June 2013 Gas & Oil Magazine - South

JUNE 2013 • www.ohiogo.com A FREE MONTHLY PUBLICATIONA FREE monthly PublicAtion

Ohio

octobER 2012 • www.ohiogo.com

Mark West builds new facility

Touring an injection well

A JudicialReview

Hazard TrainingHazard Training

Mark Grantonic, Mark West Control Center OperatorMark Grantonic, Mark West Control Center Operator

ODNR issues shale reportODNR issues shale report

Dix Communications - Gas & Oil June 2013 Edition 1www.OhioGO.com

GAS&OIL 1DIST

Quaker City (740) 679-2141Zanesville (740) 455-2141

St. Clairsville (740) 695-2141

1002591710148434

Gas & Oil June 2013 Edition - Dix Communications Southern Zone Edition2

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First responders trained on unique hazards Laurie Huffman / Dix Communications

Judges convene to talk about oil & gas cases Judie Perkowski / Dix Communications

State setting drilling standardsChristine L. Pratt / Dix Communications

Tour points out safety of injection wells Dave O’Brien / Dix Communications

CNG-powered vehicles saving money Judie Perkowski / Dix Communications

Understanding the ‘Pugh Clause’ Don Gadd / Landman

ODNR says Utica Shalenumbers strong

Cryogenic facility opening soon Michael Neilson / Dix Communications

Chesapeake, Exelon most friendly to veterans Laurie Huffman / Dix Communications

Ribbon cut for new oil and gas land labat Zane State College in Cambridge

Continued development revealing potential Norm Shade/ President, ACI Services

Bulldozer donated for training Jessica Denton / Dix Communications

Utica boom still in infancy Davis J. Wigham / Attorney

‘Historic era’ for Ohio oil production Mark Kovac / Dix Communications

Cash is key to future growth Davis Schallanberger / CPA

MWCD establishes guidelines for water sales Kimberly Lewis / Dix Communications

Table of Contents Andrew S. DixNorthern/ Southern Zone

[email protected]

G.C. Dix IISouthern Zone

[email protected]

David DixNorthern Zone

[email protected]

EXECUTIVE EDITORS

Ray BoothSouthern Zone

[email protected]

Rob TodorSouthern Zone

[email protected]

Lance WhiteNorthern Zone

LWhite@ dixcom.com

Roger DiPaoloNorthern Zone

[email protected]

Cathryn StanleySouthern Zone

[email protected]

Niki WolfeSouthern Zone

[email protected]

Judie PerkowskiSouthern Zone

[email protected]

Kimberly LewisNorthern Zone

[email protected]

Erica PetersonNorthern Zone

[email protected]

REGIONAL EDITORS

“Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio. Copyright 2013.

Kelsie Davis

LAYOUT DESIGNER

PUBLISHERS

GAS&OIL2INDEX


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What is this ‘well’ they just drilled? Ethan Vessels / Marietta Attorney

Alliance focusing on gas & oil development Judie Perkowski / Dix Communications

Keystone pipeline would create jobs Brian Hill/ State Representative

Gas/oil instructor retires Laurie Huffman / Dix Communications

Employee-owned business making its success story Judie Perkowski / Dix Communications

Barnesville council mulls ways to invest $7M Cathryn Stanley / Barnesville Bureau

‘Landmen’ say to insist on a professional

Exterran opens facility in Youngstown

Boom may be boon for students Sophie Kruse / Dix Communications

We go to work every day Babby Warren / Dix Communications

‘Exciting time’ in the gas & oil business Christine L. Pratt / Dix Communications

Natural Gas Vehicles partnership seminarJudie Perkowski / Dix Communications

A FREE monthly PublicAtion

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Kim BrenningSouthern Zone Sales

Cambridge, Ohio [email protected]

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Peggy MurgatroydSouthern Zone Sales

Barnesville and Newcomerstown, Ohio Offices

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Jeff KaplanSouthern Zone Sales

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Rhonda GeerNorthern Zone Sales

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Harry NewmanNorthern Zone Sales

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Janice WyattNational Major Accounts

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Jeff PezzanoVP Advertising Sales & Marketing

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Cover Photo: Michael Neilson/Dix CommunicationsMarc Grantonic, operator at the new MarkWest cryogenic gas processing facility in Cadiz.

JUNE 2013 • www.ohiogo.comA FREE MONTHLY PUBLICATIONA FREE monthly PublicAtion

Ohio


Mark West builds new facility

Touring an injection well

A JudicialReview

Hazard TrainingHazard Training

Mark Grantonic, Mark West

Control Center OperatorMark Grantonic, Mark West

Control Center Operator

ODNR issues shale reportODNR issues shale report

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First responders trained on unique

Review Photo/Kevin GraffDon McDonald, director of the Stark County Local Emergency Planning Commission, displays a PowerPoint slide show used in training first responders for safety in the gas and oil industry.

No one wants to see an emergency situation at a well site. And, while

safety is at a premium during the drilling and hydraulic fracturing process, there are new dangers on the scene with which first re-sponders in this part of the coun-try are not familiar.

For that reason, the Stark County Local Emergency Plan-ning Committee has put a training program together for firefighters

that can also be adapted to serve law enforcement, EMTs and public officials. The program, called “Response to Oil and Gas Well Incidents Including Horizontal Drilling and Hydraulic Fracturing,” was recently developed and has already been used to train more than 100 firefighters in the area, including those in Canton, Jackson Township, Massillon, Osnaburg Township, and Hartville. Efforts are being made now to bring the training to Alliance and Washington, Lexington and Marlboro townships as well.

“We teach how to handle the toxic or poisonous gases that could be emitted at the well sites,” said Don McDonald, direc-tor of the Stark County Local Emergency Planning Commission. “Some of these can put a person out of commission with only one whiff. They have to be monitored all the time. Also, wet gas is an extremely volatile product when it comes out of the ground, and we have explosives inside pipes sitting on the scene that are used in the underground fracturing process, which adds to the threat at the well sites. Firefighters may be on the scene for another problem to be addressed that is not related to the well at all, such as a diesel fuel fire or a fire in a mobile home used for an office. But, local first responders have to be trained to realize they cannot handle a situation like this by themselves. They will need to work with technical support groups to manage the scene. In Northeast Ohio, Boots ‘N Coots is the main resource. They are well control specialists and there are less than 100 of these people in the entire world. Boots ‘N Coots have been put on retainer by Chesapeake and the other oil and gas companies in the area. They also go all around the world to give advise to fire chiefs.”

In addition to these dangers, firefighters also have to have a

plan in place on how to obtain the amount of water that would be needed to mitigate a pressure blow out, which McDonald said can be anywhere from 3000 to 6000 gallons per minute.

“You will see a 90-foot gas well derrick swallowed in flames during a blowout,” McDonald explained.

“Massillon Fire Department Chief Tom Burgasser and I have been developing this program for over a year,” said McDonald, who is also a retired Jackson Township firefighter. “Because LEPC is a government agency, we are not bi-ased at all on the topic of horizontal drilling. It is simply a fact. There are nine wells in Stark County in

some part of the process of development. So, it’s here. And, because of that, certain training is needed to reduce the vul-nerability of the firefighters, EMT’s, law enforcement agen-cies, and all the public safety workers that are involved. We’ve programmed this training so it can be adapted to any of those venues.”

on unique

Laurie HuffmanDix Communications

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Judges convene to talk about oil and gas cases

Garrett Knott/Dix CommunicationsThe Guernsey County Common Pleas Court and Judge David Ellwood (kneeling) held host to 10 visiting judges, part of the Ohio Judicial Conference, for the Shale Oil and Gas Roundtable in Cambridge. Other judges were, second row, l to r, Judges Robert Reinbold (retired), John Solovan II (Belmont County), John Nau (Noble County), Edward Lane Jr. (Washington County), Edward O’Farrell (Tuscarawas County). Third row, l to r, Judges Dominick Olivito, Jr. (Carroll County), Scott Washam (Columbiana County), Linton Lewis, Jr. (retired), Milt Nuzum (Ohio Judicial College) and Mark Schweikert (Ohio Judicial Conference). Each judge discussed what cases they have had relating to shale oil and gas issues and talked about any new court practices or procedures developed for such cases.

Holding court under the auspices of the Ohio Judicial Conference

and hosted by the Guernsey County Common Pleas Court, Judge David A. Ellwood wel-comed 10 Common Pleas Court judges to the recent Shale Oil and Gas Roundtable meeting at the Guernsey Coun-ty Courthouse in Cambridge.

Ellwood initiated the round-table meeting after contacting

judges who preside over a county engaged in oil and gas activity, asking for input about the de-velopment of any new court practices initiated because of the expanding presence of the gas and oil industry in their com-munities.

Ellwood contacted Retired Judge Mark Schweikert, execu-tive director of the Ohio Judicial Conference, suggesting a roundtable meeting with the judges. Schweikert agreed and said, “It is sensible to begin a conversation and network to stay ahead of the issue.”

The roundtable meeting was May 10.“Judges are required to perform 24 hours of continuous le-

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gal education (over a specified period of time) relating to what judges do — either by the law or court cases — to share in-formation about how we are dealing with the demand of cases coming before the court,” said Ellwood. “We [Guernsey County] created a gas and oil case docket last year (July of 2012) because of the number of cases coming before the court. We currently have 37 cases relating to the oil and gas industry at some stage in the process.”

Because Ellwood instituted an ambitious Case Management Plan to expedite cases in a timely manner, the judges have re-ferred to his court docket as the “Rocket Docket.”

Continued on pg. 24

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State setting drilling standardsAlthough not fully in

place, the rules and regulations governing

shale development in Ohio are taking shape.

James Zehringer, director of the Ohio Department of Natural Resources, spoke at the annual meeting of the Eastern Ohio Development Alliance about how the state is working to set standards for drilling.

“Oil and gas can be prosper-ous, and not at the expense of the

environment,” he said. “The focus of the ODNR is to create regulations based on science, not emotion or politics.”

By watching what other states have done, both right and wrong, he said they’ve learned how to best approach the issue. Among the key lessons was the need to have regulations and inspectors and taxes in place early.

Pennsylvania was not ready, he said. “They did not have the inspectors with the right training in place.” Ohio now has more

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than 50 staff people employed within the oil and gas division of ODNR.

Currently more than 605 permits have been granted for hori-zontal drilling, and nearly 300 wells have been drilled.

It is anticipated a total of 750 will be drilled by year’s end, said Zehringer, who said another 1,500 are expected in 2014 and 2,000-2,050 more in 2015.

“This industry can be dangerous when it’s not properly reg-ulated. That’s why it’s important to have the right people on ground with the right regulations in place,” he said.

Already inspectors the department has been called to in-vestigate some complaints of non-compliance and was quick to permanently revoke the permit of a company found to be

“Oil and gas can be prosperous, and not at the expense of the environment.”

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Injection wells that take the waste products of oil and gas drilling and pump it into the

earth at depths of several thousand are a safe, effective and well-regulated means of disposing of such material, according to an Ohio oil and gas trade association and well owners.

To give the media a better handle on the matter of injection wells, members of the Ohio Oil and Gas Association recently gave a guided tour of a well in Windham Township, Portage County.

Penny Seipel, vice president of public affairs for OOGA, said the group want to take the “confusion and mysticism” out of injection wells, which she said are stringently regulated by state officials.

