June 2015 Gas & Oil Magazine-Ohio edition

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Gas & Oil

Ohio Edition

June 2015

Table of Contents 4

SHALE-ABRATION IS JUNE 20!

6

CONGRESSIONAL PROPANE CAUCUS CREATED

7

WHAT THEY ARE SAYING ABOUT THE CONGRESSIONAL PROPANE CAUCUS

8

OPINION: FOCUS ON PROPANE

10

ABUNDANCE BENEATH OUR FEET

12

‘THE GOOD, THE BAD, AND THE UGLY’

14

TOWERS CHANGE VILLAGE SKYLINE

16

CNG VEHICLES MAY GET TAX BREAK

18

SMALL TURN-OUT FOR PROTEST AGAINST OHIO DRILLING

20

STUDY: OIL AND NATURAL GAS STOCKS OUTPERFORM OTHER ASSETS IN STATE PENSION FUNDS

22 24

PUBLISHERS Andrew S. Dix ASDix@dixcom.com G.C. Dix II GCDixII@dixcom.com David Dix DEDix@dixcom.com

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

ODNR INJECTION WELL PROCESS UNDERFIRE BY ANTI-FRACKING GROUPS- AGAIN

OOGEEP PRESENTS WORKSHOPS IN JUNE, JULY

28

TAX PAYERS BEWARE! COSTLY BALLOT INITIATIVES ON THE WAY

30

CARRIZO OIL BEING ‘PATIENT’ WITH OIL PRICING

32

THIRD ANNIVERSARY GAS & OIL MAGAZINE IN OHIO

34

PIPELINE CONSTRUCTION MAY RESULT IN QUESTIONS

36

COALITION GETS UPDATE ON DOMINION EAST OPERATIONS

REGIONAL EDITORS Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com Judie Perkowski JPerkowski@dixcom.com Erica Peterson EPeterson@dixcom.com

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ADVERTISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Jeff Kaplan Alliance & Minerva, Ohio Office JKaplan@dixcom.com 330-821-1200 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450

June 2015

38

BRICKER & ECKLER PUBLISHES 4TH EDITION OF SHALE ECONOMIC OVERVIEW

40

THOUSANDS ATTEND 4TH ANNUAL OHIO VALLEY REGIONAL OIL & GAS EXPO

44

GAS AND OIL EXPERTS PREDICT THE BEST IS YET TO COME

46

TITLE= RESULT - OR THE IMPORTANCE OF PROPER OWNERSHIP WITH OIL AND GAS INTERESTS

48

COALITION URGES OHIO SENATE TO REJECT ANY SEVERANCE TAX INCREASE

50

CARROLLTON SCHOOLS BREAKS GROUND ON CNG FUELING STATION

54

COLUMBIA PIPELINE GROUP RECOGNIZED FOR SAFETY

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

DIGITAL MEDIA MANAGER

Brad Tansey BTansey@dixcom.com

LAYOUT DESIGNER Emily Kuhn

EKuhn@the-daily-record.com

“Gas & Oil” is a monthly publication jointly produced by Dix Communications.

Copyright 2015.

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Gas & Oil

June 2015

Ohio Edition

SHALE-ABRATION IS JUNE 20!

O

LD WASHINGTON, OH — The Friends and Family Fest- A Shale-abration! is a day long, community event designed to celebrate our natural energy resources and offer attendees the opportunity to become familiar with the oil and gas industry.

On June 20 from 10 a.m. to 7 p.m., the Guer nsey C ou nt y Fairgrounds will be full of educational exhibits and interactive activities for all ages to learn about our natural energy resources. Due to the generosity of our sponsors, there is no fee for admission.

The Cambridge Chamber of Commerce has developed an informational web site describing the event, www.

Shaleabration.com “The Chamber is excited about bringing all the partners together for this event,” Jo Sexton, Chamber president and CEO, said. “We have a great day of fun and educational activities planned. Our Shaleabration web site will allow us to keep the community updated about our second annual event.”

You will find the schedule of events, family oriented

activities, exhibitor and sponsorship opportunities and map at www.shaleabration.com.

Watch the Dock Dogs c ompetitions throughout the day and be entertained by country singer, Drew Baldridge on stage at 5 p.m.

The family will love “Rockin’ in Ohio,” a stage production by the Ohio Oil and Gas Energy Education Program at 12:30 p.m. Kids can fish in the stocked trout pond and learn tips from Buckeye Sportsman Dan Armitage. Learn about Ohio’s native wildlife with the Oglebay Good Zoo Animal Encounter. Food, games, and entertainment will be plentiful on stage and around the fairgrounds.

While a huge line-up of entertainment will attract many people to the Shale-abration, you’ll also walk away from this day with a better understanding of the role of our natural resources play in our everyday lives.

Sponsorships, exhibit booths and vendor space now available. Visit www.shaleabration.com.

Gas & Oil

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June 2015

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Gas & Oil

June 2015

Ohio Edition

Congressional Propane Caucus created C

ongressman Robert E. Latta (R-OH) and Congressman Tim Walz (D-MN) have announced the founding of the Congressional Propane Caucus.

The caucus has been formed in order to provide a bipartisan forum to engage Members of Congress, their staff, and the public on issues of importance to propane consumers and the propane industry.

“I am pleased to join my colleague Congressman Walz in leading this effort in the House. Thanks to an increase in domestic production and the development of shale formations across the country – including the Utica/Point Pleasant formation in my home state of Ohio - Americans are blessed with an abundance of this essential resource,” said Propane Caucus co-chairman Latta. “Propane is vital to our every day lives; it heats our homes, aids in the production of our farms, and is increasingly being used as an alternative, clean burning fuel for transportation. I am pleased to start this caucus in order to educate fellow Members of Congress on the many uses of propane, its importance to the constituents we serve, and the issues both the industry and its consumers face.”

“I’m proud to lead this caucus with Latta. Propane is essential for hundreds of thousands of Minnesota families, not only to heat their homes during the long, cold winter, but also for cooking, laundry, and farming,” Rep. Walz, co-chair of the Propane Caucus, said. “It is imperative that we do everything in our power to protect families and local businesses from facing the price shocks we witnessed in the winter of 2014 when a lack of supply put people’s lives and livelihoods at risk.”

Propane is an abundant, clean-burning, domestic fuel that is a key component in America’s energy portfolio. Propane contributes $38.7 billion to America’s GDP and provides nearly 50,000 domestic jobs. Furthermore, over 50 million Americans choose propane as their energy source in a wide array of applications, including: •Residential and commercial space heating (furnaces, boilers, and gas logs), water heating, cooking, and clothes drying •Farm use for irrigation pumps, grain dryers, standby generators and other agricultural equipment •As an alternative transportation fuel in school buses, delivery vans, pickup trucks, law enforcement vehicles, and forklifts

•Industrial space heating and process applications Recent developments in the energy sector have generated a strong domestic propane supply that is projected to remain plentiful for the foreseeable future. However, many challenges exist to ensure that Americans have an adequate supply of propane when they need it.

The Congressional Propane Caucus was designed to focus on these challenges, so that Congress can ensure that propane continues to serve American consumers in a consistent, reliable, and affordable manner.

Congressional Propane Caucus Founding Members Co-Chair, Rep. Robert E. Latta (R-OH) Co-Chair, Rep. Tim Walz (D-MN) Rep. Chris Collins (R-NY) Rep. Sean Duffy (R-WI) Rep. Mike Kelly (R-PA) Rep. Ron Kind (D-WI) Rep. Dave Loebsck (D-IA) Rep. Rick Nolan (D-MN) Rep. Tom Reed (R-NY) Rep. Peter Welch (D-VT) Follow on Twitter: @PropaneCaucus

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June 2015

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What They Are Saying About the Congressional Propane Caucus

Ohio Oil and Gas Association (OOGA)

I am very excited to join the House Propane Caucus and thank my colleague Rep. Latta for organizing this important group. In honor of today’s launch, this week I will be re-introducing the Powering American Jobs Act, a bipartisan bill to make the excise tax provision for propane permanent. This will bring much-needed certainty to energy providers important to Western Pennsylvania and our entire country, which in turn will help them create more jobs for more Americans. When it comes to strengthening our nation’s energy potential by supporting and spreading the benefits of propane, this is not a Republican issue or Democrat issue—it’s an American issue.

U.S Rep. Mike Kelly, Pennsylvania 3rd District

Shale plays across the United States continue to shape our nation’s energy supply structure. In Ohio, the Utica shale play is a perfect example of the associated benefits of this supply shift - revitalizing eastern Ohio through the production of natural gas and natural gas liquids. Propane has been an integral part of this change. It continues to be a great fuel source for Ohio’s citizens, especially farmers and consumers in areas without access to natural gas pipelines to heat their homes. We applaud the leadership that Congressman Robert E. Latta (R-OH) has shown in announcing the foundation of the Congressional Propane Caucus. Natural gas and the products derived from it are integral parts to Ohio’s economy, including the success of Ohio’s Utica shale play, and the everyday lives of its citizens.

