The Ohio Oil & Gas Association Pipeline

(Columbus Dispatch) An Ohio legislative panel approved new rules Monday for the construction of oil and gas drilling wells, amid an underground shale exploration boom in the state.

The state's rule-setting committee also cleared new guidelines for drilling permits and set certain industry standards, primarily affecting wells in the Utica and Marcellus shale formations.

Larry Wolpert, executive director of the Joint Committee on Agency Rule Review, said the panel must clear or reject rules based on technical criteria not policy. He said no one objected to the rules, which conform regulations to a bill passed two years ago. The new rules are expected to take effect Aug. 1.

The panel did not take up any of the environmental or public health concerns debated at public forums in Ohio, Pennsylvania, New York and other states involving hydraulic fracturing, or fracking. And a Sierra Club spokesman said the group considers the committee action as procedural.

(Cleveland Plain Dealer) Jack Shaner, a spokesman for the Ohio Environmental Council, said Monday the organization was generally supportive of the new well construction rules.

"We are satisfied that DNR has done a good job on these rules," he said. "However, Ohio needs to put many more protections in place and that's the center of the debate right now in the Legislature. Well construction is a critical part of this, but it's not the only part."

Shaner said environmentalists are still fighting for strong public notice requirements, full disclosure of the chemicals used in the drilling process, and tough fines, among other things.

In a letter Friday to nearly 1,400 oil and gas producers, state natural resources director James Zehringer said the new rules would be both environmentally safe and business-friendly. Zehringer also pitched smaller oil and gas producers on the fact that a severance tax increase on high-volume wells, proposed by Gov. John Kasich, would not apply to them.

The tax hike has been opposed by the Ohio Oil and Gas Association as an unfair burden on the industry.

Department spokesman Carlo LoParo said the letter was not an attempt to muster support among smaller drillers for the governor's proposal, which has stalled at the Statehouse. He said regulatory updates are sent routinely to affected businesses.

EPA Finds No Unsafe Contamination by Oil and Gas of Well Water in Dimock, PA

(Cleveland Plain Dealer) Federal environmental regulators say testing of scores of drinking-water wells in a northeastern Pennsylvania village has failed to show unsafe levels of contamination, a blow to residents who assert a gas driller tainted their water supply with hazardous chemicals nearly four years ago.

The U.S. Environmental Protection Agency released test results for an additional 12 homes on Friday and said they "did not show levels of contaminants that would give EPA reason to take further action." It was the fourth and final release of data for homes in Dimock, a rural Susquehanna County community that's found itself in the middle of a passionate debate over the safety of drilling and hydraulic fracturing in deep rock formations like the Marcellus Shale.

The EPA testing is only a snapshot of the highly changeable aquifer and will not be the final word on the health of the water supply. But pro-industry groups and Cabot Oil & Gas Corp., the Houston-based driller whose faulty gas wells were previously found to have leaked methane into the aquifer, assert the test results justify their position that Dimock's water is safe.

(USA Today) Drinking-water wells in a northeastern Pennsylvania community show no unsafe levels of contamination from the drilling method known as fracking, the Environmental Protection Agency announced today.

Test results for the last 12 of 61 homes in Dimock, "did not show levels of contaminants that would give EPA reason to take further action," the agency said, according to the Associated Press.

Data on two homes was not released because the agency was unable to contact the owners.

(Bloomberg Business Week) "The fact remains, EPA's own tests have already vindicated the long-standing allegations of water contamination and clearly shows that the water of the affected residents is unfit for human consumption," said Claire Sandberg, executive director of Water Defense, an anti-drilling organization.

The group distributed a statement from Ron Bishop, a drilling opponent and chemist at the State University of New York at Oneonta, that said many of the wells are "significantly contaminated" with pollutants that threaten human health.

EPA spokesman Roy Seneca defended the quality of the testing, saying "the agency has used the best available scientific data to provide clarity to Dimock residents and address their concerns about the safety of their drinking water.

ODNR to Triple Oil, Gas Inspectors, Media Concerned Wells Not Inspected

(Cleveland Plain Dealer) Ohio expects to triple the number of its oil and gas field inspectors, as horizontal drilling and fracking of shale formations intensifies and moves west across the state.

The Ohio Department of Natural Resources wants to have 90 inspectors in the field by early next year, up from more than 30 today, spokeswoman Heidi Hetzel-Evans said.

State regulators are scrambling to keep up with Ohio's latest energy push. They inspected 18 percent of the state's 64,481 operating wells in 2011, leaving more than 50,000 wells unchecked.

"It's almost a daunting task, but you gotta do the best you can," said Gene Chini, district supervisor of the north region of the Division of Oil and Gas Resources Management.

Ohio has inspected a smaller share of its wells since 2009 than its neighbor in the shale boom, Pennsylvania. Ohio's inspections also lagged those in three other big oil- and gas-producing states -- Texas, Colorado and Oklahoma, though funding shortfalls in Oklahoma have cut inspection rates almost in half in recent years.

