Current featured articles for the home page

Ohio’s Shale Gas Waste Disposal Network Map Now Online

By Ted Auch, Ohio Program Coordinator, FracTracker Alliance

A complete inventory of Ohio’s Active Class II Injection Wells, as well as Ohio Department of Natural Resources certified Underground Injection Control (UIC) certified transporters, is now available in map form on (See embedded map below). There is an interest in mapping Ohio’s waste facility network for many reasons; in addition to concerns regarding the spreading of waste on roads, problems with Class II Injection Wells in Youngstown are forcing the state to turn to secondary disposal options.

Shale Gas Waste Disposal Network

To view the map’s full set of controls, including legend, please click on the “fullscreen” button on the map.

Map Layers

In addition to the Class II waste injection wells, the map includes Ohio disposal wells designated for Enhanced Oil Recovery (129), Annular Disposal (82), Salt Water Disposal (221), Temporarily Abandoned Annular Disposal (1,987), and Class II Salt Mining (57).

Active Class II’s have quarter-mile buffering increments from 0.10 to 1.5 miles.On average, Ohio’s active Class II wells are 4,434±2,032 feet deep, with a maximum depth of 13,727 feet. There is a total of 793,734 linear feet worth of active Class II wells throughout the state. Utilizing capacity estimates from current Class II fracking waste well permits in Portage County, Ohio, the state’s active Class II’s are capable of accepting 34.6-97.2 million gallons of fracking waste. However, if we include the state’s aforementioned Class II’s that are not currently being utilized for fracking waste disposal, this capacity estimate jumps to 510.9-1,437.4 million gallons of fracking waste. Such volumes would profoundly affect surface water volumes and flows (i.e., headwater streams and vernal pools), aquifer and sub-surface water chemistry, and the types of issues facing California. [1]

At the present time Ohio’s Utica wells are utilizing 4.2-4.5 million gallons of water and 206,837-261,907 gallons of brine per well with an average of 1.96 barrels of brine produced per barrel of oil. To date Ohio’s 213 reported producing wells have utilized 949 million gallons of water and 681,789 gallons of brine. If the state’s remaining 481 permitted Utica wells produce and utilize water at a similar rate The Utica Play would utilize approximately 3.03 billion gallons of water and produce 113 million gallons of brine all of which would require additional Ohio Class II Injection Well capacity requiring the state to repurpose the existing stock to handle this sizeable increase in fracking fluids, drill cuttings and muds, and related oilfield fluids. Thus, FracTracker felt the need to begin to map the state’s non-shale gas Class II Injection Wells.

The map also shows the locations of current natural gas compressor stations and underground storage tanks, along with the state’s hazardous waste and orphaned landfills. These sites were included in response to the Ohio EPA’s recent advisory suggesting waste landfill facilities begin accepting drill cuttings, drilling muds and frac sands, and related oilfield fluids [1,2].

We also present Ohio’s network of Bulk Transporters, which are charged with transporting related materials.


This is an original map from The FracTracker Alliance and was constructed with the assistance of Ohio State University graduate student, Caleb Gallemore, and a selection of students from his GIS Class “Elements of Cartography: Serving the Community through cartography.” It was made possible by information from Bulk Transporter Magazine. [3]


[1]  Staff. (2013, May 14). Will Ohio’s Landfills Become a Dumping Ground for Radioactive Fracking Waste? EcoWatch. Read>

[2] See our recent post: Ohio’s Waste Not, Want Not!

[3] Who in their words “is the information source for liquid and dry bulk logistics industry. Written for bulk shippers, transporters, and storage operators, BT is dedicated to providing the latest information on regulations, technological developments, logistics management, and hazardous materials safety. For over 65 years, BT has been a trusted source of information for the bulk logistics industry.”

PA Unconventional Production Data Aggregated

The Pennsylvania Department of Environmental Protection (PADEP) publishes unconventional oil and gas production data twice a year.  In its raw form, the data show the production values per well for a given six month period, either January to June or July to December.  The FracTracker Alliance has aggregated the five most recent unconventional production reports in Pennsylvania, and organized the data by well.