Shawn Bennett, Executive Vice President, OOGA

Marcellus Shale Coalition Thanks to the responsible development of our abundant shale resources, America has rapidly transformed into an energy superpower. As a result, consumers, farmers, transportation providers and industrial energy users both here at home and abroad are benefitting from a robust supply of reliable and affordable propane. With millions of Americans dependent on propane and ever increasing volumes being produced in the Appalachian Basin, we welcome the formation of the Congressional Propane Caucus and look forward to working with its members in the future.

Dave Spigelmyer, President, Marcellus Shale Coalition

8

Gas & Oil

Ohio Edition

June 2015

Opinion: Focus on Propane

Rick Roldan – President & CEO National Propane Gas Association ropane users are in almost every congressional district in the United States. In Ohio, more than 240,000 homes are heated with propane and more than 295 million gallons of propane are consumed in the state. This fuel is an important part of Ohio’s energy landscape, and that is why Congressman Bob Latta has taken a leadership role in the creation of the Congressional Propane Caucus. This dedicated group of legislators is committed to addressing the infrastructure challenges facing America’s propane customers and ensuring that they can continue to rely on propane for their energy needs.

This time of year propane is widely associated with backyard barbecues. However, its usage and value extend far beyond the backyard. Propane contributes $38.7 billion to America’s Gross Domestic Product and provides nearly 50,000 domestic jobs. More than 50 million Americans choose propane for a variety of applications. Globally, propane is the third most prevalent vehicle fuel, and there are approximately 150,000 propane-powered vehicles in the United States.

Nationally, Americans consume about half of their propane residentially, including home heating, water heating, and clothes drying. The rest is used in commercial, industrial, and agricultural applications, and as an alternative fuel in vehicles, forklifts, and lawnmowers. In Ohio, 60 percent of the propane consumed is for residential use, 12 percent is consumed in commercial applications, and the balance is used for industrial, agricultural, and engine fuel uses.

The benefits of using propane can be seen across the state.

Ohioans are realizing that propane is an environmentallyfriendly tool to maximize performance, increase cost savings and achieve greater efficiency. The Recreation and Parks Department in Columbus recognized the need to implement new, emission-reducing technology to meet tightening environ-

P

mental regulations. After considering several options, the city adopted 14 propane-powered lawn mowers as part of their Green Fleet Action Plan. The results speak for themselves.

Propane-powered mowers reduce greenhouse gas emissions by more than 15 percent and carbon monoxide emissions by more than 40 percent compared with gasoline-fueled mowers.

Propane also reduces the unpleasant gasoline fumes, making visiting the park even more enjoyable.

By creating, organizing, and co-chairing the newly formed Congressional Propane Caucus, Latta continues his hard work addressing the issues affecting propane consumers. Both during and since the difficult winter of 2013-2014, Congressman Latta has led the Congressional response to the challenges facing the propane gas industry. He authored a bipartisan letter calling for more propane storage, introduced a bill to formalize the federal response to propane shortages, and successfully passed a bill that allows the propane industry to better meet consumers’ needs.

In doing so much, Latta recognized the importance of having Members of Congress and their staffs connect with the propane industry to share information and ideas. The next logical step was to create an official Congressional Propane Caucus. Through this caucus, Members and staff will have the opportunity to have a dialogue with industry experts, attend briefings, and receive the latest information. This will all help build a better understanding of the propane gas industry’s impact in their states.

Latta joined with Congressman Tim Walz (D-MN) to establish the Caucus and enlist a bipartisan group of geographically diverse Members to join. The Congressional Propane Caucus was announced on May 21 with 10 original members-five Republican and five Democratic. NPGA looks forward to working with Congressmen Latta, building support for the caucus, and expanding its membership this year.

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June 2015

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Gas & Oil

June 2015

Ohio Edition

Abundance Beneath Congressman Bob Latta – Ohio’s 5th District he benefits of Ohio’s geological gifts reach far beyond its developing areas.

Today, in spite of geopolitical adversities and a seemingly unfavorable marketplace, our energy producers continue to develop our natural resources and produce natural gas and oil at rates not seen in generations.

Increasing production numbers have had positive impacts that span and exceed our borders, and we can see the benefits in our everyday lives. From the oil fields of eastern Ohio and engineering firms in Dayton, to the steel tubing manufacturers, truck drivers and welders across the state – the industry is bringing well paying jobs to our communities.

Energy is also driving immense investment in our state’s economy. This past month, Bricker and Eckler released their Shale Economic Development Overview identifying over $28 billion dollars in direct investments into the state as a result of the continuing development of the Utica/Point Pleasant shale formation.

As the study notes, these incredible numbers do not take into account either the downstream and infrastructure investments currently pending, or the potential billions of dollars that could be entering the state with the recently announced ethane cracker plant.

What we have found since we first started tapping into the deep shale formations in eastern Ohio and across Appalachia is a viable, productive and vast resource of energy.

With a proper business and regulatory climate in place, these formations will continue to draw investment, its development will continue to create jobs, and the returns will continue to both benefit energy consumers, and drive America towards energy security.

As a region producing headline-drawing rates of natural gas and natural gas liquids, propane is a commodity in high supply. Nationally, propane contributes $38.7 billion to America’s GDP, provides nearly 50,000 domestic jobs, and over 50 million Americans choose propane as their energy source in a

T

wide array of applications.

It is an abundant, clean-burning, domestic fuel that is a key component in America’s energy portfolio.

In recognizing this vital energy source, and in an effort to help further educate fellow Members of Congress on its many uses and importance, I am pleased to have recently announced the formation Congressional Propane Caucus. As a Co-Chair with my fellow colleague Congressman Tim Walz (D-MN), I hope to grow this bipartisan caucus of ten founding members – five Republicans, five Democrats – in order to accomplish this goal.

Propane is essential to our every day lives; it heats our homes, aids in the production of our farms, and is increasingly being used as an alternative, clean burning fuel for transportation.

While the recent developments in the energy sector have generated a strong domestic propane supply that is projected to remain plentiful for the foreseeable future, many challenges exist to ensure that Americans have an adequate supply of propane when they need it.

The Congressional Propane Caucus was designed to focus on these challenges, so that Congress can ensure that propane continues to serve American consumers in a consistent, reliable, and affordable manner.

As a member of the Energy and Commerce Committee, and a representative of one of the nation’s leading energy producing states, I look forward to continue working to support an “all-of-the –above” approach to America’s energy policy, one that guarantees we may fully take advantage what our natural resources have to offer.

This goal can be accomplished through the House Energy & Commerce Committee’s “Architecture of Abundance”, which has created the guidelines to achieve all we can hope to accomplish in light of America’s new energy revolution.

These guidelines are clear, with what Committee Chairman Fred Upton (R-MI) identified as five pillars of focus: modernizing infrastructure, maintaining a diverse electricity portfolio,

www.GasandOilMag.com

Gas & Oil

June 2015

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Our Feet permitting a manufacturing renaissance, harnessing energy efficiency and innovation, and unleashing new energy diplomacy.

The United States has emerged as the world’s leading energy producer, and this comprehensive legislative plan is demonstrative of a commitment to America’s energy future.

In following this vision, Ohioans and families across the country can continue to enjoy low cost energy and petroleum by-products, the return of manufacturing, and a new genera-

tion of energy workers.

I look forward to continuing this American Energy Renaissance with the efforts of my colleagues in the House and Senate in providing an educated, commonsense approach to our energy policy.

U.S. Representative Robert E. Latta Represents Ohio’s Fifth Congressional District and serves on the U.S. House Energy and Commerce Committee.

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Gas & Oil

Ohio Edition

June 2015

‘The Good, the Bad and the Ugly’ OOGA chief gives update on gas and oil industry Kevin Lynch Dix Communications ALNUT CREEK — Shawn Bennett shared his insight and vast knowledge of the oil and gas industry as a guest speaker at the 25th anniversary banquet in April of the East Ohio Development Alliance at Carlisle Village Inn Shawn in Walnut Creek.

Bennett Bennett is the CEO of the Ohio Oil & Gas Association, and also serves as editor of the Association’s publications. He serves as spokesman for the industry to media outlets and other forums.

“I’m really just a simple man from southeastern Ohio,” Bennett said. “Where are we at in the oil and gas industry?

That’s been the topic here for three years now. We’ve been saying for the last few years that we are cautiously optimistic. Four years later, things are looking pretty good.

