Posted By Lyndsey Kleven, Communications Coordinator,
Thursday, May 14, 2015
On May 7, the U.S. Department of Energy issued a final authorization for Dominion to export domestically produced liquefied natural gas (LNG). Dominion’s LNG operation, Cove Point, located on the Chesapeake Bay in Maryland has been approved to export LNG up to 0.77 billion standard cubic feet per day (Bcf/d) of natural gas for a period of 20 years.
LNG is formed when natural gas is cooled to around -260 F, which becomes a clear, odorless, noncorrosive, nontoxic liquid. According to the American Petroleum Institute, the volume of natural gas shrinks by approximately 600 times when liquefied. LNG has been handled safely for decades, with more than 100,000 LNG vessels making trips without incident.
Highly regulated, the LNG industry is overseen by the Federal Energy Regulatory Commission, the Department of Transportation, the U.S. Coast Guard and the Department of Homeland Security, just to name a few. Under the Natural Gas Act, countries that do not have a free trade agreement (FTA) with the U.S. must be granted permission from the Department of Energy to allow export authorization. It has taken years to gain the federal support needed for the U.S. to export domestically produced LNG to countries that do not have a FTA with the U.S.
Approval of LNG exports is huge—positively impacting: the industry, Dominion and other LNG exporting companies alike, numerous states producing the resource, Calverty County (the home of the facility), and it will affect the entire nation. The Cove Point liquefaction project is estimated at $3.4-$3.8 billion, creating thousands of construction jobs, 75 permanent jobs and expected to create an additional $40 million in annual tax revenue for Calverty County.
In Ohio, Dominion operates Dominion East Ohio, one of its two local distribution companies and has additional gas processing infrastructure in the state. The Ohio transmission system and Ohio natural gas will now be part of the network used to send product to Cove Point for export.
In the U.S. Energy Information Administration’s Annual Energy Outlook for 2015 (AEO2015), it predicted natural gas becoming the dominant U.S. energy export, pending the enactment of additional policy changes. With its new federal approval, the Cove Point facility is projected to be operational in late 2017. On point with reality, the report found the U.S. becoming a net exporter of natural gas as early as 2017.
Also in the AEO2015 forecast, domestic natural gas production is expected to continue increase and in 2015 alone could continue to do so at a record average production rate of 72.4 Bcf/d. In Ohio, this resource is abundant in the Utica shale, and many other shale formations across the country contain the resource.
According to Dominion, once completed Cove Point will produce about 5.25 million metric tons of LNG annually, for it’s already contracted service agreements with two overseas companies. LNG transported from Cove Point can reduce global greenhouse emissions by millions of tons a year as a replacement for coal that is currently used in overseas electricity generation. Shipments from Cove Point are projected to reduce U.S. trade imbalance by at least $2.8 billion annually, to as much as $7.1 billion.
Posted By Lyndsey Kleven, Communications Coordinator,
Monday, May 4, 2015
The member spotlight series features legacy OOGA members who have also 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
Richard C. Poling, grew up in Hocking County on a dairy farm. His father owned the farm and the dairy business was not exactly booming in the late 1950s and early 1960s. Poling’s father shifted his focus from the dairy farm and started trading leases, eventually leading him to start pumping wells. This became Poling’s initial exposure to the oil and gas industry. Poling was an only child and spent a lot of time with his father; in his early childhood he was around the oil wells and helped pumping and hooking up wells.
Poling decided he wanted to become a surveyor and went to school at Muskingum Technical College to study drafting and surveying. He worked doing this for one year until the oil embargo of the early 1970s sent the country into a recession and Poling was out of a job.
In 1974 Poling went to work for Oxford Oil under Bill Straker, as a draftsman creating Oxford’s maps, permits and applying for permits, and he also did leasing. As Oxford Oil was picking up more business Poling began working in the office and out in the field. In 1976 Straker encouraged Poling to go back to school for Petroleum Engineering. Poling enrolled for school in Zanesville (currently Zane State College) and received his Associates Degree in Petroleum Engineering in 1977. Poling continued working for Straker at Oxford Oil fulltime while he obtained his degree and the two years after receiving it. During that time Poling expanded his experience by added well completions to his growing list of capabilities.
In 1979 Poling left Oxford and went to work for Bremco to help take care of some of their wells. Poling left Bremco in 1980 and went into business for himself. The early 1980s was a very busy time for the industry and Poling started out by operating and drilling wells for Jerry Olds.
“He was doing a lot of consulting work, so he lined me up a lot of clients to do other oilfield work for and well completion,” Poling said. “I kept doing this until I got enough production on my own, and with him, to really make it all work.”
About R.C. Poling Co., Inc.:
R.C. Poling Company was formed in 1980 and is based out of Junction City, Ohio in Perry County. Poling started the business by doing anything that needed to be done, from buying and selling wells, drilling and producing wells, and even plugging wells. Poling and his 33-year-old son currently operate 175-200 conventional wells mostly throughout Southeastern Ohio, the business also employs an office manager.
