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Ohio octobER AUGUST2012 2013••www.ohiogo.com www.ohiogo.com

AAFREE FREEmonthly MONTHLY PublicAtion PUBLICATION

Gas & Oil boosts real estate

Housing subject to law of supply and demand Study looks at affordable housing


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Dix Communications - Gas & Oil

August 2013 Edition

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Gas & Oil

August 2013 Edition - Dix Communications

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August 2013 Edition

Table of Contents

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

4

A Look at Affordable Housing

7

How Will the Budget Impact Industry

8

Industry Impacts Housing Market

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

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Housing Law of Supply & Demand

13

It’s Still Location, Location, Location

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

14

Teaching the Teachers

17

New Rules Force Unitization

18

Wayne County Seeing Ancillary Development

20

Bluegrass Pipeline Projected to Come

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

Jeff Kaplan Southern Zone Sales Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200

Sophie Kruse / Dix Communications

Rod Johnson / Dix Communications

Rob Todor / Dix Communications

David J. Wigham / Attorney

Bobby Warren / Dix Communications

A Look at the Utica Supply Chain

26

Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450

Representation Helps Landowners Benefit

29

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

LAYOUT DESIGNERS

David Shallenberger / CPA

Bobby Warren / Dix Communications

Pipeline

31 TTAWA

A Business & Events Directory

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GEAUGA CUYAHOGA ERIE

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HOLMES MORROW ORROW KNOX COSHOCTON

ARE N DELAWARE

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LICKING

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FRANKLIN LIN

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CARROLL

HARRISON

GUERNSEY

NG

M

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

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NORTHERN ZONE SOUTHERN ZONE

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Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

a look at

Affordable C

OLUMBUS — The Ohio Housing Finance Agency’s Office of Affordable Housing Research and Strategic Planning released a series of reports commissioned to examine housing markets in the regions of Ohio impacted by shale oil development. This research was a collaborative effort between OHFA and the Ohio Development Services Agency and conducted by The Ohio State University, Ohio University, Coalition on Homelessness and Housing in Ohio, and Vogt Santer Insights. “There is a great deal of interest in Ohio’s shale oil industry and its effects on Ohio’s economy,” said OHFA executive director Doug Garver. “As the first research effort of this kind in the state, each report provides valuable information for policymakers to address housing needs, but also raises additional questions and the necessity to monitor housing markets in Eastern Ohio.” “Partnering with the Ohio Housing Finance Agency on this study provided us with additional data on the housing needs in the region,” said David Goodman, director of ODSA. “This allows us to develop strategies to meet the needs of Ohioans and prepare for future business investment.” OU’s Voinovich School of Leadership and Public Affairs, examined the ongoing impacts of shale development on rental housing availability and cost, along with its impacts on homelessness. The data collection gathered information on the early impacts of horizontal shale development and the availability and affordability of rental housing in multiple counties impacted by shale oil development. The data collection is intended to assist OHFA in selecting Ohio communities to monitor long-term. OU’s researchers studied Carroll County where the demand for affordable housing has significantly risen as a result of recent drilling activity and an increased number of drilling permits. The influx of workers, limited availability of affordable housing in the county for residents, and housing per diems provided to temporary workers have enabled rental market prices to climb and other factors have led to a strain on the existing housing infrastructure. Most shale workers have been able to obtain housing in single home rental units, local hotels, campgrounds or other temporary options. A shortage of rental homes has left mod-

Housing erate- and low-income residents with limited housing options. The barriers to address these housing needs are predominantly centered on high levels of uncertainty regarding the trajectory of shale development. The findings suggest that modest increases in the development of hotels, and low-income housing may be warranted; however, it is imperative to continue monitoring housing availability and affordability to ensure the markets can appropriately respond to housing needs as they evolve. “As this industry expands in eastern Ohio, we anticipate that additional housing shortages will take place throughout the region, with smaller communities being affected the most,” said Robin Stewart, project manager at OU’s Voinovich School of Leadership and Public Affairs. “Additional analysis will help develop a regional strategy that ensures affordable housing options remain available for the area’s most vulnerable citizens.” Conducted by OSU’s Department of Agricultural, Environment and Development Economics, faculty examined the effects of the Marcellus shale gas boom on local housing market trends. This analysis compared factors including rents, housing list and sale prices, in Pennsylvania, Eastern Ohio and Western New York. The findings will be used to assess the possible impacts of Ohio’s shale oil development based on low, medium and high-drilling scenarios. “The good news is that most places with shale energy development are able to address housing needs for the middle class without too much disruption, though there appears to be some issues for some lower income households as the boom begins,” said Mark Partridge, swank chair in Rural-Urban Policy and professor at OSU’s Department of Agricultural, Environment and Development Economics. “This work will serve as a benchmark for further study of housing insecurity as the gas and oil industry grows, and will help us develop effective policy solutions to address the housing needs of impacted populations,” said Bill Faith, executive director of COHHIO. This research effort resulted in four distinct reports. Read each of the reports online at http://www.ohiohome.org/research/multifamily.aspx.


