2013 June Gas & Oil North

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Ohio octobER 2012 • www.ohiogo.com JUNE 2013 • www.ohiogo.com

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Touring an injection well ODNR issues shale report

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Gas & Oil

Northern Zone Edition

June 2013 Edition - Dix Communications

ODNR says Utica Shale Numbers

STRONG

C

OLUMBUS – The Ohio Department of Natural Resources (ODNR) said Utica shale oil and gas production has increased 93 percent for oil and 80 percent for gas since 2011. Additionally, producing wells have gone from two to 87. At this rate of growth, ODNR expects Utica shale well production to exceed the yearly output of all of Ohio’s nearly 51,000 existing conventional wells by as early as 2015. Utica wells represent less than one percent of all producing oil and gas wells in Ohio. “The production from these initial Utica wells make a compelling statement about the staggering amount of oil and gas resources Ohio’s shale appears to contain,” said ODNR Director James Zehringer. “As more data is collected and analyzed, ODNR will continue to report it and continue its careful regulation of this rapidly growing and economically vital industry.”

When comparing horizontal wells to conventional wells, the 2012 Utica shale production averages indicate: A single Utica well produced as much oil as 312 conventional wells A single Utica well produced as much natural gas as 448 conventional wells. Additionally, during 2012, these 87 Utica wells produced: • 12 percent of Ohio’s total oil production • 16 percent of Ohio’s total gas production for 2012. One of ODNR’s primary focuses is to protect Ohio’s citizens and natural resources through responsible regulation of the oil and gas industry while still encouraging industry growth. The Ohio General Assembly is considering legislation that would require well owners to report production quarterly as opposed to annually. Ohio law currently requires well owners to submit yearly production results by March 31. More frequent reporting will allow ODNR to better understand Ohio’s shale play, and therefore, provide even more effective and comprehensive regulation of this growing industry. Production results for all Utica wells are available in spreadsheet form at: http://oilandgas.ohiodnr.gov/production/. The goal of the ODNR is to ensure a balance between wise use and protection of natural resources for the benefit of all. Visit the ODNR website at ohiodnr.gov.

OHIO WELL ACTIVITY

by the numbers

MARCELLUS SHALE

15 0 5 0 6 0 0 26

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

UTICA SHALE

3 51 Wells Permitted 12 Wells Drilling 223 Wells Drilled 0 Not Drilled 100 Wells Producing 0 Inactive 0 Plugged 686 Total Horizontal Permits

Data as of 5/25/13 Source: Ohio Department of Natural Resources


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Gas & Oil

June 2013 Edition - Dix Communications

Northern Zone Edition

Tour Points Out SAFETY of Injection Well

P

Dave O’Brien Dix Communications

ORTAGE CO. — Injection wells that take the waste products of oil and gas drilling and pump it into the earth at depths of several thousand are a safe, effective and well-regulated means of disposing of such material, according to an Ohio oil and gas trade association and well owners. To give the media a better handle on the matter of injection wells, members of the Ohio Oil and Gas Association recently gave a guided tour of a well in Windham Township, Portage County. Penny Seipel, vice president of public affairs for OOGA, said the group want to take the “confusion and mysticism” out of injection wells, which she said are stringently regulated by state officials. Well owner/operator David Ballentine owns six operational injection wells and has a permit for a seventh through his company, B&B Oilfield Service, Inc. He also transports drilling waste under the name Northeast Ohio Oilfield Service Inc. In business for the past 25 years, he said he employs up to 22 people at any one time — including his wife, one of his two daughters and his son — at his shop on S.R. 88 in Portage County’s Freedom Township. Ballentine’s well, located on privately-owned property on S.R. 303, is a former oil and gas well that descends to a depth of 3,900 feet. It ceased production in 1985 and was plugged in 1986, he said. Earthen dams prevent spillage from large brown holding tanks hooked to pumps that inject the wastewater deep into the earth. Automatic “murphy” switches measure fluid levels and pressure and can shut down the injection process if a problem arises, Ballentine said. Leased from the landowners on a yearly basis, the well is monitored electronically for changes in pressure that could signal a problem. Technology contained in an app on Ballentine’s smartphone and a website allows him to check on all his wells anytime he wants, he said. His trucks are limited to 10 trips per day to the well, only between the hours of 7 a.m. and 5 p.m., and on average deposit 250 barrels of waste per day into the well. No waste produced outside of Ohio is injected into the well, Ballentine said, and the only waste injected is brine from the drilling process — basically, salt water. David Hill, OOGA vice president and the owner of several injection wells in Guernsey County, said pressure monitoring allows well owners and Ohio Department of Natural Resources officials to monitor for signs of danger in Ohio’s 179 injection wells. A geologist and member of OOGA’s Underground Injection Control work group, Hill said it is nearly impossible for such waste water to rise close enough to the surface to mix with the water table or surface soil. ODNR regulators utilize a hydrostatic pressure formula to

David Hill, vice president of the Ohio Oil and Gas Association, stands in front of holding tanks serving a Class II oil and gas wastewater injection well on S.R. 303 in Windham Township on May 8.

