Parks leaders want to make sure local metropolitan sites can't be tapped for oil and gas.
As the Ohio Senate’s finance committee conducted hearings the week of June 6 on the state budget bill, one of the many items at stake is a potential loophole that could leave metropolitan park districts vulnerable to horizontal drilling.
House Bill 49 creates the operating budget for fiscal year 2018-19, but it also includes a provision regarding unitization, a practice that allows horizontal drilling to reach minerals below the surface of a landowner’s property without the landowner’s approval.
Although state parks and nature preserves are exempt from unitization in the bill’s language, metropolitan park districts aren’t mentioned, said Tim Moloney, executive director of Columbus and Franklin County Metro Parks.
“This land was purchased for conservation purposes and never was intended for commercial use such as this,” Moloney said.
Woody Woodward, the Ohio Parks and Recreation Association’s executive director, said he’s waiting to see whether the Senate finance committee’s hearings on HB 49 would include an amendment for which he had advocated — that metropolitan park districts also be exempt from drilling through unitization.
An April 27 letter from Woodward to the finance committee states that many of Ohio’s natural resources are within metropolitan park districts, even those in central Ohio.
Although the finance committee had scheduled hearings on HB 49 for June 6 and 7, committee Chairman Scott Oelslager’s (R-North Canton) office would not comment on when the committee is slated to vote on the bill and said nothing has been determined.
The bill has until June 30 to be signed by Gov. John Kasich because it is part of the state’s 2018-19 operating budget.
As of June 12, the finance committee still hadn't voted.
How unitization works
Unitization has been legal since 1965, said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association. Oil and gas companies typically drill on 1,200 to 2,400 acres of contiguous land, called a unit, and must lease with landowners.
If a company that has authority to drill on at least 65 percent of that unit and wants to access resources beneath contiguous land owned by those who don’t want drilling done on their properties, the company could seek a unitization permit from the Ohio Department of Natural Resources.
Companies must pay $10,000 to apply for a unitization permit, and the process includes a hearing from the ODNR, Bennett said. A panel that comprises legal professionals listens to the energy company, which must present a case with expert resources to show that it has made its best effort to lease with all property owners affected by the drilling.
If such a permit is approved, landowners in the minority wouldn’t be forced to allow pipelines or drilling rigs on their properties, but minerals below the surface of their properties could be accessed via horizontal drilling from an adjacent property, Bennett said. In such a case, he said, minority landowners would be offered a royalty payment on any minerals extracted from beneath their properties.
The concept of unitization is beneficial because it ensures that one property owner is unable to block other property owners in an area from taking advantage of their resources, said state Rep. Mike Duffey (R-Worthington), a co-sponsor of HB 49. Duffey’s district includes Dublin, Worthington, Perry, Sharon and Washington townships, the village of Riverlea and parts of Columbus.
In the past decade, the shale boom in Ohio, Pennsylvania and other states and Canadian oil have created a glut of domestic oil that has dropped prices and made the United States less reliant on Middle Eastern resources, Duffey said.
Where the resources are found
According to the Ohio EPA, Marcellus and Utica shale regions extend from New York and through Pennsylvania, Maryland, West Virginia, Ohio and portions of Kentucky and Tennessee and hold large reserves of oil and natural gas.
Researchers estimate the Marcellus shale alone could contain as much as 363 trillion cubic feet of natural gas -- enough to satisfy U.S. energy demands for about 14 years.
Most shale drilling occurs primarily in the Marcellus shale regions of Pennsylvania, with increasing interest in West Virginia and New York, according to information from the Ohio EPA. The deposit is much thinner in Ohio, where Marcellus shale drilling occurs less often than in other states.
Much of Ohio, however, sits over the deeper Utica shale formation, which experts also predict holds large natural-gas reserves, according to the Ohio EPA.
The development of Utica shale largely has been relegated to the far eastern portion of Ohio, Bennett said, such as Belmont, Carroll, Columbiana, Guernsey, Harrison, Jefferson, Monroe and Noble counties.
The idea that HB 49 would enable energy companies to drill in Franklin and Cuyahoga counties is “not based in reality,” Bennett said, because the Utica shale is too immature to extract in those areas. Thermal maturity measures how much pressure and temperature shale has been subjected to and whether oil or gas has been generated during the process.
Most shale drilling has occurred east of Interstate 77, said Steve Irwin, a spokesman with the ODNR. That’s where energy companies found a good return on their investment, Irwin said.
Data from the ODNR Division of Oil & Gas Resources Management updated June 5 show that Utica-shale horizontal drilling wells extend farther west in Ohio than wells for Marcellus shale. Marcellus-shale horizontal wells that are either permitted or producing are in Belmont, Carroll, Jefferson and Monroe counties. Twenty of those wells are labeled as producing.
In comparison, 1,572 Utica-shale horizontal wells are labeled as producing. The westernmost producing well is in Coshocton County; the westernmost permitted well is in Knox County.
But additional data from the ODNR’s Division of Geological Survey show the potential for Utica shale in a larger swath of the state. Research originally presented at a March 2011 Ohio Oil and Gas Association meeting includes a map detailing areas in Ohio for potential Marcellus and Utica shale formations. According to the map, the potential for Utica shale exists in Delaware, Franklin and Pickaway counties and even includes small eastern portions of Union and Madison counties.
Irwin confirmed the map illustrates areas in which the potential for drilling could exist but said any activity would depend largely on what areas drillers choose to target.
The reason for local concern
Central Ohio isn’t high on the list for shale resources, but it’s still there, according to maps produced by the ODNR and the Ohio EPA.
The Ohio Parks and Recreation Association is concerned that allowing unitization to include metropolitan-parks property potentially could disrupt valuable natural resources, Woodward said.
“Metro parks around Ohio contain some of the most valuable natural resources in our state,” he said.
Even if oil rigs and pipelines weren’t erected on park property, natural resources still potentially could be affected, he said.
“It doesn’t change our position on that at all,” Woodward said.
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