Friday, September 29, 2017

Ohio Supreme Court Listens to Arguments in Landowner's Attempt to Force Fracking on Property

From Bloomberg BNA:
A company that is drilling for oil could be forced to extract natural gas, as well, on an Ohio property or lose those rights as part of a lawsuit that tests the requirements of a 37-year-old contract signed before fracking became commonplace. 
The lawsuit, considered by the Ohio Supreme Court Sept. 26, turns on a 1980 contract that Linda Alford signed with Collins-McGregor Operating Co., allowing it to drill for oil on 74 acres of her property near Ohio’s West Virginia border. 
The drilling company has continually extracted oil from the property as required by the contract, but Alford wants to force the company to dig deeper for natural gas—or allow her to sell those rights to another firm now that hydraulic fracturing is more practical and lucrative ( Alford v. Collins-McGregor Operating Co., Ohio, No. 2016-1281, oral argument 9/26/17 ). 
Forcing Collins-McGregor to explore deep fracking would be the first such requirement in the nation and would be prohibitive to smaller companies only interested in oil, Brent Barnes of Geiger Teeple Robinson & McElwee PLLC, the attorney representing the company, said at the court hearing. He estimated fracking Alford’s property would cost between $8 million and $10 million.
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Oil & Gas E&P Increases Q3 Volume Guidance

An analyst with Raymond James explained this energy company's recent announcement about its sales volumes and guidance.

In a Sept. 25 Company Comment, analyst John Freeman reported that Raymond James "raised its full-year EBITDA estimates on Noble Energy Inc. (NBL:NYSE) by 1%" after the company boosted its "estimated Q3/17 sales volume guidance by 10 Mboe/day." Revised guidance is 352–358 Mboe/day, which is higher than Raymond James' estimate of 347 Mboe/day.

Oil volumes are now expected to reach 126–130 Mbbl/day, Freeman wrote. This compares to previous guidance of 120–126 Mbbl/day and Raymond James' anticipated 124 Mbbl/day.

Natural gas volumes are now expected at 965–990 Mcf/day (versus 910–950 previously), but "this will be partially offset by lower than expected natural gas liquids volumes," noted Freeman.

What prompted the boost in guidance was "higher than expected volumes out of the DJ Basin, particularly from the Wells Ranch/East Pony areas, which are expected to rise by 10% quarter over quarter (QOQ)," Freeman explained. "Robust new well performance and better than anticipated pipeline pressures throughout the basin" drove the strong numbers.

"This is encouraging," concluded Freeman, given the negative impact in Q2/17 of "lower than expected production from legacy vertical wells resulting from delayed workover activity."

Noble's operations in Texas also are noteworthy. The company's "first central gathering facility in the Delaware was brought online in July and was recently connected to the Advantage Pipeline," Freeman indicated. Production out of the state "is expected to come in within guidance, with limited impact from Hurricane Harvey."

Noble's production in other areas of the world is "also coming in strong," said Freeman. For example, in the Gulf of Mexico, "volumes are expected at the high end of guidance," natural gas production in West Africa "is exceeding expectations" and gas production in Israel is "expected to come in within previous guidance."

Freeman's concluded that "Noble is performing well from an operational standpoint."

Raymond James has a Market Perform rating on Noble Energy. Its stock is currently trading at around $27.75 per share.

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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Disclosures from Raymond James, Noble Energy Inc., Company Comment, Sept. 25, 2017
ANALYST INFORMATION: Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.
The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.
Raymond James expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James & Associates makes a market in shares of NBL.
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Thursday, September 28, 2017