Well owner/operator David Ballentine describes the process by which his fleet of wastewater trucks delivers brine and unloads it into the holding tanks in the background during a tour of his well site on S.R. 303 in Windham Township, Portage County, on May 8.

determine if a well is near capacity, Hill said. If a well does exceed the pre-determined pressure, low or high, it is automatically shut down, he said. While regulators are required to visit every well at least once every eight or nine weeks, “in practice they are there every week,” Hill said. State regulators can revoke a permit anytime for cause, he said, and also won’t let drillers drill in areas prone to seismic activity. He called a series of earthquakes in the Youngstown area in 2011 that were linked by the state to a series of injection wells in the area “an unfortunate incident.” “As a geologist, I don’t think I could replicate those conditions,” Hill said, adding that “there is not enough hydraulic horsepower on the face of the Earth to create a crack” that could force wastewater thousands of feet up the well and


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June 2013 Edition

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through six layers of steel tubing and concrete surrounding the well head at the surface. Pressure sensors would also give well operators notice before that happened, he said. More than 11 million barrels of waste were injected into the ground in Ohio in 2011, according to Hill. That’s less than onehalf of one percent of all the water injected into the ground in the United States, he said. “There is not one instance where a Class II injection well has contaminated groundwater,” Hill said. Hill said Ohio laws on Class II injection wells like the Windham Township well are “at least as stringent” as federal environmental protection laws. The 144,000 Class II injection wells in the United States are safe enough to be located close to agricultural and residential property, and may only accept waste from oil and gas production. That means high volumes of water, with low toxicity, he said. Hill said he believes some of the fear and unease about injection wells among the public comes from a lack of information. He said a reading of Ohio Senate Bill 315, passed in 2012, “would demystify a lot of the process” for the public. “Often times, it’s easy to fear the unknown,” he said.

“There is not one instance where a Class II injection well has contaminated groundwater,” – David Hill

The head of a Class II injection well on private property off S.R. 303 in Windham Township, Portage County. For safety purposes, the well has wireless connectivity that allows the owner/operator to monitor it, and pressure sensors to detect subtle shifts in pressure that could signal problems. It accepts an average of 250 barrels of waste brine per day, according to owner/operator David Ballentine.

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Gas & Oil

June 2013 Edition - Dix Communications

Northern Zone Edition

Cash is KEY to FUTURE GROWTH

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ecently the State of Ohio released data concerning the development of the Utica Shale. And by the State’s account the activity in the Utica will continue to rise as large oil and gas producers keep finding successful wells. Currently, activity in the state is awaiting infrastructure to develop at an even faster pace. With this development, opportuDavid Shallenberger nities are available for businesses CPA to start, grow and thrive by serving the oil and gas industry. Accountants often look historic data to work on many compliance items like tax returns and financial statements. However, entrepreneurs focused on growth cannot rely solely on documents that look at the past. It’s imperative to look forward. One of the more important items for an entrepreneur to focus on is the business’s cash flow. The ability of a business to provide ample cash flow allows the business to plan for growth and expansion. This is especially important as bank lending is trending to focus on a business’s ability to repay the loan and not necessarily on the net income of the business. Net income is not the same as cash flow. Net income includes items that may not represent cash availability like accounts receivable. Eventually accounts receivable become cash to the business, but receivables are not generally immediately available to pay for things like new equipment or inventory. It often takes a number of days or months to convert receivables into cash that can be used to expand a business. It is only with a true understanding of cash flows that a business can plan for growth. By understanding the business’s cash flows, an entrepreneur begins to understand the business’s cycle time. Cycle time is the amount of time it takes a business to convert cash to inventory, complete sales and then collect on receivables. This cycle time varies from business to business. Until an entrepreneur can understand the business’s cycle time, there is little that can be done to change it. Not understanding cycle time can cause dire effects to a business. It can lead to inventory levels that are unsustainable or obsolete, bloated lines of credit and poor decision making. When put together, these items, an entrepreneur can build a solid financial plan. Having a forward outlook allows a business to know when it needs to expand or contract. Understanding cash flows affords the business the ability to know how it can finance those plans. Putting all of this infor-

mation into a comprehensive financial plan allows a business to be more than just a business – it becomes an investment. Owners should treat their business as an asset, working to increase its value in order to fund future goals and desires. As the Utica Play continues to develop, it will bring many opportunities for entrepreneurs who are willing to take risks and work hard. Those who will experience success are those who look and plan for the future – and who have enough cash in the bank to take advantage of opportunities as they arise.

