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Posts tagged "ODNR"

Ohio’s Production Numbers Don’t Tell All

Friday, May 17th, 2013 | 0 Comments

After at least an extra month of guarded anticipation, the Ohio Department of Natural Resources (DNR) finally released oil and gas production data on 86 wells producing from the Utica shale during 2012.  Oddly enough, an article from Reuters appearing in Friday’s papers dismisses the Utica play as a bust.  To quote the article written by Edward McAllister and Sabina Zawadzki:

“U.S. hopes for a new shale oil bonanza in Ohio, joining the prolific Bakken and Eagle Ford plays that have raised production to 20-year highs, were shattered on Thursday by the first hard evidence that the Utica formation was primarily gas-prone.

“Now, data from Ohio’s Department of Natural Resources (DNR) showed that in 2012, the first full year of drilling, oil output amounted to only 636,000 barrels — about enough to fill a single small crude oil tanker. On average for the full year, output came to a mere 1,742 barrels a day (bpd) versus 780,000 bpd in North Dakota, where much of Bakken lies.”

The numbers reported to the DNR and discussed in the Reuters account would indicate that the 86 wells now producing are averaging approximately 20 barrels of oil per day.  It’s hard to argue with statistics, but it’s also important to understand that on the surface, these particular ones are very misleading.

For example, Chesapeake Energy reported production on 53 wells that averaged 77 BOPD and 2097 Mcfd.  The gas production rates are certainly substantial, even with only three wells being online for more than 300 days, but the oil production rates appear less than impressive.  However, no mention is made of natural gas liquids (NGLs) that are being recovered from the gas.  In fact, considerable NGLs are being recovered from the gas stream and are not reported as oil production to the state.  Similarly, nothing is mentioned as to how the wells are being produced. Notably, due to limited pipeline capacity (a condition that is only temporary, given massive buildouts already underway), many of these wells are being “choked back” until the product can actually be sent somewhere.

In fact, nearly $10 billion is being invested in Ohio’s midstream infrastructure to help bring the gas and entrained NGLs from these wells to market.  How will this impact the production from these same 86 wells going forward? No one knows for sure.  But it’s safe to say that the numbers will look better when this infrastructure is in place.

In the end, the raw production numbers reported to the state represent only a snapshot of what the industry is actually doing — and, more importantly, what it’s capable of doing.  No, the oil numbers are not as good as other, more mature plays, like the Eagle Ford in Texas. But the real question is, are the wells economic?  Can a company invest $5-9 million to drill and complete a well in the Utica shale and make a profit on its investment?  The most important numbers to a company are net present value and payout time — neither of which are reported to the State.

The Reuters report also compares the Bakken’s current production numbers to the Utica’s first year.  This is hardly a fair comparison.  I don’t know what the Bakken produced in its first year, but I can assure you it wasn’t 780,000 barrels of oil per day. Heck, back in the mid-1990s, the U.S. Geological Survey thought the Bakken only held about 151 million barrels of oil, a number they later had to upwardly revised by nearly 25-fold in 2008 after development began to take off.  The article does not state how many wells are responsible for that production either.

Personally, I like to compare apples to apples — not apples to airplanes.

I’m not throwing in the towel on Ohio production, and we know the companies operating here in Ohio aren’t either.  In fact, I’m celebrating the fact that the number of permits taken out at the DNR is steadily rising along with infrastructure development and production — which is great news for our economic future in this part of the country.

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The Truth about Permitting In Ohio

Friday, May 3rd, 2013 | 0 Comments

A recent article in the Columbus Dispatch, entitled “Drillers: Ohio easy place to do business in,” left readers with the impression that Ohio has a rubber stamp system for permitting oil and gas development, and by extension a lack of proper scrutiny on safety and environmental protection. While it’s true that Ohio has an incredibly efficient permitting system, make no mistake: bringing a well online requires a heckuva lot more than a handshake and a couple of signatures.

In preparation for developing a well in Ohio — that means before securing an actual permit to drill — an operator must first fill out and submit an authority and organization form to the Ohio Department of Natural Resources (ODNR), specifically the Division of Oil and Gas Resources Management (DOGRM).  This form essentially acts as a registration of your company to develop oil and gas in the state.

Once the company has filed its notice to operate in the state, the company must next follow the bonding requirements set forth by Ohio Revised Code.  In addition to fulfilling the bonding requirements, companies must also make sure they meet the liability insurance requirements, also established by the Ohio Revised Code.  Both of these requirements must be met before the division will even consider moving forward with permitting.

It’s not a perfect analogy, but to put this in perspective: think about filling out those lovely forms at the DMV to get a driver’s license or license plates. Not exactly a fun and simple process, is it?

Once these qualifications have been met, the company can begin obtaining a permit.  The company must first fill out the application detailing how and where the well will be developed.  These items include:

Even after all of the above-mentioned paperwork and filings are completed, an operator has still only barely scratched the surface in terms of developing a well.