An “Answer to Prayer”: Thanks to Fracking, Ohio is Making and Shipping Steel Again

by Jackie Stewart, Energy in Depth

Following decades of steel mill closures, the Wall Street Journal reported in 2012 that U.S. steel companies could see a resurgence as a direct result of local, affordable and abundant natural gas. Now that forecasting is starting to become a reality in the Appalachian Basin where the Marcellus and Utica Shale-rich region is boasting the lowest natural gas prices in the developed world, giving energy intensive industries – like steel manufacturing – a global cost advantage.
Acero Junction, one of the companies that is proudly making American steel in Ohio, was formed just last year. According to Acero’s website, the company credits the shale renaissance for its very existence,
“The mill lies in the heart of Marcellus and Utica gas regions and is serviced by two railroads, the Norfolk Southern and Wheeling Lake Erie. Our strategic location gives us excellent access to our customers, as well as convenient access to high quality raw material.”
Over the past 30 years, Ohio has seen many of its steel jobs moving overseas. Plants have closed in Steubenville, Youngstown, Lorain and Cleveland to name a few.  Mingo Junction, a town that was built around its steel mill, was one such place where residents saw their mill shut down completely in 2008.
Today, after being closed for eight years, that Ohio steel mill is now open for business and shipping 19,000 tons of domestically produced steel on the Ohio River — thanks to low natural gas prices made possible from shale development. The Mingo Junction-based mill has re-opened under new ownership and now employs 125 permanent employees, with plans to add up to at least 145 more, something Mingo Junction Mayor Ed Fithen, a former employee at the mill, never thought he’d see,
“After being down for 8 years – I worked there for 35 — I said this place will never start up. It’s too down.”
Mayor Fithen’s sentiment is one shared by communities along the Ohio River that have made up a large percentage of the 48,000 U.S. steel manufacturing jobs lost since 2000.  These communities have shared a feeling of hopelessness that they would never “start up” again. However, thanks to Marcellus and Utica Shale development, that’s all starting to change. In 2017, we are in fact making and shipping domestically produced steel along the Ohio River again.
As Mingo Junction Councilman George Irvin Jr. recently said,
“It’s kind of like an answer to a whole bunch of prayers. I’m sure many people here in the village have spent times praying for something to come, and this is just one huge aspect of the good that’s coming in to Mingo Junction.”
Photo from WTOV 9
Councilman Irvin is correct. With a final investment decision from PTT Global Chemical in the works, the Ohio River Valley could very well be on the verge of making a major comeback. And with numerous abandoned steel mills along the river, local economic development professionals are gearing up for an opportunity for American steel to rebound.
Ed Looman, Project Manager for the Appalachian Partnership for Economic Growth (APEG) recently told a group of business leaders at an event held by the Ohio Valley Oil and Gas Association, “It’s an exciting time in the Ohio Valley,” and to prepare for the growth Ohio is actively marketing 500 sites for development.
Ironically enough, at this exact same time last year then candidate and now President Donald Trump forecasted the very thing that has now become a reality during his speech at the Shale Insight conference,
“The development of the Marcellus and Utica shales will fundamentally change the landscape of this region. More jobs, higher wages, a larger tax base, and dollars flowing into our country for a change, instead of out of our country. Under a Trump administration, we are going to bring back steel jobs and we are going to rebuild this nation.” (Emphasis Added)
In fact, for years academics and media outlets have been touting how shale development could help bring steel jobs back to the region. In 2012, headlines rang out that “Ohio Looks to ‘Do It Right’ as Shale Boom Revives Steel”, and in 2015 Harvard Business School and a Made In America, Again  highlighted “low-cost energy as the most significant emerging advance for U.S. manufacturing competiveness.
This gives the U.S. an incredible competitive edge, which has trickle down impacts to manufacturing including steel, petrochemicals, transportation, lighting, and appliances, among other applications. This provides hope that Americans will once again predominantly see labels on their clothes and toys that say proudly, “Made in America.” And yes, we have already experienced the infancy of this game-changer in Ohio. That’s right, we are making and shipping steel again in the Buckeye State, thanks to shale.
Could the region be on the cusp of another industrial revolution? Time will tell, but for now, we know that for the people of the Ohio Valley, this news is certainly “an answer to a whole bunch of prayers.”