Dix Communications - Gas & Oil

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August 2013 Edition

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Gas & Oil

August 2013 Edition - Dix Communications

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August 2013 Edition

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How will the Budget Impact Industry? David Shallenberger CPA, Wooster

W

OOSTER — Earlier in July Ohio Governor John Kasich signed Ohio’s new budget bill into law. The provision to raise the oil and gas severance tax was removed from the bill in its final version. However, changing the severance tax on the oil and gas industry is a topic that many observers of Ohio politics expect not to go away quietly. Overall, the bill delivers a $2.7 billion tax cut to Ohio businesses and individuals over the next three years. The tax cut was made possible by offsetting revenue raisers and efficiency changes. However, there are sections of the budget that have positive and negative effects on businesses and individuals. One of the more popular changes was the reductions made to the personal income tax. A personal income tax cut of 10 percent will be phased in over the next three years. There will be an 8.5 percent reduction this year. In 2014 there will be an additional 0.5 percent reduction, with a final 1 percent reduction taking place in 2015.

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Additionally on the personal income tax side, small businesses could qualify for a 50 percent deduction from income up to $125,000 (based on an income of $250,000). To be eligible, business income must be reported on a personal income tax return. This includes any business income on a Schedule C and income from pass-through entities. Any nonresident fi ler who invests in companies that fi le and pay Ohio Composite Income Tax are now able to fi le separate Ohio returns. This will allow the investor to take advantage of lower rates and deductions. Changes were also made to the Commercial Activity Tax (CAT). Anyone required to fi le the CAT annually will now be required to fi le electronically. However, that is not the only change. There is a new minimum tax structure for CAT starting in January. There will be no change to the CAT rate of 0.26 percent beyond the fi rst $1 million of revenue. However, the base tax for the fi rst $1 million of revenue will now be taxed progressively. The following details the new base tax due: Annual Gross Receipts $0 to $150K

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In addition to the CAT changes, effective September 1, the Ohio’s sales and use tax rate will increase 0.25 percent to 5.75 percent. And more items will now be subject to the tax effective September 29, 2013, including books, music and videos delivered electronically as well as magazine subscriptions. While there are things to celebrate as part of this new budget bill, there are also things that will require changes to some business tax process. Overall, the budget bill shows that Ohio is working to be a more business friendly state. David L. Shallenberger is a CPA with Rea & Associates in Wooster.


8

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

Growth in Industry also Means Growth in Housing Sophie Kruse Dix Communications

R

AVENNA — The growth in the gas and oil industry has had an increase on other things too — including real estate. While most of the boom is happening in the southern area of the state, it’s starting to have an effect on counties in the northeast part of Ohio. Jack Kohl, the broker and owner of Jack Kohl Realty in Ravenna, has noticed an increase in commercial properties in Portage County. “We’ve leased to several oil and gas drilling companies … Both drillers and people who make pipelines,” said Kohl. A company from Louisiana, Six C Fabrication Inc., recently purchased the former Delphi plastics plant located in Rootstown. They will be manufacturing piping and steel structural equipment for the industry working the Utica Shale gas play.

The 33-acre site, which has 222,000 square feet of building, was bought for $1.25 million in February. While they have started small, they intend to eventually have up to 300 employees. This is the largest increase with real estate Kohl has seen. He anticipates that it will continue to grow, and more locations will put down roots in Portage County. “I think you will see it as it develops. As those come on line, and if they’re successful, they’ll continue to grow. It’s so early in the process, it hasn’t really started yet,” said Kohl. Portage County had 15 horizontal drilling sites as of late June, putting it in ninth place for drilling activity in the state. Dottie Dupuy, president of the Portage County Association of Realtors and a managing broker for Howard Hanna in Aurora, has noticed that her realtors are focusing more

“May was the fourth month in a row that homes sales and prices have risen…” – Barb Kachenko


