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GasandOilMag.com

October 2016 • A Free Monthly Publication

Industry Bouncing Back Forum On

Tax Reform Shale Insight 2016

IN THIS ISSUE: EXPERT SAYS ENVIRONMENTALISTS ‘UNREALISTIC’


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Table of Contents OCTOBER 2016

4

A Look Ahead Gas & Oil Events

5

Ohio’s Oil and Gas Industry Supports Students Through Scholarships and Awards

7

Teachers Energized to Go Back to School

9

Environmentalists Unrealistic About Leaving Natural Gas in the Ground

We Will Recover

15

Dominion East Ohio Hosts Women Engineering Program

17

Ohio Court Kills Portage Charter Initiative

20

Utica Summit IV Set for October 11

David Dix DEDix@dixcom.com

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

RE G IO NAL E DIT O RS EnerGreen 360 Working to Create New Facility

23

Court Rules Dormant Mineral Act Not Self-Executing

OhioGas&Oil

G.C. Dix II GCDixII@dixcom.com

Supreme Court Rules on Dormant Mineral Rights Cases

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Andrew S. Dix ASDix@dixcom.com

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PUBLISHERS

Industry Under Attack

Erica Peterson EPeterson@dixcom.com Cathryn Stanley CStanley@dixcom.com Niki Wolfe NWolfe@dixcom.com

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Table of Contents OCTOBER 2016 ADVER TISING Kim Brenning Cambridge, Ohio Office KBrenning@dixcom.com 740-439-3531 Kelly Gearhart Wooster & Holmes, Ohio Offices KGearhart@the-daily-record.com 330-287-1653 Jeff Kaplan Alliance & Minerva, Ohio Offices JKaplan@the-review.com 330-821-1200

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Forum Digs Into Tax Reform

28

Court Ruling Favors Several Mineral Rights Owners

30

Shale Insight 2016

31

Mark Kraker Ashland, Ohio Office MKraker@times-gazette.com 419-281-0581

Study Says Ohio Could Make $237M on Pipeline

Diane K Ringer Kent, Ohio Office DRinger@recordpub.com 330-298-2002 Janice Wyatt National Major Accounts Sales Manager JWyatt@dixcom.com 330-541-9450

L AYOUT D E SIG NE R Kassandra Walter

kwalter@times-gazette.com ‘Generations of Amish Craftwork with Modern, Professional Site Management’

October 2016 • A Free Monthly

GasandOilMag.com

Publication

Industry Bouncing Back Forum On

Tax Reform Shale Insight 2016

AL-10479462

“Gas & Oil” is a monthly publication jointly produced by Dix Communications. Copyright 2016. GasandOilMag.com

On The Cover:

Experts say the gas and oil industry is bouncing back from a lull and should see an increase in activity in 2017 (Page 13). Also, get multiple reports on the implications of the Ohio Supreme Court ruling on dormant mineral rights.

ENTALISTS ‘UNREALISTIC’ IN THIS ISSUE: EXPERT SAYS ENVIRONM

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A Look Ahead

Ohio’s Gas & Oil Events • October 11, 2016 event/ne-ohio-safety-expo/ for more information. Utica Summit IV: Shaping an Energy Rich Future, Embassy Suites by Hilton at the Akron-Canton Airport. • October 22-23, 2016 Visit www.uticasummit.com or email davidk@ OOGEEP October Firefighter Workshop, Apple Creek, Ohio. Visit http://oogeep.org/event/oogeep-octobercantonchamber.org for more information. 2016-firefighter-workshop/ for more information. • October 12, 2016 OOGEEP Geology Teacher Workshop, Horace R. Collins • October 25, 2016 Laboratory and Core Repository, Delaware, Ohio. Visit Muskingum University Geology Club Presentation. oogeep.org/event/oogeep-geology-teacher-workshop/ Visit https://orgsync.com/5309/chapter for more for more information. information. • October 14, 2016 SOOGA Fall Clay Shoot, Hilltop Sports, Whipple, Ohio

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• October 14, 2016 NE Ohio Safety Expo, TCTC, Warren. Visit oogeep.org/

• October 30-November 1, 2016 NARO Appalachia Convention, White Sulphur Springs, West Virginia. Visit http://www.naro-us.org/ for more information.

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Ohio’s Gas and Oil Industry Supports Students Through Scholarships and Awards

OOGEEP Recognizes Scholarship Recipients and State Science Day Winners With More Than $50,000 in Awards

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ade possible with funding and support from Ohio’s crude oil and natural gas producers and affiliated industries, the Ohio Oil and Gas Energy Education Program (OOGEEP) is proud to announce the recipients of the 2016 OOGEEP Scholarships and recognize the winners of the OOGEEP award at the 2016 Ohio State Science Day.

OOGEEP scholarships were awarded to 50 students representing 18 local universities, colleges or technical institutes. The scholarship is renewable for up to four years and funding is made possible by special industry training proceeds, memorial contributions and general donations from Ohio’s oil and gas industry. Winners must have an energy career goal and be either an Ohio resident or attending an Ohio educational institution. A committee of oil and gas industry professionals volunteer their time to judge the students on career goals, essays, letters of recommendation, academic achievement, awards of special recognition, community service and other outside activities.

OOGEEP awarded scholarships to 50 students pursuing careers in Ohio’s oil and gas industry and recognized 24 students who competed for the OOGEEP award at the Ohio Academy of Science’s State Science Day. Since its inception, OOGEEP has recognized more than 350 students for their excellence. “Students continue to show great interest in obtaining careers in “Ohio’s oil and gas industry our industry, and we’re glad to considers it a privilege to help them pursue their dreams,” recognize the best and brightest said Frank Gonzalez, OOGEEP students our state has to offer,” Scholarship Committee Chair said Marty Miller, OOGEEP and Secretary/Treasurer, Board Chairman and Sr. Vice GonzOil, Inc. “It’s critical that our President of Operations, Alliance industry continue to support the Petroleum Corp. “Two huge parts next generation of workers who of OOGEEP’s mission are to will be hired into the 75 different encourage science education careers available in Ohio’s oil and through programs like our gas industry, and will help to science fair awards and to help fulfill our local energy needs for individuals in their pursuit of oil years to come.” and gas careers through scholarships. Our state is in good Ohio’s State Science Day is one of hands knowing these remarkable the largest events of its kind in men and women are our future.” the nation and the equivalent of a

state athletic championship. More than 1,000 students from around the state compete and OOGEEP judges students on their scientific research, communication skills and outstanding work or knowledge about crude oil and/or natural gas in the areas of geology, engineering, chemistry, technology, microbiology, physics and environmental sciences. OOGEEP recognizes students with a certificate and a cash prize. “Each and every year, we continue to be amazed by these aspiring young scientists and award winners,” said Rhonda Reda, OOOGEEP Executive Director. “The knowledge and demonstration of science, technology, engineering and math in their projects is so impressive. Coupled with our scholarship recipients, it’s rewarding for our organization and industry to be able to salute these students for all that they have already accomplished.” To date, OOGEEP has recognized 353 students with scholarship or science fair awards. These students represent 200 hometowns in 49 Ohio counties. Below are the lists of scholarship winners and schools represented, followed by the list of science fair winners.

