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Dix Communications - Gas & Oil

www.OhioGO.com

April 2013 Edition

Ohio octobER 2012 • www.ohiogo.com

A FREE monthly PublicAtion

Table of Contents

◆ Congressman visits lab ............................pg. 3 ◆ Focus on safety following fatality ...........pg. 4 ◆ 1st women to graduate from program .....pg. 6 ◆ EQT donates funds ................................pg. 11 ◆ Sales up over 24% in shale counties .....pg. 10 ◆ Young lawyers riding the wave .............pg. 12 ◆ $1 billion natural gas processing plant opens in Kensington in May..................pg. 14 ◆ Art focusing on industry sought for show .....................................pg. 16 ◆ Number of patients increasing ..............pg. 18 ◆ Adjacent lands may be drilled ..............pg. 20 ◆ Rex Energy donation .............................pg. 21 ◆ Natural gas processing plants critical to Utica Shale Development..................pg. 23 ◆ It’s not easy being ‘techno Amish’ ........pg. 24 ◆ What are those little checks...................pg. 28 ◆ Oil & Gas Assn. adds staff ....................pg. 31

◆ Ohio BWC offers safety services at no additional cost to employers.............pg. 32 ◆ Middle school students design frack water cleaning process ..........................pg. 37 ◆ 10 things about ‘fracking tax’................pg. 38 ◆ Council to sell water for fracking ..........pg. 41 ◆ Cambridge Alumni and friends receives donation from EQT Corp. .....................pg. 44 ◆ Group claims fracking secrecy illegal ...pg. 48 ◆ Job postings on the rise .........................pg. 50 ◆ EQT donates to Firefighters Assn..........pg. 54 ◆ Turner Oil Supports BARK project.......pg. 55 ◆ Ohio farmers Union takes positions ......pg. 56 ◆ Energy revolution a ‘game changer’ .....pg. 58 ◆ Proponents urge lawmakers...................pg. 59 ◆ Council says pipeline will create jobs ...pg. 61 ◆ Zeigler hired to direct OPC ...................pg. 62 ◆ Companies shut down for dumping ......pg. 64

Attributions

Andrew S. Dix Co-Publisher ASDix@dixcom.com

Rob Todor Executive Editor RTodor@dixcom.com

G.C. Dix II Co-Publisher GCDixII@dixcom.com

Cathryn Stanley Regional Editor CStanley@dixcom.com

Ray Booth Executive Editor RBooth@dixcom.com

Niki Wolfe Regional Editor NWolfe@dixcom.com

Ohio m m go.co go.co .ohio .ohio • www • www 2012 L 2013 octobER APRI

on icAtiION PublICAT thlyPUBL THLY mon MON A FREE A FREE

Ed Archibald SE Ohio Sales Cambridge, Ohio Office EArchibald@dixcom.com 740-439-3531

n Cong. Johnso b La visits Land

know 10 things to ck tax about fra Knocking Opportunity

New Gas nt Processing Pla

Kimberly Lewis Regional Editor klewis@the-review.com

Spotlight on Safety

Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450 Peggy Murgatroyd SE Ohio Sales Barnesville and Newcomerstown, Ohio Offices PMurgatroyd@dixcom.com 740-425-1912 Barnesville 740-498-7117 Newcomerstown Jeff Kaplan NE Ohio Sales Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200 Kelsie Davis Layout Designer

Cover Photos: Congressman Johnson visits ‘Land Lab’, photo by Michael Neilson/Dix Communications Construction on processing plant in Kensington by Laurie Huffman/Dix Communications “Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio. Copyright 2013.

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April 2013 Edition

Congressman visits Zane State lab

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Judie Perkowski Dix Communications

uring a recent visit to the Zane State College’s Cambridge campus, Congressman Bill Johnson spent the afternoon meeting with college President Dr. Paul Brown, administrators, instructors and students, and received a firsthand look at the school’s new oil and gas land lab. He also met with several students to learn more about what they were studying, the skills they were acquiring, and the impact a Zane State education

was having on their lives. During a stop in one of the classrooms, Johnson and the group talked about job opportunities available in the industry. Many of the students cited the emerging job market in the oil and gas industry as the main reason they decided to enroll. Johnson also toured and learned more about the medical, welding and industrial electricity programs during his visit to the school.

Congressman Bill Johnson met with staff members and also talked to students in various classes. During the tour, Johnson got a first hand look at the new technology in use with practical applications at the school

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Michael Neilson/The Daily Jeffersonian/www.buyjeffphotos.com Congressman Bill Johnson, looks through a virtual welding simulator while on a tour of the Cambridge campus of Zane State College. Cong. Johnson also talked about the impact education has in the oil and gas industry. Also pictured are Zane State College President Dr. Paul Brown and Dr. Chad Brown, executive vice president.

“You’re getting in on the beginning of a really good deal, so you should be excited. You will be able to stay in Ohio and raise your kids in Ohio,” he said. After Rep. Johnson’s visit to a welding class, Deanna Duche, director of welding education, commented, “Cong. Johnson’s interest in our oil and gas-related programs has given us a great opportunity to communicate to the public about the need for more skilled welders. There is a common misconception that manufacturing in this area is in decline and that welding as a career, is a dead-end. Nothing could be further from the truth. There are companies that are turning down millions of dollars worth of work, because they cannot find enough qualified welders. “The high demand for skilled welders, especially pipe welders, has benefitted our graduates, by raising the starting wage significantly. Our biggest problem at present, is that we cannot Continued on pg. 4

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Focus on saftey following fatality

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he death of one worker on a Carroll County well pad on February 25, has led to a renewed emphasis on safety training. According to the Carroll County Sheriff Department’s incident report, Abdal L. Audeh, 28, of Dover, and Alex R. Cox, 20, of Cadiz, were attaching long-handled tongs used to manipulate pipe on the Brace West pad located at 1165 Brussel Georgette Huff Road, in Washington Township, apDix Communications proximately six miles north of Carrollton, when they lost control of the apparatus, which swung around, striking Audeh across his back. Cox, who sustained a head laceration when he fell backwards on the rig, told investigators he and Audeh had forgotten to hook up a safety line, called a “snub line,” which would have prevented the tongs from swinging completely around. Paramedics performed CPR on Au-

transport deh at the scene before transporting him to Aultman Hospital in Canton, where he was pronounced dead. According to autopsy results released by Stark County Coroner, Dr. P.S. Murthy, Audeh died from massive blunt injuries to his chest. Cox was treated at Mercy Medical Center in Canton and released. This is the first fatality related to drilling activity in Carroll County. The Brace site is operated by R. E. Gas Development, a subsidiary of Rex Energy Corporation. Company officials released a statement saying the company would remain in communication with authorities and would “fully cooperate in the investigation” of the incident. Audeh and Cox were contractors with Rex Energy and employees of Sidewinder Drilling, Inc., a privately-owned drilling contractor based in Houston, TX, which owns and - Travis Fitts operates a fleet of land rigs to meet the needs and demands of oil and gas exploration and development companies. Company spokesman, Travis Fitts, senior vice president of human resources and health, safety and environment, said Sidewinder Drilling “has no higher priority” than employee safety and would “review all corporate-wide safety training and procedures.”

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women graduate from gas/oil program

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Jones said she attended a class that explained the drilling operahey have been best friends tion and it piqued her interest in mud drilling. Mud drilling refers to since high school, now any fluid used in the drilling process. Mud engineering is knowing they are both graduating the correct physical and chemical characteristics of fluids, solids and from Zane State College on May 11. chemicals required to safely drill a well. Stephanie Jones and Jessica Cobb, both of Caldwell, will be “That’s how I knew I wanted to get into mud drilling or mud enthe first females to receive an associate degree from the college’s inaugural Oil and Gas Engineering Technology program. gineering,” said Jones. “I checked out the oil and gas program at For Jones, her decision to attend Zane State was almost a Marietta, but it was so expensive. Then I heard about Zane State’s foregone conclusion, even though her first steps into higher program; it was closer to home and there was a big difference in the education was not exactly conducive to oil and gas. She has an cost,” said Jones. Cobb’s situation was similar to Jones’s as far as a family tradition, Associate of Liberal Arts, an Associate of Medical Administrabut not in oil and gas. She grew up in a family of police officers. So, tion and a certificate for pharmacy technician, all from Washshe decided to give it a shot. ington State College. “My dad was a cop, and I have uncles and cousins who are cops,” It wasn’t until 2011 that she became interested pursuing a Cobb said. career in the oil and gas industry. “When I was a junior in high “Working in the oil and gas and “We are just as employable as the school I enrolled at Mideast Ohio mining industry, is a family tradimale grads from this class.” Career and Technical Center in tion,” she said. “Several men in our Zanesville for the criminal justice family have worked in mines, both - Jessica Cobb program. After I graduated, I wasn’t of my grandpas and an uncle were sure what I wanted to do. miners. My dad worked in oil field “I liked the idea of going into the services. “I’m the next generation and the oldest grandchild, so I have medical field, so I began working in home health with handicapped to set the bar. My father wasn’t at all shocked at my decision, children and adults. During this time I enrolled at the Washington County Career Center to study phlebotomy. I am now a certified but my grandmother’s reaction was a different story.” phlebotomist, and I also have a certificate in sign language from Washington State College. I worked in home health care for five years, but it was very stressful, and I was tired of living from paycheck to paycheck.” The thought of going back to school full-time wasn’t easy for either Jones or Cobb. College is a huge commitment. They both had responsibilities and both had a young child. And because oil and gas classes were divided between the Zanesville and Cambridge campuses, there would be a lot of traveling. But they realized the benefits outweighed the cost, monetarily and personally. Jones’s decision to apply to Zane State’s oil and gas progam was influenced by family tradition. Cobb’s decision was to better provide for herself and her daughter. Both were determined to demonstrate that women were capable of working in a male-dominated field. Cobb initially signed up for Zane State’s program on alternative energy, until she spoke with a college advisor. “After a 20-minute discussion about the oil and gas program, I was hooked,”said Cobb. Jessica Cobb, l, and Stephanie Jones, stand on the base of the Grants and loans paid for their tuition, and their families helped pumpjack which will be installed in Zane State’s gas and oil lab, now them out by caring for their children while they attended school. under construction at the college’s Cambridge campus. Cobb and Jones are the first two females who will graduate from Zane State’s Cobb’s daughter, Tylee, is four; Jones and her husband, Bill, have a Oil & Gas Engineering Technology Associate Degree Program in three-year-old son, Jax.

