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Ohio officials see shale readiness

2010 legislation adjusted rules covering well drilling process

August 21, 2011
By PAUL GIANNAMORE - Business editor (pgiannamore@heraldstaronline.com.) , The Herald-Star

STEUBENVILLE - State officials in Ohio believe the state is better prepared to manage the anticipated boom in shale gas and oil drilling because it has learned from Pennsylvania, West Virginia and New York and because of the number 165.

Specifically it's a law that started as Senate Bill 165, passed in 2010, that adjusted the decades-old energy drilling regulations in the state to try to cover the new deep, horizontal wells and hydraulic fracking used by the shale energy industry.

"There is no reason to repeat history. We should be learning from other states and we are," said Scott Nally, director of the Ohio Environmental Protection Agency during a meeting with local government officials at Eastern Gateway Community College Tuesday.

The state officials at the meeting, one of a series being conducted throughout the shale region by the Ohio Division of Natural Resources, said the state knows rules will need to be tweaked.

Nally said West Virginia and Pennsylvania are about 36 months ahead of Ohio in the shale boom. He said Ohio is getting ready and is "on borrowed time right now" as the boom approaches. He said the public and government officials can learn about permits, regulations and more through the

state's website , ohioshaleinfo.com, which links to the Ohio Department of Natural Resources shale development page.

Senate Bill 165 made Ohio proactive, according to Todd Snitchler, chairman of the Public Utilities Commission of Ohio.

"We know generally what they've done right and what they've done wrong in Pennsylvania and West Virginia," he said. "Senate Bill 165 was a crucial piece of legislation that moved Ohio to the forefront, rather than reacting. We're not running from behind but actually got out in front of it so we can try to control what is coming our way."

Among the differences between Ohio and Pennsylvania is the availability, because of suitable geology, of deep injection wells for spent fracking fluids, according to David Mustine, director of the Ohio Department of Natural Resources. He said there are 170 deep injection wells for safe deposit of spent fracking fluid.

The state established a fee of 5 cents a barrel for each injection of fluid from within the mineral resource management district and 20 cents a barrel for out of district fluids, limited to the first 500,000 barrels of substance per injection well in a calendar year. The well owner may retain up to 3 percent of the fee collected, and collected fees go into the state Oil and Gas Well Fund.

Drilling fees also were established to cost more in townships with higher population levels.

The fund enables paying through the ODNR oil and gas division for more inspectors and plugging of old vertical wells, which have been a problem across the state, Mustine said. He said the state is working to require full disclosure of hydrofracking chemicals without loopholes. The Senate bill also added additional notification requirements for the drilling companies and additional requirements to have a state inspector on site during crucial times in well development, including the start of drilling, fracking and plug-back operations.

Tom Tugend, the ODNR deputy chief of oil and gas, noted the state is separating the mining regulators from the oil and gas regulators to allow each to focus on its part of resource development. Beginning in October, oil and gas will be controlled by the Division of Oil and Gas Resources Management, he said.

He said the state currently has 30 well inspectors and is in the process of hiring 11 more.

The sheer numbers of wells that could be coming in the next several years may be daunting, however.

Tugend noted that in Pennsylvania, there have been 1,000 shale wells drilled this year on the way to an anticipated total of 1,400. There were 1,200 shale wells drilled in Pennsylvania in 2010. Four years ago, the number totaled 94.

He said the Utica and Marcellus wells are, compared with old vertical well sites, bigger and take longer to drill and take more to build. For instance, he said, the rig floors are 14 feet off the ground. It takes 20,000 tons of stone to build the 3-to-5 acre wellpad, as well as construction of well access roads, sediment and erosion controls and all the engineering that goes into development of a single well.

The law also sets reclamation deadlines after completion of a well, ranging from 14 days within an urban area to two months in rural areas.

Senate Bill 165 does not, however, require drilling companies to make modifications to roads or provide bonds to cover any damage or environmental issues that arise, the state officials said.

Harrison County Commissioner Don Bethel said while he grasps the opportunity the shale energy drilling can bring, there will be a strain on local governments and fire department and emergency response teams.

"Are we expected to absorb the entire risk? Is there anything in the planning you have," he asked Mustine. "It seems like they are getting a lot of risk that we are expected to absorb."

Mustine said, "The short answer is 'no.' In Pennsylvania, they've done a lot through negotiations with companies. It's voluntary, not mandatory."

Senate Bill 165 also requires the state to establish a public website with a database of permit violations.

Another spot that is not clear under the regulation is where the Public Utilities Commmission of Ohio's control over pipeline permitting and siting kicks in.

Todd Snitchler, PUCO chairman, said it used to be that PUCO didn't regulate "gathering lines," those leading from a well to a processing facility. Normally, those were 9-inch diameter lines operating at low pressure, 125 pounds per square inch. He said the shale wells are using lines that are 2 feet in diameter under 1,200 pounds of pressure and are more of a potential hazard.

He said PUCO is working to determine what the appropriate threshhold for regulation is, and he wants rules and legislation to provide legal authority for the commission to regulate the siting of lines.

"Some don't want any regulations. We disagree," he said.

 
 

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