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Member Spotlight: Mark Lytle, Buckeye Oil Producing Co.

Posted By Lyndsey Kleven, Communications Coordinator, Tuesday, February 2, 2016

The member spotlight series features legacy OOGA members who have been a member of the Association for at least 10 years. If you would like to recommend someone to be highlighted, please contact Lyndsey Kleven lyndsey@ooga.org

 

Background information:

 

Mark Lytle was born and raised in Fredericksburg, Ohio (a small town just south of Wooster) and grew up wanting to become a game warden.  Mark had a short stint at a technical school in Zanesville to pursue this ambition that didn’t last long.

 

Mark’s father worked as a schoolteacher and his mother was a radiology technician.  His brother, Skip, and twin uncles, Dean and Gene Smith, worked in the oil and gas business at this time, prompting his interest.  Going a completely different direction in his career path, Mark started working for Dowell out of Wooster in 1975.

 

Dowell was Mark’s first experience in the fracking business and introduced him to many new experiences.  He was willing to take on new opportunities as they became available within Dowell.

 

“When I was at Dowell I wasn’t married, and if somebody said go somewhere I had my hand up. I was fortunate enough to go to the Alaskan North Slope and Laredo, Texas on the Mexican border.”

 

Mark worked at Dowell for three years gaining experience in the industry, learning a lot from Rick Carter, who would become a close friend and mentor. Across the street from Dowell, Buckeye Oil Producing Co. was building a new warehouse. Skip and one of his uncles were working for Buckeye at the time and in 1978 Mark also got a job at Buckeye Oil Producing.  He started out driving truck and would sit in on the handful of wells being drilled by Buckeye because of the experience he gained from working at Dowell.

 

Skip was the field superintendent at Buckeye around this time, but left the company soon after Mark started working there.  Mark inherited some of his responsibilities and managed to work his way up over the years.  Throughout the years Mark sporadically worked with his uncles, which he found to be very helpful drawing on their knowledge.  Starting with the company more than 37 years ago, Mark worked his way up to vice president, president, and served as the CEO of Buckeye Oil Producing since 2005.  Mark “semi-retired” from Buckeye in 2013 but remains active managing the production in West Virginia and southern Kansas operations.

 

Buckeye Oil Producing Overview:

 

The founder of Buckeye Oil Producing was R.K. Shoolroy, who got into the oil and gas business in the 1960s in Wooster, Ohio by owning retail gasoline stations.  The office space that Buckeye currently occupies in Wooster was one of the first gas stations that Mr. Shoolroy owned.  In the 1960s crude oil supply was starting to get short and Mr. Shoolroy sold off some of his gas stations to Ashland Oil.  Always thinking ahead, Mr. Shoolroy went out and bought some of his own crude oil production so that he could take his crude oil to the refinery and trade it for gasoline, in order to keep his remaining gas stations open.  He got into the production side with the goal of keeping the gas stations running.  Mr. Shoolroy found that he liked the production side better and got out of the gasoline station business to start Buckeye Oil Producing.

 

Buckeye started out with only a couple of well and over the years have grown greatly.  Starting off in Ohio, the company grew primarily through acquisitions with the philosophy of buying existing production.  When production began getting more challenging to purchase in Ohio, the company started its own drilling programs and drilled some wells for themselves.  Today they continue to drill their own wells and have grown outside of Ohio.  With approximately 500 wells, and 20 employees working for the company, Buckeye has come a long way from where it started.

 

“Buckeye was always very thrifty, even in the slow times, which we kind of liked actually, because you could make better buys. Today that’s not the case.”

 

Buckeye is an independent company that primarily drills their own wells.  Lytle says they have partnered with a lot the good, older generation companies in Ohio. The majority of the wells operated by Buckeye are conventional wells in the Clinton, Berea and Knox formations.

 

“In 1983 we branched out of Ohio and purchased property in West Virginia.  We kept that until 1996 and sold it off due to plugging liabilities.  In 2000, we went back to West Virginia which has been a lucrative expansion.  We’re not just a little company; we’ve expanded into seven states over the last 15 years.”

 

In 2003 Buckeye was integral in starting a consortium made up of four companies looking to grow drilling operations.

 

“We saw a lot of companies in Ohio and not a lot of good locations to drill.  We felt that in order to grow our companies we’re going to need to get out of Ohio.  We all pulled together and hired a geologist based in Colorado. We ended up drilling in Colorado, Oklahoma, Wyoming and Texas. We learned a lot and met a lot of interesting people.”

 

The consortium still exists today with three participating companies.  They still work together on projects and have found success drilling in Kansas and are currently drilling in Colorado.

 

“The direction that we’ve gone in the past 5 years or so is drilling for oil.  All of our drilling prospects must have good oil potential before we would drill.  Anything we drill now has to be primarily oil.”

 

Mark’s intrigue in outside ventures has led Buckeye to become somewhat diversified over the years.  They have always owned some real estate, but have gotten into investing in high-tech start up ideas. A group of people in Akron was recently looking to develop replacement disc for a spine and Lytle became one of the investors. Buckeye helps to providing funding to get the project up and in the start phase, with the end goal of selling them off. Other entities also include a hydraulic shop business, and tool and die plant.

 

“It’s interesting. If I get bored in the oil business, I can go somewhere else. I guess I’ve always been intrigued by new technologies. Some of the ideas we used in the oilfields weren’t the smartest or best ideas in the world, but I’ve tried a lot of different ones. Getting involved in these outside ventures has been an interesting distraction as the oil business slows a little bit.”

 

Horizontal drilling and state of the industry:

 

Buckeye Oil isn’t doing any shale work and farmed out its shale acreage. Lytle says they did this over five years ago when the shale play was just beginning.  They sold off acreage and took a decent offer early on.