“We’ve permitted about 1,900 wells, and about 1,400 wells have been drilled in that time and we’re really starting to figure out where this oil and gas is coming from, what counties are going to be prolific, what counties work and which ones don’t work,” he continued.

Bennett says when he took over for OOGA, prices started to go down. When he was elected as senior vice president, there came the crash. He apologized to all the oil and gas producers in the audience. To the consumers, he

W

said, “You’re welcome for the cheap prices at the pump.”

He calls his presentation the Good, the Bad and Ugly.

“It is good because we have gas, not a phrase you want to use at Thanksgiving dinner,” Bennett said at the April 24 meeting. “Eastern Ohio, Belmont, Carroll, Guernsey, Harrison, Monroe, Noble, Jefferson, this is where we’re seeing this development take place for many years to come.

It is very exciting to watch.

“Some folks went north, others went south,” he continued.

“Being selfish, and from southeast Ohio, I’m glad we won.”

He says a dramatic increase in oil and natural gas

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production, about 12.6 million barrels of oil and about 452 million cubic feet of gas being produced in a year. That’s about 2 million cubic feet per day.

“To put that into perspective, Ohio consumes 900 billion cubic feet per year,” he said. “For the past many years, we’ve had to get all out natural gas from the gulf of Mexico/Texas region, or from out west. We were always an importer. By the end of this year, we could potentially become an energy exporter for natural gas, which is huge. This is amazing.”

That means low costs and reliability in Ohio.

“Having said that, now I go to the Bad and the Ugly,” Bennett said. “Over the past four months, we’ve seen oil prices drop 50 percent, natural gas prices are down 60 percent. Those drops are affecting consumers in a very positive way. Natural gas prices are lower than we were paying in 1984. Hooray for consumers, not necessarily great for operators at this time.

“We also have that natural gas uplift from folks who have invested in natural gas processing,” he added. “A lot of investment in the oil and gas sector over the last four years,

13

tied to pipelines and processing, we’re seeing about $100 million a week invested in Ohio over the past four years.

I can’t imagine another industry that has put that kind of investment in Ohio.”

Rig counts have dropped. Three companies in the Utica have suspended operations until prices return.

“Cheer up, there is a silver lining,” Bennett said. “I would like to see the original 18 counties as it was touted back in 2011. Each well is a data point. Oil is a volatile market, a world commodity, so there are a lot of factors.”

Unrest in Venezuela, ISIS, Iranian sanctions tightened, unrest in oil dependent countries, if the world economy is doing better, the price oil increases.

“Natural gas is landlocked,” he added. “We were looking at ways to get natural gas into the United States and now we’re looking for ways to get it out of the United States.

There are several NGL export projects in the works and I think that will help boost prices and do a lot of good things.”

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Gas & Oil

June 2015

Towers change

Ohio Edition

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The 28 acre lot that will soon be the home of Carbo Ceramics Inc. is quickly progressing now that spring has arrived.

The facility is located just east of Newcomerstown, along U.S. Route 36.

The completion date for work is scheduled for Aug. 1.

The nature of the business involves the distribution of ceramic proppant via transload facility. The facility’s intended purpose is to serve the growing oil field clients in Ohio. The new $14.6 million facility will be a distribution center for Carbo proppants, which are ceramic beads that are made to keep a hydraulic fracture open during its operation.

The products will be delivered to the site by rail and stored in silos that are able to hold 180 million pounds of ceramic proppant before being transported by truck.

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Gas & Oil

Ohio Edition

June 2015

CNG vehicles may get tax break Marc Kovac Dix Communications OLUMBUS — Two state lawmakers have introduced revamped legislation that would provide tax breaks for the purchase of vehicles that run on compressed natural gas.

Reps. Sean O’Brien (D-Bazetta) and Dave Hall (R-Millersburg) said they have made changes to the proposed law changes, with hopes that the bill will make it through the Ohio Senate this time around. Comparable legislation passed the Ohio House a year ago but did not move through the other chamber before the end of the session.

The goal of the legislation is to prompt local governments, businesses and consumers to buy new vehicles or convert existing ones to run on natural gas, taking advantage of supplies being tapped in eastern Ohio’s emerging shale oilfields.

“It’s clean for the environment, it’s more energy independent, greater national security — we’re not sending money to countries and organizations that may be sending us terrorists or bombs,” O’Brien said during a rooftop press conference at Clean Fuels Ohio, with the Columbus skyline as a backdrop. “It’s less expensive than traditional fuels. It saves money on auto maintenance, and it’s a job creator.”

Hall added, “Ohio is a dominant energy player in not just the nation but the world. We need to be able to use our resource, use it properly.”

Last session’s legislation included thousands of dollars in tax breaks to cover new vehicle purchases or conversions.

There was also funding earmarked for grants to local governments and nonprofit groups to convert their existing vehicle fleets to compressed natural gas, plus a phased-in motor fuel tax on CNG. O’Brien said the new legislation includes some changes, including lengthening the motor fuel tax phase-in for

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State Reps. Sean O’Brien (D-Bazetta), right, and Dave Hall (R-Millersburg) announce new legislation to provide incentives to increase the adoption of vehicles that run on compressed natural gas and other alternative fuels.

compressed natural gas to 10 years from five. The new bill still includes a sunset provision, providing a set period for consumers and others to take advantage of tax breaks.

“We’re not picking winners and losers,” O’Brien said.

“We’re just jump-starting it and then letting the industry and the market forces dictate where natural gas goes.”

Backers hope to move the bill through the House before the summer recess.

“Teeing this bill up early, right out of the budget out of the House... we’ll be able to hand this off in plenty enough time for the Senate to work on it....,” Hall said.

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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Gas & Oil

June 2015

Ohio Edition

Small turn-out for protest against Ohio drilling Marc Kovac Dix Communications OLUMBUS — Groups that oppose horizontal hydraulic fracturing, or fracking, gathered outside the Statehouse Tuesday to urge lawmakers to kill a bill they say would make it easier to drill for oil and gas on state-owned land.

About 25 people held signs, listened to protest music and otherwise voiced their opinions after visiting legislators and urging them to vote against House Bill 8.

“Enough is enough,” said Alison Auciello, the Ohio organizer for Food & Water Watch, which has pushed for a statewide ban on fracking. “We are not seeing the promises come to fruition with this industry. What we’ve seen are accidents, leaks, spills. We’ve seen manmade earthquakes...

They’re happening almost on a daily basis, and now the state wants to fast-track fracking on our state lands.”

HB 8 would speed up state consideration of agreements by property owners who want to join together to tap oil and gas reserves on their lands.

HB 8 also includes provisions for the inclusion of stateowned lands in unitization applications, though lawmakers in the House edited language related to state-own lands to include protections for state parks and forests.

“It doesn’t change state laws that pertain to where hydraulic fracturing can occur,” said Rep. Christina Hagan (R-Alliance), primary sponsor of the legislation. She added, “It simply eases the government bureaucracy standing in the way of development.”

HB 8 passed the House in March on a unanimous vote, with Republicans and Democrats supporting. Deliberations on the bill are under way in the Ohio Senate.

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Alison Auciello, left, the Ohio organizer for Food & Water Watch, speakers during a protest at the Statehouse Tuesday, calling on lawmakers to reject legislation that would make it easier to lease and frack state lands.

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Gas & Oil

June 2015

Ohio Edition

Oil and natural gas stocks outperform other assets in state pension funds

Gas & Oil

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OLUMBUS, OH — Returns on state pension funds in Ohio from investments in oil and natural gas companies continue to provide strong earnings for public pension retirees, including teachers, firefighters and police officers, according to a Sonecon study released by API. On average, $1 invested in oil and natural gas stocks in 2005 was worth $2.28 in 2013. By contrast, $1 invested in all other assets over the same period was worth $1.75.

“During good economic times – or challenging ones – oil and natural gas investments far outperformed other public pension holdings in Ohio,” said Chris Zeigler, executive director of API-Ohio. “We already know that a healthy domestic oil and natural gas industry is good news for jobs and government revenue, and we now know that it also provides stability to the nest eggs that millions of Americans are counting on for a secure retirement. A thriving Ohio oil and natural gas industry directly benefits Ohio workers and retirees.”

Nationwide, oil and natural gas stocks also outperform other assets, according to the report. While oil and natural gas stocks make up, on average, 4 percent of holdings in the CAMBRIDGE LIONS CLUB top public pension funds, they accounted for 8 percent of the returns in these funds from 2005 to 2013. The owners of

June 2015

21

America’s oil and natural gas companies are largely retirees and middle class Americans saving for retirement, according to a separate report by Sonecon, Who Owns America’s Oil and Natural Gas Companies.

“Millions of Americans with a 401k, mutual fund, or pension also rely on the income and capital growth these companies provide for their retirement,” Zeigler said. America’s oil and natural gas companies are owned by tens of millions of Americans, according to a previous Sonecon study.