Scholarship Recipients Blaze Amos Rebecca Anderson Anthony Bazler II Alec Bianchi Christopher Blackwell Cole Blasko Steven Booher Damon Burghy Curtis Cameron Jensen Ciacci Cameron Connelly Joshua Debolt Darien Diddle Brianna Dooley Ashley Haas Sean Harlan Joshua Harley Brent Harley Zachariah Hickenbottom Jacob Hill Mitchell Horner Ethan Kehn Nathaniel Kehn Paul Krell Derek Krieg Madeline Lee Max Leveridge Diana McGray Hayden Meek Delanie Miles Sheldon Mullet Connor O’Brien Megan Pennock Alexander Petrovski Adam Reiss Michael Roberts James Roche Michael Roche Leah Rohan Dustin Rook Eric Rothermel Story continued on page 6

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Alec Rufener Zeke Scott Jolyn Shunk Whitney Simmons Ben Standiford Jennifer Starkey Grant Stokes Adam Stupak Samuel Wilhelm

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Science Fair Winners Muhammed Harini Abdel-Ghani Akula Martha Blatt Aaron Charney Ben Charney Lauren Dalton Edward Drabold Kyle Gallagher Alexander Gribble Sumedha Kethini Hannah McManus Quintin Muhlenkamp Abigail Myers Manas Nair Devi Dheekshita Nelakurti Jacob Queiser Alekya Raghavan Ahalya Ramesh Kali Stock Samanvith Thotapalli Kavin Vedamoorthy John Barry Wharff

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The Ohio Oil & Gas Energy Education Program (OOGEEP) is a nonprofit statewide education and public outreach  organization.  OOGEEP is funded by Ohio’s oil and gas  operators through an assessment on the production of all oil and gas produced in the state. The primary mission of OOGEEP is to facilitate programs that benefit Ohioans on behalf of the industry. Some of these programs include teacher workshops,  scholarships,  science fairs,  firefighter training,  industry safety training, career and workforce development,  research,  landowner education and  guest speaker  programs.  OOGEEP has developed nationally recognized curriculum and training programs, and has received numerous national and state awards from a variety of sources. For more information, visit www. oogeep.org.

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As part of the OOGEEP education program, educators from southeast Ohio visited an oil rig located in Noble County.

Teachers Energized to Go

Back to School T eachers of multiple grade levels, all across Ohio, will walk into classrooms this fall ready to share with their students exciting new information, labs and educational materials they received by attending specialized energy education workshops this summer. More than 70 dedicated Ohio teachers took part in the sessions hosted by the Ohio Oil and Gas Energy Education Program (OOGEEP).

filled my summer with excitement thinking about the endless possibilities available in science.”

Now in their 18th year, OOGEEP teacher workshops continue to provide educators with a better understanding of how science, technology, engineering and math (STEM) principles are used by energy professionals every day. OOGEEP’s science curriculum, STEM Lessons in Oil and Gas Energy Education, was designed by teachers to meet specific state and national science standards. During the workshops, professional educators walk teachers through the curriculum and assist in the various hands-on science labs. Industry professionals also offer insight into how science and industry are intimately connected. This year, the summer workshop series were held in Marietta and Canton, and also included tours to a wide variety of facilities in the state.

Jana Neptune, a teacher at Cambridge Middle School, said, “OOGEEP’s workshop is very informative and really opens your eyes to this industry. I already know how I will implement some of the activities in my classroom.”

“OOGEEP strongly supports education by providing instruction and supplying materials for our students to use in order to learn this curriculum,” said Twinsburg 7th grade teacher Michelle Lowden. “I believe this was the most planned, prepared, effective and useful two-day workshop I have ever attended.” “This workshop was a priceless experience for me and ultimately my students,” said New Lexington 8th grade teacher Cortney Folk. “OOGEEP furthered my own education and

Stephanie (Hope) Bradshaw, a teacher at Meadowbrook Middle School, said, “This workshop was very informative and eyeopening, especially the impact of the oil and gas industry to Guernsey County and the entire state.”

Brenda Pontius, who teaches at both Buckeye Trail Middle School and High School, said, “OOGEEP provides teachers with hands-on training about the entire oil and gas process from formation of hydrocarbons to the petrochemicals and products used by our students every day.” “It’s essential for Ohio’s teachers and students to learn about the importance of energy production, and how it impacts every resident in this state,” stated Rhonda Reda, OOGEEP Executive Director. “As an important industry to Ohio, it is also our responsibility to make sure that we continue to support teachers and students in our communities, and to help demonstrate how science education is critical to developing local energy resources.” OOGEEP’s STEM Lessons in Oil and Gas Energy Education includes curriculum related to geology, engineering and Story continued on page 8

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c h e m i s t r y, a m o n g other areas. It includes experiments t h a t : demonstrate how biotic material is transformed i n t o hydrocarbons; explain the p r i n c i p l es Brenda Pontius, a teacher at East Guernsey of geologic schools in Guernsey County, concentrates on an experiment with the OOGEEP education time and how crude oil and program. gas are stored and move through rock formations; help students understand how scientists map geologic formations underground using sound waves; demonstrate the importance of engineering and math in drilling, producing and transporting crude oil and natural gas; and how chemistry is critical to refining and processing hydrocarbons into more than 6,000 familiar products such as plastics, soaps, medicines, synthetic fibers and rubber. Through financial support from Ohio’s oil and gas producers, there is no cost for teachers to attend the energy education workshops. Educators earn continuing education credits, optional graduate credit, and receive graphic organizers, internet activities, career connections, curriculums, classroom supplies and material kits to take back to their classroom and students. Information about OOGEEP’s teacher workshops and other resources available for educators and students can be found online at oogeep.org/teachers-students. About the Ohio Oil & Gas Energy Education Program, The Ohio Oil & Gas Energy Education Program (OOGEEP) is a nonprofit statewide education and public outreach organization. OOGEEP is funded by Ohio’s oil and gas operators through an a s s e s s m e nt on the p r o du c t i o n of all oil and Karly Lyons, a teacher at Meadowbrook Middle gas produced School in Guernsey County, takes part in the in the state. OOGEEP education program. The primary 8

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mission of OOGEEP is to develop and implement educational materials and workshops. Some of these programs include teacher workshops, scholarships, science fairs, firefighter training, industry safety training, career and workforce development, research, landowner education and guest speaker programs. OOGEEP has developed nationally recognized curriculum and training programs, and has received numerous national and state awards from a variety of sources. For more information, visit www.oogeep.org.

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Environmentalists Unrealistic About Leaving

