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Page 1: February 2015 Gas & Oil Magazine-Ohio Edition

FEBRUARY 2015 • A FREE MONTHLY PUBLICATION

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Page 2: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 3: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 4: February 2015 Gas & Oil Magazine-Ohio Edition

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WHY IS OIL SO CHEAP?

UPCOMING EVENTS

SET YOUR THERMOSTATS WITH CONFIDENCE

BASIC SYSTEMS GROWTH HAS BEEN EXPONENTIAL

INVESTMENT PAYS OFF FOR WOOSTER MOTOR WAYS

VILLAGE ADDRESSES WATER CONCERNS

OOGA SHARES PLANS FOR 2015

COALITION ADDRESSES SAFETY

ET ROVER PIPELINE FILED FOR FERC APPROVAL

OGEEP DIRECTOR SAYS ROVER PIPELINE CRITICAL

TAXES COULD JEOPARDIZE JOBS

IS KEYSTONE STILL NECESSARY?

350 JOBS, BUT THEY’RE TEMPORARY

ILLINOIS MOVING FORWARD ON SHALE DEVELOPMENT

SHALE GAS FUELS JOB GROWTH

CRAIG MORGAN TO HEADLINE COUNTRY ENERGY FEST

ENERGY BRIEFS

Table of Contents

Andrew S. Dix(:+P_'KP_JVT�JVT

G.C. Dix II.*+P_00'KP_JVT�JVT

David Dix+,+P_'KP_JVT�JVT

EXECUTIVE EDITORS

Ray Booth9)VV[O'KP_JVT�JVT

Rob Todor9;VKVY'KP_JVT�JVT

Lance White3>OP[L'KP_JVT�JVT

Roger DiPaolo9+PWHVSV'KP_JVT�JVT

Cathryn Stanley*:[HUSL`'KP_JVT�JVT

Niki Wolfe5>VSML'KP_JVT�JVT

Judie Perkowski17LYRV^ZRP'KP_JVT�JVT

Kimberly Lewis23L^PZ'KP_JVT�JVT

Erica Peterson,7L[LYZVU'KP_JVT�JVT

REGIONAL EDITORS

PUBLISHERS

Page 5: February 2015 Gas & Oil Magazine-Ohio Edition

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BOOM BRINGS OPPORTUNITIES

REX ENERGY UPGRADES BRIDGE

COMMONWEALTH RULES AGAINST ENVIRONMENTAL GROUP

FIRST CHOICE ENERGY BRINGS SERVICE TO PENNSYLVANIA

A DAY WITHOUT NATURAL GAS

REFINERY RESURRECTION

KEYSTONE XL UPDATES

OIL PRICE PLUNGE

GAS PRICES SLOW DRILLING FORECAST

OPINION: OBAMA SHOULD REPEAT WORDS HE SAID ABOUT KEYSTONE PIPELINE

ASSET PROTECTION

AMERICANS SUPPORT NATURAL GAS

ZINKAN PRODUCTS FOR GREEN DRILLING

API CREATES MIDSTREAM DEPARTMENT

BETTER HEALTH CARE IN SHALE FIELDS

FUELING A 21ST CENTURY PENNSYLVANIA

Pete Kiko72PRV'[OL�KHPS`�YLJVYK�JVT

ART DIRECTOR

ADVERTISING

Brad Tansey);HUZL`'KP_JVT�JVT

DIGITAL MEDIA MANAGER

Elizabeth Horne,/VYUL'[OL�KHPS`�YLJVYK�JVT

LAYOUT DESIGNER

Kim Brenning *HTIYPKNL��6OPV�6MÄJL2)YLUUPUN'KP_JVT�JVT�

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

Copyright 2015.

Page 6: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 7: February 2015 Gas & Oil Magazine-Ohio Edition

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Jonathan Fahey AP Energy Writer

NEW YORK (AP) — The world burns enough oil-de-rived fuels to drain an Olympic-sized swimming pool four times every minute. Global consumption has

never been higher — and is rising.Yet the price of a barrel of oil has fallen by more than half

over the past six months because the globe, experts say, is awash in oil.

So, where did all this oil come from?The Earth has been accumulating oil and natural gas for

about a billion years or so. Humans have been drilling and burning crude and gas in significant amounts for only the last 156 years, since the 1859 birth of the oil industry in Pennsyl-vania.

So, even when oil prices spiked earlier this decade amid worries that oil supplies would soon run low, scientists and oil companies knew there was plenty available. It wasn’t so much a question of how much oil and gas was left in the earth’s crust, but whether we could figure out how to squeeze it out and make money doing so.

“How much oil we have is an economic and technical ques-tion, not a geologic one,” says Doug Duncan of the U.S. Geo-logical Survey. “There’s far more than we can extract econom-ically using today’s technology.”

More than enough, for now at least, to sustain record high consumption of 91.4 million barrels per day. There are 42 gal-lons in a barrel, so that’s 3.8 billion gallons per day. Looked at another way, it’s as if every human on the planet went through a gallon of oil every two days.

Since 1980, the world has burned nearly 40 trillion gallons. That’s a bit more liquid than held by Lake Tahoe, the 11th deepest lake in the world. It’s enough to cover the state of California in oil to a depth of 14 inches.

While that may sound like a lot, remember that Lake Ta-hoe, on a map of the globe, is a pretty small dot. There is sedi-mentary rock that holds old organic matter under huge swaths of the earth’s crust. Some of the rock is 20,000 to 30,000 feet thick, says Scott Tinker, a geologist at the University of Texas’s Jackson School of Geosciences. Only a small portion holds oil and gas, but the scale of the possible resource is enormous.

That’s part of what worries climate scientists so much. Burn-ing the oil and gas that we’ve already found — never mind

what we haven’t yet — will lead to dangerous and possibly catastrophic changes in the earth’s climate, they say.

And we’re finding more oil and gas than we are using. For example, since 1980, even while we were consuming all that oil, the amount we’ve found, but haven’t yet produced, has more than doubled. The world’s proven reserves are now 1.7 trillion barrels, up from 683 billion barrels in 1980, according to a closely watched statistical energy review published by BP.

Technology advances come in fits and starts, and are usually spurred by high prices. The price of oil began rising alarm-ingly in the early and mid-2000s, inspiring oil companies to take risks to apply new technology to find harder-to-reach oil.

In 2007 and 2008, they hadn’t yet cracked the code, and con-sumption was rising fast, so oil spiked to nearly $150 a barrel.

They’ve now not only caught up to the growth in demand, but surpassed it. The big technological breakthrough this time was the means to tap so-called unconventional resources, es-pecially layers of shale and other oil-and-gas rich rock.

In the past, drillers had to look for pools of oil and gas that had collected over millennia, forced by gravity and pressure from source rock into what are known as “traps.” Now they can access the layers of source rock directly, bringing billions of barrels of this unconventional oil suddenly within reach.

Rising production from these and other sources, including Canadian oil sands, oil found under mile-thick layers of salt in Brazil’s deep waters, and Iraq’s enormous fields has for now outpaced rising demand.

That has sent the price of oil under $50 a barrel — it closed Wednesday at $48.48 — after spending most of the last four years near $100. That’s less than what it costs to produce oil in many cases, which means production is likely to fall slowly until demand can catch up.

That could cause prices to shoot back up, and we might again wonder where the next barrel of oil will come from.

“A lot of people thought we were on a downward supply curve with more and more expensive oil and gas,” Duncan says. “New technology changed that equation. We don’t know if the equation will be changed again.”

Jonathan Fahey can be reached at twitter.com/JonathanFahey

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Page 8: February 2015 Gas & Oil Magazine-Ohio Edition

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Upcoming EventsFEBRUARY

10-11FEBRUARY

24-25

MARCH

11-13

APRIL

28-29

JUNE

1

JULY

28-29

AUGUST

26

MARCH - APRIL

30-1

MAY

12-14

JUNE

23-25

AUGUST

2-4

OCTOBER

27-28

Independent Oil & Gas Association of West Virginia Winter Meeting, Marriott Town Center, Charleston, West Virginia Call 304-344-9867 for more information.

PIOGA Winter Meeting, Seven Springs Mountain Resort, Seven Springs, Pa.

2015 Appalachian Basin NGV Expo, Civic Center, Charleston, West Virginia. Call 304-343-1609 for more information.

Eastern Gas Compression Round Table, Robert Morris University, Moon Town-ship, Pennsylvania. Call 412-372-4301 for more information.

DUG East Conference and Exhibition, David L. Lawrence Convention Center, Pittsburgh, Pa. Call 713-260-6400 for more information.

IOGAWV Summer Meeting, The Green-briar, White Sulphur Springs, West Virginia. Call 304-344-9867 for more information.

Eastern Oil & Gas Conference and Trade Show, Monroeville Convention Center, Monroeville, Pa.

2015 OOGA Winter Meeting, Hilton Columbus at Easton.

Ohio Valley Oil & Gas Expo 2015, at Belmont County Carnes Center, St. Clairsville. Vist http://www.ohiovalleyoil-gasexpo.com/ for more information.

PIOGA Summer Picnic and Golf Outing, Wanango Golf Club, Reno, Pa.

PIOGA Annual Pig Roast, Equipment Show & Seminar, Seven Springs Moun-tain Resort, Seven Springs, Pa.

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Page 9: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 10: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 11: February 2015 Gas & Oil Magazine-Ohio Edition

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Thomas Doohan Dix Communications

WOOSTER, OH — Despite frigid tem-peratures being common place for many Ohio residents, natural gas pro-

viders say home owners will not have a terrible time staying warm this winter.

“Once again, customers can set their thermostats with confi-dence this winter,” Dominion commercial operations general manager Jeff Murphy said.

According to a press release, that is because natural gas rates are low. For January 2015, the provider’s Standard Choice Of-fer was $3.619 per thousand cubic feet (mcf), 23 percent or $1.093 down from December, 2014’s price of $4.712 per mcf.

Columbia Gas customers are also seeing similarly reduced prices. According to a press release published on Dec. 31, Jan-uary marks the company’s lowest natural gas prices since 2010 — $4.60 per mcf.

According to representative from both companies, these rates are a breath of fresh air compared with rates this time last year. Domion East Ohio’s SCO rate for January, 2014 was $5.007 per mcf. By February, 2014, the price was over $6 per mcf. At Columbia Gas, natural gas prices during January, 2014 reached up to $5.70 per mcf.

In the release, Murphy said there are a number of reasons for such contrasts. He said the weather during winter 2014 ac-counts for some.

“Last winter’s weather really stretched natural gas supplies and prices on a national level,” Murphy said.

When the polar vortex stretched south, he said, people turned up their thermostats and the demand for natural gas increased. This year, the temperatures have been less severe.

While the contrast in weather has contributed to the stark contrast from January 2014 to January 215, Columbia Gas spokesman Ray Frank said there are other things at play. He said a lot of this is attributable to the gas that has been made available by shale production in Ohio and Pennsylvania.

“That is a good thing for our consumers,” Frank said, noting prices are lower.

Despite lower prices, Melissa Pearce and Donna Holmes of Community Action Wayne Median said there are still people who struggle to heat their homes. While fuel prices were high-er in November and December of 2013, the same months in 2014 saw an 8 percent increase in the number of people the Home Energy Assistance Program.

“They are already struggling to begin with,” Holmes said, noting the decreased cost does not decrease the number of the agency’s clients.

However, she said, the decreased costs do help in ensuring clients get more fuel when they enroll in HEAP.

For those interested in decreasing their bill even more, Frank recommends the company’s Home Performance Solu-tions Program. He said participants will go through an energy audit and receive advice on how to decrease energy consump-tion by 25-30 percent.

“It lowers your electric usage and your water usage,” Frank said.

Information can be found at www.columbiagasohio.com/ways-to-save/save-energy-money/home-performance-solu-tions.

Information on Dominion East Ohio’s Home Performance with ENERGY STAR® audit program can be found at www.deohpwes.com or by calling 1-877-287-3416.

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Page 12: February 2015 Gas & Oil Magazine-Ohio Edition

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Judie Perkowski Dix Communications

Building on its reputation for its ties to the local citizenry, the owners/operators of Basic Systems, Inc. were adamant about

their choice of a site for its new office building when Tom Stemmer and Gene Oliver decided to re-locate the business on the Cadiz Road property.

Their decision to build their new facility in Cambridge was welcomed with open arms. The company has its roots just a few miles south in Derwent, where Basic and its companion company, Bi-Con Services, has flourished since 1982 under the leadership of Jack R. Youngs, well known and respected busi-nessman who passed away in 2009.

Basic Systems and Bi-Con were created in 1979 when Youngs’ G&L Services was divided into two separate entities to compensate for the company’s dynamic growth. Basic Sys-tems provides technical, engineering and design services pri-marily for natural gas compressors and compressor stations; Bi-Con provides building construction, electrical, manufactur-ing and turnkey solutions. And, according to its website, while both companies provide services primarily focused on natural gas, the automation group can be an integral part of any auto-mation project in any industry.

In 1999, Basic Systems, reorganized into three groups: two facility groups and an automation group.

“A senior project manager leads each group,” said ˇThomas Stemmer, president of Basic Systems. “The facilities groups provide the services that support the construction of natural gas-related facilities. The automation groups provide services to support the control systems necessary to efficiently run those facilities or compressor stations.

“Both groups are staffed with engineers, designers, drafters and administrative people,” said Stemmer.

“Basic Systems is really an infrastructure company that deals primarily with the natural gas industry. We push gas through pipelines to production, to interstate and intrastate

transmission lines or storage fields. We actually design the compressor units that push the gas through the pipelines.

“Compressor stations are “pumping” facilities that advance the flow of natural gas. They are usually situated between 50 and 100 miles apart along the length of a natural gas pipeline system and are designed to operate on a nonstop basis.

“Most important, said Stemmer, “we are a people business. We develop relationships. We have ‘drop-what-you’re-doing-friends,’ not just customers. We have a long-time relationship with Columbia Gas, and newer ones like Dominion, Spectra Energy and MarkWest.

Stemmer has been with the company for 33 years.“Our projects are primarily out of state and across the coun-

try. For example, there are seven compressors in the entire state of Maine, and they were all designed by Basic Systems employees.

“There is something unique about us. We do something special. We are local people competing against big cities [for projects]. We are successful because we have a lot of credible people — our project managers, engineers, drafters, designers — our entire workforce — are hard-working and dedicated,” said Stemmer.

He noted that most of Basic’s 100 employees are local, from Guernsey, Noble and Muskingum counties.

In October of 2004, majority stockholders Jack Youngs, and his partner Ronald Miller, sold their interests in Basic Systems to Gene Oliver and Thomas Stemmer.

By 2008, Basic and Bi-Con grew exponentially, necessitating Basic Systems move to another location. In June of 2009, Ba-sic Systems opened the doors of its formidable new home. The massive 40,000 square-foot building makes a definitive state-ment about Basic Systems commitment to the community — we are here to stay.

