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2015 OOGA Technical Conference and Oilfield Expo Preview

Posted By Lyndsey Kleven, Communications Coordinator, Monday, October 12, 2015
Updated: Tuesday, October 13, 2015

www.oogatechexpo.com


The Ohio Oil and Gas Association will host the 2015 OOGA Technical Conference and Oilfield Expo on November 4th—November 5th 2015.

This year’s event will be held at the Pritchard Laughlin Civic Center in Cambridge, Ohio. This location change was made as the Association has taken past attendee’s feedback into consideration while working to improve the overall impact of the event.

The event brings together top industry leaders offering in-depth presentations on today’s most important topics. This year, attendees will learn about an array of topics, including:

 

  • NORM/TENORM and the Potential Future Impacts
    (Kevin Kosko – Shale Mountain Resources)

    Erosion and Sediment Control and Cost Management
    (Ababu Gelaye, M.S., CPESC, P.G. – Civil and Environmental Consultants, Inc.)

    Status of Rulemaking Initiatives
    (Scott Kell– Ohio Department of Natural Resources)

    SPCC Update: Compliance with New Rules
    (Ryan Elliot – Vorys, Sater, Seymour and Pease LLP)

    Oil and Gas Administration on Wayne National Forest – Federal Leasing and Oil and Gas Development
    (Richard Jones – Wayne National Forest – Supervisors Office)

    Lateral Science, Making Engineered Completions an Every Well Event
    (Tony Vilegas – C & J Energy Services)

    A Proactive Approach to Addressing Annular Pressure Issues in the Utica-Point Pleasant Shale Play
    (Tom Tomastik – ALL Consulting)

    Induced Seismicity – A Growing Concern for the Oil and Gas Industry
    (Brad Bacon – PDC Energy, Inc.)

    Passenger Vehicle/Pick-Up Truck Fleet Safety
    (Wayne Vanderhoof – RJR Safety, Inc.)

    “It” happened! What do you do? Internal Investigations of Well Site Events
    (Richard A. Schwartz – Vorys, Sater, Seymour and Pease LLP)

    Uncommon Ground for the Common Good
    (Rich Cochran – Western Reserve Land Conservancy)

As Ohio’s premier oil and gas industry event, the Oilfield Expo will host more than 80 exhibitors representing a displaying of the latest industry equipment and new practices. Both indoor and outdoor exhibitor spaces are available on a first come, first serve basis.

Join other oil and gas professionals at the oilfield celebration reception on Wednesday, November 4th. Once again this reception will be held on the trade show floor allowing attendees and exhibitors to network in a relaxed and festive setting

Registration to attend the event will be available online through October 31, onsite registration will be available at the venue. Register early to save, discounted early-bird rates end October 26.

The Association would like to say thank you to our Premier Sponsor, the International Union of Operating Engineers Local 18, along with all of our other sponsors, exhibitors and attendees. We look forward to seeing each of you at the event. 

Learn more about this event: http://oogatechexpo.com/

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Member Spotlight: Sharon Davis, EnerVest

Posted By Lyndsey Kleven, Communications Coordinator, Monday, October 5, 2015
Updated: Thursday, October 8, 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: 

Sharon Davis’ entry into the oil and gas industry was untraditional, having no family background or formal education in the field. Today her career in the industry is approaching 25 years. Davis grew up in the Hartville area where her background working as dispatcher in the trucking business. Through her mother’s connection with Chuck Moyer, a geologist, and his wife Paula, an accountant, both working for Lomak Petroleum, Davis was able to get an interview with the company, starting her career in the oilfield in 1991. She began working in Lomaks operations department as a dispatcher for the water trucks.   

Davis recalled the job as being extremely boring; the days were slow and there was little to no dispatching actually occurring. At the time Personal Computers were brand new on the scene and Lomak had two of them in the building. 

“The PCs were not an integral part of the business yet, and were more novelty than anything at the time. I used to fool around with the PCs in my downtime, which was a lot then, and I taught myself how to use Lotus, a spreadsheet program.  I enjoyed figuring out how it all worked.”

Davis’ career progression began when Steve Grose, VP of Operations for Lomak at the time, was looking to hire a petroleum engineer to assist him with his work, which wasn’t in the budget.  He saw that Davis had a certain aptitude with numbers and the Lotus program, so Grose brought Davis over to work for him. She was tasked with learning how to run an engineering software package called OGRE (oil and gas reserves economics) that does decline curve forecasting. In her new role Davis began putting together reserves reports for Lomak; all of her education on the matter she learned doing. 

Over the years Davis has seen a fair share of changeover and transition. She described Lomak Petroleum as starting in Hartville and continuing to grow after she was hired. In 1998 after expanding its operations significantly in the west, the name changed and the company became known as Range Resources.  A few years later Range entered into a deal with FirstEnergy to create a partnership. FirstEnergy contributed 50% of its Ohio assets and Range contributed 50% of its Appalachian Basin assets to form Great Lakes Energy Partners. This partnership continued until 2004 when First Energy Corp decided to move another direction and Range acquired First Energy’s piece to dissolve the partnership. In 2010 Range Resources sold everything it owned in Ohio to EnerVest. EnerVest elected to keep Davis on and now all of these years later, she is working in the same office she had while at Lomak.

Work history:

In the early 1990s Lomak was small with only a couple hundred wells, mostly in Ohio and a few in Michigan—but they were growing. Sharon’s primary role with Lomak, Great Lakes and Range was to manage the reservoir-engineering database, and to produce the reserves report biannually for the Appalachia Business Unit.  

“Early on we were in the acquisition game and bought properties throughout the Appalachian Basin. I was responsible for the reserves reports including all of the acquisition evaluations in Appalachia, with Lomak, then Range, and then Great Lakes.  These were the years when the product prices were depressed.”

“That’s how the business grew.  We were not drilling wells then, in fact, we probably didn’t drill two-dozen wells as operator in the first ten years I worked in the business. We went and bought other companies, smaller companies, or pieces of bigger companies. I was responsible for the reserves evaluations of almost all of those acquisitions in the Appalachian Basin that grew the company.”