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Northern Zone Edition

June 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

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June 2013 Edition

Utica Boom Still in Infancy

W

OOSTER — It almost goes without saying that Ohio is in the midst of an oil and gas boom, the likes of which it may never experience again. There have been many prior cycles of boom and bust in Ohio, including the Morrow County boom in the 1960s and the development of the Rose Run and Trempealeau formations in the 1980s and ‘90s. All David J. Wigham of these pale in comparison to the Attorney, Wooster current Utica Shale boom. Indeed, analysts report that the U.S. Shale boom could impact the global economy and geo-political climate, in terms of gas exports, lower energy prices, re-location and re-vitalization of U.S. business sectors and the weakening of OPEC, to name a few. To fully understand the scope and breadth of the Utica Shale play, it is helpful to review the United States Geological Survey (“USGS”) report published in September 2012, which assessed recoverable oil and gas reserves in the Utica Shale formation using current technology. A copy of this report is available at http://pubs.usgs.gov/fs/2012/3116/FS12-3116.pdf. In its report the USGS explained that the Utica Shale contains oil and gas in significant quantities that has absorbed into the Shale and which have become recoverable using current horizontal drilling and hydro fracking technology. The USGS defined “sweet spots” for oil and gas bearing areas within the Utica Shale area that cover most of eastern and into central Ohio. In fact, the USGS assessment areas for the Utica Shale estimated about 31,000,000 acres for gas and 15,000,000 acres for oil, truly a vast area in Ohio. The USGS report goes on to provide estimates of recoverable resources using current technology. There is a high likelihood that the Utica Shale holds roughly 940 million barrels of oil, 38.2 trillion cubic feet of gas and 208 million barrels of natural gas liquids. The estimated oil and gas reserves in the Utica Shale sweet spots would require 48,000 gas wells and another 7,000 oil wells to be drilled within the areas defined by the USGS as sweet spots. To put this into perspective, there were less than 10 horizontal wells drilled in 2011 and about 150 wells drilled in 2012. It is estimated that this year approximately 500 horizontal wells will be drilled to the Utica Shale formation in eastern Ohio. As pipeline and processing facilities are completed in 2014 and 2015, thus reducing the infrastructure bottleneck, an even greater rate of Utica development should be expected in years to come. Indeed, this Shale play could continue for at least 20 years. Other current unknowns that could extend this play are 1)

17

developments in technology that could open up even more recoverable reserves and 2) the duration of production of each Utica Shale well and how much production will decline as each well is produced. Given the known quantities of estimated returns using current technology, we are at the very early stages of the Utica Shale boom. Using a baseball analogy, if this were a nine inning game, we are still listening to the Star Spangled Banner and the umpire has not even yelled “play ball.” This Utica boom will likely be an interesting, prosperous and exciting game that should play out for decades to come. David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with more than 20 years of experience in the industry.

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Gas & Oil

Northern Zone Edition

June 2013 Edition - Dix Communications

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 268 2. Harrison County 99 3. Columbiana County 72 4. Monroe County 43 Noble County 43 5. Jefferson County 36 6. Guernsey County 34 7. Belmont County 29 8. Mahoning County 19 9. Portage County 15 10. Stark County 13 Tuscarawas County 13 11. Trumbull County 7 12. Coshocton County 5 13. Washington County 4 14. Muskingum County 3 Holmes County 3 15. Knox County 2 16. Ashland 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 5/25/13

25

50

75

100

125

150

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Dix Communications - Gas & Oil

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June 2013 Edition

State Setting Drilling Standards

W

OOSTER — Although not fully in place, the rules and regulations governing shale development in Ohio are taking shape. James Zehringer, director of the Ohio Department of Natural Resources, spoke at the annual meeting of the Eastern Ohio Development Alliance about how the state is working to set standards for drilling. Christine L. Pratt “Oil and gas can be prosperous, Dix Communications and not at the expense of the environment,” he said. “The focus of the ODNR is to create regulations based on science, not emotion or politics.” By watching what other states have done, both right and wrong, he said they’ve learned how to best approach the issue. Among the key lessons was the need to have regulations and inspectors and taxes in place early. Pennsylvania was not ready, he said. “They did not have the inspectors with the right training in place.” Ohio now has more than 50 staff people employed within the oil and gas

division of ODNR. Currently more than 605 permits have been granted for horizontal drilling, and nearly 300 wells have been drilled. It is anticipated a total of 750 will be drilled by year’s end, said Zehringer, who said another 1,500 are expected in 2014 and 2,000-2,050 more in 2015.

