Ohio Gas & Oil Magazine November 2016 by Gannett NEO

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November 2016 • A Free Monthly Publication

, r e h t a e W e l i t s e a c i l r P o e l V l at i o V

Trends & Directions

Marathon, MarkWest Eye Expansion IN THIS ISSUE: WHAT IF THE “ENERGY RENAISSANCE” NEVER HAPPENED?

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Table of Contents NOVEMBER 2016

A Look Ahead Gas & Oil Events

What If the “Energy Renaissance” Never Happened?

Shale Insight Update

Marathon, MarkWest See Expansion in Future

Energy Experts Look at Current Trends

Cost Increases as Pipelines Are Replaced

Severed Mineral Owners to Benefit From Recent Supreme Court Ruling but Challenges Remain

Andrew S. Dix ASDix@dixcom.com

G.C. Dix II GCDixII@dixcom.com David Dix DEDix@dixcom.com

EXECUTIVE EDITORS Ray Booth RBooth@dixcom.com

How Volatile Are Gas Prices in Ohio?

Roger DiPaolo RDipaolo@dixcom.com Rob Todor RTodor@dixcom.com Lance White LWhite@dixcom.com

Domestic Development Key at Shale Insight 2016

RE G IO NAL E DIT O RS

State Invests in Zane State Training Program

Ohio Oil and Gas Association Technical Conference and Oilfield Expo

Opinion: Unclog the Pipeline to Economic & Energy Security

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PUBLISHERS

Erica Peterson EPeterson@dixcom.com Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com

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Table of Contents NOVEMBER 2016 ADVER TISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Jeff Kaplan Alliance & Minerva, Ohio Offices JKaplan@the-review.com 330-821-1200 Mark Kraker Ashland, Ohio Office MKraker@times-gazette.com 419-281-0581

Study Shows Fracking Lowers Mortgage Defaults

Member Spotlight: Charlotte M. Pierce, Mason Producing Inc.

Setting Stage for Energy Renaissance in Our Region

Cracker Plants to Revitalize Ohio

Diane K Ringer Kent, Ohio Office DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450

L AYOUT D E SIG NE R Kassandra Walter

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Trend Directions

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Expert Reroofing

November 2016 • A Free Monthly

IN THIS ISSUE: WHAT IF THE “ENERGY

On The Cover:

Volatile weather can impact volatile gas and oil prices, but Ohio is in a more secure area, according to industry arkWest experts. on, M See page 18.

n rath xpansio Ma Eye E

? RENAISSANCE” NEVER HAPPENED

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A Look Ahead

Ohio’s Gas & Oil Events • November 2, 2016 • December 1-3, 2016 OOGA Technical Conference and Oilfield Expo, National Science Teachers Association Conference. Pritchard Laughlin Civic Center, Cambridge. Visit http:// Greater Columbus Convention Center, 400 N. High St., oogatechexpo.com for more information. Columbus; includes OOGEEP Workshop, “Teaching STEM Using the Gas & Oil Industry,” Dec. 2 • November 8, 2016 Leadership Tuscarawas Presentation, Tuscarawas • December 15, 2016 County Convention & Visitors Bureau, 124 E. High Ave., Ohio Oil & Gas Association annual Holiday Membership New Philadelphia. Reception. Cherry Valley Lodge, 2299 Cherry Valley Road, Newark • November 10-13, 2016 2016 Legislative Energy Horizon Institute. • March 8-10, 2017 Washington, D.C. Ohio Oil & Gas Association Winter Meeting, Easton Hilton, Columbus.

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What If the “Energy Renaissance” Never Happened? includes an analysis of Texas, which would have lost over 675,000 jobs, and Wisconsin, which would have lost 46,000 jobs.

he second report in the Energy Institute’s Energy Accountability Series finds that America’s economy would be much weaker today if certain politicians and special interest groups had gotten their way and oil and natural gas resources had not been developed.

The Energy Accountability Series takes a substantive look at what would happen if energy proposals from anti-energy production candidates and interest groups were actually adopted. Inspired by the “Keep in the Ground Movement,” some candidates such as Hillary Clinton and their allies have pledged to “stop” fossil fuels and make hydraulic fracturing difficult, if not impossible. This report, titled “What if America’s Energy Renaissance Had Not Actually Happened?,” uses data from 2009 through 2015 to imagine what the American economy would look like had the energy revolution not occurred.

“From Pennsylvania’s paper industry, to iron and steel in Ohio, to petrochemicals in Texas, to cheese manufacturing in Wisconsin, the energy renaissance has been responsible for the preservation and growth of industries across America,” said Harbert. “This is not just about the oil and gas industry—this is about the investment that has taken place and would continue to take place in virtually every sector of the economy if we are able to take of advantage of our abundant, inexpensive energy supplies.” The analysis also finds that very few jobs and very little growth would have been realized in other sectors had the renaissance not taken place. In other words, it is thanks to a massive expansion in America’s oil and gas production that the U.S. has experienced job growth and economic expansion since 2009.

The Energy Institute’s report examines the oil and gas value chain impact, as well as the economic impact that has been spurred by lower energy prices. The report breaks down benefits for both the residential and industrial sectors, and provides an in-depth The report found that, without the energy renaissance, America examination of the sources of jobs. would have lost 4.3 million jobs and $548 billion in annual GDP. Were it not for the growth and development of oil and natural gas, The Energy Institute’s report utilizes publically available data on today’s electricity prices would be 31 percent higher, and motor fuels jobs and production levels and the IMPLAN macro-economic would cost 43 percent more. model. A Technical Appendix to the report explains the methodology and sources of data. “The ‘Keep it in the Ground’ movement completely ignores the vast benefits to our nation’s economy that the energy renaissance has The mission of the U.S. Chamber of Commerce’s Institute for 21st brought to us,” said Karen Harbert, president and CEO of the U.S. Century Energy is to unify policymakers, regulators, business Chamber’s Institute for 21st Century Energy. “For instance, lower leaders, and the American public behind a common sense energy electricity and fuel prices spurred a comeback in manufacturing that strategy to help keep America secure, prosperous, and clean. alone is responsible for nearly 400,000 jobs. It costs consumers less to Through policy development, education, and advocacy, the Institute drive a car and heat their homes today. And all the while, our nation is building support for meaningful action at the local, state, national, has been decreasing its energy imports and lowering emissions.” and international levels. The report takes a closer look at four states that, in different ways, have realized some of the biggest benefits of expanded energy development. It finds that Pennsylvania and Ohio would have lost $13 billion and nearly $10 billion in GDP, respectively. The report also

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The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

OhioGas&Oil

Shale Insight Update

oining with regional West Virginia and Ohio partners, SHALE INSIGHT™ returned to Pittsburgh this year with a clear focus on the economic and environmental opportunities that shale development presents for the Appalachian Basin and beyond. The two-day conference, which attracted more than 1,300 attendees from across the globe, featured engaging keynote speakers, panel discussions, and technical sessions covering topics ranging from energy security to consumers benefits and environmental protection. Here’s what they’re saying about this year’s event: “Shale Gas Conference Kicks Off With Pipelines” More than 1,300 energy industry representatives are in downtown Pittsburgh this week for the annual Shale Insight Conference that this year is focusing on getting the gas from the well to the user. … “There is no bigger issue today in our economy than energy,” MSC’s Dave Spigelmyer said. “These are issues every American has on their front burner right now. They know that energy is a driver for the opportunities for Americans to be affluent, to create wealth, to create benefits and opportunities for our citizens.” (9/21/16) Unnecessary “Regulations Hurting” Energy Development Regulations and their impact on the natural gas business were a major topic of conversation in the opening sessions of the Shale Insight Conference, which is being held Wednesday and Thursday in downtown Pittsburgh. Keynote speaker Gary Heminger, president and CEO of Marathon Petroleum Corp., addressed Wednesday two challenges to overcome in the natural gas industry: lingering prices and the current regulatory and political environment. … As increased federal regulations continue to pose as issues for drillers and producers, Heminger said that the specter of higher taxes and fees is hanging over the industry and will affect whether investment capital will one day return full force to the region. (9/21/16) “Shale Conference Highlights Importance of Energy to Local Economy, National Politics” [Continental Resources’ CEO Harold] Hamm’s 27-minute speech took aim at industry regulations imposed by President Obama, protests by “enviros” who oppose