After the company has filled out and submitted its application for permit, ODNR must review the permit to check for completeness.  The permit must be filled out correctly and have the proper fees in place to permit the well.  If they deem the permit not to be complete, it goes back to the company to correct and re-file. (To continue the analogy, have you ever made a mistake on a DMV form after waiting in line for two hours — and had to redo it? Yeah, that.)

If the permit is deemed complete, then local officials, possible affected mine owners, and the inspector are notified of the permit.  The permit name is also posted on the ODNR website. 

Next, the company must submit the Surveyors Plat, in which a certified surveyor will map the pad site the company plans to use when developing the well.  The company also has to develop a restoration plan for when they plan to reclaim the site.  ODNR must approve both of these plans.  In addition, the company must sign and notarize the landowner affidavit certifying it is permitted to develop the resources where the pad will be located. 

Operators must also fill out federal Clean Water Act 401 and 404 permits for wetlands and water quality to the Army Corps of Engineers and EPA to ensure the waters of Ohio are not negatively impacted by development.  Ever hear opponents of oil and gas development claim the industry is “exempt” from the Clean Water Act? Not true.

Once these permits have been reviewed and approved — and when you’re talking about the EPA, that’s hardly a given — it is now time for ODNR to perform the technical review of the drilling permit.  ODNR checks to make sure the casing and cementing plan is sufficient to properly produce from the well, while also ensuring that groundwater will remain protected under the Safe Drinking Water Act (yet another “exemption” talking point from the activist community is shattered). The reviewers check the geology, casing plans, as well as any special permit conditions.  Once they are assured the well construction is sufficient, technical review is complete.

Ready to drill, right? Wrong.

Next, the operator performs water testing for all homes within 1,500 feet of the wellhead, as mandated by Ohio SB 315.  The results are distributed to the landowners, ODNR, as well as the company.

If there is going to be a fresh water impoundment on site, then these impoundments will also be regulated by ODNR. Two separate offices within ODNR — DOGRM or Soil and Water Division — oversee impoundments, depending on the size.   

To build the actual well pad, there are still a few more items that need to be attended to. 

First off, the operator must get permits from the Ohio Department of Transportation for driveway permits for lease roads, and the company must obtain overweight and/or over length hauling permits to allow them to get the materials to build the pad.  Of course, these permits would all be moot if the township trustees, county engineer, and the county commissioners have not signed off on the proposed Road Use Maintenance Agreement.

Each pad site also has sanitary needs, which of course need to be permitted as well.  These facilities are inspected by the Ohio EPA and Department of Health.

Okay, so the site has been constructed.  The permits are in place, and now the operator is ready to notify ODNR that it is ready to spud the well. 

Err, not so fast. 

The operator must also work with the EPA and Ohio EPA to file a SPCC Plan.  SPCC stands for Spill Prevention, Control, and Countermeasure rule, which includes requirements for spill prevention, preparedness, and response to prevent discharges to navigable waters. 

In addition to the SPCC plan the operators file with the Ohio EPA, operators must also file for an permit to install and operate (PTIO) air permits with the Ohio EPA for their production facilities that will be onsite.  The PTIO regulates emissions that would be coming from a production site as regulated under the Clean Air Act — yet another one of those laws that anti development folks like to pretend the industry is “exempt” from.

Many know the industry uses an average of five million gallons of water to hydraulically fracture a Utica Shale well.  But how does the industry obtain that water?  There are a variety of places an operator can get its water: public water supplies, which are permitted by the Ohio EPA; drill a water well, for which they would have to obtain a permit from ODNR and the local health department; or from a pond, for which they would also have to register with ODNR.

Obviously, this extensive process is a lot to take in, so here is a diagram to give a better description of the planning and permitting that goes into developing a well.

But wait, we still need pipelines to get the gas to market!But what does it take to permit a pipeline?

Permitting pipelines is another extremely time intensive component of oil and gas development that many seem to forget.To get gas from the well to market, there are various surveys and permits that each company must follow for each and every pipeline it installs.

First off, a pipeline company must obtain a Nationwide 12 Permit from the Army Corps of Engineers.  In addition to the general requirements set forth by Nationwide 12, the company must also perform due diligence on a variety of other items:

If companies run into these items and are not able to mitigate them, the companies may have to re-route to pipeline altogether — which can often entail going back to square one in this process.

Of course, these companies also have to obtain permits from the Public Utilities Commission of Ohio, which regulates gathering lines in Ohio.  The pipeline companies have to complete a Pre-Construction Notice as well as an As Built Notice. If a company has to go through a floodplain, then the company has to submit a floodplain notification to the County Floodplain Administrator.

If the companies happen to run into an area controlled by the U.S. Army Corps of Engineers, in which Corps holds perpetual rights, then the company must obtain a federal Flowage Easement.  ACE has the right to approve or deny any request on this matter, which is typically a three month process.