Severance Tax Update: As Poll Claims Public Support of Governor's Proposal, Kasich, OOGA Talk to Local Chambers of Commerce

(Columbus Dispatch) Ohio voters back Gov. John Kasich's proposal to raise taxes on shale fracking and use the revenue for an across-the-board state income tax cut, a new poll released today indicates.

Sixty percent approve of Kasich's plan, 32 percent are against, the poll shows.

The Republican governor's proposal is stalled in the GOP-controlled legislature, with several lawmakers worried about increasing any taxes. Kasich has said with energy companies poised to pull billions of dollars worth of oil and gas from the shale underneath Ohio, they can stand to pay more than 20 cents a barrel.

The measure gets support from voters of all stripe: 54 percent to 36 percent among Republicans, 65 percent to 28 percent among Democrats and 63 percent to 29 percent among independents.

By a 20-point margin, Ohioans would support higher taxes on fracking even if they didn't get the income tax cut.

(Business Journal) Existing taxes on the oil and gas industry could generate upwards of $1 billion in new revenues for state and local governments, making Gov. John Kasich's proposal to increase severance taxes in Ohio unnecessary, a representative of the industry said Thursday.

Jerry James, president of Artex Oil Co. in Marietta and volunteer president of the Ohio Oil and Gas Association, addressed members of the Youngstown/Warren Regional Chamber and its government affairs council regarding Kasich's proposal to raise taxes on natural gas liquids and crude oil from the current 1.5% to 4%, following an initial cost-recovery period. Kasich has proposed using the proceeds to fund a cut in the state income tax.

(Zanesville Times-Recorder) The Zanesville-Muskingum County Chamber of Commerce is opposed to Gov. John Kasich's proposed tax hike on drilling companies.

The chamber outlined its official position Wednesday, the same day a poll found voters strongly favor the governor's proposal to raise taxes on big oil and gas drillers to fund modest income-tax relief.

In a statement released Wednesday, chamber president Tom Poorman wrote that the chamber is not necessarily against an increase in the future but that at least for now, the potential cost outweighs the potential benefits.

"Higher taxes will make it more difficult to compete with other places," Poorman wrote. "We are not willing to risk this new opportunity."

(Cleveland Plain Dealer) Editorial Still, Ohio Natural Resources Director James Zehringer's decision to field more inspectors is welcome. It also complements oil-and-gas moves by his boss, Republican Gov. John Kasich: Despite objections from the Statehouse's inexorable oil-and-gas lobby, Kasich wants the General Assembly to enact a "fracking tax," as the oil and gas wells using this technique proliferate in eastern and southeastern Ohio.

Ohio's severance tax rates on minerals, as previously observed here, are almost laughably slight. Last fiscal year, state severance taxes on Ohio-produced minerals totaled about $1 per Ohioan. Given the enormous wealth dug or drilled out of Ohio, that's scandalous.

STRONGER's Important Role in the Ohio Regulatory Process Discussed

(Crain's Cleveland Business) by Greg Russell, Chair, OOGA Environment Committee Following several months of review, including in-person presentations made by division staff and participation by members of the Ohio EPA and the Ohio Department of Health, STRONGER issued a report praising the Ohio program as, among other things, "well-managed, professional and meeting program objectives."

The report lists several strengths of the Ohio program meriting special recognition. For example, it notes the division's efforts in undertaking a thorough assessment of the Ohio program and developing the revisions found in S.B. 165 to address hydraulic fracturing, funding and workload priorities.

It also praised the notification and disclosure requirements related to hydraulic fracturing - characterizing them as "comprehensive" - and the division's arsenal of enforcement tools to ensure compliance with Ohio's regulatory requirements.

According to the report, an estimated 80,000 wells have been hydraulically fractured in Ohio without a single instance of related groundwater contamination.

This report, and earlier STRONGER reports on Ohio's oil and gas program, illustrate why: a combination of a sensible regulatory program balancing the interests of natural resource conservation and the public, and a proactive, professional regulatory agency promoting both.

The Perils of Low Natural Gas Prices on Economy Explained

(Crain's Cleveland Business) A year ago, this newspaper was running its first stories about Ohio's potential shale gas industry. At the time, natural gas was selling for more than $4 per thousand cubic feet (MCF).

Since then, billions of dollars have been spent by drillers to secure mineral rights in Ohio's Utica shale region. But though the state has been abuzz with activity as drilling rigs move in, natural gas recently has been selling for around $2 per MCF and many worry the price will fall further.

Just how the price drop will affect the industry's development in Ohio remains to be seen. However, what's certain is that the falling prices are not welcome by drillers, by land-owners waiting for royalties from the sale of gas extracted from their properties or by the state, which is anticipating an influx of badly needed tax revenue in its coffers.

For additional information on the OOGA Pipeline, please contact:

Brian Hickman

Government Affairs Manager

Communications Director
Ohio Oil & Gas Association
(740) 587-0444
bhickman@ooga.org