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drilling and the building of new pipelines, and Saudis who “fight to retain dominance of global oil.” None of them can stop an “American energy renaissance (that) will be the growth engine of the world for the next 50 years,” Hamm said. … Beyond looking at the growing role that natural gas plays in powering the economy, many of the panels and presentations focused on the industry’s need for more pipelines and other infrastructure — and the unique challenges that companies face trying to carry out such projects, including opposition from environmental groups and property owners, media scrutiny and political and regulatory hurdles. (9/21/16) “Trump Addresses Shale Insight Conference in Pittsburgh” Republican presidential nominee Donald Trump gave the keynote address Thursday at the annual Shale Insight conference in downtown Pittsburgh, hosted by the MSC. … “Regulations are becoming a major industry right now,” said Trump. “We’re going to make it a much smaller industry, maybe a minor industry.” … The MSC says it also invited Democratic presidential nominee, Hillary Clinton, but her campaign declined. (9/23/16) “Pittsburgh Hosting Two-Day Natural Gas Conference” “What is important for this region is to open up new markets, new pipelines, new transportation, the logistics to the East Coast so we can export from the East Coast,” said Gary Heminger, the president and CEO of Marathon Petroleum. Allegheny County Executive Rich Fitzgerald believes the region’s developing shale gas resources will provide a big boost in another sector. “We can not only export the energy, but we can use that gas to have another manufacturing renaissance, making the plastics that are coming out of the cracker plant,” said Fitzgerald. (9/21/16) Natural Gas Infrastructure Key Topic at Shale Insight Conference Job growth and changing infrastructure are the two big topics at this year ’s Shale Insight conference. Dave Spigelmyer, the president of the MSC, says that the natural gas industry is giving new life to local manufacturing. “We wrote the obituary for this manufacturing industry over the past four decades. Today we’ve got the ability to write the new birth announcement for manufacturing,”

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[Spigelmyer said.] (9/22/16) “Pipelines Pushed at Tri-State Shale Energy Conference” The pipeline to efficient, cost-effective energy is – simply – the pipeline. And more of it. … “It is so important to connect production to distribution. Build the infrastructure and demand from markets will follow,” Gary Heminger said during the opening minutes of the opening keynote address. … An increase in pipelines, of course, could lead to an increase in demand – and to higher prices. … “We’re no longer relying on foreign sources for 65 percent of our energy needs,” MSC’s Dave Spigelmyer said. “That reliance has decreased to 40 percent because of what we’re doing at home.” (9/21/16)

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“Groups Begin Task of Building Petrochemical Industry in Region” Dennis Yablonsky, CEO of Allegheny Conference on Community Development, noted Shell will invest more than $6 billion on the cracker plant in Monaca, requiring an average of 2,000 construction workers, with as many as 5,000 at its peak. When finished in about three years, the plant will employ about 600 people, but its presence in the region is expected to demand the work of five times as many people in support and supply of its operations. The plant is seen by many as a “game-changer” for the region’s economy, with the expectation it will have a $4 billion impact on the region’s economy. … “We need to look at Ohio, West Virginia and Pennsylvania as a worldclass manufacturing area,” [Jerry James, director of Shale Crescent USA] said. (9/22/16)

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Rich Fitzgerald (D), a staunch proponent of shale drilling, said the decision to allow fracking to begin at the Pittsburgh International Airport in April of 2015 helped to stabilize the airport’s finances. He said other benefits since the deal with Consol Energy was signed include lowering costs for passengers. (9/22/16)

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Officials said oil and natural gas development created about $40 billion worth of economic development in the Marcellus and Utica shale region, but they know a series of interstate pipeline projects still under federal review would generate billions more in additional activity. … “We genuinely believe this is a world class resource, and

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we are genuinely committed to developing it,” [Chevron Corp. Vice President Patrick Blough said.] (9/22/16) Shale Insight Conference Focuses on Natural Gas Infrastructure Growth MSC’s David Spigelmyer: “We’re really focused now on how we get our infrastructure built so we can continue to track jobs and economic opportunity for our citizens. We’ve gotta get pipelines in the ground and

infrastructure built so we can continue to have good news spread across the region like we had not long ago with the Shell petrochemical facility announcement in Western Pennsylvania. We’ve joined with Ohio and West Virginia in this conference to shine a light on where we need to build infrastructure in an environmentally responsible fashion so we can deliver these valuable products to consumers and manufacturers across our region.” (9/21/16)

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Marathon, MarkWest

See Expansion in Future

Chelsea Shar• Dix Communications ith their newest pipeline pumping product, Marathon and MarkWest companies in northeastern Ohio are positioned for a future of growth, according to company heads. The Cornerstone Pipeline, a condensate and natural gasoline Utica pipeline, has been over three years in the making with the goal of aggregating Utica production for further distribution via pipelines across Ohio. On Sept. 29 it went live, pumping 50,000 barrels per day from Cadiz to East Sparta.

The condensate travels to East Sparta and then to the Canton refinery plant, where it is processed and then picked up by distributors. The Canton refinery plant processes propane, propylene, kerosene/jet fuel, asphalt, roofing flux, slurry and sulphur. Most of what Marathon produces is gasoline and diesel. At the Canton refinery about 370 people are employed, and the site accommodates about 295 contractors on a daily basis. Each day the plant produces about 93,000 barrels of fuel. The pipeline reflects a need for infrastructure for a Story continued on page 10

Since the beginning of the Cornerstone Pipeline project three years ago, Marathon expects to spend $500 million in pipeline infrastructure by mid-2017. “Cornerstone got its name because it is the backbone of our system. According to ODNR (Ohio Department of Natural Resources) data, Harrison County is one of the highest producing counties in Ohio,” said Jason Stechschulte, senior engineer of the Cornerstone Pipeline project. The project was begun in the spring and ended right on time, thanks to a dry summer, according to Stechschulte. It took 550 construction workers and 1.6 million man-hours to complete the project. GasandOilMag.com

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Story continued from page 9

growing Utica market in Ohio. The pipeline runs 42 miles of 16-inch diameter pipe from Cadiz to East Sparta and eight miles of 8-inch diameter pipe from East Sparta to Canton. It can transport the equivalent of 277 truckloads of fuel per day.

After the boom of natural gas and oil needs over the last few years the industry is now slow because of a decrease in the price for oil. Ledonne said the company was working hard to stay ahead of the rush and demand in wells until the price dropped. Now they are ready for another boom. “We have cryogenic plants waiting in storage now so that when production

The MarkWest company, a sister company to Marathon, has grown over the last eight years into one of the top exporters of Marcellus and Utica shale. MarkWest produces ethane, propane, normal butane, iso-butane and natural gasoline through gas treating, processing and fractionation in Cadiz. Dave Ledonne, MarkWest’s vice president of operations for Utica and Appalachia, said he sees big potential in the growing company, especially if a cracker plant comes to the area. “Cracker plants are the end game,” he said. Right now, MarkWest is rejecting and burning off much of its ethane with a small percentage going into storage. If a cracker plant was nearby, the ethane could be sold and a cracker plant could be used to supply ethylene for the plastics industry. “With Akron and Canton’s polymer ability it can support a cracker plant,” he said. 10 OhioGas&Oil

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goes back up we will be ahead of the game,â&#x20AC;? Ledonne said. Cryogenic processing plants take natural gas liquid and separate butane, ethane, propane and other natural gas liquids from the gas. Right now, Marcellus and Utica provide 20 percent of the U.S. gas supply. Ledonne said he expects that number to keep increasing.