“The focus of the ODNR is to create regulations based on science, not emotion or politics.” – James Zehringer “This industry can be dangerous when it’s not properly regulated. That’s why it’s important to have the right people on ground with the right regulations in place,” he said. Already inspectors the department has been called to investigate some complaints of non-compliance and was quick to permanently revoke the permit of a company found to be dumping oil contaminated waste in a public waterway. “We’re not going to have bad players take down the industry. While we can’t stop all illegal activity, we can respond to it and do it quickly, taking swift and strong action when violations occur,” he said. Continued on pg. 22

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Gas & Oil

June 2013 Edition - Dix Communications

GAS&OIL FEATURES

OnTheCover

COVER PHOTO: Michael Neilson/Dix Communications

Marc Grantonic, Operator at the New Markwest Cryogenic Gas Processing Facility In Cadiz.

Northern Zone Edition

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

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

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


20

Gas & Oil

June 2013 Edition - Dix Communications

Cryogenic Facility Opening

Soon in Harrison-Co.

Michael Neilson/Dix Communications MarkWest, already the largest processor and fractionator of natural gas in the Appalachian Basin, is building two new cryogenic processing facilities in Cadiz in Harrison County. Both are scheduled to begin operations in during 2013. A smaller, temporary facility has been in operation since the fall of 2012. The Cadiz complex will also include a de-ethanization facility where ethane will be removed from the gas stream and delivered into the new ATEX Express ethane pipeline that will run 1,230 miles from Pennsylvania to the Gulf Coast. The propane and heavier natural gas liquids will then flow via pipeline to a new Harrison County fractionation plant for further separation. Below, Marc Grantonic, operator at the new MarkWest cryogenic gas processing facility in Cadiz, works inside the control center for the plant. The plant, which purifies the gas of any acid gases, is expected to begin operations next week. It employs only Ohio workers.

Northern Zone Edition


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June 2013 Edition

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“WE GO TO WORK’” from pg. 9 “The Utica used to be a big pain to drill through,” Kirk Miller said. Because of science and technology, producers have found an efficient way to drill into the Utica, which has resulted in new equipment and rigs. So, where a string of pipe used to be around 3,000 feet, it is now 18,000 feet, he added. Companies like Miller Supply now face greater liability and greater risk. “There’s a fear factor,” Kirk Miller said. “A 13-inch pipe weighs about 2,000 pounds. The stuff weighs twice as; the equipment was designed for smaller pipe. It changed the dynamic.” Science and technology could possibly change the dynamic again in this area. Right now, producers are focused on drilling in Eastern Ohio because that is where the “low-hanging fruit is,” Jack Miller said. “Drilling could come west when science and technology learns how to extract oil from our shale. We need to find ways to get it out of the shale.” The family’s heritage is showcased at the Ken Miller Supply Museum, a private oil, gas, car and truck museum in near Shreve. For more information, call (330) 496-4024 or (330) 378-2121.“You will see a 90-foot gas well derrick swallowed in flames during a blowout,” McDonald explained. “Massillon Fire Department Chief Tom Burgasser and I have been developing this program for over a year,” said McDonald, who is also a retired Jackson Township firefighter.

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Gas & Oil

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June 2013 Edition - Dix Communications

“DRILLING STANDARDS’” from pg. 19 Of taxing, he said, “Our income taxes are too high and our severance tax is too low.” Even the proposed 4 percent severance tax is significantly lower than other states, making weak the argument an increase would drive companies out of Ohio. “Oil and gas is a valuable natural resource, and we don’t believe in giving away,” he said. He said the state is also trying to look out for the land owner. “We’re asking that (ownership of mineral rights) be recorded at the (county) recorder’s office. And, if there’s a well on that property, ODNR wants to know where the well is.”

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June 2013 Edition

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A BUSINESS & EVENTS DIRECTORY

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GET AWAY TOURS – 330-345-8573 Get Away Tours presents

