Ohioans One Step Closer to Developing State-Owned Minerals
After waiting for over a decade, the Ohio Oil & Gas Land Management Commission is one meeting away from voting on proposed rule 155-1-01, according to its April 10 hearing, to establish a standard lease for developing trapped natural gas and oil from beneath state-owned lands.
The proposed rule creates a process allowing for companies to enter agreements with the state to develop sub-surface oil and natural gas from nearby private lands. Until this point, resources that lay miles beneath state-owned lands were not accessible, effectively depriving private landowners of property rights and Ohio taxpayers of billions of dollars in new revenue.
How We Got Here
Like EID previously discussed, Ohio’s General Assembly approved hydraulic fracturing under state lands in 2011, but provisions to implement the law failed to occur. Then in 2017, former Gov. John Kasich passed a bill to establish the Oil & Gas Leasing Commission, an entity created to govern the process of shale gas development under state lands. However, that Commission sat empty for years with no appointments made. Even after additional language was added to incentivize the Commission, the rules were never promulgated, resulting in a de facto moratorium, and as a result, adjacent private landowners’ rights were held hostage.
To overcome this de facto moratorium, Gov. Mike DeWine signed H.B. 507 into law, enabling state agencies to sign leases for the safe and responsible development of oil and natural gas beneath state-owned lands until the Commission adopts formal leasing rules. Following its passage, the Commission was under significant pressure to pass its own leasing rules, leading us to today.
Communities v. Opposition
Regardless of the considerable economic and environmental gains to be had from accessing trapped state-owned resources, a group of environmental activists have attempted to stonewall projects in any way possible. Instead of looking at the positive benefits oil and gas development can have on the local economy and communities, this group is using the same old arguments and incorrect information to try to eliminate oil and gas development outright.
What this group fails to consider is how technological advancements like horizontal drilling have enabled the oil and gas industry to drill a wide area without the need for wellheads across the surface. Combined with this technology, the new rule would enable oil and gas companies with mineral rights adjacent to state parks to drill underneath the park, generating money for the local communities while preserving Ohio’s pristine parks.
Regardless of this reality, this small group of individuals is still opposed to the rule.
Simply put, no amount of time, public comment, or oversight review will satisfy them because their goal isn’t developing an effective leasing process but blocking any leasing from happening through bureaucratic red tape.
Just recently, an Ohio judge ruled against the Ohio Environmental Council’s claims that the new law would have adverse effects on the community. Judge Kimberly Cocroft said:
“The Court finds that any reference regarding injury to the recreational, culture, and aesthetic interests in the lands to the plaintiffs’ members is speculative, at best, and does not constitute an immediate and irreparable injury, loss, or damage.”
Multiple operators across Ohio have leased public lands for years, including in the Muskingum Watershed Conservancy District (MWCD), a park with more than 56,000 acres of land, with no hindrance to parkgoers. The revenue from the drilling has actually boosted the park’s conservation efforts, allowing the MCWD to re-invest $150 million in upgrades to the parks and lakes through water quality, infrastructure, and other programs. This is in addition Ohio’s oil and gas industry providing $100 billion in revenue since the Shale Revolution began, supporting schools and important county programs, and providing family-sustaining jobs to over 200,000 Ohioans.
And companies are ready to invest in Ohio, creating local jobs and developing the energy Ohio and America need.
For example, a proposed lease to access natural gas and oil beneath Salt Fork State Park would have generated $1.8 billion in estimated royalties and lease bonus payments. While the offer did not go through, the company plans to still pursue leasing rights in the area. This offer highlights how companies with mineral rights adjacent to parks are ready to invest in Ohio and contribute to the local job market and economy.
Additional natural gas operators are awaiting Commission rules and language, indicating significant interest development that could significantly increase resources available to upgrade parks, build new roads, and fund critical services (without increasing taxes).
The Commission will hold another meeting on April 17th to discuss updating lease and rule language that they will be submitting to the Joint Committee on Agency Rule Review. Once voted on, the Commission is expected to finalize rules controlling the leasing process in six weeks or so, according to a spokesman for the governor’s office.
Stay tuned for an update from EID following the meeting.