Pipelines tend to run straight and incorporate long distances of travel to get to processing plants or to transmission lines.  To achieve this, companies must get Driveway Occupancy Permits and Highway Occupancy Permits from the Ohio Department of Transmission, County, Township, Village or other divisions.  If a pipeline needs to cross a railroad, the pipeline company must obtain a railroad permit from the railroad operator or owner, which may take up to four months.

Of course, operators also need trucks to haul pipe and equipment, so just like oil and gas companies, the pipelines need to obtain road use maintenance agreements from the county.

Okay, but once we’ve got the well and pipeline approvals, now surely we’re done with the permitting process, right? Wrong.

To move the product from point A to B, we also need compressor stations, which are permitted the same as the pipelines but include one more significant component.

Air permitting is needed on all compressor stations to remain in compliance with the Clean Air Act (yet another “exemption” argument blown away).  Depending on the facility, air permitting involves the preparation of detail permit documents, air dispersion modeling, and design drawings and calculations.  Typically, permitting timelines are 3-6 months for minor facilities and can be 12-18 months for large, complex compressor stations after a complete application is submitted to the Ohio EPA.  The permitting timeline also includes multiple public comment periods and public hearings.

If someone believes that permitting is easy in Ohio, they need to read this post again.  The real story is that these requirements have worked: How many environmental violations have we seen among the 89 Utica Shale wells drilled since passage of SB 315? Zero.

So, the fact that this entire, cumbersome process is both effective and can be completed in an efficient manner should not be conflated with an “easy” or rubber-stamp system that ignores safety. The record speaks for itself. We just wish the folks at the Columbus Dispatch would have actually looked at it before running headlong into a false narrative based on a few out of context remarks.

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Utica Shale: By The Numbers For April

Tuesday, April 30th, 2013 | 0 Comments

Building on strong numbers from the first quarter of 2013, Utica Shale development in the second quarter of 2013 has been taking off in Ohio. Of course, we see headlines each week in newspapers all over the Buckeye state indicating new jobs, investments, and opportunities thanks to increased oil and natural gas production, so this shouldn’t really surprise anyone.  And while development is good news for getting Ohio back on track, it is equally important to understand where Utica Shale development is helping boost Ohio’s economy.

To date, there have been 627 permits issued by the Ohio Department of Natural Resources for wells in the Utica/Point Pleasant geological formation. Of those 627 permitted wells, 310 of them have been developed, and 89 of those are in production.

Thus far, Utica Shale permits have been issued in the following 22 counties (updated county numbers in bold):

All of these permits have been provided to 27 companies that are developing Ohio’s shale resources (updated permit numbers in bold):

While still very early in its development, the Utica Shale is already showing some very exciting results. The best part is that this development, and the jobs and revenue that come with it, has occurred without a single environmental violation.  That successful track record is due to the diligence of companies operating in the state and Ohio’s strong regulations put forward in Senate Bill 315, the bi-partisan update to those regulations.

Thanks to our natural resources, the public commitment of these companies, a strong regulatory foundation, and the billions of dollars being invested from development, there is a renewed sense of optimism in Ohio thanks to the Utica Shale.

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*UPDATE III* The Latest RUMA

Friday, April 19th, 2013 | 0 Comments

UPDATE III (4/19/13, 2:55 pm ET)

For over a year, Energy in Depth has updated our readers about RUMAs, which are agreements between a producer and a county that cover road repairs, upgrades and bonding. The idea behind the RUMA is simple: Leave it better than you found it. Perhaps even more important is that the agreement stipulates designated travel routes for heavy equipment to ensure safety and minimize impact. Recently, the Marietta Times featured one such agreement between PDC Energy and Washington County. It focused on a three-mile street in Adams Township on Dixon Ridge Road where PDC is developing a well pad site. Moving a few counties north into the heartbeat of the Utica play we find ourselves in Carroll County, which has seen great success in road repairs thanks to RUMAs. Here’s some coverage of the PDC agreement:

“Before the work began I reached out to other areas of the state like Carroll County where oil and gas companies have been doing horizontal drilling,  In 2011 those companies spent nearly $30 million on road improvements there.” -Washington County Commissioner Ron Feathers (Driller’s road work welcomed in Adams Twp., 4/17/13)

“The RUMA with PDC one of the best things that’s happened for this township.” -Adams Township Trustee Wayne Isner (Driller’s road work welcomed in Adams Twp., 4/17/13)

While RUMAs are with local governments — as written into law in Senate Bill 315 — Ohio Department of Transportation Director Jerry Wray weighed in on the topic during an interview with the Times Reporter.

“It’s important that we do what we can to protect the taxpayers’ investment in our roads and bridges.”  -Jerry Wray, Director of ODOT. (State rules protect roads from oil-and-gas impact 5/16/12)

With RUMAs, companies are showing that they are good corporate neighbors. But more importantly, these agreements allow for millions of dollars of investments to improve infrastructure in eastern Ohio, which in turn helps put people back to work.

