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ODNR Chief Asks Lawmakers to Restore Oil, Gas Rules in Budget Bill

The Ohio Department of Natural Resources (ODNR) wants lawmakers to restore several oil and gas rules that were included in the original version of the state's biennial budget bill, but were stripped out by the state House of Representatives.

But Tom Stewart, executive vice president of the Ohio Oil and Gas Association (OOGA), told NGI's Shale Daily the association is pleased that some of the rules were removed and doesn't want them restored, mostly on the grounds that the regulation of oil and gas activities in the state should only be the dominion of the ODNR.

During testimony before the Ohio Senate Finance General Government Subcommittee on April 25, ODNR Director James Zehringer said the agency "identified areas where we feel it is critical to expand Ohio's oil and gas regulations," in the original version of HB 59. "Unfortunately, the majority of our oil and gas policy provisions were removed by the House."

Zehringer urged lawmakers to put back a requirement that operators perform radium testing on any technologically enhanced naturally occurring radioactive materials (TENORM) produced from horizontal wells (see Shale Daily, Feb. 26). HB 59 had also required operators to submit TENORM samples to the Ohio Department of Health (ODH). The material couldn't be removed from the drilling site until the ODH analysis was complete, but it could be stored temporarily at an adjacent site.

"Our TENORM proposal is designed to keep companies in compliance with ODH and OEPA [Ohio Environmental Protection Agency] regulations," Zehringer said. "Since ODNR regulates industry exploration and production activity, it's logical for ODNR to require TENORM testing since we oversee the activity that generates the waste which may be sent to landfills."

Stewart said the TENORM issue was a subject of debate in several states.

"The biggest concern that OOGA has with the proposal is not whether government should be tracking TENORM-related waste issues," Stewart said Wednesday. "Our issue is that that authority ought to be solely and exclusively delegated to the ODNR's oil and gas regulatory program. The as-introduced version did not do that; it brought other agencies into this issue."

The House also removed a provision that would have prohibited the transfer of brine without a permit. Zehringer said that while the state's Class II injection wells were still the primary method to dispose of oilfield waste, there was a small yet growing number of companies looking into new disposal technologies. But he warned that current state law was ambiguous in some areas.

"It is our concern that a company might believe that they have the authority to utilize their new technology without any oversight by the state," Zehringer said. "As more companies begin exploring alternative methods of waste disposal, ODNR's Division of Oil and Gas must have the ability to determine whether or not these methods protect public health and safety."

Stewart called the ODNR's Underground Injection Control (UIC) program "the best and most preferred method to manage produced waters" and said OOGA fully supports it.

"We do not dispute that there might be technologies that come along that might provide some alternatives to that, but we remain concerned about the suggestion that we would put produced waters into surface bodies of water," Stewart said. "That troubles us when we have a very good, well-functioning UIC program.

"However, if somebody provided a methodology and a technology that would make sense, we're fine with that, just as long as that permitting authority is solely and exclusively delegated to the ODNR."

Zehringer conceded that oil and gas leases were "negotiations between two private entities" but argued that if a well has already been permitted, the ODNR should be notified when a contract is transferred.

The House stripped that provision from HB 59. Stewart said the OOGA supported the move. "We already record at the county recorder's office our lease contracts, memorandum of leases and assignment of lease rights," Stewart said. "The suggestion that we somehow need to register them with the ODNR...That's none of their business."

House lawmakers also removed from HB 59 a ban on spreading brine from horizontal wells on roads for deicing and dust control. They also revised a requirement that operators submit quarterly production reports, and inserted language on the use of revenue from oil and gas drilling on state park lands, which was permitted by Substitute HB 133 in 2011 (see Shale Daily, June 16, 2011).

"ODNR and other state agencies have been working very diligently, as directed by HB 133, to fully evaluate our state-owned lands to determine exactly what mineral rights the state owns and what the state does not own," Zehringer said. "ODNR is responsible for more than 714,000 acres of land, so you can understand why this process is taking a lot of time."

The House removed Gov. John Kasich's proposal to levy new severance taxes on hydraulic fracturing and natural gas liquids (see Shale Daily, Feb. 6). HB 59 passed the House on April 18 by a 61-35 vote. It was then introduced in the Senate on April 23 and assigned to the 13-member Finance Committee.

Although the budget bill was the only agenda item for the nine-member subcommittee's meeting on Wednesday, a spokeswoman for ranking minority member Sen. Joe Schiavoni (D-Boardman) told NGI's Shale Daily that it did not take a vote on the bill.

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