“We’ve done a lot of drilling and completions and we’ve put together drilling deals,” Poling shared, “A lot of the local people that are in the oil and gas industry are partners with us on wells, and we purchase some older wells.”
The fluctuating oil market has a great impact on an independent oil producer’s drilling plans for the year. Poling said in good times they would drill 10 wells, and only one in poorer market conditions. When times are slower they focus on doing a lot of their own maintenance work and would consider buyouts of other companies.
“It has treated me good, it is good work, I have enjoyed it, and I have had a lot of fun,” Poling said. “I have met a lot of characters over the years. I used to say you could spend a day with the ‘old-timers,’ do a hard day’s work and have more fun than if you paid somebody for work. I could tell stories all day long about the oilfields.”
Poling thinks of R.C. Poling as a typical, small-sized, oil and gas producing company. Poling said before the shale boom, there were thousands of companies like his around. There were a few big companies like Oxford Oil and Ken Oil but the rest of the producers were mom and pop operations. Some of the producers had 20 wells, other would have upwards of 500 wells, but take out the handful of big companies and the rest were similar to R.C. Poling.
To stay informed with what is going on in the energy industry Poling is on the board of directors of South Central Power Company, largest electric cooperative in the state of Ohio, with 110,000 members. He has also been a chairman of Commodore Bank, in Somerset for 25 years.
“You learn a lot about trends in the energy business in general. And in the banking you learn a lot about finances, investments and monetary policy and why things are done the way they are.”
Poling joined the Ohio Oil and Gas Association (OOGA) in 1974 when he started working for Oxford Oil. He maintained his individual membership when he left the company and started working for himself. Poling is active on the OOGA Board of Trustees and has been since 1996.
The value Poling sees in the OOGA is volume of members and the dimension of voices this group provides. “The bigger the voice, the louder the voice, the more they pay attention to you. No one wants to listen to me, but they will listen to 3,000 of us.”
Growing up around the oil and gas industry in southeastern Ohio, Poling has known former OOGA Executive Vice President Tom Stewart since childhood.
“I can remember, when I was a kid, going out when Tom’s dad fraced one of the first wells that was hydro fraced in this part of the country, in the late 1950s,” Poling shared. “We went to that, just to see it take place. Everyone in the area came to see it, there were cars parked for miles. They were going to hydraulically fracture a well, and that just wasn’t heard of at the time. Especially with the amount of water that was needed, everyone was rather skeptical. It made a very nice well, from then on they were fracing.”
Poling credited Stewart as being a great supporter for the oil and gas industry over the years. Poling said, “Tom Stewart has been such a great advocate for the oil and gas industry because he grew up with it, he knows what it is, and he knew what the people he was working for were thinking about and how they work. He was out there to help us and protect us—he’s always been an advocate for small oil and gas producers and has done a good job over the years.”
The Association works to represent conventional and horizontal drillers, and Poling feels well represented as a conventional driller. He says that all people in the industry should bind together and support the OOGA or that other opposing groups will conquer.
Shale-development’s impact on business:
There is no shale drilling in the areas where Poling operates, and Poling only drills conventional wells. However, Poling has seen the development’s impact creating a shift in attitude among landowners. Most notably, landowners have developed a sense entitlement overvaluing their perceived worth in royalties.
Poling also attributed increased regulatory standards on the oil and gas industry as a ramification of the shale boom.
“The industry is changing, in my opinion, they keep squeezing the smaller producer out. Between government regulations, environmental regulations and liability issues, you’ll have to be a decent sized company that’s able to afford to have the staff to keep up with it all.”
Poling again recounted drilling memories from his earlier years. “I have been around fracing for over 50 years and I don’t know of one documented case where it’s ever hurt anybody or harmed anybody. In 1958 we would go watch frac jobs and the road would be blocked off for it. The farmers down in the hills hadn’t seen anything like it.”
Dealing with Anti-Development
In dealing with anti-development, Poling sees a common theme in viewpoints, with a big issue being the idea that everything can be 100 percent renewable.
“You’ve got to have energy. Solar, wind, and other renewables have not developed enough yet to fully support us. They will in their day and there is a place for them—we’re starting to see more and more people use them. What the American people want is clean, reliable, cheap energy, whether its electric, natural gas or gasoline, whatever they’ve got, and so far nothings has beat natural gas and coal fired electricity.”
Poling sees natural gas as being the key player in future energy. In an electrical shortage natural gas would be the quickest fix. He also think the future will include a lot of personal gas generation. Poling stated that many people have back up generators now that run on natural gas, and thinks we could see more fuel cells in the future.
“You can not run an industrial nation on solar power. Nothing is going to be as cheap or as efficient as coal fired generation or base load generation. People don’t realize that, and they probably won’t ever realize that until they get cold or dark.”
