The Ohio General Assembly is considering a bill that would open leasing rights for all property owned by the state government -- including state parks -- to oil and gas companies.
HB 133, introduced March 1 by State Rep. John Adams (R-Sidney), would also create a five-member Oil and Gas Leasing Board. The panel would create a leasing procedure and ensure that the appropriate state agencies -- collectively facing an $8 billion deficit -- receive their share of revenue.
"There needs to be an open, transparent evaluation of the bidding and leasing process to assure the Ohio public that the public interest is being taken care of," Tom Stewart, executive vice president of the Ohio Oil and Gas Association, told NGI's Shale Daily. "I believe this bill is more about the state of Ohio doing something to help itself rather than the industry trying to help itself to state land."
Environmental groups are against the bill.
"We are fundamentally opposed to opening our state parks and nature preserves to development," Jack Shaner, public affairs director with the Ohio Environmental Council, told NGI's Shale Daily. "The public has always been promised that our parks would be preserved and forever protected from industrial activity and development, and it should stay that way."
Ohio law currently allows some oil and gas drilling in forests and wildlife areas owned by the Ohio Department of Natural Resources (ODNR).
Under HB 133, leasing board members would serve five-year terms. The governor would appoint three board members, two of whom would be recommended by the oil and gas industry and a third by environmentalists. The final two board members would be the heads of the ODNR's Division of Mineral Resources Management and the Division of Geological Survey.
"We think it's nutty to have private industry sit there in judgment of private industry proposals to drill," Shaner said of the proposed board. "It's completely inappropriate."
Ohio Gov. John Kasich suggested that he supports expanding oil and gas companies' access to public lands during a press conference on Dec. 30 when he was governor-elect.
"If we get that Marcellus Shale and it can yield a significant amount of gas, it will be a godsend for our state," Kasich said. "But you got to drill before you know. We need to scour Ohio for natural resource opportunities we haven't thought about that we need to be thinking about. My inclination is that when you have something that is very valuable, you use it."
Both sides of the Ohio drilling issue had differing opinions over how much revenue could be generated. Stewart said it had the potential to be in the millions of dollars.
"That's probably helpful to the managers of state-owned property who are completely broke and completely clueless about how to get themselves and the rest of state government out of an $8 billion deficit," Stewart said. "This won't solve their problems, but it would certainly be a small part in helping them get there."
Shaner disagreed. "It's fine for the industry to ballyhoo that some big, bountiful bumper crop of revenue will come our way," he said. "They have thrown around various figures [but] it won't be a sustainable source of revenue. It's hard to believe the taxpayers are going to see much benefit from this either at the gas pump, their furnace or in our parks.
"And you have to balance that potential revenue with possibly turning off park visitors. The public will see and smell and hear pipelines, maintenance roads and compressor stations. It's not our idea of 'getting away from it all.'"
Asked about the parks issue, Stewart said, "Everybody is focused on the parks because it's an easy word. It's an easy example and the poster child for the entire debate."
ODNR spokeswoman Laura Jones said the department controls more than 590,000 acres in the state, which includes parks, forests and wildlife areas. She estimated that drilling rights were already owned on roughly 25,000 acres, most in state forests. But mineral rights were severed on another 70,000 acres when the ODNR took ownership.
Jones also said ODNR currently has an office within the department to handle leases. She said it was unclear how HB 133 would affect that office.
"We're still looking into that," Jones told NGI's Shale Daily on Friday."I think it would be premature to guess."
Stewart said legislation similar to HB 133 was introduced by Republicans in the General Assembly two years ago, but it failed because the bill was controlled by Democrats. With Republicans now in charge, he believes the new bill has a better chance of passing.
"But I also believe this bill will be one of the best examples of that old phrase 'watching legislation being made is like watching sausage being made,'" Stewart said. "I have no idea what it will look like when we get to the finish line, but if we get there, I can guarantee you it will look different."
According to data from the Energy Information Administration, oil and gas production in the state dropped precipitously over the last 20 years until recently, when the production curve began to creep higher.