In the early 1990s the big thing that was happening was Rose Run drilling. One of Davis’s favorite things was to go out to the field to see the deep wells being drilled-in. They used to drill-in on air, with no fluid in the hole; there was nothing to hold the pressure down when the gas started to come up.

“The gas would ignite a flare and shoot out 50-100 feet, which was a real spectacle, and that was something I could really get excited about. I enjoy being involved with this industry because something new is always going on. Seeing these entrepreneurial people take a chance by drilling a hole in the ground and letting pressure out, and what comes out they sell—it’s very ingenious.” 

The acquisition evaluations were always very interesting to Davis, and also very time consuming, large projects, often involving travel and not always successful. Davis recalled actually purchasing only a small percentage of the acquisitions she reviewed. There was a lot of work between acquisitions, and actually purchasing one then created even more work.

In 2004 Range began exploring the Marcellus in Pennsylvania and completed their first successful hydraulic fracturing job in this formation.

“Exploring the Marcellus for Range was a landmark for the company and being part of the early play was so interesting. And then with EnerVest I have gotten to be on the periphery of what has happened in Ohio with the Utica.”

EnerVests regional headquarters is in Charleston, West Virginia and conducts business with staff at multiple locations in the Appalachian Basin. Many of the offices came from various acquisitions.

“EnerVest bought Belden in 2005. Lomak, Range, and Great Lakes all looked into acquiring Belden multiple times over the course of the years, but never got it. Then it was sort of interesting when I was the one acquired, and acquired by EnerVest who had also acquired Belden. In my daily activity I find it ironic because of the numerous times I’ve looked at these wells before.  In fact, at one time or another, over the course of time, I probably evaluated most of the wells that make up EnerVests Eastern division.”

With EnerVest Davis has remained involved in the reserves reporting process working under the direction of the Engineering Department Manager Jeff Stevens.  As Senior Engineering Technician, she currently is responsible for producing reports for the former Range properties using the Aries software package. Davis also assists in the weekly production reporting process, annual production budgeting process and other special projects for EnerVests Eastern Division, the Appalachian Basin and Michigan operations.  

“I am so fortunate to be working at EnerVest with a team of smart and talented people; and there is no end of interesting work to do. EnerVest operates about 7,600 gross wells in Ohio alone. In our division including Ohio, Pennsylvania, New York, West Virginia, Virginia, and Michigan, EnerVest has about 12,000 wells. Every one of those wells makes new data every day, and that information gets piled into some database, somewhere. There’s an enormous amount of data that goes with the production of so many wells, and it’s completely useless unless you can gather it and make sense of it.  My function is to help collect the data and make it useful. So that’s sort of my forte, I collect large amounts of data, move it around and make it accessible to people who can use it to report from or analyze it.”

Shale-development’s impact on business:

“Range Resources was where the Marcellus was born. In the early 2000s the company was drilling wells in Pennsylvania not chasing the shale at all.  At the time the shale activity in the country was fairly limited to the Barnett in Texas, which was just starting to get a lot of attention and developing. Ranges first Marcellus well was initially drilled to the Oriskany in Washington County, PA. It was a vertical well because no one was drilling horizontal in Pennsylvania at the time.” 

As an engineering technician Davis worked with the geologists and the engineers that tackled the challenge of drilling in the Marcellus shale early on.

“The first Marcellus well started as a not particularly successful Oriskany well. Range senior management had been encouraging everyone to look for new plays, shale opportunities because of the excitement over the Barnett. The senior geologist for Range at the time, Bill Zagorski proposed trying for the Marcellus so they came up the hole from the Oriskany and put a bigger, Barnet style frac on the Marcellus, producing encouraging results. The big volume hydraulic fracture was the key to making it successful and was inspired by the activity in the Barnett.” 

Operators commonly penetrated the Marcellus shale to get to the Oriskany and encountered large flows of gas that typically petered out in a few hours or days, continuing onto the Oriskany.

“It just was fortuitous that they were in the right place. If they had done it further east, or anywhere else, they probably wouldn’t have had enough success to keep them going at it. Range spent a lot of time and money on that one well, but it turned into something really big. It was an exciting time and very exciting to watch.  There were a lot of really talented and smart people involved in making it happen and this was a real game-changer for Range.  They needed to focus their attention on the play in PA so they withdrew from Ohio.”

In 2010 EnerVest experienced explosive growth in the Appalachian Basin, acquiring Ranges Ohio assets and also assets in Ohio and Pennsylvania from EXCO —more than doubling its size in the region, practically overnight, at the same time strategically positioning itself as the key holder of Utica acreage in Ohio. Right away EnerVest began working with industry partners to explore the play and now in development mode, has participated in hundreds of Utica wells in Ohio as non-operator.  Davis has established processes for the company to collect the production data for these wells from its various sources and compile it into a useful format for reporting or analysis. 

Davis cited the whole shale phenomenon in Ohio and the region as having both positive and negative affects coming along with it. 

“Shale drilling has been positive in that it brought more work, more opportunity to the region, particularly in the parts of the state where the economy has been depressed for so long.  Unfortunately product prices are so low right now and this has slowed growth for sure.  Still, it is thrilling to hear of folks whose financial situations have turned-around 180 degrees due to shale activity on their property, really life changing in some instances.”

“The downside is that it has made land acquisition difficult due to competition and has priced leasing out of reach for smaller operators. You can’t be in this business, in this basin without knowing the smaller operators. And the smaller operators have it difficult to compete with the acreage costs and to participate in these high investment wells; they’re so expensive.” 

Davis elaborated on the industry being politicized in a not so positive way. The fast activity and large-scale projects have brought a lot of attention to the oil and gas business as a whole. She felt that previously the only attention the industry received was from the people who dealt with it directly, such as landowners and people with a royalty interest. Now attention is coming from whole townships or communities worried about “fracking” when it likely does not even impact them directly.

