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Eastern Ohio Oil, Gas Losing in 'Turf War' With Coal

April 9, 2012
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Oil and natural gas operators appear to be on the wrong end of a turf war with the coal industry along the length of eastern Ohio, losing "significant" amounts of acreage in coal-bearing townships that also intersect with the Marcellus and Utica shales.

At issue is how state law defines, and the Ohio Department of Natural Resources (ODNR) interprets, the term "affected mine." Tom Stewart, executive vice president of the Ohio Oil and Gas Association (OOGA), told NGI that the coal industry has been using that ambiguity in the law to its advantage, filing objections with the ODNR that proposed oil and gas drilling would impact coal miner safety.

"Within the last 10 years, certain coal interests have taken the definition of an 'affected mine' to also mean their reserves," Stewart said. "They object to the drilling of a well, even if they openly admit that their mining operations will not be in the vicinity for some ridiculous amount of time; it could be 20 or 30 years."

Stewart agreed that the ODNR had the authority to deny oil and gas permits but said regulators were obliged to come up with alternative sites in the vicinity where drilling could occur and not impact coal mines.

"Under state statute, the [ODNR] appears to have an obligation to find a suitable alternative location," Stewart said. "But they never do. And within the last five years or so, a lot of oil and gas producers have lost significant acreage positions because this issue has not been resolved."

ODNR spokesman Carlo LoParo told NGI that under Section 1509.08 of the Ohio Revised Code, the chief of ODNR's Oil and Gas Division can recommend an alternative site for an oil and gas well. "However, that can be declined by the oil and gas company or the mining company," LoParo said. "There is no obligation or mandate for the chief to issue an alternative site or for either parties to accept that alternative site."

Mike Carey, president of the Ohio Coal Association, told NGI he wasn't aware of any objections from coal companies over horizontal drilling in eastern Ohio's shale plays. "I think the law is pretty clear," Carey said. "When you're dealing with two interests that are located within an area, you have to be able to balance where you're going to put a well. Oil and gas companies have been sitting together, working with maps and finding placements for these wells for the past 100 years. They've been able to work it out so that they are both able to proceed."

But Stewart scoffed at the suggestion that Carey didn't know about any coal company objections. He said that over the years, the oil and gas industries have had "hot and cold relations" with the coal industry over the affected mine issue. "It's just unfortunate. Usually we can all get along," he said.

Carey and Stewart said Ohio Gov. John Kasich's administration put together a task force to try and solve the issue. They said the task force met with representatives from the coal, oil and gas industries, landowners and regulators in January. But Stewart said the OOGA and its members were trying to convince legislators in the Ohio General Assembly to effectively change the law by defining what an "affected mine" is.

"What we're seeking is a clear working definition in the statute of what an affected mine is," Stewart said. "We're even willing to accept a definition handed down in case law. But the coal industry absolutely objects to trying to define it. Obviously, that serves their interests."

The issue has legal precedence. In 1996 the Ohio Supreme Court ruled in the case Redman v. Ohio Department of Industrial Relations et al that regulators had the power to deny permits for oil and gas wells in coal-bearing townships, and that their power was not unconstitutional.

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