The award winning design by local architects of the Davis Architectural Group, showcases the three-story entrance and

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Page 13: February 2015 Gas & Oil Magazine-Ohio Edition

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primary office area for its professional staff with its floor to ceiling windows providing employees with a panoramic view of the 34-acres, alive with indigenous fauna and flora. Two ad-joining wings complete the aesthetically pleasing facade.

The picturesque landscape has been captured in photos for a 2015 company calendar highlighting plant life and animals that freely occupy Basic System’s property.

([email protected])

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Page 14: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 15: February 2015 Gas & Oil Magazine-Ohio Edition

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Jonathan Scholles Dix Communications

WOOSTER –– Three years ago, the landscape changed for Wooster Mo-tor Ways, a regional truckload carrier,

when it began servicing the hydraulic fracturing industry.

With an initial investment of $148,000, WMW heeded ad-vice from a local business owner and embarked on a journey that distanced itself from its regional competition.

“I was approached by a company that was an oil field ma-chine supplier, and they said they were planning on opening a sand distribution site on the Ohio River in West Virginia,” said Paul Williams, president of WMW. “Although, they didn’t want to get involved in trucking, they knew we were a very reputable, long-time company in Wooster.

“It was a great opportunity in a new industry. But a big in-vestment.”

Initially, WMW purchased two pneumatic tankers at $74,000 a piece, and then another two quickly after, thinking business was going to explode. However, the West Virginia supplier sold its company before Williams could even roll his first truck.

After two months of perseverance and a hours of cold call-ing, Williams secured two top industry connections in Pennsyl-vania. And with these newfound relationships, Wooster Motor Ways’ troubles were over.

“We were told that we really needed 15 tanks in order to have a crew,” said Williams, who’s been president of family business for 15 years. “I said I’d commit to buying two every other month. And before you know it, we’re up to 10 in the yard.

“... So we diversified pretty considerably; there are not a lot of these companies you can do business with. We’re involved with four to five different energy companies.”

Now, WMW owns 20 bulk pneumatic tankers with another 15 a day working under its authority. In its entire fleet, the

Wooster-based trucking company has 135 units that generate an estimated $2 million a month.

“It has become a very significant segment of our organiza-tion,” Williams said of WMW’s fracking enterprise.

WMW works in five oil wells in two states, West Virginia and Pennsylvania, widely considered the most optimal territo-ry for fracking. And according to Williams, that supply should last up to 15 years.

Thankfully, Williams said, this region fracks just gas as op-posed to oil and gas, which is more prevalent in western states. With the decrease in oil costs, the industry has laid off thou-sands of workers and independent drivers. This impacts the industry as a whole as those drivers move east, causing insta-bility in the marketplace.

“We’re concerned that a lot of those guys with trucks are going to move east and try to cut rates just to get their trucks working,” Williams said. “And that will take work away from our carriers.”

Based on recent industry movement, Williams said he fore-sees oil prices rising slightly, but not a monumental spike.

“I personally see oil going back up to $60 to $70 a barrel,” he said. “The trade industry is fortunate because we use a fuel surcharge; it’s a sliding scale and every Monday the Depart-ment of Transportation publishes the average price per gallon of gasoline. That scale goes up and down each week.

“At the peak, our highest was at 59 cents a mile. And now it’s down to 42 cents a mile,” Williams added. “It then gives us the ability to adjust the pricing based on the cost of fuel.”

WMW has 145 employees along with 70 independent con-tractors.

Staff Writer Jonathan Scholles can be reached at 330-287-1632 or [email protected]. He is @jonschollesTDR on Twitter.

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Page 16: February 2015 Gas & Oil Magazine-Ohio Edition

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Cathryn Stanley Dix Communications

BARNESVILLE, OH — Mayor Dale Bunting addressed a series of ques-

tions posed by the Concerned Barnesville Area Residents (CBAR) when council met in December. The group’s conerns included wa-ter levels at Slope Creek Res-ervoir, water withdrawals and revenue from selling water to gas and oil companies, as well as air quality concerns.

Regarding the question about water levels at Slope Creek Reservoir, Bunting said, “The water level at Slope Creek was considerably lower in the fall of 2007 when the new boat launch ramp was installed on South 16 Road (TR 541). At that time the water could barely be seen looking out the valley. Currently the water is within 20 feet or so of the ramp. That same year the water levels were very low in reservoir #1 and #2 with reservoir #1 being reduced to a very small pool of water. Slope Creek was probably down three feet lower.”

CBAR representatives also asked how it has been determined what the “safe” levels are for the reservoirs in terms of what level is considered “normal” and what lev-els below that trigger a stop in with-drawals by the oil and gas industry.

Bunting said, “The village cur-rently has a contract with Antero Resources that states when the wa-ter level drops one foot from over-flow that all third parties will cease to withdraw and when it drops two feet,

Antero will also cease withdrawals until such time as the eleva-tion rises again to within one foot of overflow.”

Bunting said these elevation levels were determined by a study per-

formed by Hull and Associates, Inc. of Dublin, Ohio as a fair withdrawal based on the re-charge rate of the reservoir.

Bunting addressed a second question explaining the “safe-guards in effect to protect the public from excessive water withdrawals, specifically ask-ing if gas and oil companies are still permitted to withdraw wa-ter by other means such as hy-drants. Bunting responded, “We do have a bulk water machine that sells small quantities of wa-ter payable in quarters and will also have another on SR 800 that will be used by haulers requiring larger quantities. There will also be no withdrawals by the indus-try based on the same contract as described above.”

In response to a question about how many gallons of water have been withdrawn by the industry since the agreement has gone into effect Bunting said, “Total gallons withdrawn were 242,145,174 from all withdrawals including tanker haulers, hydrostatic testing of pipe-lines, and fracking activities.

He also reported the village has collected a total of $1,931,642.43 and he also gave a break down of all the needed village projects for which that money has been or will be used.

“Reservoir #1 (90mg) is monitored for water levels with much more fear

than Slope Creek because the Village is currently unable to transmit the water

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Page 17: February 2015 Gas & Oil Magazine-Ohio Edition

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from Slope Creek to the water treatment plant to meet the daily needs,” the mayor said. “Village Council is currently working to correct this as they are selecting an engineering firm now for design of a new larger line from Slope Creek to the plant. We expect this expenditure to be well over $3 million dollars. This project might not be possible without the funds generated (from the water sales). We will then be as-sured of being able to meet our finished water production rate without fear of reservoir #1 going dry.”

Bunting continued, “The Village also plans for many oth-er infrastructure improvements to be funded by these water sales such as a $400,000 water line replacement project and a $300,000 (Pike Street) culvert replacement project. Respon-sible decisions are being made for the health and safety of not only our residents but for those in a portion of four counties that receive their water supply from the Village of Barnes-ville. The funding received will pay for needed infrastructure to keep the system in sound operation and to the benefit of all of the users of the potable water.

“We are reinvesting that money in the village,” Bunting said. “The money from the water sales is going right back into the village. We are trying to save tax payers from having to bear these costs.”

Bunting continued, “We have this opportunity to do these

things and that is what council has decided to do. Personally, I think it is the right thing to do to take care of these things we have been putting off.”

Councilman Tony Johnson agreed saying, “The Slope Creek lines have to be replaced. That is money we normally wouldn’t have had.”

Bunting referred a CBAR question regarding air quality testing for fracking compressor stations as well as a specific question about water draws from hydrants to council to ad-dress.

Councilman Terry McCort said he appreciated the fact that CBAR’s questions were formatted and that council was given a chance to think about them and respond.

Bunting also thanked The Barnesville Enterprise for cover-ing the issues of concern to residents, and providing many of the answers to the questions in past articles.

In a related matter, Village Administrator Roger Deal dis-cussed a scoring sheet for the 13 engineering firms that sub-mitted a bid for the Slope Creek Waterline Request for Quali-fications. Deal said a committee of five met on two evenings to narrow down the field. Deal thanked the committee mem-bers for their time and said that ADR and Associates scored the highest and was the firm recommended by the committee. Council approved the recommendation.

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Page 18: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 19: February 2015 Gas & Oil Magazine-Ohio Edition

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Andrew Rogers Dix Communications

CLEVELAND — Member of the Oil and Gas industry have plans for 2015 that are centered on adjustments to new government-imposed regulations.

Shawn Bennett, Executive Vice President for the Ohio Oil and Gas Association (OOGA), says he looks forward to the 68th annual Winter Meeting, where executives in the indus-try gather on March 11-13 in Columbus. This event, according to Bennett, is used to showcase advances in the industry and update practitioners on any legislative or regulatory changes that they may need to be aware of to avoid legal penalties. It also provides the best networking opportunity of the year for oil and gas workers and is the most anticipated event in the industry any given year.

“We want people in our line of work to know the policies that can change the way we all work,” Bennett says of the meeting.

He says these changes can force companies to reevaluate how they apply technologies and cause other inconvenient shifts in their policies. Legislative restrictions on the oil and gas industry, such as recent policies enacted by the Obama Administration aimed at limiting emissions of greenhouse gasses produced by the burning of fossil fuels, have caused some reimagining of technological application that Bennett expects to extend into 2015.

“We are very excited to see conventional operators use hor-izontal drilling in coventional [shale] formations, apply tech-nologies on a smaller scale and get great results, for example,” Bennett said, “It’s good to see a positive reaction to these new regulatory realities.”

Bennett says he expects members of OOGA and contrac-tors alike to “tighten their belts” at the beginning of the year to adjust to current market realities such as the cost of oil and changes in legislation that might restrict certain drilling prac-tices. “This may slow some companies down at the beginning of the year,” said Bennett.

Policies with the aim of environmental conservation are the most common legislation capable of interrupting the industry, but Bennett expects the slow-down to be temporary, eventu-ally giving way to business as usual once oil producers accli-mate to new laws and begin to apply technologies in new ways, underscoring the need to refine new applications of technol-ogy this year.

While Bennett understands the need for certain policy changes, he says they must be properly supported. “There has to be need for these laws. They need to be based on sound sci-ence. We don’t want our members to cut any corners, but we still want to keep costs down,” Bennett said.

While the recent drop in gas prices has most people thrilled, Bennett notes the negative impact that low oil prices are hav-ing on companies in the industry, and says that companies have to “… recognize the low commodity prices and develop in those realities.”

While producers and practitioners in the oil and gas in-dustry certainly face their fair share of challenges in the year ahead, Bennett’s optimism regarding the industry’s ability to respond to and compensate for policy changes should provide some solace.

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Page 20: February 2015 Gas & Oil Magazine-Ohio Edition

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Judie Perkowski Dix Communications

CAMBRIDGE, OH -- Returning to the Southgate Hotel for its first meeting of the new year, Jo Sexton, president of the

Cambridge Area Chamber of Commerce and sponsor of the event, welcomed attendees to the Guernsey Energy Coalition.

“We are pleased to begin the new year at the Southgate Ho-tel for the 45th meeting of the Coalition. I stated at the De-cember meeting that the Coalition would meet quarterly be-cause of the difficulty in scheduling speakers who could offer a fresh take on the gas and oil industry,” said Sexton. “Since then, several people contacted me and offered the names of speakers who excel in their fields and could provide interest-ing programs.

“As long as we can present relevant information with quali-fied speakers we will continue to host Coalition meetings. This week’s speakers are from the Columbus law firm of Roetzel and Andress. They are huge supporters of the Coalition, and have been from its very beginning. Their topic is Emergency Response and Crisis Management.”

Shane Farolino, from the firm’s Akron office, spoke about what a company should do in the first 24 hours of an incident.

Even though most businesses promote their commitment to its employees’ safety, both on and off the job, accidents

happen. Whether it is caused by human error, machinery mal-function, an unsafe environment or deliberate intention, how you deal with it determines how well you protect your com-pany.

“We provide tips and strategies for managing catastrophic events in the first 24 hours and then the first seven days. We help you minimize your liability and develop a system to pro-tect your work product,” said Farolino.

Doug Kennedy, Brian Tarian and Michael Traven are from the firm’s Columbus office. Kennedy specializes in health and safety issues.

He said as of Jan. 1, 2015, the Occupational Safety and Health Administration has issued new requirements for re-porting employee fatalities and severe injuries. All work-related fatalities must be reported within eight hours and all work-related hospitalizations within 24 hours. They must also report any fatality that occurs within 30 days of a work-related incident.

“Training employees properly and documenting all neces-sary information is crucial. It can prove people were trained and the company is in compliance. In the event of an incident, the initial investigation is very important. Make sure the per-son the inspector talks to is familiar with the procedure and all evidence of the incident is documented and photographed.,”

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Page 21: February 2015 Gas & Oil Magazine-Ohio Edition

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said Kennedy.Michael Traven is involved with oil and gas litigation.“Before an incident occurs, be prepared,” said Traven. “We

can help you get the most protection possible in the first 24 hours, when an incident does occur.”

Traven said work related documents can be privileged infor-mation in case of litigation. Review master service contracts, joint operating agreements with third parties to determine who is responsible for the incident. Is there any criminal con-duct, was it intentional, is there a conflict of interest?

During the first seven days from when the incident occurred, gather whomever will be involved, control the dissemination information, review evidence, evaluate all legal defenses and identify all sources of insurance with third-party contractors and sub-contractors.

Brian Tarian talked about Violations of Specific Safety Re-quirements and the consequences for violations.

“Violation of the state safety code is very serious and can result in the additional award of benefits to the injured work-er, from 15 to 50 percent, and will be subjected to an industrial commission hearing.

To minimize liability, develop an internal plan and contact list, train employees on work product issue, complete drills and practice, and designate an “on-call counsel” to lead the investigation.

The crux of all the presentations was to demonstrate the power of preparedness. Don’t cut corners when it comes to

training employees and maintain good records. Get legal counsel before, during and after an incident occurs.

“Don’t expose yourself to bigger headaches,” said Tarian. “Plan ahead.”

After the presentations, Sexton announced the Feb. 5 En-ergy Coalition meeting will be the Significance of Wetlands in Southeast Ohio.

[email protected]

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Page 23: February 2015 Gas & Oil Magazine-Ohio Edition

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Judie Perkowski Dix Communications

Completing the initial reports required by the Federal Energy Regulatory Commis-sion* to begin the application process for

permission to construct and operate the Energy Transfer Rover Pipeline in Ohio, Michigan, West Virginia and across the border to Canada,

Vicki Granado, spokesperson for the $4.3 billion dollar project, said the company submitted the pre-filing request to FERC in June of 2014. The final report, which includes a de-tailed description of the project, will be filed with the FERC Certificate Application before the end of January.

According to information submitted to FERC, by the En-ergy Transfer Co., the Rover pipeline originated as a result of discussions with producers in the Marcellus and Utica shale areas in Pennsylvania, West Virginia and Ohio to move their product to markets in the Midwest and Canada.