UPDATE II (4/19/12, 1:00 pm ET)

Yesterday, officials from the Ohio Department of Transportation, Ohio Department of Natural Resources, as well as township and local trustees, and oil and gas industry representatives met in Jefferson County to discuss the model Road Usage Management Agreement. Producers must have a RUMA to earn a permit to work in a given location. The agreement will ensure proper maintenance of roads used in the development of Ohio’s natural resources in the Utica Shale.

Through ODNR’s website, Ohioans have total access to the information with those permits. Located in the oil and gas section of the website, people can use a map locator or a spreadsheet to find any well in the state. These resources will allow people to contact energy companies in their area directly to address any questions they may have.

UPDATE I (4/17/12, 8:00 pm ET)

According to this afternoon’s report, directors from the Ohio Department of Transportation,  Ohio Department of Natural Resources and the Governor’s office of Appalachia will hold an announcement tomorrow providing the details of a model Road Usage Maintenance Agreement that can be used by localities throughout the state.

The announcement is set for 11:15 a.m. tomorrow, Wednesday April 18, at the Pugliese Training Center in Steubenville. Be sure to stay tuned to Facebook or Twitter for the latest update.

—Original post from March 15, 2012—

Have you heard the new RUMA? It’s something most Ohioans will be familiar with in the near future. RUMA, or the Road Usage Maintenance Agreement, is an agreement between a governing body, in Ohio typically a county or a township, and an oil and gas exploration company.

An example of this agreement can be found on the Ohio County Engineer’s Association website. It is an opportunity for oil and gas developers and municipalities to reach an agreement that, either on the front end or back-end of a project, the oil and gas company will repair and or maintain a section of road. This agreement needs to be in place before a permit request is submitted to ODNR.  So before an oil and gas company begins to set up operations they must have a RUMA in place.

 What Does a RUMA Cover?

Mr. Lloyd Macadam, Ohio Department of Transportation, District 11, Deputy Director

Many individuals and groups were involved in creating the working RUMA model for Ohio. ODOT District 11 , lead by Deputy Director Lloyd MacAdam, organized a group consisting of several entities; county commissioners and their association, township trustees and their member association, county engineers and their joint association, the Ohio Railroad Association, the Ohio Department of Public Safety, the Governor’s office, Winter Meeting of the Ohio Oil and Gas Association (OOGA), several speakers addressed the subject,  providing information and answering questions from the audience. The panel of speakers included Mr. Bruce Levengood with Sound Energy Company INC, Mr. Ryan Dean with Chesapeake Energy Corporation, Mr. Tom Tugend with ODNR, Mr. Lloyd Macadam with ODOT and Staff Lt. Robert Warner of the Ohio State Highway Patrol.

How did Ohio handle creating RUMA agreements with public safety?

Staff LT. Robert Warner, Ohio State Highway Patrol, Office of Field Operations, Commander, Licensing & Commercial Standards

What is ODNR’s role with RUMAs?

Mr. Tom Tugend, Ohio Department of Natural Resources, Division of Mineral Resource Management, Deputy Chief

RUMAs are just another example of how the natural gas industry is a good neighbor and is providing support (along with jobs & revenue) to our local governments.

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Top Ohio Oil & Gas Regulator Lauds State Regulation

Thursday, April 18th, 2013 | 1 Comment

This week, Rick Simmers, Chief of the Ohio Department of Natural Resources — Division of Oil & Gas Resources, traveled to Washington, DC, to explain to the U.S. House Natural Resources Committee that Ohio’s hydraulic fracturing and Class II injection well program is properly regulated by the state — and has a track record to prove it.  As Energy In Depth has extensively covered, Ohio imposes more stringent regulation than even the federal EPA, which has jurisdiction over injection wells.  When the state improved their oversight with Senate Bill 315, existing regulation was already lauded by STRONGER, an EPA-supported review group composed of state regulators and other experts.

Simmers told the committee that his inspectors can enforce regulation properly because they live in operating areas and can reach emergencies and inspections quickly.  He said Ohio has issued 596 permits for horizontal development in the Utica Shale, and of those, 293 have been drilled and 81 and have been completed.  He said their team of fifty field inspectors is doing a great job and can hire more if needed:

“We welcome any review of our program because we’re doing a great job. We are both better suited and better situated to run this program than the federal EPA.” —Rick Simmers (Official testifies on Ohio fracking oversight, 4/17/13)

When the D&L Energy and Hardrock Excavating incidents were brought up during the testimony, Simmers explained they could be used as an example of ODNR doing its job:

“If it was not for the on-the-ground efforts of ODNR’s oil and gas inspectors, this criminal and environmentally threatening illegal activity of dumping oilfield waste directly into the Mahoning River could still be occurring. Only with the proper resources and experienced staff could this type of action have been executed so swiftly.” —Rick Simmers (Official testifies on Ohio fracking oversight, 4/17/13)

