Posted By Lyndsey Kleven, Communications Coordinator,
Monday, February 13, 2017
Updated: Tuesday, February 14, 2017
The Ohio Oil and Gas Association (OOGA) along with Energy In Depth (EID) has released its first white paper in the 2017 Utica Shale Local Support Series: Ohio Oil and Gas Industry Property Tax Payments report, highlighting that the oil and natural gas industry has contributed $43.7 million to six Ohio counties from 2010 to 2015. The report projects that over the next decade, $200-$250 million will be paid to these six counties alone. We encourage all of our members to read the report and distribute the findings among interested parties.
Given the record-breaking oil and natural gas production in 2012 and 2013, it should come as no surprise that the real estate property tax revenue, officially referred to as an ad valorem tax, has climbed as result. Of the $43 million generated between 2010 to 2015 from this tax, 95 percent was a direct result of horizontal drilling activity in the Utica Shale. In addition, of the total receipts from all real estate property taxes collected in 2015, the ad valorem taxes from wells accounted for (on average) 24 percent of total revenue collected from all real estate property taxes for these counties. This is significant, as prior to 2015, the ad valorem tax revenues from wells accounted for less than one percent of total revenue from all real estate property taxes.
Ohio oil and natural gas reserves are assessed and taxed as real estate, similar to property taxes paid on a residential home. All of the revenue collected from this tax goes directly to support the areas where the oil and natural gas is produced: counties, villages, townships, cities, and most importantly, local schools.
Key Findings For Ohio Shale Counties:
· Total Property Tax Paid (2010-2015) $43 Million
· Projected Property Taxes to Be Paid (2016-2026) $200-$250 Million
· Amount of Property Tax Directly Paid To Local Governments/Schools 100 Percent
· Percent of Property Tax Collections to Ohio Local Schools 60-70 Percent
Posted By Lyndsey Kleven, Communications Coordinator,
Monday, February 6, 2017
Updated: Thursday, February 9, 2017
Come join us in celebrating our 70th Anniversary by attending our annual Winter Meeting, which runs March 8-10. The industry is slowly emerging out of trying times, and brighter days lie ahead. It is more important now than ever that we come together and support both our industry and your Association. As always, the Winter Meeting is the Association’s premier business meeting and networking event of the year.
Join us for a series of in-depth presentations during our business sessions and panel discussions. Topics include 2016 Merger and Acquisitions in the Appalachian Basin and the DeBrosse Memorial Report reviewing annual oil and gas activity. Tune in for our panel discussion--Ohio Pipelines and End Use: Keeping it Local. Hear the latest legislative and regulatory updates, legal report as well as a Statehouse update from members of the Ohio General Assembly!
Posted By Greg Kozera, Shale Crescent USA,
Monday, January 30, 2017
Updated: Wednesday, February 1, 2017
In his inaugural speech, President Trump talked about “jobs coming back to the USA.” I was surprised and disappointed when some of the pundits commented after the speech, “We know that isn’t going to happen.” I guess that is what happens when media people don’t leave Washington, D.C., or New York City. They become clueless.
A group of successful business people and community leaders here in the Parkersburg-Marietta area figured out that this area now has the cheapest natural gas in the industrialized world. Not only is the natural gas in this area cheap, it is abundant. We have a supply that will last over 100 years based on today’s technology. In addition we are close to 50% of the markets in the USA and Canada. They also realized how our abundant economical natural gas coupled with the Ohio River for process water and transportation, an extensive rail network, an experienced workforce and a community that has a great quality of life is a unique combination that exists in very few places in the world. The problem is, do people in Asia, Europe or even Chicago know this?
This combination created prosperity here in the Mid-Ohio Valley in the late 1800s and again after World War II. Industry left when the local oil and gas industry declined and oil and natural gas had to come from outside the area. The same pipelines that brought natural gas into the region are now carrying natural gas out of the northeast and to places like the Gulf Coast and Virginia. These leaders asked the question, “Isn’t it time to use our abundant cheap natural gas to bring industry and prosperity back to the Mid-Ohio Valley?”
These leaders took action and formed Shale Crescent USA (SCUSA), a nonprofit organization to promote the Mid-Ohio Valley as a premier place for businesses to grow and relocate. The mission of Shale Crescent USA is to encourage business growth in the Mid-Ohio Valley based upon the lowest natural gas prices in the industrialized world that allows manufacturers to operate more efficiently while producing products more economically with access to fresh water and half the population of the United States and Canada. The ultimate goal is to bring in high wage permanent industrial jobs so that people don’t have to leave the area to find work.