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on educating themselves, along with homeowners, about the changes that this boom has created. “It has raised the consciousness of people owning land about the potential value because they’ve read about it so much,â€? said Dupuy. “We have to be a lot more aware and conscious that minerals and oil are an important commodity in Portage County right now.â€? There has been an increase in education for realtors to learn how to deal with the issues that the industry brings up, from whether it’s a large company buying a piece of commercial real estate to a family learning their land is rich with minerals and oil. “I think we’re prime for increased activity and that’s why the raised awareness to the potentials,â€? said Dupuy. While the education was always available for the realtors, it wasn’t always attended as much as it is now. Dupuy say that is increase in education is greatly needed, and will continue to be needed. Barb Kachenko, team leader of the Kachenko Group with Remax Haven in Twinsburg has noticed a large growth in the market. “In May, sales increased by 11.6 percent and the median price by 10.8 percent. May was the fourth month in a row that homes sales and prices have risen higher than previous months,â€? she said. “As home prices rise, homeowners gain positive equity. With a brighter fi nancial outlook, many more feel comfortable selling their homes and the inventory shortage should be greatly reduced.â€? “2013 has been a strong year so far in Portage, Summit and Geauga and Cuyahoga counties, the areas I service,â€? said Kachenko. “We anticipate that we will fi nish at the best year ever since 2007, with high hopes that this will continue.â€? Even though the Wayne County and Wooster area isn’t seeing a large increase in drilling in their area as Portage, they are still seeing a small amount of increase. “Overall we’ve seen more activity, but more of it in the eastern part of the state,â€? such as Stark and Tuscarawas counties, said Dennis Drennan, regional manager at Howard Hanna, who oversees 11 Howard Hanna offices from Wooster, north to Strongsville, east to Canton and Stow. In the eastern and southeastern portions of the state, Drennan called it “Ohio’s Saudi Arabia,â€? but with a caveat. “We have seen more people wanting to rent ‌ and maybe see how this all plays out,â€? Drennan said. “This is absolutely in its beginning stages though.â€? Drennan said it appears to him that the increased activity can be attributed to workers on “the front endâ€? of the oil and gas boom on temporary assignment, and “obviously there would have to be some permanent peopleâ€? in the state as well. Then he expects to see increased real estate activity “indefi nitely.â€? Roger Kamp, president of the Wayne-Holmes Association of Realtors, said the real boom seen in Wayne County and Wooster was focused on land values.

Dix Communications - Gas & Oil

August 2013 Edition

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“We’re not seeing as much now as a year ago, but there are still people calling,� about vacant land available in the area, Kamp said. The big question he said was if mineral rights will transfer, and that has led to many (some out-of-towners) calling for available land and driving up values. As far as home values, Drennan said while “numbers are up substantially,� a rise in home values is still lagging and will continue to do so for a year or two, he estimated. Steven Huszai, staff writer for The Daily Record, contributed to this article.

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August 2013 Edition - Dix Communications

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Housing Law of

&

SUPPLY

DEMAND

Rod Johnson Dix Communications

C

AMBRIDGE â&#x20AC;&#x201D; When it comes to local housing for oil and gas workers, the law of supply and demand is definitely in effect in the Cambridge and Guernsey County areas. In a recent interview, Cambridge Board of Realtors President Peggy Parry pointed to the influx of â&#x20AC;&#x153;pipelinersâ&#x20AC;? to the area as a boon to area motels and those who have rental properties. â&#x20AC;&#x153;We really have seen little to no activity with the local or regional housing market as it relates to the oil and gas industry,â&#x20AC;? she noted. â&#x20AC;&#x153;Early on, there were investors who bought acreage, but that has died away to almost nothing now, since property owners are holding on to their land in anticipation of dollars from granting drilling rights. â&#x20AC;&#x153;All of our local motels have profited greatly as well as individuals with properties to rent. If persons are buying property, it is usually with an eye to renting to oil and gas people. There are inexpensive houses everywhere.â&#x20AC;? Parry and other realtors have been told that there may be about a 10-year window for area drilling. Thus, the influx of â&#x20AC;&#x153;out-of-statersâ&#x20AC;? needing lodging should remain constant during that time. â&#x20AC;&#x153;While there are inexpensive houses everywhere,â&#x20AC;? Parry continued, â&#x20AC;&#x153;there are still not enough in the eastern Ohio area to fulfi ll the demand because so many workers are coming to our area.â&#x20AC;? Many local realtors have been contacted by oil and gas companies seeking lodging for employees. Area motels are nearly full. They and private owners appear to be making a â&#x20AC;&#x153;killingâ&#x20AC;? by hiking the monthly rental rates. Parry reported hearing of some rentals going for $2000/month and up. She also has heard of many oil and gas workers being unable to afford rent because it is so high.