OOGA Involvement:

Davis has been a member of the Ohio Oil and Gas Association (OOGA) for more than a decade and has attended its events for more than two decades. She is also a long-standing member of Tuscarawas Valley Desk & Derrick, and is a Board Member and Secretary for the Ohio Petroleum Section of the Society of Petroleum Engineers.  The SPE honored Davis with a Regional Service Award in 2011.

“It was a natural progression to move into the OOGA membership. I was fascinated by what Petroleum Engineers were doing with the Society of Petroleum Engineers, and OOGA was the next stepping-stone beyond that. I started going to the fall technical meetings probably twenty years ago and haven’t missed one since. I remember meeting Tom Stewart and Rhonda Reda at the first Technical meeting I attended.  I think it was Tom’s 1st or 2nd year at OOGA and I was so inspired by Rhonda’s energy and industry knowledge.  I always look forward to the Winter meeting. That’s when I can catch up with what is going on in the industry and see people I maybe only see once a year.  But I have to be honest, my favorite OOGA event has always been the Summer Meeting golf outing.  I have met so many interesting people at these events and I have met some I consider good friends.” 

Most of Davis’ participation has been attending the events for the networking and social aspect rather than active participation. An area of interest has been seeing what groups have been joining the Association over the past few years as the membership has grown. She finds the daily emails put out by the Association as a way to stay updated on regulatory issues and other happenings in the industry she normally wouldn’t keep informed with through her daily work. 

“I like getting the updates from the Bulletin and other outreach. I often share what I receive to help keep other people informed. There are so many people outside the industry that just don’t know what’s going on, and only “know” whatever they read or hear, or anything someone tells them and very often it’s not factual.”

Davis revealed how she has learned a great deal from the industry and those around her professionally. She has had strong mentors over the years and has worked with so many interesting, talented and very smart people.  She feels privileged to help train younger colleagues coming into the industry.

“For years I have shared my experience and knowledge with less seasoned techs and helped to develop new engineers fresh out of school. I see them start to use skills that they’ve learned from me and to become proficient in them. I’ve seen many people move ahead in their careers and mature professionally.  It’s been very gratifying to participate in helping to develop these people. Maybe I’ve contributed to their careers; I like to think that I have.”

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Despite downturn, Ohio’s oil and gas industry more important than ever

Posted By Rhonda Reda, Executive Director, Ohio Oil and Gas Energy Education Program, Tuesday, September 29, 2015

There is no question, it’s tough times for Ohio’s oil and gas industry. Prices for crude oil and natural gas are at their lowest levels in decades. The downturn in prices and drilling activity has caused many people to ask the questions: Is Ohio’s oil and gas industry still a major contributor to our local economy? How important in this industry to the average Ohioan? The answers are unequivocally yes and in fact more important now than ever.

As energy, economics and jobs dominate the headlines, a homegrown industry continues to supply these benefits to the Buckeye State. Ohio has a long and proud oil and gas history. In fact, Ohio’s oil and gas industry has been producing crude oil and natural gas from various geological formations beneath our feet for more than 150 years.

The past several years has also brought many new companies, jobs and innovations to Ohio’s industry, leading to unprecedented and record energy production levels. As a result, Ohioans are intertwined with the state’s oil and gas industry more than ever before.

In 2013, the Energy Information Administration reported that Ohioans used approximately 913 billion cubic feet of natural gas to heat our homes, power our electricity generation plans and to operate our businesses, schools, hospitals and factories. In fact, Ohio ranks 7th in the country for natural gas consumption, and seven out of every 10 Ohio homes use natural gas as its primary heating source. By the end of 2015, it is projected that Ohio may produce enough natural gas to fulfill all of our local energy needs.

Today, Ohioans use crude oil and natural gas for much more than heating or power. In fact, crude oil and natural gas are an integral part of our daily lives unaffected by current market or weather conditions. More than 6,000 products are produced, wholly or in part, from Ohio’s 60,000 crude oil and natural gas wells. Life saving products such as medicines and artificial hearts wouldn’t exist without petroleum products. Synthetic rubbers and fabric, asphalts and computer components are made from crude oil and natural gas. Waxes, paints and inks are too; as are hundreds of the personal care products used around our homes.

And of course, plastic and most fuels would not be possible without petroleum. Simply put, Ohioans can not live their daily lives without using petroleum based products. In fact, the average person uses the equivalent of three gallons of refined petroleum-based products each and every day.

This Ohio industry is directly part of every Ohioan’s life. Our standard and cost of living would be harder and higher without petroleum products, and our life expectancy would be dramatically shorter without oil and gas development. Through new technologies and advanced production techniques, Ohio’s oil and gas industry continues to innovate to enhance production efficiency while minimizing environmental impact.

The state of Ohio’s oil and gas industry matters to everyone because it’s a part of who we are, what we do and how we do it. Keeping our energy dollars and energy jobs at home is also positive for the economy and our natural security. Now more than ever, we need to continue to support local energy production, pipelines and processing/cracking facilities and refineries that will continue to benefit all Ohioans.

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Ohio Supreme Court Decides on November Local Control Ballot Issues

Posted By Mike Chadsey, Director of Public Relations, Tuesday, September 22, 2015

The members of the Ohio Supreme Court recently announced two separate decisions on the Community Environmental Legal Defense Fund (CELFD) “Community Bill of Rights” efforts.

The first decision involved the counties of Athens, Medina and Fulton where the CELDF attempted to put an issue on the ballot to move those counties from a statutory form of government, to a charter form of government, with the first charter amendment being their misguided “Community Bill of Rights.” The court ruled that the Secretary of State was correct in not placing these issues on the ballot, as they failed to meet the basic requirement for changing county form of government.

The second decision was regarding the great steel city of Youngstown, who through no fault of its own, have been dealing with the CELDF folks longer than anyone else. In this instance, petitioners were attempting to change the city’s existing charter, not to establish an entirely new form of government. In that decision, the high court reversed the local Mahoning County Board of Election’s unanimous decision that would have kept the issue off of the ballot and instead ruled to place that CELDF issue on the ballot.  