Natural Gas in the Ground

Renewables are decades away from meeting U.S. energy needs

A

Norm Shade• Sr. Consultant & President Emeritus ACI Services Inc. s an engineer and retired business American consumers, workers, businesses, and communities; leader, I believe that renewable energy and would seriously harm the entire U.S. economy. and energy conservation are important for meeting our long term energy OCI’s report says that in 2010, the Appalachian Basin (which needs, especially if they can reduce dependence on includes Southeastern Ohio, West Virginia and much of oil imports that drain U.S. financial wealth and enrich countries Pennsylvania) produced just 4% of U.S. natural gas. At its that are not necessarily friendly allies. projected peak in the 2030s, the Appalachian Basin could be supplying about 50%. This production growth cannot be I also believe that climate change is real. In fact, scientific evidence realized without building the pipeline capacity to carry it to shows that the earth’s climate has changed continually since market. It pointed out that there are 19 pending natural gas the beginning of time, with both warming and cooling cycles. pipeline projects that will increase takeaway capacity from the However, I am not convinced that scientific evidence proves that Appalachian Basin to double gas production from the region the current climate change cycle is caused by humans or by the in the coming decade. Dozens of downstream projects are also use of fossil fuels. But that debate is not the primary objective of planned, such as the Shell ethylene plant near Pittsburgh. The this article. group said that these projects should not be allowed to go ahead and that not acting to constrain gas production and consumption Natural gas and oil production from every well – big and to within science based climate limits is a major risk we face. It small - declines rapidly with time. In as little as one or two went on to say that this and future administrations have the years, production typically declines to a small fraction of what ability to apply the same standard to gas infrastructure as what it was originally. Therefore, new reservoirs must be discovered was applied to the Keystone XL pipeline. That means applying and new wells must be continually drilled (and stimulated by a climate test to these proposed gas pipelines and all proposed hydraulic fracturing or “fracking”) to the maintain production fossil fuel infrastructure. It said that a climate test would assess levels required to meet the nation’s energy needs. Otherwise, the need for new fossil fuel infrastructure against science-based shortages occur and energy prices increase drastically (as climate goals (generated from a complex computer model based occurred in 2003 to 2014 before U.S. shale resources were widely on many assumptions, not necessarily hard scientific data). The developed). bottom line is their goal of banning all fossil fuels, including natural gas. So, it is a concern that anti-fossil fuel advocates are gaining ground with politicians calling for bans on fossil fuels and That would mean that all the energy would have to come from fracking. A July report4 by Oil Change International (OCI), a renewable sources. The largest component of renewable energy is coalition of national and regional organizations opposed to fossil hydroelectric, which requires building dams and flooding land. fuel production and consumption, opposes all pipeline capacity This is unpopular with environmentalists and, of course, the expansions, especially any carrying natural gas to market from residents and property owners affected by it. Other renewable sources are biomass, geothermal, wind and solar. Of these, wind the Appalachian Basin. and solar are, by far, the renewable sources that are viewed as In brief, the report opposes construction of any further having the most potential for growth. pipeline infrastructure carrying natural gas to market from the Appalachian Basin, and recommends that the Federal Energy Wind (4.7%) and solar (0.6%), combined, accounted for only 5.3% Regulatory Commission (FERC) and other government agencies of U.S. electricity generation in 2015 as shown by the U.S. Energy be required to apply a “climate test” in their consideration of any Information Administration (EIA) data in Figure 1. Yet, the OCI new transmission and processing capacity anywhere. This is report asserts that these sources can somehow replace both coal similar to the Obama administration’s rationale for rejecting the and gas-fired power generation (which accounted for 66% of U.S. Keystone XL pipeline. The American Petroleum Institute and a electricity generation in 2015) in the near future. It asserts that number of other groups have said that these recommendations, if natural gas production is artificially constrained by denying if followed, would destroy jobs and manufacturing new pipeline infrastructure, investment will magically flow to competitiveness, imposing dramatically higher energy costs on produce enough wind and solar power to make up the difference. Story continued on page 10 GasandOilMag.com

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There is no question that wind and solar Solar 0.6 Wind 4.7 are important, Oil 1.0 Geothermal 0.4 but it’s prudent Biomass 1.6 to look at the Hydro 6.0 facts and to use Coal reasonably logic 33.0 in reaching decisions. Even Nuclear 20.0 with massive government subsidies, including Natural Gas 33.0 the Obama administration’s econom ic s t i m u l u s package, wind and solar’s share of U.S. electric generation has increased by an average of only about 0.5% per year over the past decade (from 1% to 6% of total electric generation). The picture is even worse when wind and solar’s contribution to the entire U.S. energy consumption - including transportation fuel, residential and commercial heating, etc. – is considered. EIA data in Figure 2 shows that wind and solar accounted for only about 2.3% of all U.S. energy needs in 2015. The data also shows that wind and solar increased their combined share of total energy consumption by a total of only 2% over the past 10 years. At that rate, it would take about 50 more years to reach 100%. U.S. Electricity Generation by Source (% of Total), 2015 Ref: U.S. Energy Information Administration

Despite these statistics, OCI and many politicians draw an extremely illogical conclusion that fossil fuel production is no longer needed. One of their arguments is that once capital is sunk into the natural gas infrastructure, it will produce power at minimal marginal cost, unfairly disadvantaging the development of renewables. This ignores the obvious conclusion that the same is true for wind and solar. More likely, healthy competition between fossil fuels and renewables would spur innovation and investment, driving costs lower for both types of generation. Another problem with the group’s logic is that solar or wind energy is intermittent. Energy is generated only when the sun shines and the wind blows. That is not necessarily when there is peak demand for energy. At other times, clouds reduce solar production and darkness shuts it down entirely. Wind too, varies with the time of day and the weather, producing either too much or not enough energy to match demand. Unlike the energy sources used in conventional fossil fueled power plants, the sun and the wind are not controllable. One hope is that excess solar and wind energy can be generated and stored for use when these sources are off line. But alternatives remain very limited. One idea, compressed air storage in underground caverns, is expensive and wastes about half the energy. Another,

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battery storage, is also very expensive and has limited capacity. Practical and commercially feasible energy storage appears to be more than a decade away. The final flaw in OCI’s logic has to do with the fact that wind and solar are only used to generate electricity. But electricity does not power very many transportation vehicles (and no airplanes other than a few small experimental and hobby craft). It does not heat many homes, businesses and factories, and it is not a feed stock for chemicals and plastics. The replacement of all furnaces, natural gas and oil (gasoline and diesel) engines, etc. would be an overwhelming financial burden and it would take decades to accomplish. Only with those replacements, added to the massive investment required for 50 times as many wind and solar farms as currently exist, plus power lines and storage facilities, could wind and solar potentially meet all the country’s energy needs. The effects of energy conservation and higher efficiency should not be discounted, but industry experts agree that most of the easy gains in efficiency have already been made. Nuclear energy is also an option, but it is even more unpopular with activists and much of the general public. So, fossil fuels – mostly abundant natural gas - have to fill the energy gap for many decades to come. The alternative would be to turn our life style back 100 years, living without lights, air conditioning, heat or transportation when renewable sources were off-line. And, of course, air travel would disappear entirely until such time that practical battery powered airplanes might be developed. Environmental activists neglect to mention these problems when they advocate banning pipelines, hydraulic fracturing or whatever other issue they can raise in the interest of shutting down oil and gas development and production. According to the U.S. Environmental Protection Agency (EPA) 6, natural gas-fired electric power generation produces only half of the emissions of other fossil fuel sources, and API contends that its growth in the U.S. over the past decade has been responsible for the greatest reduction in greenhouse gas (GHG) emissions anywhere on the planet. When sources of energy compete on their merits, consumers, workers and the overall economy will Wind & Solar % of Total U.S. Energy Consumption Ref: U.S. Energy Information Administration