These business and community leaders didn’t wait for government or industry to make something happen. They took action. That is what leaders do. SCUSA introduced their initiative to the community last June with a kickoff event in Marietta. Over 800 people attended. Jim Tressel, former Ohio State football coach and current president of Youngstown University opened the event. But it was the panel discussion that got the public excited about the potential of the Mid-Ohio Valley.
Currently SCUSA has been making progress in publicizing the benefits and creating interest in the Mid-Ohio Valley for business. SCUSA has been reaching out using the internet and traditional media like radio and print. SCUSA also will get face to face with the executives of potential new business at events like the World Petrochemical Conference in Houston, Texas in March and the Marcellus to Manufacturing Conference and Expo in Morgantown in May. This is just the beginning.
Bringing a company to the Mid-Ohio Valley is a lengthy process. It starts with creating awareness. SCUSA wants to make sure that the Mid-Ohio Valley is on the radar screen of petrochemical, glass and other industries as a place grow or relocate. Government can do a lot to help bring in business but typically doesn’t do a very good job of staying focused on marketing and sales. SCUSA can help. SCUSA doesn’t care which side of the river an industry chooses to relocate. Every win is a win for the region by providing jobs. Prosperity is contagious.
SCUSA is an example of how leadership can bring people together to achieve a common goal. A group of people formed into a Team can achieve far more than individuals or individual organizations and that is what is beginning to happen.
For more information on SCUSA go to www.shalecrescentusa.com. You can also follow Shale Crescent USA on Facebook. Activity updates are posted regularly. We know that we now have the power to bring high wage, permanent jobs back to this area. SCUSA is one vehicle that can help bring about that change. But it is a total team effort. Everyone has a role. We need to continue to be that well maintained, vibrant, welcoming community that businesses will want to become part of. It is time to use the gift of our abundant natural gas and the Ohio River to bring industry and high wage permanent jobs and prosperity back to the Mid-Ohio Valley. Everyone can pass that message on to their network. It starts with a vision of what can be and the belief that anything is possible, if we work together and take action.
Posted By Guest Submission: Makenzie Senter,
Monday, January 16, 2017
Updated: Thursday, January 19, 2017
Undergraduate student Makenzie Senter is a student at Kent State University. Senter wrote a persuasive paper on hydraulic fracturing for a college writing class. The post below has been shortened from its original version.
Fracking has been used for over 65 years, despite what most people think since it is prominent in the news now more than ever. Without fracking, energy abundance in America, along with all of its benefits, would not exist. One of the major benefits from fracking is natural gas being released in an abundant, clean manner. Fracking gives us natural gas as a source of reliable energy on days that the sun does not shine (for solar panels) or the wind does not blow (for wind mills).
When talking to people between the ages of 18-30, many of them had little to no knowledge on what hydraulic fracturing or fracking was, or what we get from fracking. According to EnergyFromShale.org fracking involves safely tapping shale and other tight-rock formations by drilling a mile or more below the surface before gradually turning horizontal and continuing several thousand feet more. Once the well is drilled, cased and cemented, small perforations are made in the horizontal portion of the well pipe, through which a typical mixture of 90% water, 9.5% sand, and 0.5% additives is pumped at high pressure to create micro-fractures in the rock that are held open by grains of sand. Additives play several roles, including helping reduce friction (thereby reducing the amount of pumping pressure from diesel-powered sources, which reduces air emissions) and prevent pipe corrosion, which in turn help protect the environment and boost well efficiency. Fracking is the single biggest reason that America is experiencing a revolution in energy right now and giving us an abundance of natural energy. Fracking is letting us get into vast oil and natural gas reserves that were previously unattainable, locked away in shale and other tight-rock formations.
A new study published by the National Academy of Sciences states that fracking is safe. The National Science Foundation and Duke University funded a team of scientists at other universities including Ohio State, to do research on if there is a link between groundwater pollution and fracking. The study examined 130 wells and concluded that no groundwater or aquifer pollution resulted from fracking. Among the 130 wells that were studied and observed, only a few cases were found to have any sort of water contamination at all. There were seven wells in Pennsylvania and one in Texas that had any contamination. However, the water contamination was due to faults in well construction. Professor Avner Bengosh of Duke University states, “these results appear to rule out the migration of methane up in to drinking water aquifers from depth because of horizontal drilling or fracturing”.