Without proper research, some would disagree Ohio is doing a great job.  An out-of-state reporter from ShaleReporter.com — part of the Beaver County Times – claimed that Ohio is essentially a disaster zone with little to no regulatory oversight:

“Despite a history marked with fracking catastrophes, Ohio still wants to retain oversight of its hydraulic fracturing and wastewater disposal industry.” –Rachel Morgan (Ohio tells feds: Stay off fracking, 4/18/13)

Ohio has no history of “fracking catastrophes” — convenient how the specific examples of incidents from fracking were omitted, isn’t it? — and that’s due to strong state oversight. Morgan instead focuses on the dubious fracking-earthquake nexus that she tried to invent a few months ago, citing a handful of specific events instead of the thousands upon thousands of wells that have operated without incident. But why would an actual reporter bother with such details?

For the sake of discussion, however, let’s now look at just how stringent Ohio’s regulation of oil and gas truly is, contrary to the narrative that ShaleReporter.com wants us all to believe.

Energy In Depth has made many comparisons between ODNR’s regulation and the federal regulation it bests.  Since Ohio received primacy of the UIC program in 1983, over 200 million barrels of brine have been processed without a single case of groundwater contamination. Environmentalists recently expressed a desire for oversight by the federal government, which means they are ironically pushing for more lax regulation (albeit with an EPA they feel they can manipulate much more easily). Here are some examples of how ODNR’s rules are more stringent than the federal EPA’s:

Comparison of Ohio’s Class II Brine Injection Regulations with USEPA Regulations
Ohio Division of Oil & Gas Resources Management United States Environmental Protection Agency
Unannounced inspections, on average, every 11-12 weeks. One inspection done per well each year by EPA consultant.
Continuous mechanical integrity monitoring or monthly mini-tests to demonstrate continuous mechanical integrity. Demonstration of mechanical integrity at least once every five years.
Injection volumes greater than 200 barrels per day require a ½-mile area of review of all other wells. Less than 200 barrels per day is a ¼-mile radius. All Class II wells shall be cased and cemented to prevent movement of fluids into or between underground sources of drinking water.
ODNR has the authority to require seismic testing and monitoring. Federal code does not specifically address seismic testing and monitoring.

 

As far as well casing standards, Ohio leads the nation in well construction regulation, boasting 54 standards in place:

 

 

It’s encouraging to see Ohio’s top oil and gas regulator lauding the state’s well researched legislation and regulation.  Ohio’s laws exceed those of the federal government for a reason. The state needs inspections, safety, and rules to insure our resources are developed properly and our economic revitalization continues, and the data prove that the state is meeting that challenge.

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Utica Shale: By The Numbers For March

Friday, March 29th, 2013 | 1 Comment

Building on strong numbers from 2012, Utica Shale development in the first quarter of 2013 has been taking off in Ohio. It seems we see headlines each week in newspapers all over the Buckeye state indicating new jobs, investments, and opportunities thanks to increased oil and natural gas production.  While development is good news for getting Ohio back on track, it is important to understand where Utica Shale development is helping boost Ohio’s economy.

To date, there have been 581 permits issued by the Ohio Department of Natural Resources, Division of Oil and Gas Resources for wells in the Utica/Point Pleasant geological formation. Of those 581 permitted wells, 281 of them have been developed, and of those, 77 are in production.

Thus far Utica Shale permits have been issued in the following 22 counties: (Updates in Bold)

All of these permits have been provided to 26 companies that are working to develop Utica Shale in Ohio. (Updates in Bold)

While still very early in its development, hosting only 77 producing wells, the Utica Shale is already showing some very exciting results. The best part is that this development, and the jobs and revenue that come with it, has occurred without a single environmental violation.  That successful track record is due to the diligence of companies operating in the state and Ohio’s strong regulations put forward in Senate Bill 315, the bi-partisan update to those regulations.

Thanks to our natural resources, the diligence of these companies, a strong regulatory foundation, and the billions being invested  from development, there is a renewed sense of optimism in Ohio thanks to the Utica Shale.

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Environmental Groups Seek Weaker Standards for Ohio’s UIC Program

Tuesday, March 19th, 2013 | 0 Comments

Anti-development groups joined forces yesterday to ask the U.S. Environmental Protection Agency to take control of Ohio’s Underground Injection Control program from the the Ohio Department of Natural Resources (ODNR).  The groups including the Buckeye Forest Council, FrackFree Mahoning Valley and the Center for Health, Environment and Justice held protests and sent a letter to U.S. EPA requesting as much.  What these activists fail to realize, or don’t care to recognize, is that Ohio’s UIC regulations provide  broad authorities that exceed those in the federal program.  So, these activists have officially gone on record  seeking a more lax regulatory environment than what currently exists in Ohio.