Casino Weekends Featuring Hollywood & Wheeling

JULY 9TH

JULY 23RD

Columbus

West Virginia

Hollywood Casino Wheeling Casino G E T AWAY TO U R S

2940 Armstrong Drive, Wooster, Ohio 44691 • 330-345-8573

K KIKO AUCTIONEERS AND REALTORS – 330-455-9357

AUCTION Exciting Real Estate Auction

590 ACRE HARRISON COUNTY FARM

SATURDAY - JUNE 29, 2013 - 11:00AM REAL ESTATE SELLS AT 12 NOON Exciting Real Estate Auction 590 Acre Harrison County Farm All Adjoining Outstanding Remodeled Victorian Home & Barn With Elaborate Pool and Waterfalls 231 Acre Parcel With Farmhouse & Good Pole Buildings Boarders Railroad * Lake - Woods - Fields - Pastures - Water * Former Elk Farm With 10 Ft. Fencing Germano Twp. - Harrison County, Ohio Just West of Wheeling & Pittsburgh Also Selling: (2) J.D. Tractors - Backhoe - Dozer Equipment - Trailers - ATV’s - Tools Elk Handling Facilities Absolute auction, all sells to the highest bidders on location: 90479 MILLER STATION RD. HOPEDALE, OH 43976. Directions: Take SR 9 south of Carrollton to SR 646 and go east to Miller Station Rd. and south to auction, or take US Rt. 22 west of Steubenville to SR 646 and continue west to auction. Watch for KIKO signs… SATURDAY - JUNE 29, 2013 - 11:00AM REAL ESTATE SELLS AT 12 NOON 590 acres - all adjoining - frontage on SR 646, Miller Station Rd., Mader Rd. and railroad - rolling land with a good mix of woods, pasture & tillable land - large strip lake & several smaller ponds - beautiful hilltop& valley views. PARCEL #1: 46613 ANNAPOLIS RD. HOPEDALE, OH. - Approx. 8.5 acres. Outstanding remodeled Victorian century home with approx. 4,634 sq. ft. of living space. Elaborate custom inground swimming pool w/massive waterfall backdrop including tons & tons of sandstone & rock plus hot tub. Also, 24 X 40’ steel. PARCEL #2: 90479 MILLER STATION RD. HOPEDALE, OH. Approx. 231 acres total - clean 2 story farmhouse - original bank barn - pole building w/farm offices & labs, heated shop w/overhead doors and equipment storage - (2) additional pole barns w/concrete adaptable for livestock and add’l. pole barn with 3 overhead doors w/ covered feedlot. Several divided pastures. Lays real nice.

PARCEL #3: Approx. 80 acres with lake. PARCEL #4: Approx. 95 acres rolling wooded land. PARCEL #5: Approx. 68 acres with woods & pastures. PARCEL #6: Approx. 37.3 acres just south of Parcel #1. PARCEL #7: Approx. 40 acres woods & fields. PARCEL #8: Approx. 30.8 acres with old two story log cabin in need of major restoration. NOTE: Walk these parcels at your convenience. Arial maps on Kiko website. TRACTORS - TRAILERS - EQUIPMENT - TOOLS: JD 6400 MFWD tractor w/JD 640 loader - JD 2550 diesel tractor w/loader - Case 580K Construction King backhoe - JD 450E dozer w/winch - 1997 Featherlite alum. stock trailer, gooseneck, 20 ft. - Gooseneck 20 ft. flatbed trailer - JD 15 ft. batwing rotary mower - assorted shop tools. ELK HANDLING FACILITIES - MOUNTS - BINS: (2) Elk handling facilities w/ steel gates & pens to be removed - (2) Reid squeeze chutes - Semen tank - s.s. tables (2) lg. Elk head mounts - Elk antler sheds - (2) grain bins (one is Brock) - Piebald full body deer mount - etc. VEHICLES - ATV’S: 1990 Range Rover 4 X 4, 4 door - 2003 F-350 XL Super Duty flatbed truck - JD 625 gator - Honda 4 wheeler - Pug 4 X 4 articulate utility vehicle JD 825 Gator. NOTE: Possibly once in a lifetime opportunity! SALE ORDER: 11:00AM small tools, 12 NOON Real Estate followed by large equipment. AUCTIONEER/REALTOR: Matthew P. Kiko, AARE, 330-327-9617 - mattkiko@ kikocompany.com REAL ESTATE BY ORDER OF: Gary & Mary Ann McBride CHATTELS - AUCTION BY ORDER OF: Wild ‘N Wooly Acres, Inc. KIKO Auctioneers 2722 Fulton Dr. NW, Canton, OH. 44718 (330) 455-9357 www.kikoauctions.com


Northern Zone Edition

June 2013 Edition - Dix Communications

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Dix Communications - Gas & Oil

www.OhioGO.com

June 2013 Edition

Table of Contents

ADVERTISING DIRECTORS Rhonda Geer Northern Zone Sales Wooster & Holmes, Ohio Offices RGeer@dixcom.com 330-287-1653

4

Judges Convene To Discuss Oil And Gas Cases

6

First Responders Trained on Unique Hazards

9

We Go to Work Every Day

Kim Brenning Southern Zone Sales Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531

10

ODNR Says Utica Shale Numbers Strong

12

Tour Points Out Safey of Injection Well

Peggy Murgatroyd Southern Zone Sales Barnesville and Newcomerstown, Ohio Offices PMurgatroyd@dixcom.com 740-425-1912 Barnesville 740-498-7117 Newcomerstown

14

Cash is Key to Future Growth

17

Utica Boom Still in Infancy

19

State Setting Drilling Standards

20

Markwest Cryogenic Facility Opening Soon

23

Pipeline

Jeff Kaplan Southern Zone Sales Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450

Judie Perkowski / Dix Communications

Laurie Huffman / Dix Communications Bobby Warren / Dix Communications

Dave O’ Brien / Dix Communications

David Shallenberger / CPA

David J. Wigham / Attorney, Wooster Christine L. Pratt / Dix Communications Michael Neilson / Dix Communications

A Business & Events Directory

OTTAWA

WAYNE YNE

GN

KNOX

COSHOCTON

LICKING K US

COLUMBIANA

CARROLL

HARRISON

NOBLE PERRY

PICKAWAY AY

PIKE

VINTON

WASHINGTON ATHENS

MEIGS JACKSON

MONROE

MORGAN

HOCKING ROSS

Carroll, Harrison, Columbiana, Guernsey, Monroe, Noble, Belmont, Mahoning, Portage, Stark, Summit, Tuscarawas, Coshocton, Trumbull, Holmes, Muskingum, Medina, Wayne, and Washington.