2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2%

Solar %

0.0% 2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

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benefit. Lower energy costs will enable U.S. manufacturing to gain competitive advantage in the global marketplace, and GHG emissions will continue to decline with the use of natural gas to replace coal-fired electric generation and gasoline and diesel fueled vehicles. But the essential link is natural gas pipeline transmission capacity. The U.S. is blessed with huge reserves of economically available and clean-burning natural gas. Its availability should not be constrained by opposition that is based on flawed assumptions and illogical conclusions. Renewable energy is consistently characterized as more environmentally friendly than fossil fuels, but as emphasized in a July 2016 article5 in Power, renewables have some environmental impacts that are rarely publicized. Arguably, solar energy is the most environmentally benign source of electricity, once a solar plant is in place. But getting there has more environmental impact than most people realize. The process of making solar photovoltaic (PV) cells uses huge amounts of electricity. Much of the world’s PV cell manufacturing occurs in China, where electricity is generated with coal. And turning raw silicon into polycrystalline silicon for PV cells involves a number of toxic and corrosive materials. For example, with each ton of polycrystalline silicon several tons of corrosive and toxic silicon tetrachloride are produced. Although this can be recycled to produce silicon and hydrochloric acid, the process is expensive,

so not all manufacturers recycle it. The PV manufacturing process also involves other toxic substances such as hydrofluoric acid, and it produces substantial wastewater and solid waste streams. Treating and recycling that waste costs money, and some PV manufacturers, including a well-documented case in China, have cut corners by dumping untreated waste into waterways5. Wind farms, too, have environmental impact. The most controversial has been the issue of bird and bat mortality. The change to the landscape and the noise associated with large wind farms are additional concerns. Less known is that wind turbines use permanent magnets that require rare earth elements such as neodymium, the extraction of which can have serious environmental consequences because of the acids used in refining and the frequent occurrence of uranium and thorium in the ores. Even higher volumes of these magnets are used in electric vehicles. Not to be overlooked is that fact that most of the world’s neodymium is mined in China. ExxonMobil dismissed calls for the banning or limiting of fossil fuels as unrealistic3 and even President Obama’s chief science and technology advisor stated2 that natural gas is imperative to a clean-energy future and grid stability. The notion that we’re going to be able to keep it all in the ground is unrealistic. Our Story continued on page 12

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economic well-being and, arguably, our future standard of living are dependent on abundant energy at reasonable costs. Renewables do have an environmental impact, and perhaps even more importantly given the critical raw materials and wind and solar equipment that come from outside the country, complete dependency on them would put U.S. strategic interests and financial well-being at significant risk. There are no easy solutions. Artificially picking a winner – whether fossil fuels or renewables – is not in the best interest of the country. Like it or not, development of both will be needed for the foreseeable future. We must help educate politicians and then hold them accountable for basing their positions on facts and sound scientific evidence. It’s important to consider political candidates’ positions on these critically important issues in the coming election!

movement-unrealistic/ 3. Molinski, Dan, Exxon Official Says a Ban on Fossil Fuel is Unrealistic, The Wall Street Journal, August 2, 2016. 4. Oil Change International, A Bridge Too Far: How Appalachian Basin Gas Pipeline Expansion Undermines U.S. Climate Goals,” July 2016. 5. Overton, Thomas W., Weighing the Environmental Impacts of Wind and Solar, Power, July 2016. 6. U.S. Environmental Protection Agency, U.S. Greenhouse Gas Inventory Report: 1990-2014.

1. Energy Equipment & Infrastructure Alliance, EEIA Issue Alert: Pipelines in the Crosshairs, July 2016 (www.eeia.org). 2. Fitzpatrick, Jack, Morning Consult, Obama Adviser: KeepIt-in-the-Ground Movement ‘Unrealistic’, July 11, 2016. https:// morningconsult.com/2016/07/11/obama-adviser-keep-ground-

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We Will Recover I

OOGA President Gives Update

n 2014 OPEC members flooded the global market according to Hill. He said that during routine annual with cheap oil. winter draw-downs, 12 billion gallons of water are released from Seneca, Clendening and Piedmont lakes. In doing so, the Organization of the Petroleum This amount is sufficient to hydraulically fracture more Exporting Countries reportedly sought to impede than 2,400 wells in the Utica Shale formation. the burgeoning American domestic oil and natural gas industry, according to David Hill, president of the Ohio OOGA Director of Public Relations Mike Chadsey Oil and Gas Association. provided an update on the state of the oil and gas industry in Ohio. As of Sept. 1, he said, 2,229 wells have Local jobs dried up as the market price per barrel been permitted in the state, with 1,996 drilled and 1,390 plummeted, and companies scaled back production. wells productive. “We will recover,” Hill told Cambridge Kiwanians Of these, 507 are located in Carroll County, 382 in recently. Harrison County, 344 in Belmont County, 250 in Monroe County, 191 in Guernsey County, 189 in Noble County The United States has emerged as the largest producer and 133 in Columbiana County. of natural gas in the world, Hill said. While much of that production is based in the Ohio-West Virginia- Though the region is largely dependent on coal-fired Pennsylvania region and will bring with it a rush of plants to generate electricity, natural gas-fired plants are Story continued on page 14 commercial development in time if unimpeded, resistance to drilling — the so-called “not in my backyard” mentality — could see employers and jobs head elsewhere to more receptive communities. Hill also addressed wastewater injection wells. Such Class II wells inject, under pressure, wastewater from drilling operations thousands of feet underground. Of the 144,000 such wells in the country, 210 lie in Ohio. Nearer the surface the wells employ five layers of steel and concrete casings. Hill said this level of redundancy exceeds that of critical components in airliners.

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The idea that Ohio, specifically East Central Ohio, has become the dumping ground for much of the nation’s wastewater is simply not true, Hill said. The state receives only .5 percent of all wastewater by volume produced in the United States.

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Story continued from page 13

gaining ground, Chadsey said. Seven such plants are in various stages, including one to be located in Guernsey County, if approved. It would generate sufficient power for 1,000,000 households, and create an estimated 525 jobs. The construction of ethane “cracker plants” would provide a tremendous boost to the region’s economy, Chadsey said. (Ethane is an organic chemical compound. At standard temperature a colorless and odorless gas, it is a byproduct of the petroleum refining process.) The plants break down ethane at the molecular level, resulting in a number of products, including PVC and styrene, among others. These raw materials can then be provided to producers of consumer goods.

Regarding fracking safety, Chadsey referenced a recently completed study conducted by the University of Cincinnati. All samples taken of groundwater in five counties reportedly fell within the range of “clean water.” Methane concentrations in water sources were explored, Chadsey said, and the study determined that some samples with the highest concentration of methane were taken from locations distant from fracking sites, indicating fracking did not contribute to the methane in the water sample. Samples were taken prior to the start of drilling, during the drilling process and following the completion of operations, according to Chadsey, and no significant increases in methane concentrations were detected.

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Companies using such raw materials find it more economical, according to Chadsey, to locate near cracker plants, rather than pay for the transportation of the raw materials to their locations. Translation: More local jobs created as these companies establish facilities near the cracker plants.

Two cracker plants are being considered for construction in Ohio, though one is not likely to materialize, Chadsey said.

14 OhioGas&Oil

GasandOilMag.com


Dominion East Ohio Hosts

Women Engineering Program Taylor Rosen • Dix Communications

D

ominion is one of the largest producers and transporters of energy in America. The company operates one of the nation’s largest natural gas storage systems. The electric company serves retail energy customers in 14 states. According to Dominion’s website, the company was built on a proud legacy of public service, innovation and community involvement. Dominion annually displayed some of those traits by hosting a session that gave aspiring young engineers a lesson on the business and work that Dominion regularly conducts. The camp for young

aspiring women engineers was created back in 1999. This year, employees at Dominion East Ohio’s Cleveland 55th Street Center invited participants of the University of Akron’s summer Women in Engineering program. There were more than 40 girls, all coming from various Northeast Ohio middle schools. “Every year Dominion hosts the students from the Summer Experience in Engineering Camp, and every time it amazes me how many young females are interested in a male dominated field,” Porsche Harris, Engineer II at E. 55th said. According to the Director of the Women in Engineering Program at the University of Akron, Heidi Cressman, the girls are asked to provide a teacher recommendation and an essay in order to attend the camp.

submit, girls are selected based on interest as demonstrated in their essays and teacher recommendations. There are usually around 50 girls accepted each year. The program, which encourages interest in the engineering industry careers among women and young girls, has become a valuable learning experience for young women interested in becoming engineers.

