March 2017 â€¢ A Free Monthly Publication
Pipeline Progress Counties Gain Tax Revenues School Board Rejects Lease IN THIS ISSUE: INDUSTRY CONFERENCES & WINTER MEETINGS
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Table of Contents MARCH 2017
A Look Ahead Gas & Oil Events
OOGA Celebrates 70th Anniversary
PUBLISHERS GateHouse Media
EXECUTIVE EDITORS Ray Booth RBooth@dixcom.com
School Board Rejects Lease For Gas Well by Kimpton
Utopia Pipeline Construction Expected to Begin in March
Rob Todor RTodor@dixcom.com
Lance White LWhite@dixcom.com
Ohio Agencies Say 6 Counties Saw $43M Tax Bump
Roger DiPaolo RDipaolo@dixcom.com
RE G IO NAL E DIT O RS Scott Shriner firstname.lastname@example.org
Target the sweet spots of the local gas & oil industry by advertising in the Ohio Gas & Oil Magazine.
Cathryn Stanley CStanley@dixcom.com
CO NTE NT CO O RDINAT O R Emily Rumes
OHIOâ€™S GAS & OIL INDUSTRY NEWS. BUSINESS. TECHNOLOGY.
CALL YOUR LOCAL OHIO GAS & OIL SALES REP. TODAY SEE PAGE 3 FOR MORE INFO 2
Table of Contents MARCH 2017
ADVER TISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Mindy Cannon Alliance & Minerva, Ohio Offices email@example.com 330-821-1200 Mark Kraker Ashland, Ohio Office MKraker@times-gazette.com 419-281-0581 Diane K Ringer Kent, Ohio Office DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450
Property Tax Tables & Figures by County
Pipelines Planned to go Through Wayne County
EPA Reports Methane Emissions Decreasing
Rover Pipeline Files Mass Condemnation Actions in Ohio
Ohio Well Activity
Horizontal Drilling Activity Graph
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Pipeline Progress Counties Gain Tax Revenues
February was a month of considerable pipeline progress, but challenges remain t in developing infrastructure needed arkWesthe on, Mansion thdeliver a p to the Shale gas to consumers. r x a ye E E
School Board Rejects Lease NCES & WINTER MEETINGS IN THIS ISSUE: INDUSTRY CONFERE
A Look Ahead
Gas & Oil Events • March 8-10, 2017 Ohio Oil & Gas Association Winter Meeting, Easton Hilton, Columbus. This event brings together top state and national industry leaders who will discuss current issues impacting the Ohio oil and gas industry. In addition to the business sessions, vendors exhibiting products and services pertinent to the industry will participate in the trade show portion of the event. Visit oogawintermeeting.com for more information. • March 9, 2017 Society of Petroleum Engineers (SPE) Scholarship Luncheon at 11:30 a.m. at the Hilton Columbus at Easton in Columbus, Ohio.
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OOGA Celebrates 70th Anniversary The Ohio Oil & Gas Association Will Celebrate Its 70th Anniversary at Its Annual Winter Meeting March 8-10.
yndsey Kleven, communications coordinator for OOGA, noted, “The industry is slowly emerging out of trying times, and brighter days lie ahead. It is more important now than ever that we come together and support both our industry and your Association. As always, the Winter Meeting is the Association’s premier business meeting and networking event of the year. “Join us for a series of in-depth presentations during our business sessions and panel discussions. Topics include 2016 Merger and Acquisitions in the Appalachian Basin and the DeBrosse Memorial Report reviewing annual oil and gas activity. Tune in for our panel discussion--Ohio Pipelines and End Use: Keeping it Local. Hear the latest legislative and regulatory updates, legal reports, and a Statehouse update from members of the Ohio General Assembly.”
an author, journalist and public speaker with more than 1,000 published articles and five books. His byline has appeared in dozens of publications ranging from the Wall Street Journal and National Review to the Sydney Morning Herald and New York Times. In 2010, he published Power Hungry: The Myths of Green Energy and the Real Fuels of the Future. His most recent book, Smaller Faster Lighter Denser Keynote Speaker Cheaper: How Innovation Keeps Robert Bryce Proving the Catastrophists Wrong, was published in 2014 by his longtime publisher, PublicAffairs, and is now available in paperback. A senior fellow at the Manhattan Institute, he lives in Austin.