The report examines the top two public pension funds in 17 states, which collectively cover nearly half (49 percent) of all workers in the United States who participate in state and local government pension plans.

States analyzed in today’s report are: California, Florida, Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Ohio, Pennsylvania, South Carolina, and West Virginia.

API-Ohio is a division of API, which represents all segments of America’s oil and natural gas industry. Its more than 625 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and is backed by a growing grassroots movement of more than 25 million Americans.

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Gas & Oil

June 2015

Ohio Edition

ODNR injection well process under fire by anti-fracking groups — again Jackie Stewart Energy in Depth - Ohio ecently, representatives from 23 known anti-fracking groups including Frackfree Mahoning Valley and the Frackfree America National Coalition, wrote a letter to the U.S. EPA Office of Environmental Justice. The groups claim to have found illegal activities, but as would be expected, their argument falls apart under closer scrutiny.

“Our industry recognized, about 17 years ago, that there was a concern of lack of science education in the classroom,” said Rhonda Reda, executive director of OOGEEP. More specifically, the coalition, led by author Teresa Mills, of the Center for Health, Environment and Justice, claimed “clear environmental justice abuses cognizable under Executive Order 12898, signed by President Clinton in 1994, addresses federal actions.” The group is alleging that Ohio’s Class II Underground Injection Control program for injection wells calls into question Executive Order 12898, a 1994 order signed by President Clinton, which aims to address federal actions pursuant to environmental justice in minority populations and low-income populations.

While the authors make a number of erroneous claims, we’ll focus on the top three, followed by the facts.

Claim No. 1: “The profoundly weak federal requirements for Class II injection well delegation under Section 1425 of the Safe Drinking Water Act.” Fact: As Energy In Depth has reported time and time again, the allegations that the Class II UIC program in Ohio

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is neither safe nor regulated is simply not factual. Ohio has some of the most stringent regulations in the country. Ohio has been regulating the process since 1983, when the EPA gave the state primacy over its program.

According to the Ohio Department of Natural Resources: “Managed by ODNR since 1983, the state’s Underground Injection Control Program has successfully injected large volumes of oilfield wastes, protecting underground sources of drinking water and our ecosystem. Fees raised by injection wells support permitting, certification, and inspection of wells and service operation.”

In 2012, ODNR updated its Class II injection well regulations, which go above and beyond what EPA regulations require. The updates include testing requirements and reporting standards. Also from ODNR (emphasis added): “Class II injection wells require at least four layers of protective steel casing and cement, which safeguards underground water aquifers. The injection zone is always below a layer of impermeable formation, which keeps the fluids trapped deep in the porous formations below.

“All aspects of the drilling and construction of Class II injection wells and surface casing are witnessed by an inspector. After deep injection begins, inspectors continue to monitor the well on a regular basis for mechanical integrity.

Each well is inspected about once every 10 to 11 weeks.”

For more understanding of the Class II Underground Injection Control process, watch a short video from the Ohio Department of Natural Resources to learn more about their stringent regulations.

Gas & Oil

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June 2015

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Gas & Oil

June 2015

Ohio Edition

OOGEEP presents workshops in June, July Sophie Kruse Dix Communications

T

eachers from all 88 counties in Ohio will once again be welcomed to two different workshops hosted by the Ohio Oil and Gas Energy Education Program.

Hosted in Marietta June 18 and 19 and Youngstown State University July 27 and 28, teachers will be welcomed to workshops, presentations and hands on activities. The workshops are geared for teachers who want to learn more about Science, Technology, Engineering, Math principles that are used in the state’s oil and gas industry.

“Our industry recognized, about 17 years ago, that there was a concern of lack of science education in the classroom,” said Rhonda Reda, executive director of OOGEEP. The workshops meet common core standards and are taught by teachers or industry professionals. The workshops were originally developed by teachers working with OOGEEP. 50 teachers per workshop is expected, and more than 2,700 teachers have gone through the workshops. Reda said that workshops regularly fill up each year.

“OOGEEP provided a great opportunity to learn more about Ohio’s energy resources,” said Shirly Singree, a recent workshop graduate, in a press release. “I’m now better equipped to bring this information back to our schools to educate our students and community.”

Teachers who attend receive continuing education credits and optional graduate credit. There’s no cost for teachers to attend, and they’ll receive graphic organizers, online activities, career connections, curriculums, classroom supplies and material kits they can tack back to their students. This is all provided through Ohio oil and gas producers.

“It’s funded by the oil and gas industry,” Reda said. “We don’t feel that is up to the schools and teachers. We feel that it’s our industry’s obligation.”

While the Marietta workshop isn’t hosted directly at the college, teachers will get the chance to visit and work at the college during their two-day workshop.

Recently, OOGEEP has introduced a revamped curriculum, called “STEM Lessons in Oil and Gas Energy Education,” which shows how STEM can be used to learn

about a variety of areas, including chemistry, engineering and geology. Some of the experiments include demonstrating how biotic material is transformed into hydrocarbons, helping students understand how sound waves can be used to map geological formations underground and how chemistry and petrochemicals are processed and refined into familiar products like soaps, medicines, plastics, rubber and synthetic fibers.

At press time, spots were quickly filling up. To register, visit the OOGEEP website.

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Gas & Oil

Ohio Edition

June 2015

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY

BY NUMBER OF SITES

1. Carroll County 482 2. Harrison County 348 3. Belmont County 248 4. Monroe County 216 5. Guernsey County 183 6. Noble County 164 7. Columbiana County 131 8. Jefferson County 57 9. Mahoning County 30 10. Tuscarawas County 20 11. Washington County 18 12. Portage County 15 Trumbull County 15 13. Stark County 13 14. Coshocton County 5 15. Holmes County 3 Morgan County 3 Muskingum County 3 16. Knox County 2 17. Ashland County 1 Astabula 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 05/23/15

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Gas & Oil

June 2015

Taxpayers Beware!

Costly ballot initiatives on the way Jackie Stewart – Energy in Depth, Ohio OLUMBUS, OH -- A tip from Energy in Depth, Ohio taxpayers beware: Costly ballot initiatives coming your way, courtesy of the national ban fracking group, the Community for Environmental Legal Defense Fund, is targeting Ohio with campaigns to initiative local fracking bans in Medina and Athens Counties.

This group has already led efforts in eight communities in Ohio, which include county petition drives in Medina, Athens, Meigs, Portage and Fulton counties, and city petition actions in Columbus, Youngstown and Akron. This string of ballot initiatives is being done under the CELDF umbrella of the Ohio Community Rights Network.

Of course, what the CELDF is not telling these communities is that lawsuits regarding local fracking bans could cost municipalities millions of dollars and could even lead to bankruptcy.

These ballot attempts have been challenged several times.

Most recently in Cuyahoga County where a judge ruled that a drilling ban clearly conflicts with Ohio’s oil and gas law. Under the law, the regulation of the oil and gas development exclusively belongs to the Ohio Department of Natural Resources.

In fact, the city of Broadview Heights ban, which was the catalyst behind Cuyahoga County’s decision, just decided they

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Ohio Edition

will not appeal the ruling. Broadview Height Law Director Vince Ruffa recently stated, “There was no basis for an appeal, honestly. They (Cuyahoga County) gave us the opinion that appealing would be pointless and frivolous.”

Judge Micheal K. Astrab said state code prohibits local governments from exercising authority that “discriminates against, unfairly impedes or obstructs oil and gas activities and operations.”

Additionally, the pivotal Ohio Supreme Court decision, which provided a final ruling to the Munroe Falls vs. Beck Energy case earlier this year, concluded that the state has primacy over oil and gas regulation. More importantly, it established that what the “state has allowed, the local government cannot prohibit.”

However, all of these actions by various courts have not dismayed the CELDF, which currently identifies Ohio as one of six states under their radar. Ohio joins New Mexico, Washington State, New Hampshire, Oregon and Colorado as targets for their campaigns.

Ohio should take a hard look at CELDF’s latest victim, New Mexico, where special interest groups cost Mora County big bucks after a federal judge overturned a 2013 ordinance that was passed, which was authored with considerable input from an “ environmental group based in Pennsylvania .”

Also noteworthy is Mora County has the second highest unemployment rate and is one of the poorest counties in the state. Folks there are now having buyer’s remorse after learning that they county may be faced with municipal bankruptcy: “We have heard estimates ranging from tens of thousands to hundreds of thousands of dollars,” Michael Aragon, an attorney for Mora County. County resident Frank Splendoria said, “It was totally foolish to begin with, to even try this. How do you pass an ordinance that’s going to override the state and the federal constitution? I don’t know if they were playing us [in Mora County] as suckers, or they were sincere in their beliefs. I would probably tend to the former rather than the latter, given that Mora County was the first county to try this and failed miserably at it. I don’t know where we would find the money. If you look at the county’s budget, they barely have enough money to provide the bare essential services ...