Posted By Lyndsey Kleven, Communications Coordinator,
Wednesday, April 29, 2015
The U.S. Energy Information Administration conducted its annual study and analysis of America’s Annual Energy Outlook for 2015 (AEO2015), and the future is bright. The report contains energy forecasts to 2040 that hold varying predictions taking into account if crude prices were to rebound quickly and remain high, as well as the reverse. The findings show what can be expected among various scenarios shaping the domestic energy market over the next 25 years.
Unleashing crude oil from tight formations thanks to hydraulic fracturing allows for strong growth in production through 2020, in turn causing a decline in net petroleum imports and a growth in net petroleum exports, in every pricing scenario. AEO2015 shows a slowing in growth of domestic production after 2020 offset by increased vehicle fuel economy standards and more efficient technologies decreasing dependency.
In 2040, 17% of U.S. crude oil and petroleum products will be imports, this cut by nearly half as the country was importing 33% of its total supply in 2013. In the high oil price and high oil and gas resource cases the U.S. can become a net exporter of petroleum and other liquids after 2020 as we continue to efficiently tap our resources. The current federal administration has recently vetoed the cross continental construction of the Keystone pipeline, an oil pipeline system crossing the United States into Canada.
The report finds that the U.S. could soon become a net exporter of natural gas as early as 2017, transition from its current position as being a net importer. Many areas of the country is blanketed with this resource, much of which we are seeing in Ohio with the Utica shale. Looking ahead to 2040, the lowest projection shows the U.S. exporting 3.0 trillion cubic feet (Tcf) in a low oil price scenario; in prime market conditions this could exceed 13 Tcf. In order to do so, additional infrastructure needs to be built.
To allow the natural gas to flow across U.S. regions, a stronger pipeline infrastructure needs to be put in place. This could require realignment of existing lines and new construction projects.
In Ohio two major pipeline projects are currently in the planning process. The Rover Pipeline LLC is approximately a $3.7 billion interstate natural gas project that could move 3.25 BcF a day, gathering in West Virginia and Eastern Ohio for delivery to the Midwest Hub near Defiance, Ohio. The NEXUS Pipeline project is approximately a $2 billion investment to move 1.5 BcF a day from Ohio to Ontario. These would allow for transportation of natural gas across Ohio states and are currently being mapped out with plans to have them built by 2017.
In turn, with growth in production and new infrastructure to transport the product will also contribute to expansion of several manufacturing industries. In Ohio we are seeing this first hand, one particularly impressive project in the works is the recent announcement of Belmont County being chosen as the potential site for a $5 billion ethane cracker plant. Capitalizing on the region’s natural resources, this type of investment will do great things for our state.
Posted By Brian Hickman, Director of Government Affairs, Operations Managing Director,
Monday, April 13, 2015
While a revised budget proposal is still being worked upon by the Ohio House of Representatives, some media reports are detailing significant changes in the Governor’s original proposal. Some of these changes will have an impact on the Ohio oil and gas industry. An official announcement on these changes is expected this Tuesday (4/14) before the House Finance Committee.
As you may recall, Governor John Kasich provided a $72.3 billion executive budget proposal to the House for consideration. The proposal included a projected personal income tax cut of $5.7 billion, while increasing taxes by the tune of an additional $5.2 billion in an effort to offset the lost state revenue. The Governor’s vision is to move the Ohio economy from a service-based economic system to a more consumption-based model going forward.
Overall, the House is expected to remove several provisions that would raise taxes upon certain businesses. Expected to be removed are the increases in a severance tax on oil and natural gas production, the Commercial Activities Tax (CAT), the state sales tax, including a general broadening of this tax to several services not currently included.
While several of these provisions were for the goal of reducing the state’s personal income tax, House Republicans are expected to still offer a sizeable reduction in the tax due to the retention of a few of the Governor’s priorities (IE – a reduced cigarette tax increase) and a continued strong state revenue projection. The cut is expected to be in the neighborhood of a $1 billion overall reduction.
In addition to these tax changes, the House is expected to also make changes to the oil and gas regulatory components as well. At this time, the extent of those changes are not as definitive as the tax provisions.
Again, the state budget process is far from over. Now, as the House nears the end of their process, the bill will move onto the Ohio Senate where it will see more changes. Then, a conference committee between the House and Senate will hammer out the final version of the bill being proposed by the state legislature for the Governor’s signature.
Posted By Lyndsey Kleven, Communications Coordinator,
Wednesday, April 1, 2015
The member spotlight series features legacy OOGA members who have also been a member of the Association for at least 10 years. If you would like to be highlighted, please contact Lyndsey Kleven firstname.lastname@example.org
Joe Haas had an unconventional start in the energy industry. Haas spent a number of years in the navy in the 1960s, working for Admiral Hyman G. Rickover; Rickover was the United States Navy admiral who directed the nuclear propulsion program. It was a joint command between the Navy and the Atomic Energy Commission. Haas was a Petty Officer assisting with the interview process for all officers entering the Navy’s nuclear power program, helped coordinate the applications for security clearances for successful candidates and performed other administrative functions. The experience launched his fascination with the role energy would play in our country’s future. Following his years in the U.S. Navy, Haas finished his pre-law program at Cleveland State University and was headed to law school.