Many of these studies answer the most important question, proving without a doubt that fracking itself does not cause gas to seep into the water supply, however it does not answer other important questions. One of the questions is whether there is a frequency of contamination of water supplies by naturally occurring petroleum, methane, and other gases. Natural pollution of this kind is extremely common and is a natural process that has been occurring for many millennia. There were sites where petroleum seeped to the surface, such as in the 19th century Drake oil field in Pennsylvania. Native Americans had made use of the oily substance as a lubricant for thousands of years. Since that oil was naturally coming to the surface, it was “contaminating” nearby streams and groundwater.
Also, at thousands of hot springs and other sites, methane and other gases, including ammonia and helium, are released naturally into the environment, the most famous example is Yellowstone National Park. The release of methane from the ocean floor is also a prevalent feature of the natural environment. In comparison with these widespread and perennial sources of methane contamination, the amount of gas released by faulty oil and gas wells is miniscule. Expectantly, there will be a study in the future that will show the ratio of man-made to natural release of gases to show just how small the number really is.
Even if the oil industry achieved 100% safety with the construction of casing and cement walls or even if they stopped fracking all together, there would still be massive amounts of methane and other “polluting” gases that would seep into groundwater as a result of natural processes.
According to a study by the University of Cincinnati, the quality of water was not in any way influenced by natural gas drilling or fracking. The study was kick-started by Duke University when they did a peer-reviewed study to answer the question “Tapping a Valuable Resource or Invading the Environment? Research Examines the Start of Fracking in Ohio” To answer this question, researchers set out to collect samples over a three-year period. The samples were collected four times a year from five different counties in Ohio that were known for their shale. They collected from 23 water wells from 2012-2015, totaling 191 samples. The samples were taken from volunteers, which many, ironically, were connected with anti-fracking groups such as the Carroll County Concerned Citizens.
Although the study claims it was not taking funding from groups who opposed fracking, Dr. Townsend, who was part of the study, said “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”. What I take away from what Dr. Townsend said is that these anti-fracking groups were not particularly interested in making sure that fracking was safe, but they were trying to find a reason to rid the oil and gas developments altogether. However, after the 2011 Duke study failed, the University of Cincinnati was given a $400,000 grant from the National Science Foundation to get to the root of the problem: what was causing the water contamination?
After the multi-year study, and evident water contamination in Flint, Michigan, as well as Sebring, Ohio, conclusions were made that the contamination was caused by ageing infrastructure issues and pre-existing water quality issues from naturally occurring methane. There was no evidence of fracking or natural gas drilling contaminating the water. Since fracking is safe for the water, it has been observed that it is also safe for the environment. Per the Energy Information Administration, they estimate that the total U.S. gas production between 2012 and 2040 will increase 56%, with natural gas from shale being the biggest contributor. EnergyFromShale.org says, “The shale gas share of total U.S. production will increase from 40% in 2012 to 53% in 2040.” That basically means that fracking is the basis of the U.S. energy revolution.
Overall, fracking is not only safe, but it is also beneficial to our economy. Fracking, itself, does not cause any sort of pollution to groundwater. The only reason, proven through studies, that there would be any sort of leakage or pollution is through faulty well construction, which is obviously a fixable flaw. Not only is fracking safe, but it is also creating jobs and boosting the economy. Prices of gasoline are lower than they have been in years and consumers are paying less for natural gas. The United States is also slowly but surely becoming the leader of oil production and has been the leader of natural gas production. In conclusion, fracking should be more widely accepted since it is safe and helping boost our economy.
Posted By Brian Hickman, Director of Government Affairs, Operations Managing Director,
Monday, January 9, 2017
Updated: Monday, January 16, 2017
As the 131st General Assembly came to a close, your Association was hard at work ensuring that two important measures passed and enacted into law. The first measure was a clarification on how sales tax can be applied to tangible personal property pertaining to oil and gas operations. The second measure involved OOGA Board-approved changes to the Ohio Oil & Gas Energy Education Program (OOGEEP).
Recently, several oil and gas producers were being audited by the Ohio Department of Taxation (ODT). The reason for these audits was tied to the application of sales tax for oil and gas related sales. While the Association and its members always understood that what was taxable was what was defined by current law and practice, the ODT appeared to take a different view. As a result, OOGA members under audit were being assessed different tax valuations outside of what was commonly viewed as taxable.