Judie Perkowski Dix Communications

May.

Continued on pg. 8

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“1ST WOMEN GRADUATE” from pg. 6 Two years ago these two young women were unsure of what their education had to offer in the rapidly changing job market. Today, they say their decision to enroll at Zane State is one of the best decisions they ever made. “If you’re not sure about what you want to do, they (advisors) will help you build a solid foundation in just about any career choice,” said Jones. While Jones is focused on mud drilling and engineering, Cobb is focusing on compression and design. A compressor station, also called a pumping station, is the engine that powers an interstate natural gas pipeline. The compressor station compresses the natural gas — pumping up its pressure — providing energy to move the gas through the pipeline. With graduation just around the corner, they smile and say they are anxious to begin a new career and look forward to further advance their education. They are also proud of their capstone project. A capstone involves the entire class by combining skills and knowledge acquired from the program to physically build something related to gas and oil. Every student in the program is required to contribute, and the capstone project must be completed before graduation. Cobb and Jones’s idea for the project was to build a metering station for the new gas and oil lab that is under construction. It

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was unanimously accepted by their classmates. They also started a Gas & Oil Club for students to participate in trade shows and fairs, which they passed down to the next class of students. In their “spare time,” they are members of the Noble County Junior Women’s League, a community outreach program for underprivileged children. “There are some people in the industry that have a traditional view of women working at non-traditional jobs ... We have proven over the past two years that we can run with the boys,” said Jones. Cobb added, “We are just as employable as the male grads from this class.” “They earned the right. They took the classes, learned the same skills and did everything asked of other students,” said Tim Snodgrass, of the Physical Science/Environmental Resource Management and assistant director of Energize Appalachian Ohio at Zane State College. For more information about Zane State’s Oil and Gas Engineering Technology program, visit www.ZaneState.edu or call (740) 588-1226. Reservoir Res·er·voir noun A portion of the formation found to contain commercial quantities of hydrocarbons within the pores of the rock.

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Sales up over 21% in strong shale counties

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conomic activity has increased in Ohio counties as a result of shale exploration and the early-stage production of oil and gas from shale reservoirs, according to a new study by Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. The study analyzed local sales receipts and total employment in areas categorized as strong shale counties – namely, the eastern Ohio counties of Ashtabula, Belmont, Carroll, Columbiana, Cochocton, Geauga, Guernsey, Harrison, Mahoning, Portage, Stark, Trumbull and Tuscarawas. Among the key findings: • Total sales activity in strong shale counties increased 21.1 percent, from $12.3 billion in 2011 to $14.9 billion in 2012. • The rebound in sales activity in strong shale counties began in 2011 and continued strongly through 2012. • The growth in sales activity among strong shale counties is occurring in a part of Ohio that has experienced little investment over the past several decades. • Employment growth in strong shale counties is not yet evi-

dent. In 2011, strong shale counties began to experience a positive growth trend in terms of estimated sales receipts. This trend continued and strengthened through 2012. Strong shale counties not only reversed negative average sales trends from the previous three years, but also outperformed moderate shale counties, weak shale counties and non-shale counties. While there is a clear positive trend in sales receipts, the employment data show a modest increase of 1.4 percent in the average employment yearly growth rate for strong shale counties between 2011 and 2012. Over the same period, moderate shale counties and non-shale counties experienced similar increases of 1.4 percent and 1.3 percent, respectively. Trends at the county level also hold true at the Metropolitan Statistical Area (MSA) level. Strong shale MSAs experienced an average sales receipt increase of 17.3 percent between 2011 and 2012, outpacing moderate/weak MSAs (11.0 percent) and non-shale MSAs (6.4 percent).

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Young lawyers riding the wave “Usually, we’re litigating law. Now we’re helping to create law.”

- Atty. Brent A. Barnes

Rob Todor Dix Communications

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he burgeoning gas and oil industry has led to the expansion of many ancillary businesses. One of those is in the city of Alliance, where the law office of Geiger, Teeple, Smith and Hahn has been in existence for over 50 years. Almost from its inception the office has been involved in advising clients in the gas & oil industry. But, like many other businesses, the recent boom in Eastern Ohio has affected Geiger, Teeple, Smith and Hahn in many ways. Brent A. Barnes, an associate in the office since 2010, was brought in specifically to work with the gas and oil industry. He’s not been surprised by the local boom, but says he’s learned to expect the unexpected. His closest associates in the office are Dustin J. Hatherill and Matthew L. Mohr. Hatherill originally was hired for his expertise in title work, and until 2012 spent the majority of his work in that field. Mohr is the so-called “baby” of the group. He is a recent graduate from the University of Akron and was brought in specifically to handle the expanding gas and oil cases. “There’s always a disparity between what you’re taught (in law school) vs. the business,” says Mohr. “Oil and gas wasn’t a course that was offered, and it wasn’t tested on the bar (exam).” The result, especially for Mohr, is that he has had to learn on the fly. “I’m as much a geologist as I am an attorney,” he laughs. “I do a lot of reading.” But the hard work pays off in rewarding ways. “Usually, we’re litigating law,” says Barnes. “Now we’re helping to create law.” Hatherill says he first experienced “a lot more hostile” environment between

Dustin J. Hatherill

Brent A. Barnes

Matthew L. Mohr

landowners and companies, but it’s “calmed down” a little since then. “It’s helped that I have a little more experience now,” he says. “From a legal standpoint it’s creating a lot of opportunities,” adds Hatherill. “We’re seeing an influx of lawyers from Texas and Louisiana who have experience in gas and oil coming up here.” Barnes says it’s too early to get a sense of any consistency in how mineral rights disputes will be judged. “It’s a shotgun — all over the place,” he says. “The courts are trying to balance two competing interests and come up with the best results for everyone.” Hatherill says he enjoys the work but admits it’s “one of the hardest things I have had to tackle.” “People think this is black and white and there’s always one answer to everything,” he says. “In most if not all of the cases that’s just not true. “There’s really no authority, no guidance for us. We’re just taking it day by day.” Mohr said he’s noticed a huge age gap in his work. “There’s no in-between,” he says. “The lawyers working in oil and gas are either really young, like the three of us, or older because they’ve been involved with it since the 1950s.” As for what lay ahead, Barnes says there’s no crystal ball. “It’s impossible to predict the future,” he says. “We’re just here to ride the wave.”

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$1 billion natural gas processing plant opens in Kensington in May

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nearly $1 billion natural gas processing plant is under construction in Kensington, and much of the end product will wind up heating homes in Stark County. The facility is slated to be the largest integrated Midstream service complex in eastern Ohio. Local business owner Donna Manfull, who co-owns Manfull’s Service with her husband, Burton Manfull, said she has seen a lot of extra trafLaurie Huffman Dix Communications fic already, while the plant is under construction, and she is being told the onslaught of trucks hasn’t even begun. “We live right in the center of it all because we’re up on a hill right across from the hill where the plant is being built, just about one quarter mile up Route 644. And we can see they’re just drilling all around us,” said Manfull. “But, everyone associated with the project so far has been so polite.” Construction of the plant is being handled by Fagen Inc., me-

chanical and electrical contractors. The facility is being built on state Route 644, just south from Kensington, where it intersects with U.S. Route 30 and state Route 9. Kensington, in Hanover Township, Columbiana County, is a sleepy little community that has a post office but is unincorporated, with only an estimated 1,648 people residing there. The natural gas processing plant was originally to be a partnership that included Chesapeake Midstream Development, but when Chesapake Energy sold its Midstream interests to Access Midstream Partners, this changed. The plant is now being built by a partnership between Access Midstream Partners, out of Oklahoma City, Ok.; M3 Midstream, also known as Momentum, out of Houston, Tx.; and EV Energy Partners,

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also of Texas. The partnership plans to invest approximately $900 million over the next five years with the majority of the capital invested in the first two years. This is the first of several natural gas plants coming to eastern Ohio, and these facilities are critical in getting the gas cleaned and moved to commercial pipelines. The Columbiana County plant will be connected to a sister plant in Leesville, Carroll County, and both to a midstream pipeline hub, about 40 miles south of Kensington, in Harrison County. The plan is for the plant to process natural gas from seven counties in the general area. The two plants combined are anticipated to process 800 million cubic feet of natural gas per day and to create 60 new jobs. The Kensington plant is slated to open in May. It will take natural gas product from Chesapeake, among others, and will process it and feed it into commercial pipelines, including Dominion East Ohio, which serves a large portion of Stark County. “We will invest significant capital and technical resources to develop this project in a responsible manner, utilizing the highest industry standards,” said Frank Tsuru, president and CEO of Momentum. Mark Houser, EVEP’s president and CEO, remarked the company was delighted to be a part of this next step in the development of Utica Shale.

