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Dix Communications - Gas & Oil

www.OhioGO.com

January 2013 Edition

Ohio octobER 2012 • www.ohiogo.com

A FREE monthly PublicAtion

Table of Contents

◆ Legislature acts on energy law ................pg. 3 ◆ Shale Gas Feeds U.S. chemical industry revival ........................pg. 6 ◆ Out-of-state workers called ‘bogus issue’ .................................pg. 8 ◆ Stark State awarded $13.2 million for oil and gas training ............................pg. 8 ◆ Exxon: US energy revival .....................pg. 11 ◆ From roddage to lineal feet ...................pg. 15 ◆ GE Oil & Gas to open Utica facility in Canton ...................................pg. 16 ◆ Car dealer experiences excitement of shale boom ........................................pg. 18 ◆ Where things stand at the Statehouse ....pg. 22 ◆ Stark State College names oil and gas ◆ Town hall meetings scheduled ..............pg. 22

◆ With new tech, US energy independence by 2035 ...........................pg. 23 ◆ Website launched for shale jobs ............pg. 26 ◆ Year in Review ......................................pg. 30 ◆ Chesapeake named a Military Friendly employer ...................pg. 33 ◆ The future of natural resources ..............pg. 37 ◆ Sure spreads holiday cheer ....................pg. 39 ◆ Local buinesses take part at Oilfield Expo ........................................pg. 41 ◆ Legislation aims to restore control ........pg. 42 ◆ Should you ratify your lease? ................pg. 44 ◆ Guernsey educators receive grants ........pg. 45 ◆ Senecaville receives lease funds ...........pg. 45 ◆ Gov ‘concerned’ about out-of-state hirings ...............................pg. 46

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

Rob Todor Executive Editor RTodor@dixcom.com

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

Cathryn Stanley Regional Editor CStanley@dixcom.com

Ray Booth Executive Editor RBooth@dixcom.com

Niki Wolfe Regional Editor NWolfe@dixcom.com

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Ed Archibald SE Ohio Sales Cambridge, Ohio Office EArchibald@dixcom.com 740-439-3531 “Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio. Copyright 2012.

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

Cover Photo: Kevin Graff Pictured is a pump jack raises at sunset along US 62 on Monday at sunset

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Dix Communications - Gas & Oil

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January 2013 Edition

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Legislature acts on energy law A

fter the introduction of Senate Bill 315, testimony by the Ohio Department of Natural Resources, the Ohio Oil & Gas Association and other representatives of the oil and gas industry, the bill was amended, hence the term Substitute Senate Bill 315, was signed into law by Gov. John Kasich on Judie Perkowski June 11, 2012, and became Dix Communications effective Sept. 11, 2012. New provisions in SB 315 updates Ohio Revised Code 1509, which regulates the oil and gas industry. The following is a compilation from the Ohio Oil & Gas Association on the comprehensive energy legislation set into law with Kasich’s signature. To read OOGA’s entire article on Substitute SB 315 visit ooga.org/issues-advocacy/archieve/ substitute-senate-bill-315. After several negotiations and committee hearings on the subject, SB 315 was moved out of the Ohio Senate and House of Representatives before their Memorial Day legislative break. The bill endured several changes before it left the respective Senate and House committees dealing with the issue. The bill creates substantial changes to Ohio oil and gas law, including making Ohio the national leader in disclosure of hydraulic fracturing fluids. The relevant provisions to the Ohio oil and gas industry can be broken down into three distinct categories: direct oil and gas policy, midstream proposals, and underground injection control program proposals. Direct Oil and Gas Policy These were the most extensive set of changes to Ohio oil and gas law contained in the bill. Several provisions were altered, including material and substantial violations, water well testing, per-day violations, insurance requirements and unitization. However, the most discussed change to oil and gas law has been the disclosure of hydraulic fracturing fluids. - Ohio Oil & With SB 315, Ohio now has the most stringent regulations for disclosure of hydraulic fracturing fluids in the nation. When the bill was introduced, language included in the bill would have created a total “spud to plug” disclosure program on all aspects of the drilling process. The program

The Ohio Statehouse

was generally modeled the recent regulatory rule package approved in Colorado. It meant that every chemical used on the well site would need to be reported to the Ohio Department of Natural Resources (ODNR). This would have included reporting chemicals contained in any paint used on site during the life of the well. Since the Ohio Department of Natural Resources’s focus was to gather all pertinent chemical information during the drilling process, the bill was amended to mirror the Colorado rule in the Ohio Revised Code with some alterations. SB 315 requires the disclosure of all chemicals intentionally added during the drilling process until the surface casing is set (including the chemical abstract services on all wells. The bill was amended to exclude chemicals deemed a trade secret by an operator or service company. Invoice for all chemicals used on the well site must be maintained by the operator for two years and made available to the chief upon request. A producer is in substantial compliance with these reporting provisions if a minor variation is found due to an inaccurate or incomplete report from a supplier. After the initial completion, operators must again make all chemical disclosure if the well is refraced or newly completed. An amendment by the industry was also accepted to remove the term “rework” from the disclosure requirements. This lanGas Association. guage, which would have included recompletion and moving down hole, was included in the original bill’s language. Since “rework” was a wide-reaching term under Ohio law, it was removed from disclosure provisions.

Substitute Senate Bill 315 — “ ... making Ohio the national leader in disclosure of hydraulic fracing fluids.”

Continued on next pg.


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The bill was also amended to provide chemical information, including those deemed a trade secret, to a medical professional in the event that an incident happens on the well site and an injury due to a chemical compound occurs. The medical professional will utilize the trade secret information for their treatment of the patient but have an obligation to keep the trade secret information confidential. Other important changes include: • SB 315 allows the ODNR to enter into “cooperative agreements” with other state agencies. OOGA was successful in amending this language to clarify that such agreements “shall not be construed to dilute or diminish the Division’s sole and exclusive authority as established in this section.” • The Road Use and Maintenance Agreement requires a producer to file a RUMA or check the appropriate box on an oil and gas permit pertaining to the RUMA. The producer can then state they do have a RUMA in place and submit an affidavit to the ODNR stating they negotiated in “good faith,” but could not reach such an agreement. • The bill changes definitions of industry terms currently within Ohio law, such as condensate, well pad, and horizontal well. Importantly, a horizontal well is now defined in Ohio law

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as a well that is drilled to the Point Pleasant, Utica, or Marcellus Shale formations and is stimulated. Well pad was defined as the area needed for one or more horizontal wells. • Water wells are now required to be tested prior to drilling in urbanized areas and on horizontal wells. Water wells within 300 feet of a wellhead in an urbanized area and 1,500 feet of a horizontal wellhead should be tested. If a producer is denied access to such a water well by a landowner, then the producer reports the denial to the Division. Though discussed during the process, requirements for post-drilling testing of water wells were not made a part of the final bill. • A provision was included in SB 315 that gives the OOGA great concern. Ohio Attorney General Mike DeWine pushed for per-day violations on oil and gas operators (for civil and criminal violations) under the law. The industry pushed for an

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January 2013 Edition

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January 2013 Edition - Dix Communications

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REVIVAL

Shale gas feeds U.S. chemical industry

A

keystone of the U.S. economy, the chemical industry converts raw materials (oil, natural gas, air, water, metals, minerals) into more than 70,000 different products. Few goods are manufactured without some input from the chemical industry. Chemicals are used to make a wide variety of conNorm Shade sumer goods, as well as thouPresident, sands of products that are esACI Services sential inputs to agriculture, manufacturing, construction, and service industries. Major industrial customers include rubber and plastic products, textiles, apparel, petroleum refining, pulp and paper, and metals. The U.S. Energy Information Administration (EIA) estimates that there are over 9,500 chemical firms with more than 13,000 facilities operating in the country, with shipments of nearly $440 billion annually. The chemical industry records large trade surpluses, employs almost 900,000 people and is the second largest consumer of energy in manufacturing. The states of Texas, Louisiana, North Carolina and Illinois are the nation’s top chemical producers, with most production occurring along the U.S. Gulf Coast (USGC). For many years, though, chemical production had been moving to other parts of the world, where supplies of oil and natural gas feed stocks were more plentiful and energy costs were much lower. Forecasts were dire as production at U.S. chemical plants was scaled back and some were shut down entirely. However, the development of previously untapped domestic shale deposits have led to vast new supplies of oil and natural gas in the U.S. After years of high and volatile natural gas prices, shale gas has created a stable, low cost supply that changes the economics and provides a competitive advantage for U.S. manufacturers. Shale gas has radically improved the economics for the U.S. chemical industry, developing into an industry revival. By 2010, the USGC had become second only to the Middle East for low production costs. With ethane supplies tightening in the Middle East, the era of low-cost feed stocks in that region soon may be over. The chemical industry reported growth of 8.8% in 2010 and 5% in 2011, with similar growth rates expected in 2012. Ben-

