|Ohio looks at new energy development|
|Thursday, September 12, 2013 12:00 AM|
BY JAMES J. HOORMAN
A couple of years ago, Ohio’s energy future looked rather bleak. High energy prices have spurred innovation and now Ohio’s energy prospects look brighter. Agriculture in the 21st century will be a major supplier of food, fiber and energy. From oil and gas, to wind and sun energy, to bio-energy from agricultural feed stocks, to pipelines, or transmission lines; Ohio is in the center of many new energy developments.
Due to our aging energy infrastructure, Ohio farmers and consumers will be seeing many changes. Ohio Policy Matters reports that Ohio ranks 28th in the nation for energy productivity and nearly 33 percent of all energy consumed in Ohio ($17 billion dollars) is lost in outdated electronic systems. Ohio’s electrical efficiency for factories and farms is rated to be only 50 to 55 efficient (Ohio Policy Matters).
Dale Arnold (Ohio Farm Bureau) shares a couple of recent innovations, including advanced electrical metering on homes, factories and farms; battery backup systems to reduce electrical peak loads; and appliances that share their load through computer reprogramming. Dale predicts that 25 percent of our energy needs will come from on-farm generators by the year 2025. Fuel cells, wind mills, sunlight and ethanol are other examples of energy that are derived from agriculture. Co-energy is a process that recycles heat into power from heat that would otherwise be wasted. In Ohio, we are ranked 44th in recapturing only 2 percent of our power lost by co-energy (Ohio Policy matters).
The horizontal hydraulic fracturing (fracking) for oil and gas in Eastern Ohio’s Marcellus and Utica shale deposits is a new energy development. In this process, one well is drilled vertically (1,000-15,000 feet deep) and then several wells are drilled horizontally. One well may replace 30 traditional wells. Water is mixed with sand and chemicals, and the mixture is injected at high pressure to create small fractures for gas and oil to flow. This process is more efficient at removing the oil and gas from the formation.
Northwest Ohio was the Sauda Arabia of oil in the late 1890’s. In 1896, over 23 million barrels of oil was pumped from Northwest oil wells and over 380 million barrels from 1895 to 1903. In Wood County, over 6,000 wells were drilled. It is estimated that 60 percent of the oil in these deposits are still remaining. At some point, the new drilling methods will be used to recover this oil. Current estimates are that when oil prices reach $120 per barrel (currently $90 per barrel), these deposits will be re-drilled.
Many landowners have old oil leases or mineral leases which should be investigated and removed from the deed. If an oil company or representative contacts you in person or by mail and offers to pay an oil royalty check for a new or old past lease, do not cash the check and consult an attorney immediately. Old leases can be reactivated and enforced under the provisions of the old lease with a recent payment. Some companies are offering to pay a small amount of money to reactivate old leases which undervalue your mineral rights.
Arnold says oil developers are also in the area trying to buy up new oil rights. If offered an oil lease, consult an attorney first. These developers are offering 1-1.5 page leases that do not protect your rights.-Typically oil, gas and wind leases should be at least 23-26 pages long, and a good attorney should be hired to protect your interest.
Here are a couple of guidelines from the Ohio Division of Natural Resources:
• Check references from the company you are leasing with because you may be in business with this company for years.
• It is a common practice for leases to be “flipped” or sold to another company. You can negotiate for approval of assigning the lease to any third party. If your lease is resold, the terms of the original lease agreement are binding to any successor company and to you.
• Landowners with multiple tracts of land should request separate oil and gas leases for separate tracts.
• Will you have first approval of the location for any well, pipeline, meter, storage tank and access road on your property?
• Will you be fairly compensated for any damage to trees, crops, fences, tile, livestock or buildings damaged by the drilling operations?
Consult the Ohio Division of Natural Resources (ODNR) or Ohio State University Extension for more information.