The county board of election had justified the decision to keep the issue off of the ballot since the Supreme Court had already ruled in another case that the legislature had enacted laws that oil and gas regulation was to be handled at the state level and local governments couldn’t unfairly impede or discriminate against this activity.

When explaining the decision in this matter, the Ohio Supreme Court indicated that local boards of election can only decide if the procedural requirements had been met when determining whether or not to put an issue on the ballot.  This is consistent with the ruling regarding the three county charter amendments as well. Unfortunately, this will simply add to the  $50,000 the City of Youngstown has already paid to put this issue on the ballot and which voters have rejected in four previous elections.

In both cases, CELDF screamed that industry “bought” the court; but let’s take a closer look at who filed briefs supporting those cases.

In the first case, involving the three counties, the Ohio County Commissioner’s Association, the Ohio Farm Bureau, Affiliated Construction Trades of Ohio and the Ohio Chamber of Commerce all filed briefs opposing the CELDF’s charters.

In the second case, involving Youngstown, the Ohio Chamber of Commerce, Youngstown-Warren Regional Chamber of Commerce and Affiliated Construction Trades of Ohio along with 17 different local labor unions all filed briefs to oppose the charter amendment.

So did all of those groups “buy” the court as well?

These groups represent thousands of hard working, land owning, bi-partisan, citizens in Ohio who all stood together to say enough is enough. Yet when you read some of the comments from the CELDF folks, they are shouting victory claims that they now have a blueprint to push their agenda forward. Never mind the fact that a small group of loosely connected activists think they know better than the elected, business, and community leaders in all of these areas who came together to defend their communities from this out of touch (and out of state) organization.

In talking with members of each of these communities one thing is clear, no matter how CELDF rewords or tweaks language to put on the ballot, there are people who will fight for their land, neighborhoods and communities and continue to say no to this small minority of activists trying to dictate what they can do.

For a more detailed legal analysis of the two Ohio Supreme Court decisions, please read the article by: Lisa Babish Forbes and Aaron M. Williams of Vorys, Sater Seymour and Pease LLP in the October edition of the Bulletin.

 

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Municipal income tax law changes: What you need to know

Posted By Guest Blog From: The Ohio Society of CPAs, Monday, September 14, 2015
Updated: Thursday, September 17, 2015

As teams begin to hit the field in preparation for the upcoming football season, we want to ensure you are also gearing up for the game-changing effective date of House Bill 5’s municipal income tax laws. Municipalities are currently amending their existing income tax ordinances to incorporate the new law’s provisions, and your business should be prepping now too in order to be ready by year end. Summarized below are just some of the benefits coming your way starting in 2016.

Pass-through entities

If your business is organized as a pass-through entity (“PTE”), the municipal net profits tax will now be imposed at the entity level (unless your municipality is one of a handful that previously voted to tax resident S corporation owners at the shareholder level), with the owner needing to file only in their city of residence. Also, gains and losses that are generated by resident taxpayers’ different pass-through entities and their own net profit may offset each other during the year in which such gains and losses were generated to arrive at the total amount of tax due. 

NOL carryforward

If your business does not have a profitable year, some relief is coming: starting in 2017 all municipalities must allow businesses to deduct any new net operating losses (NOL) and allow a five-year carryforward of those losses. Profits and losses are measured on a 12-month basis simply as an accounting tool used to facilitate the collection of tax revenues. However, businesses are established with the goal of making a profit over the long haul, not simply in any particular 12-month period. When you have a loss, an NOL carryforward is treated as an asset on your balance sheet to help offset future gains. Therefore, the NOL carryforward becomes an economic development tool by allowing businesses to deduct losses and continue to operate, helping you with job retention in down years.

Occasional entry rule

A significant improvement to the “casual entrant” exemption increases the number of days (from 12 to 20 per year) that individuals may work in a non-principal place of business municipality before incurring income tax liability there. Should your employee be there 21 or more days, you will need to withhold in that “other” city from day 21 forward until the end of the calendar year. The new law also defines a day to allocate tax liability to the city where an employee spent the majority of time working that day (you must withhold only to one municipality per calendar day), and provides that the casual entrant rule applies to all compensation. Businesses and cities may continue to work out other agreements as well if both parties agree.

Another major change eliminates the requirement for employers with gross receipts of less than $500,000 a year to track where their employees are working; instead, these small businesses will simply withhold to the jurisdiction where the principle place of business is located. These businesses must still file net profits returns in every city where they do business, but will owe no tax if the amount due is $10 or under.

Other common sense changes

If you’ve done work in a municipality in the past but no longer work there, many cities require you to continue filing tax returns anyway for up to three years. The new law allows you to certify to a municipal tax administrator that you are no longer a taxpayer there. Upon certifying, you are no longer required to file with that municipality during future taxable years, unless the tax administrator possesses conflicting information or you start working there again.

Taxpayer Bill of Rights

The new law includes the full version of the state’s Taxpayer Bill of Rights at the local level, and requires municipalities to publish a summary of the taxpayers’ bill of rights and responsibilities online, as well as publish its municipal tax ordinances and regulations. It also aligns municipal return filing dates with state filing dates, and makes consistent with federal, state and current municipal tax law the tax return due date for entities with a fiscal year-end other than a calendar year-end.

Residency changes

The new law prescribes an income tax employer withholding schedule for all municipalities on a monthly vs. quarterly basis depending on your recent withholding amounts. Finally, municipalities are allowed to treat an individual as a resident for income tax purposes only if the individual is domiciled there, and it adopts 25 generally recognized common law factors for determining an individual’s domicile.

Municipal Income Tax Webcast

To take a deeper dive into the new law and help you plan NOW for changes that will impact you, your business or your clients, please join us as former Ohio Tax Commissioner Tom Zaino, CPA, JD, Zaino Hall & Farrin LLC, hosts a webcast on September 28, 2015.