Considering the amount of paperwork involved in a large scale project, the company expects FERC to issue an order that

ET Rover’s draft resource reports are complete and grants the company a Certificate of Convenience and Necessity by November 2015. This FERC order date is necessary so trans-portation services from the supply laterals — pipelines which pick up the gas and deliver it to the mainline —the Midwest Hub in Defiance, Ohio — are in service by December 2016. Construction is scheduled to start in January 2016. The project segment from the Defiance Mid-West Hub to the Union Gas Dawn Hub in Ontario, Canada is planned to be in service in June 2017.

The new, 830 mile, multi-state natural gas pipeline will affect four counties in West Virginia, 18 counties in Ohio and nine counties in Michigan before ultimately hooking up at the hub in Canada. Approximately 80 percent of the main line will be under agricultural land and parallels existing pipelines, power lines and/or roads.

The pipeline will have the capacity to transport 3.25 billion cubic feet per day of natural gas from the Marcellus and Utica shale with the help of four main line compressor stations and six lateral compressor stations. Sixty percent of the natural gas transported by the Rover pipeline will be distributed in the U.S., with 40 percent supplied to the Canadian market.

One of the most important components of the natural gas pipeline system is the compressor station. These stations com-press the natural gas as it travels through pipelines. It is this compression which allows the gas to continue flowing through the pipe and eventually to its final destination for distribu-tion to refineries and other end users. Compressor stations are typically 40 to 60 miles apart along the pipeline route.

Granado said the pipeline is fully committed, meaning bind-ing agreements are in place from shippers for transporting natural gas through the pipeline from end to end.

Although the announcement in 2011 of eastern Ohio’s gas and oil renaissance was met with skepticism, people who have been receiving life-changing checks for the past three years can tell you it’s for real. Now that the wells have been drilled and are in production, the next step for delivering the gas and

oil to other parts of the country and beyond, has raised new issues. Even though pipelines have been determined by all standards to be the safest means of transporting gas and oil throughout the country and the world.

“The biggest obstacle encountered with the Rover project was the amount of communication required for a project of this magnitude,” she said. “Our outreach includes individual landowners, local and state officials, community groups, emer-gency responders and other interested parties.

“As expected, we have encountered people with a wide range of opinions. However, once we have had the chance to talk with landowners and they get information on the project directly from us instead of from outside sources, the process becomes much smoother.”

A problem with landowners in Michigan’s Oakland County is an example of the company’s efforts to work with local com-munities, which resulted in ET Rover officials re-examining its geographical survey at the point of contention and deter-mined the pipeline could be moved farther north without too much inconvenience for either party.

In papers filed with FERC, the company states “ET Rover is committed to identifying stakeholder issues or concerns re-garding the Rover pipeline project, and resolving the issues before filing its complete certificate application.”

The annual economic impact of the Rover pipeline is esti-mated at $134 million annually in ad valorum (property) taxes for Ohio, $13 million for Michigan, $3.8 for West Virginia. Es-timated sales tax revenue: $73 million for Ohio, $19 million for Michigan and $5.5 million for West Virginia.

• More than $1 billion in labor payments to the various con-tractors working on the project; and $100 million paid in direct payments to landowners. Rover is committed to using highly skilled, mostly local union labor to construct the pipeline.

• 80 percent of the main transmission line will be under ag-ricultural land and parallel to existing pipelines, power lines or existing roads.

• The pipeline will be buried no less than 48 inches in agri-cultural fields.

• Seventy six percent of the pipeline will be manufactured in the U.S. in addition to all compression assembly and pack-aging.

• Gas control will monitor the pipeline 24/7.• The pipeline will have automated valves installed to shut

off the flow of gas in the case of an emergency.• The pipeline will be buried no less than 48 inches in agri-

cultural fields. • Pipelines are regulated by FERC and the Pipeline and

Hazardous Materials Safety Administration.For more information go to ET Rover Pipeline, LLC, or

Rover Pipeline Project.*The Federal Energy Regulatory Commission, or FERC,

is an independent agency that regulates the interstate trans-mission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines, and regulates the transporta-tion of oil by pipeline in interstate commerce.

[email protected]

Page 24: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 25: February 2015 Gas & Oil Magazine-Ohio Edition

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Bobby Warren Dix Communications

NAVARRE, OH — As additional capac-ity to move natural gas production out of the Marcellus and Utica shale plays

come online, Ohio’s residents will benefit, said the executive director of the Ohio Oil and Gas Energy Edu-cation Program.

Rhonda Reda was one of several people to speak during a Federal Energy Regulatory Commission scoping meeting in Navarre.

While the gist of the meeting was for FERC representatives to document potential environmental impacts, many of the speakers, like Reda, focused on the benefits of the ET Rover Pipeline project.

The proposed pipeline will be about 830 miles long. The origination of the pipeline is scattered with no single point of pick up, said Joey Mahmoud, vice president of engineer-ing for Energy Transfer, who is leading the project. Laterals from Ohio, Pennsylvania and West Virginia will feed natural gas into the pipeline. The main line will begin near Cadiz, and dual 42-inch lines will run all the way into Defiance, cutting through Wayne and Ashland counties. From Defiance, the line will go northward into Michigan and ultimately into Canada. The line is designed to transport 3.25 billion cubic feet of natu-ral gas daily. Sixty percent of the volume will be delivered to the Midwest hub in Defiance, with the remaining 40 percent going into Michigan and Canada.

Seven out of 10 homes in Ohio use natural gas as the pri-mary source of heating, Reda said. Consumers use gas to heat water and cook food. In the next decade, there will be an in-crease in the number of vehicles powered by natural gas.

As the capacity to move the natural gas is increased, Reda said it will help to reduce costs. While Ohio is the eighth larg-est consumer of natural gas, what is produced here only pro-vides 20 percent of the states need’s. By the end of 2016, Ohio will be able to produce 100 percent of its natural gas needs, and there is a good chance for the state to be an exporter for the first time.

Reda also spent time informing FERC representatives about the training program OOGEEP operates at the Wayne County Fire & Rescue Regional Training Facility in Apple Creek. More than 1,200 first responders have been trained there. While oil and gas emergencies are rare, OOGEEP leaders feel an obligation to provide the training, which costs about $750 per person. It offers the training at no cost.

The organization is also working with universities, colleges, trade schools and high schools in order to develop curriculum that will help connect Ohioans with jobs in the oil and gas industry.

The oil and gas industry vital part of the state’s economy, Reda said. Development like the Rover Pipeline project is critical to the growth of Ohio.

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Page 26: February 2015 Gas & Oil Magazine-Ohio Edition

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Pennsylvania and Ohio occupy enviable positions at the forefront of America’s shale energy revolution. And membership on the list of shale energy producing

states definitely has its privileges.In Pennsylvania, the energy industry supports 339,000 jobs,

contributes $34.7 billion annually to the state economy, and saved school districts over $45.5 million on energy costs be-tween 2012 and 2013 -- enough to employ over 480 teachers.

Economic benefits extend beyond the energy sector to en-compass businesses of all sizes up and down the larger oil and natural gas supply chain.

A recent American Petroleum Institute survey identified 1,347 businesses -- many of them small and midsized – involved in Pennsylvania energy development, supplying the industry with everything from transportation and uniforms to account-ing services and environmental consultations.

In Ohio, employment in core shale industries, such as pipeline construction and well drilling, increased 88 percent from 2011 to 2014, according to the Ohio Department of Jobs and Family Services Quarterly Shale Report. Those jobs paid $25,000 more annually than jobs in other Ohio industries. Similar to Penn-sylvania, the state’s public school districts could employ 700 teachers with the $60 million in energy savings they enjoyed due to the affordable supply of shale energy unlocked through hydraulic fracturing and horizontal drilling.

Polls show Ohio and Pennsylvania residents appreciate the connection between energy development and economic growth. Strong majorities of registered voters (90 percent Ohio; 94 percent Pennsylvania) agree that increased produc-tion of domestic oil and natural gas resources could lead to more U.S. jobs.

Job creation, wages, economic growth, and taxpayer savings – every key economic indicator has benefitted from shale energy development in Ohio and Pennsylvania.

Yet potential tax increases in both states could quickly stifle energy-driven economic growth. Any proposal to impose new or increase existing severance taxes on the shale indus-try threatens the significant value-added economic investment that has generated revenue under the states’ current, successful tax structures.

Pennsylvania’s shale energy industry has generated over $2.1 billion in state and local taxes. Additionally, the state has a local impact tax in place for every shale drilling site in the state, and it’s distributed more than $630 million to communities since 2012- including more than $224 million in just 2014.

Meanwhile, unconventional development in Ohio generated nearly $1.5 billion in federal and state revenue in 2012 alone. This includes more than $910 million in state and local taxes or the equivalent of about 3.6 percent of the state’s $25 billion in 2011 revenues.

State legislators considering increasing taxes on shale devel-opment should be mindful of the maxim “if you want less of something, tax it.” Higher taxes on energy would undermine all the direct and indirect benefits that shale development pro-duces, including private investment and job creation that has provided such a shot in the arm to each state’s economy.

Leaders in Ohio and Pennsylvania should focus on policies that encourage energy-driven economic growth and reject tax proposals that could stifle energy production and the jobs that go with it.

Stephanie Catarino Wissman - Executive Director Associated Petroleum Industries of PAChris Zeigler - Executive Director Associated Petroleum Industries of Ohio

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Page 28: February 2015 Gas & Oil Magazine-Ohio Edition

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Dina Cappiello and Jonathan Fahey Associated Press

WASHINGTON (AP) — A 50-percent plunge in the price of crude oil, resulting from abundant global oil supplies and cheaper gasoline at the pump, raise

critical questions about whether the Keystone XL oil pipeline is still needed or even makes financial sense.

Oil prices always have been volatile, and both the pipeline company and the oil refiners and producers that would use the pipeline expect prices to rise and plunge throughout the project’s life.

When Keystone XL was first proposed in the fall of 2008, for example, oil was in the midst of an even bigger plunge, from nearly $150 a barrel to below $35, and the global economy was collapsing into recession.

Opponents will use lower prices to argue that the pipeline now could pose a greater threat to the environment than orig-inally thought.

Low oil prices could make the pipeline more important to the development of new oil sands projects in Canada than an-ticipated by the State Department, which is conducting the environmental review, and therefore is more likely to increase emissions of carbon dioxide and other gases linked to global warming.

The review found the pipeline was not likely to exacerbate global warming, but it based that conclusion on higher oil prices. At such prices, producers can afford the higher cost of transporting oil by rail or other means and still make a profit. At low oil prices, they might decide only to expand drilling if they have an inexpensive way of getting the oil to market.

The price of oil closed at $48 a barrel on Friday.Proponents say that during periods of low oil prices, the

pipeline is more important because oil companies would otherwise have less incentive to deliver what they say is im-portant oil from a reliable source to U.S. refiners on the Gulf

Coast. But they say the current price decline is not enough to change the long-term prospects for oil exploration in Canada, global demand for crude, or prices.

Oil prices will have little impact on the politics. The Repub-lican-controlled Congress has made passing a bill approving the pipeline a priority, despite a presidential veto threat.

Q: Will Keystone XL lower gasoline prices?A: Probably not, but that has not changed. The price of

crude oil does affect the price of gasoline, and refiners set up to use heavy crude would enjoy lower priced-oil. That would make those refiners more profitable, but it would not neces-sarily lower the price of gasoline. Wholesale gasoline prices are based on market benchmarks, which are more closely cor-related to the highest-price crude oil on the market, not the lowest price crude.

Q: Do lower oil prices mean a pipeline would have a bigger effect on oil sands development and emissions of the pollution linked to global warming?

A: Possibly. How much the pipeline could increase produc-tion in the oil sands depends on an array of assumptions about global oil demand, prices and regulation. In theory, by increas-ing the price that oil sands producers could get for their oil, the pipeline encourages more development. But that’s true at low and high prices, too, according to Michael Levi, senior fel-low for energy and the environment at the Council on Foreign Relations.

It could be, though, that at low oil prices the cheap transport provided by a pipeline would be just enough to make some new projects profitable enough to develop, and that concerns environmentalists.

In either case, however, the Canadian producers would have to assume low prices will linger for years. Oil sands projects have long lives, so companies based decisions on whether to build them based on assumptions over oil prices over the long

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Page 29: February 2015 Gas & Oil Magazine-Ohio Edition

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term, not based on current prices.Q: Does Keystone XL still make sense for TransCanada?A: It makes more sense than ever. TransCanada stands to

make more money from the project now than it did when it was first proposed.

That’s because the cost of the project has increased from $5.4 billion to $8 billion, and most of the cost will be borne by TransCanada’s customers, according to Carl Kirst, an ana-lyst at BMO Capital Markets. Oil producers and refiners have agreed to pay 75 percent of the cost overruns up to $8 billion; anything over that will be split evenly.

Q: Does it still make sense for oil companies operating in Canada?

A: Probably. Periods of low prices are to be expected over the life of the pipeline, but to producers in Canada the lower the price, the more important it is to have additional low-cost ways to get oil to market. That way they can fetch a higher price for it where it is produced. Many have already started investing in expansion projects that would benefit from low-cost market access.

If oil prices fall further or stay low for a long period, how-ever, producers will have no choice but to delay or cancel new projects. If they do not think they would be able to fill the pipeline they would back out of the project because they have to pay for capacity on the line whether they use it or not.

Q: Does it still make sense for refiners on the U.S. Gulf Coast?

A: Yes. To refiners, more oil is better, and more of the type of oil they need is better still. Many complex Gulf Coast refin-eries are geared to process the heavy crudes that come out of Canada, Venezuela and Mexico. Because that crude is harder to process, it is cheaper than light sweet crude. If there is more heavy crude available, the price drops, lowering the price for refiners. Venezuelan and Mexican crude production has been falling, so refiners would like another reliable source.

“We still want that crude,” said Bill Day, a spokesman for the refining company Valero, which would be a Keystone XL customer. “Canadian heavy crude is some of the lowest-priced crude on the planet.”

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Page 30: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 31: February 2015 Gas & Oil Magazine-Ohio Edition

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Dan Davis Dix Communications

CAMBRIDGE, OH -- For an estimated four months as many as 350 employees will work from the former Modern Build-

ers Supply facility at 707 Woodlawn Ave., Cam-bridge.

Price-Gregory is a Houston, Texas-based company head-quartered at the site.

“It’s an office and warehouse facility,” said Project Manager Kelcey Thomas. “This is where employees work. We do pipe-line construction.”

In this case, the project is the installation of eight miles of 30-inch diameter pipeline to haul natural gas through portions of Belmont and Monroe counties as part of Rice Midstream’s “Zeus” pipeline project.

Price-Gregory is no stranger in East Central Ohio, having worked here during 2009 on the Rockies Express Pipeline (REX) project.

“We’re familiar with the area,” Thomas said.Though Texas-based, the local workforce will benefit from

the project.“We’re a union contractor,” Thomas said. “We get 50 per-

cent from the unions here in Ohio, in this area. We have the opportunity to hire locally and bring in the other portion. We try to get as many people from here ... as we can.”