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School Board Rejects Lease For Gas Well by Kimpton
Jeff Saunders • GateHouse Media f there is to be a natural gas well near Kimpton Middle School, it will be without the cooperation of the Stow-Munroe Falls City Schools.
District Treasurer Dave Osborne told the Stow Sentry Jan. 31 that the district had been told the lease agreement could have brought the district as much as $500 per month. However, neither Osborne nor District Director of Operations Mark Fritz could explain why the Board decided against a lease The Board of Education unanimously approved a resolution agreement with Beck Energy. at its Jan. 30 special meeting prohibiting the negotiation of a lease agreement by the district with Ravenna-based Beck “There wasn’t a whole lot of talking about it” at the Jan. 30 meeting, said Fritz. Energy. Beck Energy Vice President David Beck had told the board Dec. 5 that the well would actually be on the northern part of 27 acres, just to the east of the school, that is owned by the Armbrust family. But under state regulations, said Beck, there needs to be at least 40 acres, with permission required from any adjacent property owners less than 500 feet from the well, which is where the district comes in.
Osborne said he did not have an opinion either way on the matter and no one with the administration, including Fritz, offered the Board an opinion. “Really, we just said, “this is a Board decision to make,’” said Osborne. When asked if he had an opinion, Fritz said it was the Board’s decision and, “My viewpoint is irrelevant.” Board member Lisa Johnson-Bowers referred a request for comment to Board President Gerry Bettio. Bettio and Board members David Licate, Pat Matthews and Kelly Toppin did not return phone calls seeking comment before press time. A phone call made to the Armbrust home was also not returned.
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David Beck told the Stow Sentry Jan. 31 that he would explore whether an alternative to including the middle school property could be found.
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“We’ll just have to go back to the drawing board, I guess, and see if there’s any room there anywhere else for a well. That definitely limits where and how we can drill the well,” said Beck. According to Summit County property records, there is an approximately 20-acre residential and agricultural parcel to the east of the Armbrust property and a portion of the Kent State University Airport to the north of the Armbrusts. “I’ll have to talk to the landowner and see if there’s a Plan B,” said Beck, referring to Armbrust. “We’ll just have to see if there’s acreage and spacing available to put it somewhere else. If not, we’ll kind of have to walk away from it. We’ll have to see.” Beck told the Board Dec. 5 that he was seeking a non-drilling lease of about 13 acres with the district, with no easement, right-of-way or entrance onto the school property. The well cannot be within 200 feet of an occupied building, such as the school and would not be visible from the school, he said. $20,000 in savings expected Osborne said the Board also approved a change to the way
it will pay to replace the high school’s 30-year-old “chiller,” a type of cooling system, with a new $715,000 system. On Jan. 10, the Board approved paying $425,000 from the district’s permanent improvement fund and borrowing $290,000 from Huntington Bank for the balance. The PI fund is being funded with a 1.99-mill continuing levy that voters approved this past November. The levy will provide about $1.8 million annually, but district officials have said that there are a number of needs for that money at district buildings and Osborne said the Board did not want to tax the PI fund too much, too quickly with the chiller replacement. But, he said the Board also asked him if there was a way to save on the $20,000 in interest the loan would cost and it accepted his recommendation that the district pay the $290,000 from its general fund, which would then be reimbursed from the PI fund at $58,000 annually over five years. “For the general fund, it will be a wash,” said Osborne. “This way, we in effect borrowed it from ourselves and saved $20,000.”
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Utopia Pipeline Construction Expected
To Begin in March
Dylan Sams • GateHouse Media onstruction on the Utopia Pipeline is expected to begin in March, according to Kinder Morgan, developer of the project. Vice President of Public Affairs, Allen Fore said clearing of the right of ways in compliance with the Migratory Bird Treaty Act was scheduled to begin in February in surrounding areas, although there are not any affected lands in the Ashland area.
Judge Ronald P. Forsthoefel ruled in favor in a judgment entry on Jan. 6, 2017. In the entry, Forsthoefel determined the Utopia pipeline will be a common carrier petroleum pipeline, a decision he made in earlier cases, he wrote. Forsthoefel also determined that the pipeline will serve a public use and that the appropriation of property “is necessary to accomplishing that public use.”