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Gas & Oil

August 2013 Edition - Dix Communications

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13

Rob Todor Dix Communications

C

ARROLLTON — JoAnn Clark likes to tell the following story about real estate in the Utica Shale: A neighbor with what could realistically be considered a “high-end” home — relatively new with aboveaverage amenities and land — wanted to list his property. His asking price was $300,000, a fairly unique number for the area. “I told him it may take awhile to fi nd a buyer at that price,” related Clark, “and his response was ‘that’s OK; I understand it may take a year to sell.’ “A week later a realtor came out with a man who was interested in the property. He is a supervisor with a gas and oil company, with a family, and he was looking for a property that he could live in for at least two or three years. “He offered a little below the asking price, but the home owner took it. His belief was he could wait the year and still not get a better offer.” Clark, a realtor with Cutler Realty, is based in Carroll County, the epicenter of the Utica Shale. She learned her home buyer will be responsible for overseeing a large area of the play and wanted a home that was centrally located. “Regardless of where he has to go — Columbiana, Stark or some other county — he figures he’ll be starting from a pretty central location,” said Clark. That’s the prevailing thought as out-of-state gas and oil employees come to Eastern Ohio. “I’ve seen more rentals purchases than home sales, but there’s been a heavy increase in both,” said Clark. “There was been a heavy increase on the price of rentals,” she added. “There’s some mixed emotions about that; some people think it’s price gouging. But a lot of the renters are pipeliners who got the job through bid. Those jobs may last Hours of Operation: Tues.-Sat. 10-6; Sunday 11:30-5 Follow Us On Facebook Locally Owned & Operated Paired with Quality Dealers. Offering a Variety of Vintage, Rare & Unusual Items. Quality Antiques Furniture & Lighting, Oddities, Gaming, Advertising, Gas & Oil, Toys, Industrial, Maritime, Aviation Railroad, Brass, Bronze, Glass, Clothing, Jewelry, Clocks Memorabilia & Paper. We have something for everyone, every age come in & check us out.

three months or six months, but they cannot commit to signing a one-year lease. “The majority of those workers own homes in Louisiana or Texas, for instance, and they’re not bringing their families here with them. So a lot of them prefer to not only have their house or apartment come furnished, but they also want towels and dishes provided as well.” Clark said she’s seen a big increase in a friend’s laundromat business, for instance. “The workers will bring in a week’s worth of dirty clothes and come back the next week, pick up the cleaned clothes and drop off another set of dirty wash. They are working many hours in a day and don’t want to come home and do laundry.” Clark said the real estate market is “safe” for now. “If we get and more large numbers of workers coming in we’ll get short on the housing,” she predicted. “There’s rumors of two new hotels coming to Carrollton, and perhaps villa-type apartments. But we’re also getting investors coming and snapping up the lower-priced properties.”

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14

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

Teaching the Teachers P

ORTAGE CO. — Two teachers in the Mogadore Local School District in Portage County recently attended a two-day teacher workshop hosted by the Ohio Oil and Gas Energy Education Program to learn how to engage and connect students to the energy industry through science education. Marti Edgerly and Amy Wilson, teachers at O.H. Somers Elementary School, attended the workshop June 19 and 20 at Marietta College in Marietta, Ohio. “OOGEEP established the teacher workshops to help teachers promote how science, technology, engineering and math (STEM) play into energy education and eventually into the workforce for young students who may consider careers in the oil and gas industry,” said Rhonda Reda, executive director of OOGEEP. “Ohio has a long history of drilling and producing oil and gas. Recent technologies have enabled the industry to explore and drill in many geological formations around the state.” The teachers learned all aspects of energy production from formation to exploration, drilling to producing and processing to refi ning. They also engaged in hands-on experiments and internet activities. The fi nal day of the workshop included a tour of the PDC Energy’s horizontal drilling site, GWB Oil & Gas, LLC’s producing well location, a behind the scenes look at Ken Miller Supply’s pipe operations and the Ergon Trucking’s crude oil terminal business. At the end of the workshop, teachers received resource materials, classroom supplies, lesson plans, DVDs, posters and documentation for CEU credits and an optional Ashland graduate credit. The workshop, accommodations and educational materials were funded by Ohio’s natural gas and crude oil producers as part of their public outreach initiatives. “OOGEEP provided me with valuable knowledge and insight into Ohio’s oil and gas industry,” Edgerly said. “They organized a positive, engaging and exciting experience for the teachers in attendance. I would highly recommend attendance to their conferences.” “OOGEEP is working hard to develop a trained workforce for the expanding oil and gas industry. And these teacher workshops are an invaluable tool that allows the industry to work with teachers and their students who may one day help develop, produce and supply our domestic energy needs,” added Sarah Tipka, OOGEEP board member, education committee chairwoman and oil and gas producer from A.W. Tipka Oil and Gas, Inc. The mission of OOGEEP is to facilitate educational, scholarship, safety and training programs; to promote public awareness about the industry; and to demonstrate to the gen-

eral public the environmental, energy and economic benefits of Ohio’s independent natural gas and crude oil producers. OOGEEP is funded by Ohio’s natural gas and crude oil producers and does not utilize any taxpayer dollars. For more information on OOGEEP, visit www.OOGEEP.org.

OOGEEPTTeachers Dozens of teachers throughout the state attended the Teacher Workshop hosted by the Ohio Oil and Gas Energy Education Program at Marietta College.

Marti Edgerly O.H. Somers Elementary School teacher Marti Edgerly, left, performs a science experiment with another teacher at a Teacher Workshop hosted by the Ohio Oil and Gas Energy Education Program at Marietta College.


