Posted By Lyndsey Kleven, Communications Coordinator,
Monday, February 29, 2016
Updated: Wednesday, March 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: email@example.com
John Miller was born in Gilmer county West Virginia; his family moved to Windham (Portage County Ohio) when he was two years old. He graduated from a small town high school in a class of 80 students. John’s father always had aspirations of being a schoolteacher, as many of the Millers in West Virginia were, but decided to forgo college and moved to Ohio for employment to support his wife and five children. As the middle child and only boy in the family, John was active in high school sports—wrestling, gymnastics, and track—and had a superb group of coaches that inspired him to also want to become a teacher and coach.
Following his high school graduation in 1966, John worked for a year to save money for college. In 1967 John enrolled in Kent State University to pursue a teaching degree. After three quarters at KSU John ran out of money and left the university to go back to work and save more. During these times it was easy to get a job and John was offered a position at Wheeling-Pittsburg Steel located in Warren, Ohio. Following his decision to leave college John was drafted into the United States Army and began serving in September 1968, in the wake of the Tet Offensive.
After being drafted John was convinced he would be deployed to Vietnam where most new recruits were being sent. However, he was not sent to Vietnam but rather to Heidelberg Germany where he was part of the 529th MP Honor Guard unit, and as he put it, “I got to march around Germany for two years.” He said “going to the military was one of the best things to happen in my life with the most important thing being accepting Jesus Christ as my savior and marring my wife Carol”. The military matured him and brought him back to the U.S. a different person.
Following his military time abroad, John returned to KSU to finish his degree while working full time at Wheeling-Pittsburg Steel. During this time he married his wife Carol in 1974 and had his first child, Jonathan in July 1975. It was also during this time that he came to the realization that teaching jobs were scares and that majoring in business would be more practical. In 1975 he graduated from KSU with an accounting degree and was recruited right out of school.
John’s career aspirations were to start working, become a CPA, and transition into industry. He was hired by a small CPA firm in Beachwood Ohio and had his own clients within six months, gaining great experience. He work at the CPA firm from 1975 to 1977 because two years public accounting experience was needed to become certified. John passed the CPA exams in 1977. Because he was working so many hours as a CPA he had little time to pursue a job in industry, as a result John left the CPA firm without having a job, all while expecting his second child, Angela.
His next position was working as a tax analyst for Premier Industries located in Cleveland, Ohio, however he didn’t see much professional opportunity within the company. In the fall of 1977 John was analyzing an offering for one of the Belden & Blake Corporation partnerships for the Mandel brothers (Premier’s primary owners). During that analysis a recruiter informed him of an opening for an accountant at an oil and gas company located in North Canton, Ohio, Belden & Blake Corporation.
Work History Overview:
Belden & Blake narrowed their search to two candidates, John and another person, who did not have public accounting experience and was asking for less money. Belden & Blake’s treasure Mary Thomson would make the final hiring decision. Fortunately for John, Henry “Chic” Belden was prepared to purchase the company from the current owners Henry S. Belden III and Glenn Blake. Marty deliberated with Chic who told him to hire the CPA.
John started working for Belden & Blake in November 1977, which launched his career into the oil and gas industry. The company at that time had a production accountant on staff, and John was hired as the only general accountant.
“Shortly after Chic acquired the company, he hired C. Richard Cox (Dick Cox) who I would consider my mentor. Dick was a brilliant man, a perfectionist and a great teacher. He expected nothing but the best from all his staff. He pushed me hard, and as a result made me a better communicator, writer, analyst and better at budgeting and cash flowing. I give Dick Cox a lot of credit for any success I have had in my career.”
Every month John prepared a 50-60 page financial analysis of Belden & Blake for Dick and together they would spend hours reviewing it. John recalled once having a present tense on page 5 and a past tense on page 13 and Dick would say, “John, you’re killing me! You have to be consistent!” With Dick you had to be consistent, he demanded excellence. John had many praises about working for Chic Belden and Dick Cox and has great respect for both men.
“I worked at Belden & Blake for 10 years and during that time earned a MBA from Kent State University. When I left I was corporate controller and managed 21 people and three accounting managers. Belden & Blake was comprised of several entities including an international company and a SEC reporting company which gave me great opportunities to learn. I traveled to London several times to set up an office. I had a wonderful work experience.”