The decision was appealed to the Fifth Appellate District Court by attorneys of the defendant opposing Kinder “Things are getting much closer to us being ready for Morgan on Jan. 17. construction,” Fore said. “I think that’s the big development.” Fore said the company was committed to “working through There are still 14 remaining tracts of land that Kinder issues with landowners.” Morgan needs to acquire rights to, although 13 have tentative agreements, Fore said. One landowner is challenging Kinder “At the end of the day, the legal proceedings in our view are Morgan in Ashland County Common Pleas Court, however, more of a continuation of a negotiation,” he said.
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The pipeline is expected to run through 14 counties in Ohio, including Harrison, Carroll, Tuscarawas, Stark, Wayne, Ashland, Richland, Huron, Seneca, Sandusky, Wood, Henry, Lucas and Fulton. It is being built to connect an existing Kinder Morgan pipeline -- the Cochin pipeline -- to transport the byproduct of Utica shale from the southeastern part of Ohio to Windsor, Ontario. The pipeline is expected to pass through Ruggles, Perry, Orange, Clear Creek and Jackson townships. The company has not finalized a contractor for the construction of the pipeline, yet Fore mentioned the chance for “more activity in Ashland County related to the contractor.” “I think what Ashland could see next, provided the contractor finalizes the (storage) yard that it’s looking at having here in Ashland County, is you would have equipment moving in and materials and things like that,” he said. The headquarters for the project is currently based in Ashland. Dylan Sams can be reached at 419-281-0581, ext. 240, and dsams@ times-gazette.com. Follow him on Twitter @dylan__sams.
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Pipeline Progress T Nicole Jacobs • Energy In Depth-Ohio
he Army Corp of Engineers’ announcement that it will issue the final permit to complete the Dakota Access Pipeline generated a lot of headlines, but it is just one of a handful of positive developments on the pipeline front in February, with three Marcellus and Utica shale projects being of particular note.
and Utica plays of Pennsylvania, West Virginia and Ohio to consumers within those states and beyond. It’s a need that is both understood and supported by voters in Pennsylvania, Ohio and Virginia, as a recent National Association of Manufacturers (NAM) poll showed:
• “91% of Republicans and 81% of Democrats indicated they support increasing investment in energy The Federal Energy Regulatory Commission (FERC) infrastructure. approved two important pipelines last week — the Atlantic Sunrise and the Rover — that will deliver • 86% of self-identified environmentalists and 89% of Marcellus and Utica gas to markets across the country. union members also support increased investment. A third pipeline slated to carry Marcellus and Utica gas, Atlantic Coast, also moved a step closer to approval • When it comes to expected outcomes from increasing recently with FERC releasing its draft environmental our investment in infrastructure, 61% say it will create assessment for the project in January. good-paying jobs and 64% believe that investing in energy infrastructure will help build a stronger economy.” As EID has discussed previously, there is a growing need for infrastructure to move gas developed in the Marcellus Despite the findings of the NAM poll, each of these Story continued on page 10
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projects have been met with opposition from a small but vocal minority, led by groups like the Sierra Club, that are eager to keep all natural gas in the ground by any means necessary, including making false claims.
• Direct payments to landowners for easements will total more than $124 million.
• It will pay an estimated $147 million in property taxes in the first year of operation, with state-by-state breakdowns as follows:
The Rover is a new natural gas pipeline that will transport 3.25 Bcf of natural gas daily approximately 713 miles. It will have three points of origin — one in Southwestern Pennsylvania, one in Western West Virginia, and one in Southeastern Ohio — that will meet at an interconnect in Defiance, Ohio, and eventually end in Livingston County, Michigan.
• Approximately $620 million will be paid for labor.