BELMONT

M

FAIRFIELD

“Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio. Copyright 2013. HLAND

UM

MAHONING

GUERNSEY

G

IN

FRANKLIN LIN

TUSCARAWAS

ARE UNION DELAWARE

PORTAGE

STARK ST

HOLMES

ORROW MORROW

FAYETTE

SUMMIT

MEDINA ASHLAND

CR

MARION

MADISON

Northern Zone: Pete Kiko Southern Zone: Kelsie Davis

DIN

RD FO W A

TRUMBULL

LORAIN

HURON

SENECA

WYANDOT

CUYAHOGA

ERIE

SANDUSKY

RICHLAND

Jeff Pezzano VP Advertising Sales & MarketingOD Kent Ohio Office JPezzano@dixcom.com COCK 330-541-9455

Coverage Area:

GEAUGA

JEFFERSON

Harry Newman Northern Zone Sales Kent, Ohio Offices HNewman@dixcom.com 330-298-2002

LAYOUT DESIGNERS

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NORTHERN ZONE SOUTHERN ZONE


4

Gas & Oil

June 2013 Edition - Dix Communications

Northern Zone Edition

Judges Convene To Discuss Oil And Gas Cases

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AMBRIDGE -- Holding court under the auspices of the Ohio Judicial Conference and hosted by the Guernsey County Common Pleas Court, Judge David A. Ellwood welcomed 10 Common Pleas Court judges to the recent Shale Oil and Gas Roundtable meeting at the Guernsey County Courthouse Judie Perkowski in Cambridge. Dix Communications Ellwood initiated the roundtable meeting after contacting judges who preside over a county engaged in oil and gas activity, asking for input about the development of any new court practices initiated because of the expanding presence of the gas and oil industry in their communities. Ellwood contacted Retired Judge Mark Schweikert, executive director of the Ohio Judicial Conference, suggesting a roundtable meeting with the judges. Schweikert agreed and said, “It is sensible to begin a conversation and network to stay ahead of the issue.” The roundtable meeting was May 10. “Judges are required to perform 24 hours of continuous legal education (over a specified period of time) relating to what judges do — either by the law or court cases — to share information about how we are dealing with the demand of cases coming before the court,” said Ellwood. “We [Guernsey County] created a gas and oil case docket last year (July of 2012) because of the number of cases coming before the court. We currently have 37 cases relating to the oil and gas industry at some stage in the process.” Because Ellwood instituted an ambitious Case Management Plan to expedite cases in a timely manner, the judges have referred to his court docket as the “Rocket Docket.” This is not to say the procedure is cutting corners, it is just a more manageable approach to resolving issues, where everyone is on the same page and everyone is expected to follow the rules. “The one issue that particularly stands out in oil and gas cases coming before the court would be the complexity and variety of the number of issues raised by these cases,” said Ellwood. “Initially, the cases were landowner cases often attempting to recover severed mineral rights or to void older oil and gas leases. The cases now pending before the court have become more complicated and are involving the oil and gas producing companies with issues such as unitization/pooling agreements. There is not one case or issue that is emblematic of the legal process today. The overriding issue with the oil and gas cases coming before the Court is to have a case management plan or

procedure in place so the case can be ‘timely’ processed, heard and decided by the court.” Ellwood said the consensus of the roundtable meeting with the judges was that they are all facing similar issues with the oil and gas boom in eastern Ohio. “We are planning another roundtable at a later date. We like to place the judges together as it is a situation where we often learn as much by talking to a peer — a similar judge — as we do from reading the cases,” he said.

Garrett Knott/The Daily Jeffersonian/www.buyjeffphotos.com The Guernsey County Common Pleas Court and Judge David Ellwood (kneeling) held host to 10 visiting judges, part of the Ohio Judicial Conference, for the Shale Oil and Gas Roundtable Friday afternoon in Cambridge. Other judges were, second row, l to r, Judges Robert Reinbold (retired), John Solovan II (Belmont County), John Nau (Noble County), Edward Lane Jr. (Washington County), Edward O’Farrell (Tuscarawas County). Third row, l to r, Judges Dominick Olivito, Jr. (Carroll County), Scott Washam (Columbiana County), Linton Lewis, Jr. (retired), Milt Nuzum (Ohio Judicial College) and Mark Schweikert (Ohio Judicial Conference). Each judge discussed what cases they have had relating to shale oil and gas issues and talked about any new court practices or procedures developed for such cases.