Well owner/operator David Ballentine owns six operational injection wells and has a permit for a seventh through his com-pany, B&B Oilfield Service, Inc. He also transports drilling waste under the name Northeast Ohio Oilfield Service Inc.

In business for the past 25 years, he said he employs up to 22 people at any one time — including his wife, one of his two daughters and his son — at his shop on S.R. 88 in Portage County’s Freedom Township.

Ballentine’s well, located on privately-owned property on S.R. 303, is a former oil and gas well that descends to a depth of 3,900 feet. It ceased production in 1985 and was plugged in 1986, he said. Earthen dams prevent spillage from large brown holding tanks hooked to pumps that inject the wastewater deep into the earth. Automatic “murphy” switches measure fluid levels and pressure and can shut down the injection process if

Tour points out safety of injection wells

David Hill, vice president of the Ohio Oil and Gas Association, stands in front of holding tanks serving a Class II oil and gas wastewater injection well on S.R. 303 in Windham Township on May 8.

Well owner/operator David Ballentine describes the process by which his fleet of wastewater trucks delivers brine and unloads it into the holding tanks in the background during a tour of his well site on S.R. 303 in Windham Township, Portage County, on May 8.

a problem arises, Ballentine said.Leased from the landowners on a yearly basis, the well is

monitored electronically for changes in pressure that could signal a problem. Technology contained in an app on Ballen-tine’s smartphone and a website allows him to check on all his wells anytime he wants, he said.

His trucks are limited to 10 trips per day to the well, only between the hours of 7 a.m. and 5 p.m., and on average deposit 250 barrels of waste per day into the well. No waste produced outside of Ohio is injected into the well, Ballentine said, and the only waste injected is brine from the drilling process — basically, salt water.

David Hill, OOGA vice president and the owner of several injection wells in Guernsey County, said pressure monitoring allows well owners and Ohio Department of Natural Resourc-es officials to monitor for signs of danger in Ohio’s 179 injec-tion wells. A geologist and member of OOGA’s Underground Injection Control work group, Hill said it is nearly impossible for such waste water to rise close enough to the surface to mix with the water table or surface soil.

ODNR regulators utilize a hydrostatic pressure formula to determine if a well is near capacity, Hill said. If a well does ex-ceed the pre-determined pressure, low or high, it is automati-cally shut down, he said. While regulators are required to visit every well at least once every eight or nine weeks, “in practice they are there every week,” Hill said.

State regulators can revoke a permit anytime for cause, he said, and also won’t let drillers drill in areas prone to seismic activity. He called a series of earthquakes in the Youngstown area in 2011 that were linked by the state to a series of injec-tion wells in the area “an unfortunate incident.”

“As a geologist, I don’t think I could replicate those condi-tions,” Hill said, adding that “there is not enough hydraulic

Dave O’BrienDix Communications

GAS&OIL10


Continued on pg. 12

horsepower on the face of the Earth to create a crack” that could force wastewater thousands of feet up the well and through six layers of steel tubing and concrete surrounding the well head at the surface. Pressure sensors would also give well operators no-tice before that happened, he said.

More than 11 million barrels of waste were injected into the ground in Ohio in 2011, according to Hill. That’s less than one-half of one percent of all the water injected into the ground in the United States, he said.

“There is not one instance where a Class II injection well has contaminated groundwater,” Hill said.

Hill said Ohio laws on Class II injection wells like the Wind-

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The head of a Class II injection well on private property off S.R. 303 in Windham Township, Portage County. For safety purposes, the well has wireless connectivity that allows the owner/operator to monitor it, and pressure sensors to detect subtle shifts in pressure that could signal problems. It accepts an average of 250 barrels of waste brine per day, according to owner/operator David Ballentine.

“SAFETY OF INJECTION WELLS” from pg. 11

ham Township well are “at least as stringent” as federal en-vironmental protection laws. The 144,000 Class II injection wells in the United States are safe enough to be located close to agricultural and residential property, and may only accept waste from oil and gas production. That means high volumes of water, with low toxicity, he said.

Hill said he believes some of the fear and unease about injec-tion wells among the public comes from a lack of information. He said a reading of Ohio Senate Bill 315, passed in 2012, “would demystify a lot of the process” for the public.

“Often times, it’s easy to fear the unknown,” he said.

Additional sources on Class II injection wells: U.S. EPA website, http://water.epa.gov/type/groundwater/uic/class2/

Additional information on Ohio Senate Bill 315: Ohio Department of Natural Resources website, http://oilandgas.ohiodnr.gov/laws-regula-tions/senate-bill-315

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hicles has been used by other countries for decades, and maybe longer, there are signs that businesses in the U.S. are now doing more than just giving the concept serious thought.

To help attendees at the Guernsey Energy Coaltion understand the transition process, the importance and the benefits of CNG, Cambridge Area Chamber of Commerce President Jo Sexton in-troduced Dave Mrowzinski, project manager of IGS Energy CNG Services, and guest facilitator of the Thursday morning meeting at the Southgate Hotel.

Mrowzinski presented an overview of IGS Energy and asked the audience, “Why is this [compressed natural gas] not prevalent in our lives? It is clean, cheap and we have an abundance of it right here in Ohio.”

What is CNG? According to IGS’s website, CNG is natural gas that is compressed to high pressures so large volumes can be stored in small places, such as a vehicles’ fuel tank. CNG has been used as


a vehicle fuel for over 50 years for limited purposes. General Motors, Ford and Honda have been in the forefront of produc-ing CNG powered vehicles. There are also conversion kits for gasoline and diesel cars and trucks.

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Recent improvements in CNG technology coupled with the rise in gasoline prices is quickly making CNG a viable option for mainstream vehicles,” he said. “It is also very affordable, about $2 per Gas Gallon Equivalent; it is abundant, we are standing on a huge reserve; and it is cleaner than gasoline —we don’t need emission controls.”

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CNG-powered vehicles saving money for trucking companies

a vehicle fuel for over 50 years for limited purposes. General Motors, Ford and Honda have been in the forefront of produc-ing CNG powered vehicles. There are also conversion kits for gasoline and diesel cars and trucks.

“IGS has more than 20 years of experience in the natural gas industry to provide CNG vehicle refueling solutions.

Recent improvements in CNG technology coupled with the rise in gasoline prices is quickly making CNG a viable option for mainstream vehicles,” he said. “It is also very affordable, about $2 per Gas Gallon Equivalent; it is abundant, we are standing on a huge reserve; and it is cleaner than gasoline —we don’t need emission controls.”

The downside to CNG fueled vehicles is the cost for the ve-hicle and the high dollar investment in constructing fueling sta-tions. The price for an original equipment personal vehicle like Honda is an additional $6,000; for a light truck, an additional $9,000 to $12,000; for heavy, large trucks the cost escalates to $15,000 per truck. Cost for original equipment and conver-sion kits are determined by the size of the tank and the casing material.

“It is the medium and heavy duty trucks that will spur de-velopment throughout the company ... Fleets are driving the market,” said Mrowzinski.

But, according to three panel members who are heavily in-volved in the CNG industry and commented on their experi-ences, the switch to CNG to fuel their fleets of trucks is well worth the investment.

Chuck Diehl, manager of a 400-plus vehicle fleet for Smith Dairy in Orrville, said “we need to change the public’s percep-tion of CNG. We have to look at it as an advanced fuel, not an alternative fuel ... We need to move on, we have a great opportunity to change our [the public’s] attitude about CNG.”

Smith Dairy Trucking’s 2012 CNG project led to one of Ohio’s first public CNG heavy truck fuel sites and Smith’s de-ployment of their first CNG tractors.

“Because of the technology, that seems to be changing every month, the company plans to be diesel independent by 2030,” said Diehl. “We built our own fuel site without any govern-ment funding. Come on out ... talk to our people and see for yourself.”

Keith Walker of Kimble Recycling & Disposal (the former Ace Disposal), said in 2011 Kimble built their first private CNG fueling station and purchased 36 residential front-lead refuse trucks, 100 percent powered by CNG. In 2012, they re-placed almost 400,000 gallons of diesel fuel with natural gas.

“We have 70 trucks, which is 30 percent of our fleet, pow-ered 100 percent by CNG,” he said. We also have plans to add

CNG fueling infrastructure to switch our entire fleet. And, we also did not apply for any government funding, because we didn’t want to wait, we wanted to get started building our fuel site immedi-ately,” said Walker.

If you need help or information about developing vehicle and/or fuel station projects, Andrew Conley, director of the Clean Fuels Ohio Program, said he has worked with hundreds of fleets across Ohio to develop fleet emissions and efficiency analyses, draft proposals for funding and created educational programs for work-shops, fuel and technology training and resources.

“CFO’s Ohio Green Fleets program engages hundreds of fleets in workshops, meeting and seminars. Fifty-five certified Ohio Green

Continued on pg. 24

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Understanding the ‘Pugh Clause’

Though I tend to write about a lot of issues revolving around con-

tracts in the oil and gas busi-ness, I don’t think any issue has come up more than the Pugh Clause. I have taken the liberty to cite directly from an oil and gas index and a lease, as this is an important topic not only to those who drill wells but to the landowner as well.

As I have stated before, it is very important to negotiate what

you want in your lease, and most importantly, get approvals where you can. A recent example had me meeting with a very nice landowner in Akron to just chat about her existing lease. The company was about to drill their land in a unit (units usually comprise more than one landowner and leases). Their original lease was around 300 acres, but what they contributed to the unit

Don GaddLandman

was only 3 acres or there about.Without a Pugh Clause their lease would be totally Held By

Production (a term referring to the lease now being held by a well and in production). They would no longer be able to lease the property or receive any additional rental monies on the land as long as it was HBP.

Of course the landowner was upset as they were some of the first to lease and had not received the huge paid up amounts being paid now. They only had a little over a year to go and their Primary Term (the amount of time negotiated to hold the lease unless and until the lease was drilled) would run out.

Instead, they will be a very small part of a unit while having a rather large tract. Doesn’t seem fair, but it is a reality. I can’t blame the company as it is in its best interest to drill and in-clude as many leases as possible to limit the amount of bonus or rental due in the future or lose a lease right in the middle of where it may be drilling a lot of wells. It’s business and you don’t stay in business too long letting things slip away. Tough terms for the landowner to hear, but just the same, that’s why I keep reminding everyone to negotiate what you want

before you sign. Sad thing in this, the landowner’s elderly par-ents and aunt signed the lease. Looked like big money at time. This landowner basically inherited a lease that wasn’t in their best interest. However, she is a bright woman and has educated herself quite well on the pitfalls of leasing. I think she appreci-ated my frank and honest assessment of here lease and tried to implement some of my suggestions even though the company rejected them later.

As for me, I like the Pugh Clause and have seen it in many forms over the years. I will point out some of the differences in the next article. Just remember, look for it, talk about it, and if you have a lot of land at stake, insist upon it. Both the land-owner and company will be better off for it.

• PUGH CLAUSE: A clause added to an Oil Lease to limit holding non-producing lands or depths beyond primary term of lease. Also called a Freestone rider.

• PRIMARY TERM: The initial period in an Oil and Gas Lease to develop the property.

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before you sign. Sad thing in this, the landowner’s elderly par-ents and aunt signed the lease. Looked like big money at time. This landowner basically inherited a lease that wasn’t in their best interest. However, she is a bright woman and has educated herself quite well on the pitfalls of leasing. I think she appreci-ated my frank and honest assessment of here lease and tried to implement some of my suggestions even though the company rejected them later.