(The ban) hasn’t made any sense to anyone with any sense to begin with.”

This cautionary tale was backed by a recent article in Energywire, warning these ballot measures can be costly to local government. But the CELDF doesn’t seem too concerned on that point.

A representative of Frack Free Mahoning Valley reported to Energywire that the CELDF agreed on the payment of $1 to represent them if they became embroiled in a suit; however, she also noted that “a possible lawsuit never entered the picture.” This is interesting, since the CELDF flew the coop when Mora County was on the hook to pick up their tab.

Luckily the voters of Youngstown have not put their city government in the same position.

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Gas & Oil

Ohio Edition

June 2015

Carrizo Oil being ‘patient’ with oil pricing Judie Perkowski – Dix Communications OUSTON — Carrizo Oil & Gas, Inc. has reduced its budget for all drilling activity in 2015 by 40 percent, said Richard “Dick” Smith, Carrizo’s vice president of land, during a recent phone interview at Carrizo’s headquarters is in Houston, Texas. The 40 percent Richard reduction amounts to approximately $500 million.

Smith A tidy sum by any standards, but a lot less than the $858 million Carrizo spent in 2014.

The company has substantial prospective acreage in the Delaware Basin and Eagle Ford Plays in Texas, Niobrara in Colorado, the Marcellus in Pennsylvania and the Utica Play in Ohio.

Carrizo has been successful because of “significant expertise in drilling and completion of complex horizontal wells in addition to advanced three-D seismic techniques to identify potential oil and gas reserves,” said Smith.

The drop in the commodity price (for a barrel of oil) is not the only reason Carrizo laid down its rigs in the Utica Play in Ohio.

“Carrizo did not have a midstream arrangement in place, but we are anticipating a midstream agreement in the near future.”

He also said Carrizo’s leases in the Utica are fairly new ... “there is a lot of time left on those leases. We are very patient ... We are well positioned to capitalize on opportunities.

“There is a lot of competition for the Utica shale, even though most of it is gas. We divested most of the company from dry gas assets in 2013. We are after liquids, primarily oil and condensate.”

But, fear not eastern Ohioans, Smith said Carrizo is not leaving the area.

“We are not going anywhere,” said Smith. “We have 28,000 net acres in the Utica. We will restart operations in the Utica when we can get a respectable rate of return.”

Smith said he is confident the company will be drilling again in 2016.

Carrizo has occupied office space in Cambridge since 2011,

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when the company began acquiring land in the Utica Play.

“We have several wells ready to drill where we have drilled top holes, and we have four drilled, three of these completed and producing. Carrizo has one well in Richland Township, one in Washington Township and two in Londonderry Township.

“So far we are happy with the [condensate] results,” he said.

Carrizo Oil & Gas was co-founded in 1993 by current President and Chief Executive Officer S.P. “Chip” Johnson.

Quotes from Johnson in a recent press release address the company’s success in the Utica formation: “We believe our combination of high-return assets, operational flexibility, and strong balance sheet have us well positioned to manage the current environment and quickly ramp up production once we get an appropriate commodity price signal. We continue to be pleased with the operational performance across all of our areas. We’re also happy with the early results from our most recent two Utica wells, which are the initial tests of our northeast Guernsey County acreage.

“We remain focused on cost savings in the current environment, and continue to make good progress on this front. Currently, we have achieved drilling cost reductions of more than 10 percent and completion cost reductions of nearly 25 percent from late 2014 levels.”

From 1993 to 2000, Carrizo operated along the Texas and Louisiana coast until Johnson learned about the Barnett Play near the Dallas-Fort Worth area and invested a minimal amount for access to the data about the play. Success came quickly, and the rest, as they say, is history. The company went public in 1997, gained access to the Eagle Ford in 2009, and today employs more than 250 people.

Dick Smith has served as vice president of land for Carrizo Oil & Gas, Inc. since 2006. He is a certified professional landman with a Bachelor of Business Administration in Petroleum Land Management from the University of Texas in Austin.

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Gas & Oil

June 2015

Third anniversary

Ohio Edition

magazine in Ohio Judie Perkowski – Dix Communications It didn’t take long for the publishers at Dix Communications to realize the commotion created by the presence of out-of-state license plates, a bevy of white trucks, and a demand for lodging accommodations were major implications that a possible oil boom was about to encompass southeastern Ohio — Appalachian Ohio — counties that have languished in stagnant unemployment and non-existent economic growth for longer than most folks care to remember.

The first ever magazine in the Dix Communications repertoire devoted entirely to the oil and gas industry was launched June of 2012 amid growing controversy as to the authenticity of the oil boom. It was up to the reporters and editors of the magazine to present a true-to-life picture of what was transpiring up and down the eastern Ohio border.

Recounting data from the first book, a 48-page publication with a typical oil field worker on the cover, posted statistics from the Ohio Department of Natural Resources listing the top counties with active horizontal drilling activity in the Marcellus and Utica shale formations. Carroll County was already in the lead with various stages of permitting, drilling or producing with 78 well sites.

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Columbiana County was second with 34 well sites, Guernsey and Noble Counties each had seven. Latest figures from the ODNR for May of 2015: Carroll Çounty 476 well sites identified, Harrison County has 341 sites and Guernsey County is alone at number 5 with 176 well sites.

All the attention was focused on the “wet gas” found in the Utica Play, instead of just dry gas in the Marcellus. But three years later, in spite of a huge decline in the price of a barrel of oil, drilling continues in Ohio for natural gas, which has been a boon to consumers at the gas station. And, one of the reasons drilling has not been curtailed as much as oil-drilling states like Texas.

Advertising was primarily from any business that could offer a service to the industry, from trucks to tankers and banks to building supplies. One of the biggest additions to the magazine in the past three years has been stories and advertising from law firms, advising landowners on how to manage that new-found wealth.

In July of 2012, the magazine was renamed the Ohio Gas&Oil, and continues today as a major source of information about the gas and oil industry for business and consumers.

Happy Anniversary GAS&OIL magazine, live long and prosper. jperkowski@daily-jeff.com

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Gas & Oil

June 2015

Ohio Edition

Pipeline construction may result in questions Thomas Doohan – Dix Communications OOSTER -- Easement contracts with pipeline developers should be thoroughly researched before signing on the dotted line; everything is negotiable.

That is what Ohio Farm Bureau Director of Energy, Utility and Local Government Policy Dale Arnold and Logee, Hostetler, Stutzman & Lehman attorney Chris Finney said during a pipeline informational in April at the Ohio Agricultural Research and Development Center’s Shisler Center.

Providing a history of pipelines in Ohio and tips for things to watch for in easement contracts, the men drilled the importance of research into the audience.

Arnold said research begins with understanding what kind of pipeline is going in, as they vary.

Interstate, intrastate and utility service pipelines are coming through Ohio, he said, as well as infrastructure renewal lines and collection lines.

There are different sizes and uses for pipelines, Arnold said.

Eminent domain, which only grants a pipeline developer access to a property, is a possibility with interstate pipelines, he said, but not for intrastate pipelines.

“Get those down,” Arnold said, explaining how asking questions in the beginning about pipeline type can go a long way in negotiating contracts.

Each type of line has a different set of rules, he said; some are governed by the Federal Energy Regulatory Commission and others are ruled by Ohio authorities.

Also impacting easement agreements, Finney said, are the characteristics of each parcel crossed by a pipeline. Each parcel is impacted differently, he said, and the costs need to be reflected in easement contracts.

In negotiations with landowners, he said, make sure things are explicitly stated. If there is an area of a property that is off limits, have it specified. Make sure the contracts note how the developer should return the land following construction, Finney said.

It is important to detail the number of pipelines that are allowed on the property as well as pipeline diameter, depth and even the content of the material being transported, he said.

“How wide will the area be,” he asked the group, explaining

W

how landowners need to know easement specification.

They should be in writing, Finney said, as well as the duration of the easement, the terms of termination and even the restoration of the land.

All of this helps with increasing compensation, Finney said.

For instance, pipeline developers will need to sign a new contract with a landowner if they change the material transported by the pipeline if only one material was previously approved.

While most farm contracts are signed on the hood of a pickup truck, he said this contract requires research. Having an attorney helps, Arnold said.

“Don’t sign anything without having it reviewed,” Finney said.

“Take it to a lawyer.”

When the research has been done, Arnold said, negotiate with the developers. When the developers ask why extra compensation is deserved, he said, “on the hood of their pick-up truck -show them.”