Dix Communications - Gas & Oil

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16

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

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David J. Wigham Attorney

W

OOSTER — Effective May 25, 2013, the Ohio Department of Natural Resources issued new rules under R.C. § 1509.28, regarding forced unitization requests. These rules are in apparent response to the Utica Shale boom and the drastic increase in the volume of unitization applications, primarily by Utica Shale producers. The original version of R.C. § 1509.28 was enacted in 1965, along with Ohio’s fi rst spacing laws. The spacing laws were Ohio’s response to the Morrow County oil boom, where literally hundreds of oil wells were drilled in close proximity. Spacing requirements were intended to ensure that vertical wells were adequately spaced for the efficient production of the oil and gas reservoir. These spacing laws, however, led to another problem: a few landowners, unwilling to allow their lands to be developed, could effectively block the development of the entire unit. Thus, Ohio also enacted statutes allowing for forced pooling and unitization. Forced unitization is the compelled participation of an unwilling landowner or group of landowners in an oil and gas unit, when the majority (at least 65%) of the surrounding landowners have already leased their lands for development. The goal of the statute is to balance the competing property rights of the landowners within a unit, to prevent waste, and to allow oil and gas development to occur when appropriate. With the recent advent of horizontal drilling, much larger drilling units are usually required. For example, a typical vertical well often requires a drilling unit of no more than 40 acres. Thus, it would be very rare that an unleased landowner could block a vertical well. In fact, it is reported that only two unitization applications have been fi led prior to the Shale boom. However, horizontal wells require much larger units, typically consisting of at least 640 acres configured in a rectangle that often stretches two miles in length and a half mile in width. A 640-acre drilling unit can accommodate up to six horizontal wells, and the laterals for each well can extend for more than a mile. Given the length and spacing of the laterals within a 640-acre drilling unit, a Utica producer encountering a landowner who is unwilling to lease her acreage could lead to vast tracts of undeveloped acreage. This is why forced unitization requests have increased so dramatically. The new rules clarify the requirements that producers must follow in order for the ODNR to grant a forced unitization request. These requirements include: • An affidavit attesting that the applicant is the owner of at least 65% of the land overlying the pool that is the subject of the unitization request.

Dix Communications - Gas & Oil

August 2013 Edition

17

• A summary of the request for unitization that includes: a statement of why unitization is necessary, a description of the plan for development of the unit, an identification of the geologic formation(s) to be developed, an estimate of the value of the recovery of oil and gas for each well proposed to be drilled in that unit area, and other additional requirements. The new rules also add requirements that not required by the statute: • An affidavit describing the applicant’s efforts to lease the remaining acres in a proposed unit. The operator must identify specific details of each attempt to lease the mineral rights, including the names of people contacted and dates of the attempts. • Maps and aerial photographs of the proposed unit, with specific dimensions and content requirements. Large visual exhibits of the application (including the maps and aerial photographs) must be brought by the applicants to the hearing. The new rules clarify the requirements Utica producers must follow and require more information to allow the ODNR to make a ruling. If forced unitization is granted, the unleased landowner will still receive their pro-rata share of the royalties from a well, in the proportion that their acreage bears to the total acreage in the drilling unit. Landowners must be mindful that forced pooling and unitization exists in Ohio, and their property rights are not absolute. Ohio’s mandatory pooling and unitization statutes have existed for almost 50 years, but they have been seldom used until now. Landowners can expect to see more instances of forced pooling and unitization orders as producers begin to ramp up development in the Utica Shale. David J. Wigham is a second generation oil and gas attorney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with more than 20 years of experience in the industry. He is also the chair of the Natural Resources Committee of the Ohio State Bar Association.

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18

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

Bobby Warren Dix Communications

W

OOSTER — The recent increase in gas and oil development led to speculation that Wayne County, a long-time player in traditional wells, would see a lot of action and royalty payments. The fans were flamed in 2010 and 2011 when landmen visited the Wayne County Recorder’s Office researching deed and lease records. Some property owners were signing agreements to lease land at $20 an acre and this caused some concern. Eventually, groups like the Mohican Basin Land Owners Association formed to protect property and to potentially negotiate a better deal by having a large number of acres in the group. Then, by the summer of 2012, Devon Energy Production became the fi rst company to get a permit to drill a horizontal, hydraulic-fractured well in Wayne County. It had also received permits and built wells in Ashland and Medina counties and secured a permit in Holmes County. The results were not what Devon had hoped for, and it ceased operating here. While the Utica Shale wells did not produce at satisfactory levels, not all was lost for Wayne County businesses connected with the industry. Much of the new production is east of Wayne County, and producers and suppliers, like Ken Miller Supply Co. and J.R. Smail Co., have seen business increase by working with the larger exploration and drilling companies who are working there. Bob Gralinksi, general manager for Scot Industries, recently told the Wayne County Tax Incentive Review Council, his company is looking to get into the business as well. The company recently received certification from the American Petroleum Institute, and it is waiting for its steel provider to become API certified, too. Once all of the certifications are in place, Gralinski said there will be opportunities to work with supply companies and provide them with heat-treated pipes. The certification ensures the pipes meet industry standards, which is important because of the liability involved with drilling down around 6,000 feet. For companies looking to expand their operations or locate here, the Wayne Economic Development Council can help. President Rod Crider said his organization has worked with Wooster Tool & Supply, a Westerman company, which is looking to add 120 full-time workers over the next three years, spokeswoman Sonya Higginbotham said. The company manufactures gas and oil separation tanks and gas production units that are used by companies drilling for gas and oil in the Marcellus and Utica shale plays. The expansion was due to the expected continued growth of oil and gas drilling in Ohio.