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Construction has started on a $1 billion natural gas processing plant being built near Kensington. This is the first of several natural gas plants coming to eastern Ohio, and these facilities are critical in getting the gas cleaned and moved to commercial pipelines. The Columbiana County plant will be connected to a sister plant in Leesville, Carroll County, and both to a midstream pipeline hub, about 40 miles south of Kensington, in Harrison County. The plan is for the plant to process natural gas from seven counties in the general area. The two plants combined are anticipated to process 800 million cubic feet of natural gas per day and to create 60 new jobs. The Kensington plant is slated to open in May. It will take natural gas product from Chesapeake, among others, and will process it and feed it into commercial pipelines, including Dominion East Ohio, which serves a large portion of Stark County

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April 2013 Edition - Dix Communications

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Art focusing on industry sought for show

C

arroll County Arts has announced a call for entries for a community art show, “Rig it Up,” in April. The subject is the oil and gas industry as depicted in Carroll County. Selected art work will be transported to and from Atwood Resort for display at the Oil Baron’s Ball on April 13. The show is open to all adult artists with a limit of three entries per artist. Entry fees are $5 for each entry if a Carroll County Arts member and $10 for each entry if a non-member. Art work will be screened for acceptance into the show. All mediums or two-dimensional work will be accepted. Photography, computer-generated art and three-dimensional art is excluded. All work must be framed and wired for hanging, not to exceed 48” framed. Saw-tooth hangers will not be accepted. Each work must be labeled on the back upper right corner to include artist’s name, address, telephone number, title, medium, and price if for sale. Accepted entries will be judged and displayed at the Carroll County Arts Center, 204 W. Main St., Carrollton. There are no separate categories for oil, watercolor, etc. Each work will be judged against the other. If an entry is not for sale, it must be labeled “NFS” and a

value indicated. Carroll County Arts retains a 30 percent commission on any work sold. Awards to be given are $100 for first place, $75 for second place, $50 for third place and $100 for “People’s Choice.” The awards will be announced April 13 at the Oil Baron’s Ball. Winners will be notified by phone or mail. Work is to be delivered to the Carroll County Arts Center the week of April 1 through April 6. The show ends April 30 and work must be picked up by May 4. The Carroll County Arts Center is open Monday, Tuesday, Friday from 10:30 a.m.-4 p.m., Thursday from 1-8:30 p.m., Saturday 11 a.m.- 2 p.m., closed Wednesday and Sunday. For further information, call 330-627-3739.

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18

Gas & Oil

April 2013 Edition - Dix Communications

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Number of patients increasing

W

hile the oil and gas industry has only scratched the surface of the Utica Shale, insofar as Midstream development and drilling are concerned, representatives from Mercy Medical Center say outpatient and Statcare volume has already increased in Carroll and Tuscarawas counties, due to added numbers of workers in the area. And, while the medical center has an expansion of its Emergency Department under construction at the main campus, in Stark County, it will continue to assess the growth of patient services and make further adjustments as needed. Rosemary Brace, manager of the Carrollton Statcare facility, and Barbara Frustaci, administrative director of the Offsight Rehabilitation Service Line, said they have also seen a significant increase in the center’s Work Health & Safety Occupational Medicine Services. While they have keep the hours of operation the same, they have had to bring extra staff in at times to accommodate the additional patients they have received due to the emerging gas and oil industry. Mercy Medical Center has Statcare as well as Occupational Medicine locations in Stark, Carroll, and Tuscarawas counties that offer immediate treatment of work-related injuries and illnesses, physical exams, drug screens, breath alcohol testing, random testing program management, hair follicle drug testing, pulmonary/ respiratory/examinations, 24-hour occupational nursing, on-site nursing,

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audiometric and vision screenings, laboratory services, certified medical officer review, training/health/wellness programs, and OSHA compliance programs. The center also provides commercial driver sleep testing, among many other services, and it has a laboratory and diagnostic service facility in Louisville, within Stark County, where Chesapeake Energy is currently building a

Continued on pg. 30

Photo courtesy of Mercy Medical Center Karen Coughlin, director of cancer services at Mercy Cancer Center, in Stark County, answers questions and gets participants registered for a cancer study in 2012

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Adjacent lands may be drilled without consent

A

fter several months of trying to set up a face-to-face meeting with state representatives in regards to questions about Ohio Revised Code 1509.022, Kathi Albertson of Guernsey County finally succeeded in a electronic person-to-person meeting via Skype, between attendees at a meeting at the Cambridge campus of Zane State College and State Reps. David Hall and Andy Thompson at the Statehouse in Columbus. Joining Albertson and several local residents and Farm Bureau members were Dale Arnold, director of energy policy at the Ohio Farm Bureau, and State Rep. Brian Hill. The point of contention by Albertson is ORC Section 1509.022 , which refers to the location of wells using directional drilling — more commonly referred to as horizontal drilling — and states, “Except as provided in 1509.021 of the Revised Code, the surface location of a new well that will be drilled using directional drilling, may be located on a parcel of land not in the drilling unit of the well.” Albertson said she did not understand an email sent to her from Thompson on behalf of Hall’s explanation as to how this could be beneficial to land owners who own property adjacent to state parks or the Muskingum Watershed Conservancy District. Albertson noted that with her original lease with Enverest the assumed intent was that any well drilled [on her property] would be

Judie Perkowski Dix Communications

vertical and would then include that parcel of land in the drilling unit. In other words, Albertson said she knows she is bound by the old lease, but takes exception to the state adding ORC 1509.022 which allows for a well to be drilled on land using horizontal drilling that would extend beyond her property and keep her from getting royalties. “This issue extends beyond my land and is a potential problem for anyone with land adjacent to state parks or the MWCD,” said Albertson. “In both instances the plan is to extract gas and/or oil from those lands by setting the drilling pads on adjacent properties.” Hall’s explanation was that the “intent of ORC 1509.022 was to form a partnership with drilling companies and land owners. The rule could facilitate unitization of private property with state park lands.” Unitization is when a gas and oil producer combines several producing leases over a pool of gas and/or oil that would otherwise be unrecoverable. Everyone in the unitized field will share in the production based on their acreage in the unit. Hall also said the issue is more complex that had previously been believed. And, it is not clear whether or not the state owns all the mineral rights under state park lands. Dale Arnold pointed out that 80 percent of the gas/oil leases in Ohio were older leases. Additionally, leases are binding contracts

“I’ m not ready yet “I’m not ready yet.” Continued on pg. 30

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A

April 2013 Edition

21

Rex Energy brings back popcorn for movies

nyone who has ever smelled freshly popped popcorn knows the scent brings back memories of movie theaters. Now, thanks to Rex Energy, residents at Great Trail Care Center can experience those memories with freshly popped popcorn. Rex Energy stepped in to assist Great Trail Care Center after its popcorn popper broke and could not be replaced because of the center’s small activities budget. “Friday was our first in-house movie day with the new popper and it smelled just like a theater,” said Tonya Howell, Great Trail referral manager. “Our residents loved it. Special thanks to Debbie Herrington, Rex’s office manager, for always being so willing to help out. We will be using the popper for in-house and marketing activities.” The center delivered 62 bags of popcorn to the residents at Carroll County Apartments in Carrollton for its movie night and plans to do the same at the Minerva Senior Apartments. “The residents told me they felt like they were actually at the movies and it was so nice as they haven’t been there in years. They said they could smell the popcorn down the halls and it made them want to come out and watch the movie with the

Submitted Photo Enjoying some of the popcorn made with a popcorn popper donated by Rex Energy to Great Trail Care Center are (from left) Great Trail Care Center Administrator Sarah Sonego, Great Trail Activities Director Tara Henderhan and Rex Energy representative Debbie Herrington.

group, as they have the option of watching it in their rooms,” said Tara Henderhan, Great Trail activities director. “It was greatly appreciated by all.”

