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Why The Oil and Gas Leasing Commission Was Created

Posted By Brian Hickman, Director of Government Affairs, Monday, October 16, 2017

In 2010, House Bill 133 was passed and enacted. The bill provided Ohio with a formalized process to determine if oil and gas activity was suitable on public lands. Before HB 133, Ohio’s Department of Administrative Services (DAS) was the sole arbiter of leases, which usually entitled DAS sending the agency in question a boilerplate contract for such an agreement.

HB 133 looked at this practice and created the Oil and Gas Leasing Commission. The panel was comprised of two representatives of the oil and gas industry, a representative knowledgeable in finance or real estate transactions, an environmental or conservation interest, and the Chief of the Division of Geological Survey, who would Chair this group.

Collectively, the Commission would harness these perspectives and decide if an oil and gas lease would be beneficial to enter into with an operator. This analysis would be vital to both the success of the program and the quality of offers accepted and entered into by the State of Ohio.

For example, conceptually the oil and gas industry representatives would provide the Commission with information regarding the drilling of the well, setbacks, and other details pertinent to drilling and operating an oil and gas well. The member representing real estate or finance would provide the Commission with information on the lease, as in what is a reasonable amount for the state to receive with the lease or other contractual provisions. The environmental or conservation interest would bring a perspective of these state lands, as in is it feasible to lease here or, if a lease can proceed, what additional safeguards should be discussed.

In summary, the Oil and Gas Leasing Commission was established to create a formalized process for various interests to begin a discussion about if an oil and gas lease should be entered into on certain state lands. Communication between these interests, the state, the regulatory body, and the general public is the central notion of the program. Now that one individual has been appointed, it is our hope that more appointments follow so that this important discussion can take place for the benefit of Ohio and its citizens. 

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