created until December, 2013, but some of the advisory committee members have been working together as far back as four years ago to secure a landowner and environmentally friendly lease. Approximately four years ago Neil Rubel, a member of the current committee, began noticing the gas and oil coming into West Virginia and Pennsylvania. He began talking with the people who would later make up the SGREF advisory committee. It was decided that the group would strive toward a better understanding of what gas and oil could mean for the area, both financially and environmentally. What they learned turned out to be very important. Many people were uneducated when it came to oil and gas. Many people signing oil and gas leases were not only being underpaid, some as little as $50 an acre, but also weren’t making informed decisions environmentally. The board continued getting more educated on the issues involving oil and gas as companies started coming to Ohio. They also held large meetings with the community in order to discuss what was important in regards to signing leases. And of course, they met with multiple oil and gas companies, trying to find one that would meet the group’s requirements. Near the end of 2012, the committee held a large landowner meeting at Union Local High School Auditorium to announce their recommendation of Rice Energy. “No company is perfect, but Rice came the closest to meeting all of our requests,” Lova Ebbert, a member of the advisory committee, said. “What really attracted us to Rice was their commitment to the landowner and their stellar safety and environmental record.” Ebbert also discussed how many of the members on the committee are farmers, so environmental safety was important to them since the land was their livelihood. She also spoke about
how it was important to them to keep the land and water as healthy as possible for future generations. “I don’t want future generations to look back and wonder how we could have allowed this to happen to our land and environment,” Ebbert said. ”It is important that we preserve our land for future generations.” Prior to signing the lease with Rice Energy, the group secured legal help to ensure that the lease protected landowner rights. In order to make this payment, people signing the lease with Rice Energy were asked to donate $35. Most did this without complaint, covering the costs. Shortly after the lease was signed, Gabe Hays, a landowner, reminded the committee of their commitment to “give back to the community.” Hays also reminded the group of their goal to help the entire community, not just the ones who had the land to sign leases. With some prodding, the committee once again became excited about helping the community. The next step, after months of research for the committee, was partnering with the Community Foundation for the Ohio Valley, a grant giving organization. This group helps the SGREF legally. The Community Foundation makes sure that the SGREF only donates to nonprofit groups. They also handle anything tax or IRS related. After that the SGREF advisory board was ready to begin one of the most daunting tasks; raising money to fund the grant requests. The board received an initial donation from Rice Energy. Members of the board also donated money. One of the commitments the enrichment fund advisory board made early on was that to be on the board, you had to contribute money to the fund. “If we were going to donate others money, we needed to be vested ourselves in the fund,” Ebbert said. “If we’re going to be responsible for wisely approving grants, we have to be vested.” Ebbert also went on to say that she believed that those who had been blessed by the leases should give back to the community because everybody is being effected whether or not they signed a lease. “This is everybody’s responsibility,” Ebbert said. “Everybody deals with the negatives, such as the noise and the traffic.” The advisory board takes a lot into account when choosing grant recipients. First and foremost the SGREF will only give to nonprofits that benefit Belmont County. The advisory board also takes into account which groups could possibly get grant money from other sources, what grants will benefit the most people, and what the immediate impact will be.
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May 2015
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Above: To thank the many people who have donated, and also to give them a chance to meet the grant recipients, a reception was held at Hays Landscape Architecture Studio.
Below: Smith-Goshen Rice Enrichment Fund group members Lova Ebbert and Gabe Hays are pictured at a reception at Hays Landscape Architecture Studio.
The first organization that the SGREF granted money to was the Barnesville Five Loaves Food Ministry, a program set up by the Barnesville First Christian Church to feed the hungry. Since that first grant, there have been many other nonprofits to receive help. Some include: Belmont Volunteer Fire Department, Belmont American Legion, Bethesda Fire Department, St. Clairsville Library, and Smith Township Fire Department. The fund has also given grants to the Tri-County Help Center, an organization dedicated to helping people overcome domestic violence, sexual assault, and mental illness, and Harmony House, a group that offers emergency housing, food, and supportive services to individuals and families who are homeless, while they work to reclaim maximum independence. The SGREF has also recently granted the Barnesville Hospital Emergency Department $5,000 a year for the next five years to help with the construction of a new emergency room. Since the formation of the SGREF, nearly $180,000 has been raised to go toward nonprofit groups in Belmont County. While the volunteer board spends ample time reviewing grant requests, the group recently did something a little different. To thank the many people who have donated, and also to give them a chance to meet the grant recipients, a reception was held at Hays Landscape Architecture Studio on March 26, 2015. The open space gave recipients, donors, and guests a chance to talk and share their experiences. A few guests spoke at the event, sharing about how the grant money had been used, or why they donated to the SGREF. Members of the advisory committee also spoke about the fund and what they have been doing. Ebbert said one of the hardest parts of being on the committee is having to turn down grant requests because of the lack of funds.