Crider said WEDC has worked with not only Westerman, but Collier Well, too. Collier was later acquired by Dragon Product. Wayne Economic Development Council can help companies understand what type of assistance or incentives are available, Crider said. Gas and oil is one of the targeted industries in Ohio, so their might be some tax abatements available. The organization can also provide project management, consulting services, help with site location, fi nding a building and fi nancing. The agency even offers help in fi lling out the necessary applications for tax abatements. These services are provided at no cost to companies, Crider said. The Wayne County commissioners use WEDC as its economic development arm and, combined with other local municipalities, provide about 30 percent of the organization’s funding. Reporter Bobby Warren can be reached at 330-287-1639 or bwarren@the-daily-record.com. He is @BobbyWarrenTDR on Twitter.

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Dix Communications - Gas & Oil

www.OhioGO.com

August 2013 Edition

ROETZEL WELCOMES DONALD L. MASON 155 East Broad Street PNC Plaza, 12th Floor Columbus, OH 43215 614.463.9770 222 South Main Street Akron, OH 44308 330.376.2700

Roetzel is pleased to welcome Donald L. Mason, Of Counsel, to its Columbus office. Don joins Roetzel’s distinguished team of experienced attorneys serving Ohio’s oil and gas industry. In addition to Don, Robert Casarona, Shane Farolino, Mike Traven, Amanda Gordon and Brian Tarian are prepared to advise a wide spectrum of clients on all aspects of the oil and gas industry including financing, environmental, mineral rights and regulatory proceedings. For more information, visit us at ralaw.com/oil_gas.

RALAW.COM ROETZEL & ANDRESS, A LEGAL PROFESSIONAL ASSOCIATION

OHIO WELL ACTIVITY

by the numbers

MARCELLUS SHALE 17 0 4 0 6 0 0 27

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

UTICA SHALE 4 2 2 Wells Permitted 11 Wells Drilling 262 Wells Drilled 0 Not Drilled 117 Wells Producing 0 Inactive 0 Plugged 812 Total Horizontal Permits

Data as of 7/20/13 Source: Ohio Department of Natural Resources

19


20

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

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ULSA, OK — The board of directors for Williams and Boardwalk Pipeline Partners, LP, has voted to approve the company’s Bluegrass Pipeline project, which projects to come directly through Columbiana, Carroll, Harrison, Guernsey, Noble and Monroe counties and through portions of several other counties in the region. On a preliminary map, the project shows two pipelines starting along the Ohio-Pennsylvania border, merging in Noble County, on its way to joining an existing pipeline in Hardinsburg, Ky., that will help take the gas liquids to the U.S. Gulf Coast in Louisiana. Williams is engaged in development work on the proposed natural-gas-liquids pipeline, which has a targeted in-service date of late 2015. The Bluegrass Pipeline will connect supply from the Marcellus and Utica shale-gas areas in the U.S. Northeast to growing petrochemical and export markets in the U.S. Gulf Coast. The pipeline also will connect NGL supply with the developing petrochemical market in the U.S. Northeast. On its website, Williams and Boardwalk Pipeline Partners, LP had previously announced they had formalized key jointventure agreements tied to the proposed Bluegrass Pipeline and related fractionation, storage and export projects. Phase one of the project will provide producers with 200,000 barrels per day of mixed NGL take-away capacity in Ohio,

Date: 6/11/2013

West Virginia and Pennsylvania. Phase two will increase capacity to 400,000 barrels per day to meet market demand, primarily by adding additional liquids pumping capacity. The pipeline will deliver mixed NGLs from these producing areas to new fractionation and storage facilities, providing connectivity to petrochemical facilities and product pipelines along the coasts of Louisiana and Texas. The Bluegrass Pipeline includes construction of a new NGL pipeline from producing areas in Ohio, West Virginia and Pennsylvania to an interconnect with Boardwalk’s Texas Gas Transmission, LLC system (Texas Gas) in Hardinsburg, Ky. From that point to Eunice, La., a portion of Texas Gas would be converted from natural gas service to NGL service. The joint venture also will include constructing a new large-scale fractionation plant and expanding natural gas liquids storage facilities in Louisiana and constructing a new pipeline connecting these facilities to the converted Texas Gas line in the Eunice, La., area. Williams and Boardwalk also are exploring development of a new export liquefied petroleum gas terminal and related facilities on the Gulf Coast to provide customers access to international markets. By combining new construction with an existing pipeline, Williams and Boardwalk believe that the Bluegrass Pipeline should be placed into service and begin serving customers sooner than other options. Williams and Boardwalk are en-