For that to happen, he said gasoline has to get above $3 per gallon at the gas station. With the Cornerstone Pipeline and room to expand at almost every Marathon facility, the company is in a future-minded position. In addition to the Cornerstone Pipeline, the Hopedale Connection to the pipeline will be complete by the end of the year, Utica build-out projects in Alexandria, Kenton and Lima will continue through 2017, and the RIO Reversal project in Lima will be finished by the end of the year.

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OhioGas&Oil 11

Energy Experts

Look at Current Trends

Dan Davis • Dix Communications urrent trends in the energy industry took the spotlight in October as several dozen local business and community leaders gathered to hear from a pair of industry insiders during the Cambridge Area Chamber of Commerce’s October Coffee & Commerce, event.

“That sounds bad,” he said. “But it is not.” The energy industry is a never-ending cycle of peaks and valleys, and the state of the industry is inching upward in rebound.

However, the production of natural gas and oil can sometimes exceed the abilities of a limited infrastructure, “We have to keep our finger on everything,” said Neil Kok, Kok said. Wells might produce a great deal of raw product, president and CEO of McDonald, Pa.-based Global Natural but if pipelines do not exist in sufficient number to transfer Resources. that product to processing facilities, the full force of production capabilities is not realized. An industry veteran of four decades, Kok is keen to the waxing and waning of the industry. He addressed three specific areas. “Coal will continue to be the primary source of energy production for another generation,” he said.

“With all this negativity ... there’s still a general upturn. There’s a future here that’s almost limitless.”

In fact, he added, as much as 30 percent of the nation’s electricity is generated at coal-fired plants. This condition —Neil Kok exists despite attempts by some groups to demonize the natural resource, and the generally negative perception the Raymond Schmaus, president of Nastrona Heights, Pa.public maintains of the coal industry. based Armstrong Search Associates Inc., sang a slightly different tune. The coal producers that will survive in the future are those that operate the most efficiently. Consolidations and “The industries are in worse shape than you’ve been told,” mergers are commonplace. he said. “It’s all a function of economics,” said Kok.

The most basic rules of economics apply, Schmaus said.

The market for timber is relatively stable, according to “That’s the nature of ‘boom’ and, unfortunately, that’s the Kok, with a slightly increased demand for products such nature of ‘bust,’” he said. as wood flooring. To ensure coal, gas and oil production remains viable in the In many cases, he added, demand is tied to housing future, local Chambers of Commerce need to assume greater markets. As new construction increases, so does the need roles, according to Schmaus. Claiming environmental for wood products. concerns, some groups advocate limiting the scope of our national activities to an extent that would require a fraction Like the coal industry, some timber producers have merged of our current energy needs. with others in order to survive. “Don’t mine it. Don’t drill it. Don’t frac it,” Schmaus said The natural gas and oil production boom peaked in early of this approach. 2012, Kok said. Since then, prices have tumbled, and production has correspondingly slipped. A few even advocate Americans use no more than a fifth of the natural resources available here. Associated industries, such as hotels, have suffered as well.

12 OhioGas&Oil

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plants would exceed that of a single facility, and that the region would benefit from the additional facility. Kok echoed this. “These are the tip of the iceberg,” he said. Cambridge Area Chamber of Commerce President Jo Sexton was unable to attend the meeting. In her absence, Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, served as master of ceremonies.

Neil Kok, right, and Raymond Schmaus, left, shared their insights on the current state of the energy industry with Cambridge Area Chamber of Commerce Coffee & Commerce attendees recently. Mike Chadsey introduced them to attendees. Some groups are calling for an expanded — even exclusive — use of such renewable energy sources as geothermal, solar, wind and hydroelectric. Though that might be viable for smaller nations, the reality in the United States is different. “It’s impossible for this country to function without coal,” Schmaus said, echoing Kok’s comments. “You’re not going to get rid of coal. Like it or not, it’s here to stay.” Given the explosive development of drilling in the massive Marcellus and Utica shales in past years, OPEC’s recent decision to reduce their costs for oil was likened by Schmaus to “just a dent” in the global market.

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Of particular interest to area residents and businesses is an ethane “cracker” plant proposed for Belmont County. Schmaus predicted momentum for the project would build following the opening of a plant in Beaver County, Pa.

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“This isn’t going to work,” he said. “There’s a lot of places in this world to get oil.”

“Shell’s decision to build a crack plant makes it much more likely PTT Global Chemical will build their cracker plant in Belmont County,” according to Schmaus. “There aren’t enough cracker plants.”

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Cost Increases as

Pipelines Are Replaced Jacob Runnels • Dix Communications

September.

he Public Utilities Commission of Ohio (PUCO) approved of an investment increase, as well as a spending increase, for Dominion East Ohio’s Pipeline Infrastructure Replacement (PIR) program in

According to a press release from Dominion East Ohio, the PIR program will receive its increased funding through annually rising rates paid by Dominion East Ohio’s customers. Though customers will see a gradual increase in price, the press release states the charges will be “reduced by any cost savings that Dominion achieves as it replaces older pipelines,” and that through the PIR program Dominion East Ohio has “passed savings totaling over $10.2 million back to customers.”

planned to run for 25 years with $4 billion in funding. The press release states the current cost recovery charge paid by customers is $8.12 per month. However, with the PUCO-approved funding increase, customers will be paying $1.40 more each year. The charge could continue to rise, with the charge being a $1.75 increase in 2018 and a $1.82 increase in 2019. According to the press release, the increase in funding toward the PIR program will go toward pipeline work that has been “performed in higher cost urban areas,” as well as new environmental regulations affecting work.

After eight years of the PIR program being enacted, Dominion East Ohio has replaced more than 1,000 miles of pipeline and has already reached its $1 billion spending point. Without the “We take the safety of our customers and our system very approved increases, the PIR program would have $3 billion left to seriously and this is a way of demonstrating that commitment,” complete the 17 years of pipeline restoration. said Neil Durbin, senior communications specialist for Dominion East Ohio. “It’s a mission that’s agreed with us in terms of the “What we’re finding is most of the easy to replace and less need for such a pipeline infrastructure replacement program.” expensive to replace pipe was replaced early on in the program, such as those in rural areas,” Durbin said. “Now a lot of the The increase in rates will go toward furthering the PIR, a program remaining pipeline that needs to be replaced is in urban areas, that will replace more than 5,500 miles of Dominion East Ohio’s where we’ll have to go through sidewalks and streets and it 22,000 miles of pipeline. The program started in 2008 and is becomes a lot more complicated.” Mark Messersmith, manager of design for Dominion East Ohio, said the PIR program focused on rural areas for pipeline restoration in the first eight years of the program so his design team, created the same time as PIR was formed, could focus on “key feed lines,” as well as give cities in the urban portion of restoration an early notice. “Our goal on these large projects is to work with them and give them notice and we couldn’t come out there in year one or two to spring the work on them,” he said. “We’ve always replaced bare steel pipe but with the advent of the program, we can be more proactive. We can be more aggressive at replacing the pipes. Frankly, it means increased work because there are a lot more projects.”

The Dominion PIR facility in Bath Township. Photo Credit: Jacob Runnels 14 OhioGas&Oil

Messersmith said, for urban pipeline restoration, his team works with city officials as they review the project’s “scope, plan and most importantly the impacts it’ll have on the city’s infrastructure.” He

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said his team has already discussed with 25 cities involved with the PIR program about how much work is left in the community and requested input on the work.

the older uncoated pipes that are being replaced. The newer steel pipes, which have been installed since the 1960s, will be coated with a paint epoxy which protects the pipes from the harmful effects of dirt.