“I talked my brother Bob into going to law school with me. He went and I didn’t,” Haas said. “I went to work for my brother Jim who had started a small oil and gas company, focused primarily in Geauga County.”
In 1972 Joe went to work for his brother, Jim Haas, who had started American National Petroleum and knew immediately that the oil industry was where he wanted to spend his career. It was a small growing business, Joe worked as a Landman, financial officer and any other job that needed to be done. Soon after starting, his brother bought a drilling rig and Joe helped manage that for a couple of years.
“I loved the industry. So I basically stayed and didn’t go to law school. Jim loved wildcatting and we worked on several large land programs in Ohio and New York. At one time we had 100,000 acres of oil and gas leases in the Finger Lakes region of New York. We sold those properties to Earl Linn (Mike Linn’s father) and Colt Crucible Steel. Several hundred wells were drilled on those leases.”
Jim and Joe worked together until 1976.
“I had my own ideas on how to run a business and Jim had his. So at the age of 29 I started my first company, which was called Pioneer Resources.”
Pioneer Resources focused on land acquisition and worked throughout Ohio and New York, doing several land acquisition programs. Like many small independent companies at the time, Pioneer had difficult financial times after the commodity prices plunged in the mid 1980’s.
From 1988 to 2000, Haas did oil and gas land work and gas marketing in Ohio, Pennsylvania and New York. In 2001 Haas formed Reserve Energy Exploration Company, which he still runs today.
About Reserve Energy Exploration Company:
Haas is the President of Reserve Energy Exploration located in Auburn Township, Geauga County. The company’s business model is to locate new reserves beginning with the development of a geological concept, reviewing historical data and using this experience to identify potential areas that may support oil and gas exploration. Upon completing the initial studies, a land team will research lease availability and infrastructure. Reserve would then typically partner with an operating company and begin to acquire leases.
The exploration team will then high grade the prospect with an in-depth subsurface study and geophysical studies that furthers the likelihood for a successful drilling program. Depending on the size of the program, Reserve and its joint venture partner will begin developing the project or in the case of larger (10,000+ acres) seek a large independent to jointly develop the prospect. Many times Reserve will continue to do land services after the prospect is in the development stage.
“We’ve worked with many of the operators in Ohio, helping them put their land programs together. We work with a lot of the legacy operators to help them augment their own land departments and have also worked with some of the largest independents in the country.”
Haas has a daughter and three sons, all of which have joined Reserve Energy in various capacities. Over the course of the last 12 years, all of his children have taken an active role in the business after pursuing other endeavors. It is anticipated that the new generation will own and manage the business.
As the company grew, it got involved in larger projects. Reserve Energy currently has lease positions in Ohio, Illinois, Kentucky and Pennsylvania. With the help of Joe’s sons and daughter the company has put together four utility scale Wind projects (150,000 acres) in Michigan, New York and Ohio. Two of the projects are currently being developed.
Having worked in the oil and gas industry for more than 40 years, Haas has a profound respect for the industry. He feels the oil and gas business in the United States is strong because most people in the industry respect and have a deep appreciation of the challenges and opportunities the industry offers. His children share the gratitude to be able to work in such a great business.
“Because we are a land based company we have a tremendous appreciation for the relationship between the landowners, both surface and mineral, and the oil and gas industry.” Haas said, “America is one of the only places in the world that an individual owns mineral rights. The freedom of mineral ownership in the United States has helped create the largest, most diverse, innovative and efficient oil and gas industry in the world. The fact one does not need to negotiate with the government to obtain mineral rights allows anyone that has the courage and financial wherewithal to develop the oil and gas rights in a free market environment.”
Shale-development’s impact on business:
Reserve was well prepared for the Shale boom in Ohio after having been involved in large-scale exploration projects throughout the Appalachian, Michigan and Illinois Basins. As Shale started developing (2004), the first project Reserve worked on was in New York, which never got fully developed because of the politics and the hydraulic fracturing ban currently in place there.
“We watched the development of the Marcellus carefully, a lot of friends were working on projects,” Haas shared. “Our first real aggressive Shale projects were in eastern Ohio. By 2008 we put together a large lease position somewhat ahead of the big activity that occurred in 2010 and 2011. The company has about 125,000 acres of Shale leasehold acres in various stages of development. There are 28 Shale wells drilled on projects Reserve initiated. Reserve has participated as a working interest and/or royalty owner in most of them. Some have been more successful than others.”