 

The nice thing about horizontal and deep shale drilling is that companies are bringing new technology and a willingness to try new techniques in the industry.  Some of the technology can be adapted to different drilling projects, like the Clinton and Berea sandstones, which Mark has been involved with.

 

“Some day you will see a handful of producers go together and drill horizontally. We’ve talked about it with some producers.  But right now, with these prices, no one could get excited about horizontal drilling.  I still think that horizontal drilling in the Clinton has some merit and we could see a little of that in Ohio.  We need to see at least $60 a barrel before anyone can get remotely excited about it.  Buckeye will remain mostly conventional, for now.”

 

Mark has watched the play and seen the deep shale lines move around, drawing big companies to come to work in Ohio in the last years. He says the only prayer for the independents is to watch and learn.

 

“On the shale side of things, I think there’s going to be a spot someday, a window, where independent producers can go in and do it.  But boy, the sad part about it is that’s years away now, not as close as we originally had thought.”

 

“I’ve been in the industry a number of years and I’ve seen a lot of highs and lows.  But today it’s a completely different low. It’s going to last longer. When we come out of this, if you’re not a little more savvy on what you do, your conventional Clinton wells aren’t going to bail you out like they have in the past.  Even with an up-tick in prices all it’s going to do is prolong the agony of the companies and it’s not going to bail everyone out.  Smaller guys are going to have to look at some of the unconventional ways of horizontal drilling in order for a company to survive. You’re not going to be sitting on these Clinton wells and produce them like we’ve all previously done to make a good living.  This time it’s a different low, I think, and it’s longer lasting.”

 

History with the OOGA:

 

Lytle has been a long time member of the Ohio Oil and Gas Association, spanning nearly 30 years. He joined when he started working for Buckeye Oil Producing, who has been involved with OOGA since 1961.

 

Jeff Baker suggested to Mark that he run to be on the board of Trustees. He said that it could take a few tries in order for Mark to actually be elected.  Lytle was elected after his first attempt. Lytle has been an OOGA board member since 1978.

 

Mark initially got his feet wet with OOGA committees back when he was on the insurance committee.  Lytle described working with Berman Shaffer, Bill Musselman and Allen Jones and some of the issues that this committee dealt with. He learned a little about the insurance business, but a lot about the oil and gas industry’s early days. 

 

Mark was involved with a few other committees following the insurance committee but reflects on how he wished he had played a more active role.  Regardless, he attended all the meetings and supported the Association over the years.

“I’m a very firm believer, and I’ve said this from the beginning, I think that anyone who is going to drill a well in the state of Ohio should have to sit in on a OOGA board meeting to see all of the activity that goes on behind the scenes. All of the people on the committees, the committee chairs, the people behind them, and there’s so much involved in this process which most people don’t even realize.”

 

The overall theme of what Mark has seen happen within the Association during his tenure as a member is the change in political structure the industry is facing. Today he feels much of what the industry is dealing with is very much a political game.  He feels the Association and its leadership has been an integral part in shaping the industry and what it has established throughout Ohio.

 

Mark lives outside Millersburg with his wife, Janet.  They have 3 children and 2 grandchildren.  He enjoys “tinkering” on their 40 acre farm.

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A Reckoning for the Community Environmental Legal Defense Fund

Posted By Penny Seipel, Vice President of Public Affairs, Monday, January 25, 2016
Updated: Friday, January 29, 2016

Over the past few years you have heard those of us at the OOGA write about the antics of the Community Environmental Legal Defense Fund (CELDF) which has tried numerous times to get “Community Bills of Rights” passed in cities and counties across Ohio as well as other states.  These Community Bill of Rights suggest that nature and ecosystems have rights, that businesses operating legally in the state have no rights, that these local government ordinances supersede any state or federal law and that citizens of the community can just shut you down if they believe you or your business are in anyway harming nature.  Crazy right?  Especially considering some of these ideas go against well-established legal precedents previously decided by the United States Supreme Court!

It looks as if CELDF has goaded a local government into legally defending one of these Community Bill of Rights one too many times.  A business in Pennsylvania, Pennsylvania General Energy LLC (PGE) went to court defending its ability to convert an existing gas well into an injection well, which it got the appropriate permits from the state and federal governments to do, against Grant Township who claimed that because the citizens of that township passed the Community Bill of Rights, their right of local self-government trumped all other forms of government and PGE was therefore not allowed to drill or operate an injection well.  PGE filed suit against Grant Township in August of 2014.  In the suit, which is proceeding in the United States District Court for the Western District of Pennsylvania, No. 1:14-cv-00209, PGE sought injunctive and declaratory relief to invalidate the Ordinance, as well as damages for the costs it incurred by having to dispose of wastewater at other locations. 

In an October 14, 2015 ruling, the court agreed that the Ordinance overstepped Grant Township’s authority, as granted to it by the Pennsylvania legislature under the state’s Second Class Township Code.  The case was continuing forward to determine if PGE was entitled to any damages.  On October 26, 2015 Grant Township filed a Motion for Reconsideration of the October 14, 2015 ruling.

On January 15, 2016 PGE filed a motion for sanctions against Grant Township and their legal counsel, the Community Environmental Legal Defense Fund for their frivolous legal claims and defenses. 

We, and many others in the oil and gas industry, will be anxiously awaiting the decision in both these matters.  If the court rules in favor of PGE, perhaps the CELDF will finally be held accountable for the snake oil they have been selling to communities across the country. 