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The Media’s Erroneous Display of Oil and Gas Production in Ohio

Posted By Lyndsey Kleven, Communications Coordinator, Wednesday, September 9, 2015

The Ohio Department of Natural Resources (ODNR) releases quarterly production numbers showing the amounts of crude oil and natural gas being extracted in Ohio. The latest set of production numbers was released during the last week of August touting the record production in the state in spite of the sharp fall in oil prices.

The fact of the matter is the current state of the oil and gas industry—in Ohio and across the United States—is struggling and has recently experienced the lowest oil and natural gas prices seen in decades. In August, Ohio producers saw some of the lowest prices with a barrel of oil selling for $37.00 and natural gas prices stalled in the upper $2.00 range. The ramifications of this downturn are wreaking havoc on all drilling operators. A large number of companies have been seen slashing capital budgets for the year, triggering mass layoffs, all of which have greatly slowed or idled drilling operations. 

So why are the latest production numbers being portrayed through rose-colored glasses? It is important to take into consideration a few factors before jumping to any conclusions.

The quarterly production numbers from the ODNR reflect the quarter prior to when the information is actually being released. For example, the well production numbers being released at the end of the third quarter are not reflecting drilling activity that occurred in the third quarter (July 1 through August 31). To report that gas production is still rising, coinciding with prices being at an all time low, is a misrepresentation to the average audience unfamiliar with the vagaries of oil and gas drilling and markets.

Another aspect to take into consideration is the lag time between the drop in prices and the effect it has on production. 

“When the crash happens, it’s not like there’s a shut-off valve, and production just stops,” said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association. “It’s going to start to gradually come down.”

The end of 2014 and beginning of 2015 is when we saw the true beginnings of the crash in oil prices. The growth continuing to be seen is because the capital had already been deployed for new wells to be drilled for the year and pipelines hadn’t been laid to connect previously drilled wells to larger gathering systems. It has been estimated that a strong drop in production may be seen as early as August or September of this year. If this is the case, the impacts will not be reflected in the quarterly reports until the year’s end.

With all of this being said, when prices rebound, as they tend to do in the oil and gas industry, drilling will follow suit as soon as it is determined to be economical and the Utica will continue to prove to be a viable play. 

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Member Spotlight: Jim Diddle, JD Drilling Company, President

Posted By Lyndsey Kleven, Communications Coordinator, Wednesday, September 2, 2015
Updated: Wednesday, September 9, 2015

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

 

Background information:

 

James “Jim” Diddle’s career in the oil and gas industry has spanned over 45 years of his life.  Prior to working in the oilfield he served in the United States Army where he completed a tour of duty in the Vietnam War.  Prior to completing this tour of duty in Vietnam, Jim had completed military police school, airborne school (para trooper training) and had earned the honor of becoming a Green Beret.  Several members of Jim’s family has a military background and after completing two years at Ohio University Jim felt the call to serve his country and enlisted in the US Army.

 

Upon returning from serving his country he was home two days and the third day he went to work in the oilfield.  The Army had a profound effect on Jim and he believes everyone should have to serve in the armed forces for a period of time to gain the qualities necessary to become disciplined and a responsible adult and likewise be held accountable for his/her actions. 

 

“The Army taught you that you have to get up, you have to go to work, and you don’t get to rely on your parents.” 

 

Jim grew up with his grandpa Roy Edward Proffitt since his parents divorced when he was very young.  After Jim was home approximately over a year from serving his country, his grandfather suggested to him that he return to Ohio University to finish what he had started. 

 

Roy was a very business oriented man, and seemingly passed this trait along to his grandson Jim.  His grandfather’s business sense became apparent to Jim when he recounted a story of Roy receiving his very first Christmas gift. 

 

“As a kid, my grandfather’s first Christmas present was a pair of roller skates.  He traded the skates for shotgun shells.  He could use that to hunt and sell the ducks.  He said he made his money so many times over by selling those skates.  I asked him why he got rid of the skates that he wanted more than anything and he said there wasn’t anything he wanted more than being successful.”

 

Work History:

 

When Jim came home from the service he had no house, no money and a wife and son to provide for.  Jim moved in with his mother for almost a year. Roy had oil and gas wells in Logan and Perry Counties and moved Jim and his family to Logan in order for Jim to attend OU full time, and tend to the oil and gas wells in his spare time. Going to school full time, tending 28 completed oil wells, and helping on the five cable tool rigs Roy had running in the area; this led to long, busy days and working on very little or no sleep.  Jim drove the trucks, dressed tools, ran the casing on the cable tool rigs and would also have to study in the meantime.  All of this hard work paid off as Jim earned a 3.87 GPA and made the Dean’s list the last two years he attended OU after serving in the US Army.

 

After graduating from Ohio University Jim and his family moved back to Racine, Ohio and Roy offered Jim a job for $100 a week to take care of Syracuse Home Utilities and Interstate Utility Company replacing lines that were suffering a 54% line loss.  Jim evaluated the project and decided the line replacement projects were tough and high risk and went back the next day to negotiate the pay to $150 a week plus transportation.  Because of the rigorous work ethic that Jim possesses he expected the same out of the crew working with him, many of the existing employees sought employment elsewhere so Jim had to hire new men.  He changed the whole business model and the entire business for the better.

 

“I took those companies and straightened them up.  In two years I had them down from 54% to 3% line loss and we were servicing 1,100 customers.”

 

Roy Proffitt was also a Pennzoil distributor and had 13 gasoline stations.  He sold all 13 of them to Jim for $150,000, and helped Jim with financing but charged 10% interest.  “There was a big gasoline shortage that year and the most gasoline you were allowed to get was $3.00 at a time.  At the time Roy figured I’d never make it and he’d get all of them back.  After I did make it, he claims he always knew I’d succeed. I was very lucky, I’ll admit that.”

 

Jim started in the oil and gas field in 1971 and started JD Drilling Company in 1975.  JD Drilling Company was later incorporated in 1984 and currently holds 50,000 acres held by production in Meigs County, has roughly 300 miles of pipeline and has permitted and drilled a thousand wells as an independent oil and gas producer.