“It’s designed to give the girls experience in engineering not really to teach them the basics,” Cressman said. “As with many engineering experiences, they Out of all of those who learn to work on a team especially in the Story continued on page 16

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Story continued from page 15

labs. They may build an aquifer to demonstrate h o w pollution affects our drinking supply or a bridge out of balsa wood.”

Data shows that women engineers are severely outnumbered, which is why Dominion is making a conservative effort to attract more women into the field of engineering. Currently, around 21% of all engineering students are female and only 10% of female engineering graduates remain in the field. “Dominion’s hope in supporting the program is that young girls who participate will find inspiration to pursue a career within the engineering industry,” Harris said. Donald MacBride, Gas Safety and Training Specialist at E. 55th, was the instructor of Gas 101, a class that focuses on natural gas basics. There a handful of student volunteers that participated in experiments in front of the rest of the class. Outside of the classroom, Mike Ickes and Matt Drews,

16 OhioGas&Oil

Dominion Gas Safety and Training Specialists, showed the students how to fuse plastic pipes and locate natural gas leaks in common household appliances. The students helped them in differentiating between strong and weak pipe fusions while also locating gas leaks using soap-water bubbles. “I find it very rewarding to help encourage young females to stay interested in engineering,” Harris said. Recently, the Dominion Foundation awarded the program $5,000 to support its efforts. The hope is to attract young girls to learn more about the company and to teach them skills that could potentially lead them to becoming an engineer. “Dominion has recognized the importance of diversity in the workplace and will continue to be a wonderful contributor of the Women in Engineering summer camps for many years to come,” Cressman said.

GasandOilMag.com


Ohio Court Kills Portage

Charter Initiative

T

Mike Sever • Dix Communications he Ohio Supreme Court on Sept. 14 killed attempts by citizens groups in Portage and two other counties to put county charter initiatives on the Nov. 8 ballot.

The proposed charters in Portage, Athens and Meigs counties were aimed at restricting or banning gas and oil exploration to protect local water and air quality. “It comes as no surprise that the court has found on behalf of the oil and gas industry,” said Gwen Fischer, an organizer from Portage County.

“Any illusion that we live in a democracy is obliterated with this decision. Will we go home and just accept the toxins in our community? No. We will fight for our rights. As the Standing Rock indigenous fight for water, we do as well. This is a fight to safeguard our air, our water, our health, our communities, today and for future generations.” —Gwen Fischer In a 6-1 decision, the court ruled the boards of election in each county and Secretary of State Jon Husted “did not abuse their discretion in determining that the proposed county charters fail to satisfy the requirements” under the Ohio Constitution for a valid charter initiative. Citizens groups gathered signatures for the charter amendments to go on the ballot, but election boards in each county said the charter language did not meet the requirements of “alternative forms of government” under the state constitution. The three charters were similar and had been drafted with the help of attorneys from the Community Environmental Legal Defense Fund, a nonprofit, public interest law firm. GasandOilMag.com

The proposed Athens and Meigs county charters seek to prohibit the use of water for hydraulic fracture drilling, and to prohibit disposal of fracking waste.

Portage’s proposed charter has those prohibitions but also would prohibit new exploration or drilling for gas and oil, and prohibit siting or operation of support equipment such as pipelines, compressors, and above-or-belowground storage facilities. Justices said the charters did not sufficiently delineate the powers to be vested in the counties through the charter, as required by the state constitution. In his dissent, Justice William O’Neill said the constitution does not limit the options of the types of government available to the people.

“The secretary of state does not have the power to veto charter petitions on behalf of the oil and gas industry simply because the citizens did not pick exclusively from the two forms of county government delineated in R.C. 302.02. This is a usurpation of power from the people that we should not indulge.” —Justice William O’Neill Contact this reporter at 330-298-1125 or msever@recordpub.com. Twitter: @MikeSever_RC

OhioGas&Oil 17


Utica Summit IV Set for October 11

H

ow does natural gas become a plastic toy or an industrial safety device? The gas molecule can be reconfigured to become a raw material for plastics manufacturing. Business leaders will hear what plastics manufacturers buy and what they make at Utica Summit IV on Oct. 11 at Embassy Suites by Hilton at Akron-Canton Airport (7883 Freedom Ave NW, North Canton, OH 44720).

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Utica Summit IV, produced by the Canton Regional Chamber of Commerce, Shale Directories and The Canton Repository, will conclude the Chamber’s fifth Beaver County, Pa. Another cracker may be announced year of explaining the Utica Shale to regional business early next year in Belmont County, Ohio. representatives who attend. Speaking about their businesses and their enthusiasm for The path for converting gas to plastic passes through an Utica energy will be: ethane cracker, like the one Shell Chemicals will build in

18 OhioGas&Oil

GasandOilMag.com


Joe C. Eddy, president and CEO of Eagle Manufacturing, Wellsburg, W.Va., whose product line includes highdensity polyethylene products for industrial safety and materials handling.

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Stan Glover, Sales manager with Zeiger Industries of Canton Ohio, which makes tools for plastic production that are sold around the world. Stan also is a director at SPI, the plastics industry trade group. Tom Gellrich of TopLine Analytics of Philadelphia, an analyst and consultant in the ethane market. Ethane is the Utica gas that can be converted into polyethylene at an ethane cracker. In addition, Step2, the manufacturer of children’s toys and recreational structures in Streetsboro, Ohio, has been invited to make a presentation.

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•The pipeline infrastructure buildout needed to serve the ethane crackers, presented by David LeDonne, vice president of operations, Utica and Appalachia, for MarkWest Energy Partners L.P. •The growing importance of liquefied natural gas exporting and importing, presented by Charlie Riedl, executive director of the Center for Liquefied Natural Gas in Washington, D.C. •A panel on workforce recruitment and preparation for downstream energy projects. Participants will include Dave Kirven, president of the East Central Ohio Building and Construction Trades Council, and Dan Murphy, director of the R.G. Drage Career Technical Center in Massillon, Oho. •The state of the energy and manufacturing economy in the region, presented by the Fourth District Federal Reserve, based in Cleveland and serving the Utica region. Cost to attend is $275. The event begins with registration at 7:30 a.m. and concludes at 2:30 p.m., with a continental breakfast and lunch provided. For more program developments, registration and sponsorship opportunities, go to www.uticasummit.com.

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Supreme Court Rules on

Dormant Mineral Rights Cases

I

Marc Kovac Kovac • Dix Capital Bureau

n a hefty release, the Ohio Supreme Court sided with longtime mineral rights holders in more than a dozen decisions involving oil and gas reserves in the eastern part of the state. The bottom line: Owners of mineral rights don’t automatically abandon those rights absent surface owners following procedures outlined in state law. And that could mean a lot of future court cases, as surface owners try to sort out whether they really hold the mineral rights to their land. “There will certainly be a lot of activity as people sort out the implications of the decision and where they stand on their mineral right interest relative to the decisions,” said Webb Vorys, who served as a legal adviser to the Ohio Oil and Gas Association in the case.