efiting from the Marcellus Shale, chemical production in the Ohio Valley has been growing at faster rates than other parts of the country. The impact of abundant low-cost shale gas now extends beyond petrochemicals to production of other chemicals including fertilizers (ammonia and urea). Domestic urea and ammonia production growth is replacing imports, reducing costs for agriculture. Over the past two years, chemical companies are reconsidering capital investment in North America and have announced a slew of projects, including several that are huge. Chevron Phillips Chemical is investing more than $5 billion expanding plants in the Houston, Texas vicinity. And Dow Chemical announced $4 billion of expansion along the Gulf Coast, including a new ethylene plant at its Freeport, Texas complex. Last year, Royal Dutch Shell, one of the largest energy companies in the world, announced that it will build a $2 billion “world-scale” petrochemical plant north of Pittsburgh to turn Marcellus gas into other consumer and industrial products including plastics. The chemical industry’s confidence in shale gas appears to be well justified. U.S. natural gas, oil and natural gas liquids (NGL) production continues to grow at astounding rates. Gas supplies have increased by about 3 trillion cubic feet per since 2008, far outpacing demand growth. Even though dry gas drilling has slowed this year, a backlog of previously drilled, stranded Marcellus and Eagle Ford Shale wells will soon be connected as pipelines are completed. Then there is still more associated gas production and the coming Utica Shale. The Utica shale formation in Ohio may hold as much as 5.5 billion barrels of oil and 15.7 trillion cubic feet of natural gas, according to the state’s Department of Natural Resources. Amazing test data on the best Utica well to date - peak rates of 20.0 million cubic feet of natural gas and 2002 barrels of natural gas liquids per day – were released by Gulfport Energy Corp. The well is located in Belmont County, Ohio. Production rates of that magnitude suggest that the Ohio DNR estimates may be understated.

W. Norm Shade is the president of ACI Services Inc., headquartered in Cambridge, OH. ACI is a leader in the manufacture of custom engineered gas compressor products used throughout the world. Shade received BME and MSME degrees from The Ohio State University, graduating Summa Cum Laude in 1970, and he is a registered professional engineer in Ohio, Oklahoma and Texas.


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Dix Communications - Gas & Oil

January 2013 Edition

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Gas & Oil

January 2013 Edition - Dix Communications

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Out-of-state workers called ‘bogus issue’

D

emocrats in the Ohio House Hagan, Foley and other House Democrats want oil and gas unsuccessfully attempted companies to ensure at least 60 percent of their employees are this week to force oil and Ohioans. gas companies to hire larger percentBut Tom Stewart, executive vice president of the Ohio Oil ages of Ohioans in the state’s growand Gas Association, called the out-of-state worker concerns ing production fields. “a bogus issue,” noting the economic impact fracking-related Rep. Bob Hagan, a Democrat from activities already are having in Carroll County and other areas. Youngstown, offered an amendment “The excitement of this play is rippling through Ohio, and Tuesday on legislation related to we simply need to make it happen,” he said. “I talked to a professional employee organizamember of mine this morning who’s been in business in the tions that would have required more state of Ohio for over 60 years, a small business, who has Mark Kovac than half of oilfield employees to be grown his business over 60 percent.” Dix Communications Ohioans. He added, “We have to think about the overall expanse and The amendment failed, but Hagan the economic multiplier of how this oil and gas activity and and other House Democrats renewed their calls for comparable the reserves and the assets that we’re going to build in this law changes Wednesday, days after Gov. John Kasich voiced state, how that ripples through the economy. his concern that energy companies were bringing out-of-state Stewart said oil and gas production in shale deposits in eastworkers into Ohio. ern Ohio is in its infancy, and it’s likely an increasing percent“We have noticed an unbelievable amount of people coming age of Ohioans will end up working on rigs as they gain the in from Texas and Oklahoma and other states ... roughnecks skills needed to do so. that have been doing it for a long time ... ,” Hagan said. “They “The Ohio shale play is one of the largest job creators to stake their claim, do the drilling and then they take off. Ohiocome into the state of Ohio in many, many years,” he said. ans are left with a promise of jobs that are not kept. It’s very But Hagan countered that oil and gas companies should disturbing.” be forced to hire a greater percentage Rep. Mike Foley, a Democrat of Ohioans, helping them to get up to from the Cleveland area, added, speed on drilling techniques and en“We’re just going to continue maksuring residents benefit economically ing a big deal about this today and from the expanding industry. tomorrow, as loudly as possible, un“We understand it’s a training protil something happens. I don’t trust cess, we understand that there’s a the oil and gas industry. It’s not in learning process in the drilling,” Hagan their self interest right now to hire said. “We want the gas and oil industry Ohioans because they’ve got all to justify through affidavits that they’re of these trained people from other going to hire people from Ohio. I don’t - Tom Stewart, Ohio Oil and states. But if they’re going to be takthink that’s asking too much.” ing our oil and gas out of the state of Gas Association. Ohio... they need to use some Ohio employees to do that.”

“The Ohio shale play is one of the largest job creators to come into the state of Ohio in many, many years.”

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Exxon: US energy revival has staying Exxon says the energy renaissance in the U.S. will continue and predicts that North America will become a net exporter of oil and gas by the middle of the next decade. The oil and gas giant’s latest long-term energy outlook, released Tuesday, says the rapid growth of production in the U.S. and Canada, along with improved energy efficiency, will lead to more oil and gas being sent overseas. Exxon Mobil Corp.’s annual outlook is noted by investors and policymakers, and the company says its conclusions shape its decisions about where to invest. The main conclusions dovetail with recent forecasts from the U.S. government and others. Among the main themes from Exxon’s report — Demand for energy will grow worldwide, but slower than the overall economy because of efficiency gains. — Energy demand will remain flat in the developed world; nearly all of the growth in demand will occur in developing countries. — The biggest shift will be growth in the use of natural gas and a decline in the use of coal. By 2025, natural gas is expected to overtake coal as the second most used fuel, after oil. — Oil and gas production in the U.S. and Canada will continue to grow so rapidly that the region will switch

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from a net importer of energy to a net exporter by 2025. The U.S. will likely be exporting natural gas in large volumes by then, and producing more oil while consuming less. Canada will continue to be a major crude exporter. While Exxon does make assumptions about energy prices to make its predictions, it does not disclose what those price assumptions are. Oil and gas production in the U.S. has surged thanks to the combination of hydraulic fracturing, or fracking, and horizontal drilling that allows companies to tap hydrocarbons trapped in shale and other tight rock formations. As a result, natural gas prices have plummeted and the nation’s dependence on oil imports has been dramatically reduced. The International Energy Agency and the U.S. Energy Department’s Energy Information Administration have also highlighted the North American oil and gas boom in recent reports. The IEA said last month that the U.S. could overtake Saudi Arabia as the world’s top crude producer by 2020. But fracking has raised environmental concerns. Opponents say drilling fluid or wastewater can seep into water supplies if wells are not constructed properly or if wastewater is not disposed of properly. Exxon’s report predicts that the use of electricity will grow Continued on next pg.

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“exxon: us energy revivaL has staying power” from pg. 11 quickly — about 1.3 billion people worldwide do not yet have access to it. But electricity demand in the developed world will remain about flat as devices and appliances get more efficient. The way electricity will be produced will continue to shift. The use of natural gas, nuclear and renewables will grow and the use of coal will decline. Wind, solar and biofuels will grow the fastest, at 5.8 percent per year. But still by 2040 they will contribute only 3 percent of the world’s energy needs. The growth in natural gas’s contribution to the world energy mix will be the most pronounced, according to Exxon’s outlook. This view led Exxon to place a big bet on natural gas when spent about $31 billion to buy XTO Energy in 2009, a price that analysts now say was much too high. But Exxon’s rivals such as Chevron Corp. and Royal Dutch Shell are also leaning more heavily on natural gas. Still, Exxon says there will be plenty of oil left to power cars, trucks and planes. By 2040 less than half of the world’s recoverable oil will have been produced, Exxon’s report predicts. Oil will remain the dominant transportation fuel, allowing demand to grow almost 1 percent a year. Demand for fuel to power heavy trucks will grow fastest, while demand for passenger car fuel will peak worldwide in 2020 as fuel efficiency gains offset the larger number of cars on the road. Worldwide, average passenger car fuel economy will rise to 47 miles per gallon by 2040, up from 27 now. Hybrids will outsell conventional gasoline cars by then, Exxon says. Worldwide emissions of carbon dioxide from energy sources will peak in about 2030. From there, worldwide emissions will gradually decline as transportation fuel economy improves and coal use declines. In the U.S., emissions per person will decline dramatically over the period, but the typical American in 2040 will still emit far more carbon dioxide than the typical Asian or European. “LegisLature acts” from pg. 4