The effect of as many as 350 employees here will be felt.“Our employees rent, eat and shop in the area. We’ll be

spending quite a bit of money here,” Thomas said.Thomas said Project Superintendent Greg Newcomb is

pleased to be again working in Ohio.“He’s excited about being back in the Cambridge area, and

looks forward to meeting new friends,” Thomas said.

[email protected]

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Page 32: February 2015 Gas & Oil Magazine-Ohio Edition

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Seth Whitehead Energy In Depth - Illinois

The shale development outlook in the Land of Lin-coln is finally looking up.

That might seem to be an odd statement consider-ing there still hasn’t been be a single high volume hydraulic fracturing treatment conducted in the state more than 500 days after the Illinois Hydraulic Fracturing Regulatory Act was signed into law.

But it’s at least a possibility now.The Joint Committee on Administrative Rules approved fi-

nal HVHF regulatory rules in November, ending more than a year and a half of waiting and frustration.

After former Gov. Pat Quinn signed the IHFRA into law in June 2013, month after month of legislative limbo pushed fracking proponents’ patience to the limit. First the Illinois Department of Natural Resources’ initial draft of regulatory rules drew the ire of environmentalists. The IDNR took nearly a year to release a second draft, using the excuse that it had been “flooded” with more than 35,000 public comments, most from fracking opponents. Then, once the second set of rules were finally released, industry leaders deemed them so cum-bersome and unworkable that some speculated a HVHF per-mit would never even be issued in Illinois should the rules be approved as drafted.

Fortunately, JCAR convinced IDNR to steer the rules back toward the legislative intent of a law already believed to be the toughest and most prescriptive in the nation. Workable rules were approved just a few days after pro-energy candi-date Bruce Rauner unseated Quinn for the governor’s seat.

For the first time in a long time, the fracking future was bright in a state in which the potential for 47,000 jobs and $9.5 billion in economic development via shale development had been put on hold for 16 months.

Then oil prices plummeted more than 50 percent.Predictably, producers have gone the cautious rout since. So

far, no HVHF permits have even been applied for, much less granted. And only once company has registered with IDNR, the first step of the permitting process.

But although things are quiet on the fracking front in Illi-nois, it sure beats the alternative.

Illinois could have very easily found itself in the same boat as New York, a state it shares much in common, with one no-table exception: fracking is now permanently banned there.

Unlike New York, Illinois industry leaders wisely rejected talk of a moratorium when regulatory talks began more than three years ago and instead chose to negotiate with main-stream environmental groups.

Granted, the tradeoff for Illinois’ strategy wasn’t always pleasant. A brutal and drawn-out negotiation process ensued, a process about which each party involved was ultimately left unhappy.

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Page 33: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 37: February 2015 Gas & Oil Magazine-Ohio Edition

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Mark Denzler of the Illinois Manufacturers Association called the negotiations “easily” the most technical and de-tailed he’s been involved with in 20 years in Springfield. They were historical negotiations as well, as labor, industry, main-stream environmental groups and agricultural leaders joined in support of HVHF legislation. The GROW-IL coalition, Il-linois Farm Bureau, Illinois Attorney General Lisa Madigan, Gov. Pat Quinn, Sierra Club, the Natural Resources Defense Council and the Illinois Environmental Council were all in-volved.

Not exactly a group that runs in the same social circles, which is a major reason why the negotiations took three years to finalize. But the result was “by far” the toughest, most com-prehensive set of regulations in the country, according to Den-zler.

With those regulations finally in place, it’s now up to state officials to get serious about maximizing on Illinois’ vast shale potential. And for the first time, they appear to be doing so.

A group of Illinois leaders from the private and public sec-tor – including former Gov. Jim Edgar and former Obama administration Chief of Staff Bill Daley – recently sent Gov. Rauner a list of recommendations for his first 100 days in of-fice. At the top of that last was “jump-starting” fracking in Il-linois.

One of the group’s suggestions for doing so is to sufficiently staff the IDNR to respond more quickly to fracking permit applications, as there are currently not enough staff members

to oversee the process. Expediting the permitting process to resemble neighboring Indiana would go a long way toward repairing Illinois’ growing reputation as a place that is difficult to do business in.

Considering business-savvy Rauner, a former private-equi-ty investor, is inheriting perhaps the worst financial situation in the nation, he is expected to heed that recommendation and many others.

Ultimately, shale development continues to move along slowly Illinois – as many things tend to due in the Land of Lincoln. But at least there is now a path forward.

Seth Whitehead is a spokesman for Energy in Depth – Illinois

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Page 38: February 2015 Gas & Oil Magazine-Ohio Edition

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-QD�*TQYVJNathan Benefield Commonwealth Foundation

For decades, Pennsylvania has been plagued by slow eco-nomic growth. The Keystone State lags the nation—rank-ing 49th, 45th, and 48th, respectively—in job, income, and

population growth since 1970. “Brain drain,” a trend of work-ers leaving the state to find employment elsewhere, continues to plague the commonwealth. Just last year, Pennsylvania lost a net 31,400 in state-to-state migration, according to the Census

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Page 39: February 2015 Gas & Oil Magazine-Ohio Edition

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But recently, there has been a bright spot with the rise of natural gas extraction in the Marcellus shale formation.

It’s indisputable that where there is Marcellus shale drill-ing there has been robust economic growth. Over the past six years, Pennsylvania counties with Marcellus shale drilling led the state in job growth along with growth in workers’ wages.

The most recent data from the Bureau of Labor Statistics shows that counties with more than 200 Marcellus shale wells dwarfed the rest of the state in job and wage growth from 2008 to 2014.

• Marcellus shale counties had, on average, 8.7 percent em-ployment growth. Counties with no Marcellus shale activ-ity had 0.6 percent job growth

• Marcellus shale counties averaged 29.9 percent growth in total wages. Counties with no Marcellus shale activity had less than half that amount.

• Average weekly wages among all jobs grew in Marcellus shale counties by an average of 20 percent, compared with 11 percent wage growth in non-Marcellus counties.

4See graph on page 15

This boom has been apparent in the Northeastern and Southwestern parts of the state, where the Marcellus shale formation lies. Susquehanna County in the Northeast led the state in both total wage growth and average weekly wage growth, while neighboring Sullivan County led in employment growth. Greene County in the Southwest ranked second in all three measures of economic growth.

Some—including Pennsylvania’s Governor-elect Tom Wolf—see this boom as an opportunity for government to cash in and solve some of the state’s looming fiscal challenges. Advocacy groups are calling for new severances taxes on nat-ural gas, on top of a recently enacted impact fee.

Such a severance tax will make Pennsylvania less attractive for gas drillers. This tax increase will not only hamper jobs and wages in the industry, but will victimize Pennsylvania landown-ers whose royalty checks will shrink and small business owners who provide products and services to gas drilling industry.

Pennsylvania has already lost ground to other states. In the 2013 Fraser Institute’s Global Petroleum Survey the state ranked 58th in attractiveness to invest, down 24 spots. When West Virginia increased its severance tax drilling, activity de-clined, according to the Pennsylvania Independent Oil and Gas Association. Such a policy in Pennsylvania would dim one of the few bright spots in our state’s economy.

Much of the push for a severance tax is based on a myth that gas companies aren’t paying their “fair share,” and that Penn-sylvanians aren’t truly benefiting from the industry. In reality, gas companies paid an estimated $810 million in royalties to landowners in 2013, have contributed $500 million to road re-pairs, and have paid billions in existing state taxes.

Gas drillers face the same tax climate common to every other Pennsylvania business, including the highest effective corporate income tax rate in the industrialized world.

Despite these facts, special interests lobbying for govern-ment handouts continue their calls for new taxes and fees. These interest groups neglect to mention the real harm that will come as a result of punitive taxes.

For starters, shale gas has reduced energy costs dramatically, saving Pennsylvania families thousands of dollars every year. Excessive taxation would effectively raise energy costs across the state, as those costs are passed on to consumers.

Natural gas taxes would also hurt small businesses, like New Pig Energy in Blair County—a company that manufacturers well pad containment products. New Pig Energy vice presi-dent Beth Powell says, “Marcellus Shale is 100 percent of our business. Our employment has more than doubled since we started. We are up to 23 employees.” But if a natural gas tax stifles drilling, New Pig’s employees could lose their jobs.

Unfortunately, the threat of a job-killing energy tax looms over all Pennsylvania—workers in the drilling industry, busi-nesses that provide related products and services, landowners, and families struggling to make ends meet while heating their homes.

Throwing cold water on an industry fueling Pennsylvania’s economic growth is not only unfair, but will do far more harm than good.

Nathan A. Benefield is vice president of policy analysis for the Commonwealth Foundation (CommonwealthFoundation.org), Pennsylvania’s free market think tank.

Marcellus Counties

(More than 200 wells)

Marcellus Shale Impact on Job and Wage GrowthPercentage Growth, 1st Quarter 2008 to 2nd Quarter 2014Average Weekly Wage

20.10

13.84

10.77

Minor Marcellus Counties

(Less than 200 wells)

Non-Marcellus Counties

Source: Bureau of Labor Statistics Get the data http://cf.datawrapper.de/Q9bPQ/1/#0

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Page 40: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 41: February 2015 Gas & Oil Magazine-Ohio Edition

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Kim Lewis Dix Communications

CARROLLTON, OH -- Self-proclaimed “American country boy” Craig Morgan will headline Country Energy Fest at

the Carroll County Fairgrounds in Carrollton on Saturday, May 30.

Morgan’s resume is varied and impressive — soldier, sher-iff’s deputy, EMT, adventurer, TV host, motocross racer, out-doorsman, farmer and family man. And then there is the mu-sic career that ties it all together.

His song catalog includes working-class anthems like “Red-neck Yacht Club,” “International Harvester” and “More Trucks Than Cars;” real-life love songs like “Tough” and “This Ole Boy”; and one song that hits on pretty much every theme Craig brings to the table, “Little Bit of Life.”

Morgan’s newest album, “The Journey (Livin’ Hits),” com-piles where he has been, where he is at and where he is head-ed. It includes his newest single, “Wake Up Lovin’ You.”

Opening for Morgan is Clare Dunn, who was recently fea-tured in The Boston Globe as one of 10 bands and solo artists to watch in 2015, in MusicRow’s 2015 “Next Big Thing” and in USA Today’s article about SiriusXM’s Fresh Female Voices. Dunn is a Colorado farm girl who drove silage trucks to put herself through college and has already opened for

big Nashville names, including Keith Urban, Dierks Bentley and Florida Georgia Line. She recently signed with Universal Nashville on the strength of her two indie singles, “Get Out” and “Cowboy Side of You.”

Ticket prices start at $20. Grandstand seating is $20 and $25. Track tickets, which are standing room only, are $40.

Tickets go on sale Feb. 14. Online sales begin at 9 a.m. at www.countryenergyfest.com or buy directly from the Carroll County Fairgrounds, 11 a.m.-5 p.m., at 106 Kensington Road NE, Carrollton.

Country Energy Fest features award-winning and mouth-watering ribs, an antique tractor show, car show, motorcycle show and much more. Activities for the entire family begin Friday, May 29, and continue through the concert on May 30.

Country Energy Fest is a community event, first organized by the Carroll County Agricultural Society as a fundraiser for the fairgrounds. The committee has grown to include business professionals and local residents who all share a common in-terest in making the local community a better place to live and work.

Bookmark www.countryenergyfest.com and follow it on Face-book and Twitter for complete festival information and exclusive giveaways. Contact 330-627-2300 for more information.

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Page 42: February 2015 Gas & Oil Magazine-Ohio Edition

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%TKGHUREPORT: WYOMING COMPANIES FLARED $11M WORTH OF NATURAL GAS

CASPER, Wyo. (AP) — A newspaper reports Wyoming energy companies flared enough natural gas through

the first 10 months of 2014 to fuel the Cheyenne Prairie Gen-erating Station for 130 days.

A review of state statistics by the Casper Star-Tribune (http://tinyurl.com/lvgwqhn) finds that statewide, 3.9 billion cubic feet of gas was burned off into the atmosphere through October.That equates to roughly $11.4 million worth of natural gas at today’s spot prices, the newspaper reported.

IMPACT OF NATURAL GAS CONTINUES TO GROW

From America’s Natural Gas Alliance: Natural gas is safely and responsibly developed in 31

states across the United States, and it is putting Americans to work in all 50 states. How many jobs? IHS Global Insight es-timates that as of 2008, total natural gas production supported more than 2.8 million jobs in the United States. Increasing the development of our nation’s unconventional sources of gas alone will add more than 1.4 million U.S. jobs by 2015.

A recent study by PricewaterhouseCoopers for the Nation-al Association of Manufacturers forecasts an additional 1 mil-lion U.S. jobs in manufacturing by 2025, thanks to our nation’s vast, affordable supplies of natural gas.

In 2010, shale gas accounted for 27 percent of total U.S. natural gas production. By 2015 this share will increase to 43 percent, and by 2035 it is expected to increase to 60 percent. In addition to supplying our nation with abundant, clean and domestic energy, this growth will help power the creation of one million new U.S. jobs. This will create opportunities for a wide range of skilled workers - from scientists and technicians, to business managers and office staff, to construction workers and truck drivers.

SWIFT ENERGY TO CUT SPENDING BY 75 PCT AMID OIL PRICE SLIDE

HOUSTON (AP) — Swift Energy plans to slash its spending by as much as 75 percent in the new year as

it becomes the latest energy company to adjust to tumbling prices for its product.

The Houston company announced on Tuesday a revised capital budget ranging from $100 million to $125 million that it said reflected recent hydrocarbon price declines.

“We continue to work with our vendors and suppliers to re-duce service costs and are taking steps to materially reduce field level operating and corporate overhead expenses,” CEO Terry Swift said in a statement from the company.

Swift Energy Co. is an independent oil and natural gas com-pany with operations mainly in Texas and Louisiana.

Oil companies have been cutting spending almost across the board as prices for natural gas slide and benchmark crude rates reach multi-year lows.

American Eagle Energy Corp. recently said it was suspend-ing its 2015 drilling budget and wasn’t going to resume drilling until crude oil prices rebound. Linn Energy also said it was cutting its capital expenditures in half for the year.

Civeo Corp., which provides housing and other services to drillers, also suspended its dividend and surprised Wall Street late last year with a particularly dismal outlook for 2015.

Shares of Swift Energy closed at $2.69 on Monday and have plunged about 80 percent since the end of 2013.

ANGA HIRES COMMUNICATIONS DIRECTOR

America’s Natural Gas Alliance (ANGA) has hired Ni-cole Daigle to oversee its regional communications ef-

forts. Daigle will serve as director of regional communications and special projects and will work with a variety of stakehold-ers across ANGA’s five regions to ensure that ANGA’s mes-sage about the benefits of greater natural gas use across all sectors of the economy reaches the American public and key decision makers.