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April 2013 Edition - Dix Communications

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23

Natural gas processing plants critical to Utica Shale development

T

Norm Shade President, ACI Services

he composition of the raw natural gas extracted from producing wells depends on the type, depth, and location of the underground deposit and the geology of the area. Oil and natural gas are often found together in the same reservoir, or natural gas may be found separately. Before natural gas can be sold commercially, it requires processing to clean the raw natural gas by separating impurities and various nonmethane hydrocarbons and fluids to produce pipeline quality dry natu-

ral gas. Raw natural gas is commonly collected from a group of adjacent wells and is first processed at the collection point for removal of free liquid water and natural gas condensate. The condensate is usually trucked to an oil refinery, and the water is disposed of as wastewater. The raw gas is then pipelined to a gas processing plant where the initial purification is the removal of any acid

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gases (hydrogen sulfide and carbon dioxide), if present. Next, water vapor is removed from the gas using a process such as glycol dehydration. In addition to methane, which is the primary component of pipeline quality natural gas, the “rich gas” currently most sought after in the Utica Shale play contains other hydrocarbons such as ethane, propane and butane. Although these hydrocarbons are typically liquids at underground pressures, they become gaseous at atmospheric pressure. Collectively, they are called natural gas liquids (NGLs). These valuable NGLs are recovered in large gas processing plants using a low temperature cryogenic distillation process involving expansion of the gas followed by distillation in a demethanizing fractionating column. Some gas processing plants use a lean oil absorption process rather than the cryogenic expansion process. The residue gas from the NGL recovery section is the final, purified sales gas – mostly methane - which is pipelined to the end-user markets. The gas processing plant may include a fractionation train that further separates the valuable NGL stream into ethane, propane and butane for sale. For economic reasons, not all Continued on pg. 26

24

Gas & Oil

April 2013 Edition - Dix Communications

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It’s not easy being ‘techno Amish’

I

describe myself as being techno Amish. Not that I will not cross over and use new things, but having to be instructed on how to use it, and gaining some kind of mastery of it really gives me a lot of consternation. Thank God my daughter graduated from that I.T. program. I put her to work for me and let her upgrade, fix, and teach Don Gadd me all the nuances of the personal Landman computer. Now, I find out that we will all be working on a Pad and connected by a cloud somewhere. No wonder it has been raining and snowing so much. One thing that hasn’t changed is the relationship that needs to be forged between the landowner and the oil and gas company. As I have explained over the last several months, we have come a long way since I rode around with my dad and took right of ways for a quarter a rod. Today there are guys showing up to sign groups at meetings offering more money than most of us have seen in our lives. They drive Mitsubishi cars, have ear rings, and enough papers for you to sign that you thing you are taking out a new loan on a car.

But, it has to be good. Right? Someone that represents you has negotiated a great deal and everyone gets to sign the same lease, right of way, or whatever else will be shoved in front of you. Not so fast. If you are not sure, then look it over. Ask the agent to meet with you again and write down your questions as you read through the agreement. Anything you sign will affect not only you, but all those that will own the property after you. It’s great getting drilled and someday getting royalties, but in order to get that money you go back to what I have been talking about these last several months. Someone has to build a pipeline. I recently met with a family that had a right of way agreement handed them and they were unsure whether they were going to sign it. I had talked to a neighbor a few days before that on the phone and knew the offer the company had offered him. I agreed to meet. The first thing I assured them of was that not all oil companies are big bad J.R. Ewing types. (He died) Then I talked to them about their property as each agreement has to be tailored to both parties negotiating the agreement. I found out they were signed with a different oil company than the one drilling next door and they only owned less than 40 acres. It was pretty likely they wouldn’t be receiving royalties any time soon. So, we got into the meat of the issues. Their home set way back off the road and they only owned 300 feet of frontage. The right of way

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they were presented was 100 feet in width with the ability to build additional lines as needed. No map, no location of the line, and only that they would survey before installing and of course the normal language that you couldn’t build upon it. To them that meant that with one line down the middle of their field they could never build along the road unless it was in a swamp. If more than one line was put in, then they were looking at putting their outhouse in a tree overlooking the creek and hoping they got permission to do that. Obviously, this agreement wouldn’t work for them. Even at 1,000 acres I probably wouldn’t have recommended it. So we set down some reasonable changes like giving the company 50 foot in width during construction and 25 feet after installation. The right of way was changed to one line only. If the company did a good job, then they could grant another right of way if needed. And since the line would only be coming from one group of wells and not a transport line, we placed a cessation cause in there that would make the right of way null and void after 24 months of no oil and or gas coming through the line. Finally, we adjusted the price to what the neighbor was getting (almost) instead of the 1/3rd amount they had been offered. All reasonable changes that made the landowners agreeable, but most of all an agreement that would get signed. I know the young man that was sent out there may be scratching his head and may even try to bluff his way through the changes But, in the end, he will learn something about dealing with people. It’s a nice job and you make a lot of money doing what the boss tells you, but in the end making a good deal for all is what it is all about.

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26

Gas & Oil

April 2013 Edition - Dix Communications

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“NATURAL GAS PROCESSING PLANTS” from pg. 23 gas processing plants include this capability, and the NGL stream is instead transported as a mixed product to standalone fractionation complexes located near rail terminals or liquid pipelines for shipment to refineries or chemical plants that use the components for feedstock. The development of Ohio’s Utica Shale is currently hampered by a lack of gas processing facilities. Investments of more than $10 billion in processing facilities, pipelines and compression facilities are required to get the pipeline gas and NGLs to market. Seven processing-separation plants for natural gas and NGLs have been recently completed or are near completion in Eastern Ohio. Columbiana County’s Kensington Plant is a state-of-the-art cryogenic processing plant for producing pipeline quality natural gas, built and operated by Utica East Ohio Buckeye (UEO), a partnership of three companies. NGLs will be stripped out and pipelined from Kensington to UEO’s new processing, natural gas liquids fractionation, loading and terminal facility at Scio in Harrison County. Both plants are scheduled for completion in the spring of 2013. 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 sched-

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uled 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. MarkWest is also building an interim natural gas refrigeration processing plant at its Seneca complex near Summerfield in Noble County. That will be followed by a new cryogenic gas processing facility expected to be in operation at Seneca by the fall of 2013, and a further cryogenic facility later in the year. NiSource Gas Transmission and Storage’s Midstream and Minerals Group LLC and its partner, Hilcorp Energy Co., have plans for a new Utica cryogenic processing network to be operational in the fall of 2013. Called Hickory Bend, it includes a pipeline and a natural gas processing plant at an unspecified location in Mahoning County. These and other gas infrastructure developments in eastcentral Ohio‘s Utica play are expected to alleviate constraints by mid-year 2013, which will result in rapid increases in Ohio natural gas and NGL production. Utica Shale gas infrastructure development is expected to continue through at least 2015. This will spur more well drilling and increased production longer term as economics justify them.

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28

Gas & Oil

April 2013 Edition - Dix Communications

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What are those little checks?

I

s the lessee sending you, the landowner, little checks every month? Every three months? Do you know what they are? You need to know. As we continue to represent landowners, a regular theme has emerged. Producers love to send little checks. Does this mean that the lease is still valid? By cashing those little checks, has the landowner agreed that the Ethan Vessels producer still has a valid lease? What Marietta Attorney the check is, and what it claims to be, may be very different. • Royalties — A royalty check is what everyone hopes to receive. If the well (or wells) on the land are producing gas or oil, the producer is supposed to send the landowner a share of the proceeds — historically 12.5%, but more these days. Some wells do not produce much, so the check may only be $10 or $20. That’s okay. Not every well is as gusher. However, be suspicious if the check has remained the same for years. Some producers have sent “royalty” checks when, in fact, there has been no production. A royalty ought to fluctuate: it de-

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pends on the price of gas (or oil) and how much the well produced. If you have received the same $5 “royalty” every month for five years, you should be investigating the actual production.

What the check is, and what it claims to be, may be very different.

• Delay rentals — When a landowner signs a brand new lease, the lessee is promising to produce gas or oil from the land. However, the lessee usually cannot get a rig out the following week to drill. So, the lessee will often promise to make a payment, usually an amount per acre and per month, to pay the landowner until the well is drilled. This keeps the lease active, even without production. How long can the lessee do that? Some producers have been routinely paying “rentals” for decades, and then claim that these payments hold the lease indefinitely. As landowner advocates, we hold the opposite view. The Monroe County Court of Common Pleas recently isContinued on pg. 33

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Gas & Oil

April 2013 Edition - Dix Communications

“ADJACENT LANDS MAY BE DRILLED” from pg. 20 and cannot be changed by law. “One of the easiest ways to address the ORC 1509.022 issue would be to create a rule that required a surface rights agreement before a drilling rig is placed on a parcel of land for the purpose of extracting resources from under state or federal lands,” said Arnold. Albertson said that she had spoken to other land downers with property adjacent to Salt Fork State Park and the Muskingum Conservancy lands and that they, the landowners, are not opposed to drilling, they just want to be treated fairly. Reps. Hall and Thompson said that given the feedback at the meeting, adjustments might need to made on this issue and that House Bill 133 needs more work. House Bill 133 Summary • Creates the Oil and Gas Leasing Commission to oversee and facilitate the leasing of land that is owned or controlled by a state agency, including a state university, for the purpose of the exploration for, development of, and production of oil and natural gas resources. • Repeals prior authority for certain state agencies to enter into oil and natural gas leases. • Establishes four classifications for all property that is owned or controlled by a state agency, and requires each state agency to inventory and classify each parcel of land that is owned or controlled by the agency. • Prohibits a state nature preserve from being nominated or leased under the act for the purpose of exploring for and developing and pro-

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ducing oil and natural gas. • Authorizes a state agency, beginning on the act’s effective date (Sept. 11. 2011) and ending on the effective date of the rules adopted by the Commission under the act, and in consultation with the Commission, to lease a formation within a parcel of land that is owned or controlled by the state agency for oil and gas drilling.