Franklin Township farmer Greg Sautter said the ET Rover pipeline was right at the edge of his property. He said this was his second pipeline meeting and he said he always learns more information. While he is arming himself with information, he still feels somewhat powerless.

“We didn’t ask for this pipeline,” Sautter said. But “we have to deal with it.”

Salt Creek Township farmers Lynn and Linda Orr said the ET Rover pipeline is going across four parcels they rent and farm.

While some felt encouraged by the fluidity of some pipelines at this point, he said he would prefer the pipeline routes be etched in stone, adding it would help for planning purposes.

“How do we predict the future?” Linda Orr asked.

Chester Township farmer Art Stoller said the Utopia East likely will go through his family farm. He said he also feels powerless, though the information at the meeting helped to curb that.

“It’s all new,” he said, explaining the pipeline representatives come to negotiations with years of research behind them. “They know what they are doing. We’ve got to scramble to catch up.”

Reporter Thomas Doohan can be reached at 330-287-1635 or tdoohan@the-daily-record.com.

Gas & Oil

www.GasandOilMag.com

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Gas & Oil

June 2015

Ohio Edition

Coalition gets update on Dominion East operations Judie Perkowski Dix Communications AMBRIDGE, OH -- Presenting an optimistic view of Dominion East Ohio, Mack Smith Jr., the company’s manager of commercial gas services, said Dominion has “overlays on the Utica and Marcellus Shale, the most prolific wet gas plays in the United States.”

Dominion’s home office is in Virginia, but it has an office in Canton.

Smith engineered a power point presentation for attendees at the Guernsey Energy Coalition meeting May 7 at the Southgate Hotel.

The Coalition meetings, initiated in 2011 by Jo Sexton, president of the Cambridge Area Chamber of Commerce, were held monthly until 2015 when Sexton announced the meetings would be whenever she could engage a speaker relevant to gas and oil, primarily in southeastern Ohio, about subjects or businesses not presented previously at any of the Coalition’s meetings.

“Dominion is one of the nation’s largest producers and transporters of energy with more than 12,000 miles of natural gas transmission, gathering and storage pipeline and more than 6,000 miles of electric transmission lines, serving utility and retail energy customers in 12 states,” said Smith.

“Dominion companies include, but not limited to Dominion Energy Solutions, Dominion Transmission, Inc., Dominion Gathering-Producer Services and Dominion Midstream Partners. ”Dominion gathers about 80 percent of all Ohio gas and interconnects with seven major pipelines to distribute gas to markets, and to sell storage services to marketers and end users.”

Since 2011 when well permitting began ramping up in the

C

Utica, shale development was the priority, and shale gas (and oil) was the prize.

“What makes shale gas so attractive. Shale gas has additional value because of components in addition to methane, such as propane, butane and pentane, that have their own markets. The natural gas found in these rocks is considered unconventional, similar to coalbed methane,” he said. “Predictions for the Marcellus and Utica shale in 2013 have come to fruition in 2015: 2bcf per day of natural gas liquids. (Translation: two billion cubic feet per day) When oil peaked in August/September of 2014, the rush came to a screeching halt and the downhill slide began.

And although oil prices have limited drilling, U.S. dry gas production has grown dramatically over the past few years.

“The drop in oil prices is not the only reason for companies laying down their rigs. It is also because of a lack of infrastructure,” said Smith. “It compounds the problem.

No pipelines to transport gas and oil, and no cracker plants for processing. And, according to most reports, the muchneeded pipelines will not be operational for another two years” “In 2012, Dominion partnered with Caiman Energy II and formed the Blue Racer Midstream, a $1.5 billion joint venture. Dominion brought the assets; Caiman brought the expertise and capital,” said Smith. “The joint venture with Caiman, and the Liquids Uplift Program for Conventional Producers, in partnership with the Ohio Oil and Gas Association, is very good opportunity for our conventional producers to participate in the liquids market. And, although drilling for oil and gas has declined 67 percent in the Appalachian Basin, Dominion gas production has increased because of four reasons: Dominion East Ohio has assets that overlay necessary

Gas & Oil

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June 2015

41

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Guest speaker Mack Smith Jr., second from Left, manager of commercial gas services for Dominion East Ohio and guest speaker at the Guernsey Energy Coalition meeting, was introduced by Jo Sexton,Left, president of the Cambridge Area Chamber of Commerce and moderator of the event. Smith was joined by Tracy Stevens, also of Dominion East Ohio; and Mike Chadsey, director of public relations for the Ohio Oil and Gas Association.

infrastructure; Dominion has unique substantial supply flexability; Dominion is making substantial capital investments in Utica development; and the development of the Utica and Marcellus continues to play a critical role in economic development and maintaining low gas prices.

“Dominion East Ohio market has changed significantly, and will continue to change in the years ahead.”

After Smith’s presentation, Sexton made the following announcements: • Due to the June 20 Shale-Abration, there will be no June Energy Coalition meeting. The next meeting is July 9 at the Southgate Hotel.

• Sexton said there is some confusion about meeting sponsors. A broadcast sponsor, sponsors the televising of the meeting by AVC Communications. Cost for this sponsorship is $150. The lesser sponsorship is for the coffee and doughnuts, which is $50. Sexton said she has coffee/doughnuts sponsors lined up until October. She needs broadcast sponsors. Call the Chamber office at (740) 439-6688 for more information, or to sponsor a broadcast.

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Gas & Oil

June 2015

Ohio Edition

Bricker & Eckler publish 4th edition of shale economic overview C

olumbus, OH – Bricker & Eckler LLP has published the fourth edition of its “Shale Economic Development Overview – Spring 2015,” a report detailing more than $28 billion in investments in Ohio as a direct result of shale development. This represents a 40 percent increase in the total investments since the Fall of 2014.

“Despite recent fluctuations in oil prices, the number of shale projects in Ohio continues to grow,” said Matt Warnock, Bricker partner and co-chair of the firm’s Oil and Gas Industry Group.

“Further—and somewhat surprising—we haven’t seen any significant slowdown in the number of high-dollar projects. All of this bodes well for Ohio, particularly the southeastern region of the state.”

“The activity we have witnessed in the last six months has diverted from a focus on exploration and production to downstream infrastructure,” says Aaron Bruggeman, Bricker attorney based in the firm’s Barnesville office.

“We continue to see an increase in the number of pipeline projects, particularly interstate lines, gathering facilities, compressor stations and related investments.”

The firm published the first edition of its report in October

2013, at which time it identified $12.2 billion in new shalerelated projects. Since then, the cumulative total grew to $16.8 billion in the Spring of 2014, $22.3 billion in the Fall of 2014, and now well over $28 billion. Most importantly, this total fails to take into account the dozens of projects with unknown values and the potentially multi-billion ethane cracker plant recently announced by Governor John Kasich as being slated for construction in Belmont County. As part of this project, PTT Global Chemical and Marubeni Corp. plan to spend approximately $150 million for engineering and permit work to determine if the project will move forward. If it does, the companies estimate it will bring several hundred permanent jobs, “several thousand construction jobs” and a total investment of “several billion dollars.”

“Development of Ohio’s shale play has created a positive and significant economic impact on southeast Ohio,” said Chris Schmenk, Bricker attorney and President of Argus Growth Consultants. “We are closely tracking the progress of this industry and are working hand-in-hand with many of the impacted communities to help them turn this activity into long-term growth and stability.”

Gas & Oil

www.GasandOilMag.com

June 2015

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Gas & Oil

June 2015

Ohio Edition

Thousands attend 4th Annual Ohio Valley Regional Oil & Gas Expo

Gas & Oil

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Cathryn Stanley Dix Communications T. CLAIRSVILLE, OH - Now in its fourth year, the Ohio Valley Regional Oil & Gas Expo, held April 28 and 29, has become so successful that it outgrew its venue this year. The event, facilitated by MPR Transloading & Energy Services on behalf of the Belmont County Commissioners and Belmont County Port Authority, featured 162 exhibitors both inside and outside at the Carnes Center located on the Belmont County Fairgrounds in St. Clairsville, Ohio.

MPR President Natalie Brown said 600 people were registered for the network reception held Tuesday evening, and nearly 3,000 people attended the convention on Wednesday.

“We sold out early on,” said Port Authority Director Larry Merry. He said organizers turned away 25-30 exhibitors, some of whom took outdoor spots. “I wish we had a bigger facility, but the weather was great and I think we had a very good event,” he said. “A show like this is about connecting businesses to customers. We have made this event about the proper businesses coming to do business with one another.”

Brown concurred that the focus of the Expo is a “business to business event” and that demand exceeded facility space.

She said there was a long waiting list this year. Organizers

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June 2015

are hoping to expand the event even more next year.

Brown said changes this year included moving the outdoor exhibitors to the front of the Carnes Center and locating parking so that those attending the Expo walked through the outdoor exhibitions.