The types of pipes that are being replaced range from materials such as copper, cast iron, wrought iron and bare steel. Durbin said the majority of pipeline being replaced is made of bare steel, but most of natural gas pipes found in homes is made of iron.

He said the coated steel pipes are more expensive to purchase but the benefits will provide a “ton of advantages,” such as being cathodically protected, which will protect it from chemical or electrical deterioration.

Messersmith said the “vintage” of these bare steel pipes being replaced is from the 1950s and earlier. He said the majority of these pipelines will be replaced by either polyethylene plastic or with a specially coated steel pipe for heavier duty systems. He said the plastic pipes, which have been used since the early 1980s, will be naturally resistant to rust or corrosion, which is a significant problem seen in

“We have a good working history of these newer materials,” he said. “We expect them to last for decades.” Messersmith said the pipeline replacement procedure hasn’t changed much because “we’re still replacing pipe as we did before PIR.” However, he said the difference in procedure for this projects involves the “scope, size and number of projects “ increasing since the start of the program, as well as communication with cities and

communities about pipeline replacement. “We have increased our focus on environmental and the environmental regulations,” he said. “We work very closely with permitting agencies, such as the Ohio EPA and the army corp engineering officers who represent the Ohio area. Some of the environmental regulations have changed since 2008 and beyond that we do far more coordinating with them to try and avoid issues but also to make sure we’re in complete compliance with the weather, law and the intent of the law.” He said all of the work for the PIR program is conducted in one engineering facility, with Dominion East Ohio’s engineering, construction and inspection groups working together. The major service areas these teams cover include areas such as Akron, Marietta, Lima, Canton, Wooster, New Philadelphia, Ashtabula, Youngstown and Warren.

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OhioGas&Oil 15

Severed Mineral Owners to Beneﬁt

From Recent Supreme Court Ruling but Challenges Remain

David J. Wigham • Attorney

n September 15, 2016, there was a sudden, dramatic and unexpected shift in ownership rights of mineral interests when the Ohio Supreme Court issued its ruling in Corban v. Chesapeake Exploration, LLC, 2016-Ohio-5796. To recap, the Court held that the 1989 version of the Ohio Dormant Mineral Act (“DMA”) was not self-executing; rather, surface owners were required to first file a lawsuit and obtain a court order that the severed mineral interests were abandoned. More importantly, Corban also held that the 2006 version of the DMA (2006 DMA) applies to all claims to abandon severed mineral interests asserted after the effective date of the 2006 DMA on June 30, 2006. The primary difference between the 1989 and 2006 DMA is that the 2006 DMA contains a mandatory notice procedure that surface owners must follow before abandonment proceedings can be initiated. Prior to the Corban ruling, surface owners were often able to rely on the self-executing provisions in the 1989 DMA, as interpreted by many lower courts, to file lawsuits and obtain court orders that severed minerals were abandoned under the 1989 DMA and had automatically vested in the surface owners. As a result of Corban, surface owners can no longer use the 1989 DMA and must instead follow the statutory abandonment procedures set forth in the 2006 DMA if they wish to obtain ownership of minerals previously severed from their surface property. The 2006 DMA abandonment procedure is difficult for surface owners to accomplish and easy for severed mineral owners to defeat. All that severed mineral owners need to do in response to a surface owner’s 2006 DMA abandonment notice is to file an Affidavit of Preservation. Based on recent Supreme Court case law, an Affidavit of Preservation cures the lack of any prior savings event and preserves all of the severed mineral interests of any mineral owners in the same property. In other words, the 2006 DMA allows one severed mineral interest owner to preserve the interest of all of the severed mineral interest owners regardless of whether those owners know they have an interest. Therefore, all it takes is one severed mineral owner to come forward in response a surface owner’s 2006 DMA abandonment notice and the severed mineral interests are preserved as to all owners. This does not mean that severed mineral interest holders are 16 OhioGas&Oil

in the clear. In fact, severed mineral interest owners still face a number of challenges. First, surface owners are only required to attempt notice by certified mail, return receipt requested, to the last known address of the mineral interest holders of record. That means that, if severed mineral interest owners do not have a current address or documentation in the county in which the mineral interest is located setting forth their claim of interest, a surface owner may still be able to complete the statutory abandonment process without the severed mineral interest holder having any knowledge of what is occurring. Second, severed mineral interest holders must still properly publish Affidavits of Preservation within a limited period of time following their receipt of notice. This can be much more complicated than many anticipate as the statutory requirements for an Affidavit of Preservation are detailed. This is particularly true in instances where old reservations were not properly transferred of record to the current generation of mineral owner heirs. Third, severed mineral interest owners must still preserve their interests against potential claims from surface owners under Ohio’s Marketable Title Act (“MTA”). While these claims can often be easily defeated by proactively filing a Preservation Notice under the MTA, failing to address these issues at all could lead to complete extinguishment of reserved rights. Finally, severed mineral interest owners will almost certainly face potential litigation going forward as a result of potential claims under the 2006 DMA or the MTA. In fact, given the history of large producers regarding potential 2006 DMA issues, severed mineral interest owners will likely be required to initiate litigation prior to producers recognizing their right to receive royalties or bonus payments at all. This 2006 DMA litigation will focus on two things: 1) the surface owners’ compliance with the mandatory 2006 DMA abandonment procedures; and 2) the severed mineral interest owners’ compliance with the 2006 DMA preservation requirements. Filing this litigation will almost certainly be more complicated than mineral interest owners will likely anticipate. As many severed mineral owners are second or third generation heirs of the original severed mineral owners, a considerable analysis will need to take place prior to initiating a lawsuit to determine the names and addresses of all of the heirs with an interest GasandOilMag.com

in the property. Once those heirs are identified and located, severed mineral interest owners will need to assure that they are actually the owners of the interest under either the descent and distribution or testamentary laws of both Ohio and the state in which the deceased owners died. Such considerations could result in drastic changes in ownership depending on the laws of descent between generations and the contents of any will setting forth who will inherit what interests. Once this analysis is completed, these severed mineral interest owners will need to act in concert to document their ownership of the mineral interests to assure the preservation of the ownership interests going forward. In some cases, this could involve more than 100 family members, depending on the age of the original severed mineral interest and the genealogy of the family.

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Even if litigation has already been initiated respecting severed mineral interests, severed mineral owners who are parties to existing DMA lawsuits that were stayed by the lower courts in anticipation of a ruling in Corban, must now amend their pleadings to focus on the 2006 DMA and instead of the 1989 DMA, which is no longer effective.

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Of course, severed mineral interest owners are not the only individuals facing new challenges. While some producers who were proactive and sought to obtain protection leases from severed mineral owners have avoided significant liability as a result of the Corban ruling, others are not so lucky. Other producers who made leasing decisions based on the 1989 DMA will either be forced to obtain new leases from severed mineral owners or face potential mineral trespass cases from severed mineral interest owners. These new leases will likely require the payment of lease bonuses and potentially unpaid royalties. Of course, producers operating existing Utica wells who have paid royalties based on what was thought to be the self-executing provision of the 1989 DMA will likely be forced to pay those royalties over again to severed mineral interest owners. Finally, surface owners who signed leases with producers containing warranties of title may face claims against the producers to recover bonus and royalty payments made in reliance of the 1989 DMA. In short, the landscape regarding title and ownership to mineral interests in Ohio has significantly changed. Although there is more clarity under the 2006 DMA, the Corban ruling has also created many new challenges for severed mineral owners, surface owners and producers alike. These new issues are complicated and parties should rely on the advice of experienced oil and gas counsel before making decisions and signing documents that could affect their mineral rights. 10950939 _2

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David J. Wigham is a second-generation Ohio oil and gas attorney with more than 25 years of experience in the industry. He practices at the law firm of Roetzel & Andress and maintains offices in Akron and Wooster, Ohio. He can be reached at 330-762-7969.

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How Volatile Are Gas Prices in Ohio?