“NUMBER OF PATIENTS INCREASING” from pg. 18 consolidated field office. “Mercy Medical Center is a preferred provider for the Utica Shale oil and gas industry,” said Frustaci. “The biggest push has been in Carroll County, so far. But, oil and gas activity is also picking up in Tuscarawas county, so patient numbers are also growing there too.” Richard Regula, director of market outreach for Mercy Medical Center, said he reached out to people in the gas and oil industry to make them feel welcome in the area and to let them know their needs will be accommodated. “The people I talked to told me since they are not welcome in New York and there was a lot of prejudice against them in Pennsylvania, they were relieved to receive a welcome in Ohio,” said Regula. “And, once I started to research and learn more about the needs of the industry, I was surprised. I had thought more emergency room facilities would be needed. But, since these companies take such good safety measures — they have good safety records. What I found that they will need more of, is family medicine. These workers are moving their whole families here and are happy to be doing so, and they intend to stay here for a long time.”

10127991

Dix Communications - Gas & Oil

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April 2013 Edition

Ohio Valley Oil & Gas Assn. adds staff

31

A

s part of its continuing effort to aid regional businesses in gaining access to the economic opportunities presented by the Marcellus and Utica shale, the leadership of the Ohio Valley Oil & Gas Association has added two staff members. Lisa Duvall has been named as industry and community relations director, and Tricia Zaccagnini has been named as membership renewal and event manager. “The impact of the Marcellus and Utica shale drilling is enormous in this region,” said Matt Steele, OVOGA board president. “The mission of the OVOGA is to educate our members, provide networking opportunities and help businesses grow. Lisa and Tricia will play integral roles in this.” “The OVOGA is pleased to have professionals of this caliber join our team and help position our members in the forefront of the shale gas revolution,” said Josh Gasber, vice president of the OVOGA board of directors. “The shale industry represents a tremendous opportunity for this area,” Duvall said, “and I look forward to helping members of the OVOGA make the connections that lead to growth.” “With the influx of oil- and gas-related companies and people in the Ohio Valley, I am proud to be a part of the OVOGA which promotes Valley businesses and organizations to those new residents,” Zaccagnini said. “I find it an admirable concept

P y o n i nt o t S

Lisa Duvall

and hope that through the OVOGA’s efforts, local companies will see an increase in business.” A native of Belmont County, Duvall is a graduate of Bellaire High School and West Liberty State College with a bachelor of arts degree in secondary education. She was a reporter and associate local news editor at The Times Leader; field representative and press Continued on pg. 34

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Gas & Oil

April 2013 Edition - Dix Communications

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Shown with optional accessories. ATV model shown is recommended for use only by riders 16 years and older. Yamaha recommends that all ATV riders take an approved training course. For

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10126832

Dix Communications - Gas & Oil

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33

“WHAT ARE THOSE LITTLE CHECKS” from pg. 28

DIESEL EXHAUST

sued a landmark decision in the case of Hupp v. Beck Energy confirming that “delay rentals” can only operate during the primary term (the initial definite period set forth in the lease). Otherwise, a lessee can indefinitely tie up land with no effort to develop it, simply by sending a nominal check. It is unfair to the landowner. This issue has been vigorously contested by the producers. We suspect that it will end up before the Ohio Supreme Court. • Shut-in royalties — These payments are akin to “delay rentals,” except that a well has produced, but it has temporarily stopped because of a lack of market for the product. Many courts in the U.S. treat these as equivalent to “rentals.” Accordingly, as with “delay rentals,” a “shut-in royalty” should not be indefinite and should not alter the lessee’s obligation to develop and market the gas or oil. • Indiscriminate payments — We have noticed that some smaller producers simply send out small checks, with the ostensible intent to send something, anything, in an effort to give the illusion that they continue to hold the lease. Producers are routinely arguing that landowners have “waived” their right to contest the lease because they accepted payments. (Courts are not necessarily buying this argument, though.) What to do? Do not cash those little checks—unless you know what they are. Call the producer. Ask. Is it a royalty? Be sure to get proof of the production. Delay rentals? Has the primary term expired? Shut-in royalty? How long has the well been “shut in”? Disclaimer: As with all articles on legal issues, this article is intended for educational and informational purposes. The reader should not rely on this article as a substitute for actual legal advice regarding his or her particular case. You should consult an attorney regarding the specifics of your situation.

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April 2013 Edition

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34

Gas & Oil

April 2013 Edition - Dix Communications

www.OhioGO.com

“OHIO VALLEY OIL & GAS ASSN.” from pg. 31 secretary for then-U.S. Rep. Ted Strickland and regional director for Gov. Strickland. She most recently managed a successful statewide judicial campaign in West Virginia. With the exception of her college years, Tricia (Lollini) Zaccagnini is a lifelong resident of the Ohio Valley.  She is a graduate of Ohio University with a bachelor of science in communications, Wheeling Jesuit University with a master of business administration and is currently pursuing a teaching certificate.  Prior to working for the OVOGA, Zaccagnini served as the public relations manager with the National Technology Transfer Center.  Zaccagnini is also a coordinator with The Gala Group in Wheeling, WV, which provides

quality wedding and event planning for the Upper Ohio Valley. She resides in Rayland, OH, with her husband, Neal.  The Ohio Valley Oil & Gas Association is a regional alliance of businesses whose mission is to support oil and gas production and distribution in the Eastern Ohio, Northern West Virginia and Western Pennsylvania areas through the use of local businesses and employees; to be a resource to match needs of the oil and gas producers and distributors with local providers and to be a resource for new business entities serving the oil and gas industry. Membership information may be found at www.ovoga.org.

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April 2013 Edition

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CUSTOM WELL SITE FABRICATION

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36

Gas & Oil

April 2013 Edition - Dix Communications

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TGS DELIVERS OHIO

TGS has begun acquisition of its Firestone 3D project in Northeast Ohio. Attributes include: • 409 mi2 multi-client 3D data • Survey is located in the heart of the Utica Shale • Formations imaged include the Utica Shale, Point Pleasant, Trenton Black River and the Knox

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Dix Communications - Gas & Oil

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Middle school students design frack water cleaning process

John Lowe Dix Communications

Rost. Together with classmate Parker Black and seventh-grader, Will Ford, the boys began working on the project last summer as one of the teams in a STEM competition. (STEM is an acronym for “science, technology, engineering, mathematics.”) If they win, they each will receive a week at Disney World and a $2,000 scholarship. They are keeping the details of their project a little close to the vest because they may be aiming even higher than the competition. “They’re considering [patenting the process],” said Jeanette Rost, the group’s adviser and Derek’s mother. A teacher at Brook Elementary School, Mrs. Rost had learned of the competition while watching the Today Show during a snow day last year. Although she and the other parents encouraged the boys, they were the ones who took the idea and ran with it. When they were brainstorming ideas for a project, the boys were

Continued on pg. 42

37

Freedom The

A

group of four Meadowbrook Middle School students put their heads together last year and over the course of a number of months developed an environmentally friendly process for cleaning contaminants from “fracking” water and recycling it. “We’re literally cleaning dirt,” said Mike Zuress, an eighth-grade student at the middle school. “It makes it so safe it turns it into soil,” said fellow eighth-grader, Derek

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38

Gas & Oil

April 2013 Edition - Dix Communications

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10 things G

Mark Kovac Dix Communications

ov. John Kasich has made no secret about his desire to increase taxes on oil and gas produced in eastern Ohio’s growing oilfields, saying the entire state should benefit from the valuable resources in underground shale formations. But Statehouse Democrats and some Republicans remain skeptical of the governor’s plan, voicing a desire to use the increased tax collections to help local governments and schools or concerns that a tax hike could hinder future fracking-related economic de-

velopment. Proponents and opponents are in the midst of a debate on the issue, via hearings on Kasich’s biennial budget plan. Here are 10 things you should know about oil and gas taxes and what the governor is proposing: 1. Severance: The severance tax is so named because filers “extract, or sever, certain natural resources from the soil and waters of Ohio,” according to an explanation by the Ohio Department of Taxation. Last year, there were about 1,300 individuals or business entities that filed severance taxes, said Gary Gudmundson, spokesman for the taxation department. Of those, 984 focused solely on oil or natural gas. 2. The Rates: According to the Department of Taxation, severance taxes are levied based on the weight or volume of resources extracted from the ground. Under current rates, filers pay 10 cents per barrel of oil and 2.5 cents per thousand cubic feet of natural gas produced. Production valued at less than $1,000 is exempt if used on the same property where it is extracted, according to the taxation department. Upward of $10.2 million in total severance taxes were paid in the state in fiscal 2012. The total included more than $2 million in natural gas payments and about $467,000 in oil payments. 3. Where the Money Goes: According to the Ohio Department of Taxation, 90 percent of oil and gas severance taxes currently are directed to the state’s unreclaimed lands fund. It’s used to reclaim “land, public or private, affected by mining or controlling mining drainage,” according to Ohio Revised Code. The remaining 10 percent goes to the state’s geological mapping fund for “field, laboratory and administrative tasks to map and make public reports on the geology, geologic hazards and energy and mineral resources of the state.” 4. Kasich’s Plan: Under the governor’s proposal, rates would

about the ‘fracking tax’

remain unchanged or would be reduced or eliminated for lowvolume producers with vertical wells. Increased rates would be enacted for higher-volume, horizontal wells, the focus of oilfield activities in eastern Ohio, with the expanding use of horizontal hydraulic fracturing, or fracking. According to Tax Commissioner Joe Testa, owners of high-volume horizontal wells would be taxed at a rate of 1 percent for gas and 4 percent for oil, natural gas liquids and condensate. The latter would be taxed at a lower 1.5 percent rate during the first year of production to enable producers to recoup their drilling costs. Additionally, “To provide immediate revenue to local governments, the owners of high-volume horizontal wells will provide a no-interest impact loan of $25,000 per well when the permit is obtained,” Testa told the House’s finance committee last week. “This will aid local governments during the period of drilling when there is increased stress on infrastructure.” The proceeds from collections on horizontal wells would go to the state’s general revenue fund. The proceeds from conventional vertical wells would continue to be directed to unreclaimed lands Continued on pg. 46