Daigle comes to ANGA after spending six years at the In-dependent Petroleum Association of America, most recently as director of public and government affairs. She also worked for a range of energy clients as an executive for the former FD Dittus Communications in Washington and has worked in the communications shops of Entergy Corp. and Calpine Corp.

Daigle holds a Master’s in Business Administration from the University of New Orleans and a B.A. in Mass Communi-cations/Public Relations from Louisiana State University.

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Page 43: February 2015 Gas & Oil Magazine-Ohio Edition

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ALASKA LNG EXPORT PROJECT ADVANCES DE-SPITE OIL PRICE FALL

ANCHORAGE, Alaska (AP) — Work on a proposed Alaska pipeline that could be part of a system to ex-

port liquefied natural gas to Asia is moving forward despite collapsing oil prices, according to officials connected to the project.

The lower price of oil is delaying at least two other North American LNG export projects but has not stopped the Alas-ka venture because of its size, projected timelines and a part-nership involving some of the world’s largest companies, the Alaska Dispatch News (http://bit.ly/1AJ0s7y) reported.

“Our mission hasn’t changed, and to my knowledge none of the investing companies are looking to change that at this time either,” said Steve Butt, senior manager for Alaska LNG and an Exxon employee.

The project would include an 800-mile pipeline to move North Slope natural gas to a southcentral Alaska plant, where it would be chilled, loaded on LNG tankers and shipped to Asia.

The cost is estimated at $45 billion to more than $65 billion. The state of Alaska, Exxon, BP and ConocoPhillips are equity partners.

The project is a giant among dozens of LNG export projects being pursued, but most probably will not be built, said Larry Persily, federal pipeline coordinator.

One difference between the Alaska LNG and others is the timeline. Investment decisions must be made for some proj-ects based on the expectation of exporting gas in five years or less.

Alaska LNG is in an early study phase, with the parties fo-cused on preliminary engineering and design.

A critical decision point comes next year when companies decide whether they will continue to front-end engineering and design before a final critical decision to invest in 2018 or 2019. With an estimated seven years of construction, gas could move for shipping in 2025 or 2026.

The size of the Alaska project might also help. Gas is ex-pected to flow for three to five decades and it could weather fluctuations in the price, Butt said.

“Short-term price movements don’t impact a project with a very long life the same way they impact projects with a very short life,” Butt said. “Alaska LNG has a very long life.”

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Page 44: February 2015 Gas & Oil Magazine-Ohio Edition

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Kim Lewis Dix Communications

The oil-and-gas boom has brought oppor-tunities to Carroll County, U.S. Senator Rob Portman learned Thursday, Dec. 18,

during a roundtable discussion with government and school officials and area businessmen.

The event was held at Atwood Lake Resort, itself a Utica Shale success story. The Muskingum Watershed Conservancy District had scheduled the resort to be demolished but decid-ed to donate the property, with its oil-and-gas leases, to the county.

“If not for the oil-and-gas boom, (the re-opening of the resort) would not have happened,” Carroll County Commis-sioner Robert Wirkner explained. “The lease of the grounds helped fund the renovations. The people of this county have not put any money into this facility.”

“We couldn’t be more pleased,” John Logsdon, Radius Hos-pitality’s regional director of operations, said of the oil-and-gas workers staying and eating at Atwood Lake Resort. “It is a very reciprocal business. We don’t mind the muddy boots by the doors. Our housekeeper might, but we don’t. Oil and gas (industry) is essential to our food and beverage business.”

Logsdon, along with Atwood Lake Resort General Man-ager Brad Cass and Sales Manager Marlene Wakefield, noted the oil-and-gas workers fill 15-20 rooms during a slow period and up to 50-60 rooms when it is busy.

“It is very project driven,” Logsdon said of the oil-and-gas occupancy.

But he admits it is a fine line for the hotel, which continues to grow and revitalize its tourism aspect.

Portman, who serves on the Energy Committee, noted the number of Oklahoma, Louisiana, Texas and other license plates found in the resort’s parking lot.

“Sometimes our parking lot looks like that,” said Tom Kish-man, owner of Kishman’s IGA, of the out-of-state license plates. Located “one block out of Carroll County” in Minerva, Kishman’s IGA recently completed a 10,000-square-foot ex-pansion.

“Oil and gas has been good to us. We have gotten more into catering and have been catering at well sites,” he said. “We have expanded our food items. We now carry alligator meat. More people have been coming in.”

Kishman noted certain federal regulations, like the 30-hour insurance benefit and the upcoming requirement to provide nutritional values on deli and bakery foods, negatively affect small businesses like his.

The Kishman family also owns a gas station and he noted they are looking at CNG but wants to see what the need is with no plans for another 5-10 years.

An organization that is planning for a CNG station is Car-rollton Exempted School District.

Carrollton Superintendent Dave Quattrochi reported the district has received two grants to develop a STEM training center and a CNG station, which will be used not only for its fleet of buses but for the public as well.

Director of Programs Ed Robinson believes the training center brings the district “to the cutting edge of workforce development,” pointing out the county does “not have a job issue, but a will to work issue.” He said the district has part-nered with Stark State College and Eastern Gateway College to provide stackable credentials as the students complete job training.

Quattrochi pointed out the district signed a lease with Chesapeake Energy for its 165-acre farm, and an enterprise zone agreement with Washington Township trustees, Carroll County Energy and county commissioners is in the works now, which will provide the district to build a new school.

He explained that residents have not passed a levy since 1977 and the district got “creative” with funding in an effort to build a new facility.

“We, as a dealership, have benefited from the shale boom,” said Scott Cole, owner of Huebner Chevrolet Subaru in Car-rollton. He noted the dealership saw the biggest uptick in sales when residents received their signing bonuses and now are starting to receive their royalties. “They are just more stealthy,” Cole said. “When they received their bonuses, car buyers came in with lumps of money. Now they are putting more money down.”

He said the company is on its third building project but is facing a challenge to find and keep good technicians. The oil-and-gas industry “throws a lot of money at them and we are not normally at the same scale,” he noted.

“It has been wonderful,” Cole said of the boom.

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Portman said he understood the concerns of local officials regarding infrastructure and tax structure. He believes the fo-cus needs to be on training Ohio residents for the oil-and-gas jobs.

Amy Rutledge, Executive Director of the Carroll County Chamber of Commerce, said Carroll County has seen exten-sive growth, with only one hotel with 50 rooms operating in 2010 but four hotels with 400 rooms by 2015. She noted the county unemployment rate has dropped below five percent from 15 percent in 2009.

Realtor Bryce Custer of NAI Spring explained that Carroll County has been “extremely” active with more than 20 new companies coming into the county with some great jobs. “It has been an exciting opportunity to bring these companies to the area,” Custer said, but he acknowledged it has been a chal-lenge with a lack of “product,” no four-lane highway and the lack of infrastructure.

“As commercial opportunities grow, I expect to see more activity in retail and single- and multi-family homes,” he said.

Custer pointed out local companies are growing, and with the abundance of natural gas, he believes manufacturing jobs will increase.

Wirkner believes the county “is ahead of the curve when it comes to issues,” noting the county’s infrastructure cannot cope with the abundance of traffic.

Despite the challenges, “I cannot think of a more exciting or opportunity time to be in Carroll County,” he said. He said the county’s general fund, which has benefited from an increase in sales-tax revenue, is being used to take care of immediate needs. He pointed out the commissioners usually had a budget of $5.8 million to run the entire county but now have a budget of $8-$9 million where agency budgets can be restored to pre-recession levels.

Wirkner noted the commissioners want to focus on infra-structure projects but are leery of overextending the county’s budget.

“Six years ago, Ohio was not an oil-and-gas state. They for-got our history,” Portman pointed out. “This boom has put Ohio on the map.”

Portman said 200,000 jobs are expected to be created in the Utica Shale region and approximately 700 wells are in produc-tion in Ohio.

“This is pretty exciting and our expectations are pretty high,” he said, noting that Carroll County remains first in well production.

While federal agencies are looking at leasing federal lands and international, as well as interstate, pipelines, he stressed the importance of ensuring “production is safe for the work-force and the environment” and how “one bad operator spoils it for everybody.”

“Originally, they were saying this (boom) was going to last 20-30 years. With the technology, they are now saying it will last 40-50 years. Who knows how long. With everything going on, we don’t want this to be a flash in the pan,” Portman said.

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Page 46: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 47: February 2015 Gas & Oil Magazine-Ohio Edition

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Sara Klein Dix Communications

CARROLL CO., OH -- The Carroll County Engineer’s Office officially reopened Hibbetts Bridge on Arrow Road (C.R. 15) during a brief ribbon-cutting ceremo-

ny Wednesday, Dec. 31. The bridge had been closed while Rex Energy and contrac-

tor U.S. Bridge, of Cambridge, upgraded it to support com-mercial traffic traveling to Rex Energy well sites in the area. Work was undertaken from Sept. 22 to Nov. 20 of the recently-ended year.

According to information provided by County Engineer Brian Wise, the galvanized steel beam bridge sits on rein-forced concrete-capped pile foundations, replacing the old steel beam bridge, which sat on a timber deck with a steel pile foundation.

The new construction, which cost approximately $300,000, is state-certified to hold commercial loads.

Rex Energy Director of Civil Engineering Steve Harris said the oil-and-gas company paid all of the costs associated with the work.

Hibbets Bridge is located 0.1 mile east of Arrow Road’s in-tersection with state Route 43.

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Page 48: February 2015 Gas & Oil Magazine-Ohio Edition

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Dan Garcia - AttorneyKyle A. Webster contributing

A Pennsylvania court ruled in favor of the oil and gas industry… sort of. On January 7, 2015, the Com-monwealth Court, one of two intermediary courts

for this state, ruled against the Pennsylvania Environmental Defense Foundation (“PEDF”), a non-profit organization that states its mission as, “educating the citizens of Pennsylva-nia about state and federal environmental laws, and enabling citizens to use these laws to protect and improve the environ-ment.”

In the case, PEDF brought suit against the Governor and the Commonwealth, alleging, among other things, that using funds from the lease of oil and gas rights under state-owned lands in order to balance the state budget was a violation of the state constitution. The primary argument lies in Article I, Section 27 of the Pennsylvania Constitution (“The Environ-mental Rights Amendment”), which declares that “Pennsyl-vania’s public natural resources are the common property of

all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and main-tain them for the benefit of all the people.”

PEDF’s argument is that the royalties collected from drill-ing under these public lands must be a part of the Public Trust. The particular laws that PEDF challenged vested the power to distribute these funds solely in the General Assembly.

The Commonwealth Court ruled that these provisions were not unconstitutional. Further, the Court ruled that the 1995 Conservation and Natural Resources Act exclusively vests the power to lease public lands in the Department of Conserva-tion and Natural Resources (“DCNR”), and the Governor does not have authority to usurp this power.

What makes this case so odd to most observers is not the outcome of this case, but how the court got there. Also, on most points, this was a unanimous decision by seven judges of the Commonwealth Court, which makes the rationale a

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bit more puzzling. In analyzing the Environmental Rights Amendment, the Court did not turn to what most would view as the precedent on such matters, the 2013 Robinson decision that overturned parts of Act 13, the 2012 Oil and Gas Act. Rather, they held that, because only three Justices agreed to it, the test set forth in that decision was not precedential, and instead relied on a forty-year old case, Payne v. Kassab. This test was explicitly criticized and assumed to be overruled by the Robinson decision.

The Payne test puts forth three questions in assessing whether a government action violates the Environmental Rights Amendment that basically ask if environmental im-pacts have been considered and then balances the environ-mental impacts to the benefits of the action. This decision ef-fectively puts this test back in play, seemingly replacing the far more rigid Robinson test.

While this seems like a win for oil and gas companies, there are two concerns here. First, seeing the entire Commonwealth Court reinstate a constitutional test most legal observers as-sumed had been overturned by the Supreme Court is both startling and dangerous precedent. Granted, the way the Court justified this was not without finesse and rationale, but it still is concerning. It also leaves in limbo what test actu-ally does stand, something the Pennsylvania Supreme Court is likely to decide on appeal. Secondly, the largest owner of

land in Pennsylvania is the Commonwealth. Vesting that en-tire power in one administrative department without room for much oversight (beyond the legislature’s ability to change the law, an unlikely prospect at this point) seems problematic and against the best interests of the people of the Commonwealth, including the oil and gas industry. Really, this was a win for bureaucracy and removed any possibility of a constitutional challenge to the powers of the legislature and the DCNR as above all other citizens, including oil and gas companies, when it comes to making decisions regarding state-owned lands. At the end of the day, oil and gas companies may not care where the royalties from drilling under state-owned lands end up, but they do care who gets to make these decisions and what voice they, and other citizens, have on such matters.

There is much more to this case worthy of analysis, but for now the outcome is likely in the hands of the Supreme Court. There are currently two vacancies on the bench, so where this ends up could very well be decided by the next election. Let’s just hope the Supreme Court comes to a similar decision, but by better means.

Dan Garcia is an attorney with Leech Tishman Fuscaldo and Lampl in Pittsburgh, PA and can be reached via email at [email protected]

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Page 50: February 2015 Gas & Oil Magazine-Ohio Edition

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1. Carroll County 4622. Harrison County 3233. Belmont County 224

4. Guernsey County 176 5. Monroe County 175

6. Noble County 152 7. Columbiana County 129

8. Jefferson County 51 9. Mahoning County 30

10. Tuscarawas County 1911. Washington County 17

12. Portage County 15Trumbull County 1513. Stark County 13

14. Coshocton County 515. Holmes County 3

Morgan County 3Muskingum County 3

16. Knox County 217. Ashland County 1

Astabula County 1 Geauga County 1 Medina County 1

Wayne County 125 50 75 100 125 150 400

TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITYBY NUMBER OF SITES

WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGEDSOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 1/17/15

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Page 51: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 52: February 2015 Gas & Oil Magazine-Ohio Edition

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Kim Lewis Dix Communications

With the Utica and Marcellus shale re-gions continuing to prosper, more companies are bringing their services

to Pennsylvania.One such company is First Choice Energy, the energy divi-

sion of Ag-Land Co-op, which provides oils, lubricants, fuel and other items to clients.

“I’ve been telling people that if it’s wet and slippery and makes things go then we probably have it or we can get it,” said Ron Klemm, who is leading First Choice Energy’s expan-sion.

While the co-op was started by farmers, Klemm explained that while expanding into Pennsylvania, he’s been targeting mainly gas and oil companies.

“We are working with bringing fuel to the different frack-ing companies and stuff especially like lube for the wireline industry and other regular lubricants,” he said. “It’s been a whirlwind so far to say the least. But it’s been fun.”

Though First Choice Energy is new to Pennsylvania, it wasn’t a total stranger to the state.

“Essentially, the reason we expanded into Pennsylvania was because we already had trucks running over here delivering fuel and delivering national account stuff for Valvoline,” Kl-emm explained.