Baker Hostetler breakdown of the case thus far can be found here:

http://www.northamericashaleblog.com/2015/11/02/pennsylvania-township-moves-to-revive-an-ordinance-banning-disposal-of-wastewater-from-hydraulic-fracturing-activities-after-federal-court-ruling-invalidated-it/?utm_source=feedburner&utm_medium=feed&utm_cam

January 15, filing by PGE found here:

http://naturalgasnow.org/wp-content/uploads/2016/01/161-main.pdf

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OOGA 2016 Winter Meeting Preview

Posted By Lyndsey Kleven, Communications Coordinator, Tuesday, January 19, 2016

www.oogawintermeeting.com

The Ohio Oil and Gas Association will host its Annual Winter Meeting on March 16th – March 18th at the Hilton Columbus at Easton. The event will bring together the membership and top industry leaders from Ohio and across the nation to provide the most current updates regarding the oil and gas industry. Attendees will hear from state and federal elected officials and nationally accredited speakers. Topics will include production, exploration, legal and legislative updates.

As many of you know the annual meeting has grown in size and scope over the last few years and pre-registration for the meeting is recommended. Hotel accommodations are filling up quick, check the website under “Staying in Columbus” to find partnering hotel.

The opening day of the event will include select Association committee meetings. Beginning at noon, exhibitors are able to set up and prepare their spaces for the Winter Meeting. The Ohio Geological Society will hold a special session at 4:00 p.m. Joseph Smith with PDC Energy, will present “Determination of Wellbore Orientation in the Utica Shale of Southeast Ohio.” Afterwards, the OOGA will hold our Explorer Foundation Corporate Member Reception starting at 5:00 p.m. (Please note that this event is by invitation only.)

On the second day of the event, registration opens at 7:30 a.m. Registration to the event includes breakfast which is available from 7:30 – 9:30 a.m. The trade show begins at 8:00 a.m. and will run all day, featuring a diverse array of industry products, goods and services. The Thursday business session will kick off at 9:00 a.m. We are developing a must see display of presenters that will keep the audience engaged and informed on all that is happening within the industry. A reception to benefit the OOGA’s PAC will be held at 4:30 p.m. will also be held from 4:30 p.m. to 5:30 p.m. followed by the OOGA President’s Reception that begins at 5:30 p.m.  The reception includes complimentary drinks and hors d’oeuvres for all attendees to join and network with event attendees, speakers and exhibitors.

As in years past some of the topics for the business session will include a legal report, regulatory update, and legislative update. OOGEEP will provide its annual update, as well as a review of industry data with an in-depth look at the 2015 DeBrosse report and a merger and acquisition analysis. Important issues affecting the industry today will include presentations the Pipeline and Hazardous Materials Safety Administration (PHMSA), the U.S. Energy Information Administration and Ohio EPA on assistance with permitting programs.

The final day of the event includes more of the trade show, breakfast, and the Friday business session that begins at 9:00 a.m. The event concludes with our Membership Luncheon featuring the keynote speaker that begins at noon.

This year we are proud to announce that David Wasserman, U.S. House editor and quantitative election analyst of the non-partisan Cook Political Report, as the Keynote speaker. Founded in 1984, The Cook Political Report provides analyses of presidential, Senate, House, and gubernatorial races. The New York Times called the Cook Political Report “a newsletter that both parties regard as authoritative.”

In this role, Mr. Wasserman is responsible for handicapping and analyzing U.S. House races. His data-driven forecasting looks at both national and local politics, including the relationship between consumer brand loyalties and voting, and what the future holds for American elections. His commentary on U.S. House races has been cited in numerous outlets including POLITICO, the New York Times, the Washington PostUSA Today, the Wall Street Journal, the Economist, and RealClearPolitics.

Prior to his service to the Cook Political Report, Wasserman served as an analyst for the NBC News Election Night Decision Desk in 2014, 2012, 2010, and 2008. He has appeared on NBC Nightly NewsABC World NewsC-SPAN Washington Journal, CNN, and NPR.

For more information on this event, please visit our newly redesigned event website at www.oogawintermeeting.com where you may also register online. Contact the Association for available exhibit and sponsor opprtuinites. We look forward to seeing you there.

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Landowners deserve to have their minerals developed in Southeastern Ohio

Posted By U.S Congressman Bill Johnson, Wednesday, January 13, 2016

For more than a century and a half, Ohio has been developing our natural resources sensibly and responsibly. This approach is rooted in our culture and economy.

Despite this tradition, the federal government is hindering shale development throughout significant parts of Southeastern Ohio. Some residents, particularly in Monroe and Washington counties, have elected to lease their private mineral rights for the purpose of oil and natural gas development. But many are finding themselves in a situation where their private leases are at risk of not being developed because their private mineral leases are adjacent to, or under the surface of, the Wayne National Forest.

As the federal agency with jurisdiction over these leases, the Bureau of Land Management must allow for a transparent and efficient consideration of these leases in and under the Wayne. While there are more than 1,200 active oil and gas wells on the surface of the Wayne National Forest, there has not been any shale development under the forest, despite the fact that the U.S. Forest Service has indicated that its Forest Plan would accommodate shale development.

Recently, the BLM took a positive step forward announcing the start of the process to approve federal leasing in the Wayne National Forest. While this is progress --- a much needed step toward restoring property rights -- all too often President Obama's agencies put politics ahead of sound science when making regulatory decisions. That's why I have been tracking this process for a few years now. In fact, I have authored legislation that would require 20 percent of the revenues from production sites on federally-owned land be returned to the counties whose governments provide services there. This legislation would also require that this revenue be used to support education initiatives and road improvements within that county -- at no additional cost to the taxpayer.

Ohio is rebounding, and oil and gas development is playing a major role in strengthening our economy. The Wayne National Forest Supervisor stated in August 2012, and I concur, that "there is neither the need to restrict availability of federal oil and gas resources, nor the need to propose additional Forest Plan standards of guidelines."

I urge the BLM to take action on the pending leases in the Wayne National Forest.