Approximate Projected Ad Valorem Taxes: $147 million*
*The tax figures listed above are calculated according to the state tax code based on a estimated capital spend for Rover. The state will allocate Rover’s taxable value based on a distribution of cost per taxing jurisdiction and counties will disperse funds to townships/districts in accordance with local taxing jurisdiction rates. These figures are estimates and should not be used for tax jurisdiction planning purposes since they are subject to change. The Rover is scheduled to be built this year, according to Detroit News:
Once complete, Rover will deliver Marcellus and Utica gas not only to consumers in Pennsylvania, West Virginia, Ohio and Michigan, but also other markets across the U.S. and Canada. This pipeline could have tremendous economic benefits for these four states, with total investments of approximately $4.2 billion: • It will create an estimated 10,000 jobs during construction, with a commitment to utilize union labor exclusively. Jobs By State
West Virginia: 1,800-2,200
• Another 30-40 permanent positions will also be created in the four-state region once the pipeline is operational.
“Energy Transfer spokeswoman Vicki Granado said the company is on schedule to complete its pipeline this year. ’Currently, we have said that we anticipate we will meet the targeted in-service goals of July 2017 for Phase I and November 2017 for Phase II,’ she wrote in an email.” The approval and progress made by FERC toward these pipelines is monumental and is a step in the right direction to get Marcellus and Utica gas into markets across the country and the world. But at the same time, several pipelines that have faced opposition from a vocal minority are still awaiting FERC approval, with the Penn East Pipeline being a prime example. Additionally, pipelines like the Constitution and Atlantic Sunrise are being held up at the state level, despite having all the necessary federal permits to begin construction and the growing need for more natural gas. Although February has been a month of considerable pipeline progress, challenges remain in developing the infrastructure needed to deliver the American people shale gas, resulting in energy costs falling to all-time lows.
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Ohio Agencies Say 6 Counties
Saw $43M Tax Bump
hio’s top six Utica Shale counties collected more than $43.7 million in real estate property taxes on production from 2010-2015, according to a new report by Energy In Depth and the Ohio Oil and Gas Association. The report entitled “The Utica Shale Local Support Series: Ohio’s Oil and Gas Industry Property Tax Payments,” consults ad valorem (real estate) tax collection data from six Utica Shale mineral producing counties from 20102015 to examine the impact made from the first three years of Utica Shale production in these six counties. The report includes breakout statistics for each county as well, including Belmont, Carroll, Guernsey, Harrison, Monroe and Noble. Below are the report’s key findings, by the numbers, • Real Estate Property Tax Paid for Six Counties -- $43.7 Million • Projected Property Taxes To Be Paid (2016-2026) -- $200-$250 Million • Amount of Tax Directly Paid to Local Government/ Schools -- 100 Percent • Percent of Property Tax Collection to Ohio Local Schools -- 60-70 Percent The finding by the Ohio Oil and Gas Association and Energy In Depth Ohio, a natural-gas research and education group, comes as Republican Gov. John Kasich has renewed calls for a severance-tax increase on the industry. Kasich’s proposed two-year, $66.9 billion operating budget raises $448 million from the severance-tax
increase. The increase would combine with other tax reforms to pay for a net statewide income-tax reduction of $39 million.
consequences,” he said. “In this instance, you’re going to see less drilling, less development of natural resources. So there’s going to be less wells drilled, and less wells drilled on Thursday’s report shows Belmont, the fringe counties.” Carroll, Harrison, Noble, Monroe and Guernsey Counties have seen a Kasich argues the industry’s operations combined 22 percent revenue boost in Ohio’s lucrative Utica Shale play is from the longstanding ad valorem strong enough to sustain a severance real estate property tax, amid a 35-fold tax increase. increase in natural gas production. The report helps to quantify taxes to “I’ve heard from many county be paid over the next 10 years, based commissioners and other elected on payments already received to six officials, community leaders in Eastern counties from the first three years of and Southeastern Ohio, who’ve told Utica Shale production (taxes collected me that they’ve had their budgets in the latest year available, 2015, reflect saved, thanks to the millions of new 2013 production). Using the Freedom tax dollars rolling into their coffers,” of Information Act, we were able to said U.S. Rep. Bill Johnson, a Marietta obtain the data from these six counties Republican whose district spans much on real estate property taxes collected, of Appalachian Ohio. as well as the breakout of real estate property taxes paid specifically from The industry projects that continued wells or ad valorem taxes. growth will allow the same tax to generate between $200 million and Stewart said that considering Utica $250 million over the next 10 years. Shale oil production has increased by 496 percent and natural gas production Energy In Depth State Director has increased by 852 percent since Jackie Stewart said counties have the 2013, it is reasonable to conservatively opportunity to build a coordinated project Ohio Utica Shale counties will regional growth strategy based on reasonably receive an additional $200those estimates. She said the tax has $250 million boost from real estate been misunderstood and hard to track, property taxes on wells over the course so her organization took the initiative of 10 years (2016-2026). Of course this to sort out the information and provide is only one tax the oil and natural it to the counties. gas industry pays in Ohio. Energy in Depth - Ohio has previously reported, Shawn Bennett, Executive Vice sales tax revenues have skyrocketed President of the Oil and Gas by 65 percent in these same counties Association, said Kasich’s tax proposal over the past five year as well. Real could negatively impact an industry estate taxes paid on wells accounted that’s already giving money back to for, on average, 22 percent of the total the communities. real estate property taxes paid in 2015 to these counties. “Any time you raise taxes on an industry, there is going to be
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Pipelines Planned to go
Through Wayne County
Bobby Warren • GateHouse Media hile no pipelines broke ground in 2016, one was finally granted approval to commence, but it wasn’t until the beginning of February 2017.