Brown said exhibitors came from the tri-state area, as well as California, Oklahoma, Texas and Mississippi.

“Feedback we have received already is that this is the show to be at in the tri-state area,” she said. “We have been told numerous times this year that our Expo is comparable to those held in larger Ohio cities.”

Brown said feedback from a survey of this year’s exhibitors will be used to make improvements for next year’s Expo. MPR took over the facilitation of the Expo two years ago.

Speakers at this year’s event included: keynote speaker Daniel Rice of Rice Energy; Ohio Gas Association President Jimmy Stewart; President and CEO of TEK Construction Services, George Harakal; Ohio Oil and Gas Association Executive Vice President Shawn Bennett; Jackie Stewart, Director of Strategic Communications at FTI Consulting; Shale Media Group founder Tejas Gosai; Natalie Brown and Rick Frio, Executive Chairman of MPR Transloading and Energy Service.

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Gas & Oil

Ohio Edition

June 2015

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Gas & Oil

June 2015

Ohio Edition

Gas and oil experts predict the best is yet to come Chelsea Shar cshar@the-review.com peakers at the Stark County Oil and Gas Partnership’s Supply-Demand-Price Oil and Gas Expo on May 13 echoed the theme of oil enthusiasts across the state: the industry’s only gearing up.

During the event, held at the Pro Football Hall of Fame in Canton, three speakers talked about how the supply and demand of oil has affected the price and how that will affect residents of Ohio.

“We are in a renaissance and we need to take advantage of it,” said John Felmy, chief economist for the American Petroleum Institute.

He said despite the success of the industry, growth in the U.S. depends on the fundamentals of supply and demand.

“A 4 to 5 percent increase in supply has lead to a 40-50 percent decrease in price. ... The key from this is what came down fast can quickly reverse,” he said.

Today, 49 of Ohio’s counties contain over 50,000 producing wells — a statistic that was not valid five years ago.

Jimmy Stewart, president of the Ohio Gas Association, is in the business of transporting natural gas from one point to another.

“You are seeing hundreds of millions of dollars in newly proposed natural gas transmission lines,” said Stewart.

He attended the expo and said the technology that allows for drilling in Ohio and western Pennsylvania has changed the way Ohio will consume natural gas.

Stewart is president of a company working on half a dozen major natural gas transmission lines and said more will come in the future.

Historically, Ohio shipped it’s natural gas from the Gulf of Mexico or Colorado. He expects though that by the end of this year Ohio will be reaping as much oil to meet 100 percent of it’s consumption.

The ET Rover Pipeline and the Nexus Pipeline are two new Ohio pipelines that Ohio Gas Association is working on.

The pipelines will ship oil from Ohio though Michigan and to reserves in Canada. Some of that oil is used in Canada, while some is shipped back.

Stewart anticipates that like on interstates, businesses will

S

crop up along pipelines to take advantage of access to natural gas.

However, the potential industry growth has been slightly halted while oil hydraulic fracturing and drilling has slowed.

Jackie Stewart, a gas and oil research blogger and speaker for the online publication Energy In Depth, said the drilling uptick won’t likely happen until Ohio legislators decide on policy surrounding oil and gas development.

She said a year ago at this time oil and gas companies couldn’t drill as much as they wanted to because of lacking infrastructure. Today, she said, it’s a waiting game for companies as they anticipate the Ohio Senate making a decision in June of this year.

Stewart explained that Belmont, Noble and Carroll counties are top producers for oil and gas. Much of the drilling in other counties throughout Ohio has slowed in comparison to those three counties as oil and gas wells produce the most farther south.

“Those are regions that are still profitable because of the commodity prices. It’s all about the geology of the region and what they’re pulling out of the rocks,” she said.

By the end of the year, when Stewart predicts the gas and oil commodity prices will have the opportunity to correct from the oversupply in the market, it will be easier to predict the economic impact of the drilling.

“When commodity prices come back, and they will, you are going to see an uptick (in drilling). A lot of companies are waiting to see the regulations that come out of Columbus,” Stewart said.

In the meantime, both Stewart and Felmy predicted that the gas and oil market in Ohio will produce more jobs and economic growth than the state has seen in decades.

“American’s story, as far as shale development goes, has yet to be told,” Stewart said.

Gas & Oil

www.GasandOilMag.com

June 2015

49

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Gas & Oil

June 2015

Ohio Edition

TITLE = RESULT – Or the Importance of Proper Ownership with Oil and Gas Interests Frank McClure–Attorney Something I have found that people do not understand is the impact of TITLING property on their estate planning. This becomes even more important when you are dealing with real estate and Oil and Gas interests in particular. How you own your property helps determine its distribution when you die. It is important to double-check how you own your property.

Planning with property you don’t actually own (and this does happen) is no planning at all. The three primary forms of property ownership include fee simple, tenancy in common, and joint tenancy with right of survivorship. Each these forms of ownership has its own inherent and unique features, so it is wise to understand them.

Fee simple is simple. You and only you own the property. Property in fee simple means you own all of it. You can: (1) give it away, (2) sell it, or (3) leave it on death.

Is there any pitfall with fee simple property? Yes. Property owned in your own name is subject to both a living probate in the case where you become mentally disability, and a death probate upon death. In short, what may appear to be maximum control may actually result in a total loss of control.

Tenancy in common means that you and others own part of an asset. Each “tenant” has less control of the whole property than

would one person who owned it in fee simple. With tenancy in common you can: (1) give your part of it away, (2) sell your part, or (3) leave your part on death.

Tenancy in common requires that you own the property with one or more other people. Each tenant owns a percentage of the whole asset. For example, if there are two tenants, each owns 50 percent of the asset. If there are three, each owns 33 1/3 percent.

The number of possible tenants in tenancy in common has no limit.

For example, if you and a friend own a horse as tenants in common, you each own 50 percent of that horse. But who owns which half? It really doesn’t matter while both of you are alive, healthy, and getting along. You accommodate each other: each paying half of the expenses and receiving half of any income from trail rides. You have an agreement about when each of you gets to use the horse. If you should quarrel, however, problems can arise.

You can’t demand your half of the horse. Very likely, you and your ex-friend will have to sell the horse – if you can both agree on the price and manner of sale.

In case you and your friend cannot reach any agreement, you can go to court and have the judge sell the horse. This method is expensive, and odds are you won’t get the best price for the horse. But when tenants in common can’t agree, courts are virtu-

www.GasandOilMag.com

ally the only recourse available. If you can’t reach an agreement on who owns the horse, and what one co-tenant is going to pay the other for their half, you are likely to end up in court with a judge ordering a sale. Other challenges can arise even if you and your co-owner get along fine. Issues arise if one of you wants to sell your half to a third party, or if one of you becomes mentally disabled.

You can sell your 50 percent interest in the horse anytime you want, or you can give it away. Your other tenant cannot prevent either action. Even if you sell the horse to your friend’s worst enemy, your friend cannot do anything about it! The real problem is getting someone to buy your part of the horse. This new tenant will have to deal with your friend, and they, too, will have to agree on what to do with the horse.

Disability can be a problem for both you and your cotenant.

If you are disabled to such an extent that you cannot manage your own affairs, and you have not done proper living trust planning, a probate court will likely control your part of the property. The court may demand that the property should be sold—and your other tenant will have little or no control over the whole process.

At your death, you can leave your share of the property to whomever you want. Without proper planning, it will go through probate, leaving your other tenant once again under the control of the court. You may leave your share to several heirs, making life that much more difficult for the other tenant.

What I have stated above would also apply if you owned real property or oil and gas interests. The example above would apply for any property you owned with someone else as tenants in come.

Joint with right of survivorship is very common and very misunderstood. It is routinely used by spouses, but people who are not married use it too. Although similar to tenancy in common, joint tenancy has totally different results. If you own property in joint tenancy with right of survivorship: 1. You own all of it with someone else.

2. You can (a) give your interest away or (b) sell your interest.

3. You cannot leave your interest on death it will go to whomever you own it at that time.

There are many possible pitfalls with joint tenancy (outside use with spouses) that we don’t have enough space with this article to discuss them here.

What sometimes seems to be so simple, sometimes has more traps and problems than something that seems so complex.

This why when you are dealing with your real estate , oil and gas interests, or any planning concerning your property of any kind you should be talking to and attorney who concentrates in this area. If you have any questions or just want more information please contact our office or go to our website at www. fmcclurelaw.com.For example, if you and a friend own a horse as tenants in common, you each own 50 percent of that horse.

But who owns which half? It really doesn’t matter while both

Gas & Oil

June 2015

51

of you are alive, healthy, and getting along. You accommodate each other: each paying half of the expenses and receiving half of any income from trail rides. You have an agreement about when each of you gets to use the horse. If you should quarrel, however, problems can arise. You can’t demand your half of the horse.