As for me, I like the Pugh Clause and have seen it in many forms over the years. I will point out some of the differences in the next article. Just remember, look for it, talk about it, and if you have a lot of land at stake, insist upon it. Both the land-owner and company will be better off for it.

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ODNR says Utica Shale numbers strong

The Ohio Department of Natural Resources (ODNR) said Utica shale oil and gas production has increased 93 percent for oil and 80 percent for gas since 2011. Ad-

ditionally, producing wells have gone from two to 87. At this rate of growth, ODNR expects Utica shale well production to exceed the yearly output of all of Ohio’s nearly 51,000 existing conventional wells by as early as 2015. Utica wells represent less than one percent of all producing oil and gas wells in Ohio.

“The production from these initial Utica wells make a compelling state-ment about the staggering amount of oil and gas resources Ohio’s shale ap-pears to contain,” said ODNR Direc-tor James Zehringer. “As more data is collected and analyzed, ODNR will continue to report it and continue its careful regulation of this rapidly growing and economically vital in-dustry.”

When comparing horizontal wells to conventional wells, the 2012 Utica shale production averages indicate:

A single Utica well produced as much oil as 312 conven-tional wells

A single Utica well produced as much natural gas as 448

conventional wells. Additionally, during 2012, these 87 Utica wells produced:• 12 percent of Ohio’s total oil production• 16 percent of Ohio’s total gas production for 2012. One of ODNR’s primary focuses is to protect Ohio’s citizens

and natural resources through responsible regulation of the oil and gas industry while still encouraging industry growth. The Ohio General Assembly is considering legislation that would

require well owners to report produc-tion quarterly as opposed to annual-ly. Ohio law currently requires well owners to submit yearly production results by March 31. More frequent reporting will allow ODNR to better understand Ohio’s shale play, and therefore, provide even more effec-tive and comprehensive regulation of this growing industry.

Production results for all Utica wells are available in spread-sheet form at: http://oilandgas.ohiodnr.gov/production/.

The goal of the ODNR is to ensure a balance between wise use and protection of natural resources for the benefit of all. Visit the ODNR website at ohiodnr.gov.

“The production from these initial Utica wells make a compelling statement about the staggering amount of oil and gas resources Ohio’s shale appears to contain.”

- James Zehringer

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Michael Neilson/The Daily Jeffersonian/www.buyjeffphotos.comMarkWest, already the largest processor and fractionator of natural gas in the Appalachian Basin, is building two new cryogenic processing facilities in Cadiz in Harrison County. Both are scheduled to begin operations in 2013. A smaller, temporary facility has been in operation since the fall of 2012. The Cadiz complex will also include a de-ethanization facility where ethane will be removed from the gas stream and delivered into the new ATEX Express ethane pipeline that will run 1,230 miles from Pennsylvania to the Gulf Coast. The propane and heavier natural gas liquids will then flow via pipeline to a new Harrison County fractionation plant for further separation. Below, Marc Grantonic, operator at the new MarkWest cryogenic gas processing facility in Cadiz, works inside the control center for the plant. The plant, which purifies the gas of any acid gases, is expected to begin operations next week. It employs only Ohio workers.

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Chesapeake, Exelon among the 2013 companies most friendly to veterans

Military Times EDGE has announced its staff sur-veyed more than 1,000

major companies and top govern-ment contractors with a detailed questionnaire about their recruiting and hiring policies, social recognition for veterans and pay and benefits for reservists. The magazine looked for companies that didn’t just talk about how much they support the military, but had in place tangible policies and programs to help veterans get in the door and feel welcome once inside. Chesapeake Energy Corp was listed among the companies do-ing the most for veterans in 2013.

Chesapeake ranked in 21st place out of total of 53 companies noted for the number of 2012 hirees, with Exelon Corp. fol-lowing in 40th place. Chesapeake was reported to have hired 11,880 individuals total with nine percent of those being vet-erans, and in 2012, a total of 3,960, with two percent of those being veterans. Exelon hired 26,000, with nine percent being veterans, and in 2012, the company hired 1,718 people, with 11 percent of those being veterans.


Chesapeake was also listed among those companies with the most benefits for active reservists, as was Exelon Corp., with the companies again ranked in the 21st and 40th place, respectively. Benefits included military spouse policies, medi-cal insurance, life insurance, pay raises, retirement contribu-tions, sick days and vacation days, and whether or not reserv-ists receive their full pay of the full difference between their military and civilian pay, among others.

Exelon Energy, based out of Columbus, markets electricity to customers in Illinois, Pennsylvania, and Ohio and natural gas to customers in Illinois, Michigan, and Ohio. Chesapeake Energy is the leading leaseholder in eastern Ohio’s Utica Shale, which produces liquids-rich natural gas.

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The Zane State College OGET Land Laboratory ribbon cutting ceremony was held recently at the Cambridge campus. Shown are, l to r, student Devon McGrath; Cambridge Mayor Tom Orr; College President Dr. Paul Brown; Lynne Sprague; Dan Durfee; College Provost Dr. Chad Brown; Campus Dean Mike Whitson; Robert Stonerock; Paul Palsly and student Stephanie Jones. The simulated oil field created by the land lab is comprised of several stations, including an 18-foot-deep simulated well with a pump jack and a two-barrel storage tank battery — one corrosion protected and one not, so students can witness the effects of corrosion. The land lab will provide Oil and Gas Program students with hands-on learning opportunities as they explore what it is like to work in an oil field.

Ribbon cut for new oil and gas land laboratory at Zane State College in Cambridge

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“CNG-POWERED VEHICLES” from pg. 14

fleets have displaced a combined total of more than six million gallons of petroleum.

“And, yes, there are government based incentives, tax breaks and grants for CNG projects,” said Conley.

Regarding environmental concerns, Conley said gas can be captured from land fills and recycled into organic compost and natural gas, instead of flaring it away.

“We want to turn our waste into energy.”Sexton announced an open house, sponsored by EQT, will

be at the Byesville Volunteer Fire Dept., Byesville, from 6 to 8 p.m. Wednesday, May 22. Everyone welcome.

Also, Ohio Natural Gas Vehicle Partnership event at Zane State’s Zanesville Campus, will be from 11 a.m. to 2 p.m. Thursday, May 16. Panel will discuss NGV training and tech-nician certification. To register, go to zanestatengv.eventbrite.com/

For more information about CNG, visit Ohio NGV Partners at www.cleanfuelsohio.org.

This is not to say the procedure is cutting corners, it is just a more manageable approach to resolving issues, where everyone is on the same page and everyone is expected to follow the rules.

“The one issue that particularly stands out in oil and gas cases coming before the court would be the complexity and variety of the number of issues raised by these cases,” said Ellwood.

“Initially, the cases were landowner cases often attempting to recover severed mineral rights or to void older oil and gas leases. The cases now pending before the court have become more com-plicated and are involving the oil and gas producing companies with issues such as unitization/pooling agreements. There is not one case or issue that is emblematic of the legal process today. The overriding issue with the oil and gas cases coming before the Court is to have a case management plan or procedure in place so the case can be ‘timely’ processed, heard and decided by the court.”

Ellwood said the consensus of the roundtable meeting with the judges was that they are all facing similar issues with the oil and gas boom in eastern Ohio.

“We are planning another roundtable at a later date. We like to place the judges together as it is a situation where we often learn as much by talking to a peer — a similar judge — as we do from reading the cases,” he said.

“JUDGES CONVENE HERE” from pg. 6

dumping oil contaminated waste in a public waterway.“We’re not going to have bad players take down the indus-

try. While we can’t stop all illegal activity, we can respond to it and do it quickly, taking swift and strong action when viola-tions occur,” he said.

Of taxing, he said, “Our income taxes are too high and our severance tax is too low.” Even the proposed 4 percent sever-ance tax is significantly lower than other states, making weak the argument an increase would drive companies out of the Ohio.

“Oil and gas is a valuable natural resource, and we don’t believe in giving away,” he said.

He said the state is also trying to look out for the land owner. “We’re asking that (ownership of mineral rights) be recorded at the (county) recorder’s office. And, if there’s a well on that property, ODNR wants to know where the well is.”

“STATE SETTING STANDARDS” from pg. 8

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Continued development gradually revealing Utica Shale potential

The Utica Shale is rela-tively rich in natural gas, oil and gas liquids.

Early estimates by the Ohio Department of Natural Re-sources (ODNR) suggest a re-coverable reserve potential of as much as 5.5 billion barrels of oil and 15.7 trillion cubic feet (tcf) of natural gas. Some geologists believe that the Uti-ca Shale could rival the mas-sive Marcellus Shale play in potential. At least one industry

analyst has opined that the Utica likely will become the nation’s third largest shale producer of oil, natural gas, and gas liquids, after the Bakken in North Dakota and the Eagle Ford in Texas.

Some forecasts say that Ohio could be producing 200,000 barrels per day (bpd) of oil from the Utica by 2017, which is small by Bakken and Eagle Ford standards, but a huge in-crease over Ohio’s 13,000 bpd production rate of the recent past. With development of the Utica in its infancy, more wells will have to be drilled before those forecasts can be validated.

In the past year, the eastern Ohio area of the Utica has been heavily targeted for development of oil and natural gas liquids (NGLs). A sweet spot has been identified extending

Utica Shale production is expected to increase rapidly as new gas gathering and processing facilities. This new compression facility – built outside of Carrollton, Ohio as part of the Utica East Ohio Buckeye project – utilizes natural gas compressors provided by MidCon Compression, an operating unit of Chesapeake Energy Corp. Ten identical 1775 horsepower gas engines drive reciprocating compressors to compress gas from the Utica Shale and move it through a pipeline to new processing facilities in Eastern Ohio.

Norm ShadePresident,

ACI Services

from Columbiana and Carroll Counties in the north and extending through three other counties to Noble County to the south. Interest-ingly, Noble County is the site of the very first commercial oil well drilled in Ohio in 1860.

Leases, exploration and drilling operations have expanded steadily, but most wells are just starting to be put into production as investments in infrastructure expansions have lagged drilling. As of early April the ODNR reported only about 81 Utica wells were pro-ducing, with 189 more drilled, but not producing because gathering systems and processing plants were not yet in place to handle the gas and liquids. The ODNR report listed 303 more wells permitted or in various stages of completion.

Chesapeake Energy Corp., by far Ohio’s most active driller and largest leaseholder with more than one million acres, continues to

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maintain an enormous growth outlook in the Utica Shale area. With 14 drilling rigs operating, Chesapeake expects to more than quadruple its Ohio oil and gas production by the end of 2013. At least 23 other companies have been actively drilling in the Utica, led by Gulfport, Anadarko, Antero, CNX, Devon, Enervest, HG Energy and RE Gas Resources.

In February Chesapeake projected that the estimated ultimate recovery (EUR) in its core area of Carroll and surrounding counties will average 5 to 10 billion cubic feet (bcf) of equiva-lents (combined natural gas, natural gas liquids, and oil) per well over its lifetime. Those estimates are significantly higher

Continued on pg. 32

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Gas & Oil Technology course instructor, Bob Givens, left, watches over Anthony Kirby, a senior, as he operates a bulldozer during a recent training session at the high school.

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Randy Vaughan, a senior studying in the high school gas and oil program, learns how to balance a bulldozer on a mount of dirt during a recent training session on the school grounds.