PA Production data from July 2010 through December 2012. To learn more about the map and access additional tools, please click the Fullscreen icon.  To access well production data, please zoom in to 1:750,000 (about the size of a county), then click any well icon.

In the thirty months represented in this data, unconventional wells in Pennsylvania produced almost 3.4 trillion cubic feet of gas, about 490,000 barrels of oil, and 2.8 million barrels of condensate.  In terms of geographic distribution, there are thirty-three different counties producing gas, seven counties producing oil, and nine counties producing condensate.

Gas production by PA county from July 2010 to December 2012. Source: PADEP

Gas production by PA county from July 2010 to December 2012. Source: PADEP

Over two trillion cubic feet (Tcf), or sixty-one percent of gas production, came from Bradford, Greene, Lycoming, Susquehanna, Tioga, and Washington counties during this period.

Oil County pie

Oil production by PA county from July 2010 to December 2012. Source: PADEP

Over 97 percent of oil production from Pennsylvania’s unconventional wells during the two and a half year period was from Washington County.

Cond county pie

Condensate production by PA county from July 2010 to December 2012. Source: PADEP

In addition to providing most of the oil, almost 92 percent of the condensate from Pennsylvania’s unconventional wells came from Washington County as well.  Greene County reported 0.01 barrels of condensate production through the thirty month period, but the values here have been rounded to the nearest integer.

We can also look at the production data sorted by operator:

Gas production in Bcf by operator:  July 2010 - December 2012.  Source:  PADEP

Gas production in Bcf by operator from July 2010 to December 2012. Source: PADEP

And finally, we can use this data to compare operators in terms of production per well. Below are the normalized production values for the state’s top 20 unconventional gas producers:

Production per well in thousands of cubic feet (Mcf) by Pennsylvania unconventional operator from July 2010 to December 2012.  Note that the well count includes wells reporting production, not the total number of wells on the report.

Production per well in thousands of cubic feet (Mcf) by Pennsylvania unconventional operator from July 2010 to December 2012. Note that the well count includes wells reporting production, not the total number of wells on the report.

The aggregated production data can be obtained from our Downloads page.

Controversy in the Loyalsock

Controversy in the Loyalsock

By Mark Szybist, Staff Attorney, PennFuture

What are the Clarence Moore Lands?

The Clarence Moore lands are 25,621 acres of “split estate” lands in the Loyalsock State Forest where the surface rights are owned by the Commonwealth of Pennsylvania and the oil and gas rights are owned by two private parties – an affiliate of Anadarko Petroleum Corporation (Anadarko) and a private company called International Development Corporation (IDC). The Pennsylvania Department of Conservation and Natural Resources (DCNR) calls this acreage the “Clarence Moore lands,” after an individual who once owned the area’s oil and gas interests.

What is the controversy over the Clarence Moore lands?

The Clarence Moore lands have become controversial because Anadarko wants to drill gas wells on them (and build compressor stations, water impoundments, pipelines, and new roads). Because of the ecological and recreational sensitivity of the Clarence Moore lands, PA’s conservation community (and much of the general public) wants the DCNR to use its substantial powers to minimize surface activities, if not prevent them altogether.

In general, when a “split estate” exists in PA, the party that owns or controls the oil and gas estate has an implied right to use the surface that it does not own in order to extract oil and gas. The Clarence Moore lands present an exception to this rule. Due to a provision in the Commonwealth’s deed, the DCNR has the power to deny Anadarko access to 18,870 acres of the Clarence Moore lands – almost 75%. To obtain access, Anadarko needs a right-of-way from the DCNR. Conservationists are arguing that given this power, the DCNR has leverage to protect all of the Clarence Moore lands – including the 6,841 acres where Anadarko appears to have traditional “split estate” surface rights.