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April 2013 Edition N

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Gas & Oil

April 2013 Edition - Dix Communications

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41

Bethesda council to sell water for fracking

I

t was a busy night for Bethesda Village Council members recently as members signed a contract with LBG Water Services LLC to sell water from the village reservoir to be sold to local fracking companies. Jim Harber from LBG Land Services LLC of New Philadelphia, Ohio presented council with a oneyear contract for the village to sell Cathryn Stanley water from the reservoir at a price Barnesville Bureau of $5 per one thousand gallons. The contract states that there is a one-year minimum of 10,000,000 gallons to be purchased and a $500 per month fee to be paid to Bethesda for each month LBG does not purchase water after the staging area pumping station is set up. Council and Mayor Marty Lucas had various suggestions and questions. They agreed on the following changes to the contract: LBG will repair or replace roads that have been torn up

by the water transport trucks; LBG will install their staging area for pumping by March 1st 2013, and LBG will pay for the staging area dirt work to be completed. Davis suggested a local person to dig the dirt for the staging area. Davis said that person was already providing that service for water service companies. Mayor Lucas asked Harber to look at the staging area (below the reservoir) with the street committee to discuss options for the best ingress and egress of the staging area. “I need you guys to tell me what will work and I will work around that,” Harber said. “This is your community. I want to buy water and you want to sell water. I want to respect your community and cause as little headaches as possible.” He said the staging area will contain four frack tanks (40 feet long by 8 feet wide) side by side. Each tank holds 25,000 gallons of water. He estimated that 10 to 30 trucks would come in and out of the area each day, Monday through Saturday. He said they operated

Continued on pg. 42

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Gas & Oil

April 2013 Edition - Dix Communications

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“MIDDLE SCHOOL STUDENTS DESIGN” from pg. 37 drawn to the natural gas and oil industry. They realized the economic promise of the industry for this area. Yet, they also recognized genuine concerns about the potential for environmental hazards from frack water. It was a problem, a dilemma. Following the entrepreneur’s mantra of finding a problem and solving it, they zeroed in on the fracking issue. They initially developed a unit designed to be mobile. Meanwhile, executives at Waste Treatment Corp. of Warren, Pa., learned about the boys’ project. “When they heard about it, they were all over it like syrup over pancakes,” Mrs. Rost said. The president of the company invited the boys to Warren and gave them a tour of the Pennsylvania facility. As they toured the facility, the team realized the initial prototype was not feasible. “We realized our design wouldn’t fit inside a truck,” Derek said. “So we went to a stationary design,” Parker said. They wasted little time regrouping. “While we were driving back, they were huddling in the back of the van and drawing sketches,” Mrs. Rost said. Principal Russ Spence said he could not believe how much time the boys invested in the project. They worked on it during the summer and, when school started, they were spending, on average, three hours, five nights weekly working on it. With their design reconceived, they turned for technical assistance to Basic Services Inc. BSI engineer Dan Webster helped them with specifications and with drawing up blueprints.

The boys did all of the documentation and even created a Powerpoint presentation to illustrate their unit and the process it utilizes. “I’m proud of all of [the boys],” Mrs. Rost said. “When there were snow days for others, there were no snow days for them. They kept right on working.”

“BETHESDA COUNCIL TO SELL WATER” from pg. 41 two, eight hours shifts per day. Harber also said that the company will be looking to hire two full-time and one part-time person and that they ‘like to hire within the community.”

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Gas & Oil

April 2013 Edition - Dix Communications

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Cambridge Alumni and Friends receives donation from EQT Corp.

T

he Cambridge Alumni and Friends Educational Fund received a considerable boost in the dollar amount it was able to award to four Cambridge schools through the organization’s annual grant program. A check for $1,000 from EQT Corporation was presented to Tim Evancho, Cambridge Alumni and Friends trustee, by Jessica Baker, EQT community advisor, at Rea & Associates in Cambridge, office of Alumni and Friends Trustee Maribeth Wright. This is the third donation EQT has made to Guernsey County entities this month. “EQT Corp. places heavy emphasis on literacy and education. We are pleased to partner with Cambridge Alumni and Friends to provide new books for Cambridge area schools,” said Baker. “The donation is from the company’s local giving program.” Recipients of the 2013 awards are: • Marguerite Younker, Cambridge Middle School and South Elementary, $1,000 for current books for school libraries • Alisha Colon, South Elementary School, laptops for learning,

Judie Perkowski Dix Communications

Continued on pg. 52

Jessica Baker, community advisor for EQT Corp., c, presents a check for $1,000 to Tim Evancho, trustee of the Cambridge Alumni and Friends Educational Fund, to replenish Cambridge school libraries with current books. Recipients of other grant awards were l to r, seated, Hailee Engle and Olivia Rhodes, Cambridge High School United Nations delegates; standing, l to r, Margie Younker, Alisha Speer, Baker, Evancho, Alisha Colon and Robyn Kyser.

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Gas & Oil

April 2013 Edition - Dix Communications

“10 THINGS ABOUT FRACK TAX” from pg. 38 and geological mapping, Gudmundson said. 5. The Return: Testa said the proposed changes would pump an additional $45 million into the state’s general revenue fund in fiscal 2014, $155 million in ‘15, $305 million in ‘16 and $415 million in ‘17. Testa added, “ ... right now, oil companies are only able to extract about 10 percent of the shale oil and gas with current technology. As technologies advance and evolve, more oil and gas will be extracted from our shale resources for decades to come. And as long as there is money to be made, the producers and pipeline companies will be active.” 6. The Pros: Kasich has said repeatedly that the severance tax rate should be increased to ensure that out-of-state energy companies don’t take Ohio’s oil and gas and the resulting profits from their sale entirely outside of the state’s border. The governor is quick to point out that energy companies have already invested billions of dollars in Ohio’s oilfields (more than 500 horizontal well permits have been issued to date) the natural resources are here and they’re valuable. And the administration says the proposed rates are lower than Michigan, Pennsylvania, West Virginia, Arkansas, North Dakota, Oklahoma and Texas. 7. The Cons: Oil and gas industry advocates remain opposed to the tax hike, saying Ohio already is benefiting from increased production and increasing rates could stifle future investment. As Tom Stewart, executive vice president of the Oil and Gas

www.OhioGO.com

Association told reporters late last month, “If you want to see this play develop, what you want these producers to do ... is to take their net revenues and plow it back into the ground, just the same way that a farmer takes his net revenues and plants his field. You want these producers to take the money they make plus more and put it back in the ground to make this economic opportunity expand.” 8. MBR: Kasich initially proposed the frack tax increase in 2012 in Mid-biennium Review, a massive package of policy proposals that kept lawmakers busy during what was supposed to be a slower, off-budget year. The original proposal would have used the increased collections to institute a corresponding decrease to income tax rates. But lawmakers balked, removing the severance tax language from legislation and saying they needed more time to study the issue as part of a larger tax reform effort. The governor reintroduced the plan as part of his two-year spending proposal, with a lower sales tax broadened to cover services and an income tax cut. 9. Democrats: Many Statehouse Democrats oppose the governor’s frack tax plan, saying the proceeds should be directed to local governments and schools and/or communities whose infrastructure has been affected by drilling activities rather than rolled into an income tax cut. “I’ve never seen so many lobbyists from the gas and oil industry in one place in the 26 years that I’ve been here,” Rep. Bob Hagan,

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a Democrat from Youngstown and frequent critic of Kasich, said late last month. “And they’re winning this. So those of us that have an obligation to stand up and fight for local governments and fight for education dollars have to do it now, and we have to confront the governor on it.” 10. Republicans: Some GOP lawmakers also are questioning the severance tax increase. “I am concerned on the 200,000 jobs that are projected to come to the state of Ohio,” Rep. Cheryl Grossman, a Republican from the Columbus area, told the House’s finance committee last week. “I don’t want to do anything to discourage that. And I think that we are already seeing tremendous benefits as far as home building, restaurants, hotels where that activity is going on. It’s really important to me that they pay their fair share....” Rep. Dave Hall, a Republican from Millersburg, said some landowners will have to pay the severance taxes, due to the wording of leases established in earlier decades with local oil and gas companies before Ohio’s shale oil deposits were discovered. And Rep. Ron Amstutz, chairman of the powerful House finance committee, has asked taxation officials about the constitutionality of the plan, among other questions. Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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Group claims fracking chemical secrecy illegal

A

n environmental group has filed a complaint with federal regulators over an Ohio law that blocks public access to details of chemicals used in the oil and gas industry. The Center for Health, Environment and Justice alleges state officials are violating federal law by allowing horizontal hydraulic fracturing without full disclosure in advance to emergency responders and certain state agencies. The group filed a formal petition this week with the U.S. Environmental Protection Agency, hoping to prompt federal officials to force the state into compliance. “The oil and gas industry has come in and created a situation where you will not know what those chemicals are...,” said Brian Rothenberg, executive director of Progress Ohio, a liberal advocacy group that is supporting the petition. “They’ve exempted themselves from you knowing what chemicals are causing problems or damage, and a first responder or anybody else responding to an emergency would have to jump through hoops to fix this.”