Marlington seniors, Alex Hatfield, left, Austin Hoover, and Randy Vaughan, check out the bulldozer donated by Greg Fausel, on right, of Murphy Tractor & Equipment, in Canton.

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Utica BOOM still in infancyIt almost goes without say-

ing that Ohio is in the midst of an oil and gas boom, the

likes of which it may never ex-perience again. There have been many prior cycles of boom and bust in Ohio, including the Morrow County boom in the 1960s and the development of the Rose Run and Trempea-leau formations in the 1980s and ‘90s. All of these pale in comparison to the current Utica

Shale boom. Indeed, analysts re-port that the U.S. Shale boom could impact the global economy and geo-political climate, in terms of gas exports, lower energy prices, re-location and re-vitalization of U.S. business sectors and the weakening of OPEC, to name a few.

To fully understand the scope and breadth of the Utica Shale play, it is helpful to review the United States Geological Survey (“USGS”) report published in September 2012, which assessed recoverable oil and gas reserves in the Utica Shale formation using current technology. A copy of this report is available at

David J. WighamAttorney

http://pubs.usgs.gov/fs/2012/3116/FS12-3116.pdf. In its report the USGS explained that the Utica Shale con-

tains oil and gas in significant quantities that has absorbed into the Shale and which have become recoverable using current horizontal drilling and hydro fracking technology. The USGS defined “sweet spots” for oil and gas bearing areas within the Utica Shale area that cover most of eastern and into central Ohio. In fact, the USGS assessment areas for the Utica Shale estimated about 31,000,000 acres for gas and 15,000,000 acres for oil, truly a vast area in Ohio.

The USGS report goes on to provide estimates of recoverable resources using current technology. There is a high likelihood that the Utica Shale holds roughly 940 million barrels of oil, 38.2 trillion cubic feet of gas and 208 million barrels of natu-ral gas liquids. The estimated oil and gas reserves in the Utica Shale sweet spots would require 48,000 gas wells and another 7,000 oil wells to be drilled within the areas defined by the USGS as sweet spots.

To put this into perspective, there were less than 10 horizon-tal wells drilled in 2011 and about 150 wells drilled in 2012. It is estimated that this year approximately 500 horizontal wells will be drilled to the Utica Shale formation in eastern Ohio.

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As pipeline and processing facilities are completed in 2014 and 2015, thus reducing the infrastructure bottleneck, an even greater rate of Utica development should be expected in years to come.

Indeed, this Shale play could continue for at least 20 years. Other current unknowns that could extend this play are 1) de-velopments in technology that could open up even more recov-erable reserves and 2) the duration of production of each Utica Shale well and how much production will decline as each well is produced.

Given the known quantities of estimated returns using cur-rent technology, we are at the very early stages of the Utica Shale boom.

Using a baseball analogy, if this were a nine inning game, we are still listening to the Star Spangled Banner and the um-pire has not even yelled “play ball.”

This Utica boom will likely be an interesting, prosperous and exciting game that should play out for decades to come.

David J. Wigham is a second generation oil and gas attor-ney at the law firm of Critchfield, Critchfield & Johnston, in Wooster, Ohio, with more than 20 years of experience in the industry.

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“CONTINUED DEVELOPMENT” from pg. 26

than what has been reported from wells drilled in the shallow-er Marcellus shale in Pennsylvania. Chesapeake and Range Resources have both reported EURs from the Marcellus as high as 4.2 bcf of equivalents per well. The U.S. Geological Survey reports that the average Marcellus well has an EUR of 1.1 bcf of equivalents. Marcellus wells in Pennsylvania tend to produce mostly natural gas, with small volumes of liquids.

For the first three months of 2013, Chesapeake reported Utica net production of 60 million cubic feet of natural gas equivalent per day (mmcfd). Although that is less than its ear-lier estimate of 75 mmcfd, Chesapeake still forecasts a much

higher production rate of 330 mmcfd by year end as more pro-cessing facilities come on line. As of the end of March, Chesa-peake reported 249 wells drilled in the Utica play, with 66 producing, another 86 waiting on connection to pipelines and 97 in various stages of completion. In the first three months of 2013, 13 Chesapeake wells began producing for the first time.

Overall, production information from Utica Shale wells is still somewhat limited, but several companies area reporting exceptional initial production rates. Chesapeake reported that its Cain well in Jefferson County tested at 1,540 barrels of oil equivalents per day (boepd), including 6.7 mmcfd of natural gas and 425 bpd of natural gas liquids (NGLs). Its Walters well in Carroll County reported 1,140 boepd, including 3.6

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mmcfd of natural gas, 315 bpd of oil, and 220 bpd of NGLs. Its Houyouse well in Carroll County came in even better at 1,730 boepd, including 5.4 mmcfd of gas, 525 bpd of oil, and 305 bpd of NGLs. Even better was its Coe well in Carroll County, which was reported at 2,225 boepd, with about one-third being liquids.

Rex Energy Corp. announced initial production results from its first Ohio Utica Shale well, Brace #1H, located in Carroll County, at 1,094 boepd composed of 43% NGLs, 31% gas and 26% condensate.

Ohio’s biggest well to date is Gulfport Energy’s Shugert well in Belmont County. It tested late last year at an amazing 7,482 boepd, including 28.5 mmcfd of natural gas, 300 bpd of oil and 2,907 bpd of NGLs. Its 9,020 ft. deep Stutzman well in Belmont County reported 4,060 boepd, including 21 mmcfd of natural gas and 945 bpd of NGLs. And its 7,806 ft. deep Clay well in Harrison County was reported at 2,226 boepd, includ-ing 5.9 mmcfd of natural gas and 761 bpd of NGLs.

Shale wells tend to produce at very high rates initially and then decline rapidly to a lower rate that is sustained for many years. It will therefore be several years before the true poten-tial of the Utica is validated. As infrastructure for gathering and processing more gas is completed over the next couple of years, east-central Ohio‘s Utica play is expected to show rapid increases in production of natural gas, oil and NGLs.

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‘Historic era’ seen for Ohio oil production

Eighty-seven wells tapped into eastern Ohio’s underground shale formations have produced

nearly 636,000 barrels of oil and 12.8 billion cubic feet of natural gas in the last year, nearly double the volume produce in 2011, according to a report released Thursday by the Ohio Depart-ment of Natural Resources.

The number of wells in the state’s Utica formation also grew to 87 from two.

The horizontal hydraulic fracturing, or fracking, wells accounted for 12

percent of the state’s total oil and 16 percent of its total gas pro-duction in 2012.

And state officials projected that total fracked production will outpace conventional vertical well production within three years.

Mark KovacDix Communications

“... We believe Ohio is now at the beginning of a historic era of oil and gas production,” said Jim Zehringer, director of the Ohio Department of Natural Resources. And state officials are projecting that oil and gas produced from horizontal wells could outpace conventional vertical wells within three years, with about 1,000 of the new wells expected to be in production by 2015.

Zehringer said the state is seeing “the beginning of a historic era of oil and gas production.”

He added, “The production from these initial Utica wells makes a compelling statement about the staggering amount of oil and gas resources Ohio shale may contain. ... We believe that we are on the onset of a new boom.”

Carroll County, called by some the epicenter of the state’s fracking activities, led in the number of wells in production in 2012, with 41.

Guernsey County had six, Columbiana and Noble counties had five, and Stark and Tuscarawas counties had two. Mahon-

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ing, Portage, Wayne and Ashland were among counties with single horizontal wells.

A total of a dozen companies had wells in production; more than 50 belonged to Chesapeake Exploration LLC.

A single Utica well is producing as much oil as 312 conven-tional wells and as much natural gas as 448 conventional wells.

Additionally, the fracked wells accounted for 12 percent and 16 percent, respectively, of the state’s total oil and gas produc-tion in 2012, though the number of conventional wells (nearly 51,000) far outpaced horizontal ones.

“Utica shale production is skyrocketing,” Zehringer said. “These wells make up only two-tenths of 1 percent of all the wells in Ohio, yet last year they produced 12 percent of the oil and 16 percent of the natural gas in Ohio.”

He added later, “... That’s a lot of home heated, a lot of water warmed, a lot of gasoline refined for Ohio families.”

Among other information included in Thursday’s report:• Twenty-seven companies have sought state permits for hor-

izontal wells. Only four have not yet begun to drill, said Rick Simmers, chief of ODNR’s Division of Oil and Gas Resource Management.

• More than 688,000 barrels (nearly 2.9 million gallons) of wastewater brine has been produced from fracking activities for wells in production. Most of that likely was disposed of via injection wells, though Simmers said companies are recycling more of the fluid for reuse in future fracking activities.

• Though 87 wells were reported to be in production in 2012, not all of those are active. Seventy-four wells were in produc-tion for less than six months, and 32 had less than a month of production. Three wells were actually plugged after being tested. And more wells have gone into production during the current year that are not included in the 2012 report, Simmers said.

• At any given time, 30-32 rigs are involved drilling new wells in the state. The time involved to dig each well has de-creased from about 30 or more days at the start of the Utica activities to 17-20 days now, Simmers said.

• A total of 660 permits, good for up to two years, have been issued to date, with more than 300 horizontal wells already drilled. State officials expect drilling and production to in-crease as facilities and infrastructure are completed to process the oil and gas produced from the Utica formation.

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Cash is key to future growthRecently the State of Ohio

released data concerning the development of the

Utica Shale. And by the State’s ac-count the activity in the Utica will continue to rise as large oil and gas producers keep finding success-ful wells. Currently, activity in the state is awaiting infrastructure to develop at an even faster pace. With this development, opportuni-ties are available for businesses to start, grow and thrive by serving the

oil and gas industry.Accountants often look historic data to work on many com-

pliance items like tax returns and financial statements. How-ever, entrepreneurs focused on growth cannot rely solely on documents that look at the past. It’s imperative to look forward.

One of the more important items for an entrepreneur to fo-cus on is the business’s cash flow. The ability of a business to provide ample cash flow allows the business to plan for growth and expansion. This is especially important as bank lending is trending to focus on a business’s ability to repay the loan and

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not necessarily on the net income of the business. Net income is not the same as cash flow. Net income includes items that may not represent cash availability like accounts receivable. Eventually accounts receivable become cash to the business, but receivables are not generally immediately available to pay for things like new equipment or inventory. It often takes a number of days or months to convert receivables into cash that can be used to expand a business.

It is only with a true understanding of cash flows that a busi-ness can plan for growth. By understanding the business’s cash flows, an entrepreneur begins to understand the busi-ness’s cycle time. Cycle time is the amount of time it takes a business to convert cash to inventory, complete sales and then collect on receivables. This cycle time varies from business to business. Until an entrepreneur can understand the business’s cycle time, there is little that can be done to change it. Not un-derstanding cycle time can cause dire effects to a business. It can lead to inventory levels that are unsustainable or obsolete, bloated lines of credit and poor decision making.

When put together, these items, an entrepreneur can build a solid financial plan. Having a forward outlook allows a busi-

Continued on pg. 44

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MWCD establishes guidelines for short-term water sales

A policy containing up-graded guidelines for the short-term sales

of water from the lakes of the Muskingum Watershed Con-servancy District that includes provisions for supplies for the oil and gas industry has been approved and will go into ef-fect immediately.

Members of the MWCD Board of Directors approved the “Short-Term Water Sup-

ply” policy that also limits sales of water for the oil and gas industry to firms that are working in areas near individual MWCD lakes during a meeting May 17 at New Philadelphia.