Republican William Leslie "Bill" Johnson has been U.S. Representative for Ohio's 6th Congressional District since 2011.

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Bruce Levengood, OOGA Member Spotlight

Posted By Lyndsey Kleven, Thursday, January 7, 2016

The member spotlight series features legacy OOGA members who have been a member of the Association for at least 10 years. If you would like to recommend someone to be highlighted, please contact Lyndsey Kleven lyndsey@ooga.org

Background information:

Bruce Levengood got his start in the oilfield merely out of the need for a job. Bruce grew up in Mineral City and after finishing high school went to Columbus to study electrical engineering at Ohio Tech; the program was part of the Bell and Howell Education Group in Columbus (currently DeVry University). Bruce liked it, but found it wasn’t hands-on enough, so shortly after he ended up back home working in a grocery store.

A local man that worked a nearby oilfield job would shop for his groceries every Friday night. Bruce would ask him if the company was hiring yet, and the man would tell Bruce to show up at the worksite at 6:00 am with his lunch to see if they would hire him. Bruce did this about three times unsuccessfully.

“Finally one Friday night, he came in, same old routine. He said, ‘you know that job you’ve been wanting in the oilfield? If you take your lunch at 6:00 am I guarantee they will hire you. Today was my last day, I quit.’ The next day I showed up with my lunch and I was hired.”

Bruce started out as a roustabout. When the rig hand was out sick he was put working on the service rig. The service rig operator wouldn’t let Bruce leave the service rig when the original one was able to come back to work. It wasn’t long until Bruce was running the service rig and pumping wells. Bruce would go to pump one lunger wells that hadn’t worked for a while because the engine wasn’t running. He would tell the boss to get him the parts and that he could fix the engine. Much to his boss’s surprise, 19 year-old Bruce was able to fix the well engine.

“He was surprised I was able to fix this stuff. I grew up on farm and when something breaks you fix it. When Grandpa needs a hammer, you get him a bigger hammer. You just learn how to do that stuff, I was kind of mechanically oriented.”

The oil industry was percolating around 1977 with a lot of wells being drilled in eastern Ohio. Bruce’s brother John and our cousin Rick were also working in the industry at the time, painting tanks for oil and gas companies. Many of the companies were asking John if he knew where they could get a service rig. Bruce knew how to run a service rig and John had companies willing to provide them with a lot of work. 

Bruce’s parents were union carpenters, facing the recession in the 1970s they were in and out of work. They mortgaged the farm and started Levengood Well Service, a partnership of all nine members of the family. After pulling together the financing, the family went to Cambridge and bought a rig from Dale Young who was building rigs from recycled parts from the 1950s.

The business grew to two service rigs, a swab rig, three cable tool drilling rigs with trucks and dozers. “The demand for turnkey drilling services was so great that we leveraged the knowledge learned working for others in to drilling wells for limited partnerships. 

“We knew how to drill wells, we learned how to take leases, and so we got into the turnkey drilling business. We would drill a well for that customer, on that site, and operate it for them. So that got us into the operating business. We basically learned what needed know about drilling a well from being contractors. We kind of learned the business from the ground down. The service, how to put a well together, and make it work.”

Company Information:

In 1981 the Levengoods formed Atwood Resources, Inc., which became their turnkey drilling company. In 1988 Atwood bought Park Ohio Industries’ wells; at the time prices were thought to be at the bottom which turned out not to be the case. In 1992 Atwood sold controlling interest to Transfuel and the brothers amicably parted ways. Bruce took 100 of the old wells and started Sound Energy Company in 1992. The company started as a sole proprietor and was incorporated in 1994.

“I needed a name just like that, quickly, so I thought, what sounds good, and that sounded good—Sound Energy. One day I was in my suit and tie signing papers and the next day I was in my pick up truck pumping wells, happy as a clam—that’s me, I like being hands on.” 

Today Bruce is the President of Sound Energy Company, Inc. and runs the company with his wife Annette; his two sons Nate and Tyler also work for the company. Bruce’s entire family, including his daughter Amber, are all on the company board of directors. They still do business with Bruce’s other brothers and will occasionally drill wells together.  

Sound Energy is based in Ohio and focuses mostly on conventional wells, operating in 18 counties, with most of the focus being in Eastern Ohio. The company has seven employees, and use contractors when needed for services not provided by the company. 

“I live near Dover and I wanted to be able to get to our wells within a few hours.  If the phone rings, I am the guy to get it taken care of. Now we have wells from Cleveland all the way down to Cambridge.”

Sound Energy has drilled some wells over the years, becoming more oil oriented in the recent years when the price of oil started going up in the mid 2000s. Most of what they have came from acquisitions, starting with 100 wells in 1992 and operating 470 wells today.

The Shale play in Ohio has impacted Sound Energy with some of its wells overlaying the area. Sound Energy took advantage of the 1031 exchange, which created a tax-free exchange when selling assets. For this reason many operators had a willingness to sell properties about the same time Bruce was interested in selling some of Sound Energy’s Shale assets. Through this exchange Sound Energy launched into an acquisition mode and increased its well count by 200. It was able to convert non-performing assets in the Utica Shale, into performing assets.

Shale-development’s impact on business:

Shale development has been both good and bad for Sound Energy. It has been good in the positioning of its assets and operations that happened to over lay where the shale is located. The acreage they did own the deep rights on was in play and of interest to buyers.

“We were able to get some Shale sales to offset some of the pain we are facing with low margins on conventional wells. We were blessed to have the acreage in a really desirable place that worked out for us.”

Another positive are the technological advances that have come with this new play. Bruce says, the horizontal drilling will probably keep them in business longer through their conventional reservoirs. Sound Energy is staying very alert to how this is advancing as they acquired more Clinton wells while selling some Shale assets. 