Mark Kovac Dix Communications

The Ohio Department of Natural Resources declined comment on the filing Tuesday. “We have not seen the petition so to comment on it would be inappropriate,” spokesman Matt Eiselstein said in a released stateContinued on pg. 57

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Job postings for Eastern Ohio Counties on the rise Judie Perkowski Dix Communications

S

ue Thomas Sikora, manager of the Guernsey County Opportunity Center in Cambridge, said jobs in the gas and oil industry are there for the taking, especially in Carroll and Belmont counties. “The Opportunity Center, part of the ‘One-Stop’ system that includes Guernsey, Muskingum, Coshocton and Licking counties, continues to provide job postings and recruiting support for various oil and gas companies. Oil and gas companies continue to request drivers, technicians and roustabouts ... But individuals interested in oil and gas careers must be willing to travel,” Sikora said. “Eastern Ohio, in particular, the Carroll/ Belmont County area, continues to be the hub of activity right now.” The Opportunity Center may be able to support individuals who would like to upgrade their skills to work in energy related fields. The Center has had funds available for those interested,

partnering with local and regional career centers and community colleges to fund short-term trainings. Sikora offers another perspective on the rising demand for workers at established and new local businesses. “While jobs in the oil and gas industry are exciting to plan for, we can’t lose sight of our local business and industry, in particular our manufacturing sector, which continues to be strong,” said Sikora. She said that most local businesses have added jobs over the past year and continue to actively hire. “The Opp Center has been able to help our local businesses with on-the-job training subsidies in support of their hiring and training efforts, and we hope to continue to provide that support to them over the next year.” Ohio’s unemployment rate in early 2012 was almost 11 percent, latest available report shows as of December 2012, unemployment rate in Ohio dropped to 6.7 percent. “Seasonal layoffs have contributed to a slight increase we are currently experiencing, however, with a strong local industry, current job postings reported to the Opp Center and tightening of unemployment rules forcing more to seek work sooner, we will again see the unemployment rate dip below the seven percent mark,” she said.

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“We can tell the workforce is ready to get back to work. This past January we had 1,100 customers visit our Opp Center, either looking for work, preparing a new resume, or attending our Job Shop Workshop. “In 2012, we had just under 9,000 customer visits for the entire year, so in comparison we can tell this year is going to a busy and exiting one for both the Opportunity Center and our job seekers.” The ShaleNet website reports the drilling of a single well requires 400 people working in nearly 150 occupations with 47 percent of a well’s workforce consists of jobs that do not require a four-year degree: general labor (20 percent), heavy equipment operators (17 percent), and commercial driver’s

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license on and off-road truckers (10 percent). These positions offer an important opportunity to retrain and assist low-wage, unemployed and dislocated workers for jobs that have significant career growth opportunity, and offer family sustaining wages.

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“CAMBRIDGE ALUMNI AND FRIENDS” from pg. 44 $1,000, to provide students with the technology they will need for future success • Robyn Kyser, South and Central Elementary and Cambridge High School, $600 for I-Pad with cover/case and applications for speech and language therapy • Alisha Speer, Cambridge High School, $600 to help offset the cost of sending two students to the Ohio Model United Nations program in Columbus. Total disbursements for 2013 grants was $3,200. “Trustees solicit donations for grants from alumni of Cam-

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EQT Corp. donates funds to Guernsey County Firefighters Association

T

he EQT Corp. is making its presence known in Guernsey Judie Perkowski County, not only for its gas and Dix Communications oil activities, but also because of its generous donations to local entities. The Guernsey County Firefighters Association was the latest beneficiary of EQT’s generosity. This past week Mike Warner, president of the Guernsey County Firefighters Association, accepted a check for $23,335 from Jessica Baker, community adviser for EQT, at the Cambridge Fire Department. “EQT is happy to support fire departments for their hard work and dedication within their communities,” Baker said. “The check was a result of a grant from EQT’s Foundation.” Said Warner, “We applied for the grant in mid-December and notified in January that we would get the money. In fact, we were at a training exercise at Cassell Station, which was sponsored by EQT, when we heard the news. It’s a huge asset to all fire departments in Guernsey County and enables us to purchase 15 Panasonic Toughbook laptops. The laptops will have information readily

Jessica Baker, community advisor for EQT Corp., c, presents a check for $23,335 to Mike Warner, president of the Guernsey County Firefighters Association at the Cambridge Fire Department on Tuesday, Feb. 19. Also pictured are l to r, Byesville Assistant Fire Chief Scott Wilson, Senecaville Fire Chief Jeff Guiler, Lore City Training Officer Mike Warner, Jessica Baker, Cambridge Fire Dept. Capt. Louie Province, and Cambridge Fire Dept. Firefighter Brian Vorhies.

Continued on pg. 59

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Ohio Farmers Union takes 2013 positions on severance taxes, fracking

S

everance taxes, the Ohio Turnpike and agriculture nutrient pollution are among the policy initiatives in the spotlight for The Ohio Farmers Union, a 5,000 member family farm and consumer advocacy group. New state and federal level public policy positions are made by OFU each year at its annual convention. Gone from last year’s policy list is a call for a moratorium on fracking in Ohio until the U.S. EPA issues a report on horizontal drilling’s effects on the environment. “We’ve removed our moratorium request due to the fact that the EPA report is still not complete. We have members in shale counties who stand to benefit from responsible welldrilling, but we also have members greatly concerned about what we don’t know about what fracking will do to water supplies,” said Roger Wise, OFU president. “We will continue to urge lawmakers to protect farmers and rural landowners and our air and water first. Our new policy position requests that the U.S. EPA include water quality in its ongoing study.” At the state level, OFU is supporting Gov. John Kasich’s Ohio Turnpike plan with two caveats: First, that northern

Ohio be defined as territory north of U.S. 224 and second that the Ohio General Assembly codify Administration pledges to keep 90 percent or more of Turnpike bond and other revenue in northern Ohio. OFU is also supportive of raising severance taxes in the state, but differs with Kasich on where new revenue should go. “Shale counties should see some of that severance tax revenue. Keep some of the revenue where it’s collected for public education and infrastructure. We know from other states that roads are going to be torn up in drilling areas, let’s make sure we rebuild them,” Wise said. OFU is also calling for some severance tax revenue to be set aside for environmental mitigation. Wise also said the group will ask Kasich and legislators to add so-called Natural Gas Liquids to the list of items taxed. “Conspicuously absent from the governor’s first severance tax proposal were Natural Gas Liquids – the most valuable resource coming out of the well. Why Ohio would tax silver, but not gold, that’s a question for the governor and the Ohio General Assembly. It appears to be a gift to ‘Big Oil & Gas’,” Continued on pg. 57

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“OHIO FARMERS UNION” from pg. 56 Wise said. OFU will also advocate this year for updates to Ohio’s grain indemnity law. The Grain Indemnity Fund is a producer-funded Ohio Dept. of Agriculture program that keeps farmers whole in the event of a grain elevator failure. No tax dollars or general revenue funds are used to maintain the inspection program or emergency fund. “FRACKING SECRECY ILLEGAL” from pg. 48 ment. “However, ODNR maintains that we have the most stringent chemical reporting requirements in the nation.” Environmental groups have long voiced concern about the lack of public disclosure of the specific chemicals used in fracking. The issue has been in the spotlight in recent weeks, after an incident in Youngstown involving the illegal dumping of oilfield waste into a storm sewer and subsequent federal criminal charges filed against the business owner involved. State Rep. Bob Hagan, a Democrat from Youngstown, has complained publicly about the lack of information about the chemical composition of the dumped fluids and has introduced legislation that would require increased disclosure. Teresa Mills, field director for the Ohio office of the Center for Health, Environment and Justice, who filed the petition with the U.S. EPA, said oil and gas companies, under federal law, already

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are required to compile information about chemicals used in their operations, with details provided to state and local emergency management offices and fire departments. The latter are supposed to use the information in developing emergency response plans to deal with potential chemical incidents, Mills said. Under Ohio law, however, such information is filed only with the Ohio Department of Natural Resources and is not readily available for public perusal. “The chemical inventory and ODNR, you can’t find it,” Mills said. “I have requested it. ... To date, I have not received that information, so I assume that it does not exist.” Shale noun A dense rock formed over millions of years from ancient sediments of decaying, organic material. Although geologists have known about the energy-potential of shale rock for generations, only within the past decade have these resources been considered economical to produce, thanks in large part to the advances in horizontal drilling and the application of the 60-year-old technology of hydraulic fracturing. Shale is known as a “source rock” because it is the source of oil and gas deposits that are contained in sandstone and carbonate formations from which oil and gas are normally produced.