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Analyst Thinks Chesapeake Energy May Look to Sell Utica and Marcellus Assets

From Reuters:
Chesapeake had warned that Harvey would impact its business and said on Tuesday it expects current-quarter production to be about 542,000 barrels of oil equivalent per day (boepd), lower than the 638,100 boepd it reported a year earlier. 
The company’s forecast was below Wall Street’s estimate of about 550,000 boepd, according to investment bank Tudor, Pickering, Holt & Co.

Shares of Chesapeake, which also trimmed its adjusted production forecast for the full year, were down 1.5 percent at $4.30 in morning trading. The S&P energy index was lower due to a drop in crude oil prices. 
Chesapeake, which is selling assets worth $2 billion to $3 billion, said sales completed so far and changes to the way it allocated capital also contributed to the drop in production, but did not give further details. 
“We look to the Marcellus or Utica as potential asset sale candidates,” Tudor Pickering said, noting Chesapeake has been focusing on producing oil, rather than natural gas, of late.
The rest of this article can be read by clicking here.

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Cabot Reaches Settlement with Dimock Families

From PA Homepage:
Nearly six months after a federal judge threw out a multi-million dollar verdict in a water contamination trial, the case has now been quietly settled. 
According to a court filing late last week, two families from Susquehanna County and Cabot Oil & Gas have reached a settlement. 
The one-page court document says the civil lawsuit has been "amicably resolved" by the parties and the lawsuit is being dismissed without prejudice. 
The settlement brings to a close a nearly decade-long fight. 
There is no denying that Cabot Oil & Gas and other natural gas drilling companies have made their mark in Susquehanna County. 
For some, news that there is now a settlement in the high-profile water contamination lawsuit in Dimock is not surprising. 
"No. I'm not surprised because I think sometimes people ask too much, you know? They expect, okay, their big money and I'm going to get big money," Janet Hogle of New Milford said.
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Wednesday, September 27, 2017

Utica Rig Count Up, Permitting Down on Latest ODNR Weekly Update

New permits issued last week: 5  (Previous week: 15-10
Total horizontal permits issued: 2625  (Previous week: 2620+5
Total horizontal wells drilled: 2131  (Previous week: 2123+8
Total horizontal wells producing: 1688 (Previous week: 1683+5
Utica rig count: 26 (Previous week: 23)  +3

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NEXUS Pipeline Opponents Not Giving Up Fight

From the Toledo Blade:
Mr. Parker said the approval by the Ohio EPA will put the company on track to begin construction this fall, with the third quarter of 2018 targeted for when gas would begin to flow. 
Next is a notice to proceed with construction from the Federal Energy Regulatory Commission. But citizen groups fighting the pipeline’s construction say they plan to continue to challenge the project in court. 
Paul Gierosky of Coalition to Re-Route Nexus said a May 12 federal lawsuit out of Akron about the pipeline is still pending. The group also plans to file for rehearings on FERC’s decision, and will also appeal in federal court the commission’s decision to issue the notice to proceed, which is expected. 
The Ohio EPA’s decision was not surprising, Mr. Gierosky said. 
"The states have control over this,” he said. “We have had absolutely no support from our governor on this.”
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Ohio Farmer Shares Account of Rover Pipeline Problems

From MDN:
Not everyone on the “pro” side of the pipeline issue is happy with Rover Pipeline and the work they’ve done in Ohio. You know that MDN is supportive of the Rover project. You also know that MDN believes Craig Butler, director of the Ohio EPA, is way out of line with his campaign to fine Rover $2.3 million. However, Rover is not lily white in their handling of building the pipeline across Ohio. They’ve made mistakes. And they’ve made some enemies of the people who should be their biggest supporters–farmers whose land they cross. MDN editor Jim Willis recently spoke with one of those farmers, from the Definance, OH area. Ben Polasek owns a farm that has been in the family for four generations. He plants wheat, corn, and soybeans on his Ohio land. Polasek says he is a strong supporter of the energy industry–and of pipelines. However, he says, “Rover has not shown any respect for the landowners of this project.” Polasek says Rover made promises–like being able to access fields he needs to plant–only to see those promises broken. He also believes Rover didn’t properly plan for the heavy rains that caused his property to become a mud pit in areas where Rover was working. With pictures (below) and an impassioned letter to the Federal Energy Regulatory Commission (also below), Polasek is asking FERC to hold Rover responsible for the damage done to his, and other farmer’s, property…
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Wayne Forest Lease Sales Changing Lives With Nearly $7 Million To Date