amendment that would clarify this broad provision under the law to an intentional standard and focus it on civil penalties. For now, the language remains applicable to even minor violations and will remain in Ohio law. However, the industry has grave concerns over broad per-day violations being part of Ohio oil and gas law without some guardrails to avoid abuse of this power. Midstream Proposals With the expected development of Utica Shale in Ohio comes the anticipated construction of an underground pipeline network. This network is needed to move the natural gas and natural gas liquids from the site of production to newly constructed processing plants and then to the marketplace. It is this network of pipelines and processing plants that is commonly referred to as the “midstream industry.” After several amendments, the Ohio legislature clearly drew lines of regulation by Ohio’s three midstream regulatory agencies. The ODNR retains its jurisdiction over production sites and production facilities. The Public Utilities Commission of Ohio has the exclusive jurisdiction over all gas gathering lines that are currently regulated and overseen by their Pipeline Safety Division for production from a horizontal well. This authority has been expanded to cover Class One rural gas gathering pipelines. A Class One pipeline is a classification by the United States Department of Transportation which includes pipelines in rural areas. Finally, the Ohio Power Siting Board will continue to have the authority to site major utility facilities. Their final role was not expanded from the gas transmission lines that they currently site but the midstream processing plants and gathering systems will not be subject to Power Siting Board jurisdiction. All midstream jurisdictional pipelines under the Ohio Power Siting Board authority are required to have a corrosion control program, damage prevention program, maximum allowable operating pressures, public education program, above-ground markers, excavation registration and leak surveys. Underground Injection Control Program Proposals Due to recent seismic events in northeastern Ohio and concerns from the public, changes to the underground injection control (UIC) program were brought forward. The program deals with the underground disposal of produced waters ad brine stemming from oil and gas exploration and development. These fluids are disposed of in underground rock formations as deep or even deeper than the geologic formations from which the brine was extracted. • The bill passed removed all increases to the brine disposal fee. Also stripped from the final version of the bill are the electronic monitoring provisions via transponder and additional chemical disclosure provisions for “out-of-district” brine. • SB 315 retains all previous requirements under today’s UIC law. Those transporting brine into the State of Ohio must be registered with the ODNR. Those operating UIC wells must collect all information required under the law today before the fluids are injected. This information must be reported to ODNR electronically every quarter for all vehicles, vessels and containers transporting brine, specifically rail cars. While the book on Substitute Senate Bill 315 can now be shut, it may not be too long before the next chapter plays out before the legislature. In testimony before the House Public Utilities Committee, ODNR Director Jim Zehringer stated that the ODNR would like to revisit two issues before the legislature — broader chemical disclosure provisions and additional changes for UIC injection.


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January 2013 Edition

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“We Always Have Time For You”

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15

From ‘RODDAGE’ to lineal feet

R

oddage is a term that is beginning to fade in oil and gas. (A rod is 16½ feet in length). I couldn’t count how many times I have explained what it meant, but it is a quaint term that reminds me of our heritage and the common law system that was incorporated by us in forming this county. It has companion verbiage Don Gadd such as links, chains, perches, Landman and poles as lengths of measure that are mainly used in surveying and property descriptions unless you live in Kentucky where everything meanders, ie: from a rock with an x on it around the ridge to a man sitting on a gray horse witnessed by two “ellem” trees. Been there, seen that. All those terms revert back to the ‘Virginia system’ which was used to lay out lands in the wilderness areas like Ohio to better set up governments, including counties, townships, etc. The smallest unit for a township was a section. Each section was one square mile (5280 feet by 5280 feet). Acreage con-

tained therein equals 640 square acres. Each township was to be six sections wide by six sections high or 36 sections to a township. The rudimentary form of government could now be established. True, if you look at the county maps of today, the idea of six miles by six miles then forming a square county from that didn’t exactly work out. But, what would you expect from a bunch of rabble rousers, ex-soldiers, and others who just wanted to be left alone. At least in most places one mile by one mile was established and formed into sections. This, coContinued on pg. 29

... from a rock with an x on it around the ridge to a man sitting on a gray horse witnessed by two “ellem” trees. Been there, seen that. - Don Gadd

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January 2013 Edition - Dix Communications

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GE Oil & Gas to open Utica facility in Canton

GE Oil & Gas will be building a new 24,000-square-foot facility on five acres in Mills Business Park in Canton. This new facility will serve the Utica Shale, which extends through Ohio, Pennsylvania, New York and parts of West Virginia. GE Oil & Gas is a world leader in advanced technology equipment and services for all segments of the oil and gas industry, from drilling and production, LNG, pipelines and storage, to industrial power generation, refining and petrochemicals. It also provides pipeline integrity solutions, including inspection and data management, and designs and manufactures wire-line and drilling measurement solutions for the oilfield services segment. The company will be the third business to locate in the park, joining Medline Industries and Old Dominion Freight Line, Inc. “We are very excited that GE Oil & Gas has decided to locate in Canton. It is definitely a mutually beneficial relationship. It is also a smart investment for the future of our city and brings with it new jobs and technology, making Canton an ideal location for all shale investors,” said Mayor William

J. Healy II. It is estimated that the facility will create approximately 34 new area jobs. Construction on the project is slated to begin soon, and will be handled by AVERA Companies, a Houstonbased commercial real estate development, construction and investment firm. “We have put together a dynamic construction team using local subcontractors and we are pleased to be working with the City of Canton, who have been great to work with on getting this project kicked off,” said AVERA Project Manager Ron Kohlenberger. “General Electric’s presence in Canton supports our vision that Canton is the Utica Capital, the city in Ohio’s Utica Shale that is best suited to host significant corporate installations and to connect those installations by highway, rail and air to the rest of the Utica, and the rest of the world,” said Dennis P. Saunier, president and CEO of the Canton Regional Chamber of Commerce. The City of Canton, led by Mayor William J. Healy II and

“We are very excited that GE Oil & Gas has decided to locate in Canton.”

- Mayor William J. Healy II

Continued on pg. 43

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January 2013 Edition - Dix Communications

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Car dealer experiences excitement of shale boom

T

here haven’t been too many scenes like the one Larry Haidet recently experienced. Haidet, the general sales manager at Lavery Chevrolet in Alliance, met with a prospective new vehicle buyer. The gentleman wanted to purchase a new auto for his daughter, and selected a CadilRob Todor lac Escalade. Dix Communications When it came time to talk about payments Haidet received his first education on this changing times in Eastern Ohio. The buyer paid for the auto, entirely in cash. “That was pretty exciting for everybody,” lauaghed Haidet. So far in the gas & oil push in Stark County and elsewhere, Haidet and other dealers like him have experienced an increase in landowners making big purchases.

“What’s the term? Shale-ionaires? I kind of like that. I think it sums them up perfectly.” - Larry Haidet “What’s the term? Shale-ionaires,” said Haidet. “I kind of like that. I think it sums them up perfectly.” Like many other industries tied to the gas and oil boom, auto dealers are experiencing an increase in traffic and sales. With the gas and oil industry here still in its infancy sales have been

somewhat inconsistent, as in many other related businesses. And Haidet, like others, expects sales will continue to grow and beieves the potential for sustained growth is high. Lavery Chevrolet, for example, recently purchased land next to its current location and is expanding its inventory. “Definitely the potential is there,” says Haidet. “I think it’s a little premature to say we’ve seen a big growth so far; sales have kind of been all over the board. “But there’s no question is been the normal ebb and flow of the business, and in talking with other subsidiary companies, they’ve all experienced growth and had some months where sales fell back.” Haidet says Lavery Chevrolet has been communicating with oil and gas companies like Chesapeake Energy, which is building a new field office in nearby Louisville, for example, to provide fleet service. “It’s a difficult door to get open,” says Haidet, “because a lot of those companies buy their fleets on a national scale. “But as I said, there is potential, both on a company-wide scale and with the individuals who work for them.” And, of course, the land-owners who suddenly have spending money in their pockets.

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The Colonel Taylor Inn BED & BREAKFAST

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January 2013 Edition

21

‘Green Completion’ could save gas/oil producers

D

MILLIONS

rillers who use the EPA-ordered “green completion” process to purify natural gas could save millions of dollars. Natural gas operators traditionally have vented or burned off a well’s initial production to clear out impurities before tying the well to a pipeline. Now a new process known as “green completion,” which filters out hydraulic fracturing fluids, drilling debris and sand, is being employed by more operators because the U.S. Environmental Protection Agency passed rules this year requiring drillers to use the process nationwide by 2015, The Philadelphia Inquirer reports. EPA regulations that became effective on Oct. 15 prevent drillers from venting the gas into the atmosphere without burning, and with the new green completion requirement — which exempts “exploratory wells unconnected to pipelines” — the agency says these measures will save drillers “up to $19 million a year” through the capture and sale of natural gas that would otherwise be wasted, the article said. The five gas wells that EQT Corp. completed last month at a remote site in Greene County’s Washington Township are typical. Compared to a gas flare, which roars like a jet engine and licks the sky with flame like a giant welder’s torch, green completion is dull and quiet.