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Page 53: February 2015 Gas & Oil Magazine-Ohio Edition

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While the company is focusing on western side of the state, Klemm has clients as far north as Williamsport and Mansfield who purchase one of First Choice’s hot-ticket items: wireline grease.

“That stuff up North, really the only thing we’re doing is that wireline grease,” he said. “It’s just because we can take up 60 tubs at a time and drop it off and leave. We can’t really go there effectively, continually. Some of these old tankers needs a drum of this and a drum of that, but as far as the wireline grease goes, I’ll go just about anywhere in the state, I don’t care.”

Klemm’s willingness to work with clients is an accurate rep-resentation of First Choice’s attitude toward customer service.

“Really, wherever somebody has a need if they’re just a little bit patient we can get them moving and rolling along,” he said.

If a client uses a substantial amount of a particular product, the company is willing to find a supplier so that First Choice can sell it.

“We’re very flexible, whatever the customer needs,” Klemm said. “Like the pads they lay down whenever oil spills. One of my customers said, ‘Look I buy three or four skids of those a month. It would help me if you could buy a few and sell them to me.’ We went out a supplier and now we’re selling it. So we’re trying to be as much of a one-stop shop for our custom-ers as we can.”

Another way that the company looks to convenience clients is by lending equipment for free.

Klemm explained that because First Choice is connected with some of the largest tank manufacturers in the country, the company can send a tank full of fuel with a pump to a cli-ent.

Klemm is able to place monitoring devices on the equip-ment to track its location, while saving a customer time and money.

With customer convenience always on the agenda, it isn’t a surprise that First Choice is swarmed with business.

“I think part of it is because of the boom in the area,” Kl-emm explained. “I think part of it is because we’re able to of-fer high-quality products with great service and phenomenal pricing.”

Though First Choice has successfully expanded into Penn-sylvania, it wasn’t an entirely smooth process.

One of the company’s biggest issues is having enough staff and equipment to meet the demands of its customers.

“With drilling in this area comes growing pains,” Klemm said “The guys that are working here are working lots of over-time. We are literally running our rear ends off trying to keep up. We’re trying to cover a lot and assure customers that we’re doing everything to make it as seamless as possible because at

the end of the day we know that our business relies on them.”Part of that assurance means making sure that clients al-

ways have a supply of product, whether or not First Choice has employees available.

“I had one of my customers who needed fuel tanks on a well pad way down in the middle of nowhere in West Virginia,” Klemm recalled. “We just didn’t have anybody that could do it, so I just drove over to New Philadelphia from Pittsburgh, picked up a truck with fuel tanks on it and drove to West Vir-ginia. I didn’t get home until 1 a.m., but whatever.”

With the surge in business the company is looking at invest-ing in more trucks as well as drivers. Klemm said that First Choice is currently in the process of purchasing a 40-foot truck and hiring one or two field drivers.

While the added manpower will further the company’s prof-it, Klemm explained that it’s less about their pocketbooks and more about serving their clients.

“We’re really just looking at the market and where we need to be and what we need to do.”

For more information contact Ron Klemm at 330-407-1416.

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Page 54: February 2015 Gas & Oil Magazine-Ohio Edition

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Dan Garcia Attorney

Let’s play a thought exercise: imagine yourself living in a rural part of the state on family farm that belonged to

your great-grandfather. For generations, this modest family farm contributed to the local economy in a number of agrarian ways but, these last few years have been tough. Your family has been a staple to these parts for just over 100 years…that is, until this year. This year your farm has been hit with a tax bill that you just can’t seem to afford. You and your wife sit at the kitchen table with a stack of tri-folded bills, an old calculator, and a wilting gerber daisy you brought in a few days back. This farm, this home, this family’s survival fell into jeopardy the moment you opened that letter from the county telling you how much you still owed and the thoughts of these things make your stomach run sour from the stress. Your head, heavy from the fear of losing everything you have ever known, falls into your hands. Just then, you hear a knock-ing at your door. You look up to make eye contact with your wife but you can tell that she was not expecting anyone either. Cautiously, you make your way to the door and take a look through the hard cracked glass framing your front door. You see a young lady standing on your front porch. Her navy blue fleece has a prominent blue flame embroidered just above the North Face logo; in her hands, a clipboard.

“Mr. Smith? My name is Cassie; I am a landman with ___________. May come in?”

This is how the conversation started for a number of small family farms in Pennsylvania, Ohio, West Virginia, and New York. Before the discovery of the Marcellus and Utica, many small families faced the real danger of losing their family

$�FC[�YKVJQWVfarms. Instead, thanks to the development of shale gas, these families are the recipients of life-changing bonuses and royal-ties.

So, why did I start off with this story? A number of editori-als have touted the great benefits of Marcellus and Utica gas, justifiably so, but may come off a bit academic given a target audience. In light of New York’s recent shut down of the shale gas industry, perhaps a more appropriate narrative is one that addresses the effects this industry has had on some economi-cally depressed areas in the northeast.

The discovery of the natural resources within the Marcellus and Utica formations ranks amongst the greatest in our life-time, and continued development of these resources will be a positive economic game-changer for generations. This fact is lost on the decision-makers in New York State, and is certainly lost on the highly vocal anti-drilling crowd.

The benefit of shale gas drilling that is most widely felt will be the decrease in winter heating and utility costs. While many of the anti-frackers scream about environmental ‘damages’ – both real and imagined - they do not seem to understand that the survivability of millions of lower and middle class Ameri-cans depends on the availability of clean burning and inex-pensive natural gas. The abundance in supply makes this fuel inexpensive and has been the primary source of comfort to many lower and middle class families. Without the availabil-ity of this resource, many of these families’ living conditions would be much worse.

Imagine waking up at 4 am every morning this winter, not because your alarm went off but because your house went cold. The prevention of shale gas development and infrastructure construction can have devastating effects on the very people these activists are seeking to protect. According to data from UGI Penn Natural Gas, despite a rate increase on June 1 of this year, the company says consumers’ bills should still be ap-proximately a third lower than they were in 2008.

Second to a less expensive winter heating bill, communities from central Ohio to the far northeast corner of Pennsylva-nia are experiencing an uptick in entrepreneurship and job creation. The oil and gas industry demands a diverse cross section of professional and non-professional services needed to support the massive $1.5 trillion infrastructure develop-ment of pipelines, railroads, gathering systems, and process-ing plants. Many of these projects will be financed by private capital and has the potential to create 1.6 million jobs in the process. This massive economic injection will likely push the economic wave to other industries like real estate, retail, edu-cation, and medical.

Imagine what this improvement in job availability could do for that lower to middle income family. Better yet, imagine what this new opportunity could do to that small survey com-pany that was treading water after the real estate bubble burst in 2008. Had the Marcellus or Utica never been discovered

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Page 55: February 2015 Gas & Oil Magazine-Ohio Edition

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or, even more dramatic, there was a national ban on fracking, these economic opportunities for millions of small businesses would cease to exist.

Finally, let’s get back to that family farm mentioned in the introduction. For thousands of land owners, oil and natural gas development has saved family farms and homesteads. This new-found income has provided the more rural areas of the state to improve their infrastructure. In states like Penn-sylvania, the use of an Impact Fee has injected some much needed funds into a number of utility and roadway projects in traditionally lower income counties. These counties are im-proving their roads, building parks, and funding their pensions all thanks to this new found windfall.

These benefits from shale drilling are real; the science sup-porting the anti-fracking movement is not. Fracking is not a new technology. This technology has been used by the oil and gas industry since 1949. Since 1949, this technology and its supporting infrastructure has been responsible for providing the fuel that allows us to flip on a light switch, watch television, and keep our homes warm during these winter months.

Dan Garcia is an attorney with Leech Tishman Fuscaldo and Lampl in Pittsburgh, PA and can be reached via email at [email protected]

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Page 56: February 2015 Gas & Oil Magazine-Ohio Edition

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OHIO WELL ACTIVITYby the numbersMARCELLUS SHALE UTICA SHALE15 Wells Permitted

16 Wells Drilled 307 Wells Drilled

0 Inactive

0 Not Drilled

0 Plugged

723 Wells Producing

466 Wells Permitted

0 Not Drilled

1 Wells Drilling

0 Inactive12 Wells Producing

1778 Total Horizontal Permits

Data as of 1/17/15 Source: Ohio Department of Natural Resources

282 Wells Drilling

0 Plugged44 Total Horizontal Permits

Missed an Issue?Catch up at

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Page 57: February 2015 Gas & Oil Magazine-Ohio Edition

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Shelley Terry Associated Press

ASHTABULA TOWNSHIP, OH — A $200 million re-finery project first proposed in 2013 has been given new life by a Texas energy company.

Ashtabula Energy — a division of Velocys, whose U.S. office is based in Houston — wants to build the $200 million natural gas-to-liquids conversion plant on Lake Road and has applied for a permit from the Ohio Environmental Protection Agency.

The application, if approved by the Ohio EPA, would allow 1.6 million gallons of wastewater per day to be discharged into Lake Erie, which is expected to “have minimal impact on the water quality of the lake,” according to the agency.

The 2,800-barrel-per-day gas to liquids plant would be locat-ed on an 80-acre site that was once part of Ashtabula’s Union Carbide plant on the south side of Lake Road.

Two years ago, Pinto Energy said it would move forward with the project before Velocys bought Pinto in June 2013. Ve-locys is a British company that moved its operations to Hous-ton in 2013 to enter the U.S. market. Officials from Velocys did not return a call seeking comment Thursday.

Ashtabula Township Zoning Inspector Ryan Whitmire said he remembers when Pinto Energy announced the project.

“They said they wanted to complete it by 2016,” he said.State Rep. John Patterson, D-Jefferson, said he’s been wait-

ing for this project to move forward.“The construction phase will provide job opportunities and

then there will be more jobs when the plant is up and run-ning,” he said. “It puts us in the driver’s seat when it comes to diesel fuel.”

When the project was first announced in 2013, it was es-timated the plant would create 30 permanent jobs, 400 con-struction jobs and 100 indirect jobs. It is unclear what the cur-rent projections are.

Patterson said this company can produce diesel fuel that burns cleaner, costs less and creates less greenhouse gas pollu-tion than fuel derived from crude oil.

“The emissions are clean, they don’t smell and it doesn’t break down like gasoline,” he said.

Over the past few years, advances in technology have al-lowed companies to discover and develop supplies of natural gas within shale plays across the United States and Canada.

The Ashtabula plant would convert natural gas obtained from the Utica and Marcellus shale plays in Ohio and Penn-sylvania to diesel fuel, according to the Ohio EPA.

The process is complex. First a synthetic gas is made from pure oxygen and methane, the main component of natural gas, which is cleansed of sulfur, metals and other impurities, under intense pressure and heat. Then the synthetic gas is put in gi-ant reactors that make a synthetic crude. Finally that liquid is refined into one fuel or another.

The wastewaters would be sent through a treatment process prior to being discharged in the lake, and would discharge less than 10 percent of what Lake Erie can safely accept.

In September 2013, Brian Anderson, then-executive direc-tor of Growth Partnership for Ashtabula County, said the Growth Partnership had been working with these companies for two years, encouraging them to come to Ashtabula County where there is access to rail, land and water.

On Thursday, the current executive director, Don Iannone, said he could not comment.

The Ohio EPA will host a public hearing on the matter at 6 p.m. Thursday at Kent State University at Ashtabula, 3300 Lake Road W.

Ohio EPA will consider the technical, economic, social and environmental aspects of the project before deciding to issue or deny the final permit.

The public can submit written comments through Jan. 29 to [email protected] or Ohio EPA, Division of Surface Water, Permits Processing Unit, P.O. Box 1049, Co-lumbus, OH 43216-1049. Include ID # 3IN00387 in all corre-spondence.

For more information, contact the Ohio EPA at (614) 644-2001 or (330) 963-1200.

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Page 58: February 2015 Gas & Oil Magazine-Ohio Edition

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Dina Cappiello Associated Press

WASHINGTON (AP) — To build or not to build?That question is at the heart of the debate over the Keystone XL oil pipeline.

The answer, and the fate of the $8 billion project, depends on what happens in Congress, the courts, the White House and with TransCanada, the company planning to construct it.The odds of building seem to change almost daily.A lawsuit is tossed out, then some others filed. The Repub-lican-controlled Congress is poised to approve a bill autho-rizing construction, despite a White House promise of a veto. The State Department, after stalling its review because of a Nebraska court case, gives federal agencies a new deadline to weigh in.The 1,179-mile pipeline, first proposed in 2008, would carry an estimated 800,000 barrels of tar sands oil from Canada into the United States, connecting with existing pipelines leading to Gulf Coast refineries.For environmentalists, approval would prove catastrophic for the global climate and erode efforts by President Barack Obama to rein in heat-trapping emissions.For Republicans, who have made it their first order of busi-ness in the new Congress they control, the pipeline is critical to supplying the country with jobs and with oil from a friendly neighbor, rather than the Middle East.A look at the major players and where they stand:CONGRESSThe House this month passed legislation approving, for the 10th time, the pipeline’s construction. Identical legislation cleared an initial hurdle in the Senate, where a 63-32 vote was three more than the 60 required, but not enough to override a veto.The Senate is now considering dozens of amendments. On Wednesday, it overwhelmingly adopted, 98-1, a measure say-ing climate change is not a hoax and real, but Republicans re-fused to back two others that said human beings contributed to the problem. The scientific consensus is that burning fossil fuels is behind climate change.Republicans intend to offer other additions, including one that would say the Senate rejects international agreements to reduce heat-trapping pollution that would harm the U.S. economy.THE WHITE HOUSEThe White House explained the veto threat by saying it had to wait for the outcome of a Nebraska court case and the State Department review to play out.Obama’s remarks about the pipeline have gotten increas-ingly negative in recent months, emboldening environmental groups who have called on him to reject the pipeline outright. In his State of the Union address Tuesday night, Obama urged Congress to “set our sights higher than a single oil pipeline.”

THE COURTSOpponents in Nebraska reignited the legal fight last week, fil-ing two new suits over its proposed route.They came from seven landowners in Holt and York counties who have received written warnings that TransCanada plans to file eminent domain papers to gain access to their land.The landowners’ lawyer, Dave Domina, said TransCanada’s written warnings give the plaintiffs a clear legal basis to chal-lenge the project. That’s a key issue, because the Nebraska Su-preme Court tossed an earlier, similar suit, with three judges saying those plaintiffs failed to meet the threshold. The judges’ decision removed an obstacle to the project and was a major reason the White House threatened a veto.THE STATE DEPARTMENTThe department has given federal agencies until Feb. 2 to weigh in on whether the pipeline serves the national interest, a determination required for all border-crossing pipelines. That gives agencies specializing in the environment, commerce and other matters just weeks to file their opinions.The department didn’t set a timeline for when it would make its long-awaited judgment on whether the pipeline was in the U.S. national interest.THE COMPANYWith the state court removing a legal barrier, TransCanada has filed paperwork in nine counties to acquire access to the remaining land that’s needed to construct, operate and main-tain the pipeline.By law, TransCanada can use the courts to force landowners to sell access to their land. Company officials say they still need to acquire 12 percent of the total land easements from land-owners who have not yet reached a deal. Some holdouts have said they won’t negotiate.The route still faces legal challenges in Nebraska, where two new suits have been filed.