In March 2012 Anadarko submitted to the DCNR a development plan for the Clarence Moore lands. For almost a year, a coalition of conservation, recreation, fishing and hunting organizations (and thousands of private citizens) have been pressing the DCNR to conduct a public input process on the Clarence Moore lands before making any agreement with Anadarko. The coalition wants the DCNR to make public its environmental impact analyses, allow public comment on all development and non-development alternatives, and protect the Clarence Moore lands for future generations of Pennsylvania citizens. In April 2013 the DCNR conducted an invitation-only meeting about the Clarence Moore lands for “local stakeholders,” followed by a webinar in collaboration with the Penn State Extension of the Penn State College of Agricultural Sciences. The DCNR announced on May 22, 2013 that it would hold a public meeting in Williamsport on June 3rd.

Why are the Clarence Moore lands so important?

The Clarence Moore lands are a wealth of ecological and recreational resources. They include the Old Loggers Path (OLP), an acclaimed 27-mile hiking trail that follows former logging trails and opens onto stunning vistas. According to DCNR documents, the OLP “will be taking the brunt of development [from Anadarko’s activities].”

The Clarence Moore lands include most of the watershed of Rock Run, an Exceptional Value (EV) stream widely hailed as the most beautiful stream in Pennsylvania. The headwaters of Rock Run and Pleasant Stream, another EV stream, emerge from ridge-top wetlands that provide habitat for several threatened or endangered plant and animal species.

The Clarence Moore lands provide habitat for numerous plant and animal species that Pennsylvania has classified as threatened, rare, or at risk (or determined to be candidates for these classifications). Among these species (to name just a few): the timber rattlesnake, northern water shrew, creeping snowberry, northern bulrush, northern goshawk, and yellow-bellied flycatcher. The Clarence Moore lands have been designated an Important Bird Area by the Audubon Society. (See p. 82 of this PDF).

Finally, the Clarence Moore lands are one of only a few large public land areas in north-central PA that have not been opened to gas development, and still contain relatively unfragmented forests.  The DCNR has already leased almost 21,000 other acres of Loyalsock (the forest is around 114,000 acres in all), and has also leased much of the Tiadaghton State Forest to the west and the Tioga State Forest to the north.

FracTracker map of Clarence Moore Lands and Activity

The map above shows the Clarence Moore lands as yellow and blue areas within the Loyalsock State Forest. In the yellow areas, the DCNR has exclusive control of the surface. In the blue areas, Anadarko has the right to use the surface to extract oil and gas. The locations of the yellow and blue Clarence Moore areas are based on documents obtained by PennFuture through the Pennsylvania Right to Know Law (RTKL) and on maps that the DCNR presented at the April 2013 webinar noted above.

The map also shows the oil and gas wells, pipelines, roads, compressor stations, and impoundments that conservationists believe Anadarko has proposed to build in the Clarence Moore lands. The locations of this infrastructure are based on the RTKL documents and on hikers’ observations of survey flags within the Loyalsock State Forest.

Questions and comments about this issue or the June 3rd public meeting can be directed to Mark Szybist:

Groundwater Complaints to PADEP Compiled by Times-Tribune

In a May 19th article published in the Scranton Times-Tribune, Laura Legere discusses data that she has compiled from a Right-to-know law request to the Pennsylvania Department of Environmental Protection (PADEP).  The data show 969 complaints between 2008 and the fall of 2012.  According to the article, 161 of these complaints include determination letters where PADEP indicates some sort of link between oil and gas activity and impacted groundwater supplies. The Times-Tribune data has been geolocated and mapped by the FracTracker Alliance:

Map showing groundwater complaints to PADEP from 2008 through Fall 2012. Orange-red dots indicate instances where PADEP has established come connection between drilling activity and groundwater impacts, yellow dots mean that PADEP analysis is still pending, and green dots indicate that PADEP has not established such a connection. Please note that the locations are not exact, and that in many instances there are multiple records at a single location on the map. Click on “Fullscreen” to access additional mapping tools.

According to our correspondence with Ms. Legere, there are future plans to release the source documents to the public as well, once needs to protect the privacy of the complainants have been addressed.