A former executive at Belden & Blake left the company to consult for Alliance Petroleum Corporation and operate wells on their behalf. John was recruited by that executive to work for Alliance Petroleum in the fall of 1987. John felt he would always be a middle manager if he stayed at Belden & Blake so he decided to submit his resignation to Chic Belden. Chic advised John that Alliance was a struggling company and might not survive.
Alliance was headquartered in Atlanta, Georgia where John interviewed. He thought the company had great future plans. Retrospectively, John described Alliance as being comprised of three small struggling companies that were syndicating drilling programs. An attorney convinced the owners of those companies to align themselves to form one larger struggling company. Alliance had little cash flow, a lot of debt, and did not have an operating arm. In December of 1987 they bought Ohio L&M Co, Inc., located in Marietta Ohio which provided them with an operating team. John was recruited to serve as CFO of Ohio L&M.
“So I left Belden & Blake for Alliance, and Chic was right, they were not going to make it, it was pretty bad. The folks at Alliance had great plans; the problem was that they were not ready to execute those plans. They had no accounting system, and no viable strategic plan. They had ideas but no plan to get it done.”
John spent all of 1988 working in Marietta and living in the Lafayette hotel. The directors of Alliance soon realized the company was going in the wrong direction and began restructuring. By mid 1988 the process of closing the Atlanta office had begun and by the end of 1988 all the former principles were no longer with the company. The president of Ohio L&M was promoted to president of Alliance and John became the CFO of Alliance. In a matter of months John went from being CFO of the operating company to CFO of the parent company. In December of 1988 the company was nearly bankrupt, they moved the headquarters to Canton and started hiring staff.
John said he hired an outstanding group in Canton which greatly contributed to the success of Alliance. He hired Dora Silvis as his accounting clerk; she was greatly needed for the position but he also recognized that she was highly over qualified. In 1991 the company restructured again and John was promoted to president & CEO and Dora was promoted to vice president. Marty Miller, Vice President of Operations was another important member of the management team as was Steve Nicholson who managed the Ohio L&M northern field.
John started restructuring Alliance’s debt in 1988 and 1989, and at the same time determined that in an effort to generate more income and cash flow Alliance needed to expand its production through acquisitions and drilling. During 1993-1996 Alliance drilling 2 to 5 well programs. In the late 1990s John started raising money through brokerage firms. In the early 2000s they had success drilling some of their best wells and gained increased access with those firms. In 2006 Alliance Petroleum was the number one driller in Ohio. The company operated approximately 1,700 wells during this time period.
In the height of its drilling success Alliance started looking for an exit strategy and began marketing the company in 2007 because the price of oil and gas was peaking at this time. In 2008 the market crashed, as did the price of oil and gas, greatly slashing the market value of Alliance and as a result the company suspended its marketing effort.
Along came the Utica, which provided another marketing opportunity for the company. Alliance had built up a massive leasing program by raising money through brokerage firms and drilling wells, much of that acreage covered the Utica shale. In late 2011 they started marketing the company again. Interest in the Utica play was still early, but they saw it as an opportunity to sell the company and provide a return for their shareholders. Management’s plans were to sell the deep rights and find a buyer for the stock. They were able to sell the company’s “deep rights” to larger companies interested in the shale play and in January 2012 sold the stock of the company to Lake Fork Resources owned by Tom Wright. The stock sale provided an opportunity for the employees of Alliance to keep their jobs which was a priority for John when negotiating the sale.
“I loved the people I worked with at Alliance, I loved the job, it was my life for 25 years. I was in mourning for months after I left Alliance. But you would have to drag me back at this point.”
John started AIM Energy LLC in 2007. He had interest in some wells along with friends and used that interest to form AIM Energy. AIM Energy operates about 80 wells; some wells John and his partners owned and others were acquired. “I do all the administrative work and my two partners are field oriented so they operate and manage the wells, pipelines and compressors. It keeps me in the industry and I’m still a producer. I love the industry and I and want to stay involved in oil & gas and OOGA as long as I can.”
John came up with a slogan while he was at Alliance, “Vision alone is no solution, success depends on execution. And that’s what we did with the company. The employees of Alliance executed, they performed with excellence (as Dick Cox taught me early in my career) and that made all the difference”.
History with the OOGA:
John became involved with the Ohio Oil and Gas Association when he started working for Ohio L&M in 1988. The first meeting he attended was the Summer Meeting and he came back to the Winter Meeting the following year. He hasn’t missed many meetings since then and feels that OOGA is a great organization and wants to stay involved as a member.