 

“We do it all, everything from beginning to end.  We lease the ground, drill, complete the wells, lay lines and hook them up to our lines that eventually run through one of two of our compressor stations that feed directly into Columbia’s line E-18.  Our office also completes the monthly task of disbursing the monies to the appropriate royalty owners, overrides, and working interest.”

 

When Jim was 37 years old he had drilled over 1,000 wells.  In his early 30’s he put together several deals and things really started to take off.  JD drilled 187 wells one year and 254 wells the next year.  The majority of the wells were 4,000’ deep.

 

“At that time we were going so fast, the only thing they were changing out was the cement trucks.  The men were taking showers in the street.  I sold them the diesel fuel and I even bought a truck just to deliver it to the rigs.  I leased three rigs at that time to aid my three rigs in order to make it all happen.

 

Times were not always easy and sometimes he thought about leaving the oil and gas business.  Those moments were usually short lived and then he would move onto the next big project.

 

“Every well I drilled and every contract well I drilled, with the exception of about 50 of them, I always kept a part in each.  I would buy an eighth or a sixteenth to show my investments were worthwhile.”

 

Grandfather Roy always used cable rigs, and it was Jim’s lifetime ambition to acquire a 36L Bucyrus Erie rig.  Instead he bought three rigs as his business grew, including a Model 360 Challenger Drilling rig which he bought in Texas, SS 40 Speed Star, and a Model 2500 Failing rig. He also has three service rigs, air compressor packages, boosters and several dozers, backhoes, ditchers among other pieces of equipment of his own.

 

True to his business sense, Jim saw a need to enter the injection well business and currently owns 3 working injection wells and is now accepting water.  The business is true to name as it is operating as JD Injection Specialists, LLC.  Jim drilled the first injection well in the state of Ohio in 1981.  He now has 8 including the 3 he is accepting water from outside sources.

 

“I started thinking about the injection business.  When I applied for a permit for an injection well it was declined, because no one had ever applied for one.  I designed and drilled the first injection well.

 

With the current state of the industry, JD Drilling Company didn’t drill any new wells this year; because they were busy working on all of the old ones they maintain, which is a never-ending process.  All together JD Drilling Company employs 35-40 people through his various businesses.  His rolodex of companies include: JD Drilling Company, Jim’s Production Company, DHF Drilling Company, C&D Drilling Co., Inc., Twin Oaks Store, LLC (a convenience store on St Rt. 7) and his newest adventure JD Injection Specialists, LLC which is currently accepting water.

 

OOGA Involvement:

 

The family lineage with the Ohio Oil and Gas Association (OOGA) spans from Roy Proffitt’s days with the Association, to Diddle’s present day involvement.  Roy Proffitt was one of the original inductees into the Oil and Gas Hall of Fame. Following in his grandfather’s footsteps yet again, Jim was also inducted into the OOGA Hall of Fame in 2011.

 

Due to an injury Jim has had numerous operations on his arm and shoulder.  Prior to one of his final surgeries, Jim received the news of his nomination.

 

“Tom Stewart had called me at my house, and I knew my arm surgery was coming up so I wasn’t in a good mood.  I answered and said, no I can’t drill any wells Tom.  Tom began laughing and told me I was being inducted into the oil and gas hall of fame.  I called to cancel my appointment at the Mayo Clinic so that I could attend the ceremony.”

 

The nurse wasn’t able to cancel the surgery—much to Jim’s relief as the pain in his arm intensified.  Although he was not able to attend the ceremony, he is so proud to have been given this honor from the Association.

 

Overall Business Perspective:

 

“I remember back when I was just getting started.  One day we were leaving a friend’s parking lot and some of his equipment was in there being stored.  Back in those days I was just getting my feet on the floor and it was a lot of equipment to see.  I made a joke and I told my other friend, ‘I’m going to smoke you, Grandpa Roy, and my friend’s yard we just pulled out of looking at his equipment.’  My friend said, ‘How do you figure?’  I said ‘well I have 20 years to steal everything that all of you know about business and add to it.’”

 

When Jim started in the business he was roughly 20 years younger than all of the older guys in the industry.  When he attended business meetings he would always go to see the top guy. 

 

Diddle now has nine companies, all different names.  He also has had some loyal workers that trusted him and are still with him today.  He says he’s worked with a lot of good people and has always remained loyal to his employees and has invested in his employees through blood, sweat and tears.

 

“It’s all kind of evolved from nothing to something.  Don’t get me wrong; I’ve seen a lot of ups and downs.  It has all been very rewarding and at the same time very punishing.”

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Report: Tightened Ozone Standards Threaten Ohio’s Economy

Posted By Jacques Klick, Energy In Depth, Washington, D.C., Tuesday, August 25, 2015

A new report released this week by the Center for Regulatory Solutions (CRS) finds that if the Environmental Protection Agency (EPA) goes through with its plan to tighten the ozone standard, new regulatory restrictions would be imposed on a huge majority of Ohio’s economy, causing economic hardship across the state.  As the report explains,

“By lowering the National Ambient Air Quality Standard from 75 parts per billion (ppb) into the 65 to 70 ppb range, the EPA would cause at least 34 counties in Ohio to be in violation of federal law. These are some of Ohio’s most populated counties, concentrated around the Cleveland and Cincinnati metropolitan areas, but a number of Ohio’s rural counties may be dragged into nonattainment as well.  The vast majority of Ohio’s economy, population, and workforce could be caught in the net of ozone nonattainment under the EPA’s proposed range. The 34 impacted counties represent 84 percent of the state’s GDP, 80 percent of the state’s workforce, and 77 percent of the state’s population. (p. 3; emphasis added)

Just to provide a bit of background, if a county doesn’t meet EPA’s new standard, it is considered in “non-attainment” and must comply with additional permitting requirements to start a new business, expand an existing one, or drill an oil or gas well, making economic growth exceedingly difficult.  This new CRS report looks at each one of these counties that would be in non-attainment, noting the economic harm that the tightened standard would cause in these areas.  This would have certainly have significant negative implications for Ohio’s energy industry, which is currently an huge engine for economic growth.  From the report:

“23 of the 34 counties account for 29% of the state’s oil production and 17% of the state’s gas production in 2014; significant emission controls would need to be installed to reduce ozone precursors.” [Emphasis Added] (Executive Summary)

The report interviews Ohioans running businesses, such as Jeff Miller from Ken Miler Supply, who stated,

 “We care deeply about the environment in Ohio. Increasing Air Regulations will further slowdown Ohio Oil and Gas activity without providing air quality benefit. New regulations will diminish activity and investment and make it even more difficult to do business in Ohio.”