by Jackie Stewart, Energy in Depth

The Bureau of Land Management (BLM) conducted a competitive online auction today for federal minerals on 191 acres located in the Wayne National Forest (WNF). The combined sale of this acreage – all of which is located in Monroe  County, Ohio — totaled $192,023.84, bringing the grand total for the three WNF lease sales thus far to just under $7 million. That grand total only accounts for five percent of the potential acreage available to lease in WNF.
The state of Ohio will receive approximately 25 percent of today’s sale, and each county with WNF acreage will also receive a share of the proceeds.  This is certainly good news for the people who live and work in Monroe County, as Monroe County Commissioner Mick Schumacher recently told the Times Leader,
“The money goes to the county to be divided. The school district gets 68 percent, and the rest is to be divided between the townships, local governments and levies. This is only initial sales, not royalties.”
But it’s not just the direct revenue from WNF lease sales and royalty payments that are having significant impacts. The real potential economic driver going forward is access to larger private units that will now be available for exploration. Previously, some private minerals and lands adjacent to the public land leased today were held hostage because WNF is a non-contiguous patchwork of federal and private lands and minerals weaved together, which is problematic for economic oil and natural gas development. Thanks to this recent lease sale, more exploration on adjacent private lands can be developed, and with that comes significant tax benefits from property taxes paid on production. As you can see below, Monroe County has watched its property taxes from production skyrocket since shale development began. In 2015 the county collected over $3.4 million.
With 37,904 acres yet to be leased in the Wayne through competitive online auction sales, WNF leasing and development are going to provide tremendous benefits for nearby communities in the coming years — especially if local schools near Ohio are any indicator.
Local schools see big benefits
The oil and gas industry has truly been transformational for children in Appalachia. Monroe County schools are reporting that revenue from the WNF lease sales combined with taxes from oil and natural gas development has enabled them to have more resources available for students.  This added funding has helped curtail the recent trend of students transferring to schools that have traditionally had more resources available.  As Beallsville High School Head Football Coach Larry Deem recently said,
“It’s a step in the right direction, and hopefully the kids are starting to see it, too. We will have what we are supposed to have (enrollment wise). As of right now, this is the first year we don’t have any eighth graders open-enrolled out of Beallsville for the first time since I’ve been here.” (Emphasis added)
To put the significance of this into perspective, it’s important to understand the school has been in dire need of funding to add and improve resources. For instance, the Beallsville High School football team has been using a two-room trailer that has only one restroom,  no hot water and a leaky roof as its locker room. Thanks to local oil and gas leasing and development, including in WNF revenue, the school is now able to make improvements. As Beallsville Superintendent Jeffrey Greenley recently reported to the Intelligencer,
“There is a legitimate business reason to invest in our campuses. Every year we lose 102 students to Barnesville, and in 2016 we also lost another 102 to Shadyside. We receive $6,000 per student, and if I keep 50 kids from leaving the district for three years, we make our full investment back. I don’t think they’re going to come back, but if I can keep them from going there in the first place is the goal. … We want to compete for our kids, and we have to invest in these programs to keep them.”
Greenley reported that one school in his district has been able to spend $948,000 on academic materials just within the last 15 months, with plans to spend an additional $200,000, thanks to revenue from oil and gas.
But Beallsville is not the only school district in the region that has benefited. Thanks to property taxes paid on production combined with proceeds from the mineral sales in WNF, the Switzerland of Ohio Local School District recently made a $700,000 improvement to their athletic field, replacing grass with artificial turf. This is a repair that should last 15 years before it needs replaced.  In fact, all three schools in the district are planning to make improvements to their athletic complexes, including their softball and baseball fields, all funded exclusively by oil and gas money.
In Monroe County particularly, gaining access to these federal minerals is vital, which is why the local schools have overwhelmingly supported the leasing of federal minerals. This is just one more example of many of how disconnected fringe environmental activists really are out of touch with the people who live in work in these communities. The fact is, fracking is positively changing lives and lifting communities and schools in Appalachia.