The policy also states that public drinking water supplies remain the priority for withdrawals from the MWCD lakes and that supplying the oil and gas industry must be balanced among the many other multiple benefits of the lakes, includ-ing recreation, flood-storage capacity and ensuring acceptable downstream flows.

“It has never been the intent nor the goal of the MWCD that its surface-water lakes serve as the sole or a primary source of water for the entire oil and gas industry in Eastern Ohio,” said Sean D. Logan, MWCD’s chief of conservation. “This policy provides very straight-forward guidelines for how requests for sales of water for oil and gas production will be managed by the MWCD.”

The 10 permanent MWCD lakes (Atwood, Beach City, Charles Mill, Clendening, Leesville, Piedmont, Pleasant Hill, Seneca, Tappan and Wills Creek lakes) were constructed in the 1930s as part of the flood-reduction system of reservoirs and dams in the Muskingum River Watershed, and for conservation

Kimberly LewisDix Communications

of water for public benefit. Through the years, short-term sales of water from the MWCD lakes – which are legal and au-thorized through provisions of the Ohio Revised Code – have occurred for multiple uses, ranging from assistance for local farmers during drought conditions, serving as locations for “dry” fire hydrants for fire departments, public drinking water supply and for construction projects. Guidelines developed by the conservancy district to manage these sales and requests periodically have been updated, too, including most recently in 2010.

To date, there have been five individual agreements for sales of water to the oil and gas industry approved by the MWCD Board of Directors for water from Clendening, Piedmont and Seneca lakes. Two of the sales from Clendening Lake in Har-rison County have been completed, and a third at that lake recently began operations.

The Short-Term Water Supply Policy covers two categories of sales, one for construction and other small withdrawals, and the other for the oil and gas industry. The construction cat-egory provides for a specific fee structure, while the category

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for “mineral production and other large consumptive uses” sets fees at market or near-market rate, along with refundable and non-refundable security deposits. The MWCD previously an-nounced that a special fund has been created for proceeds from the sale of water to the oil-and-gas industry and those revenues will be used for water-quality improvement projects in the re-gion.

Logan said supplying water from the MWCD lakes for oil-and-gas development near the reservoirs also serves as a way to reduce tens of thousands of potential tanker-truck trips across township roads that are not designed to hold up to the constant pounding. The agreements approved by the MWCD for water sales at Clendening Lake eliminated an estimated 14,000 one-way tanker-truck trips, because of the temporary pipeline sys-tem utilized from the lake to the well site, Logan said. Letters of support have been received by the MWCD from both The Nature Conservancy and the Ohio Township Association for water sales from the MWCD lakes to the oil-and-gas industry

for operations around the lakes as a method to reduce tanker truck traffic and road damage.

“This has been an evolving process and the industry’s increas-ing work in Eastern Ohio and near the MWCD lakes makes it a natural that they will look toward the lakes as a source of water for the hydraulic fracturing process in the Utica Shale development,” Logan said. “But it is very important for the MWCD to protect the reservoirs and protect the water in the lakes through documented conservation practices that also balance the benefits they create.”

According to the policy, buyers of water from the MWCD lakes for use in the oil-and-gas industry also must agree that the MWCD has complete authority to suspend or terminate the supply agree-

“This policy provides very straight-forward guidelines for how requests for sales of water for oil and gas production will be managed by the MWCD.”

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Continued on pg. 44

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What is this ‘well’ they just drilled?As landowner advocates,

we have noticed an un-usual trend in recent

months. Some “shallow” pro-ducers have been hastily drilling shallow wells, and then doing nothing to produce from these wells.

Some background. From 2000 until 2010, before the “shale” boom arrived in force, local and regional producers were signing leases with landowners much as

they had in the previous hundred years. Of course, by signing, the landowners relinquished the rights to the oil and gas on the prop-erty to the lessee (the producer who leased those rights).

As with virtually all leases, the leases contain a definite “primary” term, usually one to five years. Then, there is an indefinite “secondary” term that holds the lease open so long as gas or oil is produced. Put differ-

What is this ‘well’ they just drilled?

Ethan VesselsMarietta Attorney

ently, if gas or oil is not produced by the end of the primary term, the lease expires.

Curiously, a few of these local and regional producers did nothing with these leases during the last decade. No drilling. No producing. Nothing.

Alas, with only weeks remaining until the leases expired, these producers hastily drilled shallow holes on these proper-ties. Yet, they failed to produce the wells. The wells are not fractured. They are not hooked up.They are capped.

Why? We feel certain that their only purpose is to avoid let-ting the leases expire. These wells are “shams” in our opinion. These are not “wells” designed to extract to gas, but to provide the illusion that the producer has complied with the lease. The shallow producer’s purpose, of course, is to re-sell those gas rights to a company that will drill and extract from the Utica

shale—while keeping the up-front bonus and excess royalties for itself. It is cheating the landowners, in our opinion.

Is this legal? We don’t think so. Under Ohio law, the lessee of an oil & gas lease has a duty to exercise “due diligence” during the primary

“These wells are ‘shams’ in our opinion ... Is this legal? We don’t think so.”

Continued on pg. 44

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term of the lease to produce gas. In 1955, the Ohio Supreme Court held in a case called Hanna v. Shorts that a gas lease expires at the end of the primary term unless: (1) gas or oil is actually being produced, (2) the landowner agreed to extend the lease, or (3) the landowner prevented the lessee from pro-ducing.

On the other hand…some leases have “commencement” clauses. These clauses specify that if the lessee has “com-menced” drilling operations at the end of the lease, the lease will remain active as the lessee attempts to get the well in pro-duction. Of course, the lease must contain this clause in order to invoke the “commencement” argument.

And, yet still on the other hand…even with “commence-ment” clauses, courts have held that the lessee must be acting in good faith, in a bona fide attempt to produce oil or gas. Courts have held that drilling solely for the purpose of extend-ing the lease is a mere pretense—not a bona fide attempt to produce.

What can you do? First, do not try to hinder the shallow producer in any way. If you do, the producer will complain that you prevented the success of the bogus well.

Second, you need to call a lawyer. The only recourse is to file a lawsuit to have a court declare that the lease expired. These are complicated cases and depend on several factors: the exact language of the lease; when the well was drilled; the

Continued on pg. 44

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Kenworth of Canton 3350 Bruening Ave SW Canton, OH 44706330-459-4496Kenworth of Richfi eld is the oldest and largest dealership in our organization. Located in Northeast Ohio, Kenworth of Richfi eld serves the greater Cleveland and Akron areas with easy inter-state access. Kenworth of Richfi eld offers New and Used Truck sales, Heavy Duty Truck Parts, Service Department (open two shifts daily) and full collision repair capabilities.

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10149965


Alliance focusing on gas and oil development in eastern Ohio

It was a who’s who of state, regional and local politicians, executives and business people

who met at the Carlisle Inn for the 23rd annual meeting of the Eastern Ohio Development Alliance.

The EODA is an independent, nonprofit organization of 16 eastern and southeastern Ohio counties that promotes econom-ic growth in the region. And, in eastern Ohio economic growth is oil and gas.

The meeting’s agenda included a speaker from a company immersed in oil and gas development and a speaker at the helm of Ohio’s oil and gas regulatory agency, in addition to the pre-sentation of EODA Excellence Awards.

EODA President Tracy Drake welcomed 200 attendees and introduced EODA board members and array of politicians.

Dale Hileman, executive director of EODA, introduced keynote speaker Jack Partridge, president of Columbia Gas/NiSource. NiSource is the parent company of Columbia Gas.

“There is incredible growth on the horizon in the oil and gas industry. It’s an exciting time for all of us,” said Partridge. “Decades low natural gas prices have presented an opportunity


for us to do more for our customers. “We have made a commitment to invest $2 billion over the

next 25 years with 4,000 miles of new durable plastic pipelines to replace the old, worn out, rusted pipe. We will spend $15 million this year and $60 million over the next five years.”

Partridge said other developments which will benefit cus-tomers include: “No more estimated bills, everything will be computerized and accurate. And, our home energy audit pro-gram to reduce natural gas usage has been very successful. An energy audit can reduce gas usage by up to 30 percent.

“The Utica Shale boom is one of the most profound events in U.S. history in 100 years ... It will leverage wealth for fu-ture prosperity. We are all in this together, we are in a posi-tion for long-term prosperity. Appalachia has suffered through generational poverty, it is time to set the table for generational prosperity.”

State Rep. Dave Hall reiterated remarks about the Utica Shale by Partridge, and added that “Kasich has all hands on deck involving oil and gas. This is not a Democrat or Republi-can issue. We learned from the mistakes made by other states, and as a result, Ohio has the best standards in the nation, and

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Dale Hileman, l, executive director of the Eastern Ohio Development Alliance, Jack Partridge, c, president of Columbua Gas/NiSource, and Sam Speck, r, former president of Muskingum University and founder of the EODA, at the EODA’s annual meeting Friday in Walnut Creek.

maybe in the world. “They [those in the oil and gas business] know about eastern

Ohio in Texas ... They even knew where Carroll County is. We have a long way to go, but we have great leadership.”

Speaking about the regulatory role governing the oil and gas industry, Jim Zehringer, director of the Ohio Department of Natural Resources, said Ohio is blessed with many natural re-sources: an abundance of water, gas, coal, wildlife and parks.

“Oil and gas regulations are in place to protect our resources, and to ensure all oil and gas operations are safe and efficient.

“We have learned from the mistakes made in West Virginia and Pennsylvania, who told us to have regulations, people and taxes in place. Which we did with Senate Bill 315. The regula-tions which monitor the industry are clear and complete. So far this year, 297 wells have been drilled in the Utica Shale, predicted to increase to 750 by the end of the year, to 1,500 in 2014 and 2,250 in 2015.

Regarding the governor’s plan for increasing the severance tax, Zehringer said, “the severance tax is in desperate need of revision, it has been the same for more than 10 years. We need to be competitive ... He [Kasich] doesn’t want Ohio giving away our natural resources.”

The meeting culminated in the presentation of EODA Ex-cellence awards.

Cambridge Packaging owners/operators Larry and Bill Knellinger were presented the Small Business Excellence Award for their continued expansion of the company since its inception by their parents, Dick and Peggy Knellinger, who started the business in 1982 in their basement. The company is a manufacturer of corrugated products and a distributor of packaging and shipping supplies. Its 120,000 square-foot fa-cility on Southgate Road in Cambridge includes the Box & Gift Shop, providing UPS shipping, gift wrapping, packing supplies, gift and shipping boxes and packing service.

Larry credited the success of the business to the work ethic inspired by their parents and their dedication to community

Continued on pg. 52

GAS&OIL43

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10151569


ness to know when it needs to expand or contract. Under-standing cash flows affords the business the ability to know how it can finance those plans. Putting all of this information into a comprehensive financial plan allows a business to be more than just a business – it becomes an investment. Owners should treat their business as an asset, working to increase its value in order to fund future goals and desires.

As the Utica Play continues to develop, it will bring many opportunities for entrepreneurs who are willing to take risks and work hard. Those who will experience success are those who look and plan for the future – and who have enough cash in the bank to take advantage of opportunities as they arise.

“CASH IS KEY” from pg. 36

ments for any purpose.Other terms and conditions that will be included in agree-

ments for short-term water sales to the oil-and-gas industry include:

No withdrawals of water can occur during the months of February, March and April unless waived by the MWCD.