Haas cited having a well-trained and effective land team and working with geologists and engineers that really understood the Shale and helped develop the projects. Reserve worked closely with several legacy operators in Ohio and were able to place their deep rights under their held by production assets in drilling programs along with term leases secured by Reserve.
Recognizing that the success of the Shale programs would eventually negatively impact the commodity prices for oil and gas, Reserve shifted its focus from Shale prospects to shallow oil. Joe and his joint venture partner Bill Kinney of Summit Petroleum Inc. are focused on developing conventional prospects with lower finding cost. They are currently in the process of creating several large exploration projects in Ohio.
Haas joined the Ohio Oil and Gas Association in 1975 and has been an active member his entire career. He served as a Trustee for the Association in the late 1980s when he was elected as one of the Association’s Regional Producers’ Representatives. Tom Stewart asked Joe to chair a Landman’s committee to manage an attempt by the State of Ohio to license Landmen. The committee defeated the attempt to license Landmen as real estate agents. Haas feels the Association creates a vehicle for the diverse membership to work together for the betterment of the industry and each member.
“I think the difference between the oil and gas industry and many other businesses in this country is that the participants love the industry. It goes beyond the role they play in the industry, whether they’re a geologist, an engineer, a Landman, drive a truck, pump wells, everyone should realize the importance of our work and have a deep appreciation and respect of the industry,” Haas said. “There always seems to be negative forces that are opposed to the oil and gas development, therefore, people in the oil and gas industry tend to be very protective of our business, I don’t see that in other industries.”
One of the greatest benefits of being a member, and the most important aspect Haas noted, was the effectiveness of the Association’s legislative advocacy on behalf of the industry.
“OOGA has been one of the most effective oil and gas trade associations of any of the other state oil and gas organizations in the country. It’s very well respected.” Haas said, “We spend time in other states and knowledgeable oil people speak very highly of the OOGA. The organization has a strong cadre of producers and professionals that volunteer countless hours to make the OOGA an effective industry advocate.”
The networking opportunities are also important. The Association provides an opportunity to build long lasting friendships and business relationships which are critical for success in the oil and gas industry.
“For my business, the networking is very important. It’s great to meet the folks in the business at the meetings and activities the Association holds. It is hard to go out and drill [especially Shale] when you have several companies contributing leases to the unit unless you have some form of relationship. Contacts made at various OOGA functions often turn out to be very helpful in a future business deal.”
Haas also mentioned OOGA’s sister organization, OOGEEP, for doing a tremendous job in getting the word out to schools and the public at large as to what the industry is all about. He feels showing the benefits, both financially and the long term security of our nation needs to be publicized by groups like OOGEEP.
“I encourage all oil and gas professional to not only be active in the OOGA, but also their respective professional associations.” Joe has been an active member in the American Association of Professional Landmen (AAPL) since 1977. He has twice served on the Board of Directors and served as a member of several committees. As chair of the long range educational committee, he helped create two videos that set out the AAPL’s ethical standards and best practices. These videos are used for seminars and in house training of Landmen.
Joe and wife (Cindy) of 42 years live in Newbury, Ohio. They both are active in several civic and church organizations.
Posted By Lyndsey Kleven, Communications Coordinator,
Tuesday, March 24, 2015
The Ohio Oil and Gas Association hosted its 68th annual Winter Meeting in Columbus on March 11th – March 13th which brought together 1,150 individuals including membership and top industry leaders from Ohio and the nation to provide the most current updates of the state’s oil and gas industry.
The first day was considered a day of “pre-meeting events,” leaving most the day for OOGA Committees, Executive Committee and Board of Trustees to reconvene and continue to work towards improving the Association. This also served as time for exhibitors to set up and prepare for the following day’s main event. Succeeding the board and committee meetings, the first speaker event was hosted in collaboration with the Ohio Geological Society. This event brought in a large crowd, as the topic was “Hydraulic Fracturing and Earthquakes: Ethically, How Do We Move Forward and Do the Right Thing?” presented by Donald D. Clarke, AAPG Distinguished Ethics Lecturer. The Association hosted its Corporate Member Reception following the OGS presentation. The reception provided an opportunity for the Association to show its appreciation of its valued 225 Corporate Members who convened for hors d’oeuvres and drinks.
The next two days held the main events including updates from national authorities, state and federal elected officials, and included production, exploration, legal and legislative industry information. The keynote speaker for this year was Dr. Philip K. Verleger, president of PKVerleger LLC, his research has focused on the study of energy commodity markets and more recently the amazing transformation of the US energy sector. Dr. Verleger will have a feature article in the April issue of the Bulletin on his presentation on “Energy’s Black Swan: Why Saudi Arabia Refused to Cut” provided interesting insight on current oil pricing.