In an effort to provide clarity to the situation, the OOGA inserted an amendment into Substitute Senate Bill 235 that would marry the definition of sales tax to a production operation as defined in Ohio Revised Code Section 1509.01. Generally speaking, the sales tax does not apply to items directly used in the exploration and production of oil and gas, or specifically a production operation. The sales tax only applies to indirect items, which includes things such as tanks or other storage devices used to hold hydraulic fracturing fluids, equipment used for earth moving and reclamation at the well site, and property used to transport, deliver, or remove other equipment to or from a well site or the storage of such equipment before its use at a well site.
Additionally, in the uncodified section of the law, this definition was applied retroactively to all sales since Substitute Senate Bill 165 was enacted (and when a production operation was defined in Ohio law). Therefore, this change is retroactive and effective as of June 30, 2010.
On December 22nd, Governor John Kasich, citing his ability to utilize a line-item veto, vetoed the sales tax provisions pertaining to oil and gas in Substitute Senate Bill 235, thus eliminating it from Ohio law.
In his veto message, Governor Kasich noted that there were several reasons for the veto. First, he noted that the language would expand the current exemption for the application of sales tax for tangible personal property purchased and directly used in oil and gas production. In his view, the language “goes well beyond the ‘direct use’ exemption for exploration and production and would result in a situation where oil and gas companies would be exempt from sales tax on almost everything they purchase.”
Kasich also noted that the loss of state and local government revenues was also considered in the veto. Per the Ohio Department of Taxation, this revenue loss was scored at $264 million ($215 million in state resources, $49 million to local governments) due to the retroactivity of these provisions. However, no further information or details on where the specific losses would come from where ever revealed.
“This revenue loss as well as the ongoing issues in the future would force the need to reassess current and upcoming budget plans, triggering a triaging of priorities to ensure the most essential functions can still be covered, such as education, policing, fire protection and ambulance services,” Kasich noted in his veto message.
The Governor concluded his veto message noting the “favorable tax climate” the oil and gas industry currently enjoys, stating that the language was “not necessary for this industry to flourish”.
“The oil and gas industry already has a very favorable tax climate in Ohio,” Kasich stated in his message. “This is true not only with respect to the severance tax, which is only 20 cents per barrel of oil and 3 cents per MCF of natural gas, but also with respect to the commercial activity tax (CAT) and the property tax. The oil and gas industry has continued to expand its production in Ohio, even in the face of price declines for oil and gas, which is further evidence that the industry tax climate is no barrier to exploration or production.”
Kasich concluded his remarks noting that such a measure would create an “uneven playing field” benefiting the oil and gas industry over other industries within the state. This could lead to other industries, such as the agriculture and manufacturing industries, to push for similar exemptions within the tax code.
Also during “lame duck” session, an amendment was inserted into Amended Substitute House Bill 471 (the sunset review bill) that would make statutory changes to the OOGEEP program. The amendment expanded the OOGEEP operating committee from 7 members to 13 members in an effort to incorporate horizontal shale production. A change was also made to allow a horizontal shale producer to directly pay the program in lieu of the traditional first purchaser assessment. The measure also officially provided a mechanism for OOGEEP to administer administrative aspects of the referendum procedure.
As such, OOGEEP is in the process of creating the referendum to officially implement these changes into the program. The referendum will also include a 50% reduction in fees collected by the program.
In other news, another measure passed the legislature that impacts local ballot initiatives, including those anti-industry groups who continue their fights against the oil and gas industry. An amendment was included in Amended Substitute House Bill 463 that would provide a statutory mechanism for the Ohio Secretary of State to invalidate a local ballot initiative if the measure is outside of the powers of that locality. As such, municipalities cannot go against general law, which would include Ohio Revised Code Section 1509.02, which states that the siting and location of oil and gas wells are the “sole and exclusive” regulatory authority of the Ohio Department of Natural Resources.
Next up, the 132nd General Assembly begins on January 3rd whose first big responsibility will be the next state budget bill.
Posted By Lyndsey Kleven, Communications Coordinator,
Wednesday, December 21, 2016
Updated: Friday, December 23, 2016
With 2017 rapidly approaching, the Association would like to take a moment to recap some activities ending 2016 and take a look ahead at 2017. Last Thursday we hosted our Annual Holiday Membership reception at the Cherry Valley Lodge in Newark. The event had a great turnout, with 250 of our members coming out to celebrate the holiday season with colleagues, friends and Association staff.
Prior to the Holiday Reception the Association held an annual meeting for the OOGA Executive Committee and Board of Directors. This year was especially significant as the Association’s leadership is undergoing a presidential transition due to term limits.
