Improved Regulations Set the Stage for Increased Shale Development
This month, Substitute Senate Bill 315 sponsored by State Senator Shannon Jones (R) takes effect creating the “Gold Standard” of oil and gas regulations in the country. This bill was introduced at Governor John Kasich’s request in March 2012. It was debated and changed as it moved through both the Ohio House and Senate, was signed into law in June, and becomes effective this month.
The law updates Ohio Revised Code Chapter 1509 on regulations governing crude oil and natural gas production. The legislation improves upon existing regulations already lauded by STRONGER, an EPA supported review group composed of state regulators and independent consultants. As the law goes into effect this month it sets a foundation of even stronger protection for Ohio’s environment in advance of continued Utica Shale development. Some of new requirements required under the law include:
Increased water protection:
- The permit application requires a report on anticipated sources of water and if that water will come from the Lake Erie or the Ohio River water shed. Because Ohio signed the Great Lakes compact with several other states, and parts of Canada, Ohio must return water taken from the Lake Erie water shed.
- In addition, other regulations put into effect this year prohibit oil and natural gas development in or under Lake Erie.
- The bill also requires water testing out to a radius of 1,500 feet from the well head. This is done to establish a base line water test for future use.
- On the well completion report all additives used must be disclosed on the completion report. This includes all materials used while developing until the surface casing is set.
- The additives used must be disclosed to the Division of Mineral Resource Management (DMRM) and will also be provided to . When disclosed to DMRM the additives must be listed by their Chemical Abstract Number or CAS.
- If the well is re-fractured any additional additives used must also be disclosed.
- Horizontal wells are defined as a well producing from Utica, Point Pleasant or Marcellus formations.
- The regulations increase insurance requirements to $5 million from $3 million.
- There is a well pad site visit and inspection by DMRM before construction is allowed to identify, and avoid, sensitive habitats and species.
- A Road Use and Maintenance Agreement must be in place with the local community as part of the permit process to ensure any road degradation is addressed in a timely manner.
- Each day a violation is not corrected will be treated as a separate offense for both civil and criminal penalties. This will significantly increase fines and other enforcement options.
- Failure to file reports fully and on time is now recognized as a major violation.
State Agency Coordination:
- DMRM can now enter into a cooperative agreement to seek advice or consultation from other state agencies before, during, or after a well pad is built and or production has begun.
In commenting on the law, Jim Zehringer, Director of the Ohio Department of Natural Resources, said:
I can assure Ohioans that our regulators will demand strict compliance with all aspects of this tough new law.
Smart, strong, and enforceable regulations ensure Ohioans health and safety while enabling the expanded production of natural resources from the Utica Shale. With no environmental violations to date, Ohio already has a strong environmental success record in Utica Shale development which will be further strengthened by these new rules.