“I can’t remember going to a Winter Meeting held by OOGA while I was president and CEO of Alliance that I didn’t do a deal. Besides all the training the meetings give us, you get to network with people you don’t see very often. We were always buying and selling and discussing drilling programs at that event.”
John began to get involved with the Association during the Tom Stewart era. Tom encouraged John’s involvement and a president’s appointment was used to put John on the board, John was elected thereafter. In 2002 he was appointed to the executive committee, where he served through 2008. Today he remains on the board and hopes to be reelected when his seat is up again next year so that he can remain involved. In addition to serving on the board of trustees and executive committee, John was previously involved with the government affairs committee, was PAC chairman for over six years and is currently on the audit committee.
“The great thing about the industry is all of the relationships. It is truly full of fantastic people and I’ve made some great relationships over the years. I can’t imagine any oil and gas state that would have a better organization than the Ohio Oil and Gas Association.”
New information has surfaced on how its research was funded. Based on this, the university is obligated to do more to publicize the study’s findings.
For those getting up to speed on the story, Energy In Depth posted a short clip [full video] from the University of Cincinnati’s Dr. Amy Townsend-Small’s presentation to local Ohio hydraulic fracturing opponents along with some key findings about hydraulic fracturing’s safety:
“All the samples fell within the clean water range and they did not find any changes over time either in any of our homes during the time series of fracking.”
“We never saw a significant increase in methane concentration after fracking well was drilled.”
Samples that were collected that were high in methane “clearly did not have a natural gas source.”
“Some of our highest observed methane concentrations were not near a fracking well at all.”
“There was no significant change in methane concentration over time, even as more and more natural gas wells were drilled in the area.”
Unfortunately Townsend-Small said her team’s research won’t be publicized further because the study’s funders stopped supporting them because of they didn’t like the findings.
“I’m really sad to say this but some of our funders, the groups that had given us funding in the past, were a little disappointed in our results,” Townsend-Small told the audience. “They feel that fracking is scary and so they were hoping our data could point to a reason to ban it.”
No press releases, no research papers, and no data released for the public or other researchers to dig deeper.
That’s not just disappointing; it looks to be in violation of the grant the University of Cincinnati used to fund its research.
The premise of the research project was to see what effects hydraulic fracturing has on drinking water by testing wells before, during, and after fracturing took place.
This innovative research study is examining the potential effects of hydraulic fracturing, or fracking, on groundwater in Ohio's Utica shale. Led by UC geologist Amy Townsend Small, this first-of-a-kind project is testing for the presence of methane (the primary component of natural gas) and its origins in groundwater and drinking water wells before, during, and after the onset of fracking.
Water samples were tested using a stable isotope ratio mass spectrometer to determine the source of methane found in the water. As Inside Climate News explained in a 2014 story:
Each sample is tested for methane, the main component of natural gas. Townsend-Small's lab uses isotopic analysis to "fingerprint" the methane to determine if it's "biogenic methane" (produced by microbes, and unrelated to natural gas drilling) or "fossil fuel methane" (methane found in oil, gas and coal deposits).
The NSF grant’s mandate states unequivocally that findings gleaned from using the instrument be made publically available:
Results from research projects using this instrumentation will be disseminated through student and faculty presentations at national and international scientific meetings, publications in peer-reviewed journals, and online data repositories.
The University of Cincinnati should hold up its end and add to the public’s knowledge of hydraulic fracturing’s safety. With so much misinformation being pushed by hydraulic fracturing opponents, a short presentation in front of a few people in southeast of Canton, Ohio doesn’t cut it.
Posted By Brian Hickman, Director of Government Affairs,
Tuesday, February 16, 2016
The unexpected and untimely passing of Associate Justice Antonin Scalia will create a ripple effect on our nation’s government in several ways.
First, the make-up of the Court will take on a new look. With Scalia, the U.S. Supreme Court leaned conservative, with a general voting bloc of 5 conservative justices to 4 liberal justices. Without Scalia, and arguably without the prominent voice of the conservative bloc (Scalia was known for writing colorful opinions on landmark cases), the conservatives are now even at best with the liberal bloc. I say even at best because conservative Justice Anthony Kennedy often takes a more liberal stance on cases. You could state that the liberal bloc would have the upper hand in several upcoming cases to be determined by the Supreme Court because of this tendency.
Secondly, the new look Court does and will have several major policy initiatives before it. Cases pertaining to voting rights, affirmative action, and labor unions were already heard. The Court is scheduled to hear cases regarding abortion, contraception coverage, President Barack Obama’s health care plan and immigration policies as well this session (which ends this June).