The Association has been under the leadership of David R. Hill from January 2014 to December 2016. This is an unusual term for the Association’s president to hold, but when the OOGA needed someone to step-up and fulfill an extra year of an unexpired presidential term, David stepped right in.
To say that David faced a difficult term would be an understatement. Over the past 36 months he guided the Association through wildly fluctuating oil and gas prices; he started his term as the industry began to peak and saw prices collapse at the end of 2015, thankfully he is leaving at a time when prices have begun to pick up. In addition, he was here to see the Association through a major transition when Tom Stewart retired as the OOGA’s executive vice president after 21 years in late 2014, and Shawn Bennett took over the position to manage and lead the organization. These events only begin to skim the surface.
The onslaught of legislative and regulatory changes presented from both the state and federal government throughout this time has been unprecedented. David has been instrumental in helping to identify possible threats to the industry and guide the OOGA to deal with them accordingly.
“I would be remiss if I didn’t give a proper farewell to our President David R. Hill,” said Shawn Bennett, OOGA’s executive vice president. “Anyone can hold the helm when the sea is calm. David however took the helm during some of the roughest seas our industry has faced in many years. Without his guidance and leadership, our Association would not have been in the position it is today. We thank you for your time, your effort, those years we have unintentionally taken off of your life by being the President of the Ohio Oil and Gas Association.”
The Association is extremely grateful for David’s service to Ohio’s oil and gas producers. David will continue to stay involved with the OOGA and among our past presidents council. With that, we would like to welcome Jim Aslanides to the OOGA as our new president.
“Having worked with Jim over the years, there couldn’t have been a better pick to follow David,” said Bennett. “He is a true leader and as a former legislator, he will be invaluable as we continue to drive oil and gas policy at the Ohio Statehouse.”
Jim Aslanides has a multi-faceted background that will greatly benefit the Association. Jim has served in various capacities during his career, as Chair and a member of OOGA Committees, as a member of the Ohio House of Representative, and now, as the Association’s President.
Jim currently serves as the President of Media Fuel Company (dba MFC Drilling, Inc.). The company, which was founded in 1981, is actively involved in the exploration and production of oil and gas in Ohio. The company has also made new field discoveries in the State of Ohio.
Jim has been a member of the Ohio Oil & Gas Association since 1981. He has served on the OOGA Board of Trustees twice, with the first run beginning in 1996. He served for six years, ending his first Board of Trustees run in 2001. Jim rejoined the OOGA Board in 2009, where he has served ever since. During this time, he has served as the Chair of the OOGA Meetings Committee and the Governmental Affairs Committee.
When Jim was away, he was serving the constituents of the 94th and 95th House Districts. On June 30, 1999, Aslanides was elected to replace Rep. Joy Padgett, who had resigned. Aslanides served an additional four terms in this position.
As Jim prepares to takeover leadership of the Association, he is reminded of a saying that he is fond of: “As a family of producers, there is no one of us that is as good as all of us.” Jim will use this as a mantra for his upcoming Presidency.
Posted By Mike Chadsey, Director of Public Relations,
Friday, December 16, 2016
On Wednesday, December 14th at the Ascent Resources field office in Cambridge, OH more than 30 local families were able to stop by and bring home a little holiday magic, thanks to Ascent Resources. The effort in Cambridge was led by the Southeast Ohio Coordinator, Deborah Oberlin and the team at Ascent.
“Ascent Resources stepped up in a big way to sponsor and host this year’s toy distribution,” said Oberlin. “They collected over $8,000 in toys, games and dolls for needy families in Guernsey County from vendors and Ascent staff to show they care about their community and its residents.”
Also stopping by was U.S. Congressman Bill Johnson who helped parents select toys for their little ones. Upon learning that the effort was still short in funds, Johnson donated the remaining balance needed for renting a box truck to be used to pick up the collected toys, ensuring no detail was overlooked. Congressman Johnson said, “The Marine Toys for Tots Foundation does great work, and it’s great to see Ascent Resources give back to the community by leading an effort to make sure that more local children will get toys – and hope – for Christmas. Just to play a very small role in this effort is very rewarding and brings a lot of joy to my heart.”
“We are grateful to have a community partner like Ascent Resources in town that shows what this time of year is all about,” said Cambridge Area Chamber of Commerce President and CEO Jo Sexton. “They’ve really helped provide some local families with joy this Christmas.”