Packed into the Business Session Verleger presented to, was a powerhouse of additional speakers. Karen Harbert is the president and chief executive officer of the U.S. Chamber of Commerce’s Institute for 21st Century Energy. Harbert leads the Institutes’ efforts to build support for meaningful energy action nationally and internationally. It was a packed house during her presentation on “America’s Energy Future: Challenges & Opportunities.” Former Member of the U.S. House of Representatives 4th District of Oklahoma J.C. Watts, Jr. provided a captivating presentation on “The State of Washington.” Watts has tremendous insight on national policy through his experience in Congress and is still greatly involved with the industry through the Domestic Energy Producers Alliance. Matt Kellogg, Tax and Environmental Council for the Independent Petroleum Association of America (IPAA) also provided a national perspective during Thursday’s business session where he provided an update of what IPAA the national trade association is involved with.
Federal officials representing Ohio were present during this session as well, and the Association is appreciative for their support of the industry. U.S. Senator Rob Portman made a special guest appearance, along with U.S. Congressman Bill Johnson, 6th District of Ohio. Both gave speeches echoing similar messages, on the importance of having policies and regulations that encourage responsible growth for development of oil and gas in Ohio, and not hinder it. Both of these officials recognize the impact this industry is making in the state of Ohio, creating jobs and the tremendous economic impact, and want to see the oil and gas boom continue.
The Winter Meeting also hosted a strong political presence from the Ohio General Assembly. Cliff Rosenberger, Speaker of the Ohio House of Representatives, along with Andy Thompson, State Representative from the 95th district, Christina Hagan, State Representative from the 50th District, Al Landis, State Representative from the 98th District, and Sean O’Brien, State Representative from the 63rd District, and Ohio Senator Troy Balderson all stopped by the event.
The Thursday afternoon business session included an Ohio Statehouse Roundtable discussion. The Roundtable dialogue was between: Ohio Senator Troy Balderson, 20th District, Rep. Sean O’Brien, Rep. Al Landis, and Rep. Andy Thompson. Moderated by Matt Hammond of Chesapeake Energy, this discussion centered on Ohio policy impacting the oil and gas industry, as well as highlighting the importance of this industry being in Ohio and staying in Ohio.
OOGA Technical Committee Chair Jody Jones of Chesapeake Energy and OOGA Environmental Committee Chair Melissa Hamsher, gave their perspective on a regulatory updates as well.
Shifting from the political recap, the Winter Meeting also included a slew of industry professionals covering various topics. The other panel discussion that took place was a Clinton Horizontal Panel. Moderated by OOGA President David R. Hill, Mark Lytle of Buckeye Oil Producing Co., Greg Mason from the Energy Cooperative, and Bob Trevail of Dallas Energy, LLC, all reflected and examined on their experiences drilling horizontally in the Clinton sandstone.
Additional industry specific presentations were covered during the Thursday morning business session. OOGA’s legal counsel W. Jonathan Airey, Of Counsel for Vorys, Sater, Seymour and Pease LLP, gave an Ohio Oil and Gas Legal Report. Martin Shumway, of Shumway Resources, LLC, gave an in-depth presentation on the Debrosse & Exploration Report. Jackie Stewart of Energy In Depth, and Mike Chadsey of OOGA gave an “Out in the Field” report of how these two groups are collaborating to make a grassroots impact in local communities. The Ohio Oil and Gas Energy Education Program (OOGEEP) Executive Director Rhonda Reda gave a presentation on what OOGEEP does to educate the community and Ohio schools on the oil and gas industry.
As all of these business session presentations were occurring, another component of the Winter Meeting was simultaneously taking place right outside the presentations in the form of an industry trade show. This year the Association had 83 exhibitor booths displaying products, demonstrating new equipment techniques, and representing multifaceted components of the industry. As attendees came and went and transitioned between business sessions, they could engage with exhibitors showing the latest in oil and gas.
And of course this event would not be possible without our sponsors. Even during trying times in the industry we appreciate the support from each and every one of you.
The Association hopes to see each of you back at next year’s 69th annual Winter Meeting.
Posted By Lyndsey Kleven, Communications Coordinator,
Monday, March 9, 2015
Over the past month the Association has provided testimony for House Bill 64 and House Bill 8, both of which impact our membership. On March 3, OOGA Executive Vice President Shawn Bennett appeared before the House Ways and Means Committee to discuss the severance tax provision of HB 64. The membership of the Association opposes the severance tax provisions proposed in HB 64.
The current market forces that are impacting the oil and gas industry provide a clear explanation that the industry is entering a recession. Crude oil prices have dropped over 50% since June of 2014 and has slowed many projects.
Governor Kasich's executive budget proposal includes a substantial severance tax increase. This high severance tax rate will curb exploration of Ohio's Utica Shale and diminish many company's drilling schedules.
The new rate would also be calculated on the commodity's "spot price" as determined by the tax commissioner, and not the actual value that the producer received.