EQT is not the only drilling company that has embraced green completions. The equipment for separating the gas from the “flowback” has been perfected over the last decade and in the next three years, using it will become standard practice across the nation. “What was true yesterday is no longer true today,” said Andrew Place, director of public policy research at EQT, based in Pittsburgh. “Systems are evolving.” Much of the new technology has been driven to address fears about drilling, including hydraulic fracturing, the extraction technique that has turned impermeable shale into a bonanza of oil and gas. “Public concerns have pushed the engineers to come up with solutions,” Place said.

“What was true yesterday is no longer true today,” said Andrew Place, director of public policy research at EQT, based in Pittsburgh. “Systems are evolving.”

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Where things stand at the Statehouse Mark Kovac Dix Communications

A

n update on lawmaker action and other activities at the Ohio Statehouse related to horizontal hydraulic fracturing: • Local Control: Rep. Bob Hagan, a Democrat from Youngstown who has been outspoken in his criticism of how the state has handled oil and gas production activities connected to horizontal hydraulic fracturing, or fracking, offered sponsor testimony on Nov. 27 on legislation that would empower local governments to regulate the locations of oil and gas wells and enforce health and safety standards. House Bill 537 would restore local control rather than rely on statewide standards and regulations under the Ohio Department of Natural Resources. The switch in state law to the latter was made about eight years ago. “Numerous localities across the state have requested local control be restored due to the increasingly in appropriate placement of drill sites — many in highly populated areas,” Hagan told the House’s agriculture committee. “... This legislation will provide freedom to communities, not unelected bureaucrats, to decide what is best for them and their families.” • Not Supporting: On Nov. 30, the Ohio Farm Bureau Federation announced it was not supporting Gov. John Kasich’s plan to increase taxes on oil and gas production and using the resulting proceeds to implement an income tax cut. Members said any plan to increase the severance tax solely for the purpose of instituting an income tax cut. Instead, the group said any increase in the severance tax should be used to address local government funding, pay for infrastructure needs and economic development and mitigate negative impacts of oil and gas drilling on communities and the environment. The stance came a day after Kasich appeared before the group urging support for the plan. • Out-of-state Workers: The governor voiced “deep concern” on Dec. 5 that energy companies were hiring out-of-state workers for jobs in the state’s emerging production fields that should be going to Ohioans. “We are currently looking at the possibility that these energy companies that have come into Ohio to extract our very valuable assets may not be hiring Ohioans,” the governor said. “That is a very serious matter.” But the head of one industry group called Kasich’s comments off base. “If we could quit trying to find ways to confiscate return on investment and instead try to put investment in the state of Ohio to work and try to figure out ways to quit punishing producers who are actually trying to expand ... here in the state of Ohio, perhaps we could move this state forward and expand the opportunity for everybody,” said Tom Stewart, executive vice president of the Ohio Oil and Gas Association.

• Amendment Fails: Hagan failed in his attempt to amend legislation on Dec. 11 that would have required natural gas companies to hire at least 60 percent of their work forces from Ohio. Later in the week, Hagan and other Democrats held a press conference urging support for comparable legislation, saying oilfield jobs should be going to Ohioans. “We have noticed an unbelievable amount of people coming in from Texas and Oklahoma and other states ... roughnecks that have been doing it for a long time... ,” Hagan said. “They stake their claim, do the drilling and then they take off. Ohioans are left with a promise of jobs that are not kept. It’s very disturbing.” • Poll Backs Plan: A majority of Ohio voters questioned as part of a new Quinnipiac University poll said they supported Kasich’s severance tax plan. A total of 62 percent of 1,165 registered voters would support the severance tax hike if an income tax cut is part of the plan. Without an accompanying income tax cut, support dropped to 52 percent, with 38 percent opposing. • Frack Jobs: On Dec. 19, the Ohio Petroleum Council touted a study that placed Ohio among the Top 10 state for the number of jobs gained by fracking-related activities. The council noted that Ohio had more than 38,000 directly related to “unconventional gas and oil activity, a number expected to increase to 143,595 in 2020 and to 266,624 by 2035.”

Town hall meetings scheduled

T

he Ohio Environmental Council has scheduled two “fracking” town-hall meetings in the upcoming months. The first will be held Wednesday, Jan. 16, at the Cambridge YMCA, 1301 Clairmont Ave., Cambridge. The Cambridge town-hall meeting will allow the public to ask questions about shale gas development in Ohio and locally and about local preparedness for the shale gas rush in a moderated session. The public will also learn how to comment on future controls on the shale gas industry. Invited officials include city council members, county commissioners, state and congressional representatives, local fire chiefs, public health officials, city planners and emergency responders. A second town-hall meeting will be held Wednesday, Feb. 20, at the Athens Community Center, 701 E. State St., Suite 201, Athens. Both events are free, but attendees are asked to make reservations to the OEC at 614-487-7506 or OEC@theOEC.org. Registration begins at 6:30 p.m. The panel and a question-andanswer session starts at 7 p.m. followed by a presentation and community planning session at 8:30 p.m. Complimentary food and beverages will be provided.


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ously untouchable. As a result, the United States will be energy independent by 2035, Daniels said. Although the new method of drilling that enables energy companies to tap into the fossil fuel reserves in the Marcellus and Utica shale formations here in eastern Ohio is costly, that expense is more than justified by the crude oil recovery rate, Daniels said.

“Shale energy is just the beginning,” “Horizontal drilling has a recovery rate three to four times greater than [conventional] drilling,” he said. The conventional method of vertical, drilled wells only captured 15 to 20 percent of the oil present, leaving about 80 percent of the reserve behind. “Shale energy is just the beginning,” Daniels said. “We will be using horizontal drilling in the [traditional] fields.” The current boom with regard to the shale promise is “not a geology play,” he said. “It’s a technology play.” Horizontal drilling is the biggest “game changer” to come along in petroleum engineering in the course of Daniels’ 50-year career in geology, he said. Despite Daniels’ belief there is yet an abundant supply of petroleum worldwide, he espoused a balanced approach to satisfying our energy needs. Nuclear and renewable energy sources must be developed and deployed in addition to our continued use of fossil fuels, he said.

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US energy independence

The days of worrying about imminent decline of crude petroleum production (known as “peak oil”) and a consequent energy crisis can be pushed well into the future, an expert from The Ohio State University suggested. “Forget about peak oil,” Jeff John Lowe Dix Communications Daniels said Thursday during a meeting of the Guernsey County Energy Coalition at the Southgate Hotel. The development of horizontal drilling technology, as well as the use of hydraulic fracturing, will open the United States and the world to crude oil reserves previ-

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January 2013 Edition

10062538

Continued on pg. 29


24

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January 2013 Edition - Dix Communications

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January 2013 Edition - Dix Communications

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h e c d n u a l e t i s b e for shale jobs W

E

nergy in Depth - Ohio has launched Ohio’s first jobs site focusing specifically on employment opportunities supported by the development of the Utica Shale in the Buckeye State. The site, available at http:// www.EIDOhio.org/jobsite, is designed as a one-stop resource to help Ohioans beKimberly Lewis come aware of, and secure, Dix Communications new opportunities in Ohio’s burgeoning oil and natural gas industry which is providing good-paying jobs in many areas throughout the state. The interactive website is designed to connect job seekers with companies and vendors developing oil and natural gas in the Utica Shale, as well as the supply chain that supports those companies. There are 29 companies listed on the site at press-time. “With more than 10,000 jobs created last year alone, and studies project-Linda Woggon, ing the creation of more than 204,000 jobs through 2015, it’s important that Ohioans know what great opportunities exist here in the Buckeye State,” said Dan Alfaro, spokesperson for Energy In Depth. “Energy in Depth Ohio is committed to ensuring Ohioans are in the best possible position to take advantage of these opportunities. This site helps facilitate that by providing a direct connection between the industry and our communities - an important step in putting Ohio back to work, and returning prosperity to our state.” “Thanks to the development of the Utica Shale, there will be many job opportunities in Ohio for years to come,” said Mark Matusick, manager of corporate development at Chesapeake Energy. “While some of those jobs will come directly from oil and gas companies, many additional positions can be expected within industries that are indirectly benefitting from oil and gas production in the Buckeye state. At Chesapeake, we support any program that links those who are seeking jobs to the employment opportunities and job training that exist. EID Ohio is a group that is well connected in the state and well suited to

