What the Frack?
February 16, 2012
Since the improvement in technology in recent years, oil companies have been looking to expand their operations into Ohio where they hope to harvest Ohio’s rich oil shale reserve.
Buried deep under Ohio is the Utica shale plate, a plate of oil shale that can be reached and harvested through a process called “hydraulic fracturing,” which has rose in efficiency in recent years. This fracturing process involves reaching the oil plate horizontally and harvesting the oil.
The problem most oil companies have been having recently though isn’t one regarding technology; it’s the land and the people who live on it.
A fracking forum was hosted in upper convo Feb. 2, featuring seven presentations and a question/answer segment aimed at informing landowners what to expect from oil companies.
While the forum was marketed as informational, the panel was decidedly pro-fracking.
The event was moderated by Terry Rumker, an Ashland University assistant professor of finance.
First to speak was Larry Wickstrom, a state geologist who presented on the geology of shale and the fracture treatment. He outlined the production potential but said there is no way to precisely know the amount of oil in the shale. He explained that companies have to use production history from wells, which operate completely differently, to gauge the potential production amount.
Rebecca Heimlich, a representative from the Ohio Energy Resource Alliance, outlined the benefits that allowing more fracking locations in Ohio would bring to the economy. Hiemlich estimated an increase of oil fracking centers in Ohio would bring the amount of oil related jobs in Ohio from 4,614 in 2011 to 204,520 by 2015. She explained that there would be a need for more processing plants across the state due to a lack of proper centers now. She also said that increased oil fracking could decrease natural gas prices.
Tom Stewart, a representative from the Ohio Oil and Gas Association, was next, speaking in a presentation titled “Opportunities and Issues.”
“Horizontal drilling is a game changer,” Stewart said, regarding how much more efficient horizontal drilling is than the traditional well method. Stewart also highlighted that oil and gas companies have to pay royalties to the landowners as they operate, likening it to “The Beverly Hillbillies” wherein an Appalachian family becomes millionaires over night because of oil royalties.
State Representative David Hall spoke briefly on the regulations and bills regarding fracking. He explained that state House bills require companies to submit a “frack ticket” and “frack chart” which would detail the entire job both in graphic writing and data. Hall also remarked that he has hosted many events across the state that allows average landowners to become informed and know the pros and cons of fracking.
Unity Resources, an energy firm focusing on the acquisition and divestiture of shale based oil and gas, was represented by Mark Mersman, who asked Ohio landowners to investigate and think before they agree to lease their land to fracking companies.
He said the questions to consider were: Who am I dealing with? What land do I actually own? Are there any pre-existing leases on the land? Who gets the value? Who gets the bonus payment?
He also urged landowners to investigate their land leases and to consult a lawyer to try and knock out the lease. He elaborated that leases with oil companies are all different and unique to every single person and should be treated with extreme care, as well as be read by a lawyer.
“Drilling typically takes five years,” Mersman said. “If they ask to renew for another five do it; you’ll get paid again.”
He also outlined the need to negotiate with the oil companies to avoid environmental problems and also to avoid putting the site too close to your home.
Jeff Huntsberger, a lawyer from McDonalds Hopkins, clarified, saying that oil companies demanding that landowners sign a lease or lose out on the deal is unethical and illegal in some cases.
Robin Kinney from an organization, known as Look Before You Leap, focused on things landowners can do to ensure their safety both financially and environmentally when dealing with companies. He urged landowners to make sure their lease ensures they can sue if their water or dirt becomes contaminated.
The speakers wrapped up and the floor was opened to questions.
Questions were handed in on notecards and most of the ones read were relatively short, which caused some attendees to become frustrated.
One such audience member said that the presentation was too skewed towards pro-fracking.
“This was a circus, not a forum,” he said. “We’ve heard two hours of benefits, I’d like to hear five minutes about the risks.”
Wickstrom said the risks were the typical risks associated with oil drilling and added that risks were always part of drilling. The exchange became heated when this answer didn’t satisfy the audience, putting Wickstrom on the offensive.
The forum ran over time and was then promptly concluded.