The scorched earth Republicans in Ohio have opened up all state lands to oil and gas drilling. The impact will be extensive in the eastern half of the state where the Devonian and Marcellus shale formations will be targeted by drillers. Frack, baby, frack.
The bill would open parks, forests, and other state-controlled lands, including public university and college property, to potential drilling for oil and natural gas.
Even Lake Erie may not be off limits. There is currently a federal ban on drilling in the lake, but Republican state lawmakers want to make sure there is nothing to protect the lake in the event the federal ban can be lifted. Some Congressional Republicans have already advocated lifting the federal ban.
Rep. Kristina Roegner (R., Hudson), however, urged rejection of the amendment, which would have added an extra layer of protection for Lake Erie on top of an existing federal ban on drilling.
“It would be foolish and rather short-sighted for this state to prohibit future generations of the possibility of even considering tapping into what equates to 50 percent of Ohio’s reserve potential,’’ she said. “But for now, the United States will just continue to just let the Canadians enjoy the benefits from Lake Erie.’’
The Kasich administration is not wasting any time with cost-benefit analyses related to drilling. The Ohio Department of Natural Resources already has a section on shale gas exploration in the state parks site.
While the amount of revenue from leasing and royalties is uncertain now, proceeds from natural gas activity would be used to address the large backlog of deferred maintenance needs at state parks.
We encourage you to visit this page again as information will continue to be posted on this site about your state parks. Learn about oil and natural gas in Ohio.
A study conducted in 2004 indicated that state parks generated $1.1 billion for state and local economies. Yet, the parks are being opened without a clue about whether the revenues generated from drilling will offset, much less exceed, any negative effects from degrading state park lands. The idea that revenues from drilling in state parks will pay for deferred maintenance costs associated with draconian budget cuts is absurd. Why maintain a resource you are allowing to be destroyed?
I cannot tell whether Republicans are cynical, delusional, or simply stupid when they tout drilling as a long-term economic strategy with benefits that will extend far beyond the drilling industry. Resource extraction has predictable trajectory of brief boom and long bust. Lax regulations have always allowed oil, gas, and coal companies to close up shop when the wells and mines are no longer profitable, leaving toxic residuals for the taxpayers to clean up or live with.
“What we should be doing is embracing the use of oil and gas that’s right here in our state,’’ said Rep. Matt Huffman (R., Lima). “... If we embrace that, we’re in a position economically to return to the power that we were roughly in the last part of the 1800s and the beginning of the 1900s. ... If this gas boom takes off like we understand it is, there aren’t going to be enough hotels, houses, and restaurants to handle all the people coming into this state.’’
Matt Huffman is a lawyer by training and you can probably fit what he understands about the economics of shale gas drilling in a thimble with room to spare. His dreams of people flocking to Ohio ignores the fact that they will not stay in any one area for any length of time. Shale gas is a locust economy.
Arthur Berman provides a sobering assessment of the economic realities of shale gas drilling in a recent Oil Drum article. Based on other data from other shale formations, most gas wells typically play out within 5 years. Only 15% are productive for more than 10 years. His dissection of recent Securities and Exchange Commission filings for the 10 largest drilling companies uncovers substantial weakness, such as high debt levels, estimates of reserves not justified by current production levels, and poor returns on investment.
U.S. shale plays have been over-sold and are unlikely to deliver the results that investors now expect. In fact, shareholders have already lost most of their investment. The shale gas resource is huge but the commercial portion is likely to be much smaller than what has been claimed or hoped for. At higher gas prices, more of the resource makes economic sense but that depends for the near term on production discipline that seems to be absent in the U.S. exploration and production companies. It also assumes that attendant service costs do not escalate at similar multiples to gas prices.
The unsound economics in current large scale shale gas drilling operations means that political promises of gas-driven prosperity are not likely to materialize. If the larger operations do not live up to expectations, it is safe to assume that fundamentals for small to mid-sized operations will not be much better.
While the economic benefits will almost certainly be smaller than advertised, the external costs will be much larger. Many of the environmental myths surrounding natural gas have been dispelled. We now know that its carbon footprint rivals coal. The environmental hazards associated with hydraulic fracturing have proven to be much more common than advertised. The millions of gallons of wastewater generated from each and every well overwhelm current water treatment resources, which cannot handle the volume, salinity, and toxic contamination of the drilling fluids. Ohio has no plan in place to deal with wastewater. They are still at the talking stage. States lack the resources and political will to monitor operations, identify abuses, punish offenders, and reclaim abandoned wells. Ohio is no exception.
The saving grace for two-thirds of Ohio's state lands is that drilling cannot take place because of "deed restrictions, federal encumbrances, and the fact that Ohio doesn’t own the mineral rights." However, for the rest, expect the worst.