Jacob Runnels • Dix Communications

urricane Hermine, the first hurricane to hit Florida in more than a decade, blew through the eastern border and into the Gulf of Mexico over the course of more than a week.

With these kinds of effects on natural gas production, would areas like Ohio be affected by these production shut-ins or any kind of major disaster hitting the area?

“There’s no weather event that’s going to create that type of volatility,” said Tim McNutt, Director of Commercial It started in late August and lasted through early September Operations for Dominion East Ohio. “It’s hard to come up with as market price speculation caused the NYMEX Commodity a natural disaster that’s going to create a supply interruption Futures National Average Natural Gas Prices to rise and fall on a scale that’s going to cause price volatility.” during that timespan, but it started to rise again afterward. According to workboat.com, in preparation for the hurricane, For being near the natural gas-rich Marcellus and Utica oil rigs in the Gulf of Mexico were evacuated and shut-in shales, McNutt said areas — such as Ohio, Pennsylvania, West procedures were enacted, which resulted in “approximately Virginia and the Appalachia region — around these shales 15 percent of the current oil production in the Gulf of Mexico are very secure when it comes to natural disasters affecting [being] shut-in,” with “roughly 9 percent of natural gas natural gas prices or supply. production” shut-in as well. “With the amount of supply and the amount of locations [producers] have where they have proven reserves of natural gas, it’s hard to imagine a scenario where we’re going to get an extremely short supply and a significant upward volatility,” he said. With the event of natural disasters that be predicted, such as Hurricane Hermine, they could influence prices based off speculation alone. These are what Ralph Talmage, chairman of Northwood Energy Corp., calls short run price speculation.

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“Perception is the gas market’s price in the short run,” he said. “You’ll have something like a hurricane, a pipeline blowing up or you have something like an international recession or some sort of thing happen and it can affect prices quite dramatically in a very short period of time. But then it gets back to reality and toward a shift in supply and demand.” McNutt said through the shale revolution — which involved technological advances with horizontal drilling and fracking — areas near the Marcellus and Utica shale regions were able to combat outside events from affecting local natural gas prices significantly. With this, he said these areas are more resilient to price volatility because of the abundance of natural gas that’s available to drill and left in reserve. “Our pricing was significantly impacted by hurricanes in the Gulf of Mexico [in the past] because a lot of our supply came from there,” he said. “We get so much of our supply coming from Utica and Marcellus development that we probably GasandOilMag.com

hardly saw any volatility at all with the hurricane here in Ohio.” McNutt said there aren’t many significant natural disasters or weather patterns that could affect natural gas supply or production. For areas near the Marcellus and Utica shales, disasters such as a tornado would “take out a really small area in the big picture of things” and even if there was a “crazy earthquake,” he said there’s “not a history” of that possibly happening. McNutt said one of the major determining factors that would put significant pressure on prices in natural gas-rich areas would be through legislation that would limit or ban fracking.

According to Bloomberg.com, the state of New York banned fracking in Dec. 2014, as the decision was “hailed by environmentalists and derided in the economically depressed Southern Tier region.” Talmage said with states like New York and New Jersey, which “use a tremendous amount of natural gas,” they can be susceptible to price volatility because of their lack of “pipeline capacity to get more gas.” “A lot of times they have to interrupt business and pull their storages as far as they can and try to force as much gas that way as they can,” Talmage said. “If you need to buy some gas on the spot market to cover your shortfall, you’ll have to pay through the nose for it. Unfortunately,

producers like me can’t take advantage of it because we don’t have the contracts for transportation. We’re limited to the number of bigger companies who can do something like that because they have the stuff in play, can get ahold of gas and also get it there.” For now, in Ohio, Talmage said natural gas prices will continue at low prices because of the large amount of supply available. “Gas will slowly ratch up in the future but there’s not going to be anything dramatic,” he said. “It’s going to be down for a long time. There’s so much good horizontal drilling acreage you can do in the country.” McNutt said areas like Ohio are less susceptible to price volatility, but Talmage said prices are going “very depressed” and will continue to “stay depressed.”

WO-10495384

“You cannot drill and commercially produce any wells without hydraulic fracturing,” he said. “Effectively, if they shut hydraulic fracturing down, you’re

not going to have any wells drilled. That’s what you have in New York right now: there are no wells drilled in the whole state right now because they have a ban on hydraulic fracturing.”

GasandOilMag.com

OhioGas&Oil 19

Domestic Development Key at

Shale Insight 2016

Jackie Stewart Stewart • Energy in Depth, Ohio

abor leaders, elected officials, and business groups came to Pittsburgh Sept. 21-22 in support of domestic oil and natural gas development at the 2016 Shale Insight Conference. The gathering featured speakers and panel discussions that highlighted a broad-base of support for hydraulic fracturing and the economic benefits that go along with it. As the Pittsburgh Post-Gazette reports, Jim Kunz, business manager for the International Union of Operating Engineers Local 66, explained how shale turned the job situation around for his union: “Half a dozen years ago, Mr. Kunz said his union was nearing 10 percent unemployment. A year later, when the shale industry started to take off, employment ramped up to 100 percent. In fact, Mr. Kunz said, the locals had to recruit operators from other areas to fill the need. And while he’s seen a dip in jobs in the past year that parallels the oil and gas downturn, he expects to be back up to full employment next year.

“It’s all driven by this industry.” — Jim Kunz Another labor leader, Roland “Butch” Taylor, retired business manager for the Plumbers and Pipefitters Union Local 396 in Ohio told the Pittsburgh Post-Gazette that oil and natural gas development has created enormous opportunities: “I’m here because the industry has given us so much opportunity,” he said. “It wasn’t a political decision, Mr. Taylor said. In fact, his message was about how successful his union has been in banding with business groups and members of both parties at the local level to oppose efforts by citizen and environmental groups to restrict natural gas development.” Other speakers, like Harold Hamm, chairman and CEO of Continental Resources told attendees that fracking 20 OhioGas&Oil

has “changed the world.” As DC Media Group reports: “Speaking at the Shale Insight conference in Pittsburgh, Pa., on Sept. 21, Hamm said the U.S. shale gas sector has “changed the world” in a way that will provide energy security to the U.S. for the next 50 years.” And as WESA public radio reported, that sentiment was echoed by Marcellus Shale Coalition President David Spigelmyer: “There is no bigger issue today in our economy than energy,” Spigelmyer said. “These are issues every American has on their front burner right now. They know that energy is a driver for the opportunities for Americans to be affluent, to create wealth, to create benefit and opportunity for our citizens.” Also addressing the conference was presidential candidate Donald Trump, whose comments touched on the economic cost of banning fracking. From Trump’s remarks: “Hillary Clinton wants to put the coal miners out of work, ban hydraulic fracturing in most places, and extensively restrict and ban energy production on public lands and in most offshore areas. This will produce devastation for states like Pennsylvania, Ohio, and West Virginia, where shale energy and coal production are critical parts of the economy.” Trump’s comments are justified by a new report from the U.S. Chamber entitled “What if America’s Energy Renaissance Never Actually Happened?” In particular, the report details how Pennsylvania and Ohio, prominent areas represented at the Shale Insight Conference would have lost 232,400 jobs, $22.9 billion in state GDP and $13 billion in labor income annually without shale development. Fortunately, strong coalitions are forming to reject the “Keep It In The Ground” movement and their allies in Washington. That is because the people who actually live around the Appalachian Basin understand the economic and environmental benefits of fracking.

GasandOilMag.com

State Invests in

Zane State Training Program

tate Senator Troy Balderson (R-Zanesville) announced the approval of more than $280,000 in state funds that will be invested in a workforce training program at Zane State College, which prepares workers for skilled positions in southeast Ohio’s growing oil and gas industry.