Internally, the effort was led by Joe Steele at Ascent. Joe helped rally his colleagues and is proud of what the staff at Ascent was able to accomplish, in terms of the time they donated and the gift contributions made. In addition, this event would not be possible without the vendor/contractor partners and their donations, and special thanks to the Target in Wheeling for helping stretch our dollar during the shopping process. This is Ascent Resources third year hosting the program and according to Joe, will be back next year even bigger and better.
The U.S. Marines Toys for Tots program has been in existence nationwide since the Christmas of 1948. Originally started by a Major Bill Hendricks in 1947 and some fellow Marines is has spread to many communities across the country.
Posted By Mike Chadsey, Director of Public Relations,
Monday, December 12, 2016
Updated: Tuesday, December 13, 2016
A few weeks back, I traveled down to White Sulphur Springs, West Virginia to attend the National Association of Royalty Owners (NARO) Appalachian Chapter, 6th annual member conference. In attendance were people from Ohio, West Virginia, Kentucky and North Carolina. During the social functions between speakers, I was able to meet many great landowners and heard some wonderful stories on what shale development has done for their families and small businesses.
One such story was presented at the conference jointly by mineral owner Alan Walter, and producer Manny Johnson. Together they presented a story on how a landowner and operator work together to produce shale gas from eastern Ohio.
Walter purchased a 150-acre tree farm in Harrison County in 1990. He bought it from a family who had owned it since the 1940s. He shared that the property had lots of issues with overgrowth of both vines and weeds. The problem took him 20 years and over $20,000 to control and finally resolve. To say that Walter was invested in his property is an understatement. During his weekly travels around the farm he found a used cable system, a few tanks, a damaged pump jack, and even 21 oils wells from the 1900s. There was such history with all of this equipment that it took him a while to dig into the records to get a proper account of the activity on his land. Jumping forward into the shale revolution, he watched as the processing plant in Scio was constructed. He recalled wondering if all of the activity would mean a new well on the farm. The answer to that question came in 2014. He was approached with a lease in April of 2011 with not much follow up action. He was contacted again in January 2014 and negotiated details through July 2014. Construction began in August 2014 and oil and gas production began in August 2015.
As Walter described the process from start-to-finish, one of the most important themes he expressed was, “stay in communication with your producer.” As he begin to lay out the details of the well pad on the property, he showed photos of a 20-foot wide, 3,000-foot long lease road where many trees were removed, and even to this day that was a hard decision for Walter to make. Now, he shared, “it’s a great road to use for my next tree harvest.” In addition over 66,000 yards of dirt was moved. The other thing he did not expect was 20 people working daily on his land (on average). After a few days he got to know the people doing work and admits he asked them questions almost every day. In total 19 acres of trees were cleared. Mr. Walter said through the entire process he had a very good experience. He was impressed by what he called an “incredible” environmental protection feel, and that the operator was going above and beyond for drainage. He said that everyone was nice and great to deal with. He concluded his remarks by suggesting that mineral/landowners have a consistent message to the operator, keep good notes, and give written questions when available. He also said don’t be surprised at the size of the equipment or the speed of the operation.
Next up was Manny Johnson:
Manny Johnson has worked in the oil patch for the last decade. First he was a production superintendent at Chesapeake and is currently an operations manager for Huntley and Huntley Energy. This story is from his time at Chesapeake. He started off his comments by saying he really enjoys working with landowners and that, “they are our partners and we truly see them as that.” He sees a harmony of an eight well pad in the middle of a tree farm—and living in St. Clairsville, it is all about maintaining relationships and the landowners are a big part. One of the key reasons his employer liked the Walter farm is that it is located in the wet gas area of the Utica play and his farm is so very close to the Scio plant. He shared that a lot of mineral owners in Ohio have wells and pipelines, but few are so close to a processing plant. One of the key points that he and his crews talk to landowners about is the building of the pad. He stopped there for just a moment to pay special attention and note that every pad has to be engineered and designed, and that he takes lot of environmental considerations into the pad location.
One story he told was when he talked with Walter about how they are using a closed loop system to limit emissions, which is something that was very important to Walter and his farm. He went on to explain that he instructs his crew and mineral owners to get to know each other and stay involved from start to finish of the entire project.
He also emphasized the importance to take spacing on the well pad into consideration, and having the ability to shut down the well remotely if needed. Johnson described how the company has a, “’stop work’ program in place. It is about getting everyone home safe at the end of the day, we spend a lot of time on preventative maintenance. That means we have to keep this well in compliance. To do so, we have weekly, monthly, quarterly, and yearly reports in Ohio to regulatory agencies.”