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Ohio EPA Director Bashes Rover Pipeline as NEXUS Certificate is Approved

From NGI:
"After more than three years of public and agency review, we were pleased to receive the 401 Water Quality Certification from the Ohio EPA," project spokesman Adam Parker said. "This receipt marks another key milestone as we prepare for construction and work toward an in-service date late in the third quarter of 2018."" 
Securing the Ohio water quality certificate counts as a major win for Nexus given that anti-pipeline groups have looked to state CWA 401 reviews recently as a means to thwart projects. After New York state regulators successfully stalled progress on the Constitution Pipeline by denying a CWA 401 permit last year, environmental groups and other project opponents have been paying close attention to state water quality reviews for natural gas infrastructure, most recently the Atlantic Coast and Mountain Valley pipelines. 
Nexus has faced pushback from landowners along the route and from Michigan regulators, who have scrutinized DTE's capacity commitments to the project. 
The approval for Nexus also comes as Ohio EPA has been at odds with Rover Pipeline LLC, another major greenfield transmission project traveling through the state, over alleged environmental violations occurring during construction of that project. 
Ohio EPA Director Craig Butler said during a media call Wednesday that the agency is taking a different approach with Nexus after the issues it experienced with Rover.
Continue reading by clicking here.

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Thursday, September 21, 2017

Ohio EPA Still Going After Energy Transfer Over Rover Pipeline

From NGI:
The Ohio Environmental Protection Agency (Ohio EPA) still wants Rover Pipeline LLC to submit a stormwater permit application and pay $2.3 million in fines, and the regulator has asked the state attorney general (AG) to assist in enforcement, Director Craig Butler said Wednesday. 
Butler said during a conference call with media that he sent a letter Wednesday to Ohio AG Mike DeWine asking for help in pursuing a stormwater permit from Rover. But with Rover and Ohio EPA at an impasse in negotiations, the dispute could end up in court, he said. 
While Rover has completed Ohio EPA’s clean-up requirements following a drilling fluids spill earlier this year, the state regulator still wants the pipeline to apply for a National Pollutant Discharge Elimination System (NPDES) stormwater permit, part of a series of unilateral orders issued in July. 
Ohio EPA took the "unfortunate, unprecedented step" to issue those unilateral orders after the agency and Rover could not agree on a consent order to resolve numerous alleged environmental violations occurring during the project's construction, which began earlier this year. 
As for the proposed $2.3 million fine, that total includes about $2 million in civil penalties, with the rest covering Ohio EPA's monitoring, oversight and emergency response costs, Butler said.
Read the whole article by clicking here.

We received an email containing the following statement in response to Butler's comments from Craig Stevens, spokesperson for the Grow America’s Infrastructure Now (GAIN) Coalition:
“Regulations are put into place to create a predicable set of rules for companies to follow; and the Rover Pipeline project has been planned, vetted, and approved after an exhaustive regulatory process that has lasted more than three years. Stakeholders should want to see the safe, successful completion of the Rover Pipeline. Bullying industry through the media is not the way to achieve that goal.”

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How Much Rover Volume is Taken From Other Pipelines?