According to a report from the Associated Press, the groups are seeking the change due to “recent federal indictments of a Youngstown-area businessman,” previous incidents in Youngstown linked to the same person and what they review as a “general lack of public responsiveness.”  Given these activists are seeking a more lax regulatory that will fall to a smaller workforce of inspectors its worth asking if their concerns are supported by the events they reference. So, lets take a look at the facts as they exist, not as they are imagined by some.

Brine Incident

In regards to the dumping incident, it’s worth mentioning the suspect was caught engaging in the illegal act because an ODNR employee responded swiftly to a public complaint.  This was noted in the Youngstown Vindicator on Wednesday, February 6th. Specifically, the Vindicator noted:

Both the Ohio Department of Natural Resources and the Ohio Environmental Protection Agency received an anonymous tip late Thursday and were on the scene within three hours. They were able to obtain photographic  evidence of the dumping taking place,

That doesn’t sound like a “general lack of public responsiveness” to most folks.

In fact, federal charges were filed under the Clean Water Act within a week of the event taking place due to the swift action by investigators with ODNR and Ohio EPA.

Yes, that’s right charges were filed under the Clean Water Act.  The same legislation that the Center for Health, Environment and Justice says doesn’t apply to the oil and gas industry. In fact, on their website the group proudly touts efforts  ”to end dirty and dangerous fracking; closure of the seven legal loopholes that let frackers in the oil and gas industry ignore the…Clean Water Act,”

It’s also worth noting that the regulations being protested by the activists, as outlined in SB 165, allowed ODNR to revoke the suspected company’s  permits throughout the entire state.

So, in review. ODNR officials were on scene within three hours of receiving a tip of illegal dumping taking place. Due to their swift reaction they were able to gather photos of the event taking place which ultimately helped the U.S. EPA and U.S. Department of Justice (DOJ) file charges against the individual which, according to DOJ, could result in three years imprisonment and/or a $250,000 fine.

Meanwhile, the injection well that was linked to previous seismic activity in Youngstown - along with four others in a seven mile radius – has been shut down under indefinite suspension for the better of a year.

Successful history of Ohio’s UIC program

Since Ohio received primacy of the UIC program in 1983 over 200 million barrels of brine have been processed without a single case of groundwater contamination.  If ODNR was not doing their jobs and the standards were weak, this certainly wouldn’t be the case.  This history is matter of public record, not my opinion.

Since 1983, more than 202 million barrels (42 gallons per barrel) of brine have been injected back into depleted oil and gas reservoirs or deep geologic formations without one single instance of groundwater contamination.

- Ohio Department of Natural Resources Director James Zehringer, House Finance and Appropriations Subcommittee on Agriculture and Development Testimony in Support of House Bill 59

With out a single groundwater contamination case since it received primacy, it seems like ODNR’s UIC program must be doing their job at protecting Ohio’s groundwater.

But what’s more compelling than this is the fact Ohio’s UIC rules and regulations are actually more stringent than those used by the U.S. EPA. This was made clear in testimony provided to the Ohio legislature as it was considering regulatory revisions last year. The below chart shows just a few of these examples:

Comparison of Ohio’s Class II Brine Injection Regulations with USEPA Regulations
Ohio Division of Oil & Gas Resources Management United States Environmental Protection Agency
Unannounced inspections on an average of every 11-12 weeks. One inspection done per well each year by EPA consultant.
Continuous mechanical integrity monitoring or monthly mini-tests to demonstrate continuous mechanical integrity. Demonstration of mechanical integrity at least once every five years.
Injection volumes greater than 200 barrels per day require a ½-mile area of review of all other wells. Less than 200 barrels per day is a ¼-mile radius. All Class II wells shall be cased and cemented to prevent movement of fluids into or between underground sources of drinking water.
ODNR has the authority to require seismic testing and monitoring. Federal code does not specifically address seismic testing and monitoring.

These are just a few examples of how Ohio’s regulatory system out performs its federal counterparts.  Let’s face it, having unannounced inspections every 11-12 weeks instead of once a year should be something these groups applaud instead of condemn.

Now just because Ohio received its primacy in 1983 doesn’t mean that Ohio is not subjected to review and new rules coming from the U.S. EPA.  When ever new rules are placed into effect at the federal level, Ohio must follow them per Section 1425 of the Safe Drinking Water Act.  Section 1425 clearly states that states must demonstrate that their existing standards are effective in preventing endangerment of drinking water in the United States. These programs must include permitting, inspection, monitoring, and record-keeping and reporting that demonstrates the effectiveness of their requirements.

The facts are simple and ODNR’s record speaks for itself.  The agency is enforcing against the industry and is continuously looking at new rules and regulations to safeguard Ohio’s environment.  This is something we have seen with SB 165 in 2010, SB 315 in 2012 and HB 59 in 2013.  Having state primacy means rules and regulations can be swiftly implemented and go far and above what’s required at the federal level.