to the pipeline from eastern Ohio, western Pennsylvania and West Virginia.
Rover Pipeline was the first of the three projects to be announced here. One of the biggest concerns was from farmers wanting to make sure the disturbed ground Three pipelines are expected to be constructed in the would be restored to full productivity. Public hearings county, barring any surprises. They are the Rover, allowed for those issues to be entered into the record. Utopia and NEXUS lines. Rover officials had hoped the construction process would have been moving by the end The Kinder Morgan Utopia Pipeline is only in Ohio, so of 2016, but after they failed to get the necessary approval it operates under state regulations, not federal ones. The from the Federal Energy Regulatory Commission, line will start in Harrison County and move northwest to Fulton County. There will be four points feeding into attorneys petitioned the agency to take action. It did. the line in Harrison and Carroll counties. The pipeline The Rover Pipeline, more than 710 miles long, will run will enter Wayne County east of Mount Eaton in Paint from West Virginia to Michigan. It is estimated to be a Township and exit west of New Pittsburg. Affected $4.2 billion project. It will have the capacity to transmit townships in Wayne are Paint, Salt Creek, East Union, up to 3.25 billion cubic feet of gas. The gas will be pumped Franklin, Wooster, Plain and Chester. NEXUS will affect only Chippewa Township in Wayne County, and Rover will cut through the same townships as Utopia. Because Rover and Utopia will follow similar paths, construction of the Kinder Morgan line will follow that of Rover, Commissioner Ann Obrecht said. Allen Fore, Vice President of Public Outreach for Kinder Morgan, said in October representatives of the pipeline had visited every affected township twice and had visited every board of county commissioners along the path. Those who do the construction work will live here and not be flown here, he added. Call us for a
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Fore is hopeful construction will begin in the summer, and it will be in service by 2018.
will not exceed a pressure of 1,440 pounds per square inch.
Kinder Morgan has been working with the Ohio Farm Bureau Federation to make sure soils are segregated and returned properly. He said he believes there should be a negligible effect, and there will be a temporary provision for loss of crops. “We are trying to make sure landowners are made whole,” he said.
Perhaps the biggest news for the Wayne County commissioners and engineer was the fact that all three companies signed road use maintenance agreements, which are designed to protect county and township roads from excessive wear and tear from the heavy equipment that will be used to construct the pipeline and haul pipe to the sites.
The Ohio State University will do a multi-year study to see how productive the land is post construction. There was a lot of discussion about the NEXUS Pipeline, which will cut through about 6 miles of Chippewa Township. There was a big push to have the proposed route moved to the south to avoid urban areas in favor of more rural settings. The FERC ultimately did not recommend moving the route.
Reporter Bobby Warren can be reached at 330-287-1639 or firstname.lastname@example.org. He is @BobbyWarrenTDR on Twitter.