The study also highlights a new poll conducted by the National Association of Manufacturing (NAM), which finds that Ohioans overwhelmingly have a high opinion of the quality of their local air. Moreover, the survey found that nearly two-thirds (65 percent) of voters in Ohio rate their local air quality as “Excellent” or “Good.”  Meanwhile, 73 percent of voters think the most important problem for their local area is “less economic growth and job opportunities caused by regulations.” Breaking the numbers down further, the CRS report explains,

“Spelling trouble for the proposed rule, most Ohio voters (55 percent) oppose any additional environmental regulations on businesses, believing these would have negative impacts on the economy through higher taxes (78 percent), higher prices (80 percent), and making it harder to start or grow businesses (69 percent)” (p. 28; emphasis added)

The report summarizes these numbers well, concluding,

“Ohioans are clearly proud of their environment, their economy, and the overall direction of their state. The more they learn about Washington’s ozone agenda and how it could impact their way of life, the more they oppose it.” (p. 38).

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Oilfield Patriot Award Acceptance Speech from Jerry Olds

Posted By Lyndsey Kleven, Communications Coordinator, Monday, August 17, 2015

On July 27, 2015 during the Ohio Oil and Gas Association (OOGA) annual summer meeting, OOGA presented Jerry Olds, founder and president of Solid Rock Energy, Inc. (Solid Rock) with the Oilfield Patriot Award, a decade long honor bestowed by the trade association.

Amidst Jerry’s shock of being chosen as the recipient, he made his way through the cheering reception hall filled with oil and gas colleagues, where he met his family in the front of the room. Together the more than 130 attendees watched a 10-minute video of Jerry’s family, friends, and colleagues reflecting on his distinguished career as a petroleum geologist and his contributions to protect, promote, and advance the industry.

Jerry accepted the award and delivered one of the most remarkable impromptu speeches any recipient of the award has ever given. He accepted the award on behalf of the “old timers,” the ones that laid the foundation for the OOGA.

“I would hate to think what the oil and gas industry in Ohio would be like without this Association,” said Olds. “My claim-to-fame with the Association was that I was on the executive committee when Tom Stewart was hired.”

Olds went on to express his gratitude of being able to make a living in something that he’s really enjoyed doing, with the people he’s enjoyed being around—not to mention in the greatest industry ever known.

He then asked, “Have you ever thought about what the American oil and gas industry has done?”

Olds described the astonishing amount of wealth the industry has created and its extent. And not just for those in the industry, but also for the people building the hotels, the investors, the steel mills, and farmers collecting a royalty check, and so on.

“And it’s been creating wealth from the very start. It has been the innovator and pusher of discovering oil and gas in this world. From Titusville, to Burning Springs, to Findlay, to Spindle Top, to the Persian Gulf, to Venezuela, to the North Sea, to the Gulf of Mexico, and all the places in-between.” Jerry told how the industry hasn’t only created wealth but it has also created better lives for countless people.

He described how the first oil that was produced before automobiles existed was refined into kerosene and used for lighting, before which, lighting came by means of candles and whale oil. Jerry said the oil and gas industry “saved the whales.” Following this, the oil and gas industry teamed up with the automobile industry.

“Even today we’re cleaning up the atmosphere. And you’re a part of that industry, whatever you do in it. From an Exxon CEO to a roughneck, you’re a part of that, creating this better life for people.”

The two reasons people in the United States choose to work in the oil and gas industry are because of the free enterprise system and the private ownership of oil and gas mineral rights.

“A lot of people don’t like the free enterprise system, they say ‘it’s not fair.’ Their definition of fair is that every game ends in a tie. But fair is, win or lose, you play by the rules. And this competition is what’s making it great. It is thanks for those profits that our environment has gotten better. The guys that saved the whales didn’t set out to save the whales; they set out to make a profit. The guys combating pollutions, they didn’t set out to do that; they set out to make a profit. And even today we’re cleaning up the atmosphere even when we set out to make a profit. Profit is a good word! And I’d like to have some more of it. So hang in there and continue to work at it.”

The other reason is the private ownership of oil and gas rights. More wells have been drilled in the United States than the rest of the world combined. “And that is because of private ownership of oil and gas rights.”

Jerry warned to be wary when a misguided journalist or politicians starts talking about oil and gas rights in the state of Ohio. “They’re not talking about what Ohio state owns in oil and gas rights. Which by the way, was mismanaged and the state could have picked up several hundred millions dollars out of that. They’re trying to confiscate the rights that people own and distribute them among everyone. They can do that in one of two ways.”

“One way is that they could raise the severance tax above what is needed to run and supervise the industry. By doing this, they’re taking a little nip out of people’s oil and gas rights. And the thing about that is, they’re not going to be satisfied in a few years with a little nip, they’re going to want a bigger one.”

He cited the other way being through regulations, which are expensive and ridiculous. Olds said, “and the worst example I can think of is the state of New York.” New York banned hydro fracking of horizontal wells in the Marcellus shale formation.

“The landowners along the Pennsylvania line can look across the road, and they can see the Pennsylvania farmer reaping tens of thousands of dollars in their mineral rights, while they don’t get a dime.”

Jerry brought this to perspective when he asked, “what do you think would have happened if all the states had been like New York? What do you think the price of gasoline would be today? And how big of a depression would we currently be in?”