We have also added this data to our US Map of Suspected Well Water Impacts:

US Map of Suspected Well Water Impacts. Here, the Times-Tribune data have been represented by light blue dots. Due to crowding from other layers, it is necessary to zoom in to Pennsylvania to see all of the data. For more information on this map, please click on “Fullscreen” and then the “About” tool.

US Map of Suspected Well Water Impacts

Launch of National Mapping Project Designed to Show Possible Impacts of Oil and Gas Drilling on Well Water

US Map of Suspected Well Water Impacts
Contacts: Brook Lenker, Executive Director, FracTracker Alliance, (717) 303-0403; and
Samantha Malone, Manager of Science and Communications, FracTracker Alliance, (412) 802-0273

May 1, 2013 – The US Map of Suspected Well Water Impacts is a project that will attempt to piece together recent complaints of well water quality impacts that people believe are attributed to unconventional gas and oil operations. Research has demonstrated potential risks to ground and drinking water posed by faulty well casings, surface spills, and hydraulic fracturing. From across the country, in areas where gas and oil development is occurring, accounts of possible well water contamination have been reported but not been collected all in one place – yet. The FracTracker Alliance and cooperating organizations are providing that opportunity.

Inspired by other “crowd-sourced” data and mapping projects, this project aims to collect ongoing stories, narratives, and data from individual homeowners living on well water near drilling operations and map the general location of these reports online.  The first version of the dynamic map (shown below) is available at

US Map of Suspected Well Water Impacts - V1

US Map of Suspected Well Water Impacts
Read more about Version 1 of the map

Once received, submissions will be reviewed to the extent possible by cooperating researchers and organizations. Not all reported cases of water contamination, however, have been or will be able to be substantiated. According to Brook Lenker, Executive Director of FracTracker Alliance:

The reports we are collecting are not necessarily indisputable evidence that drilling has contaminated drinking water sources. Some accounts are irrefutable. Others remain unsubstantiated, but that doesn’t mean the well owner isn’t experiencing serious problems. Even where proof may be elusive, perception of risk can tell us much about an issue and the level of concern by the community.  This information will likely help to identify pre-existing problems or conditions that were not previously well known.  Such outreach is needed to permit citizens, local agencies, and others to work together to address pre-existing concerns, improve local regulations or standards, conduct proper baseline testing and monitoring, and make informed decisions.

As unconventional natural gas and oil extraction expands internationally, an Internet-based project like the US Map of Suspected Well Water Impacts can help to share on a global scale how people in the U.S. view – and may be impacted by – unconventional drilling. If everyone contributed their stories, the public’s understanding of gas and oil extraction’s impacts on well water could expand dramatically.

Anyone wishing to submit their story should visit or call (202) 639-6426. A complete list of current project partners is available on the website.

# # #

Downloadable Press Release (PDF)
Read more about Version 1 of the map

US Map of Suspected Well Water Impacts - V1

Introducing the US Map of Suspected Well Water Impacts

About the Map

The FracTracker Alliance has been working with nine different community partners on a project to map instances where oil and gas activity are suspect of impacting groundwater supplies in the United States. The US Map of Suspected Well Water Impacts is now ready for its initial release, and consists of the following data layers:

  • Visitor Submitted Impacts. This layer consists of viewer submitted form data describing suspected incidents of groundwater contamination by oil and gas extraction and related industries.  The locations have been determined using the centroids or geometric center-points of the zip code in which the suspected incident occurred.  If you are aware of additional incidents, please submit them here.
  • Pipeline Incidents Contaminating Groundwater. This data layer includes hazardous liquid pipeline incidents that were indicated as resulting in groundwater contamination between 1/1/2010 and 3/29/2013.  The data were obtained by the US Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA).  The data have been altered by the FracTracker Alliance in that it only includes incidents leading to groundwater contamination, and by the removal of several dozen columns of data about the incident for the sake of brevity.  There are 30 incidents on this list.
  • NRDC Suspected Contamination Events. Amy Mall of the Natural Resources Defense Council compiled a list of 37 incidents where hydraulic fracturing is suspected of contributing to groundwater contamination.   The list was compiled in December 2011, and each entry is linked to news reports of the event.   This layer was mapped by the FracTracker Alliance based on the centroids or geographic center-points of the municipality, county, or state of the incident, depending on the best information available.
  • List of the Harmed Suspected Water Incidents. Jenny Lisak, co-director of the Pennsylvania Alliance for Clean Water and Air, maintains a list of people claiming to be harmed by hydraulic fracturing or related processes, called the List of the Harmed (LotH).  This data layer is based on the February 23, 2013 update of the list, and contains only the events in which water is the suspected exposure pathway.  This data was mapped by the FracTracker Alliance based on the centroids or geographic center-points of the municipality, county, or state of the incident, depending on the best information available.
  • NM Pit Contamination Events. This layer consists of events where the New Mexico Oil Conservation Division determined that substances from oil and gas pits contaminated groundwater.  Altogether, there are 369 incidents included in the data.  The document on which this map was based was published in 2008.  This data was mapped by the FracTracker Alliance based on the centroids or geographic center-points of the PLSS section, meaning that the points should be accurate within 0.72 miles.

US Map of Suspected Well Water Impacts – Version 1

It is important to note that the standard for inclusion in the map is simply whether or not someone suspects that well water has been impacted by oil and gas extraction-related activity.  Specifically, items on the Visitor Submitted Impacts, NRDC Suspected Contamination Events, and List of the Harmed Suspected Water Incidents should be thought of as perceived  impacts by oil and gas activity, not confirmed ones.  The NRDC and LotH lists were built with links to one or more media reports about the event.

On the other hand, the New Mexico document on which the pit contamination event layer was built simply says, “Cases Where Pit Substances Contaminated New Mexico’s Ground Water,” and it is worth noting that it was published by a state regulatory agency. Likewise, the PHMSA pipeline data is published by an administration within the US Department of Transportation.  Between these two layers, there are 399 incidents with the authority of a regulatory agency behind them.

Future versions of this map can be found on the project’s landing page.

US Pipelines Incidents Are a Daily Occurrence

Recently, there has been a lot of attention focused on the Mayflower, Arkansas pipeline failure that resulted in a massive oil spill, particularly as it comes at a time when discussions of the controversial Keystone XL Pipeline project are once again heating up.  However, the situation is far from unusual.  In fact, according to data downloaded from the Pipeline and Hazardous Materials Safety Administration (PHMSA), there were 1,887 incidents in the nation’s gathering and transmission, distribution, and hazardous liquids pipelines between January 1, 2010 and March 29, 2013, or an average of 1.6 incidents per day.

Pipeline incidents from 1/1/2010 through 3/29/2013.

Pipeline incidents from 1/1/2010 through 3/29/2013. Data Source: PHMSA.

Obviously, not all of these failures are on par with the massive spill in Mayflower, and it should be noted that there are a variety of reasons for these lines to fail.  Some of these reasons, such as excavation activity in the vicinity of a pipeline, are not necessarily the fault of the pipeline’s operator.  The fact that these incidents are commonplace, however, is not one that can be dismissed.

Pipeline incidents in the United States from 1/1/2010 through 3/29/2013. Source: PHMSA.  Red Triangles represent incidents leading to fatalities, and yellow triangles represent those leading to injuries.  To access the legend and other controls, click the “Fullscreen” icon at the top-right corner of the map.

It is clear from the map that there a few data entry errors, as a few of the data points draw in locations that aren’t even in the jurisdiction of the United States. However, each entry also contains a city and state that the incident is associated with, and for the most part, the data seem to be fairly reliable.

PACWA’s List of the Harmed Now Mapped by FracTracker

Jenny Lisak, co-director of the Pennsylvania Alliance for Clean Water and Air, maintains a list of people claiming to be harmed by hydraulic fracturing or related processes, called the List of the Harmed.  This version of the list, last updated on February 23, 2013, has 822 people thought to be negatively impacted by the industry, with symptoms ranging from headaches and rashes to death.