The 255-mile pipeline was originally designed to come up from Kensington and travel north to meet up with a pipeline in Michigan, eventually making its way to Ontario, Canada. The 36-inch line will be capable of moving 1.5 billion cubic feet of natural gas a day and
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EPA Reports Methane
Emissions Decreasing Seth Whitehead • Energy In Depth-Ohio
he U.S. Environmental Protection Agency (EPA) released its draft 2017 Greenhouse Gas Inventory (GHGI) in February, and the new EPA data show that methane emissions from oil and natural gas systems continue to fall at the same time production has continued to ramp up. From the report,
The EPA also reports that methane emissions from natural gas systems have decreased 18.6 percent since 1990 “largely due to a decrease in emissions from transmission, storage, and distribution.”
Equally notable is the fact that 2015 natural gas system methane emissions are 1.3 percent below 2005 levels and 1.1 “Methane emissions from natural gas systems and petroleum percent below 2011 levels, as the following EPA chart shows. systems (combined here) decreased from 254.8 MMT CO2 Eq. in 1990 to 201.5 MMT CO2 Eq. (53.3 MMT CO2 Eq. or 20.9 percent) from 1990 to 2015.” The new EPA data is all the more relevant as the U.S. Senate is expected to vote soon on repealing the Bureau of Land Management (BLM) venting and flaring rule aimed at regulating methane emissions on federal lands. The U.S. House of representatives voted to repeal the rule using the Congressional Review Act earlier this month. These reductions are quite remarkable, considering natural gas production was 52 percent higher than 1990 levels, 50 Notably, the new EPA data show that petroleum system percent higher than 2005 levels and 18 percent higher than methane emissions have decreased significantly — just under 2011 levels in 2015. 29 percent since 1990, 13.5 percent since 2005 and 17 percent since 2011 — primarily due to “decreases in emissions from Industry efforts to reduce methane emissions have helped associated gas venting and flaring.” A huge chunk of those the U.S. reduce overall methane emissions by 16.7 percent reductions occurred between 2014 and 2015, according to the since 1990, according to the EPA, and enteric fermentation EPA, has replaced natural gas as the top source of anthropogenic methane emissions. “[P]roduction segment methane emissions have decreased by around 8 percent from 2014 levels, primarily due to decreases in emissions from associated gas venting and flaring.” The following EPA chart illustrates these significant decreases, which have occurred as oil production has increased 81 percent since 2005 and 28 percent since 1990.
While methane emissions from oil and gas systems have fallen as production has skyrocketed — thanks to the shale revolution — increased natural gas use continues to drive down greenhouse gas emissions, according to the new EPA data. The EPA reports that overall greenhouse gas emissions are down 2.2 percent from 2014 to 2015 and 11.2 percent below
2005 levels, as the following chart illustrates.
approximately 33 percent of their total energy requirements in 2015.” EPA reports that electricity generation-related emissions decreased 6.7 percent from 2014 to 2015 alone “primarily due to decreased CO2 emissions from fossil fuel combustion due to an increase in natural gas consumption…” Natural gas use for power generation increased 18.7 percent during this time.
Increased natural gas use is the first reason on the EPA’s list of explanations for these decreases, “The decrease in total greenhouse gas emissions between 2014 and 2015 was driven in large part by a decrease in CO2 emissions from fossil fuel combustion. The decrease in CO2 emissions from fossil fuel combustion was a result of multiple factors, including: (1) substitution from coal to natural gas consumption in the electric power sector; (2) warmer winter conditions in the first quarter of 2015 resulting in a decreased demand for heating fuel in the residential and commercial sectors; and (3) a slight decrease in electricity demand. Lastly, since 1990, U.S. emissions have increased at an average annual rate of 0.2 percent.”
All told, this latest EPA data further confirms what EID has reported many times before: Fracking is the No. 1 reason the U.S. is the only major country that is reducing GHG emissions. Furthermore, EPA data shows the methane leakage rate from natural gas systems is just 1.5 percent, agreeing with numerous reputable reports that show the rate ranges from 1.2 percent to 1.9 percent — well below the rate needed for natural gas to maintain its climate benefits. So considering this new EPA data show methane emissions continue to fall at the same time production increases, this is just the latest example of why costly and duplicative methane regulations on the oil and gas industry are completely unnecessary.
Most importantly, EPA data shows overall CO2 emissions continue to plummet, as carbon emissions are down 11.7 percent from 2005 levels and 2.7 percent from 2014. Again, the EPA gives credit where credit is due: natural gas use for electrical generation.
