American Oil and Gas Reporter - April 2016 - 100

ConventionCoverage: Ohio Oil & Gas Association
should lead to some upward pressures
on prices, he added.
"In the longer term, EIA expects prices
to remain below $3.00 an Mcf at Henry
Hub until 2017," he said. "2016 prices
are expected to average $2.25, which, if
that proves to be accurate, would be the
lowest level since 1998."
Increased domestic gas demand and
increased exports-both by pipeline and
LNG- should support upward price movement, Krohn posed. According to preliminary EIA data, he said the electric
power sector consumed 26.0 Bcf/d of
gas in 2015, a 15 percent jump from
2014, while pipeline exports-mainly to
Mexico-reached 2.9 Bcf/d, a 30 percent
jump from 2014's 1.9 Bcf/d. The agency's
demand model forecasts U.S. electric
power generation should use 33.7 Bcf/d
of gas this summer, he said.
"LNG is starting to ramp up now, and
EIA expects exports will average 500
MMcf/d in 2016," Krohn said. "When
EIA looks to 2017, as more export projects
come on line, its model shows it will average 1.3 Bcf/d."
Regulatory Update
Ohio's most significant regulatory
change in 2015 was its horizontal well
site construction rule, assessed Jody Jones,
regulatory affairs adviser at Chesapeake
Energy Corp. He reported OOGA attended
meetings and submitted comments during
the two years it took the Ohio Department
of Natural Resources to draft and refine
the rule.
According to the agency, the new rule
addresses well pad construction, access
roads and associated stormwater management for horizontal wells. In addition to
setting minimum pad design requirements,
the rule establishes qualifications for those
designing well sites.
"The rule brings what was an unregulated portion of the horizontal drilling
process under ODNR's regulatory oversight. Now it is wholly regulated through
an individual permit process," Jones said.
OOGA worked with state regulators
to separate tree and vegetation clearing
from the permitted construction process
to enable companies to comply with seasonal restrictions, he reported. The treeclearing restrictions that have been imposed to protect species such as the northern long-eared bat can inhibit site construction in the spring and summer months,
but ODNR's rule allows operators to prepare sites in the winter and be ready for

well pad work in the spring and summer.
The new rules do not cover freshwater
impoundments, and the permitting process
does not impose financial or surety requirements, Jones added.
ODNR has set a 55-day permit review
time frame, but Jones said most operators
reported a quicker turnaround. By midMarch, the state had issued 78 new permits,
and he said 12 were under review.
Melissa Hamsher, vice president of
environment, regulatory, safety and construction for Eclipse Resources Corp.,
reported on the comments OOGA submitted in March on the Environmental
Protection Agency's New Source Performance Standards for new and modified
sources of methane and volatile organic
compound emissions, and related control
technology guidelines.
The federal regulations will affect the
cost of carbon emissions, hydraulic fracturing, and environmental review and
permitting, Hamsher said, adding proposed
amendments to the petroleum and natural
gas source category for greenhouse gas
reporting would focus on leak detection
and new emission factors for calculating
GHG levels.
OOGA also continues to monitor the
White House proposal released on March
10 to reduce methane emissions from
existing sources, Hamsher reported.
"The Obama administration is targeting

100 THE AMERICAN OIL & GAS REPORTER

Jody Jones, regulatory affairs adviser at
Chesapeake Energy Corp, tells the Ohio
Oil & Gas Association that the most significant regulatory change in the state
during 2015 was its horizontal well site
construction rule. He added that the association was involved in a two-year
push to draft and refine the rule.

the oil and gas industry again with its plan
to require operators to provide the EPA
with emissions information. This goes along
with the Obama climate change rules," she
said. "EPA will use that information to lay
out more stringent operating emissionsource rules. If the rules do become more
stringent, you may get to the point where
your wells no longer are economic."
Transport Regulations
Marcellus producers can learn from
their counterparts working the Bakken
Shale, suggested Theodore J. Turner III,
hazardous materials investigator for the
Pipeline & Hazardous Materials Safety
Administration's central region. The
agency has 50 inspectors in its Office of
Hazardous Materials Safety who oversee
the classification of products into hazard
classes and packing groups, he noted.
"As a shipper of hazardous materials,
you are responsible for properly classifying
the material. You are responsible for ensuring that packaging is proper. You have
to determine what the material is, which
package is authorized, and what part of
the PHMSA rules apply to you," he said.
Turner said the first step for producers
shipping potentially hazardous materials
such as petroleum products was classifying
their products properly. That step enables
correct packaging as well as the required
communications material: labeling, placards and shipping papers, he detailed.
"You are supposed to test the material
prior to shipping it," he said. "You should
be testing the material before the well
starts producing and you start shipping off
site. In the Bakken, we found nobody was
really testing their crude for what mattered
to PHMSA, which is classification of material, including flammability and initial
boiling point. Producers are more interested
in water, sulfur or sand content."
Sampling methods that ensure proper
representation of the entire mixture also
are crucial, Turner emphasized, saying
operators should draw storage tank samples
from the bottom, middle and top of tanks.
He added that it was common in the
Bakken for oil to come out of the ground
with specifications suitable for a midrange
hazardous classification, but after it was
stored with petroleum from other wells,
its classification shifted. Blending led to
having to classify oil as a more hazardous
material when it was shipped, he said.
"When I do inspections, I find between
80 and 90 percent of violations are directly
attributable to improper, poor or nonexistent



American Oil and Gas Reporter - April 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2016

Contents
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