Commodity prices have a direct impact on industry activity. Companies base drilling schedules on economics and geology. In times when the industry is facing low commodity prices, schedules are curtailed in line with how much minerals the rock will produce and how economic those minerals will be. Lumping a severance tax increase on top of these market factors will further depress drilling activity.
On February 17, 2015 Bennett appeared before the House Energy and Natural Resources Committee to offer proponent testimony regarding House Bill 8. The bill will provide for timely consideration of unitization requests submitted by our membership's operators, as well as urge county auditors to follow the law when when establishing Ad Valoreum valuation on minerals in their county.
Unitization is the process by which landowners can share in the benefits of oil and natural gas resources by combining their acreage into a "unit." It is a process which ensures that majority mineral interest are not blocked from development by minority mineral interest. Currently the industry is experiencing unnecessary delays in the process when the minority interest involves state-owned lands.
HB 8 streamlines the current process by creating a statutory timeline by which the Ohio Department of Natural Resources would need to schedule a hearing or make a determination on a unitization application. Each day of unnecessary delay could lead to less revenue for energy companies, businesses, and landowners.
Posted By Lyndsey Kleven, Communications Coordinator,
Monday, March 2, 2015
The member spotlight series features legacy OOGA members who have also been a member of the Association for at least 10 years. If you would like to be highlighted, please contact Lyndsey Kleven. email@example.com
Todd Dever was born and bread into the oil and gas industry, he is the fourth generation of his family to work in the industry and, the third generation to work for Devco Oil, Inc. the Dever family business, which Todd now runs. Growing up Dever always worked at Devco Oil during the summers while he was in school.
“You can’t get away from it. My dad and grandpa, Frank, they put you to work,” said Dever. “You were out there at least weed eating, painting tanks, any little knickknack job that needed done.”
A graduate from John Glenn High School in New Concord, Ohio, Dever did not start working for the family business immediately. Following high school he went to Otterbein College in Westerville where he received a degree in public relations and a minor in speech communications. After college he started working in Columbus.
Dever worked in Columbus for a year when the family started talking about having him come back to work for Devco. At this point Dever’s parents were getting older and became interested in traveling more. Everyone agreed it was the right time for him to come back, so Dever became Operations Manager, over seeing day-to-day operations. Dever now lives in New Concord with his wife Cassie, who will soon be joining the business and their two children Noah, 7 and Cora, 4.
Todd’s grandfather Frank Dever along with his father Phill Dever and Roger Frantz (Phill’s brother-in-law) started the company. Much of the knowledge came from the experience Frank gained working in the oil fields of Findlay, Ohio, as his father did. Frank did not finish high school but immediately started working in the oil and gas industry as a teenager in the 1930s. In the 1950s, Frank built a couple of service rigs and started servicing wells in Findlay and locally. In 1975 Devco Oil Inc. was established.
In addition to service rigs, Frank also had a couple drilling rigs working throughout Ohio and some in Michigan. The Dever’s had wells that they drilled which made up the business through the mid 1980s, later leading them into the trucking business.
“We kind of actually just fell into trucking,” Todd said. “We had our own wells and our own production and thought we would just haul our own oil. In 1975 we started hauling our own production just in Guernsey County. We’re a service outfit, and we wanted it picked up quickly and safely.”
Other local producers knew Devco was hauling its own oil, and asked the company to haul theirs as well, and this became Devco’s original client base. In the mid 1980s Devco got out of drilling to focus on trucking. Devco still has 7 wells that are in production from the late 1960s.
“Once we started building a customer base for hauling we saw that’s where we needed to be. So we went that route, started to gather customers and meeting with clients to build the trucking side.” Devco now operates solely as a trucking outlet; it purchases oil and sells it to refineries.
“The producers are also friends, it’s not just a business relationship. We like to build a solid friendship with everyone, and I think everyone in the industry, for the most part, gets along—it’s a great industry to be in and associated with.”
During the Mt. Gilead boom, Devco had 12-15 trucks operating with a facility in Ashland. Today Devco operates with approximately 12 employees; this includes 8 drivers and office personnel. Todd became the president of the company following his father’s recent passing.
“We’ve been here for 40 years, hauling crude. We just have a really good core of people in this company, and our turn over rate is exceptional. I have a guy still working for me that started with us and is coming close to retirement.”
Devco Oil has been a member of the Ohio Oil and Gas Association (OOGA) since the mid 1970s. The Association’s current President, David R. Hill has been a longtime friend and business associate with Devco, and shared the value of joining the Association with Todd.
“The leadership that is in place at OOGA is probably the best Association that is around. The Association is great and really works together. It’s good at getting the word out and we have great people putting the positive information out there—not only positive, but factual information.”
Dever also credited the Association’s sister organization, OOGEEP, as being a powerhouse on the educational front. Being involved with both organizations, Dever has served on the OOGEEP Scholarship Committee since 2009 and currently holds a position on the OOGA Board of Trustees.
