Metropolitan parks in Ohio no longer are at risk of being included in horizontal drilling pools without the parks system’s permission, as a result of an Ohio House conference committee meeting regarding the state budget bill, House Bill 49.
The House and Senate reached a final agreement on the budget bill June 28, and the bill is headed to the governor’s desk to be signed.
Gov. John Kasich must sign the bill by June 30 because it is part of the state’s 2018-19 operating budget. Ohio operates on a two-year budget cycle. Ohio’s fiscal year runs from July 1 through June 30 of the following year.
In addition to creating the operating budget for fiscal year 2018-19, HB 49 previously included a loophole regarding unitization, a practice that allows horizontal drilling to reach minerals below the surface of a landowner’s property without the landowner’s approval.
Woody Woodward, the Ohio Parks and Recreation Association’s executive director, said the House committee’s revisions reverted the unitization protocol to current law, meaning that the unitization of public land is not allowed.
A metropolitan park is protected from any unitization order, and it cannot be included in a unitization pool without that metropolitan parks district’s approval, Woodward said.
“We feel good about the work that the conference committee has done on this,” Woodward said. “It protects the valuable natural resources, which are included in metro parks throughout the state.”
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 was concerned that allowing unitization to include metropolitan-parks property potentially could disrupt valuable natural resources, Woodward has 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 have been affected, he said.