“We have operators now drilling horizontal wells in our conventional reservoirs like the Clinton, Berea, and the shallower Shales. If prices ever come back to a reasonable place, this could give us the next playing ground to develop a new play.”

The negative side is the fact that it has created more regulatory oversight causing drillers to have to deal with new regulations coming from the state.

“Regulatory changes are the things that cause us to spend more time and money on things we don’t necessarily see a lot of reasoning for it, or could be overkill in some respects. It all comes from something happening in the industry and the reaction is more rules and more laws and stricter enforcement.” 

In addition, the advances in technology and drilling efficiencies have made the industry too good at producing.

“Ultimately it has impacted the price, the shale not just in Ohio, but all over the place has created this over supply that we’re all facing now. We’ve seen it before, although it seems like it’s the worst ever right now, but that’s what I thought the last time. The 90s were really bad, hopefully this won’t be too bad for too long.” 

History with the OOGA: 

Bruce joined the Ohio Oil and Gas Association (OOGA) in the early 1980s shortly after starting Atwood Resources. The early 1980s was a boom time for the industry and the Association had gone through a growth period at the time and had more than 3,000 members. Bruce originally joined the Association as a way to network and get to know other people in the industry.

Bruce recalled the Association’s leadership at the time and how the organization was able to evolve from this.

“Jerry Jordan was a good ambassador and was the one who took note of different regions across the state. Some areas felt missrepresented and the OOGA broke the state into the four regions. The bylaws were rewritten to have a producer representative from every region. If a company already had a member as a Trustee, no employee of the company could be the regional representative, the idea was to bring in new blood. Jerry was the spearhead to get that up and running." 

Bruce had also joined the North East Ohio Oil and Gas Association, which was formed because the upper region of the state felt underrepresented. When the Trustees created the regional groups among OOGA this interested Bruce and he started to get more involved, becoming the regional representative for his area.

“Finally they ran me for a producer category and I was elected to be a Trustee. Once you’re sitting on the Board and on the inside, you hear all of the issues talked about. The outer regions didn’t necessarily know a lot of what was going on. That communication was very well received and much needed. It did a lot to pull the whole state together and for this Association.” 

In 1980s Bruce was involved with the Association’s natural gas committee (there was also an oil committee). At some point along the way these committees were combined to form the producers committee. The moving parts of pricing open access and changes made in marketing of gas were issues the committee tried to stay on top of. 

When Bruce was starting Sound Energy he let his time as a Trustee expire to focus on managing his company. He remained involved with committees from 1994 through the 2000s when he would be elected on the Board of Trustees again as well as the Executive Committee, positions he still presently holds. 

“If anyone is going to be active in exploration or any ancillary aspect of working in the oil and gas fields in this state, they should become a member of this organization. There is so much that we do in both the political arena as well as the technological arenas. The knowledge that you can gain here is tremendous. Not only that, but supporting the organization helps to support your own livelihood. You will be with like-minded people to share your issues and try to solve those issues. It’s the old saying from Franklin, ‘if we don’t hang together we’ll surely hang separately.’”

Bruce also highlighted the importance of having an industry voice in the statehouse. He also cited OOGA’s good working relationship with IPAA to deal with issues at the federal level.

In regards to some of the issues the Association is currently facing Bruce pointed to everything the industry has done for Ohio and its residents.

“The savings that the people make on what they spend for gasoline and natural gas to heat their homes is far more than what they could ever get from a tax cut. When you get an industry that has basically done such a good job that we hurt our own economics the beneficiaries are the citizens of our state. Most people don’t understand the fact that the better break for citizens is someone who creates such a good product and so much of it that it causes the prices to come down, which has been a result of our industry. We’ve saved billions of dollars as a state for our citizens. That point is just not amplified enough.”  

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2015 Year in Review from OOGA President

Posted By David Hill, OOGA President, Tuesday, December 29, 2015

I would like to take a moment to reflect on past year and all that has materialized within the Ohio Oil and Gas Association in 2015. As I reflect on what we’ve seen over the year, the litany of issues the industry has faced this particular year have been seemingly insurmountable. I can't think of any time in the last 40-years where the hill to climb has seemed so high.

We have seen crude oil prices fall below $40 per barrel and natural gas prices are languishing at record lows, creating a general sense of gloom and doom among our industry on a global scale.

The price rut, brought to us mainly by Saudi Arabia, which is making an effort to control market share, is wreaking havoc on the United States’ domestic oil and gas industry. Decisions made half way around the globe are having real life implications right here in Ohio. Simultaneously, the collapse of the natural gas price in Appalachia, mainly due to lack of adequate infrastructure to get the gas out of the basin, is making life practically impossible for many members of the Ohio Oil and Gas Association.

Seeking Resolution:

All while this was going on, some of our elected officials in Ohio still believed that this would be a good time to increase the severance tax. After months of interested party meetings with the Administration, affected agencies and appointed House and Senate members to the 2020 Tax Policy Study Commission, I am pleased to report that it looks like we won’t have to discuss the severance tax for the next year or so.

The Association went through every aspect of oil and gas taxation from cost recovery to post production with the group.  It was truly a thorough process, and we believe the Commission finally realized that the industry was not over exaggerating our dire situation. 

And as if that wasn't enough, the well haters, mainly funded by left-leaning individuals and organizations, continued to declare war on the fossil fuel industry. Make no mistake, these groups, at their core, despise capitalism. 

The OOGA spent a considerable amount of time dealing with local control initiatives, dubbed the “Community Bill of Rights,” that popped up in multiple areas from Medina to Athens, by some radical outfit based out of Pennsylvania—the Community Environmental Legal Defense Fund (CELDF). They started attempting to dupe folks over in Youngstown several years ago into placing these items on the ballot.  Thankfully voters in Youngstown are smarter than what the CELDF had hoped and voted down the ballot initiatives for a fifth time this past November.