“Recently, a decrease in the carbon intensity of fuels consumed to generate electricity has occurred due to a decrease in coal consumption, and increased natural gas consumption and other generation sources. Including all electricity generation modes, electricity generators used natural gas for
“The process of generating electricity is the single largest source of CO2 emissions in the United States, representing 35 percent of total CO2 emissions from all CO2 emissions sources across the United States.”
Rover Pipeline Files Mass
Condemnation Actions in Ohio
David J. Wigham • Attorney
n February 2, 2017, the Federal Energy Regulatory Commission (“FERC”) issued a Certificate of Public Convenience and Necessity under Section 7(c) of the Natural Gas Act approving the Rover Pipeline Project and enabling the project sponsor, Rover Pipeline LLC (“Rover”), to begin filing condemnation actions against landowners in the pipeline route. More than two years ago, Rover, a subsidiary of Energy Transfer Partners, L.P., publicly announced its intent to build a 713 miles interstate pipeline system spanning over four states, including Ohio. The Rover Pipeline system, as proposed, consists of up to two parallel 42-inch high-pressure lines capable of transporting 3.25 billion cubic feet of natural gas per day from the Utica Shale basin in Ohio, West Virginia and Pennsylvania to market in Ontario, Canada. In order to build this project within the next year, however, Rover has to fell trees on the pipeline route before
March 31, 2017, in order to avoid harming two protected species of bats along the pipeline route. Unless Rover is able to do so, construction of the pipeline project would be delayed for an additional year. Issuance of the Section 7(c) Certificate proved a critical step in this process since it is the issuance of a Section 7(c) Certificate that enables a pipeline company to begin condemning landowners who are unwilling to sign an easement voluntarily. Not surprisingly, on February 3, 2017, the day after the Section 7(c) Certificate was issued, Rover filed three mass condemnation actions in Ohio federal courts naming nearly a thousand different defendants. These actions, two in the Northern District of Ohio and one in the Southern District of Ohio, not only seek to obtain a permanent easement over the property in question, they also seek immediate possession of the property in order for Rover to meet its tree clearing deadline.
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While Rover has received the Section 7(c) Certificate which enables the condemnation of the landowner’s property, the battle for compensation is not over. These defendants, many of whom balked at the low offers made by Rover, still have an opportunity to obtain additional compensation by either forcing Rover to settle in order to meet its March 31 tree-clearing deadline or by fighting Rover over the issue of adequate compensation and damages in court.
American Legal System that property cannot be taken without providing just compensation determined by a court. In other words, Rover cannot tell landowners what they have to take, only a court can make that determination. Valuation hearings, however, are one of the most complicated aspects of litigation involving not only competing expert opinions on valuation but significant evidentiary issues as well. It is important for the landowner to have counsel experienced in this area of litigation.
While Rover has refused to pay the normal compensation typically offered by companies in Ohio for pipeline easements, a failure to obtain immediate access to the property may still bring Rover back to the bargaining table. For Rover, a company with hundreds of unsigned landowners remaining in Ohio alone, failing to obtain immediate access in any of these three cases will almost certainly result in a delay of up to a year in the pipeline construction schedule, including a resulting financial loss. As the current hearing dates for Rover’s motions for immediate possession fall, quite literally, the day before Rover claims it must begin clearing trees, any delay in obtaining these orders could quickly bring Rover back to the settlement table with larger offers.
Regardless of how Ohio landowners decide to proceed, it is imperative that they make their determination immediately. Due to the expedited schedule and complexity of this litigation, landowners who have been named in these actions have days, not weeks, to begin defending their rights. Any landowners who fail to do so will face what Rover has been threatening all along, taking the amount of money Rover thinks is “just compensation” for Rover’s pipeline easement. Thus, it is critical that landowners seek counsel from law firms with not only experienced oil and gas attorneys but also lawyers with expertise in handling eminent domain cases, such as the Rover Pipeline litigation.
Even if Rover is not willing to pay to avoid a delay, landowners can still litigate over the issue of damages. It is axiomatic under the
David J. Wigham is a second-generation oil and gas attorney at the firm of Roetzel & Andress, with more than 25 years of experience in the industry. He maintains offices in Akron and Wooster, Ohio, and can be reached at 330-762-7969.
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