The Association has opened Devco Oil up to new clients and provided great networking opportunities. Dever also highlighted the annual Winter and Summer Meetings as providing great opportunities for interactions with people in the industry.
“You definitely meet interesting people and a lot of great contacts. Being around this group has exposed Devco to more northern producers. Previously there was a perception that Devco only worked in the southern region around Cambridge. Networking throughout the OOGA has allowed us to let more people know we go all the way up to Ashtabula.”
Shale-development’s impact on business:
Devco’s original client base had been conventional oil producers, but it recently has started hauling some Utica shale. Devco plans to continue to take care of its conventional producers, as this group helped to build the business, but sees the future where shale is heading and is prepared for it when the time comes.
“It’s only a matter of time where everyone has to put their hand in to keep up with shale development. These wells they’re drilling are huge, even with higher decline rates, they keep drilling a lot of wells. If they do decline, at some point, the rate will level out to a certain number of barrels a day, they’ll be around for a long time.”
Dever cited the decline in current oil prices as being a deterrent for new shale drilling, but foresees it taking a turn once oil prices bounce back.
“We’ve been through the booms and busts. These are expensive wells, if you’re spending 6-10 million it takes a long time to get a return on that investment. While prices are low Utica wells will remain low, but will come back once the prices take a turn.”
Dever sees that it has been proven that the oil and natural gas is here and it’s going to be around. He sees that companies continue to have infrastructure being built and even if they leave for a little while, the infrastructure will still be there to come back. He thinks that once prices rebound all of the infrastructure in place will be ready to be put to work.
Posted By Brian Hickman, Director of Government Affairs, Operations Managing Director,
Wednesday, February 18, 2015
It’s officially state budget bill season. Language pertaining to Governor John Kasich’s executive budget proposal has been released in the form of House Bill 64 and several provisions impact our membership.
Several regulatory provisions are included in the budget bill. Most proposals were discussed last year during House Bill 490 (Governor Kasich’s Energy “MBR” bill) deliberations. The bill includes regulatory changes which, if enacted, would require companies applying for a registration to operate in Ohio to disclose any felony convictions or pleas pertaining to state or federal Clean Water Act violations for the officers of the company. As proposed, this disclosure would be for 25 years from the date of application. After this background check, the Chief would have the ability to deny the company’s registration.
Additionally, chemical disclosure requirements are expanded in times of an emergency to public and private water supplies. ODNR is permitted to share chemical information to another state agency or emergency responder in the time of an emergency or investigation. Once shared, chemicals designated as a “trade secret” are not public records and restrictions on disclosing trade secret information carry to whomever receives the information.
Criminal penalties and civil penalties and their associated fines are increased in the bill. A majority of those increases would make violations of oil and gas law felonies. Certain violations of oil and gas law would permit a fine for each day of each violation.
Other regulatory provisions included in House Bill 64 involve a re-write of current law pertaining to unitization, clarification of how the state handles information under the Emergency Planning and Community Right-to-Know Act (EPCRA), and providing the ODNR notice when an oilfield emergency takes place, amongst others.
It wouldn’t be a budget bill if oil and gas taxation wasn’t being changed. Under the bill, oil and natural gas severed from a horizontal well will be taxed at 6.5% of total volume multiplied by the quarterly spot price. Natural gas that is processed into natural gas liquids or condensate will be taxed at 4.5% of total volume multiplied by the quarterly spot price. The spot price will be defined by the Ohio Tax Commissioner from a source of their choosing. The purpose of this increase is to first fund the state oil and gas regulatory program. The next 20% of the funds collected are for counties experiencing the shale activity. The remainder will go towards a reduction in the personal income tax.
Additional tax changes included in the budget are an increase in the CAT (Commercial Activities Tax) from 0.026% to 0.032 on every commercial transaction and an increase in the state sales tax (from 5.75% to 6.25%). Those tax changes will have an impact on the industry as well.
The OOGA will continue to promote, protect, and foster our member’s interests before the state legislature and update our membership on the budget bill and our actions accordingly.
The Ohio Oil and Gas Association will host its annual meeting in Columbus on March 11th – March 13th bringing together the membership and top industry leaders, from Ohio and the nation, to provide the most current updates of the state’s oil and gas industry. Attendees will hear from the nationally renowned oil markets economist Phil Verleger, Karen Harbert of the U.S. Chamber’s Institute for 21st Century Energy as well as state and federal elected officials. The meeting will also include production, exploration, legal and legislative updates, as well as several evening receptions to socialize with old friends and new. Visit the newly redesigned website at www.oogawintermeeting.com to register and find additional information.
As many of you know the annual meeting has grown in both size and scope over the last few years to reflect the changes of Ohio’s oil and gas industry. The Association expects a large capacity crowd again this year and pre-registration for the meeting is recommended. Hotel accommodations are filling up quick, check the website under “Staying in Columbus” to find partnering hotels. We look forward to seeing you there.