From BTU Analytics:
It has been a bumpy ride, but the Northeast has finally begun flows on the first major greenfield project to come to market in almost a decade – Energy Transfer’s Rover. This begins a major shift in Marcellus and Utica production dynamics, with implications for the future of Dominion South and Henry Hub pricing– but what is changing in the here and now? 
Rover received a notice-to-proceed yesterday for horizontal directional drilling activity which will bring critical capacity to market (we expect a November start-up for the next tranche of Rover capacity), as of today, Rover is receiving volumes only at two points along the Cadiz lateral: MarkWest’s Cadiz processing plant and the Ohio River System. Today we’ll take a granular approach and look at receipts only around those two points. We can see in the graphic below, which compares Rover receipts from the Ohio River system with declines seen on other pipelines, that while Rover has been flowing full at its current 700 MMcf/d capacity, that gas is coming at the expense of other pipes, mainly TETCO. 
So now we can answer one of the market’s big questions: how much new production will come online with Rover? To date, we have seen about 150 MMcf/d of new production directly attributable to Rover, which is in-line with our Northeast production forecasts.
But what about the other end of Rover? Where is that 700 MMcf/d of gas actually going? Currently, almost all of Rover’s volumes are being delivered to ANR, but again, a good amount Rover volumes are displacing volumes from other pipes. Rover deliveries are displacing REX deliveries to ANR. Because of this displacement, REX deliveries to ANR are moving southbound and more gas is moving further west on REX.
Click here to read the whole article.

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Wednesday, September 20, 2017

Local First Responders Say Oil & Gas Companies Keeping Them ‘Well-Informed’

by Jackie Stewart, Energy in Depth

For years, Energy In Depth has reported on how Ohio anti-fracking activists have tried to slow down first responders with added bureaucracy and misinformation campaigns based on dubious assumptions regarding regulatory exemptions. Meanwhile, Ohio oil and gas operators continue to lead in terms of streamlining information access for first responders with aggressive training and communication strategies. Those efforts are paying off, as first responders are reporting,
“[T]he companies will email us weekly updates of what’s going on in their company and locations. That way, in the event that something’s going on, we’ll have up-to-date information. They usually keep us pretty well informed.”
This first-hand report from Cumberland Trail Assistant Fire Chief Tim Hall is yet another example of how out-of-state Keep It In the Ground activists are misrepresenting the reality of what actually is occurring in oil and natural gas producing states. In fact, training and communication between the oil and gas industry and Ohio first responders has been ongoing for years and comes at no cost to the public, thanks to a bi-yearly fire academy hosted by the Ohio Oil and Gas Energy Education Program (OOGEEP). Last year marked the 15th anniversary of free training for firefighters, and to date the program has trained more than 1,400 first responders who have participated in the Responding to Oilfield Emergencies workshops. In fact, almost all of the volunteer fire departments across the state have participated in the free training.
The free fire academy training is vital, especially when you consider that more than 70 percent of Ohio’s fire departments are volunteer. The reason that the fire academy is free is because the Ohio Revised Code 1510 requires all oil and natural gas producers in the state to pay five cents per gross barrel of crude oil (including condensate) and a half cent per gross Mcf (thousand cubic feet) of natural gas. This is just one tax  paid by oil and gas operators, the most significant being ad valorem or property taxes paid on production, which have yielded (to date) more than $45 million and also directly support local communities.
Here’s what some of Ohio’s first responders are saying about the free fire academy,
“It’s very pertinent to our area. We go out and fight these fires, and it’s very enlightening. … There’s so many gas well simulators. It’s probably one of the best in the Midwest.”
In addition to the training with OOGEEP, individual companies are continuing to reach out to local first responders for live exercises as well. Numerous upstream and midstream companies host live exercises at no cost to first responders and provide extensive hands-on training. More importantly, the exercises provide an open line of communication between local communities and companies who operate in their backyards.
Ironically enough, the Ohio Environmental Council has stated,
“Emergency responders have a huge responsibility to the public, and carry this responsibility bravely despite the risks. We should be striving to make their jobs easier, not putting barriers between them and the information they need to protect themselves and us.”
We agree! Which is exactly why Ohio’s oil and natural gas industry continues take steps to ensure that shale development can occur while protecting the health and safety of our people and our environment — and do so without creating unnecessary bureaucratic red tape.

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