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gaged in comprehensive project development planning including permitting, public consultation and right-of-way acquisition. Williams and Boardwalk expect that the planned project should be placed into service in late 2015, assuming all necessary conditions are met. Completion of this project is subject to all necessary or required approvals, elections, and actions, as well as execution of formal customer commitments. Williams is one of the leading energy infrastructure companies in North America. It owns interests in or operates 15,000 miles of interstate gas pipelines, 1,000 miles of NGL transportation pipelines, and more than 10,000 miles of oil and gas gathering pipelines. The company’s facilities have daily gas processing capacity of 6.6 billion cubic feet of natural gas, NGL production of more than 200,000 barrels per day and domestic olefi ns production capacity of 1.35 billion pounds of ethylene and 90 million pounds of propylene per year. Williams owns approximately 68 percent of Williams Partners L.P, one of the largest diversified energy master limited partnerships. Williams Partners owns most of Williams’ interstate gas pipeline and domestic midstream assets. Williams also owns Canadian operations and certain domestic olefi ns pipelines assets, as well as a significant investment in Access Midstream Partners, L.P. , a midstream natural gas services provider. The company’s headquarters is in Tulsa, Okla. For more information, visit www.williams.com, where the company routinely posts information.

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22

Gas & Oil

August 2013 Edition - Dix Communications

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August 2013 Edition

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24

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

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Dix Communications - Gas & Oil

www.OhioGO.com

August 2013 Edition

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES

1. Carroll County 308 2. Harrison County 118 3. Columbiana County 80 4. Noble County 51 5. Monroe County 50 6. Belmont County 47 7. Guernsey County 46 8. Jefferson County 38 9. Mahoning County 27 10. Portage County 15 11. Stark County 13 Tuscarawas County 13 12. Trumbull County 10 13. Coshocton County 5 Washington County 5 14. Muskingum County 3 Holmes County 3 15. Knox County 2 16. Ashland County 1 Geauga County 1 Medina County 1 Wayne County 1 WE L SITES WELL SIT ITES IN IN VARIOUS VAR VAR A OU US S STAGES: STA S T GES GES: PERMITTED PERMITTED, E M T ED D, DRILLING DRILLING, D LLING, DRILLED, D I LE LED, ED D, COMPLETED, COMPL PLETED LET ETED PRODUCING PRODUCING, PRODU PR RODUC O UCING I G PLUGGED LUGGED

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26

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

A LOOK AT THE

A

KRON — Logistics service providers who are active in the Utica shale supply chain will be featured at the 16th annual Northeast Ohio Logistics Conference and Golf Open, on Monday, Aug. 12, at Firestone Country Club in Akron. The event is hosted by the Northeast Ohio Trade & Economic Consortium (NEOTEC) and the Cleveland-Cuyahoga County Port Authority. The agenda includes presentations by area logistics experts from various modes of transportation who currently serve the Utica shale industry, followed by a panel discussion with Q&A. After the morning conference, there will be an afternoon golf scramble on Firestone’s North course and an evening dinner and awards program. “Following a successful conference last year on the growing Utica shale industry, we are pleased to co-host this event again with NEOTEC to delve deeper into the opportunities and challenges that logistics service providers in the area are experiencing,” said David Gutheil, vice president of maritime and logistics for the Port Authority. “This will be a valuable educational and networking opportunity for anyone interested in the shale energy industry.” Topics include “Utica: From production wells to automobiles,” “Trucking to support the Utica and Marcellus shale plays,” and “Safety fi rst: An environmental and logistics perspective.” The conference presenters are Chris Cotter and Shane Farolino, partners with the transportation law group and environmental/energy/health & safety division of Roetzel & Andress LPA; Jonathan Chastek, assistant vice president of business development for Wheeling & Lake Erie Railway Company; Doug Allen, executive vice president of Kenan Advantage Group (KAG); and Nick De La Garza, refining planning and economics supervisor at Marathon Petroleum Company’s Ohio Refining Division. The morning conference program begins at 7:45 a.m. with continental breakfast and concludes with a buffet lunch from 11:45 a.m. to 12:30 p.m. The afternoon golf session, a fourperson scramble format on Firestone’s North course, begins at 1 p.m., and is followed by an evening buffet dinner, refreshments, prizes and golf awards presentation at 6 p.m. Registration costs are $275 per person for the entire day, or $125 per person for the breakfast, conference and lunch only. Deadline to register is Wednesday, Aug. 7. To register, visit the NEOTEC web site at www.neotec.org, or call NEOTEC for registration information at (800) 793-0912.