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Page 60: February 2015 Gas & Oil Magazine-Ohio Edition

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Jonathan Fahey AP Energy Writer

NEW YORK (AP) — For the first half of 2014 the oil market looked just as it had the year before — and the 2 years before that. Oil was over $100 and drivers in the U.S. were paying around $3.50 for gasoline.

Economies around the world seemed to have adjusted to higher priced oil and oil companies were using high profits and debt from willing lenders to scour the world for new reserves.

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There was no real hope or expectation that U.S. drivers would see a price at the pump that started with a $2 ever again.

Then, despite intense turmoil in the Middle East and an im-proving economy in the U.S. — things that have historically sent oil prices soaring — the price of oil went into a nosedive. In the second half of 2014, it dropped by half, to depths not seen since May of 2009 when the U.S. was in the Great Reces-sion. By December, some drivers even saw a price at the pump that started with a $1.

WHAT HAPPENEDOil reached a high for the year of $107 in late June after

Islamic State fighters in Iraq seemed poised to threaten Iraq’s southern oil fields and disrupt supplies from OPEC’s second largest exporter. Then, as Islamic State’s advance was halted, and Libya ramped up its production, oil began to drift lower.

Oil slipped further in the fall as signs emerged that global demand was weakening. The plunge accelerated in late No-vember when OPEC decided to keep producing the same amount of oil despite the low demand.

WHY IT HAPPENEDOil production in the U.S., Canada, Iraq and elsewhere had

been climbing for several years, but rising demand in China and other developing nations along with sporadic outages around the world kept supply and demand in balance.

The price of oil remained remarkably steady, near $100 a barrel, for nearly four years. But U.S. oil production surged far beyond what even the most optimistic forecasts predicted. By the end of 2014, U.S. drillers were producing 9 million bar-rels of oil per day, up 80 percent since 2008 and the most in 3 decades.

At the same time, growth in demand for oil began to weak-en. China, the biggest single source of oil demand growth in recent years, saw its economic expansion begin to slow. Japan slipped deeper into recession and Western Europe’s economic struggles continued. The U.S. economy — the world’s biggest oil consumer — grew nearly 4 percent over the summer, but efficiency measures and changing demographics in the U.S. are reducing demand for oil.

With rising global supplies and weak demand, prices dropped.

WHO WINSDrivers, shippers, airlines and other consumers of fuel

around the world are benefiting from sharply lower prices, and importing countries are benefiting from improving trade balances.

U.S. drivers are paying $2.38 a gallon for gasoline on aver-age, the lowest since May of 2009. A typical household will save $550 over the course of the next year because of lower prices.

Diesel and jet fuel prices have also plunged, helping boost the profits and share prices of airlines and shippers. The Dow Jones Transportation Index was up 23 percent through late December, compared with a 13 percent gain for the broader U.S. market.

WHO LOSESFor oil companies, oil-producing states, and oil-exporting

countries the oil price plunge has been excruciating.Oil companies generally continue to produce oil from wells

they’ve already drilled when prices fall. But sharply lower rev-enue forces them to cut spending on new exploration projects, makes it harder for them to raise money, and worries lenders and investors that they won’t be able to pay off debt. BP an-nounced last week efforts to trim $1 billion in spending next year. Analysts say that could result in thousands of job cuts.

States that rely on taxes from energy production such as Alaska, North Dakota, Oklahoma and Texas will see lower revenues and some have already trimmed budgets. Major oil exporters such as Iran, Iraq, Russia and Venezuela rely heav-ily on revenues from state-owned oil companies to run their governments and are struggling under major budget shortfalls.

WHAT’S NEXTThe past year is a reminder that predicting the price of oil

is all but impossible, but global supply and demand balances point to low prices sticking around.

OPEC, for example, expects the world to need 28.9 million barrels of its oil per day next year — yet production target is 30 million barrels per day. More oil on the market than con-sumers demand is a recipe for low prices.

A weak global economy would reduce demand still further, and create an even bigger oversupply of oil. An improving global economy — perhaps helped by the strengthening U.S. economy — could push demand higher, and sop up some of the excess supply of oil.

And lower prices will force investor-owned drillers to cut spending to protect profits, which will eventually reduce out-put. OPEC also could decide to trim production, either offi-cially or unofficially, to prevent further price declines.

Jonathan Fahey can be reached at http://twitter.com/Jona-thanFahey .

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Page 62: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 63: February 2015 Gas & Oil Magazine-Ohio Edition

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WHEELING, W.VA -- Gastar Exploration is among several companies cutting their drilling forecasts for this year, a sign that lower natural gas and oil

prices are starting to hit home in the Marcellus and Utica Shale region.

The spot price of natural gas is nearing $3 per thousand cu-bic feet, the lowest it’s been since it fell below $3 per Mcf in mid-2012.

The reason is simple: there’s just too much natural gas.Consider this: in December 2004, the average daily produc-

tion of dry natural gas in the United States -- the product used in home heating sources -- stood at about 2.8 billion cubic feet. In December 2014, production had swelled to more than 39 billion cubic feet per day, according to the U.S Energy Infor-mation Administration.

There’s also more oil, which has led the price per barrel to fall to about $48. That is less than half the $100 per barrel price in July -- and is down from about $80 just two months ago. Natural gas liquids, such as ethane, propane and butane, are also in abuncance, leading to lower prices.

With prices down and supply up, the local region’s drilling boom will suffer.

“We have a glut of oil, a glut of natural gas liquids, and a glut of natural gas,”

R. Dennis Xander, past president of the Independent Oil and Gas Association of West Virginia, said. “It’s really just supply and demand.”

Tim Carr, Marshall Miller professor of Energy at West Vir-ginia University, said it’s likely going to take a mindset change from oil- and gas-producing nations -- meaning a willingness to cut production -- for prices to increase.

He also noted that low prices could impact investment in the Marcellus and Utica region.

“I expect drilling will really slow down in shale,” he added. “I would think that investment capital for drilling is tough to attract at these prices.”

And he’s right. According to the U.S. Energy Information Administration, some Marcellus gas being produced today is selling for less than $1 per unit on the wholesale market. “Very substantial production gains over the past few years, es-pecially compared with last year, combined with constrained pipeline takeaway capacity have boosted the supply of natural gas within the region,” according to the EIA.

“We are slowing down our activity,” said company Vice President and Chief Operating Office Mike McCown. “The NYMEX price is around $3. We get even less than that for our gas because there is such a glut of gas here.”

PDC Energy is eliminating its funding for Ohio drilling al-together this year. Oil and natural gas giant ConocoPhillips, meanwhile, slashed its drilling budget by 20 percent for 2015, emphasizing that it will defer spending in North American shale plays.

“We are setting our 2015 capital budget at a level that we believe is prudent given the current environment,” said Cono-coPhillips Chairman and CEO Ryan Lance.

McCown said more processing and pipeline infrastructure are needed to be able to transport Marcellus and Utica gas to market.

At least four major pipeline projects to do just that are in the works, but are not yet complete: the Atlantic Coast Pipe-line, the Rover Pipeline, the Leach XPress and the Mountain Valley Pipeline.

“You are going to see a lot of activity in the areas where that Atlantic Coast Pipeline is going,” Xander said regarding the project that would ship 1.5 billion cubic feet of Marcellus and Utica gas per day for use in North Carolina.

Not all companies are cutting back. XTO Energy spokes-woman Suann Guthrie said the firm, which is a subsidiary of oil and natural gas giant Exxon Mobil, should continue its plans in Ohio.

“Exxon Mobil is uniquely positioned to invest in new energy supplies throughout the business cycle. Our capital spending plans are unaffected by the recent reduction in oil prices. We use a range of pricing to evaluate our investments,” she said.

Xander said when he started a career in the oil and natural gas industry 40 years ago, a barrel of oil sold for about $5. That price jumped nearly eight-fold to $38.50 by 1980.

“There are natural fluctuations in the market. Things are go-ing to go up and down,” he said. “The good thing is that cheap energy drives the economy. Everything you buy comes on a truck. For the average ‘Joe,’ these low prices are a good thing.”

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Page 64: February 2015 Gas & Oil Magazine-Ohio Edition

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Christian Zeigler Director of API Ohio

Standing before a backdrop of pipeline sections in Cush-ing, Okla., President Obama pledged to expedite ap-proval of the southern leg of the Keystone XL pipeline

because “we’re actually producing so much oil in places like North Dakota and Colorado that we don’t have enough pipe-line capacity to transport it all where it needs to go.” Allevi-ating the “bottleneck” in Cushing is important, the president stated, because “we would be able to increase our oil supplies at a time when they’re needed as much as possible.”

That was three years ago, and the southern section of the Keystone XL pipeline is now fully operational. Transporting 700,000 barrels of oil per day from the storage hub in Cush-ing to Gulf Coast refineries, Keystone’s southern leg is just one part of the 184,644 miles of liquid pipeline in the United States that transport crude oil and petroleum products with a 99.999 percent safety rate.

The northern portion of Keystone XL would add one more link to that system — a vital link that would transport 830,000 barrels per day from Canada, North Dakota and Montana. While Keystone’s southern section was quickly approved and built in two years, the northern half has been under review for six years simply because it crosses an international border and requires State Department approval. That’s 76 months com-pared to the typical approval process for cross-border pipe-line projects, which takes 18 to 24 months. Five thorough State Department assessments have determined repeatedly that the pipeline is safe and would have no significant climate impact. As the State Department report stated, cumulative green-house gas impacts connected to KXL would not “constitute a substantive contribution to the U.S. or global emissions.”

By dragging its feet on Keystone XL, the Obama adminis-tration is impeding much-needed job creation for America’s construction sector. According to the State Department, building Keystone XL will create more than 42,000 jobs and put about $2 billion in workers’ pockets during the two-year construction period. Those construction workers will need materials and supplies, food and lodging, goods and services

-- which translates to a $3.1 billion boost for large manufac-turers, small supply firms and service industry businesses. Eco-nomic activity generated by pipeline construction will support jobs in multiple states, including Ohio.

At least 2,400 American companies in 49 states are already involved in Canada’s oil sands development, and expanding our trade relationship with our top trading partner promises long-term economic benefits.

In addition to being a shovel-ready project guaranteed to generate significant job growth and economic stimulus, the pipeline is a crucial leap forward for energy security. With the full Keystone XL, our crude imports from Canada could reach 4 million barrels a day by 2030, which is twice what we import from the Persian Gulf. We’re on the verge of the abil-ity to supply 100 percent of our liquid fuel needs from stable North American sources, and Keystone XL will help us get there within 10 years.

Polls show the American people support Keystone XL by nearly a 3 to 1 margin, and a number of President Obama’s former energy and national security advisers favor approval.

Promoting Keystone XL’s southern leg three years ago, President Obama stated, “I’m directing my administration to cut through the red tape, break through the bureaucratic hur-dles, and make this project a priority.” With the same words, the president can approve the completion of Keystone XL and put thousands of construction workers back to work. Biparti-san majorities in the House and Senate support the pipeline, and legislation will soon be headed to the president’s desk. He should heed his own words, and the findings of his State De-partment, and stop blocking the Keystone XL pipeline.

The Ohio Petroleum Council has a new name. It is now American Petroleum Institute (API) Ohio, according to Crain’s Cleveland Business and the Marcellus Drilling News.

The council was founded in 1956, but it has always been part of the powerful API, the national drilling trade group.

API Ohio is headed by Christian Zeigler, who assumed the post last March.

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Page 65: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 66: February 2015 Gas & Oil Magazine-Ohio Edition

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Frank McClure Attorney

This month I thought I would go back to review some important information about asset protection in general and concern-

ing oil and gas interests specifically. Many people are discovering they have wealth under their feet that they never expected. While this is a wonderful thing, these assets need to be protected and secured for you, your family and your loved ones, just like all of your other assets. But how do you do this.

You can do that, by using one of the many different asset protection options that are available. These options can help you maintain control over your mineral rights while prevent-ing them from being considered as a personal asset that could be tapped if you would end up in a civil lawsuit.

You have worked hard as a steward of your land. You de-serve to reap the benefit of its wealth above and below ground. Make sure you are able to keep as much of that wealth as is possible for yourself and your heirs.

First of all what is asset protection anyway?Asset protection is planning designed to shield your assets

from the claims of creditors. You may be thinking, but I don’t have any creditors. That is the best time to do asset protection planning, when you have no creditors breathing down your neck! Also creditors take many forms and arise in many dif-ferent ways and from many different situations. The creditor most people think of is the one who arises from an involve-ment in an auto accident with you and the accident is your fault. You may say but I have insurance. The problem is that the damages you caused could be valued at more than your insurance coverage. There are many other possible creditors looming in your future from an ex-spouse (divorce), to the government, and every creditor in between. What effective asset protection planning will do is make the creditors’ access to your assets more difficult to accomplish.

The goal of asset protection is not to make you “bulletproof” from creditor attack, but rather to make it much more dif-ficult and expensive for the potential creditor to gain control of your assets. In other words, if a creditor (an example be-ing a person who was involved in an auto accident with you), obtains a judgment against you, and attempts to take control of your assets to pay off his claim against you, effective asset protection is designed to put you and the creditor on a more equal footing and to either stop the creditor in his

tracks or to, at a minimum, allow for negotiations to settle the amount owed at a lower level. If the creditor and his attorney know that it may take months or even years, to collect their claim and that the costs to the creditor will be substantial, the creditor may settle for a lower amount or the amount of the insurance alone, in satisfaction of the claim.

The best way to think about this situation is to try and think of your assets as a treasure you wish to protect. What might you do with your treasure? You might but it into a chest for safe keeping. Then you might put a lock on the chest. Then you might put the chest into a vault. Then you might build a castle around your vault. Then you might put a moat around the castle. Hopefully, this will give you a great picture in your mind as to what asset protection planning is. All we are do-ing is adding addition barriers and protections to protect your treasure (your assets). Each level is another obstacle which the creditor must find a way to get through to get to your treasure. By using proven, simple techniques and strategies you can create different levels of protection for your assets. It may still be possible for a very determined creditor with very “deep pockets” to get though all the obstacles you have placed in their path, but the odds of success for the creditor get weaker with each new obstacle in front of them.

Hopefully, this has given you some insight into asset pro-tection that you did not realize before. One the first things that seems to be asked after this discussion is completed, is why I would be concerned with this? One of the tenants of estate planning is distributing your assets to your loved ones. This may be money, real estate, and personal property that is important to you. Also, what if I told you that you could give these treasures loved ones and have them protected from your loved ones creditors and predators, including the in-law that after your death becomes the outlaw. This can be done through the use of a lifetime protective trust for your loved ones. This is something you should definitely talk to you es-tate planning attorney about.

