Ohio Environmental CouncilClean Water Conference

08/06/201108/06/2011

Ohio Department of Natural Resources Shale DevelopmentShale Development

On Behalf of:O e a o

Director: David Mustine

Assistant Director: Scott Zody

Deputy Director/Acting Chief:Deputy Director/Acting Chief:

Mike Biddison

Presenter: Tom Tugend

State Budget Bill Changes

Oil and Gas program will become a stand alone division – will split off from DMRMalone division will split off from DMRM

Acknowledgement of the importance for

a direct focus on oil and gas regulation

in relation to the pending shalein relation to the pending shale

development

A Little History

Wells Drilled and When

Year Wells Drilled189 6141895 6147

1930 2134

2008 1087

2010 431

Our Legal Authority

Ohio Revised Code 1509 Ohio Revised Code 1509 Ohio Administrative Code 1501

Our marching ordersS t b d iSets our boundaries

RC 1509 effective in 1965 – MorrowCounty “oil boom”

Our Legal Authority Continued

From 1893 – 1965 the minimal regulations in place were primarily self enforced with p ythe focus on miner safety

Basis of the Oil and Gas LawsBasis of the Oil and Gas Laws and Rules

Conservation

Protection of the environment and

public health and safety

Basis of the Oil and Gas LawsBasis of the Oil and Gas Laws and Rules

Conservation Based Laws and Rules

For the effective development of Ohio’s oil and natural Gas resources to Prevent

WasteWaste

- Maximize Recoverable Resources -

SENATE BILL 165 – EFFECTIVE06/30/10 Cont.

Strengthened enforcementg Provided additional funding: For

operations and Orphan Well Programp p g Increased insurance requirements Provided for additional notifications:

Commencement of drilling, fracking, placement of conductor, surface andproduction casing {Provided for more opportunity for staff to oversee operations}

Shale Exploration

PA – Where is the MarcellusA ti itActivity

The PA Marcellus “Fairway”

Gold = Primary Area of Marcellus Drilling Activity [“The Fairway”]

PA – Where is the MarcellusActivity

Red = Marcellus

Marcellus Shale ActivityyPennsylvania

2011: 1,600 (projected)

2010: 1 454 Marcellus wells drilled2010: 1,454 Marcellus wells drilled

2009: 763 Marcellus wells drilled

2008: 195 Marcellus wells drilled

2004 R R d ill d th fi t2004: Range Resources drilled the first

horizontal shale well

Differences Between aDifferences Between a Horizontal Well and

Traditional Vertical WellTraditional Vertical Well

Everything is bigger – It takes longer

W ll it 3 5 1 2 Well site 3-5 acres vs. 1-2 acres

Shale rig is much largerg g

Associated equipment – more of it

Differences Between a Horizontal Well and

Traditional Vertical WellTraditional Vertical Well

One month/well to drill vs one weekOne month/well to drill vs. one week

6 or more wells can be drilled from one 6 or more wells can be drilled from one

well site pad or back to back

$5 million vs. $400,000 to drill

Possible Game Changer

The Utica Shale may contain significant The Utica Shale may contain significantquantities of natural gas liquids ( d t ) d il(condensate) and oil

If so and once proven, drilling activitycould increase quickly in Ohiocould increase quickly in Ohio

Hydraulic Fracturing Cont.Hydraulic Fracturing Cont.

Ohio Hydraulic Fracturing State Review January 2011 by:January 2011, by:

State Review of Oil and Natural GasRegulations, Inc (STRONGER)egu at o s, c (S O G )

Hydraulic Fracturing Cont.Hydraulic Fracturing Cont.

Eight officials (Industry, regulatory, i l) i d Ohi ’environmental) reviewed Ohio’s

hydraulic fracturing regulatory programy g g y p gand found:

Hydraulic Fracturing Cont.Hydraulic Fracturing Cont.

Ohio’s program is well managed, professional and meeting it’s programprofessional and meeting it s program objectives.

Protection of the Environment and Public Health and Safety

Key Factors: Permitting Permitting Well site construction Well construction ! Well control ! Fluid control ! Oversight Oversight

PARTNERSHIPS

ODNR/DMRM h t th ODNR/DMRM has more partners thanever in the past - this is good

OEPA, USACE, MWCD, Jobs and FamilyServices, Ohio Shale Coalition, OGEEP,OSU Cooperative Extension, Ohio FarmBureau PUCOBureau, PUCO………

Ohio Shale Wells Permitted/Drilled

Marcellus ShaleMarcellus Shale Horizontal permits issued 13 Horizontal wells drilled 5 Horizontal wells drilled 5Utica Shale Horizontal permits issued 26 Horizontal permits issued 26 Horizontal wells drilled 8

Total companies having permitted anddrilled hori ontal shale ells 8drilled horizontal shale wells 8

Who Are The Current Shale Players

Chesapeakep Ohio Buckeye Marquette Marquette Triad-Hunter

P té é Protégé Enervest Phillips Exploration

Who To Expect

Anadarko CNX Chevron Talisman Gulfport Gulfport Shell

Sierra Sierra HG Others

What To Expect

Past vs. Future – Visual Depiction

Billy Bob’sOilfield SecurityOilfield Security