“Our founding fathers knew that government was necessary. But they also knew it was like a wild horse. That it had to be tamed before it could be of a service to people. And if you don’t restrain it, it turns out to be a monster. And it will devour the fruits of your labor and it will consume your freedom.”

Jerry turned to Shawn Bennett and said, “Shawn, your main job is to train wild horses and restrain monsters.”

Jerry proceeded to give a rather unique analogy of OPEC, saying there is a man in Saudi Arabia with his hand on the oil valve. And up until last November he’d pinch it back just a little bit. In November something changed; and they stopped pinching it back, but instead started opening it up just a little bit. And the price of oil and gasoline crashed.

“And do you know why he changed? He changed what he was doing because of what you do. And everybody that goes out to fill up his or her tank with cheap gasoline ought to be giving you a thank you note. But instead you’ve got people that berate you.”

Jerry went on to highlight the obliviousness of the many groups of people outside the oil and gas industry and how they attempt to portray the industry and those working in it. 

“From the self-appointed environmentalist, flying around in a private jet that says that you’re killing the polar bears. To the naïve student, who doesn’t know what he doesn’t know inspired by a professor that’s educated beyond his intelligence; says that you are polluting the ground water. To the journalist, wrapped up in their own agenda, who is too lazy to research, who writes about a fracking company, drilling a fracking well, on a fracking location, with a fracking rig, and that anybody within 5 miles of there is going to die an early death to some kind of radiation poisoning, or heart disease, or some kind of cancer. To the egotistical politician who thinks he can garner a few votes because he’s calling you greedy or mean spirited.”

“I don’t care what anybody says about you, I know who you are, and I am proud to be one of you! Thank you for what you do and thank you for this award!”

Olds also elaborated on thanking a few significant people that had been a part of his career for a very long time:

Suzanne Beck who has worked in his office for more than 20 years. Jerry attributed her as being “one of those people who steps in and takes over the office and takes charge of everything. And I found out when I took a vacation earlier this year, that things run better without me." 

Chris Figge, who grew up with Jerry and has been a partner on many ventures, some good and some not so good. Jerry and a group once drilled a dry hole, having failed to mention to Chris that he had an interest in it. Jerry recalled telling Chris the news and then sending him a bill, which Chris paid, “who wouldn’t want a business partner like that?” 

Dick Poling and David Hill, who did the “hard heavy lifting” and the “dirty work” as Jerry considered himself to be the somewhat lazy one. Olds attributed these two as carrying him for a longtime. 

Nathan Anderson and his crew at PDC for taking Jerry under his wing to education him on the shale.

Connie Olds, Jerry’s wife. Olds said, “I wouldn’t be here if it wasn’t for her.” The two met while Jerry was a sophomore in college, his wife’s life savings helped to put him through school. They then packed up and moved to Lafayette Louisiana where they didn’t know a soul. Following this, Jerry “quit the best job he’d ever had” and moved his wife, along with their two kids, to Ohio to chase the Morrow County boom. “She never knew when I was going to be home, weekends, holidays, etc. But she stayed with me through thick and thin. This award is for you.” Connie and Jerry will be celebrating their 60th wedding anniversary this August.

Choosing just one recipient for this award is always very difficult, but recognizing Jerry’s service and what he has accomplished throughout his more than 50 year storied career in oil and gas needs to be celebrated. The message among all of his friend’s and colleagues resonates in similarity. Jerry’s passionate knowledge of the industry, willingness to share and mentor those around him, joined with his astounding work ethic make him a shining example of an Oilfield Patriot.

On behalf of the entire Ohio Oil and Gas Association and its membership, congratulations to Jerry Olds on receiving the honor of being our 2015 Oilfield Patriot Award recipient, it is very well deserved. 

You can view the Oilfield Patriot Award video here: https://www.youtube.com/watch?v=69fFOdIw6Sk

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Secretary of State Ruling: Anti-development County Charters Do NOT Belong on the Ballot

Posted By Mike Chadsey, Director of Public Relations, Monday, August 17, 2015

Recently, Ohio Secretary of State Jon Husted ruled that the proposed county charters in Medina, Athens and Fulton do not meet the basic legal requirements to go on the ballot and according to Husted are a “violation of provisions of statutory and Ohio constitutional law.”

 

According the Secretary’s press release:

“The issue of whether local communities can get around state laws on fracking has already been litigated,” Secretary Husted said. “Allowing these proposals to proceed will only serve a false promise that wastes taxpayer’s time and money and will eventually end in sending the charters to certain death in the courts.”

 

As many of you know a group called the Community Environmental Legal Defense Fund (CELDF), a law firm, has been pedaling these anti-development charters and charter amendments in Ohio since early 2012.

 

Here is a quick recap of where the CELDF has been active this year:

 

Portage County – The petitions were never submitted due to lack of signatures.

City of Columbus – The petitions were submitted but failed to make the ballot due to lack of valid signatures.

Medina County – Husted decision removes these petitions from the ballot.

Fulton County – Husted decision removes these petitions from the ballot.

Athens County – Husted decision removes these petitions from the ballot.

Meigs County – The petitions have been submitted however the County Commissioners and Board of Elections has not placed the issue on the ballot. CELDF has appealed.

City of Youngstown – Yes, for a 5th time CELDF has submitted petitions even though the last four times the effort has been met with resounding defeat at the ballot box.

Village of Gates Mills – Pending submission. This effort was defeated by 68% last November.

City of Akron – Pending submission.

The reason Husted decided on the issue in the first place is that in each of the counties, where a charter form of government would have been created, is that many local elected, business, community, agricultural and labor leads joined together and submitted a form protest and asked the Secretary of State’s office to review the petitions and to not place them on the ballot. Considering the strong legal case they made siting both state preemption as well as the Ohio Supreme Court case and the fact that they are not valid charters, Mr. Husted made the right call to prevent the waste of taxpayers’ dollars in each of these counties saying “the issue has already been resolved.”

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