These groups also caught the attention of the Ohio Secretary of State Jon Husted, who issued an order to put a stop to this nonsense and keep these items off the ballot in Athens, Medina and Fulton Counties in November.  The way the CELDF crafted their ballot language to ban oil and gas activities did not follow Ohio law, which states that you need to establish an alternate form of local government when you propose to change the current system. Of course the Secretary of State’s ruling did not sit well with the CELDF and their disciples so they ended up taking the matter to the Ohio Supreme Court. 

But all in all, in dealing with these dishonest initiatives we successfully pushed back to defeat the majority of them. Columbus also sought for a similar initiative but came of short of having enough valid signatures for its petition, and the city of Akron and Portage County did not move forward with any action knowing they didn’t not have enough signatures to support.

If there was ever a time when the OOGA and this industry needed the full support of its entire membership, it is now. In light of the current situation it may seem difficult to donate your precious time and energy. But, if you're willing to help in this fight it is greatly important to stay involved with your state Associations to help get us through these challenging times.

Issues to Come:

In 2015 this Association has been actively engaging in stakeholder meetings on a number of rules packages stemming from the passage of several items of legislation over the years.  Secondary containment, well spacing and incident notification rules are being discussed and should be sent out for comment early next year. It is our hope that the new well spacing rules open up new opportunities for both our shale and conventional operators. 

The Association is still pursuing corrections to Ohio’s unitization laws that have caused our operators to stall all of their projects that include state lands.  We remain committed to the passage of House Bill 8 and will hopefully see some movement on that issue early next year. 

Looking Ahead:

It is estimated that by the year 2050, there will be 10 billion people on planet earth. Please remember that it will be your industry, the oil and gas industry, which supplies the energy needs for those 10 billion people in 2050. Things are very dire as we stand here at the end of 2015. However, access to abundant clean energy will continue to improve the human condition around the world for decades to come, so hold your head high.

In conclusion, I really cannot remember a more difficult and challenging time facing the domestic oil and gas industry in my lifetime. In these miserable times, giving up and throwing in the towel is not the solution. We must remain resolute, we must all work together and we all need to share information and ideas on how to survive in this environment. Please remember there is a reason why we are called "independent" oil and gas producers. We are a resilient and independent lot of people. We will get through this—we always have. No one is saying it's going to be painless or enjoyable.

I have recently had the opportunity to go to a few Universities throughout Ohio and give a "state of the industry" speech to the geology students and staff. More often then not, the students are very polite and attentive, and much is able to come to light during the question and answer sessions. But what troubles me the most is that these young people were struggling to see how they were going to be able to monetize the geology degrees that they are in the process of earning.

I offered to arrange a tour of a Utica production pad, a Clinton production well and allowed them to tour one of my own UIC facilities. With each visit the students became more and more engaged in the discussion and each site lasted longer and longer as the questions kept popping up. As I reflected on the day with the group of students, it dawned on me that in light of what we’re currently facing, what we have to do is gain the interest of the next generation and to build the next defenders of the industry. When an opportunity presents itself to engage the next generation, we have to show them, explain to them and let them see the value in what it is that we do—it is what makes me and someday them, proud to work in the oil and gas industry.

As I always say to the OOGA membership, keep your heads held high and always remember that you are helping to produce clean, abundant, domestic, affordable, life-giving energy to a nation that is starving for more.

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Merry Christmas from the OOGA

Posted By Lyndsey Kleven, Communications Coordinator, Tuesday, December 22, 2015

The Ohio Oil and Gas Association (OOGA) hosted its annual holiday membership reception on December 17, 2015 at the Cherry Valley Lodge in Newark. The event had a great turn out, with more than 200 members coming out to celebrate the holiday season with colleagues, friends, and Association staff.

Following the annual OOGA Executive Committee and Board of Directors meeting, a large representation from these groups was also present. This event is a great opportunity for groups to network, mingle, and Association members from near and far to get together to enjoy hors d’oeuvres and drinks.

The OOGA thanks everyone who was able to attend the annual holiday reception and wishes all of our members a very Happy New Year!

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Member Spotlight: Eddy Biehl, Stonebridge Oilfield Services

Posted By Lyndsey Kleven, Communications Coordinator, Tuesday, December 15, 2015

The member spotlight series features legacy OOGA members who have been a member of the Association for at least 10 years. If you would like to recommend someone to be highlighted, please contact Lyndsey Kleven lyndsey@ooga.org

Background information:


You can trace Eddy Biehl’s family history in oil and gas back to the 1870’s. Eddy’s great-great-grandfather briefly strayed from farming to give the oilfields a try but discovered he didn’t like it. The industry at some point busted in the 1870s and he went back to the hillside farms, which laid fallow for a couple of years and that was when he swore off the oil and gas industry. To his dismay, his four sons and son-in-law all went into the oil and gas business starting during the 1890s boom.

 

Eddy is the fourth generation in oil and gas and grew up on stories that his grandfather told his father and uncles of the oil booms in the 1890s. The family that didn’t stay in Ohio and the Appalachian region followed the industry west to California, and Texas by way of Illinois and Kansas. 

“There was family on mother’s side in the industry that were well shooters and glycerin hands. Before we had fracking we used nitroglycerine to access oil and gas. The safety concerns people have today pale in comparison to what was previously done with nitroglycerine.”

Eddy grew up working on nearby leases when he was 12 years old. Growing up around the business he thought that he wanted to get away from it in high school. This was in the 1960s and the industry was just coming out of a dry spell, which was tough. He recalled one of his first “economics lessons” of how his grandpa carried around a check from his best barrel of oil in 1928 and his worst in 1968, 40 years later and the checks were almost the same.