The List of the Harmed is maintained by the Pennsylvania Alliance for Clean Water and Air. For full access to map controls, click the “Fullscreen” icon at the top right corner of the map.

The FracTracker Alliance was not involved in the creation or maintenance of this list, but our intern Stephen Paddock did map the incidents to the best available level of accuracy, whether that was at the municipal, county, or state level. Please do not assume that the locations on the map are any more accurate than the level indicated in the “Accuracy” column.

Popup box containing the data for one of the 878 entries on the List.

Popup box containing the data for one of the 878 entries on the List.  The yellow oval shows that there are multiple boxes stacked on top of each other, and the green oval provides a hyperlink to more information about the incident in question.

Each entry on the List of the Harmed has at least one link to more information about the given incident.  To access those, click on any map icon to bring up the popup box.  Then scroll down to the “Link” section, and click on “More info”.  If there are multiple sources, they will appear under “Link_2” or “Link_3”.

In the picture above, the text “(1 of 11)” in the yellow oval tells us that there are eleven popup boxes stacked on top on one another.  To sort through the records, simply click the arrow button toward the right edge of the yellow oval.

Waste produced by unconventional wells in Pennsylvania from June to December 2012.

Six Months of Production and Waste From PA’s Unconventional Wells

The Pennsylvania Department of Environmental Protection (DEP) recently published its biannual reports for production and waste from unconventional wells throughout the state for the last half of 2012. FracTracker has learned the hard way not to be too eager in analyzing this data.  In the previous cycle, this data was released without the contribution several operators, one of which happened to be the biggest player in the state, Chesapeake Appalachia.  That incident prompted the inclusion of a data disclaimer from DEP, which includes the following text:

The Oil and Gas Act reporting is a self-reporting system, meaning that data is reported from producers to DEP as required by law. All production data is posted as it was received from the unconventional well operators. DEP does not independently verify the data before it is posted.

While the Oil and Gas Act requires accurate and on-time data reporting by producers, and the producers and DEP endeavor to correct any errors discovered after the data is posted, DEP makes no claims, promises or guarantees regarding the accuracy, completeness or timeliness of the operators’ data that DEP is required to post.

While considering content regarding production and waste in Pennsylvania, it is worth noting that the DEP considers the data to belong to the various operators.  All data for this post was downloaded on February 25, 2013, and while it seems reasonably complete, it is important to note that there could be operators which have not posted their data to DEP in a timely fashion.

PA Production and Waste From Unconventional Wells: July 2012 to December 2012. Click on any map icon for more information, or click the “Fullscreen” button at the top right of the map to access more toolbars.  To access data for individual wells, viewers must zoom in to 1:750,000, or an area equivalent to several counties.

The default map frame includes most of the activity for unconventional oil and gas production and waste from Pennsylvania, but if you zoom out, you can find a landfill in southwestern Idaho that accepted 11 tons of flowback fracturing sand for disposal.  Unfortunately, the available data does not give any indication of why an operator might choose to ship waste over 2,000 miles away from its source.

Below are the six month statewide production and waste totals for Pennsylvania’s unconventional wells, including the number of wells that contributed to each total:


Production from unconventional wells in Pennsylvania from July to December 2012

Production from unconventional wells in Pennsylvania from July to December 2012.  Mcf represents 1,000 cubic feet, and barrels measure 42 US gallons.

The total gas produced was over 1.1 trillion cubic feet (Tcf) for the six month period, which was over 250 billion cubic feet (Bcf) higher than the previous total of 895 Bcf.

Waste produced by unconventional wells in Pennsylvania from June to December 2012.

Waste produced by unconventional wells in Pennsylvania from June to December 2012.

And here is a look at the disposal method for each type of waste, in terms of percentage:

Disposal methods of Pennsylvania unconventional oil and gas waste products, in terms of percentage of the waste type.  July - December 2012.

Disposal methods of Pennsylvania unconventional oil and gas waste products, in terms of percentage of the waste type. July – December 2012.

Note that while road spreading rounds down to 0%, 425 barrels of produced fluid were used in this effort.