—Troy Balderson

Senator Balderson serves as chairman of the Senate Committee on Energy and Natural Resources and vice chairman of the Senate Committee on Public Utilities. Both committees play an important role in setting policy initiatives for the oil and gas industry, which is one of the fastest growing sectors of Ohio’s economy.

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Members of the Ohio Controlling Board approved the release of funds supporting the construction of a new standalone workforce training facility. Zane State’s decision to build the new facility was in response to demands from local employers seeking to hire qualified workers to fill high-wage jobs.

“New investments in Zane State’s training facilities will help prepare students to take on available, good-paying jobs in Ohio’s developing oil and gas industry.”

Students participating in the program develop a deeper understanding of the oil and natural gas industry and establish basic knowledge and skills necessary to begin careers as heavy truck and equipment technicians in the oil and gas industry.

GasandOilMag.com

OhioGas&Oil 21

Ohio Oil and Gas Association Technical Conference and Oilfield Expo

he 2016 Technical Conference and Oilfield Expo of the Ohio Oil and Gas Association will unfold on Wednesday, Nov. 2, at the Pritchard Laughlin Civic Center.

The day-long event will afford an opportunity for oil and gas industry professionals to network, to hear speakers discuss the latest industry topics and to join in the oilfield celebration reception. In addition to the conference, attendees will have the opportunity to visit with 75 indoor exhibitors and to view an outdoor display of large equipment. Registration on Nov. 2 begins at 7 a.m. and opening remarks will be at 9 a.m. If registering tomorrow (Monday, Oct. 24), the fee is $150 each for an Association member; $250 each for a nonmember; and $125 for a corporate member. If registering after tomorrow, the cost is $200 each for an Association member; $300 each for a non-member; and $125 for a corporate member. Go to http://oogatechexpo.com/attend/ and follow the links to register online.

Conference Schedule: • 9 a.m. Opening remarks by Shawn Bennett, executive vice president of the Association. • 9:15 a.m. “Low Oil Prices and Big Data Analytics: What’s the Synergy?” by Srikanta Mishra, Ph.D., Battelle Memorial Institiute. •10:15 a.m. “Produced Water Geochemistry of the Ordovician Utica Shale and Adjacent Formations in the Appalachian Basin” by Madalyn Blondes, U.S. Geological Survey Energy Resources Sciene Center. •11 a.m. “Saltwater Disposal and Management Panel: An Ohio Perspective” by Tom Tomastik, ALL Consulting; Bill Dawson, Buckeye Brine; and Jason Trembly, Ohio University. •12:45 p.m. — “Artificial Lift Solutions in Point Pleasant Wells” by Catlin Ball, PDC Energy. •2:30 p.m. “Do You Have Gas?” by Rob Cose, Command Systems Inc. • 3:15 p.m. “Federal Quad O Rule Panel: How a Small Change Has a Large Impact on Today’s Oil and Gas Industry” by Thomas Tucker, Apex Companies LLC; Michael Szabo, GZA GeoEnvironmental Inc.; and John McGreevy, Civil & Environmental Consultants Inc. • 4 to 6 p.m. — Oilfield Celebration on the exhibit floor.

22 OhioGas&Oil

GasandOilMag.com

Opinion: Unclog the Pipeline to

Economic & Energy Security

Tom Borelli • Conservative Review

lans for a new oil pipeline just went up in flames -- literally. This summer, radical environmentalists in Iowa set fire to pipeline construction equipment, causing nearly $1 million in damages.

economy would miss out on 15,000 jobs and $100 million each year.

Unfortunately, these activists -- and the politicians who pander to them -- aren’t just slowing the construction of new oil and gas pipelines. They’re also slowing economic growth and limiting America’s efforts to become energy independent.

Activists aren’t just hindering economic benefits; they’re impeding American energy security as well. Since the 1970s, America has significantly moved away from dependence on foreign oil -- nearly 90 percent of oil consumed by Americans is now domestically produced.

Meanwhile, activists in New York are blocking the Constitution gas pipeline -- halting 2,400 jobs and $130 million in labor income. The Comanche Trail and TransThe incident was hardly isolated. Environmentalists Pecos pipelines in West Texas face opposition as well. nationwide are desperately working to stop pipeline construction. In Massachusetts, for example, protestors Misguided pipeline protests are having a devastating locked themselves to their cars -- with bike locks! -- ripple effect. Ever since the Obama administration in an effort to block construction of a pipeline in West vetoed Keystone XL last year, 11 pipeline projects have Roxbury. been cancelled or postponed.

Story continued on page 24

Take the project that inspired the Iowa arson -- the 1,168mile Dakota Access pipeline. The pipeline will move 570,000 barrels of oil daily across North Dakota, South Dakota, Iowa, and Illinois -- bringing each of those states 4,000 jobs. It’s also expected to generate $156 million in tax revenue. These economic gains will give local economies a welcome boost. Campgrounds and rental properties near Dakota Access pipeline construction sites are in high demand. Restaurants, grocery stores, healthcare clinics, and recreational venues will all benefit from more business.

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In fact, our nation has become a world leader in gas and oil production -- beating out giants like Russia and Saudi Arabia. Pipeline projects will help America keep that status and achieve total energy independence. Pipeline opponents often express concerns over accidents. But pipelines are by far the safest method to move oil and gas. In 2013, pipeline-transported oil and gas safely reached its destination more than 99.999 percent of the time. In fact, a person is more likely to be killed by a lightning strike than by a pipeline accident. With hundreds planning to risk arrest to stall construction of the Dakota Access pipeline, it’s clear that the green radicals’ crusade won’t end anytime soon. Politicians should look past incendiary attacks on American economic and energy security -- and support pipeline construction.

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Tom Borelli, Ph.D. is a contributor with Conservative Review.

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Study Shows Fracking

Lowers Mortgage Defaults

espite the negativity many associate with fracking, the controversial technique for extracting oil and natural gas from the earth had a positive impact on mortgage defaults in areas where fracking occurred, according to research by a Clemson University finance professor.

The research, by Lily Shen, assistant professor of finance in the College of Business, examined data from 20042011 and found that mortgages originated in shalegas fracking regions of Pennsylvania had a 58 percent lower default rate compared to the state’s average rate of default.

in the form of signing bonuses and royalty payments from leases they sign with oil and gas companies, which typically pay between 15 to 25 percent of gas production profits.

“So, one can see why it behooves a property owner in these ares to stay current on their mortgage payments.” —Lily Shen

The fracking process for extracting oil and natural gas from the earth has raised environmental concerns due to the excessive water it requires and the resulting contaminated wastewater. As fracking wells spread across the U.S, financial regulators, banks, and realThe research, the first to link fracking with mortgage estate investors also expressed great concern about performance, seems to debunk a widely held belief the possible negative effect of fracking on mortgage that fracking has devastating impacts on the mortgage performance. market. But from 2004-2011, Shen’s study found a much lower rate of mortgage defaults than elsewhere in the state and borrowers’ credit (FICO) scores showed a 40-percent increase amounting to an average score of 660. Fracking, or hydraulic fracturing, is an extraction process of drilling into the earth before a high-pressure injection of a water, sand and chemical mixture is used to force natural gas and oil to flow out of the well head.

“When there’s discovery of a mineral resource, a property becomes more than a place to live. The mineral rights are tied to property ownership. If a person defaults on the mortgage and loses the property, they lose the mineral rights and the potential revenue they could have generated from those rights”

—Lily Shen

The research examined nearly 372,000 residential mortgages originated in shale-gas fracking areas of Pennsylvania, a state with a history of oil and gas extraction that goes back to the beginning of the 20th century. It is estimated there are approximately 300,000 fracking wells in the U.S. today. Almost 90 percent of new U.S. onshore oil and natural gas wells are hydraulically fractured and they account for more than half of the U.S. oil output. In the last decade, the fracking process has led to an eightfold increase in U.S. natural gas production.