He ended his public comments by addressing the landowners in the room by saying, “as landowners you are encouraged to ask questions—ask to take a tour and communicate as you need to, don’t let something fester.” Lastly, he closed by saying, “as your partners we want to get out front of issues.” The company has a vested interest in the family on the land the lease, and they hope the landowners take a vested interest in the well, so that everyone will benefit.
This is just one of the many great shared success stories from the Utica. Our special thanks for NARO for the invite to attend its event and to Manny Johnson and Alan Walter for sharing their story.
Posted By Lyndsey Kleven, Communications Coordinator,
Monday, November 28, 2016
Updated: Tuesday, November 29, 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
Tom Giusti was born and raised in Logan, West Virginia in the heart of coal and oil and gas country. Shortly after getting his drivers license, his cousin James Ferzacca asked Tom to drive him around in his 1959 Cadillac after he experienced a health issue that caused Ferzacca to have concerns about driving, frequently. Ferzacca was an oil and gas driller who had two partners and this was how Tom got his first education in oil and gas production in southern West Virginia.
Tom graduated from high school in 1960 and continued driving Ferzacca until he attended college at Marshall University. In the winter of 1965 Tom graduated from Marshall with a business degree and a specialty in accounting. Ready to enter the workforce, his plans were stalled as Tom was drafted into the U.S. Army where he spent two years as a helicopter mechanic. Tom had orders for Vietnam but did not serve because it came too near the end of his term.
Following his time in the U.S. Army, Tom started working at Coopers and Lybrand in Columbus in 1967 (today known as Price Waterhouse Cooper). Coopers and Lybrand wanted to hire Tom two years prior but the issue of being drafted that was inevitably going to occur put that on hold. In 1969 Tom was asked by one of the partners to work on an engagement involving clients with oil and gas production in Marietta. This pulled Tom back into the oil and gas industry as he started working on some of the accounting and tax issues related to those particular clients.
Work History Overview:
In 1974 Tom was working for Ralph Dickson and Company which is where he met Jerry Jordan. Jordan was instrumental in getting Tom involved with the Ohio Oil and Gas Association and keeping him involved with the industry. Tom, being a cross-trained accountant, worked in tax area, consults, accounting and assurance. Tom wanted to use his knowledge with the Ohio Oil and Gas Association and got involved in some of the tax issues affecting the industry.
“Oil and gas taxation is unique because there are a lot of special provisions in the industry, simply because there is a lot of risk. Consequently, you need to keep abreast of any changes.”
It was while he was at Ralph Dickson and Company he also met and worked with another gentleman named Neal Longanbach in 1974. They had worked contemporaneously, before. The two developed a good working relationship and in 1979 Neal and Tom were both ready to establish their own Firm. They called it Longanbach, Giusti and Associates.
For approximately 25 years they did accounting and tax for work for operators, producers and drilling contractors. Along the way, Tom met Jerry Olds (longtime OOGA member) and Richard Meyer (deceased), and along with Neal bought a producing company they named Zenith Oil and Gas. Olds and Meyer were the industry shareholders while Tom and Neal were non industry shareholders in the company. Zenith Oil and Gas drilled a few wells over the years to supplement production it already owned.
“As a tax and accounting consultant you see some of these expenditures and you learn to know what they are, but it’s nice to be on the real side of that and have operations in which you yourself participate.”
Reflecting on the industry, Tom noted that it has its ups and downs. Throughout the years Tom has seen that once a tax stature gets legislated, you seem to never get rid of it, even if profits drop immensely from when the tax was invoked in the first place—heightening the importance to protect the industry. Specifically mentioning when the industry was under attack by Congress with the windfall profit tax, profits became ridden with a “dirty” reputation and therefore they wanted to tax the industry.
“It’s kind of like a yo-yo with the way pricing is set from world influences; we have to ride with the tide,” Tom quipped.
Tom reads a lot and subscribes to specific publications focused in oil and gas to stay updated on the industry. He also noted that accounting and reporting issues are peculiar, aside from the tax issues. They have what his profession calls the successful efforts method and the full cost method. There are different ways you capitalize and depreciate/deplete assets, and check them for impairment.
“There really hasn’t been much of a change lately at the federal level, there are a lot of issues at the state level, but federally there hasn’t been a lot of change.”
