OSU Extension Educates Area Residents On Shale Development
Recently, the Ohio State University Extension Offices from eastern Ohio held a conference titled Shale and You: A Workshop for Landowners and Communities. The 5 hour symposium at the Pritchard Laughlin Center in Cambridge was designed to help area farmers and residents gain a better understanding of how to take advantage of the benefits of shale development as it continues to expand in the region. The event covered such topics community planning, tax issues, leasing issues as well as an update of Utica shale activity.
The event drew nearly 100 attendees – most of whom were either farmers or individuals interested in shale development – eager to learn about how the Utica Shale is helping revitalize eastern Ohio. To help give the attendees a picture of what shale development could mean to Ohio’s future, Chris Penrose from the OSU Extension in Morgan County gave an overview of oil and gas development, one helping to separate the myths from the facts.
Mr. Penrose educated the crowd on the history of hydraulic fracturing, noting that is only part of the process of development, and one with a long, proven history of success. He noted that there have been over 60,000 wells hydraulically fractured in Ohio, with over a million in the United States completed using the technique.
Mr. Penrose also gave the crowd an update on Utica Shale development, noting these recent production results from the eastern portion of the state are looking very promising.
In terms of community planning, the next panel focused on how to manage new wealth and development in our communities. Focus was placed on financial diversity as means to help make our communities take advantage of the opportunity shale development brings, and to help direct the new found wealth in our communities to focus investments to make our communities more attracting to new businesses. Whether it be investing in infrastructure, diversifying our economy or encouraging small business and innovation, developing plans for the future will benefit our residents.
By following these steps, our areas can continue to thrive not just thanks to shale development, also with manufacturing and other industries attracted to Ohio’s natural resources. These businesses will be drawn to our area from the lower energy costs, as well as new infrastructure and growing economy thanks to the development of Utica Shale.
One of the more pertinent subjects addressing the farmers in the crowd was the advice the OSU extension had managing taxes as Dave Morrison helped guide the audience though the in’s and out’s of lease bonus payments. These new payments will be reported under Schedule E, supplemental income and loss. These payments are subject to tax rates as high as 42% between federal and state taxes of course these rates will jump in 2013 to almost 46%.
To help the audience understand how much these percentages meant, Mr. Morrison gave the audience some quick answers to how much should be set aside. A landowner receiving a $250,000 lease payment should set aside about $100,000 while someone receiving a $500,000 lease payment should set aside around $210,000. While these sound like big numbers to set aside, it is always better to error on the side of caution instead not having enough money when the taxman comes knocking on your door.
The forum offered great information and advice for those attending the day long seminar. Not only did the crowd learn more about oil and gas development, but also advice on how to handle their taxes for if or when they decide to lease their land. Dedicating six hours on a Saturday, all of the attendees got their times worth in the knowledge they gained from the symposium.