The findings show that borrowers stopped defaulting on mortgages after the nationwide fracking boom, late in 2007, when extracting natural gas became technically feasible and profitable. Natural gas extraction creates income for property owners

GasandOilMag.com

OhioGas&Oil 25

Member Spotlight: Charlotte M. Pierce,

Mason Producing Inc.

Lyndsey Kleven• Communications Coordinator he member spotlight series features legacy OOGA members who have been a member of the Association for at least 10 years. If you would like to recommend someone to be highlighted, please contact Lyndsey Kleven at lyndsey@ooga.org Background information: Charlotte Mason Pierce grew up in the oil and gas industry and is the third generation of her family working in the business. Her father John Mason started out in the business as a contract driller, later working himself up to being a producer and having his own wells. The first job he landed was for Henry Lightner (Charlotte’s grandfather), fellow oilman, welder and machinist. John later married Lightner’s daughter and ran a family-owned business with Henry. Additionally John had uncles that were in the business around Fairfield and Logan Ohio.

Being female, her involvement was Work History Overview: limited to helping her dad roll pipe and gauge tanks. Charlotte was always asking Charlotte credits her father for being a questions and learned quite a bit about the good mentor about the industry. Being industry growing up. involved with the small family business provided a multifaceted education of Feeling rejected to entering a career how the industry works. She was able to in the oilfields as a female, Charlotte gain the knowledge of what areas of the attended Ohio University in search of a business need to be taken care of, in order different professional route. Charlotte to keep the company running well. Her took an alternate career path for nearly experiences throughout childhood and two decades before returning back to the coming back into the business gave her an industry in 1987. As her father was nearing over arching perspective, not just niching retirement age he wanted Charlotte to take her in one trade. over the administrative side of the family business. Charlotte had invested in some “It has been an exciting career and a wells giving her a stake in the business and rewarding one,” described Charlotte. “My she decided to work in the industry. education for the industry is a unique one, which I learned and earned the hard way, attending seminar after seminar.”

Raised in Killbuck Ohio, the area known for good Clinton wells, Charlotte’s father started in the business as a contract driller under Mason Drilling Inc. After establishing himself in the field and building up business he Charlotte Mason Pierce of Mason Producing Inc. was able to acquire his own wells and production as Mason Producing It was during this time people were Inc. Charlotte was brought up around starting to poke around at the Rose Run. other oilfield kids, many are also actively John Mason was not optimistic for this possibility, especially after the first test hole involved with the Association. he completed and the seismic run. Charlotte “My childhood memories are going to the and her brother were encouraging him to rig after dinner with my dad, to run some keep testing this—eventually they found night tower work. I would sit on the lazy success, leading them to drill many more bench in front of the stove and watch them Rose Run wells. This lead to even bigger for a couple hours—watching him and the things, like the joint venture work with other guys dress bits. I have some very Columbia Natural Resources, the Oxford strong memories of watching my dad and Oil Company and Jerry Moore Inc. among others. the men work on the cable tool rigs.”

26 OhioGas&Oil

Much of it has been trial and error, but the fundamentals her father laid, have helped her to be successful. This all brought more experience, and distribution became the next step, Charlotte started marketing her own gas and has successfully marketed it on the Columbia system since the early 1990s. Initially Mason Producing started in Clinton and shifted focused to Rose Run in the late 1980s. Today they operate 120 wells, the majority are Stripper wells, 45 of which are still producing Rose Run. The longevity of their production was surprising as some are currently a decade over surpassing the predicted lifespan, which has been a nice run. In 2002 Charlotte took ownership of the company that she runs with one other employee, with the rest being contracted out. Over the years Charlotte has seen the different industry cycles spanning her GasandOilMag.com

father’s career and now hers. Her father instilled great values on how to ride the cycles. One thing she stressed learning was the importance of spending money to take care of wells when the prices are good, to save yourself in situation where the prices are low. Being a small company, the cycle’s impacts can hit a little harder than they do on investor rich corporations. Women in Oil and Gas: Seeing her father work and getting to experience the oilfields as a child provided Charlotte a unique exposure to the industry that most females would never have. While always having an interest in the work, when she became old enough to forge her own career path Charlotte diverged from the oil and gas industry—and not necessarily by choice. She described the challenges of being a female in a male dominated industry and the evolution she has experienced over the years. During this time 1987 there was still a large stigma that the oil and gas industry was a man’s world and women were not to cross the threshold and work in this industry—and if they did, they were looked at as, “what are you thinking?” As she has seen, when her father worked in the industry it consisted of mostly fieldwork with a minimal amount of administrative work. The central aspect of the business was the service side that was predominately a man’s role, solely for the fact of their physical stature for doing the work. Charlotte reflected on an instance of watching her father dress bits with a sledgehammer and concluded that the majority of women would never have the upper body strength do this type of work. While the opportunity to work in the industry may exist, it is not appropriate for everyone. As the industry has progressed over the years, the administrative aspect has increased twofold and opened up more opportunities for women to get involved. Charlotte attributed this to the regulatory structure and facets of getting the product to market that did not exist 30 years ago.

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She sees that today there are a lot more areas where women can now be part of the team. They do not have to turn the wrench—some of them can though—but they sure can do anything else. This has been a positive for the industry and a noticeable change, as women are becoming more prevalent attending seminars, conferences and being engaged in the industry. Charlotte gave kudos to the women that came into the industry in the last 10-15 years and withstood the perception put upon them by some. She feels that today women are starting to be justified for working in the industry and getting some respect for their efforts in the business. What has carried Charlotte through over the years has been her passion for the business and that she really enjoys her work and her involvement. History with the OOGA: Charlotte joined the Ohio Oil and Gas Association (OOGA) in 1987 right as she began working in the industry. One of the first committees she sat on was the legislative committee with Tom Stewart. Charlotte spoke praises of Tom being an advocate of support and encourager of her becoming involved in the business. John Mason and Henry Lightner and were both inducted in the OOGA Hall of Fame in 1994 and 1998 respectively for their outstanding contributions to the oil and gas industry in the state of Ohio. Her father’s involvement in the business helped her to navigate the industry and build relationships within the Association. Her father was also president of the Association during 1997-1998 and once her father resigned the presidency of OOGA, she slid into many roles he was holding and held strong there. In the early 2000s she became a Board of Trustee member and was later given the responsibility of chairing the Ohio Oil and Gas Producers Underground Protection Service (OGPUPS). “If we didn’t have an Association I hate to think regulatory wise where we would be,” said Charlotte “That’s the whole point

of banning together and has always been the point of banning together to educate and promote our industry to people that hold public office.” Charlotte enjoys being part of the OOGA community. She also feels the educational push through the Ohio Oil and Gas Energy Education Program (OOGEEP) has been a tremendous thing in the school and that pushing natural science is so important. In addition to her contributions within the OOGA, Charlotte has been actively involved with other industry organizations. She was a founding board member for Gatherco in 1997 and served as secretary until 2010, remaining on the board until it was sold last year. She was also appointed by Governor George Voinovich 1998 to serve as a member of the Technical Advisory Committee (TAC) advising ODNR, holding consecutive appointments until 2008. Other groups she is a member of are Michael Late Benedem Chapter of the American Association of Professional Landmen and the Eastern Mineral Law Foundation. Evolution of the Industry/ Horizontal Drilling perspective: The greatest transformation Charlotte has seen in her time in the industry is the change in technology. Technology has evolved and is always going to evolve and change, and the amounts of gas being excavated now from just a few years ago would have been unbelievable. She also feels the oil and gas environment she grew up in and came to know throughout her career will be entirely different going forward. Seeing the change and movement into the 21st century there is a much larger and growing population on earth to take care of, and in order to take care of them in a more efficient way we need these larger operators and shale drilling. The amount of resources we will need going forward is no longer something that’s within grasp of the smaller operators.