“We get so many requests from so many worthy organizations, but we just don’t have enough money to give to them all,” Ebbert said. Ebbert mentioned that something she thinks people might not realize is that all gifts to the fund are tax deductible. Instead of paying out large amounts for taxes, people can make a donation and get a tax deduction. Those wishing to donate to the Smith-Goshen Rice Enrichment Fund can do so in a couple of ways. The simplest is by sending a check made out to Smith-Goshen Rice Enrichment Fund to the Community Foundation of the Ohio Valley, 1310 Market Street, Wheeling, WV 26003. Interested parties can also call any of the advisory committee members to make a donation or ask questions. Members who can be reached are: Lova Ebbert - 740-695-5619, Gabe Hays - 740-695-6505, Floyd Simpson - 740-686-2802, Larry Cain - 740-484-1612, and Neil Rubel - 740-686-2153.
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Gas & Oil
Ohio Edition
May 2015
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May 2015
Ohio Edition
Northeast despite highest gas costs resists more pipelines RIK STEVENS - Associated Press
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ONCORD, N.H. (AP) — There is near universal agreement that the Northeast has to expand its energy supply to rein in the nation's highest costs and that cheap, abundant, relatively clean natural gas could be at least a short-term answer. But heels dig deep when it comes to those thorniest of questions: how and where? Proposals to build or expand natural gas pipelines are met with an upswell of citizen discontent. At the end of last year, a Massachusetts route selected by Texas-based Kinder Morgan generated so much venom that the company nudged it north into New Hampshire — where the venom is also flowing freely. During this winter's town meetings, a centuries-old staple of local governance in New England, people in the nine towns touched by the route voted to oppose the project. That Northeast Direct line is one of about 20 pipeline projects being proposed throughout the Northeast, where savvy environmental and political forces combine with population density to provide a formidable bulwark. There's another reason the loudest protests are all coming from the region: They're where the gas is, waiting just east of the gas-rich Marcellus Shale region. “Everyone seems to know the Northeast has a pipeline capacity problem, but not many seem to be willing to make many concessions to fix that problem,” said Andrew Pusateri, senior utilities analyst for Edward Jones. And these are folks who pay a lot to stay warm in the winter and keep the lights on in summer. According to the U.S. Energy Information Administration, New Englanders paid $14.52 per thousand cubic feet of gas in 2014, compared to $10.94 for the rest of the nation. ISO-New England, which operates the region's power grid, said in its 2015 Regional Electricity Outlook that natural gas availability is “one of the most serious challenges” the region faces as more coal and oil units go offline. The Kinder Morgan plan would take gas from the plentiful Marcellus Shale region of Pennsylvania and pump it through a 36-inch line from Wright, New York, to Dracut, Massachusetts. Along the way, it would cut across a 70-mile stretch of southern New Hampshire, tickling the Massachusetts line. About 90 percent of the project would be along an existing power line corridor. Homer Shannon and his wife raised three children on their suburban plot in Windham, New Hampshire, where the pipeline would pass a few hundred feet from their house. The retired high-tech salesman is part of a 10-family group of neighbors opposed to the pipeline's route. “This whole Northeast Direct thing is just fraught with question marks,” Shannon said. “Why in the hell is it in New Hampshire anyway? They want to get it from New York to Massachusetts and if you draw that line on a map, it sure doesn't go through New Hampshire.”
Opponents — on the route and far from it — worry about environmental and scenic harm, lower property values, the potential for accidents and the idea that relying on natural gas only forestalls a switch to more renewable sources like wind or solar. “It would be really nice if, as a region, we had a coherent energy policy that stated, 'These are the things we need to do to improve our energy situation,'” Shannon said. “And if one of those things is I have to sacrifice part of my backyard for the greater good, I'd be willing to have that discussion. But I don't see it that way. I see it as them enriching themselves on my back and I don't like that.” In New York and Pennsylvania, the 124-mile Constitution Pipeline has also fanned flames of opposition, some of it pegged to the price the gas company is paying to take land. Of 651 landowners in New York and Pennsylvania affected by the $700 million pipeline project, 125 refused to sign right of way agreements. Condemnation proceedings undertaken by Constitution have largely resolved the remaining disputes, either through settlements or access granted by a judge. Donald Santa, president and CEO of the Interstate Natural Gas Association of America, said it follows that the most complaints would come from the Northeast because that's where most of the pipeline activity is happening, largely because of the boom enabled by the Marcellus Shale. “Having so much of this gas literally on the doorstep of the market has really increased the need to get the gas to consumers,” Santa said. Richard Wheatley, a spokesman for Kinder Morgan, said the company's pipeline is not the only one getting pushback. He declined to address the opposition specifically but said the company continues to reach out to landowners and others as the siting process moves along. The company expects to file a certificate with the Federal Energy Regulatory Commission this year. Pusateri, the Edward Jones analyst, said part of the resistance may also be inflamed because of how the gas gets out of the ground. The Marcellus Shale gas is extracted using hydraulic fracturing, or fracking. The process, which blasts chemical-laden water into wells to crack open rock, has drawn heavy criticism. In New York, much of the antipathy toward pipelines was driven by the anti-fracking sentiment that resulted in Gov. Andrew Cuomo's ban on shale gas development in New York. “All major projects have some opposition, but I would say this pipe has garnered more attention and protests and gained more steam than average,” he said. “I think Kinder has done what they can to move the right of way of the pipe as much off of people's property as possible. They can do this by utilizing utility easements at times. I don't know that opposition really softens.” ___ Associated Press writer Mary Esch in Albany, New York, contributed to this report.