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Energy revolution a ‘game changer’

T

he Ohio Petroleum Council (OPC) applauded Governor Kasich’s third State of the State address and said that Ohio’s burgeoning oil and natural gas industry is well positioned to advance the administration’s goals of continued economic growth and job creation. “Ohio’s oil and natural gas industry is a proven game-changer in the state’s economic resurgence,” said OPC Legislative Analyst Robert Eshenbaugh. “The arrival of shale energy development and production in Ohio has brought tens of thousands of new high paying jobs and the promise of a bright economic future for hard working Ohio families. Our industry not only shares the governor’s desire for progress, we are leading the way.” In 2012, more than 38,380 high paying Ohio jobs were directly attributed to oil and natural gas activity. These jobs are expected to increase to 143,595 by 2020 and to 266,624 by 2035, according to a recent study by the global information and research firm IHS. “We are encouraged by the governor’s focus on shale energy,” said Eshenbaugh. “We will continue to work closely with the ad-

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Proponents urge lawmakers to expand natural undreds of members of the Ohio Petroleum Council, gas development Ohio Oil and Gas Association and Ohio Shale Coalition

H

urged state legislators to expand natural gas development in the state. “Investments in oil and natural gas are refueling Ohio’s economy,” said OPC Legislative Director Robert Eshenbaugh. “Ohio’s energy revolution took off because lawmakers matched prudent fiscal policies with smart and effective regulation. The legislature should build on recent success by allowing greater development of Ohio’s vast natural gas reserves.”

Eshenbaugh addressed more than 200 oil and natural gas advocates, workers, employers and representatives from Ohio’s growing oil and natural gas industry in the Capitol Atrium, as part of the industry’s Oil and Gas Lobby Day on Jan. 23. The event focused on the expanding development of Ohio’s vast natural gas reserves that is revitalizing the state’s economically distressed eastern region and creating thousands of good paying jobs across the state.

“EQT CORP DONATES FUNDS” from pg. 54

gavailable for firefighters to identify problems at any emergency, whether it is a fire or a hazardous material spill. “There is no way we could afford the laptops without EQT’s donation. The laptops are another tool for first responders and for the safety of the citizens of our county.” According to Panasonic’s website, Toughbook mobile computers have armored cases and are engineered to withstand drops, spills, dust and grime,and to perform in the harshest environments. Cambridge Fire Chief Jeff Deeks added that the Guernsey County Emergency Management Agency will supply a “thumb drive” for information and response to any type of hazardous spill, and includes a mapping program for any location in Guernsey County.

A USB flash (thumb) drive is a data storage device that includes flash memory with an integrated Universal Serial Bus (USB) interface. USB flash drives are typically removable and rewritable, and physically much smaller than a floppy disk. “Mapping will help us find any residence and evacuation routes. This thumb drive will be extremely helpful. Hopefully, we will never have to use it,” said Deeks. EQT Corp. is one of the largest and oldest natural gas producers in the Appalachian Basin operating in Pennsylvania, Virginia, West Virginia, Kentucky and Ohio.

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OHIO WELL ACTIVITY

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Data as of 3/26/13 Source: Ohio Department of Natural Resources

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Petroleum Council says pipeline will create Ohio jobs

he Ohio Petroleum Council (OPC) has applauded the Ohio House of Representatives’ passage of HCR 9, a resolution urging the federal government to approve construction of the Keystone XL pipeline. The resolution now moves to the Ohio Senate for approval. “Today’s vote shows the growing understanding about the game changing opportunity the oil and gas industry can have on Ohio’s working families,” OPC Executive Director Chris Zeigler said. “The White House has an opportunity to approve the pipeline and create thousands of jobs today. This investment in America will also go a long way to generating government revenue in the state while enhancing the nation’s energy security.” “The combined economic benefits of the Keystone XL pipeline and our state’s emerging shale energy industry will provide millions of Ohioans with a real opportunity for long-term job security and economic prosperity,” Zeigler said.

The OPC applauded the resolution to approve the pipeline, sponsored by Rep. John Adams and supported by Chairman Mike Dovilla, as a step forward in helping fuel job and economic growth in the state. It also noted that the pipeline will increase Ohio’s GDP by $9.6 billion over the next 25 years, according to Canadian Economic Research Institute. Last year alone, Ohio’s oil and gas industry created more than 38,000 new jobs and projections indicate the industry will create over 266,000 additional jobs by 2035. OPC is an arm of API, which represents all segments of America’s technology-driven oil and natural gas industry. Its more than 500 members provide most of the nation’s energy. The industry also supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers $85 million a day in revenue to our government, and since 2000, has invested over $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.

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Zeigler hired to lead Ohio Petroleum Council

C

hris Zeigler, former chief of staff to Congressman Pat Tiberi, is the Ohio Petroleum Council’s new executive director, the American Petroleum Institute announced. “Zeigler joins the council at one of the most exciting times in Ohio’s energy history,” said API Senior Director of State Relations Rolf Hanson. “Ohio is poised to become one of the nation’s leading energy producers, which can be an enormous economic benefit for the state. Zeigler will be focused on fostering smart regulations and fiscal policies to sustain the economic prosperity that shale energy development offers hard working Ohio families.” Zeigler, who brings over 20 years of experience in successfully bringing together diverse groups of government, civic and business stakeholders, will lead OPC’s advocacy efforts and serve as principal spokesperson. In addition to serving as Congressman Tiberi’s chief of staff since 2001, Zeigler has worked for several Ohio legislators, including former Ohio House Speaker Jo Ann Davidson.

He received a BA in political science from The Ohio State University. He begins work with OPC on March 11. OPC is a division of API, which represents all segments of America’s technology-driven oil and natural gas industry. Its 500-plus members provide most of the nation’s energy. The industry also supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers $86 million a day in revenue to the government, and since 2000, has invested over $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives. Stimulation stim·u·late·tion noun : Generally, any process performed on an oil or natural gas well to increase the flow of energy to the surface. Stimulation processes include fracturing, scale and paraffin removal, controlling unwanted water, and certain types of perforating.

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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 224 2. Harrison County 71 3. Columbiana County 67 4. Jefferson County 35 Guernsey County 35 Monroe County 35 5. Noble County 30 6. Belmont County 26 7. Mahoning County 16 8. Portage County 14 9. Stark County 13 9. Tuscarawas County 13 10. Coshocton County 5 11. Trumbull County 4 12. Holmes County 3 Muskingum County 3 13. Knox County 2 14. 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 3/26/13

25

50

75

100

125

150

225

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Companies

N W O D T U H S for illegal dumping I

llegal dumping of up to dumping at the Salt Springs Road facility and immediately began work20,000 gallons of gas and oil ing with the Ohio EPA to stop and contain the release of the waste into wastewater that wound up in the stream. Investigators reportedly confirmed the tip the following day the Mahoning River caused two when they watched the illegal activity as it occurred. Ohio EPA Director Scott Nally was also quoted in the ODNR stateYoungstown companies owned by Ben Lupo to be shut down by ment as saying, “We are working as fast as possible to complete this cleanup...” the state on Feb. 7. According to the violation issued to the companies by the EPA, the The Ohio Department of Natural Resources issued a release oil-based mud, wastewater, brine and brine residue generated by the oil stating it had served orders to and gas industry during drilling was intentionally discharged into the D&L Energy and Hardrock Ex- storm sewer by company employees under the direction of owner Ben cavating, located at 2761 Salt Lupo. The EPA said the release impacted the Mahoning River and one of Laurie Huffman Dix Communications Springs Road in Youngstown, its tributaries. Initial abatement actions taken by the EPA include: • Stopping the release of the wastewater into the storm sewer. that permanently revokes operat• Establishing and maintaining containment systems in the tributary ing permits for both companies. The action came after employees of the companies were caught dumping oil field waste into a storm and the river to collect the oil. • Removing the oil and oil-impacted material from the waterway. sewer that empties into the Mahoning River watershed. The revo• Removing the grossly impacted debris media to prevent leaking into cation means D&L must cease its injection well operations in the waterway. state, plus its storage at the site and any • Cleaning impacted sewer lines. brine hauling. • Properly managing waste material. “Ohio has enacted some of the most “We are working as fast as possible • Maintaining remediation until wacomprehensive oil and gas regulations to complete this cleanup...” terway quality is restored to prerelease in the nation to safeguard the public - Ohio EPA Director Scott Nally condition. and the environment,” ODNR Director Lupo, 62, was charged with violating James Zehringer said in a statement. the federal Clean Water Act and faces “ODNR treats all allegations of wrongdoing involving oil field waste very seriously and will continue to up to three years in prison, a $250,000 fine and a year of supervised aggressively investigate each of these cases to ensure violators are release if convicted. Marc Kovac, Dix Capital Bureau, contributed to this story. held accountable.” Industry officials praised the state response to the situation but cautioned against making judgments about others involved in Ohio’s growing horizontal hydraulic fracturing, or fracking, industry. “If an individual or company has willfully violated Ohio law regarding the proper disposal of oil field wastewater and has jeopardized the health and safety of the public and the environment, we believe they should be prosecuted to the fullest extent of the law,” Thomas Stewart, executive vice president of the Ohio Oil and Gas Association, said in a released statement. “We caution that the actions of one individual or company should not diminish octobER 2012 • www.ohiogo.com A FREE monthly PublicAtion the reputation of injection well operators who strictly abide by the state’s laws and regulations.” The ODNR received an anonymous tip on Jan. 31 about the

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