Akron Canton Awning LLC Awnings PAtio Rooms • PAtio Roofs sCReen Rooms BBB Gold Star Member Fully Insured & Bonded In Our 20th Year NARI Member Serving OHiO & PA

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Dix Communications - Gas & Oil

June 2013 Edition

Your Truck Accessory Headquarters • • • •

Grille Guards Bumpers Lighting Headache Racks

• Tool Boxes • Wheels & Tires • Lift Kits • Nerf Bars Installation Available!

• • • •

Ohio Light Truck Parts 7643 Fort Laurens Rd. Strasburg, OH • 330-878-6587 • 800-333-3536

Winches Hitches Fender Flares Floor Mats

Mon. • Wed. • Fri. 8-5 Tues. & Thurs. 8-6 Saturday 8-12

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Gas & Oil

June 2013 Edition - Dix Communications

First Responders Trained On Unique

Northern Zone Edition

Hazards

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TARK CO. — No one wants to see an emergency situation at a well site. And, while safety is at a premium during the drilling and hydraulic fracturing process, there are new dangers on the scene with which first responders in this part of the country are not familiar. For that reason, the Stark County Local Emergency Planning ComLaurie Huffman mittee has put a training program Dix Communications together for firefighters that can also be adapted to serve law enforcement, EMTs and public officials. The program, called “Response to Oil and Gas Well Incidents Including Horizontal Drilling and Hydraulic Fracturing,” was recently developed and has already been used to train more than 100 firefighters in the area, including those in Canton, Jackson Township, Massillon, Osnaburg Township, and Hartville. Efforts are being made now to bring the training to Alliance and Washington, Lexington and Marlboro townships as well. “We teach how to handle the toxic or poisonous gases that could be emitted at the well sites,” said Don McDonald, director of the Stark County Local Emergency Planning Commission. “Some of these can put a person out of commission with only one whiff. They have to be monitored all the time. Also, wet gas is an extremely volatile product when it comes out of the ground, and we have explosives inside pipes sitting on the scene that are used in the underground fracturing process, which adds to the threat at the well sites. Firefighters may be on the scene for another problem to be addressed that is not related to the well at all, such as a diesel fuel fire or a fire in a mobile home used for an office. But, local first responders have to be trained to realize they cannot handle a situation like this by themselves. They will need to work with technical support groups to manage the scene. In Northeast Ohio, Boots ‘N Coots is the main resource. They are well control specialists and there are less than 100 of these people in the entire world. Boots ‘N Coots have been put on retainer by Chesapeake and the other oil and gas companies in the area. They also go all around the world to give advise to fire chiefs.” In addition to these dangers, firefighters also have to have a plan in place on how to obtain the amount of water that would be needed to mitigate a pressure blow out, which McDonald said can be anywhere from 3000 to 6000 gallons per minute. “You will see a 90-foot gas well derrick swallowed in flames during a blowout,” McDonald explained. “Massillon Fire Department Chief Tom Burgasser and I have been developing this program for over a year,” said

Review Photo/Kevin Graff Don McDonald, director of the Stark County Local Emergency Planning Commission, displays a PowerPoint slide show used in training first responders for safety in the gas and oil industry.

McDonald, who is also a retired Jackson Township firefighter. “Because LEPC is a government agency, we are not biased at all on the topic of horizontal drilling. It is simply a fact. There are nine wells in Stark County in some part of the process of development. So, it’s here. And, because of that, certain training is needed to reduce the vulnerability of the firefighters, EMT’s, law enforcement agencies, and all the public safety workers that are involved. We’ve programmed this training so it can be adapted to any of those venues.”

“We teach how to handle the toxic or poisonous gases that could be emitted at the well sites. Some of these can put a person out of commission with only one whiff. They have to be monitored all the time.” – Don McDonald

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Dix Communications - Gas & Oil

www.OhioGO.com

June 2013 Edition

Supplying the Material Handling Industry for Over 40 Years!