Withdrawals can occur during the specific periods of the months of May, June and July; the months of August, Sep-tember and October; and the months of November, December and January.

“MWCD ESTABLISHES GUIDELINES” from pg. 38

Each of the specified periods results in a new agreement that must be developed, with subsequent renewal agreements for the next period not needing specific approval by the board of directors.

Agreements for renewals beyond 12 consecutive months must be approved by the board of directors.

The MWCD also will approve of potential sites where water will be withdrawn from the lakes, and consult with other agen-cies and partners, such as the U.S. Army Corps of Engineers, as necessary, the policy states.

efforts made to produce the well; and the level of any produc-tion (if any).

Disclaimer. As with all articles on legal issues, this article is intended for educational and informational purposes. The reader should not rely on this article as a substitute for actual legal advice regarding his or her particular case. You should consult an attorney regarding the specifics of your situation.

Ethan Vessels is an attorney in Marietta, Ohio with the firm of Fields, Dehmlow & Vessels, LLC. His firm is actively represent-ing landowners throughout East and Southeast Ohio regarding oil & gas lease forfeiture actions, lease disputes, and other oil & gas matters. Visit www.fieldsdehmlow.com for more infor-mation.

“WHAT IS THIS WELL?” from pg. 40

GAS&OIL44

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Move to Copeland Oaks while still active, and you can enjoy everything you do now, only more. With maintenance-free living, wonderful friends, and quality health care and services available if the need arises, now is the ideal time to secure your future. And peace of mind. When you’re ready, call us at (800) 222-4640.

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Keystone Pipeline Would Create American Energy and Jobs

The United States is the largest consumer of petroleum in the

world, importing more than $8 million barrels of oil each day. Americans rely on oil for ev-eryday tasks like filling their gas tanks and heating their homes. So the importance of crude oil cannot be under-stated.

Ohio, especially the eastern part of the state, has a tremen-

dous opportunity for produc-ing oil and natural gas, which can supplement some of our consumption needs. But I have long believed that the United States should do more to develop its potential for oil extraction and production, both to move towards energy independence and create jobs.

Construction of the TransCanada Keystone XL Pipeline

would help the country achieve these goals. By no means would it eliminate all dependence on foreign countries, but it would be a step in the right direction. Unfortunately, the completion of this project has been sidelined by the Obama administration.

Because this is a federal issue, there is very little that the State of Ohio can do to move the mission forward. However, the Ohio House last month passed House Concurrent Resolu-tion 9, urging the US State Department to approve the process of constructing and operating the Keystone Pipeline. The reso-lution passed the House by an 86-7 vote.

Our country is rich in energy resources, and not moving ahead on using these resources can be very damaging. It is not a project that can be completed overnight, but continuing to delay the development of our own energy sources can put our nation in a very troubling position should our demand for foreign oil ever not be met.

I eagerly supported HCR 9 because I believe it is important that all of us do whatever we can to move the United States in the direction of energy independence. Two-thirds of Ameri-cans support the construction of the Keystone Pipeline, ac-cording to poll results published by USA Today earlier this month.

I think this indicates that most Americans understand the importance of this issue, and I urge the president and the State Department to approve the completion of this important proj-ect.

Rep. Hill may be reached by calling (614) 644-6014, e-mail-

ing [email protected], or writing to State Representative Brian Hill, 77 S. High St., Columbus, OH 43215.

Brian HillState Representative

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Gas/oil instructor retiresThe instructor of Marlington

High School’s Gas & Oil Tech-nology course will retire at the

end of the school year, but the program will continue as is.Bob Givens, who helped design and launch the model program

within the Stark County high school, said the district has posted his position and has received at least a couple of applications al-ready.

“The school took a big risk in starting the program, especially since there was no budget for it. But it’s worked out really well,” said Givens. “So, the school officials said they will keep it going.

“Several teachers have applied for the job, so there are people who are interested. Plus, all the information and contacts I have on my computer, on tests, and videos, has been gathered and in-cluded in PowerPoint presentations that will be passed down to the new instructor as well.”

Givens said the program took off much quicker than he antici-pated.

“Networking has been the key, and between news stories and the people we know in the industry, we’ve had a lot of help getting it started,” Givens added.

The two-year course, the first offered in any high school in Ohio, is offered to juniors and seniors. There are 10 juniors and 10 seniors scheduled to complete the program this year, and Giv-ens said there are jobs available for all who want them.


However, some of the positions involve traveling one to two hours each way, and the students elected to try to find jobs closer to home. The possibility exists, as two seniors have al-ready secured positions within the field, and two more have been shadowing workers at Whipstock, a Canton-based gas services company. Some of the seniors are still interviewing and some are trying to decide whether they wish to continue gas and oil studies at the college level.

Givens said the course curriculum has been sent to Mari-etta for use by a group of educators who are hoping to get a similar program going in southeast Ohio. The consortium includes Gary Williams of Washington State Community Col-lege and the new superintendent of the Ohio State Department of Education, Richard Ross. In fact, a meeting has been called for later this month at Marlington with the two men and other officials from the state and the gas and oil industry.

“Even after I retire, I will continue to volunteer my services to help with these efforts,” Givens said.

Bob Givens , instructor of Marlington High School’s Gas & Oil Technology course

“The school took a big risk in starting the program, especially since there was no budget for it. But it’s worked out really well.”

-Bob Givens

GAS&OIL4810

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GAS&OIL49

Anderson Propane Services, LLC has been in the bulk propane business since 1999 and has 35 years of propane experience. We are a family owned business and have expanded our business to the Muskingum County area as

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Employee-owned business making its success story

An employee-owned busi-ness in Zanesville, Produc-ers Services Corporation,

has seen growth in recent years due to the increase in gas and oil drilling in the region.

Jim Rose has been involved in the gas and oil industry since he graduated from Marietta College in 1976 with a bachelor’s degree in petroleum engineering. He met his wife of 35 years, Annie, who graduated the same year from Marietta majoring in art and mathematics.

After graduation Rose went to work for Dowell, the Gas & Oil Division of Dow Chemical in Midland, Mich. where he was employed for eight years. But, when a chance to work for a com-pany in Ohio arose, he jumped at the offer and began working for Producers Service Corporation in 1984 as vice president of sales, never giving a second thought to becoming one of its own-ers.

The couple moved to Zanesville and lived there until 1994

when they moved to Wheeling W.Va. when Annie was offered a position as head of online and distance learning at West Lib-erty University. Rose said he commutes to the Zanesville office weekly.

Producers Service Corp. was founded in 1981 by a dozen gas and oil producers who left Haliburton to form their own com-pany. The business was designed to be a local supplier of fractur-ing and acidizing services. Acidizing is a method by which pe-troleum bearing limestone or sandstone formations are injected with an acid to enlarge the pore spaces and passages through which reservoir fluids can flow.

Everything was going pretty good for Rose, who joined the firm in 1984 — until the economy tanked in the late 1980s. Even with all their expertise in the industry, the business suf-fered some lean years.

“We struggled. We all took pay cuts ... we were all in it to-gether, and we hung in there,” said Rose.

“Then, in 1994, the stockholders (owners) decided to sell the company. They were going to sell all the equipment overseas,


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Employee-owned business making its success story

when they moved to Wheeling W.Va. when Annie was offered a position as head of online and distance learning at West Lib-erty University. Rose said he commutes to the Zanesville office weekly.

Producers Service Corp. was founded in 1981 by a dozen gas and oil producers who left Haliburton to form their own com-pany. The business was designed to be a local supplier of fractur-ing and acidizing services. Acidizing is a method by which pe-troleum bearing limestone or sandstone formations are injected with an acid to enlarge the pore spaces and passages through which reservoir fluids can flow.

Everything was going pretty good for Rose, who joined the firm in 1984 — until the economy tanked in the late 1980s. Even with all their expertise in the industry, the business suf-fered some lean years.

“We struggled. We all took pay cuts ... we were all in it to-gether, and we hung in there,” said Rose.

“Then, in 1994, the stockholders (owners) decided to sell the company. They were going to sell all the equipment overseas,

and even worse, we would all lose our jobs. So, about 10 of us talked about buy-ing the company and asked for the opportunity to pres-ent it to the owners.

“We put together an Em-ployee Stock Ownership Plan,” he said.

Most ESOPs are used to provide a market for the shares of a departing owner of a profitable, closely held company.*

“The company’s board of directors gave us 90 days to have a signed deal. Part of the deal was that the company was allowed to stay operational to retain its customers. The biggest struggle was with the bank. They were not sure if we could actually run the business.

“Our down payment included all of our combined profit-sharing and selling off one crew (six) of our trucks. We came up with about $2 million, and the bank loaned us the balance of $3 million. We were elated ... We were in business for our-selves!”

“Everything was great, we are a 100 percent employee-

Jim Rose, vice president of sales for Producers Service Corporation

Continued on pg. 60

GAS&OIL51

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Corner of 209 & Wheeling Ave. This building offers 3780 Sq. Ft. and a nice 2 bedroom apt. on 2nd fl oor @ 758 Wheeling Ave. MLS #3399343. $175,000. Call Howard Dennis @ 584-5649.

7½ Acres, 4800 Sq. Ft. Multi Commercial Use.There are (3) buildings and (1) bay on this 7.5 Acres. The green building is 32’x80’, the middle building is 30’x30’ and the front building is 30x’36’. The green building is currently being used as a Hair Salon and rent is $1600.00 per month @ 61074 Southgate Rd. MLS #3399306. Call Carol Goff @ 819-2301.

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Norm Blanchard, executive director of the Cambridge/Guernsey County Community Improvement Corp., third from l, presents Bill Knellinger, l, and Larry Knellinger, second from l, owners/operators of Cambridge Packaging, with the 2013 Small Business Excellence Award at the Eastern Ohio Development Alliance meeting at the Carlisle Inn in Walnut Creek on Friday. After Blanchard is EODA President Tracy Drake and Jack Partridge, president of Columbia Gas in Columbus.

service.“We are the second generation, we are instilling that same

work ethic and involvement in community service into the third generation — our children,” he said.

The Knellinger brothers also received a commendation signed by Gov. John Kasich and Lt. Gov. Mary Taylor.

Cambridge Mayor Tom Orr congratulated the Knellingers on their “much deserved” award and said, “the Knellinger family has always been associated with helping others whenever and wherever they can. Their work ethic and generosity epitomize the kind of people who could make any business communi-ty successful. We are very proud they call Cambridge their home.”

Other 2013 Excellence Award recipients were Pioneer Pipe, Inc., Washington County, Manufacturing Excellence Award; Historic Fort Steuben, Jefferson County for Tourism Excel-lence Award; and the C.A. Joseph Co., Jefferson County, for Emerging Business Excellence Award. Belmont College Foun-dation received the Don Myers Legacy Fund award of $1,000 from the Foundation for Appalachia Ohio. Cara Dingus Brook, president and CEO of the FAO, presented the check.

“GAS & OIL DEVELOPMENT” from pg. 42

Ginzel Gin•zelnoun: Slang term for a worker even lower on the food chain than a worm. A ginzel would be someone just starting out that has no oilfield experience whatsoever.