provide useful information to anyone seeking to know more about the benefits and opportunities resulting from oil and gas production here.” Just launched, the site has already been recognized by multiple organizations across Ohio, including the Ohio Chamber of Commerce’s Ohio Shale Coalition, who are committed to improving Ohio’s economy and providing opportunities for hard working Ohioans. “Shale energy has the potential to create thousands of jobs for Ohioans. To capitalize on that opportunity we must ensure that our businesses have the tools to succeed and our citizens are prepared for the jobs they create,” said Linda Woggon, executive vice president of the Ohio Chamber of Commerce. “The Ohio Shale Coalition salutes Energy in Depth for creating a comprehensive center on its website for Ohioan’s seeking career training and employment opportunities related to shale energy. This is another example of how Ohio is doing it right!” “There is no doubt in my mind that increased natural gas development will bring jobs and economic growth to our state. Increasing natural gas development is part of a true ‘all of the above’ approach to energy development that will lower enOhio Chamber of ergy prices, take America one step Commerce closer to energy independence, and create much needed jobs in Ohio. It is important to make sure these Ohio jobs are filled by Ohioans. When we can fully take advantage of our energy resources without the government standing in the way, we will see a resurgence of American exceptionalism,” said Congressman Bill Johnson, who represents Ohio 16th District. “We’ve already seen what sort of impact this shale development will have in investments and job opportunities for our communities with the arrival of Halliburton and the expansion of Producer Services. This site will help our residents find more opportunities to secure good, well-paying jobs in the years to come,” noted Tom Poorman, president of the Zanesville-Muskingum Chamber of Commerce. Cambridge Chamber of Commerce President Jo Sexton agrees, “I think it’s great that we now have a jobs and education clearinghouse to help local residents find the training

“This is another example of how Ohio is doing it right!”

Continued on pg. 29


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“From ‘roDDage’ to LineaL Feet” from pg. 15

incidently, means that if you own a section each side of your property is 5280 feet. Divide that by a rod of 16½ feet you come up with 320 rods per mile. This means that if owned only a quarter of the section (160 acres) your roddage would be 160 rods by 160 rods, and a quarter of that would be 40 square acres 80 rods by 80 rods. Sounds like a lot, and it was in earlier times as most of the lines were small transport or collection lines to the main system. Generally, the payment was five to fifteen dollars “per rod” along with some damages to be paid when completed. Depending on whether you went straight across, around the field, or zigzagged through the back forty made the difference in how much you made on the roddage fee. True, most of the time it was a pain in the backside for a property owner to grant another line and it was my job to get it. Most companies wanted their own line to the main transport line and after a while you could have three or four of these small lines running all over the property. But they were generally granted with conditions as it was the neighborly thing to do to get the gas out for your friends and neighbors. Now, today’s words are “lineal feet” and it important to read just what that encompasses. Your payment for the right of way depends on just how this is set forth in your right of way. Payments are being made by the foot, by the inch in diameter, width of the right of way and whether it is for a single line or

Dix Communications - Gas & Oil

January 2013 Edition

29

many. Each can impact you and your land. And, as I always say, it is important both for the company and the landowner to have a clear understanding as this is the contract that you will live with for many years to come. Next month I will explore the language. “ us energy inDepenDence” from pg. 23 The meeting Thursday was the 18th gathering of the Guernsey County Energy Coalition, said Jo Sexton, president of the Cambridge Area Chamber of Commerce. The next meeting will be Jan. 3. She suggested members go online to check out how oil drilling rigs work. “The more we understand about what is going on, the better,” she said. “website LauncheD” from pg. 26 and opportunities in the oil and gas industry here in Ohio. As exploration and activity continues to ramp up in Guernsey County, it’s imperative our workforce has the tools to locate these opportunities and take full advantage of them.” In addition to connecting Ohioan’s to these new opportunities, which in Pennsylvania are providing an average wage $81,000 per year in core industries, the site also provide an understanding or what degrees or certifications are needed for the many career paths available in the oil and gas industry.

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‘Year in Review’ K

demonstrated just how “well worth the trip” Carroll County really was, and is, by drilling its first well there in 2010. According to ODNR’s website, Carroll County is currently the “hot spot” and is at the top of the list for the number of wells in various stages from permitted to production, with the majority owned by Chesapeake.

2011

nowing that Ohio was the leading oil-producing state in the nation from 1895 to 1903 doesn’t mean much to most people living in eastern Ohio today, with the exception of some who inherited gas and/or oil lease royalties from their grandparents or great-grandparents. According to the Ohio DeJudie Perkowski partment of Natural Resources, Dix Communications Division of Mineral Resources Management, while Ohio oiland-gas production has never again reached the levels attained in 1896, petroleum producers have worked continuously since that time to steadily identify and develop oil-and-gas resources across Ohio, with little attention paid to their activity. Until July of 2011, no one was really excited or interested in listening to the “grapevine” chatter elicited from newspaper articles, the unusually high number of vehicles with out-of-state license plates seen in the area, or the increased traffic at local airports up and down the eastern Ohio border and extending westward to Muskingum County. Although the Marcellus Shale, which encompasses a “sliver” of Ohio’s eastern border and has produced an overabundance of dry natural gas, geologists reports and seismic studies indicate the Utica Shale, which lies under the Marcellus formation and covers approximately a third of Ohio’s land mass, has the more desirable “wet gas” from which “black gold” is extracted. Critics scoffed at the “rumors,” and said Ohio was possibly on the brink of another “boom and bust.” By January of 2012, rumors transformed into viable discussions as the gas and oil industry made its presence known when dozens of abstractors researching landowners’ leases lined the hallways leading to county recorders’ offices in counties situated on the Marcellus and Utica Shale Plays. It’s hard to believe how two little words — gas and oil — have dramatically changed the lives of so many people who reside in the depressed Appalachian counties in Ohio. Who would have thought in their wildest dreams of what has transpired in one of eastern Ohio’s poorest counties since May of 2009 when Amy Rutledge, director of the Carroll County Convention and Visitors Bureau, said, “There are no four-lane highways in this laid-back community ... Carroll County is off the beaten path but well worth the trip,” when she spoke at a Cambridge Rotary Club meeting. Truer words about Carroll County were never spoken. Just ask Chesapeake Exploration, LLC, the major oil company has

January-June 2012

30

• In mid-July of 2011, in the early stages of the gas and oil conversation, Cambridge Area Chamber of Commerce President Jo Sexton, initiated the Guernsey County Energy Coalition, which has emerged as a reliable source of information about complicated issues in the gas and oil industry. Sexton invites industry and ancillary service-related representatives, state officials and heads of industry-related organizations, to speak to local business owners, city and county officials and other interested persons at the monthly meetings. • Local newspapers began reporting on the all areas of the industry, from explaining terms most knew nothing about, to quoting experts in the field about leases, adamantly recommending landowners seek legal advice before signing anything, to attending meet and greet events scheduled by gas and oil companies to acquaint the public with industry equipment and personnel. Residents were introduced to words like shale formations, seismic activity, hydraulic fracturing, brine water, flaring, injection wells, royalties, road use agreements, etc., and names like Halliburton, Shell, Chesapeake, Anadarko and Gulfport, to name a few of the energy companies converging on Appalachian counties. As more and more information became available, the editors at Dix Communication decided to compose a magazine devoted exclusively to the gas and oil industry, to keep the public abreast of what, where and by whom the industry’s activity was occurring in eastern Ohio. Dix Communication, based in Wooster, is a family-owned business, offering media to small markets and local communities. • In June of 2012, GAS& OIL magazine debuted. The publication has developed into a forum for advertising products and services, articles offering legal advice, the importance of education, jobs, state rules and regulations, water issues, stories of gas and oil companies building a rapport with communities where they have staked a claim, and much more. The free monthly magazine, which has received rave reviews, is distributed to 13 counties situated on the immense Marcellus and Utica Shale formations. Continued on pg. 32


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• Throughout the years gas and oil companies, collectively referred to as “big oil,” has not have a stellar public image. Huge oil spills combined with soaring gasoline prices, gave the public little to commend and environmentalists a platform to make their case for moratoriums on any phase of gas and oil activity. Most recent case in point: Environmental groups rally for their cause claiming vertical and horizontal drilling were the reason for minor earthquakes in Mahoning County, beginning in August of 2011 through May 29, 2012. To ensure public safety and to determine the origin of the quakes was reason enough for local officials to cease operation of several injection wells in the area. After a thorough investigation of the Youngstown seismic events, Terry Fleming, executive director, Ohio Petroleum Council, said, “The report by Ohio’s Department of Natural Resources states that ‘all the evidence indicates that properly located injection wells will not cause earthquakes.’ We look forward to reviewing Ohio’s proposed new set of regulatory standards for these brine disposal wells. “Man made earthquakes have been known for some time, from dam building to geothermal projects. Geologists involved in this isolated report concluded that ‘it is very difficult for all conditions to be met to induce seismic events.’” And it wasn’t long before a group of environmentalists, with a movie star at the helm of a production called “Gasland,” conjured up a DVD of “incidents related to the harmful effects of hydraulic fracturing.” Which was later followed by “Truthland,” produced by experts in the field of gas and oil, which dispelled the falsehood of the previous movie’s contentions. But, be aware, the ball is in actor Matt Damon’s court, again. This time with a full blown-out Hollywood production with actors and scripts written by people with too much money. • To promote training and education of the local workforce and accommodate the industry with competent employees, Zane State College President Dr. Paul Brown hosted a seminar at the Zanesville campus in February of 2012 on energy, education and economic development for a consortium of business leaders and oil and gas representatives to address the need for education and training for jobs in the industry. Brown related his vision for a High Tech Corridor encompassing seven counties within the Marcellus and Utica Shale Formations.