In 2005 Tom and Neal sold Longabach, Giusti and Associates to purchaser Schneider Downs, where Tom continued working until 2009. Following this Tom went to work for Fentress and Barnes until 2012, when ultimately Fentress and Barnes joined with Clark Schaefer Hackett, where Tom is employed today. He continues to do work for people in the industry and has continued to participate in wells, some royalty interest, and lease acquisitions with others.
In 2010 Tom coauthored a course for oil and gas taxation and reporting, along with Mike Eberhart (another OOGA member). They organized and presented a seminar for people in the industry, lawyers and CPA practitioners and had more than 170 attendees. They hosted another seminar in 2013 in which Tom was the master of ceremonies and numerous other OOGA members presented.
Tom has seen the industry through many changes over the years and reflected on Shale development. He felt it initially gave the industry a false sense of all the wealth. It came at a time when the prices were high and a lot of people spent a lot of money buying into the deep right acquisitions. When you look back, it has been a tough scenario for many, and still is.
Tom has dealt with a lot of activity relative to deep right leasing and subleasing. He’s worked on strategies to utilize the internal revenue code to the fullest extent, to optimize the tax structure to close some of these subleases and sales.
History with the OOGA:
Tom has been a member of the Ohio Oil and Gas Association since the 1980s. After meeting Jerry Jordan in the 1970s, Jerry was instrumental in getting Tom involved with the Association. He started out on the tax committee and has volunteered on various special projects.
Tom was active as the Commercial Activity Tax (CAT) was enacted in Ohio, and was very involved throughout that process. Tom attended all the meetings with the Chamber of Commerce on behalf of OOGA in 2005. He also met with numerous legislators along with Tom Stewart concerning CAT, and how it was to replace the general personal property tax and corporate franchise tax.
Tom feels that Jerry’s guidance early on within the Association led him on the path of getting the opportunity to become a trustee. Tom was elected to the OOGA Board of Trustees in 2013, where he continues to serve in this capacity. Tom also currently serves as the Chair for the OOGA Tax Committee. In 2014 Tom was inducted into the Association’s Hall of Fame and believes that was connected to the seminars he’s hosted, since he is not a producer.
Being a member has helped Tom’s networking in developing good relationships with law firms and banks. Tom’s skill set is very unique being that he is an accountant that is oil and gas industry specific. There are not many other accountants with this niche, especially in central Ohio.
Tom reflected on how much he has enjoyed bring involved with the people in the oil and gas industry. He finds it satisfying knowing he’s involved with an industry that is vital to everyone and as far as Tom’s concerned, it always will be. He is an advocate for the industry and enjoys being an advocate to people unfamiliar with the industry that don’t fully understand it, and prides himself to make a convincing argument that some of their illusions about the industry are incorrect.
Posted By Penny Seipel, Vice President of Public Affairs,
Monday, November 21, 2016
Updated: Wednesday, November 23, 2016
As many of you have likely already heard, The Bureau of Land Management will be offering up for lease 1,600 acres located in the Wayne National Forest. The competitive bidding process will take place on December 13, 2016 beginning at 8:00 AM EST via internet only. There will be a total of thirty five parcels up for bid that day with the acreage in the Wayne National Forest comprising thirty three of those parcels.
If you are interested in participating in the competitive leasing process you will need to register at www.energynet.com/index.pl. If you are interested in watching the competitive bidding process you will also need to register.
Important facts to know in advance:
Each acreage block will be open for only three hours (with start and stop times clearly delineated on the website) and bidding will close consecutively for the parcels so that bidders will know if they if they are the highest bidder before the next block closes.
Information on the exact time of the bidding process for the lease will be available on the website up to ten days in advance of the scheduled sale.
Parcels are sold in the entire acreage block and rounded up to the next whole acre. A list of acreage blocks can be found in this BLM Notice of lease sale as well as more comprehensive information about the leasing process and restrictions on the acreage blocks.
Minimum bid is $2.00 per acre and minimum increments for bidding thereafter are $1.00 per acre.
You cannot withdraw a bid once the system determines that you are the high bidder.
Winners will know if they have successfully acquired the lease by the end of the lease sale.
If you are the highest bidder, fees due include the minimum bonus bid of $2.00 per acre or the highest bid if greater, a first year’s advance rental of $1.50 per acre and a non-refundable administrative fee of $160. Winning bidders must provide how they will make payment by 4:30 PM EST on the day the auction closes.
There are a number of restrictions for drilling in the Wayne National Forest which is also dependent on each acreage block. If your company is interested in bidding on any of these parcels, we would encourage you to review those restrictions in the BLM Notice of lease sale pamphlet.