“I was going to run off and become a chemist and a lawyer, but ended up becoming a geologist with plans to go into mining. I went to Harvard and got my degree in economic geology in 1979.  I thought I was going to do hard rock metal mining. I then took a year off and came back to work in the coal mines to get some experience underground, which happened to be the year of the big strike with United Mine Workers. So I went back to work in the patch for a year, that really started to re-set the hook.” 

The 1979 oil boom caused prices to spike and Eddy started working on some well sites setting rigs as a well site geologist. He worked as an independent consultant until he was able to build up enough business to start a consulting firm. In the height of the boom they were setting rigs all over the Appalachian basin. Throughout his consulting work, Eddy and a partner had started drilling some of their own wells in the 1980s. When rigs were being laid down they morphed into the financial side and started doing asset evolutions, bankruptcies, and foreclosures. 

Eddy continued to do evaluation work from 1984 through 1998. He worked as the operations manager for Halwell Company, whose focus was on acquiring distressed properties in Ohio, West Virginia, and Pennsylvania for over a decade. This expanded into 11 states with 1,200 operated wells and more than 300 non-operated interest wells. The downturn came in the late 1990s and in 1998, Eddy acquired the company whose remaining assets were 900 wells in southeastern Ohio.

Company Information:

Stonebridge Operating Company was formed from the wells Eddy had acquired from Halwell in 1998. The company started during a bust, which was a difficult way to start off. To tighten cost they sold the office they had, with plans of being a district production office. They functioned as a small producer, operating wells and fixing them up.

Shale operating affected Stonebridge Operating Company as they originally estimated shale drilling was going to double cost and halve revenues. It turned out it more than doubled the cost of drilling and cut revenues by more than half on the traditional vertical wells. Eddy created a strategy to expand the company into new arenas.

Stonebridge devised and implemented on a four-prong approach to its operations. With close to 1,000 wells, traditional vertical drilling was still important. Cutting cost while still trying to figure out how to make the drilling work remains a focus today. The second prong was modifying its existing injection wells in order to take additional water from the shale plays to generate some additional income. Eddy described the remaining prongs and the shift to shale work.

“We don’t own a lot of deep rights but we had some leases we were able to clean up. We were able to put together a couple packages and worked with horizontal drillers, where they did have the deep rights. This included working with PDC on the first shale well drilled in Washington County, through a Stonebridge lease. The last piece we needed was offering service work.”

Stonebridge Oilfield Services was formed and provides services to Utica wells and vertical wells throughout the Appalachian Basin.

In 2011 Stonebridge Oilfield Services started offering services to the Utica drillers in Carrollton. They have worked on more than a third of the Utica wells in Ohio. The company provides roustabout oilfield services and continues to provide new services including containment, pipeline construction, land clearing, excavation, and injection wells.

“We’re not too good to do anything, were not afraid to get dirty or work hard. When a company needs a couple of extra hands on a rig move, or to hook up some pipe, they give us a call. It has given us the chance to develop some confidence, experience, and knowledge in the horizontal shale play.”

Stonebridge Oilfield Services is learning as they go and have expanded the services they offer as they’re gaining more confidence with horizontal drilling. With the current downturn, Utica drillers are looking for more bundled services which Stonebridge has been able to accommodate.

The service business has been good and done well, exceeding the production side this year. Production revenue has dropped during the downturn and Stonebridge Oilfield Services is always looking for ways to adapt and cut cost. In terms of the overall Stonebridge umbrella, they are becoming more service focused than production. 

Stonebridge has more than 80 employees and is based in Marietta. They have a Uhrichsville Yard where they service most of the Utica drilling support (previously in Carrollton). They also have yards and permitting facilities in Barnesville and Fleming. 

Shale-development’s impact on business:

Independently Stonebridge Oilfield Services didn’t have the specialized knowledge to drill horizontal shale wells, even though they had drilled a lot of vertical shale wells. Also with the group’s decline in drilling and shift to well services, they didn’t want to shift its capital to drill horizontal shale wells. Stonebridge Oilfield Services has taken its traditional oilfield knowledge to do roustabout contractor work in the Utica.

“2010 was kind of a pivotal moment for us, to watch the shale plays jump the river and come to Ohio. The family had seen dozens of booms and busts, but I said we were fixing to have our first “boom-bust” and that’s a different thing than we’ve ever been thorough before. You could just see that this thing was going to roll over the river and come south in Ohio,” Biehl said.  

Getting involved in the service business has allowed Stonebridge to participate in some new business ventures. “We looked at the play and frankly I was tired of standing at the gate peaking in. I wanted to be a part of what was going on.”

As Stonebridge has gained more confidence and picked up lessons along the way, they have been able to add the services that shale drillers are looking for.  The current focus is on growing injection well, pipeline construction, containment and production services.  The company has also diversified and is installing poly pipe for an asphalt company and containment for a county jail. 

“The industry has been built on change, and booms and busts. Change can be exhilarating and hard, and the Utica has been both for us, but you have to adapt to it. We’re dealing with higher line pressures, lower prices, which makes it harder to sell gas. But there are also many opportunities to do new things and it has been great for Eastern Ohio. The industry has been resilient enough to get under that cost curve and make it work.”

OOGA Involvement:

Eddy has been a member of the Ohio Oil and Gas Association (OOGA) since the early 1980s, seeing through the numerous issues that the industry faced throughout this decade. Eddy has taken on a participatory role with the Association throughout the years.

“The OOGA has been a vital voice for Ohio producers and helps to prevent overregulation. We have seen it before and we’re seeing now that the regulatory climate lags the booms, and a lot of time is spent with new proposed regulations. Often times this is like fixing the barn door after the horse is already out.”