To Severance Tax or not to Severance Tax, that is the question!

By Ted Auch, PhD – OH Program Coordinator, FracTracker Alliance

Million Cubic Feet (MCF) as measured over industry standard test periods.

Barrels of Oil Equivalents (BOE) as measured over industry standard test periods.
Figure 1. Ohio’s Producing Utica Wells & Primary Shale Geology – plus non-reporting, drilled, or producing Utica & Marcellus Wells.
“Million Cubic Feet” (MCF) as measured over industry standard test periods.
“Barrels of Oil Equivalents” (BOE) as measured over industry standard test periods.

The economic opportunities provided by Ohio’s Utica Shale play via hydraulic fracturing have been cited repeatedly by the Ohio Oil and Gas Association and industry think-tanks like IHS Inc [1]. Numbers published by the latter last October [2] predicted 143,000 Ohio jobs and $18 billion in state revenue by 2020. However, these projections are accompanied by substantial amounts of error. Given that the state’s Utica Shale well movement is now more than 500 wells permitted strong, we thought it was time to take a closer look at the demographics and economics of the Utica Play, given that there will be a strong geographic component being inserted into the “To Drill Or Not To Drill” and waste disposal debate here in Ohio. This is an especially important issue given that the state is wrestling with either implementing an ad valorem [3] tax or raising the state’s industry-low severance taxes, which currently stands at 0.5-0.8% but would be raised to 1% under the governor’s budget. In contrast, proposals from Policy Matters Ohio and northeast Ohio Democrats seek 5% – 7%, respectively.

In comparison to most other states producing oil and gas, even 5% may be a trivial amount, or what The Cleveland Plain Dealer called “indefensibly low.” It amounts to 97 cents per Ohioan (i.e., $275 mi2) [4]. According to an Ernst & Young analysis of eight states that produce dry gas and natural gas liquids and/or dry gas and oil…

  • Ohio currently imposes the lowest combined state and local taxes of the states included in the analysis.
  • …Ohio’s overall effective tax rate (measured as total taxes divided by sales) is 80% below the average rate for the other 7 states for a well producing dry natural gas and natural gas liquids.
  •  For a well producing dry natural gas and oil, Ohio’s effective tax rate is 65% below the other-state average…
  • With the [proposed] increase, Ohio’s effective severance tax rate (ETR) would be 16% lower than the other states’ average for the well producing dry natural gas liquids and 4% lower than the other states’ average for the well producing dry natural gas and oil.

The governor’s proposed “Severance Tax Changes” will not apply to any Marcellus Shale wells, even though the state is home to five producing Marcellus wells (two in Monroe County) and eight permitted wells across Belmont and Monroe Counties. Additionally, the governor and his staff included a severance tax exemption for all “small-volume gas wells” (gas wells with average daily production of under 10 million cubic feet [MCF] would be exempt from the tax). If early industry production reports – and the Ohio Business Roundtable requested Ernst & Young report – are any indication, only 19% of wells will be subject to this tax. Our own analysis revealed that of the 32 industry reported production wells, the average production value is 7.5 MCF (Figure 1).The Kasich administration admitted the exemptions would apply to – by their estimation – 45,000 gas wells.

Another nuance of the Kasich administration’s severance tax complicated mélange is that rates will be 1% for natural gas and 4% for oil, natural gas liquids, and condensate. However, according to the administration:

… there will be a lower tax rate of 1.5 percent for the first year of production, in order to allow producers to recover the cost of preparing the well site and drilling the well.

Coincidentally, “the first year of production” is generally the time of greatest gas yields. Anonymous sources in Ohio’s Utica sweet spot have spoken of 50% declines in royalties within 6 months of production.

The Ohio Oil and Gas Association, the industry’s lobbying arm, has weighed-in against higher severance taxes, stating that:

a 4% severance tax on oil and gas would be equivalent to a 40% income tax and 16 times more than the commercial activities tax (or CAT). It would also burden economically challenged area throughout the state and landowners who want to lease their land and receive royalty streams.

