Ohio Petroleum Producers Push Back Against Proposed Regulations

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Ohio petroleum producers are pushing back against a call by the state attorney general to increase environmental penalties and chemical reporting requirements on the drilling industry.

Republican Attorney General Mike DeWine has recommended three changes that he says will bring Ohio in line with other drilling states and allow effective enforcement against violators.

He wants to see civil penalties for environmental, safety and other violations raised from the current $20,000 maximum per incident to as much as $10,000 a day. He supports requiring full disclosure of the chemicals and their concentrations used in hydraulic fracturing, a high-pressure drilling process. And he recommends giving his office or another state agency the ability to intervene in homeowner complaints over drilling lease agreements.

Terry Fleming, executive director of the Ohio Petroleum Council, opposes the idea of pursuing stiffer regulations. He says it seems to be at odds with desires of state policymakers to reap the benefits of tens of thousands of prospective good-paying jobs by exploiting Ohio’s newly accessible shale resources.

“Large-scale private sector investments and activity have already created significant economic benefits in parts of eastern Ohio, helped reduce natural gas prices for residential and business consumers, generated manufacturing gains and begun to attract other business to locate in Ohio,” he said in a statement.

“It is critical that we continue to work together to boost Ohio’s economy and enhance our nation’s energy security — and do so in a safe, thoughtful and agile regulatory environment — and that state officials base rule-making and enforcement actions on sound scientific principles,” Fleming added.

DeWine told The Associated Press in an interview that he had ordered his staff to review state oil and gas regulations because of his role as the lawyer for the Ohio Department of Natural Resources and other state agencies that regulate oil and gas drilling, and wastewater disposal into deep injection wells, that’s becoming more common in the state.

He believes Ohio’s laws are not adequate to protect residents and the environment. He said other states, including Colorado, Texas, Pennsylvania and Michigan, have imposed steeper penalties or stiffer chemical reporting requirements.

DeWine said the state has no jurisdiction under the Consumer Sales Practices Act to help landowners who sell lease rights to their property. State law would need to be changed to establish that authority, he said.

Fleming pointed to an independent review of ODNR’s oil and gas resources management program in December 2010, which concluded that Ohio’s regulatory oversight effort was overall “well managed, professional and meeting program objectives.”

He pointed to the fact that the department was able to intervene to stop underground wastewater injection in Youngstown when seismic activity was taking place in the area of a disposal well. He also noted there have been in incidents of groundwater contamination despite hydraulic fracturing being commonplace in the state for years. Some 80,000 oil and gas wells have been drilled using the procedure.

“State leaders and the public need to understand that hydraulic fracturing is only one step in the drilling process to access oil and natural gas in the Utica and Marcellus shale here in Ohio,” he said. “The entire well construction process generally takes only two to three months, compared to the 20- to 30-year productive life of a typical well. And the size of the area drained by a horizontally fractured well means fewer oil and gas wells need to be drilled, which in turn minimizes surface disturbance associated with oil and gas drilling.”

DeWine’s recommendations drew praise from the liberal policy think tank Innovation Ohio.

“We’re delighted that Attorney General DeWine obviously agreed with us that action must be taken to protect Ohio landowners from being ripped off or kept in the dark when they sell mineral rights to big oil and gas companies,” said president Janetta King, who served as policy adviser to former Gov. Ted Strickland. “In particular, we’re delighted that the AG and IO are on the same page concerning the need for stronger chemical disclosure regulations on a per-well basis, that his office should be empowered to assist landowners with complaints, and that current state law must be strengthened when it comes to penalizing violations.”

She said the group would still like to see a “Hire Ohio” policy requiring energy companies to employ in-state workers, and an increase in the severance tax they pay on natural gas and oil and natural gas liquids.