OhioGas&Oil 27

Setting Stage for Energy

Renaissance in Our Region

et us take a look at what shale has done for our region. The following letter to the editor was published in the Wheeling News-Register by Shawn Bennett, David Spigelmyer and Kevin Ellis, leaders of their respective organizations; Ohio Oil and Gas Association, Marcellus Shale Coalition, and West Virginia Oil and Natural Gas Association. Visit ShaleInsight.com to learn more about this regional partnership.

Thanks to our domestic energy revolution — led by record natural gas production right here in the tri-state region — our nation is more energy secure than ever, allowing us to break free from reliance on foreign, often hostile nations to meet our growing energy needs. These uniquely American achievements are well worth celebrating. Recognizing that shale’s opportunity — and challenges — have no borders, the Ohio Oil and Gas Association and West Virginia Oil and Natural Gas Association are joining with the Marcellus Shale Coalition to host the 6th annual Shale Insight conference to foster greater regional dialogue, discussion and unity in our shared goal of advancing shale development throughout the Appalachian Basin.

Our region is blessed with an abundance of natural resources that have supported America’s energy needs for generations. Appalachia-produced raw materials helped usher in and ignite America’s Industrial Revolution, power the United States to victory in World War II, and provide good-paying, family sustaining jobs for hundreds of thousands of local citizens. Some of these regional themes reflect the clear fact that shale development continues to support good-paying jobs, Today, America continues to rely on Appalachia’s abundant promote small business growth opportunities, generate energy reserves to power our modern 21st century economy. energy savings for hard-working Americans and their

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families, strengthen our region’s environment, and spark a regional manufacturing revival. In fact, Shell’s commitment to building a world-class petrochemical facility in Beaver County, Pa. — a $6 billion to $7 billion investment — is truly representative of shale’s broad benefits. Representing the largest investment made in Pennsylvania since World War II, this single project will have a significant and positive impact on our region’s economy as it’s expected to create 6,000 construction jobs — including many for our region’s building trade union members — and 600 permanent jobs once the facility is complete.

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What’s more, this facility is expected to encourage additional manufacturing investments throughout the Appalachian Basin as manufacturers look to the tristate area to capitalize on our local energy advantage.

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This inspiring American story of manufacturing’s comeback is the crown jewel of natural gas development as our region has the competitive edge for new, job-creating investment. That’s one of many reasons why a 2015 Harvard Business School report concluded shale represents the “single largest opportunity to improve (the) trajectory of U.S. economy.” Indeed, thanks to natural gas, we don’t have to choose between economic growth and improved air quality. We can have both as the greater use and development of cleanburning natural gas has driven America’s carbon emissions to 24-year lows and enabled the U.S. to reduce its emissions more than any other nation.

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But to fully realize shale’s economic and environmental benefits, natural gas infrastructure modernization and expansion is mission critical. A strong, reliable infrastructure network will connect consumers, manufacturers and power generators with our abundant, affordable energy resources. And to be sure, pipelines are the absolute safest and most effective way to transport natural gas.

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From unleashing a manufacturing renaissance, to creating and supporting hundreds of thousands of jobs, and expanding our natural gas infrastructure network, shale’s benefits — and the challenges our industry faces — extend beyond state boundaries.

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Of course, for our region to capitalize on shale’s economic and environmental opportunity, lawmakers throughout Pennsylvania, Ohio, and West Virginia need to get the energy equation right with pro-growth policies that encourage jobcreating investment, greater production, and, importantly, end-use opportunities for natural gas, especially among our power generators and manufacturers.

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OhioGas&Oil 29

Cracker Plants to Revitalize Ohio C Chelsea Shar• Dix Communications

racker plants were the main topic of discussion at the Utica Summit IV hosted by the Canton Regional Chamber of Commerce in October.

in petrochemical has been totally manufactured products will be shipped obliterated. It’s not even close, it’s not there. a ten percent difference, it’s a two or three-fold difference,” he said. The Appalachian area is a great place for the cracker plants, he said, According to the American Chemistry because of the growing labor pool, low Council, Gellrich explained, over $160 transportation costs and because it is an billion in capital is invested in the U.S. EPA non-attainment area. Representatives from different aspects gas and oil market, 60 percent of which of the gas and oil upstream production is from foreign countries. Gellrich predicted 6 cracker plants cycle were at the summit to discuss in the Utica region. Each cracker with Stark County plant, according to area businesses what is Joe C. Eddy of Eagle ahead for the industry Manufacturing which from their perspectives. relies on ethylene from cracker plants to create Cracker plants take gas plastic products, will and turn it into ethylene each generate about which then is used in $330 million per year in the polymer industry economic activity. to create plastics used for products such as Shell will be live in medical supplies, wire the next four years. coating, vehicle parts Gellrich said Shell and more. executives he has spoken to assure him In the summer Shell that they are working announced its plan to as fast as possible since build a cracker plant every day the cracker in Pennsylvania, along Attendees listen to speakers at the Utica Summit in North Canton on Tuesday. plant is in operation it the Ohio river. With Photo Credit: Kevin Graff generates $1 million in the natural gas and revenue. oil harvested from the Utica region Polyethylene economics will also in eastern Ohio, industry expert Tom experience benefits from the oil and gas MarkWest Company, a sister company Gellrich of Topline Analytics, said Ohio surplus in the U.S., he explained. to Marathon is located in Cadiz, Ohio. has a lot to look forward to. VP of Operations for the Appalachian “There is a demand for four to five new and Utica region of the company David Rather than depending on the middle cracker plants per year in the world and Ledonne oversees a company that has east for gas and oil, the U.S. is not only why shouldn’t they be located here in a ethane they cannot use right now. self-sustaining with its supply, but it low-cost region,” he said. is on the verge of becoming a major Ethane is a fuel used by cracker plants. exporter, he said. The need is coming from the Asian Ledonne said with a cracker plant in the middle class, which is growing quickly. area MarkWest could sell their ethane “The norm that we grew up with The chemicals and more finished, to the cracker plant which would allow

30 OhioGas&Oil

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Kathy Heidebrecht of VAIREX speaks at the Utica Summit in North Canton on Tuesday. Photo Credit: Kevin Graff

Right now, Ledonne said, there is no local storage for the ethane they take out of fuel processes in the plant, so they reject most of it to the tune of 70,000 to 80,000 barrels of ethane per day. “There is a significant amount of ethane, we believe, in these shale plays for quite a long time,” he said. If ethane is stored locally and turned into ethylene locally at a cracker plant, local plastics companies might as well benefit from the supply. Stan Glover, sales manager for Zeiger Industries in Canton travels all over the world selling the plastics used to create thousands of products. The plastics industry is known as being downstream, a market that comes from the gas and oil industry.

Total there will be $47 billion in investment over the next decade put into the plastics industry due to the success of the shale play, he said.

It was the de-regulated market in Ohio, a high capacity market and a shale dome with “unprecedented opportunity” that made Ohio the ideal place in the country to place a power generator.

The plastics processing industry currently employ 940,000 people directly in the U.S. and operates over 16,800 facilities in all 50 states. One of the needs he sees the plastics industry having to prepare is new talent.

Zac Gordon, project manager at Southfield Energy spoke about what made the Ohio Utica region ideal for the Boston-based company.

Southfield Energy plant will be a 1,100-megawatt power generator, the equivalent of over 1 million residential homes. Southfield will be online in about three years. The company of about 30 employees has invested $2 billion in the U.S. in power plants. They have another located in Caroll County.

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“We can’t find talent. We don’t know how to find talent. We are talking about millennialls,” he said. Zeiger, he said, is spending time with demographers to find out how to tap into that generation to take over the industry in the future.

He sees the plastics industry expanding exponentially over the coming years Another industry and a demand globally for the products. that has popped up due to the “The surge in natural gas production local gas and oil has reversed the force of the U.S. plastic industry is in GasandOilMag.com

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