(Total of 4,037 individual donations, Data courtesy of Common Cause Ohio’s “Deep Drilling, Deep Pockets: Campaign Cash and Fracking Regulation in Ohio” spreadsheet)

Figure 2. Ohio’s Big Energy individual or Political Action Committee (PAC) political donations from 2001 to 2011. (Total: 4,037 individual donations. Data courtesy of Common Cause Ohio’s Deep Drilling, Deep Pockets spreadsheet.)

The anonymous BizzyBlog took the OOGA position one step further proclaiming that energy companies “won’t do business in a state with a newly-enacted punitive severance tax.”

Such arguments against a “hefty tax increase” don’t have much empirical support. OSU oil and gas development expert Douglas Southgate called such taxes “definitely affordable for the industry.” Even with the increases proposed by some, Ohio would still rank lowest among the eight shale gas producing states investigated by Ernst & Young in 2012.

Whereas an ad valorem tax would be redistributed directly back into the communities from which the hydrocarbons are extracted, a severance tax would be distributed throughout the state, even to communities and counties that prohibit Utica Shale drilling and/or injection activity. Theoretically, the entire state could benefit from the toils and environmental risks taken on by Ohio’s Appalachian region. According to a Quinnipiac pole, Ohioans support (52 to 38%) an increase in drilling-related severance taxes. Bipartisan voter support for a severance tax increases (60 to 32%) when the prospect of offsetting state income taxes is proposed.

Either levy – an ad valorem tax or severance tax – would be based upon the industry’s headline well production, even though USGS research recently spoke to the substantial well-to-well production variability in the Appalachian Shale Basin: 250-600% [5]. There are quite a few short- and long-term costs and benefits associated with exploitation of the Utica Shale; however, as it stands the risk burden is disproportionately being shouldered by Appalachian Ohio. Thus, the severance tax being proposed by the governor and House Democrats could add to the regional schisms evident in the state.

But maybe geography is immaterial. The likely big winner of the tax decisions will be energy companies and, according to data on recent campaign contributions, those politicians they deem worthy of their political donations – many of whom are on the fringes or completely outside the Utica Shale (Figure 2).

[1]  IHS Global Insight is the brainchild of Daniel Yergin.

[2] This work was funded by the US Chamber of Commerce’s Institute for 21st Century Energy, the American Petroleum Institute, the American Chemistry Council, America’s natural Gas Alliance, and the Natural Gas Supply Association.

[3] Ad valorem taxes are assessed according to the value of the natural gas extracted.

[4] The Kasich “Ohio’s Jobs Budget 2.0: Jobs. Momentum. Transformation” highlights this aspect of their proposed severance tax, explicitly noting that it “has researched the severance tax structures of other states with significant oil and gas production, particularly those states with shale resources, and has found that even with a 4 percent tax rate, the tax burden on the revenues from these horizontal Utica wells will be lower than in other states.”

[5] According to the USGS, production from the most productive wells in the Appalachian Basin’s shale formations is commonly 50 times larger than the poorest producing wells, with the same value being 250-600 times larger for the Marcellus Basin. However, the only numbers presented to individual landowners – but less frequently to collectives given that energy firms are increasingly aware of the legal advice that land aggregators are seeking out – when the subject of royalties comes up are near-term gushers. For example:

  1. GPOR’s “’King’ of Utica Well” the Shugert 1-1H at 4,913 barrels of oil equivalents per day (BOEPD),
  2. CHK’s Buell well in Harrison County, OH producing 1,040 BOE[5],
  3. GPOR’s Boy Scout 1-33H in Wagner, Harrison County producing 3,456 BOE, the Ryser 1-25H producing 2,914, or the Groh 1-12H producing 1,935 BOE,
  4. Anadarko’s 9,5000 BOE, and
  5. The Wagner 1-H well producing 4,650 BOE. Yet, wells like the Frank unit in Stark County owned by Enervest producing 515 BOE or the non-producing wells across Ashland and Medina Counties are barely discussed – what a JP Morgan energy analyst called a “funding gap.”