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Gas & Oil
Briefs
WOLF ADMINISTRATION EXPANDS PUBLIC INPUT ON DRILLING RULES ARRISBURG, Pa. (AP) — Pennsylvania state environmental regulators are broadening an effort to collect public response to their proposal to toughen regulations over the Marcellus Shale natural gas drilling industry. The Department of Environmental Protection said it will allow a 45-day public comment period, rather than 30 days, and schedule three public hearings. The public comment period ends May 19, and two of the yet-to-be-scheduled public hearings will happen in northern Pennsylvania and one in southwestern Pennsylvania. The department hopes its plan will become regulation in 2016. Agency officials want more stringent reviews of proposed drilling sites that are within 100 feet of streams or wetlands, tougher requirements over noise and waste storage and more analysis of how each new well could affect drinking water sources, schools and playgrounds.
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WILLIAMS PARTNERS TO BUY MAJORITY INTEREST IN UTICA EAST EW YORK (AP) — Williams Partners L.P. will expand its stake in Utica East Ohio Midstream to a majority interest for about $575 million. The energy infrastructure company already owns a 49 percent stake in Utica East, which focuses on fracking in the Utica Shale formation in eastern Ohio. It is buying the 21 percent interest owned by EV Energy Partners L.P. "Acquiring these cash-generating assets supports our strategy to grow our natural gas midstream position in key basins," said Williams Partners CEO Alan Armstrong, in a statement. Tulsa, Oklahoma-based Williams Partners agreed to waive about $43 million of general partner incentive distribution rights for the three-year period 2015 through 2017 as part of the deal with Houston-based EV Energy Partners. The deal is expected to close by the middle of July. Williams Partners shares fell 76 cents to $48 in afternoon trading Monday. Its shares are down 11 percent over the past year.
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Ohio Edition
May 2015
OIL SPILL AVOIDED AFTER DEADLY OFFSHORE BLAZE EXICO CITY (AP) — A huge blaze twisted and blackened an oil platform in the Gulf of Mexico, but the state-run Pemex oil company said it managed to avert any significant oil spill. At least four workers died and two suffered life-threatening injuries in an explosion that engulfed the platform in flames Wednesday, forcing 300 people to abandon the facility. Officials said environmental damage was avoided because the fire happened on a processing platform where the feeder lines could be turned off, rather than at an active oil well with a virtually unlimited amount of fuel flowing up from the seabed. In a statement Wednesday night, Pemex said the accident "did not cause an oil spill into the sea, given that there was only a seepage, which is being taken care of by specialized vessels." It suggested the oil remaining in the pipelines was burning off. The company's official Twitter account announced late Wednesday that fire had been extinguished after hours of being showered with water sprayed from 10 firefighting and emergency boats. Pemex Director General Emilio Lozoya said the accident "would have a minimal impact on production, because this was a processing platform," not a producing well. Production from nearby wells it normally serves could be rerouted to other processing platforms. Lozoya said the explosion appeared to have been set off by some kind of mechanical problem but the precise cause was still under investigation.
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CONSOL ENERGY USING ENGINES TO CUT FRACKING PUMP EMISSIONS MPERIAL, Pa. (AP) — Consol Energy has begun using new, cleaner-burning engines to run its hydraulic fracturing pumps at natural gas well sites on Pittsburgh International Airport property. The company says the diesel engines are supposed to cut harmful emissions by 36 percent. They're developed jointly by Cummins Inc., which makes engines and fuel systems, and Halliburton, the oilfield services company. Consol's chief operations officer of exploration and production, Tim Dugan, says the airport drilling sites are the company's "flagship project." The cleaner engines are being used on a six-well drilling site on the 9,000-acre airport site.
I
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