Very likely, you and your ex-friend will have to sell the horse – if you can both agree

CORRECTIONS Tiger General LLC was incorrectly identified as Tiger Energy LLC in an article published in the May issue of the Ohio Gas & Oil Magazine. We apologize for the error. information about the company can be found at www.tigergeneral.com

June 11th at 1:30 June 25th at 1:30 July 9th at 1:30

52

Gas & Oil

Ohio Edition

June 2015

Coalition urges C Ohio Senate to reject any severance tax increase

AMBRIDGE, OH -- A press release from Guernsey County Commission President Skip Gardner and Jill McCartney, executive director of the Noble County Chamber of Commerce & Tourism Bureau, on behalf of the Protect Ohio Jobs Coalition, urges Ohio Senate Ways and Means Committee members to reject the controversial severance increase tax and instead focus on policies that encourage oil and natural gas industry growth and job creation.

The Protect Ohio Jobs Coalition is a rapidly growing coalition of elected, community, labor and business leaders dedicated to ensuring tax policies do not stop the growth of Ohio’s Utica shale development, the Ohio businesses that support it and the Ohio jobs it creates in the oil and natural gas and related industries. The coalition has grown to more than 75 Ohio leaders from nine eastern Ohio counties.

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“Increasing the severance tax by 45 times as proposed in the as-introduced version of House Bill 64 could have a devastating effect on Utica shale development in Ohio,” said Canton City Councilman Kevin Fisher. “The oil and natural gas industry’s development of the Utica shale is supporting much needed employment in Ohio and developing job creating supply chains across the state. And it is lowering energy costs for Ohio families ...”(2) sell your part, or (3) leave your part on death.

Tenancy in common requires that you own the property with one or more other people. Each tenant owns a percentage of the whole asset. For example, if there are two tenants, each owns 50 percent of the asset. If there are three, each owns 33 1/3 percent. The number of possible tenants in tenancy in common has no limit.

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Gas & Oil

June 2015

Ohio Edition

Carrollton Schools breaks ground on CNG fueling station

By Sara Klein arrollton school administrators joined Carroll County officials, state agencies and businesses for a May 8 open house and ground-breaking ceremony to celebrate the Carrollton Exempted Village School District’s future compressed natural gas fueling station and new POWER Education Center.

Carrollton Exempted is partnering with the Joseph Jeffries Company to construct the CNG fueling station, which will be located at 203 Scio Road S.W. near the district’s new POWER Education Center .

American Natural Gas will coordinate the transportation of compressed natural gas to the station.

“We couldn’t be more excited to be partnering with the Carrollton school district,” commented Andrea Feinstein, executive vice president of American Natural Gas. “We think they’re incredibly forward thinking in having this resource not only for the school but also for the community and for students’ education.”

She noted that the station will use compressed natural gas produced and midstreamed at sites in Ohio.

Construction of the station is anticipated to be complete by the end of this summer, Feinstein stated.

District Superintendent Dr. Dave Quattrochi said the station will be used to fuel part of the Carrollton School District’s bus fleet as well as commercial and private natural gas vehicles.

The station will also provide hands-on training for students who are interested in pursuing careers in the energy industry as well as for the local community.

“We are in the midst of developing training sessions with American Natural and Alternative Fuel Vehicle International that will be available to students, employees

C

and the interested community related to CNG fueling and safety,” said Ed Robinson, director of programs for Carrollton Schools.

“Most student-based lessons will be embedded to existing courses, such as science and economics. We will disseminate information to the community when those sessions have been finalized,” he stated.

Robinson said Carrollton Schools conducted professional development for CNG fueled vehicles with local firstresponders, businesses, and the district’s bus maintenance staff this January.

Courses under development include a driver safety course to teach concepts involved in the safe driving and fueling of natural gas and Autogas vehicles and a workshop for emergency responders that introduces concepts related to compressed natural gas and liquid natural gas fueling stations and safety systems.

The district’s adjacent POWER Center, located at 207 Scio Road, includes a 3,000-square foot classroom with work stations and industrial welders, a room for classes and meetings with a seating capacity of 30, an adjacent greenhouse, agricultural fields, a water recycling system and an outdoor trail system with exhibits to teach ecology and environmentally sustainable agriculture.

Indoor spaces in the POWER Center are used for handson, interactive classes using specialized equipment and computer software that introduce students to technology and techniques used in industry while teaching them science, technology, engineering and math curriculum.

Technical training at the center includes robotics, welding, hydraulics and pneumatics, circuit design and fabrication, electronics, three-dimensional CNC modeling, and

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“megatronics,” which combines technologies for industrial projects.

Carrollton Schools purchased 800 pieces of technology that are used in students’ education and training at the center, said District Superintendent Dave Quattrochi.

Funds and materials for the construction and development of the POWER Center came from corporate donors and a $5 million Straight A Grant award from the Ohio Department of Education.

The May 8 event included a tour of the POWER Center, teacher and student demonstrations of educational projects that have been undertaken at the center, and tours of the center’s outdoor trail system.

Quattrochi and Robinson presented remarks along with Carroll County Board of Commissioners Vice President Robert Wirkner and Carroll County Energy Director Jonathan Winslow.

Carrollton Exempted worked with county officials and Carroll County Energy representatives to develop an enterprise zone agreement and tax abatement for the CCE power company, which announced that it will construct a natural-gas-fired electricity generating plant in Washington Township over a period of two-and-a-half years.

CCE representatives have stated that tax savings from the abatement will enable the power company to help fund the construction of a new school for the Carrollton School District.

“I cannot say enough for all of the time we spent working on an agreement,” stated Quattrochi during his remarks.

“I think it’s a win-win for our school and our county. We’re going to be able to raise a new facility without raising a cent in taxes.”

“What a wonderful and opportunity-filled time this is for Carroll County,” Commissioner Wirkner said. “We truly are turning the point of moving towards prosperity for all.”

Business and agency sponsors of the POWER Center and CNG fueling station include FFA Camp Muskingum, Buckeye Career Center, the Carroll County Farm Bureau,

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Quattrochi said the school district has formed partnerships with more than 60 businesses as part of its Straight A Grant award, POWER Center and CNG station.

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June 2015

Ohio Edition

Columbia Pipeline Group recognized for safety F

or the second consecutive year, Columbia Pipeline Group has earned the American Gas Association Safety Achievement Award for outstanding employee safety performance in 2014. The award was presented during the AGA Operations Conference & Biennial Exhibition on May 20, 2015 at the Gaylord Texan Hotel & Convention Center in Grapevine, Texas.

The Safety Achievement Awards are significant as they recognize AGA member companies for having the lowest injury rate for companies of their type. According to the AGA, the natural gas industry spends more than $6 billion annually to ensure the safety of employees and nearby communities.

“We are honored to once again have the opportunity to accept this award – it is a testament of the accountability and focus our team has in regards to building a premier interdependent safety culture,” said Farrah Lowe, vice president of safety, training, and natural resource management, CPG. “I could not be more proud of the entire team for their commitment to ensuring all of our employees and contractors remain safe and healthy each and every day.”

Columbia’s 1,506 employees finished 2014 with seven recordable Occupational Safety and Health Administration (OSHA) incidents. That translates to a .49 OSHA rate, which put CPG in the AGA top decile category. The company only recorded one Days Away, Restrictions and Transfers (DART) incident in 2014 (.09 DART rate), which

also put it in the AGA top decile category.

“This is a great achievement that recognizes our company’s commitment to safety,” said Shawn Patterson, president, Operations & Project Delivery, CPG. “Our challenge in 2015 is going to be to maintain this status by remaining focused on being present in the moment and never losing sight of the task at hand. A sincere thank you to everyone at CPG for making the conscious effort to keep safety at the forefront of everything we do day in and day out.”

The AGA, founded in 1918, represents more than 200 local energy companies that deliver clean natural gas throughout the United States. There are more than 71 million residential, commercial and industrial natural gas customers in the U.S., of which 92 percent — more than 68 million customers — receive their gas from AGA members.

Columbia Pipeline Group companies own and operate more than 15,000 miles of strategically located natural gas pipelines, integrated with one of the largest underground storage systems in North America. From the Gulf Coast to the Midwest, Mid-Atlantic and Northeast, their systems connect premium natural gas supplies with some of the nation’s strongest energy markets, serving customers in more than 16 states. Approximately 1.3 trillion cubic feet of natural gas flows through CPG pipeline and storage systems each year, providing competitively priced, clean energy for millions of homes, businesses and industries. For more information, visit www.columbiapipelinegroup.com.

Gas & Oil

www.GasandOilMag.com

June 2015

59

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Ohio Edition

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