Williams Toyota Lift

9462 Main Ave SE East Sparta, Ohio 44626

Phone (330) 866-2121 Fax (330) 866-3701

P y o n i nt o t S

4455 CR 229

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330-695-2265

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2010 PRO RETAILER OF THE YEAR

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Drain Pipe In Stock:

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CONTRACTOR SUPPLY • GENERAL HARDWARE

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Gas & Oil

Northern Zone Edition

June 2013 Edition - Dix Communications

• Complete Oil Field Services • Frac Support • Completion support • General Excavation • Spill Trailer & Shower Trailer Rental

Expert Sales, Parts & Service for Diesel Powered Equipment

• Factory Certified & Trained • 24 Hour Emergency/On Call • Full Service Truck Shop With All-Makes Parts

4188 S.R. 14 Ravenna, OH 44266

Wade Pol, President Office: 330-325-7177 Fax: 330-325-0263 Cell: 330-697-1783

Canton, OH | 330-454-8800 St. Clairsville, OH | 740-695-6301

wbdiesel.com WBD_quarter.indd 1

4/24/2013 12:08:47 PM Kenworth of Canton is located in Canton, Ohio this dealership is a 10-bay full service facility and is just off I-77 to the south of State Route 30. The Canton dealership sells and services new and used class 7-8 trucks. At both of these locations our Parts departments have a large inventory of trucks parts to meet your needs. Also offering free delivery of parts to your location.

Kenworth of Canton

3350 Bruening Ave SW Canton, OH 44706

330-459-4496

Kenworth of Richfield is the oldest and largest dealership in our organization. Located in Northeast Ohio, Kenworth of Richfield serves the greater Cleveland and Akron areas with easy interstate access. Kenworth of Richfield offers New and Used Truck sales, Heavy Duty Truck Parts, Service Department (open two shifts daily) and full collision repair capabilities.

Kenworth of Richfield

2890 Brecksville Rd Richfield, OH 44286

330-659-4123

www.hissonggroup.com


Dix Communications - Gas & Oil

www.OhioGO.com

June 2013 Edition

‘We Go to Work Every Day’

9

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OOSTER — For more than half of a century, the Ken Miller Supply Co. has served the needs of the gas and oil industry. The third generation of the family-run business is now leading the company, with Kirk Miller and Lindy Chandler serving as co-chief executive officers. Ken and Lois Miller started the Bobby Warren company in 1959 in Wooster and Dix Communications later relocated operations to Blachleyville Road, Wooster. It has grown from a single location to 11 stores in five states: Ohio, Pennsylvania, Kentucky, West Virginia and Virginia. Past CEO Jack Miller said the company has been successful because “we go to work every day.” And when he says “every day,” he means it. Kirk Miller recently spent about half of the Memorial Day weekend at the Wooster location because the drilling rigs do not take days off. “We’re on call seven days a week now,” Kirk Miller said. “Someone will send an email at 2 in the morning and if we don’t respond right away, we’ll get another email in 20 minutes asking if something is wrong.” One time, when the company picked up a new customer, Kirk Miller sent an email asking if the drilling rig would be shut down over the July 4th holiday. He received a simple reply: “24. 7. 365.” “I got the message,” Kirk Miller said. Business has been good lately because there is a lot of drilling east of Interstate 77, Jack Miller said. Within the past four years, there was increased activity in states surrounding Ohio that contributed, too. “It’s been very good for us,” Jack Miller said. “We can see a lot of strong activity for the next three to five years.”

Mike Schenk/The Daily Record Co-CEO Kirk Miller and his father, former CEO Jack Miller, say Ken Miller Supply has been successful over the years because of good workers and good customers. Jack Miller’s father started the company in 1959, and it has grown to 11 locations in five states.

The company has seen a lot of changes in the industry over the past five decades. The primary thing the company does is sell steel pipe. It also threads pipe in three states. But, as Kirk Miller said, “We do everything.” In addition to supplying quality tubular products and services for the oil and gas industry, it sells production equipment and provides repair services. When Ken Miller Supply began, it was supplying frac tanks for those drilling in the Clinton formation, which is a shallow formation. Continued on pg. 21

1030 S Chillicothe, Aurora $249,900 Private newly updated 4 level Split in almost 6 acres of wooded paradise of Aurora! Brand new kit from Cabs., fixtures, lights, garbage disposal 2012. Both full BA redone from toilets, tile showers/fl., cabs., sinks 2012. New carpet in the FR. 4 BR. Deck w/stoned patio, 21x18 outbuilding, Gar. door, gar. opener. Well tank/pump 2010. Washer and Dryer included. Horses permitted.

Each office is independently owned and operated.

1723 Dunlap Streetsboro $242,000 1/2 acre lot. 2 story wood Foyer opens to the formal LR/DR. Kit. cabinets, stainless steel applcs, cer. tile fl., custom deck w/gas grill hook up. Open FR featuring a gas FP. Wall of wndws, four BR, mstr ste walk in closet and full BA w/an over-sized shower/double sinks, ceramic tile fl. The LL has a rec/game room w/built in refriger., workout or play rm, extra rms for storage.



A Local Company

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Four Branch Location

Contacts: Call or Text

Jay Kitzmiller - 330.353.3555 Todd Pugh 330.353.1001

Youngstown ~ Canton ~ Akron ~ Louisville

www.GrowingGood.com

10137354


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