Given all of this,  it appears that other than garnering a headline the only thing these activists accomplished was proving just how little they know, or care to know, about the actions of  Ohio’s regulators and the regulations in place protecting Ohio’s environment.

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ODNR’s Preemption of Oil & Gas Regulation Upheld

Monday, March 18th, 2013 | 3 Comments

In State ex rel. Morrison v. Beck Energy Corp., 2013-Ohio-356 (Ninth Dist.) Beck Energy obtained a permit from the Ohio Department of Natural Resources (ODNR) to drill an oil and gas well on property located within the city of Munroe Falls, Summit County, Ohio. When Beck began drilling, the city issued a stop work order and filed a lawsuit. The city claimed that Beck’s activities were illegal because Beck did not comply with city ordinances that required Beck to obtain a city drilling permit (and pay the associated application fee), a zoning certificate, rights-of-way construction permits, post a performance bond and attend a public hearing. The trial court agreed with the city and issued an injunction. Beck appealed.The appellate court framed the issue on appeal as, “whether the City of Munroe Falls can enforce its ordinances governing oil and gas drilling and related zoning and rights-of-way issues despite the state’s comprehensive statutory scheme for drilling set forth in R.C. Chapter 1509.” The court added that this was a case of first impression; i.e., the first time the court had considered this question.The court pointed out, “In 2004, the General Assembly enacted H.B. 278, which expanded the regulatory scheme and amended R.C.1509.02 to give the Division of Mineral Resources Management of the Ohio Department of Natural Resources the ‘sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells.’”The court also observed that in 2010 ODNR’s authority was expanded to include “production operations,” and was expanded further in 2011 to include “well stimulation,” “completing,” “construction” of site and “permitting related to those activities.”

Nevertheless, the city argued that Article XVIII, Section 3 of the Ohio Constitution gives municipalities “home-rule” authority to regulate gas drilling operations because the authority given to the state by the statute only pertains to “permitting, location and spacing of” oil and gas wells under R.C. 1509.02.To decide whether the ordinances were an appropriate use of the city’s home-rule authority, the court went through a three-step analysis established by the Ohio Supreme Court. After disposing of the first two steps, the court determined that the third step — whether the ordinances conflicted with a state statute — was most critical. The court said: “… the issue to be resolved in this appeal boils down to whether the ordinances Munroe Falls attempts to enforce are in conflict with R.C. 1509.02. In the event of a direct conflict, the state regulation prevails.”The city argued that because none of its ordinances infringed on the states control over “permitting, location and spacing” of oil and gas wells, the ordinances did not conflict with the statute and were enforceable.The court agreed that the city’s ordinances regarding excavations and rights-of-way do not conflict with R.C. 1509.02 and found those ordinances to be enforceable as long as the city did not enforce those ordinances “in a way that discriminates against, unfairly impedes or obstructs oil and gas activities and operations.”However, with respect to the other ordinances, the court did not agree with the city, finding instead that the authority granted to the state by statute is broader than the city’s interpretation and in conflict with the remaining city ordinances. The court held, “We are compelled to follow the established law in our application of the constitutional home-rule analysis to Munroe Falls’ drilling ordinances. Because the drilling ordinances are in direct conflict with the state statutes, the city cannot enforce the ordinances as presently written.”

With that, the court reversed the judgment of the Summit County Court of Common Pleas, but instructed that Beck would need to apply for the excavation and rights-of-way permits.

You can bet that, given this guidance, creative city council members who are opposed to oil and gas production will stretch the court’s reasoning as far as possible. We expect to see more litigation testing the limits of home rule authority.

Jeff’s practice focuses on advising oil & gas clients on day-to-day operational, governance, environmental, employment and contracting issues. In addition, his environmental practice encompasses permitting and regulatory compliance, environmental audits and assessments, SARA Title III/EPCRA, solid and hazardous waste disposal and CERCLA. Jeff also serves as co-editor of the Firm’s Oil & Gas Law Report blog.

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Shale Economic Opportunity Forum Showcases Youngstown’s Bright Future

Tuesday, March 12th, 2013 | 0 Comments

Yesterday, Energy In Depth attended the Ohio Shale Development: Economic Impact & Opportunities Forum in Youngstown.  The event was co-sponsored by the Youngstown/Warren Regional Chamber, the Ohio Chamber of Commerce, the Ohio Energy Resource Alliance, and the Ohio Shale Coalition.  The event presented a crowd of over 200 an update of what is going on in Ohio’s shale industry, what they can expect in the coming year, and how to benefit from the incredible economic opportunities afoot.