For the oil and gas industry, litigation on a number of issues continues to work their way through various courts which may ultimately end up in the U.S. Supreme Court. Issues such as challenges to the expansion of “waters of the United States” via rule for the Clean Water Act, challenges to emissions standards under the Clean Air Act, and additional litigation from environmental interests challenging species protection plans under the Endangered Species Act are all currently being litigated in lower courts.
Finally, this temporary vacancy in the Supreme Court could put a higher standard on lower court cases. Procedurally, if a case being heard in the US Supreme Court were to end in a 4-4 decision, then the decision made in the lower court would hold legal precedent for that jurisdiction. For example, if a decision of the Sixth Circuit Court of Appeals was appealed to the U.S. Supreme Court and the Justices ended up with a 4-4 decision, then that decision would be the legal precedent in the 4 states within the Sixth Circuit, including Ohio.
The focus of this blog has only been on what will happen during the remainder of the current session of the Supreme Court. This doesn’t consider President Obama’s ability to appoint another Justice to the Supreme Court - which he has declared his intention to do. If he attempts to do so, the Republican controlled U.S. Senate (who must approve such an appointment) has already stated they would block it. Their reasoning is that a new President will be elected and that person (along with the American people) should have a say in the next justice. If this appointment lingers, it is expected to set a new record for the modern era, which was a 363 day vacancy due to a resignation in May, 1969. This unfortunately tragedy will add even more weight and flavor to the ongoing Presidential debates and election this year.
Posted By Mike Chadsey, Director of Public Relations,
Wednesday, February 10, 2016
Last week, the Concerned Citizens of Carroll County held a public meeting in the Village of Carrollton to reveal the results of a three-year long study conducted in order to determine if natural gas drilling has had an effect on the quality of water coming from the wells in Carroll County. The Ohio Oil and Gas Association, national group Energy In Depth and other industry folks have attended the meetings over the years to listen to the guest speakers, talk with the media and see the concerns over what is happening in the area.
On this particular night, the guest speaker was a Dr. Amy Townsend-Small a geologist from the University of Cincinnati. Amy and her team had been in the area over the past 3 years testing private water wells to determine if thermogenic methane was present (the kind of methane found in natural gas). The project was funded from two foundations providing grants; one was the Deer Creek Foundation in St. Louis and the other was the Alice Weston foundation from Cincinnati. They have since cut off funding but more on that in a minute. The idea of the study was to take baseline water well testing before much, or in some instances any drilling had taken place in the area near the water wells.
Over the course of the study, which included taking almost 200 samples from 23 water wells in 5 counties, it was reported that natural gas development has had no effect on the water quality. Amy spoke with the local Times Reporter after the meeting and said:
“The good news is that our study did not document that fracking was directly linked to water contamination.”
This was not an unexpected result considering the many studies which have previously come to the same conclusion, including the US Environmental Protection Agency. Having been to many forums like this over the last few years, one never knows how the reactions to positive results will be received. It was shortly after Dr. Townsend-Small released that statement that a pin drop on the carpet would have been overheard. The silence was so obvious that even the leader of the group Mr. Paul Feezel said:
“You all are very quiet tonight.”
I am sure the residents were happy to hear the great news but one did get the impression that they were somehow disappointed. We are sure the residents in these counties will stay vigilant but since the water well testing results have been conducted and verified by an outside source perhaps they won’t be as skeptical of information letting them know that oil and gas development can happen safely in their community.
It was clear from Dr. Townsend-Small that the residents did a have problem with biogenic methane but not thermogenic. She did a great job during her presentation explaining the difference and how they could test for the 2 in her lab back on campus.
Let’s take a look back at the previous comment about funding. It was made clear that the study has run out of money for testing and promotion of the results, but they are still looking for additional funding sources. On the same point during the question and answer session, someone from the audience asked if the university was going to publicize the results of the study, Dr. Townsend-Small has this to say:
“I’m really sad to say this but some of our funders, the groups that had given us funding in the past, were a little disappointed in our results. They feel that fracking is scary and so they were hoping our data could point to a reason to ban it.”
I guess in this case, good news will travel slow, but at the end of the evening after all of the talk, debate and questions, the facts remain the same, water in Carroll County and the surrounding areas have not been negatively impacted by natural gas development.
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 firstname.lastname@example.org
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.
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:
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 Post, USA 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 News, ABC World News, C-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.
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.
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 email@example.com
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.”
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.”
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.
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.
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.