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The lead case, Corban v. Chesapeake Exploration LLC, focused on mineral rights in Harrison County, but that opinion was cited in 13 other pending cases involving the state’s Dormant Mineral Act. The ownership issues came to light as companies turned to horizontal hydraulic fracturing, or fracking, to drill for oil and gas reserves in shale formations deep underground. In Corban, justices ruled that the current surface owner of about 165 acres was not entitled to compensation for minerals extracted by a company that long held oil and gas rights to the property, despite decades of inactivity at the site. Other cases decided pitted current property owners against companies that have held mineral rights but did not launch exploration work for years. The former alleged the companies had abandoned their mineral rights, with a prior state law automatically shifting those rights to the surface owner. The latter held that those rights were reserved and properly documented or held and were not automatically abandoned. A majority of justices sided with the mineral rights holders, saying that a 1989 state law did “not automatically transfer the interest from the mineral rights holder to the surface owner by operation of law… Rather, a surface holder seeking to merge those rights with the surface estate under the 1989 law was required to commence a quiet title action seeking a decree that the dormant mineral interest was deemed abandoned.” Additionally, law changes enacted in 2006 directed surface owners to provide advance notice and follow recording procedures in order to deem mineral rights abandoned. Translated, this means surface property owners could not declare mineral rights abandoned without completing that process. Vorys said the decisions mean surface landowners could need to pursue court action to solidify abandoned mineral rights — “… You then have to go through the process of getting it merged with the surface [rights],” he said. Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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GasandOilMag.com


EnerGreen 360 Working to

Create New Facility

S

Holly Bilyeu Bilyeu • Dix Communications

outheastern Ohio has been a hotbed of oil and gas activity for the past several years. Much of that success has rapidly decreased in the most recent months; however, a new company is currently proposing an innovative approach to the oil and gas industry that would bring jobs to the Cambridge area. EnerGreen 360 is a multifaceted company that wishes to address the growing problem of Ohio’s overcrowded landfills, create commercial industrial sites, and establish new jobs. Founder Joe Lorenz has over 20 years of experience in the oil remediation business. President Rob Smith has over 30 years in the solid waste business. They realized that together they have the expertise for uncovering a logistics solution to earthen material management.

“We are passionate about being a job creator. We’re still trying to make sure to educate, though”

EnerGreen 360 has developed encapsulating methods to treat the drill cuttings and eliminate dust and debris leaving the treatment site. The encapsulating method has been proven since 1985 and meets Commercial Industrial VAP standards and compaction standards for new construction. Studies have indicated the cuttings treatment process would not pose a substantial risk to ground or surface water sources, and monitoring will be done and secondary and tertiary containment strategies adopted. Safeguards would also exist to prevent off-site contamination, including those addressing as many as thirty trucks delivering to the cutting facility daily. The facility could take in as many as 1,000 tons of cuttings per day. The material would be radioactive, but the measurable radioactivity, measured in millrems (mRem), is minimal. The calculated annual radiation dosage when working at or living near the facility is less than a dental x-ray at 0.1mRem. Liability for any contamination would be shouldered through insurance and the state of Ohio.

—Rob Smith The proposed location of the facility is in the D.O. Industrial President of EnerGreen 360 Hall Park, just south of Cambridge. The site is an attractive Essentially, the company would transport and reuse earthen materials that are produced at new drilling sites to establish a hard, clean fill for industrial sites that are otherwise rendered as undevelopable. This safe process helps in the economic development of land that is deemed “Brownfield Site,” or old Cambridge area strip mining.

location for the business due to the location of existing infrastructure, a large population related to Utica Shale, and the flat acreage that is available. Similar facilities are currently being used in Texas, Oklahoma, and Wyoming, but it is the first of its kind in Ohio.

EnerGreen 360 would create about 15 to 20 jobs, broken down into operators, a foreman, and a superintendent. Collectively, these jobs would gross annually $452,000. With another six jobs created for the roving crew and other staff, the total gross wages would be approximately $1,028,000 each year.

“We’re excited about getting our operation going,” said Smith. “I’m looking forward to being even more of an integral part of the community.”

The company has collaborated with other agencies in order to complete the necessary studies and obtain the necessary permits for operation. Specifically, Jobs Ohio assisted with a significant hydrogeological study to support OEPA beneficial use permits.

EnerGreen 360 has had a Cambridge presence over the past three years. They are members of the Chamber of Commerce, BUCKEYE STEPS safety meetings, and OOGA. Additionally, they have given numerous presentations to economic leaders over the past two years and have been exhibitors in the Guernsey County Shale-A-Bration.

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Currently, the business is still waiting for permits from the Ohio EPA and the Ohio Department of Natural Resources.

OhioGas&Oil 21


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Court Rules Dormant Mineral Act

Not Self-Executing

O

Andrew P. Lycans • Attorney n Sept. 15, the Ohio Supreme Court issued decisions in 12 cases concerning the proper interpretation of the Dormant Mineral Act of 1989 (the “1989 Act”). The most important of these decisions was Corban v. Chesapeake Exploration, L.L.C. where the Court ruled that the 1989 Act was not self-executing and that surface owners wishing to take advantage of the provisions in the 1989 Act were therefore obligated to file a quiet title action prior to June 30, 2006, when the Dormant Mineral Act of 2006 (the “2006 Act”) went into effect and significantly altered the requirements for obtaining an abandonment pursuant to Ohio’s Dormant Mineral Act. The 1989 Act provided that: “Any mineral interest held by any person, other than the owner of the surface of the lands subject to the interest, shall be deemed abandoned and vested in the owner of the surface” unless the mineral interest involved coal; the interest was held by the United States, the State of Ohio, or certain other governmental entities identified in the statute; or one of six savings events identified in the statute had occurred during the preceding 20 years. Three intermediary courts of appeals had interpreted this language as meaning the 1989 Act was self-executing, i.e., the mineral rights would automatically vest in the surface owner without any action being required by that surface owner to accomplish an abandonment.

The Supreme Court overruled these lower courts, holding that the quoted language only created a conclusive evidentiary presumption that the minerals had been abandoned. In order to take advantage of that evidentiary presumption, a surface owner would need to bring a quiet title action to have a court declare that the severed mineral interest had been deemed abandoned. In other words, if the surface owner brought a lawsuit the severed mineral interest owner would lose if it could not prove that the mineral interest involved coal, was owned by one of the listed public entities, or that a savings event had occurred during the preceding 20 years. However, if a lawsuit was not filed, then the severed mineral interest owner would continue to own the minerals.

the severed mineral interest owner. The severed mineral interest owner then would have 60 days to preserve their rights to the minerals by either filing an affidavit pointing out a savings event which had occurred during the 20 years preceding the notice or by recording a claim stating that the severed mineral interest had not been abandoned. The Supreme Court held that this change in the law did not affect a vested property right because it merely changed the method and procedure for achieving a deemed abandonment under the Dormant Mineral Act. Like Corban, all the other cases pending before the Supreme Court were originally filed after June 30, 2006. Thus, the Supreme Court decided all of these other cases based upon the reasoning of Corban, declining to offer its opinion as to the intricacies of how the 1989 Act had operated because any currently pending cases would be decided based upon the provisions in the revised 2006 Act. The Corban decision makes it significantly more difficult for surface owners to successfully work an abandonment of severed mineral interests. Under the 2006 Act, the surface owner arguably must locate the current owners of the severed mineral interest and provide them with actual notice of the surface owner’s intent to seek an abandonment of the minerals. Part of the rationale for adopting a dormant mineral act is because the severed mineral interest owners are often difficult (if not impossible) to locate decades or centuries after the minerals were first reserved. Further, if the surface owner does manage to locate the current severed mineral interest owners, those mineral owners can then avoid any abandonment by simply recording a claim announcing that they have not abandoned the mineral interest. The difficulty of locating the severed mineral interest owners, combined with such owners’ ability to preserve their interests after obtaining notice even though they have not actually exploited their mineral interests for two decades or more, will make it extremely difficult for surface owners to successfully obtain the unexploited minerals underlying their property using Ohio’s Dormant Mineral Act. However, there are many unanswered questions regarding how the 2006 Act operates, and litigation regarding the proper interpretation of the 2006 Act will likely play out over the next several years. Surface owners may yet prevail on some of those statutory interpretation issues.