January-May 2012

“year in review” from pg. 30 • To dispel misinformation and refute environmentalists’ efforts for a statewide moratorium, industry organizations, agencies, and programs such as Energy in Depth, Ohio Oil and Gas Energy Education Program, Ohio Farm Bureau, Ohio Oil and Gas Association — and many more — sent representatives to counties on the speculated huge oil and gas reserve to educate a nervous public, not only about the gas and oil industry, but of the real possibility of the economic benefits for families and communities through substantial tax revenues and thousands of jobs in the industry and its service providers. Almost overnight entrepreneurs were finding their niche by creating new businesses, encouraging established businesses to expand their square footage and number of employees. “The unemployment rate continues to drop in Guernsey County, and part of that is due to local residents becoming employed with companies related to the oil and gas industry. Many have found work with Halliburton, GoFrac, Crescent, Chesapeake, and many smaller service companies,” said Sue Thomas Sikora, manager of the Guernsey County Opportunity Center, during a recent interview. The Center is part of the One-Stop system that includes Muskingum, Coshocton and Licking counties. “Job orders continue to be posted. I think many thought the industry would come in stronger so there seems to be a perception that the work really isn’t there, but that isn’t true. Companies continue to look for individuals with CDL/ tanker and haz-mat endorsement, as well as field mechanics, pipeline techs, engineering and some general operator techs. To find work in this industry, you have to be diligent in your job search and make sure you have the credentials they are asking for, such as the licensures/certifications. “It is so important to use our Opportunity Center as the base for job searching. More employers than ever, including oil and gas companies, are relying on the services provided by the Opportunity Center to help them find the workers they need. “Guernsey County continues to be in a very good place for employment in general, across all industry sectors. Oil and gas careers are an added bonus to the wonderful job opportunities available with our existing businesses and industries.”

Since then Zane State has broken ground for a multi-million dollar expansion to its home at the Willet-Pratt Training Center in Cambridge where certificates and expanded associate degree programs relating to the gas and oil industry are already available. Zane State has been in the forefront of industry-related programs. Ohio University, the latest institution of higher learning “to expand academic offerings in the areas of applied management, social work and general education and to serve the needs of non-traditional, working students in the Cambridge area,” said Richard Greenlee, dean of OU Zanesville and Eastern. “Degrees to be offered in Cambridge could provide a boost to new business ventures related to the gas and oil industry.” The new OU campus will be in a building at 7077 Glenn Highway (Route 40). Continued on pg. 34


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Chesapeake named a

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employer

G

.I. Jobs Magazine named Chesapeake Energy Corporation a 2013 Top 100 Military-Friendly Employer, ranking the company 43rd out of 100 companies. This is Chesapeake’s third year on the list, and it’s highest ranking so far. The honor recognizes the company’s continued progress in both hiring veterans and supporting them in the workforce. In 2012, Chesapeake created a military hiring initiative and hired more than 600 veterans for high-paying, quality jobs in the oil and natural gas industry. “Chesapeake is an American company that is a top producer of American oil and natural gas. Creating jobs and hiring veterans to work in our oil and gas fields and in our offices has become central to our recruiting strategy,” said Martha Burger, Chesapeake senior vice president of Human Chesapeake Energy Corporation, recently named a 2013 and Corporate Resources. “Veterans perform well in our inTop Military-Friendly Employer, gathered its employees dustry and share our company’s commitment to energy inwho were formerly in the U.S. military for special cerdependence. We hope to honor their talent, experience, and emonies in cities across the country on Veteran’s Day. military service with rewarding careers, while easing their transition to civilian life.” ties to veterans within Chesapeake. Chesapeake focuses its efforts This past Veterans Day, Chesapeake mainly on job fairs held on mili“We hope to honor their also honored each of its more than tary bases and offers veterans di1,200 military employees with a comrect access to recruiters through (veterans) talent, experience, memorative challenge coin, letter of a veterans-only email address. Of and military service with gratitude from Chesapeake’s CEO, a the more than 600 veterans hired rewarding careers, while easing pin and hard hat sticker. Chesapeake this past year, many positions across the country also hosted were in the field. Performance their transition to civilian life.” offices special ceremonies for their local emTechnologies, a Chesapeake affili- Martha Burger, Chesapeake ployees who are veterans. In addition ate, recruited veterans to make up to internal veteran support, members more than 30 percent of its 2012 Energy of Chesapeake’s military relations new hires. Veterans also filled one team work to prepare all veterans for in five Chesapeake operating jobs the workforce. in 2012. The Top 100 Military Friendly Employers® list is At Chesapeake, support for veterans also goes beyond now in its 10th year. The survey results that determined the hiring. In 2012, the company created a Troop Connect program to provide resources and networking opportuniContinued on pg. 43

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“year in review” from pg. 32 • “A year ago, many around the state thought the Ohio Oil and Gas Energy Education Program Economic Impact Study, released late in 2011, was exaggerating the economic and job potential of the Utica Shale. One year later, more than $3 billion has been invested in the state, and nearly 39,000 jobs have been generated in Ohio. Hotels throughout the eastern part of the state are full, and many restaurants even have an “Oilfield Worker Special” on the menu. No, these were not exaggerated numbers, but now appear to have been conservative,” said Rhonda Reda, executive director of the Ohio Oil and Gas energy Education Program. “With funding from Ohio’s natural gas and crude oil producers, and no taxpayer dollars, OOGEEP is now working with 45 Ohio colleges, universities, career centers and vocational schools gearing up to help meet the demands for a trained workforce in the next several years. An additional 35 new scholarships were awarded to Ohio students through our scholarship foundation. More than 2,600 K-12 schools and teachers, from all 88 Ohio counties, have participated in science-based curriculum workshops. Another 1,800 Ohio industry workers and 972 Ohio firefighters have completed specialized industry training. In 2012, OOGEEP gave 208 public presentations around the state and distributed more than 1 million fact sheets to local communities, business leaders, chambers and professional groups. And, to think — we are just getting started.” • As of Dec. 15, 2012, the latest figures available from the ODNR report on Utica/Point Pleasant Shale Wells, activity continues to grow. A total of 477 horizontal permits have been issued; 196 horizontal wells have been drilled; and 45 wells are producing, with Carroll County still leading the pack with 165 wells in some step of the process, from permitted to production.

May-December 2012

• In April of 2012, neighboring Muskingum County was awarded a multi-million dollar contract from Halliburton, one of the world’s largest providers of products and services to the energy industry. The company broke ground at the EastPoint Business Park for a $35-$50 million investment in an equipment and field service center, which will employ approximately 300 people, 70 percent of them local. A recent report from the Ohio Oil & Gas Association announced a $1 billion natural gas processing plant is being built in eastern Columbiana County, scheduled to be operational in May 2013. The facility is being built by M3 Midstream LLC in a partnership with Chesapeake Corp. and EV Energy Partners. “The growing infrastructure, like this new plant, is needed to handle the volume expected from the Utica Shale,” said Dan Alfero, spokesperson for Energy in Depth-Ohio, an outreach and education group, who was quoted on EID’s website in regards to the processing facility. “Midstream investment, things like pipelines and processing facilities, are absolutely essential to maximize the resources we have in Ohio, and they’re probably the greatest barometer of the potential we have here,” he added.

• News items that will be front and center in 2013: A hike in the gas and oil severance tax, and House Bill 537. Gov. John Kasich stated unequivocally that “We are going to get a higher severance tax plan in this state. It’s going to happen. It’s just a matter of when ... I will not give up on this until we get it done, and it is going to get done.” House Bill 537 is legislation that has been offered in the Ohio House. The bill calls for restoring local control of regulating locations of gas and oil wells, rather than rely on statewide standards and regulations under the ODNR.