GAS&OIL52

I_PB_Ohio_oilgas_7-25x4-5.indd 1 5/28/13 12:09 PM

10152284


GAS&OIL53

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Barnesville council mulls ways to invest $7MVillage Council members

continue to weigh invest-ment options to generate

returns from approximately $7 mil-lion of money received from gas and oil leases of village property and the sale of water to companies drilling in the area.

At an April meeting, finance com-mittee member Terry McCort said investment professionals from Hun-tington Bank, MultiBank Securities, Star Plus and WesBanco have made presentations and recommendations.

He shared options with fellow council members, who decided a work session should be held with those companies, as well as at least one investment firm.

McCort said the companies identified four different areas of investment. He said Huntington suggested a savings-type ac-count with a higher interest percentage and the other three companies offered investment portfolios. All companies were advised of the village’s past investments and the Ohio Revised Code requirements.

Cathryn StanleyBarnesville Bureau

Councilman Brad Hudson felt council needed to act soon to take advantage of interest earnings on the money, while Economic De-velopment Director Bill Knox urged caution.

“You have millions of tax payer dollars. You have been prudent to date. This needs to be as open and transparent of a process as pos-sible, not only with the firms but with the public too,” Knox said.

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‘Landmen’ say to insist

Landowners across America have a new way to be confident ne-gotiating oil and gas leases: the

AAPL membership mark.Since 1956, members of the Ameri-

can Association of Professional Land-men (AAPL) have publicly committed to abiding by the association’s Code of Ethics and Standards of Practice for the

land profession. That means landowners who interact with AAPL members to lease oil and gas rights on their property can have confidence they’ll be treated in a fair and ethical manner.

Last year, AAPL made it easier for the public to identify a land-man who has made that commitment by creating a membership mark .

Jim Dewbre, president of AAPL, explained, “An oil and gas lease is a serious commitment that should be entered into careful-ly and thoughtfully. When landowners insist on working with an AAPL member to negotiate that lease, they know they’re working with a professional landman committed to operating ethically.”

AAPL announced the mark through an advertising campaign last summer in the Eagle Ford Shale. The advertisements encour-aged the public to “insist on a professional” and directed landown-ers to AmericasLandman.com, a new website for the public that

describes the land profession and explains what landowners should expect from landmen.

A second advertising campaign is currently running through the Marcellus Shale region through May. The advertisements can be seen in newspapers throughout the shale play and on billboards along main thoroughfares in the area.

To learn more, visit AmericasLandman.com.

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Exciting Real Estate Auction590 Acre Harrison County FarmAll AdjoiningOutstanding Remodeled Victorian Home & Barn With Elaborate Pool and Waterfalls231 Acre Parcel With Farmhouse & Good Pole BuildingsBoarders Railroad* Lake - Woods - Fields - Pastures - Water *Former Elk Farm With 10 Ft. FencingGermano Twp. - Harrison County, OhioJust West of Wheeling & PittsburghAlso Selling: (2) J.D. Tractors - Backhoe - DozerEquipment - Trailers - ATV’s - ToolsElk Handling FacilitiesAbsolute auction, all sells to the highest bidders on location: 90479 MILLER STATION RD. HOPEDALE, OH 43976. Directions: Take SR 9 south of Carrollton to SR 646 and go east to Miller Station Rd. and south to auction, or take US Rt. 22 west of Steubenville to SR 646 and continue west to auction. Watch for KIKO signs…SATURDAY - JUNE 29, 2013 - 11:00AMREAL ESTATE SELLS AT 12 NOON590 acres - all adjoining - frontage on SR 646, Miller Station Rd., Mader Rd. and railroad - rolling land with a good mix of woods, pasture & tillable land - large strip lake & several smaller ponds - beautiful hilltop& valley views.PARCEL #1: 46613 ANNAPOLIS RD. HOPEDALE, OH. - Approx. 8.5 acres. Outstanding remodeled Victorian century home with approx. 4,634 sq. ft. of living space. Elaborate custom inground swimming pool w/massive waterfall backdrop including tons & tons of sandstone & rock plus hot tub. Also, 24 X 40’ steel.PARCEL #2: 90479 MILLER STATION RD. HOPEDALE, OH. Approx. 231 acres total - clean 2 story farmhouse - original bank barn - pole building w/farm offices & labs, heated shop w/overhead doors and equipment storage - (2) additional pole barns w/concrete adaptable for livestock and add’l. pole barn with 3 overhead doors w/ covered feedlot. Several divided pastures. Lays real nice.

PARCEL #3: Approx. 80 acres with lake.PARCEL #4: Approx. 95 acres rolling wooded land.PARCEL #5: Approx. 68 acres with woods & pastures.PARCEL #6: Approx. 37.3 acres just south of Parcel #1.PARCEL #7: Approx. 40 acres woods & fields.PARCEL #8: Approx. 30.8 acres with old two story log cabin in need of major restoration.NOTE: Walk these parcels at your convenience. Arial maps on Kiko website.TRACTORS - TRAILERS - EQUIPMENT - TOOLS: JD 6400 MFWD tractor w/JD 640 loader - JD 2550 diesel tractor w/loader - Case 580K Construction King backhoe - JD 450E dozer w/winch - 1997 Featherlite alum. stock trailer, gooseneck, 20 ft. - Gooseneck 20 ft. flatbed trailer - JD 15 ft. batwing rotary mower - assorted shop tools.ELK HANDLING FACILITIES - MOUNTS - BINS: (2) Elk handling facilities w/steel gates & pens to be removed - (2) Reid squeeze chutes - Semen tank - s.s. tables - (2) lg. Elk head mounts - Elk antler sheds - (2) grain bins (one is Brock) - Piebald full body deer mount - etc.VEHICLES - ATV’S: 1990 Range Rover 4 X 4, 4 door - 2003 F-350 XL Super Duty flatbed truck - JD 625 gator - Honda 4 wheeler - Pug 4 X 4 articulate utility vehicle - JD 825 Gator.NOTE: Possibly once in a lifetime opportunity! SALE ORDER: 11:00AM small tools, 12 NOON Real Estate followed by large equipment.AUCTIONEER/REALTOR: Matthew P. Kiko, AARE, 330-327-9617 - [email protected] ESTATE BY ORDER OF: Gary & Mary Ann McBrideCHATTELS - AUCTION BY ORDER OF: Wild ‘N Wooly Acres, Inc.

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Exterran opens facility in Youngstown

Ohio Gov. John Kasich (fifth from left) is shown at a ribbon-cutting ceremony May 7 for Exterran’s new 65,000-square-foot fabrication facility in Youngstown. Also included are, from left: Matt Sucy and Chris Werner of Exterran; David Mustine, JobsOhio; Youngstown Mayor Chuck Sammarone; Kasich; Brad Childers, President and CEO, Exterran; Tom Humphries, Regional Chamber; Tom Waltermire, Team Northeast Ohio, and Rob Rice and Daniel Schlanger of Exterran.

Gov. John Kasich and executives from Houston-based Ex-terran celebrated the grand opening of Exterran’s new 65,000-square-foot production equipment fabrication fa-

cility in Youngstown on May 7 with a ceremonial ribbon-cutting.The new facility, expected to employ more than 100 workers, is

dedicated to the fabrication of production equipment used to treat or otherwise process natural gas and oil after it is extracted from the ground, such as separation, dehydration, natural gas conditioning, oil treating and conditioning, filtration and air emissions control.

The facility’s streamlined lean manufacturing process shortens lead times, increases manufacturing output and produces high-quality products.

“Our customers are actively participating in the development and production of oil and gas in this region, including the Marcellus and Utica shale plays, making this a natural geographic fit for us,” said Exterran President and CEO Brad Childers. “We chose the Youngstown area to ensure the rapid, efficient delivery of quality products to our clients working in the region and because of the outstanding quality of the local workforce here. The Youngstown facility will allow Exterran to meet existing demand and will posi-tion us to quickly respond to our valued clients’ future needs.”

The fabrication facility is located in the Salt Springs Industrial

Continued on pg. 60

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owned company, and we were paying our bills on time. We ran into a slump in 1995 and 1996, but we were determined to keep the business on track. Slowly, things started picking up, and in August of 1999 we paid off the bank loan. The follow-ing October we shut the business down for four days and took all employees and their wives to the Bahamas for a mortgage burning ceremony.

“In 2004 we were named the ESOP of the Year. We had 20 employees, and by 2007 we had 30. We now have 100 employ-ees from Caldwell, Logan and Killbuck area,” said Rose, who is optimistic about the future.

“We are very busy with conventional wells in Ohio and West Virginia ... We are ready to meet the demands of this highly specialized industry.”

The Roses’ have two children, a son, James, who lives in In-diana and works for the Chicago Tribune; and Julia, who lives and works in Columbus at the Wexner Ohio State University Medical Center.

According to the company’s website, Producers Service Corporation has worked with numerous companies in Ohio, Pennsylvania and West Virginia, providing pressure pumping services, such as oil and gas well fracturing, acidizing services, water transfer and pumping, high pressure pumping and skilled technical advice.

The company has maintained the expertise of its original

“EMPLOYEE-OWNED BUSINESS” from pg. 50 core employees and have recently added a second, large, high-rate high-pressure shale crew to service the growing needs of the Appalacian Basin, in both the Marcellus and Utica shale plays.

* An Employee Stock Ownership Plan is governed by federal pension laws. There are clear requirements to ensure that there can be no preferred classes of participants in an ESOP; all em-ployees must be treated proportionally the same.

Park. On hand for the celebration were more than 60 new Ex-terran employees from the local area already on the job.

“We are excited by the opportunities and long-term poten-tial we see here,” said Childers. “The equipment we produce at this facility is critical to oil and gas production in the north-eastern United States, including Ohio, Pennsylvania and West Virginia.”

An international leader in oil and natural gas products and services, Exterran is expanding its manufacturing into the Northeast United States to meet growing client demand.

“Exterran is an important addition to Ohio’s oil and gas in-dustry supply chain. Through teamwork at the local, regional, and state levels, Exterran committed to building in Ohio and creating jobs, all of which will further strengthen the state’s manufacturing base,” said John Minor, JobsOhio President and Chief Investment Officer.

Over the past year, the Mahoning-Columbiana Training As-sociation (MCTA) / Ohio One Stop has served as the single point for recruiting, screening, referral and placement for new employees. Additionally, Exterran has worked closely with lo-cal technical schools to meet its needs for skilled welders.

“We greatly appreciate the support we have received from the community, including the state of Ohio, city of Youngstown, JobsOhio, the Youngstown/Warren Regional Chamber and Team NEO,” Childers said.

“This new facility is another example of what we can accom-plish as a region by working together to create an environment where businesses can succeed,” said Tom Waltermire, Chief Executive Officer of Team NEO. “It’s an exciting time for our region as we emerge as an ideal location for shale-related busi-nesses.”

“EXTERRAN OPENS” from pg. 58

GAS&OIL60

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core employees and have recently added a second, large, high-rate high-pressure shale crew to service the growing needs of the Appalacian Basin, in both the Marcellus and Utica shale plays.

* An Employee Stock Ownership Plan is governed by federal pension laws. There are clear requirements to ensure that there can be no preferred classes of participants in an ESOP; all em-ployees must be treated proportionally the same.

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‘Boom’ may be boon for college students

The boom in the gas and oil industry isn’t just affecting those already in the busi-

ness, but also includes those who are in school.

Kent State University’s geology department has seen a huge jump in numbers of enrollment for geology majors — in fact, it has doubled in the past four years.