Being in the industry for more than three decades, Eddy has seen how far it has come. From safety to environmental advances the industry has made great strides.

“The number one important thing the OOGA does is to be the industry voice and work to help balance the regulation. The group has remained a voice for vertical well producers, which is the industry’s “bread and butter.” We need to be proud that Ohio is doing many things better than other states and that all voices continue to be represented among the oil and gas industry.”

Eddy is also active on the national level where he is the small service company representative on the National Safeland Advisory Board.  

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The Ramifications of Low Oil and Natural Gas Prices

Posted By Lyndsey Kleven, Communications Coordinator, Tuesday, December 8, 2015

Throughout 2015 we’ve seen a lot occur within Ohio’s oil and natural gas industry. The most radical change, noticeable to those working in the industry and any regular person, would be the staggering drop in commodity price—with multiple factors playing into what we’re currently seeing.

OPEC, making an effort to control market share, has contributed to the price rut created all across the United States on our domestic oil and natural gas industry. Decisions being made across the globe are having real life pricing implications right here in Ohio.

The effectiveness of our oil and gas producers is another piece of this. Looking at the industry as a whole, it has done such a good job at more effectively producing oil and natural gas in recent years that it has created an oversupply. Robust natural gas production has helped inventories soar to record highs we haven’t seen before.

New production is stalling as producers are responding to the current market conditions. Although overall production levels in the Utica Shale continue to rise (the latest ODNR Utica production report shows a Q3 2% increase in oil production and a 10% increase in natural gas production), the production is a result of wells that have been drilled and are now being completed or that now have access to pipelines that can finally move the commodity to market.

Simultaneously, there is still inadequate infrastructure to move the natural gas from our Appalachian Basin. Access is vital to oil and natural gas producers, as it is a key economic factor in a company’s decision to drill a well in certain areas. Without this access, the natural gas is either not produced (the well is not economic to drill) or produced and is consumed within the basin (which further depresses the commodity price the company receives).  

Finally, let’s look at where the domestic oil and natural gas industry was approximately ten years ago. In short, the opposite factors were in play. After Hurricanes Katrina and Rita struck in late 2005, natural gas was not as readily available and prices in this basin hovered around $12.00 per mcf. The price eventually receeded, in part, due to company’s expanding their drilling plans to increase the supply. Higher prices and lower supplies led to companies expanding their drilling plans. Conversely, lower prices and higher supplies lead to company’s contracting their drilling plans – which is what is generally happening for the Ohio producer.    

To recap, it’s a challenging time to be oil and gas producer in the midst of all these circumstances. It is a great time for Ohio consumers who are benefitting greatly with serious energy savings from the higher supplies and lower energy costs.

And the savings continue on products associated with this production. For example, gasoline prices have fallen to six year lows in Ohio. At Thanksgiving, some Ohio pumps were dipping under $1.50 a gallon. Consumers are expected to save a reported $7 billion at the pump during this holiday season, which translates out to about $40 per driver.

I’ve seen it myself in my monthly bills. My household’s monthly electric, natural gas, and gasoline expenses are at lows I haven’t seen in years. And for that I have to thank Ohio’s oil and gas producers. 

Tags:  drilling  natural gas  ohio oil and gas association  oil  shale 

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OOGA President David Hill Provides a First Hand Look at Production for Kent State Students

Posted By Mike Chadsey, Director of Public Relations, Tuesday, November 24, 2015

It was a chilly Saturday morning, but the 16 Kent State University Geology Department students, who are members of the University’s chapter of the American Association of Petroleum Geologists, caravanned to a PDC Utica well pad on the outskirts of Cambridge for a tour.

OOGA President David Hill extended the invite to them as he concluded his talk with the department facility, staff and current students recently on the main campus of Kent State. Hill was asked to speak about the current state of the industry and what current students should expect to experience when they graduate. He shared with them that the industry is down but not out and that it will bounce back, and when it does there will be positions of all kinds waiting to be filled. As he explained, “not everyone has the intestinal fortitude and the willingness to be relocated throughout their career, but if you do this could be a great opportunity for you upon graduation.”

During the hour long presentation, David shared with everyone his personal experience in the industry with details about how and why he got started and what he has seen over the years. To hammer this point home he said, “this industry is second only to NASA in our use of technology, and it is always changing and always improving.” David went on to explain the various careers in the industry and what type of education and training is needed to fill those positions.

At the conclusion of his prepared remarks, began the question and answer session that promoted various questions about production in Ohio, to that word that seems to be on everyone’s mind these days, “fracking.” It was at this point the idea of an up-close and personal tour was mentioned. There was no hesitation from David and he could barely keep his excitement contained and said, “Absolutely! We want you all to come down and see what we do and how we do it!”

David arraigned for a tour of a Utica production pad, a Clinton production well and his own Underground Injection Control (UIC) well. With each visit the students became more and more engaged in the discussion and each site lasted longer and longer as the questions kept popping up. By late afternoon the tour had concluded so David took everyone out to lunch to keep the conversation going. It was at lunch that we heard that of all the field tours they had taken as a group, this was by far the most interactive and interesting.

As lunch was winding down and the group started to make their way back to campus, David pulled me aside and said that he really enjoyed the day and explained that “this is what we have to do to gain the interest of the next generation and to build defenders of the industry, we have to show them, explain to them and let them see the value in what it is that we do. It is what makes me, and someday them, proud of the work.”

After everyone said their goodbyes and shared their thanks, I jumped in my own car and started to make the trek back home. I reflected thinking how proud I was to be an alumni of Kent State (Go Flashes!) and proud of the interest that was shared among the new group of friends we had made—it was great day. 

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