The Court further held that any lawsuits brought after June 30, 2006, would have to comply with new requirements imposed by the 2006 Act. Specifically, the 2006 Act provided a way for surface owners to establish that they owned marketable record title of the minerals without a quiet title action. In order to take advantage of this new provision, however, the landowner would Lycans is a member of Critchfield, Critchfield and Johnston, Ltd., a law need to provide notice of its intent to seek an abandonment to firm with extensive experience in all aspects of the oil and gas industry.

GasandOilMag.com

OhioGas&Oil 23


Industry Under Attack John Lowe • Dix Communications

T

he precipitous decline of the gas and flood the market.” oil industry in Guernsey County was not for want of those natural “And, indeed, they did because they wanted to eliminate resources, a prominent industry their competition.” insider reported in early September. Hill’s remarks came during a “Coffee and Commerce” Rather it resulted from a decision of the Organization meeting sponsored by the Cambridge Area Chamber of of Petroleum Exporting Countries, David Hill said. Commerce at the Southgate Hotel. A geologist and an oil and natural gas producer from Byesville, Hill also serves as president of the Ohio Oil OPEC acted because they viewed the shale development here and across the United States as eating into their and Gas Association. share of the petroleum market. In fact, Hill can pinpoint the date that brought the OPEC was able to slash crude oil prices because those decline. countries have lower “lifting costs” than producers in “I remember sitting at home on Thanksgiving Day [in the United States. 2014],” he said. “I knew OPEC was meeting and many of us suspected that this was going to happen. They By increasing the crude supply, OPEC drove prices down decided that they were going defend market share and to the point of crude selling at $45 per barrel. Hill said

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producers here thought they could learn to live with oil at that price, but, then, OPEC threw another curve. “Early this year, they decided we haven’t had enough pain and they took it down even further,” he said. “At one point in February, we were down to $26 per barrel.” Because of the “thinner” consistency of oil recovered in this region, the effective price here at that time was about $20 per barrel, he said. Hill likened it to the income of a family in which the wage earners take a fivefold cut in their takehome pay while expenses such as the family mortgage and grocery bills remain the same.

Attending a meeting to discuss the status of the gas and oil industry locally are Mike Chadsey, l, director of public relations for the Ohio Oil and Gas Association; Jo Sexton, president of Cambridge Area Chamber of Commerce; and geologist David Hill, president of the Ohio Oil and Gas Association.

“It makes it tough, very difficult to operate under these conditions,” he said. “What I try to relay to people is that Saudi Arabia and OPEC half way across the world made a decision that’s hurting us right here in Guernsey County. We’re paying a tremendous price for what they are doing. The domestic oil and gas industry is under attack.” (EDITOR’S NOTE — In another article, David Hill offers a positive outlook for the gas and oil industry in this region.)

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Forum Digs Into Tax Reform

C

Bobby Warren • Dix Communications ongressmen Bob Gibbs and Jim Renacci were on friendly turf talking about the need for regulatory and tax reform at the Consumer Energy Alliance Midwest forum recently in Canton.

America became a great country because of innovative people chasing dreams, creating wealth and providing opportunities, Gibbs said. The Lakeville Republican said there are three ways he believes wealth is created: Through agriculture, raise it and grow it; manufacturing, make it and add value; and developing natural resources, mine it or drill it. A major focus for Gibbs in Congress has been dealing with regulations originating with the U.S. Environmental Protection Agency, particularly the Waters of the United States rule, which was to update and defi ne the waters under the federal government.

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To Gibbs, “EPA” stands for “Eliminate Productive Activity.” He views the Waters of the United States rule as a power grab having nothing to do with the environment. He talked about how the agency has not found one instance where horizontal wells using hydraulic fracturing of shale have led to the contamination of groundwater, even though its directors have tried. An EPA report in 2015 stated, “From our assessment, we conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources.” In the next paragraph, the report states, “We did not fi nd evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Of the potential mechanisms identified in this report, we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.”

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Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, talked about a University of Cincinnati study, which has not yet been published, where the fi ndings showed natural gas development in a five-county area, including Stark and Carroll, did not impact the water quality. When Gibbs had a hog farm in Holmes County, he said he had problems with orphan wells. It is most likely orphan wells are the source of problems. Chadsey noted the UC study indicated people in Carroll County had a problem with biogenic methane (which involves bacterial and organic activity), but not thermogenic methane (which involves high pressure and heat in the last stages of gas production).

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The country should follow an “all of the above” energy policy, including petroleum and coal, Renacci said. In 2015, 24 percent of the petroleum consumed in the United States was imported from foreign countries. While it was the lowest in decades, Renacci would like to see the country do even better. Now is the greatest opportunity to become energy independent, he said.

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does not believe in all of the above,” Renacci said, adding it wants to get away from petroleum, natural gas and carbon.

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Renacci, a businessman, told the crowd he is as frustrated as they are with the federal government regulatory burdens and a complex tax code. The average company pays $10,000 per year to comply with federal regulations, he said. The stat comes from a study by the National Association of Manufacturers, which estimated the country’s total cost of complying with federal regulations to be $2 billion, which averaged slightly less than $10,000 per employee. The study noted small firms might pay 30 percent more than larger firms. The greatest opportunity to change this is to eliminate some of the regulations and reform the tax code, Renacci said.

Mike Chadsey, l, of the Ohio Oil & Gas Association joins Congressman Jim Renacci at the Consumer Energy Alliance Midwest Forum.

Reporter Bobby Warren can be reached at 330-287-1639 or bwarren@the-daily-record.com. He is @BobbyWarrenTDR on Twitter.

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Court Ruling Favors Several

Mineral Rights Owners

I

David J. Wigham • Attorney n a long awaited ruling issued yesterday, the Supreme Court of Ohio held that a surface owner could only bring a claim for abandonment of a severed mineral interest under the 1989 version of the Ohio Dormant Mineral Act (“1989 DMA”) before June 30, 2006.

automatically transfer the interest from the mineral rights holder to the surface owner by operation of law.” Since the 1989 DMA was only an evidentiary device, when the 2006 version of the Ohio Dormant Mineral Act (“2006 DMA”) became effective on June 30, 2006, surface owners lost their ability to rely on this evidentiary mechanism when bringing an action to quiet title against severed mineral interest In Corban v. Chesapeake Exploration, L.L.C., et al., the holders. The Court also held that payment of delay rentals is Supreme Court of Ohio ruled that the language contained not a title transaction under the 2006 DMA. in the 1989 DMA created a conclusive presumption of abandonment in the event that the surface owner showed, When coupled with the Court’s prior ruling in Dodd v. in a court action, that no savings event applied in the twenty Croskey , the ruling in Corban, essentially guts Ohio’s DMA, years preceding the filing of his action for abandonment of which will generally favor the claims of severed mineral minerals. Instead of finding that the 1989 DMA automatically owners over the competing claims of surface owners. Dodd vested mineral rights to surface owners upon the occurrence held that even if there is no savings event in the chain of of certain conditions listed in the Act (as some Courts had title, a mineral holder’s claim to preserve a mineral interest previously indicated), the Court stated that the 1989 DMA filed in compliance with R.C. 5301.56(H)(1)(a) is sufficient to “was only an evidentiary device that applied to litigation prevent the mineral interest from being deemed abandoned seeking to quiet title to a mineral interest” and did “not to the surface owner. Now, if a surface owner follows the