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The future of natural resources

T

Cara Dingus Brook Foundation for Appalachian Ohio create

he extraction of Appalachian Ohio’s natural resources has helped wealth and prosperity in many parts of the state and nation, yet the region itself has continued to struggle with persistent poverty. Now, new technologies for accessing oil and gas from shale are placing the region at the center of another energy boom. As the group rises to the challenge of providing the resources needed to power the country, they must also rise to the unprecedented opportunity to extract prosperity and lasting wealth for this region’s citizens and communities. People can learn a great deal about today’s opportunity from the region’s past. Many Appalachian Ohio communities were created by natural resource extraction. The mining of coal, iron ore, and clay produced jobs, attracting people to settle in the region. During these early energy booms, communities were emerging. They had not yet developed charitable foundations or economic-development organizations to retain a portion of the

“It is time to start serious discussions regarding how the region can benefit long-term from today’s energy boom.” - Cara Dingus Brook

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Top CounTies WiTh horizonTal Drilling aCTiviTy By numBer of siTes

1. Carroll County 178 2. Harrison County 63 3. Columbiana County 61 4. Jefferson County 33 5. Monroe County 32 6. Guernsey County 25 7. Noble County 22 8. Belmont County 18 9. Mahoning County 15 10. Portage County 14 11. Stark County 13 12. Tuscarawas County 12 13. Coshocton County 5 14. Muskingum County 3 Holmes County 3 15. Knox County 2 Trumbull County 2 14. Ashland County 1 Geauga County 1 Medina County 1 Wayne County 1 Well SiteS SiteS in variouS variouS Stage tageS:: Permitted, drilling, drilled, ComP ComPleted, ProduC ProduCing, Plugged SourC Sour Ce: ohio dePartment of natural reSour ourC CeS aS of 11/30/12

S

s m

w

25

50

75

100

125

150

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S

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SURE spreads holiday cheer

URE, a grassroots organization of local landowners, recently presented checks totalling $50,000 to groups and organizations serving Carroll County. The landowners benefited from the oil-and-gas boom and set aside a portion of their bonuses to give back to their community. The members donated $10,000 to FFA Camp Muskingum, which will use the money for its upcoming projects, and to the

Carroll County Junior Fair’s barn fund. Members also presented $5,000 donations to the Carroll County District Library for new computers and software upgrades, the Carroll County 4-H Program, Loaves and Fishes Food Pantry, Community Hospice of Carroll County, Senior Citizens Friendship Center and the Salvation Army’s Carrollton Service Unit.

SURE member Ron Carlton (right) presents a $10,000 check to Wes Frew for the Carroll County Junior Fair’s barn fund.

SURE member Ron Carlton (right) presents a $10,000 check to Wes Frew for the Carroll County Junior Fair’s barn fund.

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Local businesses take part at Oilfield Expo

I

n 2011, the Ohio Oil and Gas Association held its first Oilfield Expo at the Canton Civic Center. By 2012, the expo had grown into the nation’s only all-indoor trade and equipment show and had moved to Cleveland’s I-X Center. With approximately 240 exhibitors, the two-day show saw Kimberly Lewis more than 3,000 visitors. The Dix Communications event featured a fall technical conference, held in conjunction with the Society of Petroleum Engineers, that highlighted the latest technology. The second day was the OOGA Oil and Gas Industry Symposium and included panels of industry leaders. There were also training sessions following environmental, safety and business development tracks. For students in Marlington High School’s oil and gas technology program, the expo gave them an opportunity to explore the oil and gas industry and to speak to people actually working in the industry. The students got an up close look at the equipment and the careers that will be available to them. Some of those industries may not be what people first think of - companies who measure the gas production, develop innovative pipes, and create shut-off valves that stop well production during emergencies. The Oilfield Expo also gave exhibitors an opportunity to network and to build relationships with companies that provide services, as well as equipment. Several local companies were on display including American Road Machinery, Mac Liquid Tank Trailers, Murphy Tractor and Equipment Company, AultWorks, Beaver Excavating Company, Geiger, Teeple, Smith and Hahn LLP, McJunkin Red Man Corporation, David Bodo and Associates, Hammontree and Associates, Nicolozakes Trucking and Construction Inc., Kelchner Energy Services, NAI Spring Com-

mercial Realty, SUNPRO and Buckeye Career Center. From tankers to pipes to health services, the expo had displays on every aspect of the oil and gas industry. Also on hand were representatives from area communities that are already experiencing the oil and gas boom or anticipating the growth. The Stark County Oil and Gas Partnership were on hand to “connect Stark County to the oil and gas industry” and to “encourage the use of Stark County residents and businesses in the development, extraction and processing of oil and natural gas.” The Zanesville-Muskingum County Port Authority highlighted the area’s available building sites, quality workforce and its strategic location to the Marcellus and Utica Shale Plays. OOGA’s Oilfield Expo 2012 successfully provided opportunities for both networking and education to the public and industry representatives.

Dix Communications Photo / Kimberly Lewis Marlington High School juniors Otha Loving (left) and Cole Bright check out one of the vehicles on display by Nabors Completion and Production Services at the Ohio OIl and Gas Association’s Oilfield Expo in Cleveland. The students are part of the school’s oil and gas technology program.

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Legislation aims to restore local control

Mark Kovac Dix Communications

eight years ago. “Numerous localities across the state have requested local control be restored due to the increasingly in appropriate placement of drill sites — many in highly populated areas,” Hagan told the House’s agriculture committee Tuesday afternoon. “... This legislation will provide freedom to communities, not unelected bureaucrats, to decide what is best for them and their families.” Continued on pg. 47

This legislation will provide freedom to communities, not unelected bureaucrats, to decide what is best for them and their families.” -Rep. Bob Hagan

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ounties, townships and other local governments would have the power to regulate the locations of oil and gas wells and enforce health and safety standards, under legislation offered in the Ohio House. Rep. Bob Hagan, a Democrat from Youngstown, offered House Bill 537 to restore local control rather than rely on statewide standards and regulations under the Ohio Department of Natural Resources. The switch in state law to the latter was made about


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“ge oiL & gas” from pg. 16 development director Fonda Williams, provided the city’s Job Creation Incentive Program as an incentive to GE Oil & Gas, and Canton City Council approved the incentive package. The State of Ohio has offered funds for worker training. The Canton Regional Chamber of Commerce and DeHoff Development were closely involved throughout the process. “With each new company, we are reminded of the benefits of having fully improved level building sites, regional storm water detention and design covenants assuring quality buildings. Mills Business Park truly offers business and industry shovel ready sites,” said Dan DeHoff, president, DeHoff Development Company. “miLitary FrienDLy” from pg. 33 2013 list were independently tested by Ernst & Young LLP based upon the weightings and methodology established by G.I. Jobs. A full list of the advisory board members, consisting of leaders in the military recruitment community, can be found at www.MilitaryFriendly.com/board. To view available jobs at Chesapeake, visit www.chk.com/ careers. Veterans may also contact chkmilitary@chk.com. “Future oF naturaL resources” from pg. 37 income flowing through their communities for reinvestment in the communities’ wellbeing. When the income produced by

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extraction began to dry up, communities lacked resources to prepare for a new future. Appalachian Ohio’s experience with shale development can be dramatically different. Their region is now home to strong philanthropic, economic-development, educational, and socialservice organizations. These organizations are well-positioned to retain and reinvest shale-development wealth. Further, there are many examples of regions across the United States that have leveraged extractive industry resources to create sustained prosperity for their citizens and communities. While already experiencing success in building lasting resources from shale wealth, much more can be done. The Foundation for Appalachian Ohio believe it is within the collective potential to leverage shale development resources to fundamentally transform the region’s quality of life, not just for today, but for generations to come. While it does not have all of the answers, it understands success will require vision, strategy, and collaboration. It is time to start serious discussions regarding how the region can benefit long-term from today’s energy boom. Over the coming months, the foundation will gather and share ideas on this topic, to culminate in a public discussion regarding what it learns. Ideas and suggestions may be sent to idea@ffao.org. Cara Dingus Brook is the president and CEO of the Foundation for Appalachian Ohio, a regional community foundation partnering with donors to enrich the current and future quality of life for the 32 counties of Appalachian Ohio.

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Should you ratify your lease?