Numerous elected officials and local leaders came out to show their support for the region including State Senator Joe Schiavoni, State Senator Eric Kearney, State Representative Sean O’Brien.  Those in attendance also got to hear from U.S. Congressmen from both sides of the aisle.  First up, Congressman Bill Johnson spoke on Ohio’s role in creating American energy independence:

There’s a place on this playing field called energy independence and security. There’s room for everybody to get int he game; and you folks are in the game. We’re going to take this to unbelievable levels. Eastern and southeastern Ohio and right here in the Mahoning Valley–we’re sitting on the pointed end of the spear of what’s going to lead America back, I really believe–Congressman Bill Johnson (:02)

Echoing much of what Congressman Johnson said, Congressman Tim Ryan emphasized working together to provide a safe and successful business atmosphere in the region:

We have come such a long way in this community.  And I think that the natural gas and the Utica and everything that has happened here is God’s way of saying, ‘You weathered the storm, you did it, now take it to the next level’, and that’s what’s happening here.  We are going to work now from the Appropriations Committee, working with Congressman Johnson and the Defense Appropriations Committee, to try to build an ecosystem here of skilled workers, additive manufacturing, business software, clean energy – the next future–Congressman Tim Ryan (6:43)

Next up, the room heard from Linda Woggon with the Ohio Chamber of Commerce.  Woggon heads the Ohio Shale Coalition, which was created in May of 2012 because they realized shale energy was going to have one of the most profound impacts on Ohio’s economy in recent history.  She also moderated one of the day’s three panels.  Her panel was titled “Supply Chain Opportunities” and featured Butch Taylor with Plumbers and Pipefitters Local 396, Chris Jaskiewicz with VEC Inc., and Eric Planey with the Youngstown/Warren Regional Chamber.  Planey stated that some 42 companies and projects have come to the Mahoning Valley because of shale and that the chamber is working to reach out to more companies, instead of waiting for opportunity.

Many in the crowd were representatives from companies looking to take advantage of the growing shale industry and Mr. Jaskiewicz used his time to give them advice.  In 11 years, his company saw their revenue go from virtually none to more than $50 million and they’ve hired more than 110 people.  Much of this is thanks to shale.  He explained their success is largely due to their flexibility. When clients would ask them if they did something and they didn’t, the company grew to fill more needs.  They also focus on safety, employing 5 safety directors.

EID’s own Shawn Bennett sat on the “Update on Utica Shale Development: Where Are We & What Can We Expect in 2013″ panel.  Shawn, Rick Simmers, Chief of ODNR’s Oil & Gas Division, and Michael Grimland with Exterran Holdings explained what is happening in Ohio’s oil and gas industry including permits, regulation, employment, and investment.

EID’s Mike Chadsey also got a chance to participate by moderating a third panel, “Protecting Workers and the Community”.  Craig Kasper with Hull & Associates, Amy Rutledge with the Carroll County Chamber of Commerce, and Rhonda Reda of the Ohio Oil and Gas Energy Education Program all weighed in on the subject.  Rutledge gave Mahoning Valley residents a peek into what they can expect in the coming year and Reda explained to the crowd the firefighter and emergency responder training her group does to encourage a safe and prepared industry.

To finish out the day, Tim Gonzalez with American Petroleum Institute outline the process of getting API certified and answered questions from the crowd.  The Regional Chamber, the Ohio Shale Coalition, and the American Petroleum Institute are teaming up to provide API Spec Q1 training on April 9 & 10.

Overall, the chamber hosted an incredible event.  Local and state leaders showed the community they have their support and now local businesses have the information they need to take full advantage of the opportunities coming from Ohio’s oil and gas industry.

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Ohio’s Oil and Natural Gas Industry Responds to Youngstown Case

Sunday, February 17th, 2013 | 1 Comment

From Rhonda Reda, Executive Director, Ohio Oil and Gas Energy Education Program:

We applaud the prompt response by the Ohio Department of Natural Resources and the Ohio Environmental Protection Agency in this investigation. Their swift, diligent action is reflective of a strong regulatory system in which irresponsible behavior will not be tolerated, and are measures we fully support in this isolated incident.  The simple fact is this: there is no room in Ohio’s oil and natural gas industry for operators whose deliberate actions have placed our environment at risk.

Our industry holds itself to the highest standards as good stewards of the community, and good stewards of the environment. Should the state determine that any operation fails to meet these standards, swift action must be taken. Any findings of criminal misconduct should be prosecuted accordingly.

Again, there is no role for operators who knowingly, and willingly, ignore our regulations to cause harm to our environment in our state’s bright energy future.

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From Thomas E. Stewart, Executive Vice President, Ohio Oil and Gas Association:

Today, federal charges were filed against the injection well operator accused of illegally disposing of oilfield wastewater into a Mahoning County storm sewer.

We believe that any individual or company that has willfully violated Ohio and/or federal law regarding the proper disposal of oilfield wastewater should be prosecuted to the fullest extent of the law.

We support the efforts of the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management (DOGRM), the Ohio Environmental Protection Agency (OEPA) and the federal government to thoroughly investigate and prosecute this incident.

We applaud these groups for working in tandem and acting quickly to address this unfortunate incident. It demonstrates that Ohio has the appropriate protections in place to appropriately regulate the oil and gas industry and to swiftly punish those who violate laws and regulations.

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