NEOTEC is a multicounty economic development partnership that works as a regional force to attract capital investments, create jobs and enhance economic opportunities throughout Northeast Ohio. NEOTEC has a partnership agreement with the Cleveland-Cuyahoga County Port Authority to promote international trade through the administration of Foreign-Trade Zones 40 and 181 in Northeast Ohio. Other regional efforts administered by NEOTEC include improving market access through the Northeast Ohio Logistics Network, promoting export development through the services of the Global Trade Group and the regional International Trade Assistance Center, and attracting foreign direct investment to Northeast Ohio through the Global Business Development Initiative. NEOTEC is based in Kent on the campus of Kent State University, which partners with NEOTEC in its economic development efforts. For more information, visit www.neotec.org. The Cleveland-Cuyahoga County Port Authority operates the Port of Cleveland, a leading gateway for waterborne trade on the Great Lakes/St. Lawrence Seaway System. Nearly 18,000 jobs and $1.8 billion in economic activity result from the roughly 13 million tons of cargo that move through Cleveland Harbor on average each year. The Port also provides innovative fi nancing services for a wide range of development projects in Northeast Ohio, and is leading initiatives to solve critical infrastructure challenges along Cleveland’s waterfronts. For more information, visit the Port website at: www. portofcleveland.com.

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28

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August 2013 Edition - Dix Communications

Northern Zone Edition

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Dix Communications - Gas & Oil

August 2013 Edition

29

Bobby Warren Dix Communications

W

AYNE CO. — A few dozen property owners packed the Canaan Township fire station recently to hear how to protect their land and receive more money for easements needed for a pipeline project that will cut across Wayne County. William Goldman and Mike Braunstein, attorneys from Columbus, talked about the Allegheny Access pipeline project that will transport refi ned petroleum products from the Midwest to eastern Ohio and Western Pennsylvania. When the project was announced in September, Sunoco Logistics Partners CEO Michael J. Hennigan said it would “give refi ners and marketers in the Midwest convenient and cost-effective access to eastern Ohio and western Pennsylvania markets, including Pittsburgh.” It is expected to have the ability to transport 85,000 barrels a day initially, with the ability to increase the capacity to 110,000 barrels per day. The project is slated to begin around the beginning of October, but Goldman and Braunstein said they do not think it will happen. Sunoco expects the pipeline to be operational in the fi rst half of 2014. The attorneys and some property owners said land agents have been making high-pressure pitches to get people to sign updated lease agreements for $3 a linear foot. Many property owners had signed easements in 1942 allowing Standard Oil to build a pipeline, Goldman said. He does not think those easements allow for a second pipeline to be built, but if it does, then there needs to be just compensation. Goldman also wants protections for the landowners written into the agreements. The wording now appears to make the property owners responsible if something happens to the pipeline. The offer of $3 per linear foot, which is actually 75 square feet because Sunoco is seeking a 50-foot easement and a 25foot temporary easement for equipment, is too low, Braunstein and Goldman said. “We’re confident we can get appropriate compensation,” Goldman said. “Whether it is us or another attorney, you need to be represented.”

Bobby Warren / Dix Communications Columbus-area attorneys Michael Braunstein (left) and William Goldman (seated) talk about some of the options property owners have in dealing the Allegheny Access pipeline project that will cut across northern Wayne County and transport refined petroleum products. The attorneys met with the property owners at the Canaan Township fire station on Burbank Road.

“They cannot rely on 1942 prices; they have to pay current prices,” Braunstein said. He noted a pipeline on a piece of property can cause damage in several ways. What if a farmer cannot cross the easement with equipment, what if trees have to be removed, what if the property is less attractive because of the existence of a pipeline. “The pipeline could diminish the value of your property,” Braunstein said. Both attorneys said the pipeline is going to be built, and they could not stop it. Their goal is to maximize the protection of property and compensation. While the two have negotiated substantial settlements in the past, property owners should not think this will be a windfall. But, the fi nal price could be much more substantial than the $3 being offered. Jim Kelly, who owns property on Sterling Road in the township, said he was offered $15 per foot, but he was told none of the landscaping in the easement area would have to be restored. “Don’t give them anything,” Braunstein said. “If you want to give money away, give it to your church or children.” Reporter Bobby Warren can be reached at 330-287-1639 or bwarren@the-daily-record.com. He is @BobbyWarrenTDR on Twitter.


30

Gas & Oil

August 2013 Edition - Dix Communications

Northern Zone Edition

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August 2013 Gas & Oil-Northern Edition