Y

ou are a landowner with a current oil & gas lease for your property. The current lessee sends a land man asking you to “ratify” your existing lease. Should you do it? Probably not. Do you know what it means to “ratify” the lease? Do you know why your current lessee wants you to Ethan Vessels sign a “ratification”? Do you Marietta Attorney know what the market would pay in bonus and royalties for your land if you did not already have a lease? Do you know what other landowner protections are being written into new leases? Until you know the answers to these questions, you should not sign anything. To “ratify” a lease means that the landowner and oil & gas producer, as current lessor and lessee of the land, agree (or reagree) to the terms of the existing lease. It is basically saying, “Yes, this is our agreement, and it will be our agreement going forward.” It is as though you are starting anew with the same

agreement—but you can add or change terms. The real question is why? Why is the land man coming to you now? If you already have an existing lease, why would the lessee want you to sign something? In all likelihood, the lessee (usually the current producer) believes that you have legitimate grounds to break the existing lease. The most common reason is that there has been little or no production from your property. Your existing lease may not have unitization or pooling language in it (and the lessee now wants to add this as part of the “ratification”). The current lease may contain terms regarding shallow and deep rights that make the property unmarketable to the “deep” producers. Continued on pg. 47

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Guernsey County educators receive Duke ICAN! mini-grants

n partnership with the Duke Energy Foundation, the Foundation for Appalachian Ohio announces the awarding of 23 ICAN! Classroom Enrichment Mini-Grants for over $25,000 to support the efforts of teachers across the region in ) connecting their classrooms with Science, Technology, Engig neering, Mathematics or Medicine related businesses and pror fessions. t w Distributed to K-12 educators with a wide range of innoevative classroom goals, funding from these 23 grants will be eused for hands-on learning initiatives that range from training in meteorological forecasting or fuel cell related technology research to health industry exploration - all with the common goal of introducing the next generation of Appalachian Ohioans to important new career opportunities. Through collaboration with local businesses in the classroom or during class field-trips, each grant will contribute a unique educational experience meant to engage students with essential skills and tools. “As a leader in innovation and technology, Duke Energy is excited to contribute to an initiative that focuses on so many important components of impactful classroom education,” said Karen Monday, vice president of the Duke Energy Foundation. “The career training and research aspect of this mini-grants program provides important vocational opportunities that each student should experience before he or she chooses to move forward into the unique challenges of collegiate education or the workforce.” In the past, FAO has heard from educators across the region about how important it is to introduce students to potential career pathways, with an emphasis on the education needed for professional success. The 2012 ICAN! mini-grants will provide unique opportunities for students to see a direct application of their current studies in today’s dynamic workforce. In addition, students and educators will capture these experiences on iPads so that what they learn about different professions can be widely accessible to other students across the region through a Virtual STEMM Platform. Two Guernsey County educators received Duke ICAN! mini-grants. Jill Ross of Brook Elementary School will use her $1,163.84 to help students conduct an engineering showcase, in which engineering professionals in the community will be guest speakers at the school. The showcase will be filmed and shared with other classes within the district. Students will also gain hands-on experience in engineering by constructing structurally varied bridges using K’NEX kits. Molly Kaplet of Meadowbrook Middle School will use her $1,225 grant to introduce students to medical careers and interview professionals within the field. Students will visit the Southeastern Ohio Regional Medical Center, as well as host

o e

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professionals in the classroom. “Going forward, the path we take as a region will be determined by our commitment to education and innovation,” said Cara Dingus Brook, FAO president and CEO. “This set of 23 mini-grants is a direct contribution to those educators working on the front lines of the fight for student success and opportunity in Appalachian Ohio. We couldn’t be prouder to work alongside Duke Energy as a partner in such a wonderful initiative.” For a complete list of all 2012 ICAN! Classroom Enrichment Mini-Grants or to learn more please visit FAO’s website at www.appalachianohio.org The Foundation for Appalachian Ohio is a regional community foundation serving the 32 counties of Appalachian Ohio with the mission of enriching the region’s current and future quality of life. Visit www.appalachianohio.org. Duke Energy is the largest electric power holding company in the United States with more than $100 billion in total assets. Visit www.duke-energy.com. 

Senecaville receives more than $104K in oil and gas lease funds

T

he Village Council here received the money from the oil and gas lease and met recently to appropriate those funds. The village received approximately $104,000 and voted to appropriate $10,000 to the sewer debt, $70,607.50 to the general fund, $20,000 to the street department, and $4,000 to police. dditionally, the village was able Holly Bilyeu to pay $90,000 on the sewage debt Dix Communications decreasing the loan payable to 2040 to 2030. In other news, the village reported that the annual Christmas party for the kids will be held on Saturday, Dec. 21, at 6 p.m. at the firehouse. Marshal Joe Evancho reported that he hasn’t worked in two weeks due to the condition of the cruiser. Council is still trying to get the cruiser back in operable condition. New village employee Rodney St. Clair has been in training for the sewage department. The village plans for him to take his test next month for a sanitary sewage license. Council voted to purchase a heater and insulation for the Continued on pg. 47


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Gov. Kasich ‘concerned’ about out-of-state hirings

G

ov. John Kasich voiced “deep concern” in December that oil and gas companies were hiring out-of-state workers for jobs in the state’s emerging production fields that should be going to Ohioans. “We are currently looking at the possibility that these energy companies that have come into Ohio to extract our very valuable assets may Mark Kovac not be hiring Ohioans,” the governor Dix Communications said. “That is a very serious matter.” But the head of one industry group called Kasich’s comments off base. “If we could quit trying to find ways to confiscate return on investment and instead try to put investment in the state of Ohio to work and try to figure out ways to quit punishing producers who are actually trying to expand ... here in the state of Ohio, perhaps we could move this state forward and expand the

“We are currently looking at the possibility that these energy companies that have come into Ohio to extract our very valuable assets may not be hiring Ohioans. That is a very serious matter.” - Ohio Gov. John Kasich opportunity for everybody,” said Tom Stewart, executive vice president of the Ohio Oil and Gas Association. Kasich said he has repeatedly asked energy companies to forecast the types of employees they are seeking so that the state could provide the proper training or education policies to meet the need. “... We don’t want foreigners working in our field, and forContinued on next pg.

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47

“restore LocaL controL” from pg. 42

“out-oF-stste-hirings” from pg. 46

Hagan offered sponsor testimony on the legislation Tuesday, though the bill is not expected to pass before the end of the session in a couple of weeks. Under existing law, the ODNR’s Division of Oil and Gas Resources and Management “has sold and exclusive authority to regulate the permitting, location and spacing of oil and gas wells and production operations within Ohio,” according to an analysis by the Ohio Legislative Service Commission. Hagan’s bill would enable local governments to adopt standards for oil and gas wells, as long as “those standards are not less restrictive” than state laws and rules. The legislation also would require a 1,000-foot setback for new oil and gas wells and apparatus. That would be more than triple the current requirement.

eigners are people from Georgia and Alabama and Mississippi and Texas,” Kasich said, repeating a jest he’s used in speeches since taking office. “We want Ohioans working here.” Kasich said his administration is gathering evidence about the out-of-state hires. “We understand companies need to ramp up,” he said. “We’re not in a position [here] where we don’t understand common sense. But I’m concerned about these reports that somehow people are being transported to this state. You could have a situation where we’re not getting the jobs, they’re taking the resources and all their profits and they’re heading home. That is not acceptable to me.” He added, “We expect them to be responsive to the people of this state.” Kasich’s comments likely will add to the debate over his plan to increase taxes on oil and gas production while implementing a corresponding decrease in the state’s income tax rates. The industry is expected to add billions of dollars into the state economy in years to come, and Kasich wants to increase severance taxes to ensure some economic benefit for Ohio from big profits expected by out-of-state energy companies. But some Statehouse Republicans oppose the plan, as does the Ohio Oil and Gas Association and other groups. Stewart said the oil and gas industry has pumped more than $3 billion into the state as part of the emerging shale-related production “I’ve talked to many members of mine to who report to me that they have doubled, tripled the expansion of jobs, expansion of investment, expansion of equipment and durable goods and that they’re hiring people just to keep up with this play,” he said, adding later, “If all you do is drive through Carroll County or Harrison County or any of these other eastern counties that are experiencing this, you will see a renaissance of economic development that is rippling through their economies.”

“ratiFy your Lease” from pg. 44 The bottom line is that the lessee needs you to “re-agree” to the original lease (perhaps changing some terms here and there) so that the lessee can sell these gas rights to one of the dozen or so shale developers. Think before you sign. If asked to ratify, the landowner probably has the better negotiation position. Yet, the landowner often has insufficient information to effectively negotiate. First, you should learn why the lessee wants to ratify. It is important to know the strength of your case if you attempt to break the existing lease. Second, you need to understand the market. Is the lessee offering bonus money and enhanced royalties as an enticement to ratify? How much could be reasonably obtained if your land were clear of the existing lease? Third, new leases often contain favorable terms for landowners. They often contain clauses for increased domestic use, land use restrictions, restrictions on pipeline placement, etc. Can you negotiate these terms into a “ratification”? Only when you, the landowner, believe that you have negotiated a ratification based on the market conditions and with ample knowledge of your lease should you agree to a ratification. Of course, when in doubt, hire a lawyer. Disclaimer. As with all articles on legal issues, this article is intended for educational and informational purposes. The reader should not rely on this article as a substitute for actual legal advice regarding his or her particular case. You should consult an attorney regarding the specifics of your situation.

“senecaviLLe reveives 104K” from pg. 45 street department garage. They plan to have a work day to install the insulation. Council voted to change their meetings to the second Monday of every month beginning in February, but keeping with their regular time at 7:00 p.m. Council voted to allow fiscal officer Laurie Haning to pay the bills up until the next meeting. This action is taken every year in December to allow the fiscal officer to close out the year and prepare to budget for the new year. Council discussed upcoming summer movie nights where they would see concessions to benefit the park fund. The next regular meeting of Senecaville Village Council will be on Tuesday, Jan. 15 at 7 p.m.


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