Daniel Holm, professor and chair of the geology department, can’t pinpoint what sparked the increase in interest, but said that some of it could be credited to the booming business.

“We serve our students well and broadly,” said Holm. “We have seen an increase in majors in the last three or four years, which may be in part with the increase of oil and gas explora-tion but it’s always hard to know what’s driving it.”

Even with the increase, there has been no change in curricu-lum in KSU’s geology department. Holm stated that they don’t plan on changing any part of it because of the growth.

“There have been many of our students being hired by oil and gas companies right when they graduate,” said Holm. “A lot of us touch on things that are happening with the expansion in Ohio, but we don’t go in depth with the extraction in Ohio. Companies are interested in the basic topics that our geology

students know.”The increase in the industry also has caused an increase in

annual salary, or at least according to statistics. In the past three years, there’s been a 15 percent increase in average sal-ary for geologists.

The highest salaries for geologists often tend to be in the petroleum and mineral resource side, where there was a 7.9 percent increase just in the past year.

While there isn’t a way to pinpoint the growth in the choice to study geology, the link may very well be in the boom in the industry.

Sophie KruseDix Communications

“There have been many of our students being hired by oil and gas companies right when they graduate.”

- Daniel Holm

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‘Boom’ may be boon for college students ‘We go to work every day’For more than half of a

century, the Ken Miller Supply Co. has served

the needs of the gas and oil in-dustry.

The third generation of the family-run business is now leading the company, with Kirk Miller and Lindy Chan-dler serving as co-chief execu-tive officers.

Ken and Lois Miller start-ed the company in 1959 in

Wooster and later relocated op-erations to Blachleyville Road, Wooster. It has grown from a single location to 11 stores in five states: Ohio, Pennsylvania, Kentucky, West Virginia and Virginia.

Past CEO Jack Miller said the company has been successful because “we go to work every day.”

And when he says “every day,” he means it.Kirk Miller recently spent about half of the Memorial Day

weekend at the Wooster location because the drilling rigs do not take days off.

“We’re on call seven days a week now,” Kirk Miller said.

Co-CEO Kirk Miller and his father, former CEO Jack Miller, say Ken Miller Supply has been successful over the years because of good workers and good customers. Jack Miller’s father started the company in 1959, and it has grown to 11 locations in five states.

Bobby WarrenDix Communications

“Someone will send an email at 2 in the morning and if we don’t respond right away, we’ll get another email in 20 minutes asking if something is wrong.”

One time, when the company picked up a new customer, Kirk Miller sent an email asking if the drilling rig would be shut down over the July 4th holiday. He received a simple reply: “24. 7. 365.”

“I got the message,” Kirk Miller said.Business has been good lately because there is a lot of drilling

east of Interstate 77, Jack Miller said. Within the past four years, there was increased activity in states surrounding Ohio that con-tributed, too.

“It’s been very good for us,” Jack Miller said. “We can see a lot of strong activity for the next three to five years.”

The company has seen a lot of changes in the industry over the past five decades. The primary thing the company does is sell steel pipe. It also threads pipe in three states. But, as Kirk Miller said, “We do everything.”

Continued on pg. 68

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1. Carroll County 2682. Harrison County 99

3. Columbiana County 724. Monroe County 43

Noble County 435. Jefferson County 366. Guernsey County 34 7. Belmont County 29

8. Mahoning County 199. Portage County 1510. Stark County 13

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IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, WELL SITES IN VARIOUS STAGES: PERMITTED, DRILLING, DRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDDRILLED, COMPLETED, PRODUCING, PLUGGEDSOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF 5/25/13

GAS&OIL64


Commissioners updated on changes in legal process of transferring property

from one owner to another

Guernsey County Auditor Tony Brown and Amy Swigart met recently with county com-

missioners to update them regarding changes to conveyance standards.

Brown said the changes are neces-sary to address gas, oil and mineral deed transfers and conveyances.

“We previously met with local at-torney Dave DeSelm and he formed a committee to draft the new convey-ance standards,” said Brown. “Those standards will then be approved by the county’s prosecuting attorney and

public hearings will be held before final approval.”Brown said he will attend a meeting with other auditors from

the oil and gas counties in Ohio to discuss the standards.“We want them to be uniform,” said Brown.Call the commissioner’s office, 432-9200, for additional in-

formation.

Rick StillionDix Communications

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‘Exciting time’ in gas businessWhen he recently ad-

dressed local leaders, politicians and members

of the oil and gas industry, the presi-dent of Ohio’s largest gas utility outlined a variety of ongoing and upcoming programs.

Jack Partridge, president of Columbia Gas/NiSource, spoke at the annual meeting of the Eastern Ohio Development Alliance.

“It’s an exciting time to be in the gas business. Gas is good. The state is blessed with a number of resources beyond gas, in-cluding coal,” said Partridge. “It’s a wonderful time to promote growth and economic development in Ohio. What a different world it is now versus a few years ago.”

The industry is experiencing decade-low natural gas prices, and the company is well entrenched in customer-friendly pro-grams.

Work has started on a $2 billion project to replace portions of its pipeline system across the state. Over 25 years, the com-pany anticipates replacing 4,000 miles of aging steel pipes with longer-lasting plastic, he said. The new system provides for in-creased pressure and “paves the way for residential growth and job creation.”

Also begun is a five-year program upgrading the way it reads meters by installing a radio-based Automated Meter Reading System.

It will replace bimonthly estimated readings with an actual monthly reading from a vehicle.

“It’s accurate, efficient and customer friendly,” he said.Moving into the area of shale play, Partridge said, “We are in

an up cycle. New shale discoveries are good for producers and communities. But, until (the gas) gets to distributors, it has not it’s full potential.”

Columbia Gas of Ohio and NiSource, he said, are “helping to reduce infrastructure bottlenecks.” Shale is “such a game chang-er. We think this is one of the most profound events that has

Christine L. PrattDix Communications

Work has started on a $2 billion project to replace portions of its pipeline system across the state. Over 25 years, Columbia Gas/NiSource anticipates replacing 4,000 miles of aging steel pipes with longer-lasting plastic, according to president Jack Partridge.

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unfolded in U.S. history.”By working together, he said, shale play promises to translate

into “lasting gains for the population.”To do that, Ohio and the industry are learning from the mis-

takes of others, said Partridge. To enjoy long-term prosperity, “We need to do it right.”

“We’ve experienced generational poverty. Now is the time to experience generational prosperity.”

To make that happen, he said, the company is granting a total of $100,000 to the Foundation for Appalachia Ohio and Appa-lachian Partnership for Economic Growth. The grant funds will allow partners leverage funding to advance regional opportuni-ties and strategies that benefit Ohio’s communities.

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Kirk Miller, co-chief executive officer of Ken Miller Supply Co., Wooster, stands by the popular “Purple Pumper” that has greeted passers-by for decades. His son, Jordon, was the last to paint the smiling steel structure, making him the fourth generation of the family to work in the business.

“WE GO TO WORK EVERY DAY” from pg. 63

In addition to supplying quality tubular products and services for the oil and gas industry, it sells production equipment and provides repair services.

When Ken Miller Supply began, it was supplying frac tanks for those drilling in the Clinton formation, which is a shallow formation.

“The Utica used to be a big pain to drill through,” Kirk Miller said. Because of science and technology, producers have found an efficient way to drill into the Utica, which has resulted in new equipment and rigs. So, where a string of pipe used to be around 3,000 feet, it is now 18,000 feet, he added. Companies like Miller Supply now face greater liability and greater risk.

“There’s a fear factor,” Kirk Miller said. “A 13-inch pipe weighs about 2,000 pounds. The stuff weighs twice as; the equip-ment was designed for smaller pipe. It changed the dynamic.”

Science and technology could possibly change the dynamic again in this area.

Right now, producers are focused on drilling in Eastern Ohio because that is where the “low-hanging fruit is,” Jack Miller said. “Drilling could come west when science and technology learns how to extract oil from our shale. We need to find ways to get it out of the shale.”

The family’s heritage is showcased at the Ken Miller Supply Museum, a private oil, gas, car and truck museum in near Shreve. For more information, call (330) 496-4024 or (330) 378-2121.

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Natural Gas Vehicle partnership seminar held at ‘energy college’

As the keynote speaker for the recent Ohio Natural Gas Vehicle Partnership

seminar, Dr. Paul Brown, president of Zane State College, site of the event, said he was “very proud and very excited about energy. We are on the brink of making history. We are becoming the ‘energy college’ in this area.

“In addition to the oil and gas technology programs, there are many certification and training programs in ancillary industries, such as science, mechanical/civil/construction and electrical en-gineering, environmental and business paralegal courses.”

Brown said his vision of these diverse training sectors can be used to create a hi-tech corridor that focuses on our greatest as-sets, adamantly stating, “we must merge business and academia to be successful.”

“We have an energy calling card to attract business. We can use energy as the foundation of the corridor. We have a strong energy sector emerging, in addition to manufacturing, which is an added advantage in the creation of the corridor,” said Brown.

“We need education leading the way with research and de-velopment. We have access to one of the country’s greatest in-terstate connections — I-70 and I-77 — and we have airports. With these fundamental assets we can transform Appalachia. The goal is to turn the vision into a plan and invite all who want to be part of the energy revolution. Energy will lead the way.

“We are in exactly the right place at the right time.” The second statement refers to a ranking in 2007 when Zane

Stare College was ranked 9th in the nation based on gradua-tion rates and student satisfaction. That source is Washington Monthly magazine, Sept 2007.

The event, was a cooperative initiative sponsored by the col-lege and Clean Fuels Ohio, “a statewide non-profit organization dedicated to promoting the use of cleaner, domestic fuels and ef-ficient vehicles to the transportation industry, government, and the general public,” said Dr. Jerrold Hutton of Clean Fuels Ohio, and moderator of a panel of invited speakers.

Clean Fuels Ohio purpose if to educate and advise, leverages funding, improve air quality and energy security and recognize leaders through Ohio NGV Partnerships, networking, confer-ences, workshops, webinars, and technology expos.

“We are currently tracking and mapping compressed natural gas and liquid natural gas and renewable natural gas develop-ment, an alternative fuel station locator, policy education and outreach,” said Hutton.

Panel members included:• Bill McGlinchey of AFV International, said, “Ohio is in the

heart of natural gas development ...Kudos to Zane State for of-fering training relating to natural gas.”

• John Magill of the Ohio Board of Regents, said steps have

been taken by the Regents to transfer credits between educational institutions to build consistency between universities. “We must be responsive to the people in the oil and gas industry,” he said.

• Denny McCann of the Ohio Fire Marshall’s Office, said, “We are very involved in the oil and gas business. Our primary responsibility is to save lives, contain fires or gas leaks. There are standards for the fuel source, but not the dispensing of natural gas, even though there are companies who have natural gas vehicles and their own fueling stations.”

McCann said to install a CNG fueling station, the only regulation is to comply with the building code, There is no permit required, although discretionary permits are issued by the fire department rela-tive to the Ohio Revised Code, Section 2208, Compressed Natural Gas motor fuel dispensing facilities.

All of the speakers voiced their concerns regarding the lack of standards or regulations for dispensing compressed natural gas and for fueling stations.

There are currently two CNG fueling stations for fleets in Zanes-ville.

For more information about Zane State’s certification and degree programs related to gas and oil, contact Paul LaPrise at Zane State College, (740) 588-1219, or email [email protected].


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