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notice provisions of the 2006 DMA and any mineral interest holder files a Notice of Preservation, that Notice “preserves the rights of all holders of a mineral interest” from being deemed abandoned. R.C. 5301.56(C)(2). Going forward, it will be very difficult, if not practically impossible, for a surface owner to achieve an abandonment under the 2006 Act since (1) a Notice of Preservation cures the lack of a prior savings event and (2) a Notice of Preservation is effective as to all severed mineral owners, even if the mineral interest holder filing the Notice owns only a fractional interest in the severed mineral rights. While Corban and the other 1989 DMA decisions finally clarify this previously murky area of the law, the holding severely restricts the ability of a surface owner to achieve an abandonment of a mineral interest in most circumstances. Conversely, severed mineral owners have gained important rights to claim title to mineral interests that were previously thought to be abandoned.

FILL UP

HERE!

While Corban was only one in a series of opinions, the subsequent decisions relating to the Ohio Dormant Mineral Act on Thursday were rendered almost exclusive on the reasoning contained in Corban. From the producer’s perspective, the Corban decision clarifies many open title issues that prevented them, in many cases, from proceeding with development. Producers now will be able to ensure that they have valid lease rights from the true owner of the minerals, as the 2006 Act contains a notice procedure that will enable the true owners of the mineral rights to be determined. Producers may now also take steps to cure title deficiency questions that were unanswered prior to the Corban ruling. Also, while producers may have claims that they have adversely possessed minerals by producing them for over 21-years, many producers may find themselves facing claims filed by severed mineral interest holders who may now own rights to minerals that were previously believed to be abandoned.

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Corban changes the landscape in Ohio regarding ownership of valuable oil and gas interests. The pendulum has now swung drastically in favor of the severed mineral owners’ ability to claim ownerships interests that were previously believed to be abandoned. The legal issues are still complicated, making it essential for mineral owners to engage a knowledgeable and experienced oil and gas attorney to guide them through the process of preserving and protecting these potentially valuable mineral interests.

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David J. Wigham is a second-generation Ohio oil and gas attorney with nearly 25 years of experience in the industry. He practices at the law firm of Roetzel & Andress and maintains offices in Akron and Wooster, Ohio. He can be reached at 330-762-7969. KO-10488318

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OhioGas&Oil 29


Shale Insight 2016

R

Trump Calls for Expansion in Energy Exploration

epublican presidential nominee Donald Trump gave the keynote address Sept. 22 at the annual Shale Insight conference in downtown Pittsburgh, calling the contrast of the energy policies of Democratic presidential nominee Hillary Clinton, “a war.” Trump said he is calling for a dramatic expansion in domestic energy exploration, combined with a dramatic scale-back of regulations meant to protect the environment and public land.

Trump has advocated an “America first” energy policy. He is contrasting that with Democratic rival Hillary Clinton, who has advocated a move away from dirty fossil fuels. “It’s war,” he says.

Trump told the crowd of about 1,200 industry representatives at the Republican presidential candidate Donald Trump speaks David L. Lawrence at the Shale Insight Conference, Thursday, Sept. 22, 2016, He said that as president, he would convention center that in Pittsburgh. open federal lands and off-shore as president, he would (AP Photo/ Evan Vucci) areas for energy exploration. encourage American administration moratorium on new energy production and He also wants to eliminate regulations roll back environmental regulations coal leases. intended to protect America’s fresh as a way to “make America wealthy” “We have just begun, as a nation, to water and limit carbon emissions again. recognize our economic advantage from power plants. “Regulations are that is made possible by shale becoming a major energy,” said Trump, warning industry right now,” Clinton’s policies would hurt the said Trump. “We’re industry. going to make it a much smaller Outside the convention center about industry, maybe a 200 protesters gathered to denounce his visit, holding signs with slogans minor industry.” like, “Frack Trump.” StateImpact, a reporting project The Marcellus Shale Coalition says it of National Public also invited Democratic presidential Radio, said the GOP nominee, Hillary Clinton, but her nominee highlighted campaign declined. his plans to undo President Obama’s Shale Insight 2016 is a partnership of major climate change the Marcellus Shale Coalition (MSC), initiative, the Clean the Ohio Oil and Gas Association Plan, and (OOGA) and the West Virginia Shawn Bennett, executive vice president of the Ohio Oil and Power Oil and Natural Gas Association Gas Association, opened Shale Insight 2016, noting, “If Ohio, said he would lift (WVONGA). Pennsylvania and West Virginia were a country, we would drilling restrictions and on be the third largest natural gas producer in the world. This offshore federal lands, as well is why this conference is so focused on the marketplace and as a recent Obama creating demand.” 30 OhioGas&Oil

GasandOilMag.com


Study Says Ohio Could

Make $237M on Pipeline Dylan Sams • Dix Communications

O

hio could take in $237.3 million from the proposed Utopia Pipeline, according to a study conducted by two Kent State University professors. Allen Fore, vice president of public affairs of Kinder Morgan, said 80 percent of the land required for the project inside Ashland County has been acquired as of Tuesday. There are 113 tracts of land countywide that Kinder Morgan needs to acquire before construction can begin on the pipeline.

will be 50 percent local, Ohio-based union workers and 50 percent non-local workers.

According to the study released Tuesday, the pipeline will generate $4.9 million in tax revenue for the state. The study was conducted by Shawn M. Rohlin, an associate professor of economics and director of the Center for Entrepreneurship and Business Innovation at Kent State, and Nadia Greenhalgh-Stanley, an associate professor of economics.

NOTICE!

Construction is expected to take 20 months and to begin January 2017.

Throughout construction, 1,730 jobs are expected to be “Our focus at this point is landowner relations and land created, including pipeline operation workers. acquisition,” Fore said. A public hearing on the project with the Ohio Sixty percent of the land has been acquired statewide. Environmental Protection Agency will be 6 p.m. Sept. 28, Once all the land is purchased, the pipeline will run at Ross High School in Fremont. through 14 counties in Ohio including Harrison, Carroll, Tuscarawas, Stark, Wayne, Ashland, Richland, Huron, Seneca, Sandusky, Wood, Henry, Lucas and Fulton. Ethane and ethane propane blends will flow through the 215-mile long pipeline.

Fore said Kinder Morgan commissioned the study to get an accurate picture of the economic impact the pipeline would have on Ohio. “I think it’s important that we back up what we’re saying,” Fore said. “I think if you’ve read it, it speaks for itself.” The pipeline is expected to cost $500 million, with about $168 million dedicated to the construction labor and $332 million for material costs, according to the report.

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About 750 workers from Ohio will be needed to complete the project, Rohlin and Greenhalgh-Stanley wrote, with a construction schedule of six days in daylight hours. The report also says Kinder Morgan’s construction workforce

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Ohio Gas & Oil Magazine October 2016  

October 2016 edition of the Ohio Gas & Oil Magazine published by Dix Communications.

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