If any of the above has hit a cord of interest with you, you should be talking with an attorney who concentrates in the area of estate planning, about asset protection and all your estate planning needs. If you are interested in more information about estate and asset protection planning, please go to our website at www.fmcclurelaw.com.

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Page 67: February 2015 Gas & Oil Magazine-Ohio Edition

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A new poll released by Honeywell finds an over-whelming majority of Americans agree economic growth in the United States is being driven by the

development of natural gas. Accordingly, the poll also finds majority of Americans supporting the development of addi-tional of infrastructure in order to expand the use of natural gas in the country.

Conducted by Ipsos Public Affairs for Honeywell’s UOP business, the poll surveyed more than 2,000 adults. Honeywell UOP supplies technology and equipment to natural gas pro-ducers.

A “supermajority” of 75% believes natural gas exploration and development is providing economic resurgence in the na-tion, specifically in sectors including manufacturing, according to the survey. 56% of respondents supported expanded de-velopment of infrastructure, including processing facilities to clean natural gas and transportation pipelines to bring that gas to consumers.

“The survey results demonstrate that most people recog-nize the importance of natural gas to the U.S. economy and support investment needed to expand its use,” said Rebecca Liebert, senior vice president and general manager of UOP’s Gas Processing and Hydrogen business. “We continue to see robust demand for our technology both here in the U.S. and globally as natural gas becomes a greater solution to energy and other needs.”

ADDITIONAL HIGHLIGHTS FROM THE SURVEY:• When asked about the two most appealing reasons to

use natural gas, respondents most frequently said that it reduces energy dependence on other countries (48 per-cent), while more than one-third (35 percent) agreed that it costs less than other sources of energy fuels. Nearly one-third (30 percent) said it is better for the environment than other energy fuels. Almost one quar-ter (23 percent) said it is more abundant and accessible

than other fuels, and nearly one-fifth (19 percent) said creates jobs and powers economic growth.

• Nearly 6 in 10 (57 percent) of respondents said that natural gas is the most cost-effective way to heat homes, eclipsing electricity (20 percent), wood stoves (19 per-cent) and fuel oil (3 percent).

• Across all categories, interest in using natural gas out-paces current usage. A majority of adults report being very interested or somewhat interested in natural gas for either heating the home (63 percent) or for cook-ing (58 percent). Nearly half (46 percent) report interest in acquiring a natural gas-powered clothes dryer, while more than one-third indicate interest in natural gas for a BBQ hook-up (40 percent) or to power a car or vehicle (36 percent). The greatest interest in new uses for natu-ral gas comes from people who already use it.

• Currently, 6 in 10 adults report they use natural gas for at least one household task, with home heating the most common at 49 percent. Nearly 4 in 10 (37 percent) re-port using natural gas for cooking, with either a stove or oven. One-fourth (24 percent) report using natural gas for a clothes dryer, and 1 in 10 (11 percent) use it as barbecue hook-up.

With an influx of industry related jobs, capital investment and tax revenues generated from the continued development of shale formations across the Appalachian Basin – and in de-veloping areas across the country – the results of the poll are encouraging to industry advocates.

“Americans understand the benefits of natural gas and sup-port greater access to this clean and abundant domestic re-source,” said Erica Bowman, vice president of research and policy analysis for America’s Natural Gas Alliance. “It’s en-couraging to see that people by and large know that natural gas offers intrinsic environmental and economic benefits,”

4See graph on next page.

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Page 69: February 2015 Gas & Oil Magazine-Ohio Edition

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Page 70: February 2015 Gas & Oil Magazine-Ohio Edition

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TWINSBURG, OH -- Zinkan Enterprises, a North-east Ohio company since 1981, has released a line of WellREADY™ biocides, friction reducers and pipe-

line/well pipe scale inhibitors to be used by the oil and gas in-dustry during every phase of the hydraulic fracturing process.

Throughout its history, Zinkan Enterprises has manufac-tured chemicals for use in water treatment, coal mining, and other industrial and commercial endeavors. Headquartered in Twinsburg, Zinkan has manufacturing and distribution loca-tions across the United States as well as in Europe and China.

Biocides are sophisticated antiseptic solutions that kill bac-teria in the water used during the fracturing process. Jerry Willnecker, Market Segments manager for Zinkan, explained, “When you pump the water and sand far down into the earth, you are trying to create pressure fractures that allow the re-lease of natural gas held in the shale. The conditions a mile or more down into the earth are ‘anaerobic’ – meaning there is no oxygen. However, there are bacteria that can live in the earth in these conditions by feeding off minerals such as iron, nitrates, and sulfur as well as old organic material. Water pumped into the well environment can trigger these bacte-ria to multiply. Under certain conditions, many air-breathing (aerobic) bacteria can also become anaerobic, which means that even if no bacteria are in the wellbore beforehand, this proliferation of bacteria can be triggered by pumping in water

that contains these types of bacteria. These changeling bacte-ria may exist naturally in the lakes, streams, and ponds sup-plying the source water. If all these bacteria are allowed to thrive, detrimental effects can occur in the well and result in well souring. Adding the sand used to support the “fractures” also provides a large total surface area on which these bac-teria can grow. Such a newly contaminated well very rapidly loses productivity since the resultant slime and scales form a barrier to the free flow of the gas.”

Fortunately, Zinkan Enterprises has extensive experience in determining the biocides that work best for any particular well and collaborates with well operators to determine which of the company’s range of biocides will have the greatest effi-cacy. The conditions considered when choosing a biocide, are the mineral content in the water, the nature of the other fluids used in the fracturing process, the type of sand used, the depth of the well and the nature of the layers of rock or ground be-ing drilled through.

“Most companies doing the drilling understand their own needs,” Willnecker said, “but our process engineers consult closely with them. We also gather water samples at various times and from various locations at the well site to ensure the bacteria and well remain in a controlled condition. We are able to prescribe the right formulations for individual condi-tions. Some of the biocides are quick acting, while others are longer-acting.”

Nearly all of the biocide products supplied by Zinkan for downhole use are in liquid form and require no mixing or complex gas-to-liquid generating systems. They are ready for immediate on-site use by the well operator. WellREADY™ 006 VigorOX is an example Zinkan biocide that has been ap-

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Page 71: February 2015 Gas & Oil Magazine-Ohio Edition

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proved by the FDA and used for years in other industries for sterilization, such as in the meat processing industry. Unlike bleaches and many other biocides, properly applied, it fea-tures an extremely effective rapid-kill formulation that has the desirable “GREEN” environmental characteristics of very low persistence and no residual toxic byproducts.

Besides the biocides, Zinkan supplies other products that contribute to safe, efficient wells.

“We carry a line of friction reducing chemicals,” says Will-necker. “These help ensure the water and sand that fracture the well flow smoothly. The smoother the flow, the more ef-ficient the hydraulic pumps can work, and the less fuel need-ed to power them.” Another problem that can reduce the efficiency of the well’s production is the formation of scale. “Most of the water in Ohio naturally contains sulfates,” says Willnecker. “The sulfates combine with minerals in the earth such as barium or iron or calcium to create barium sulfate, iron sulfate, or calcium sulfate and other mineral scales. Scale can be a hard, insoluble mass that can plug up a well.”

Experience has shown that a 10 % or lower scale coating-plug can cause up to an 80% reduction in well productivity. Producers can ameliorate this type of problem by using the scale inhibitors Zinkan manufactures.

All of these products help to improve the integrity of the hydraulic fracturing process. Zinkan’s family of biocides, fric-

tion reducers and scale inhibitor products help a well to be more productive and also safer for the environment.

“The best practices used in the drilling process are continu-ally being updated and revised as we gain a better understand-ing of the fluids involved in that process,” says Willnecker. “We expect the oil and gas production in eastern Ohio to continue at least 50 or more years, and at Zinkan, we are constantly working to better understand the value propositions we need to offer: first, before the wells are drilled; then, at drilling and hydraulic fracturing; again, at day-one of production; and fi-nally, for the well’s entire life to keep these wells productive and safe.”

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Page 73: February 2015 Gas & Oil Magazine-Ohio Edition

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WASHINGTON – The American Petroleum In-stitute has announced the cre-

ation of a Midstream Department that will fo-cus on issues related to energy infrastructure and the transportation of oil and natural gas. Harry Pefanis, president and COO of Plains All American, will chair the committee made up of API member company representatives that will oversee the work of the Midstream Department.

“In order for America’s oil and natural gas renaissance to continue, we need a world class infrastructure system to deliver that energy to con-sumers,” said API President and CEO Jack Gerard. “Creating a division within our organization focused on midstream issues will enable the industry to address the critical issues around energy infrastructure.”

The Midstream Department will encompass API’s policy work on the transportation of oil and natural gas by pipelines, rail, ship and other methods. These areas were previously split between API’s Upstream and Downstream departments. Robin Rorick, who has nearly 20 years of experience in the oil and natural gas industry, will lead the department as Group Director of Mid-stream and Industry Operations.

“American families and businesses rely on oil and natural gas every day, and it takes a strong and diverse supply chain to meet America’s needs,” said Rorick. “Every method of transportation that we use has an impor-tant role to play in the safe, reliable and efficient movement of oil and natural gas from the wellhead to consumers.”

Rorick joined API in 1996 and for the last five years has worked as API’s Director of Marine and Security, with respon-sibility for maritime transportation issues and emergency response. A graduate of the College of William and Mary and then later Johns Hopkins University, Rorick lives with his family in Fairfax, Virginia.

API represents all segments of America’s oil and natural gas industry. Its more than 625 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy.

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Page 75: February 2015 Gas & Oil Magazine-Ohio Edition

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Joe Massaro Energy in Depth - PA

It’s been long known that in today’s world, physical and mental health is much more related to money and income than any-

thing else. This is largely because of our ability to treat disease and illness – given you have, or can afford health care. That’s why a recent study conducted in Pennsylvania showed that since the shale industry began developing in the Commonwealth, more Pennsylvanians have been able to af-ford quality healthcare thanks to the well-paying jobs provid-ed by the oil and gas industry.

The health study, which was released by the Center for Ru-ral Pennsylvania looked at the impact of Marcellus Shale de-velopment on public health in the northeast and southwest regions of Pennsylvania – Specifically: Bradford, Lycoming, Greene and Washington Counties. Overall the study found nothing definitive to link drilling with negative health impacts. However, as previously stated, the study found that more peo-ple had access to health insurance due to the higher paying jobs across the state, which positively impacted public health in the regions studied.

The study itself focused on trends, and then supplemented the quantitative data with information obtained from regional focus groups held with health, housing and human service pro-fessionals. One of the participants in the northeastern focus group explained how Marcellus shale development has led to more individuals in their community having health insurance:

“…They’ve been great for business. When you speak to our director of occupational health, he will tell you that they are very good payers, that they hold to their standards very

tightly, that initially one of the concerns about this developing industry in our areas was these horrendous trauma injuries, but they have not found that to be the case because safety is such a primary concern of the industry. …I was interviewing people within the health system before today and they said that there is a positive trickledown effect when it comes to our payer mix. With the natural gas industry developing and gain-ing a foothold here, people who were locally employed here and other industries, they are moving into higher paying jobs, which is opening up their old jobs, which typically—employer based health insurance. We’re seeing an improvement in our payer mix. As people then move into their jobs, it’s the shell game, but more people are gaining employer based healthcare as a result.”

Years of other research has also supported the link between employment and improved health. For example, the Robert Wood Johnson Foundation’s “Health Policy Snapshot” series recently showed that “a stable, well-paying job leads to better health.” It also noted that employment enables individuals to provide their families with “nutritious foods,” “quality child-care,” and “educational opportunities,” all of which help im-prove health. According to RWJF, laid-off workers are “54% more likely to have fair or poor health” than those who are employed.

Since the first successful well was drilled into the Marcellus shale a decade ago this industry has been a blessing to resi-dents of the Commonwealth and as more development takes place we’ll continue to see these benefits ripple through com-munities.

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Page 76: February 2015 Gas & Oil Magazine-Ohio Edition

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Rep. Mike Turzai, Speaker of the House, Pennsylvania

The ongoing impact of career-creating natural gas from the Marcellus and Utica Shale plays has had on Pennsylvania fam-

ilies can never be repeated enough.During some of Pennsylvania’s darkest economic days, the

natural gas industry brought more than 50,000 families depend-able paychecks through leasing their private property, resulting in what today brings more than $800 million annually to these residents.

Overall, nearly 240,000 Pennsylvanians are now working in or supporting shale development at incomes well above our state average while the industry supplies more than $2billion annu-ally in revenues to local and state government. The benefits to energy consumers, school districts and infrastructure are nearly immeasurable.

But Pennsylvania’s leaders would be remiss in stopping to admire what has already been done. To truly fuel a 21st cen-tury Pennsylvania that makes the Keystone State a destination for job creators and career seekers, both political and industry leaders must develop, articulate and push a shared vision for our future.

It starts by recognizing that more than double that many jobs and far greater revenue could be created by allowing gas compa-nies to continue to invest in the Marcellus and Utica plays here.

Ultimately, creating more jobs and contributing further to the budding Pennsylvania manufacturing renaissance doesn’t magi-cally happen in a vacuum. It requires the right policies are put in place, including a commitment from state government to allow the industry grow without fear of unique or punitive taxation and regulation.

Policies like the 2012 Pennsylvania Resource Manufacturing Tax Credit were created to help industries associated with our natural gas industry grow and create stable jobs and career op-portunities.

This program can help secure Shell’s planned ethane cracker plant in Beaver County, which has the potential to reindustrial-ize an entire region of the state by producing ethylene used for manufacturing a variety of products, including footwear, tires, diapers and detergent, and a wide variety of other goods.

To secure more job-creating programs like these, the Pennsyl-vania energy revolution must be extended directly throughout the entire state, especially the Philadelphia region.

Philadelphia’s unique and robust railway and port infrastruc-ture make it an ideal gateway to the world, factors not lost on the

North Dakota Bakken oil formation industry that are already using it as a main transit point.

With policies to allow renewed private investment in the Philadelphia region’s extensive railway network and aging infra-structure, there should be little doubt natural gas can help turn the region into a global energy hub.

Already in the works is Sunoco Limited’s pipeline that will fun-nel nearly 300,000 barrels per day of natural gas liquids (NGL) to Philadelphia’s Marcus Hook Industrial Complex. And that’s just the beginning.

From Beaver to Bradford and Pittsburgh to Philadelphia, a vision of extending Pennsylvania’s Marcellus and Utica Shale plays into the global economy will ensure Pennsylvanians every-where in the state benefit from our vast natural resources.

It is now up to state’s leaders to decide whether we will build upon that vision to fuel a 21st century Pennsylvania.

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Page 77: February 2015 Gas & Oil Magazine-Ohio Edition

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