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Sunday, February 5,2012

OU reviews land holdings for possible oil/gas drilling

By Jim Phillips
Photo Credits: Photo by Ian Bates.
Photo Caption: Because of a new state law, OU is looking at this property, along with all of its other land, for potential oil-and-gas drilling.

Ohio University is currently looking at all the land it owns, to let the state know which of it may be available for oil-and-gas drilling.

It is doing so in response to a new state law passed last year that opened up most lands owned by state entities, including state universities, to such drilling, and created a new state board to oversee and facilitate such leasing.

At the April meeting of the OU Board of Trustees, the board is scheduled to hear an update on this issue.

"A mineral rights review committee has been convened within the university with the responsibility for overseeing the proper execution of any potential lease agreements that may be entered into by the institution or state," confirmed Donna Goss, OU's director of engagement and real estate management, in an email to The Athens NEWS Jan. 31.

Goss added that the committee is in the midst of a property inventory "to identify potential areas that may be impacted by (the new state law)," and "will be compiling a report to update the Board of Trustees at the April meeting."

The eastern part of Ohio is currently in the midst of a nascent boom in the leasing of land for oil-and-gas drilling in shale beds that lie thousands of feet below the surface.

This is based on the relatively new drilling technique called "horizontal hydraulic fracturing," in which a company drills down vertically into a shale bed, then drills out horizontally to create multiple underground channels into the shale.

Hydraulic fluids are then pumped in to fracture the shale, allowing the pressure of the soil above it to force oil and/or natural gas and other hydrocarbon fuels to the surface.

The technique has made it economically feasible for the first time to try to extract fuels from the Marcellus and Utica shale beds in this region, but has also triggered serious opposition from people who fear its environmental impacts.

AN OU STUDENT environmental organization, meanwhile, has been sending the message to the university that it would like to see a policy of no drilling on any of its land, as well as a commitment to avoid the use of any fuel extracted with the horizontal hydro-fracking method.

OU senior Tyler Barton, a member of OU Students Against Fracking, said the group has set itself three main goals.

First, he said, the group wants to educate more students about the fracking issue.

Second, it wants to push OU to adopt policies that will make it highly unlikely that any of its land will be fracked for oil and gas.

This "wouldn't necessarily be a ban" on drilling leases, Barton said.

"What we'd like to do is get a confirmation from the university that they'll put the strongest possible restrictions in any lease that they can," he said, thus making such leases less attractive to the oil-and-gas industry, while affording more protection for the university.

Third, the group wants OU to commit that any natural gas used by the university will come exclusively from non-fracking sources – i.e., that it will come from traditional vertical wells.

This is an important issue because OU has committed to retiring its coal-burning Lausche steam-heating plant, and moving to a new heating source, probably natural gas. (Hydro-fracking in eastern Ohio increasingly is going after so-called "wet" or liquid gases, rather than standard natural gas, and in Athens County drilling companies have said they'll seek oil rather than gas.)

As of Friday afternoon, The NEWS was still awaiting answers from OU to further questions about its leasing plans. Barton claimed, however, that in a recent meeting of his group with OU President Roderick McDavis, "he told us that the Eastern Campus is already looking to lease" some of its land for drilling.

OU'S EASTERN CAMPUS is in Belmont County, and the land OU owns there includes Dysart Woods, probably Ohio's most significant old-growth forest. (Barton said OU officials "didn't mention" Dysart in discussions with the student group.)

Belmont County has been seeing some new oil-and-gas fracking permit activity recently, though nowhere near on a par with counties such as Carroll or Columbiana.

Records of the Ohio Department of Natural Resources indicate that as of the week of Jan. 22 (the most recent listed), two permits had been approved for Belmont County for drilling into the Utica/Point Pleasant shale formation, both for horizontal wells. These both date from last month.

For the less-deep Marcellus shale, the ODNR lists six horizontal-drilling permits in Belmont County as of the same week, three of which were listed as "drilled," and one as "producing." These permits date from 2006 to early 2011, however.

The Ohio General Assembly passed Substitute House Bill 133 last summer, despite concerns voiced by groups including the Buckeye Forest Council, an environmental organization that began in Athens and is now headquartered in Columbus, and the Ohio Archaeological Council.

The major industry group in the state, the Ohio Oil and Gas Association (OOGA), supported the bill, arguing that it "provides Ohio with a rational process to access state-owned properties for oil and gas production."

The legislation created a state Oil and Gas Leasing Commission to oversee the leasing of any lands owned or controlled by state agencies – including public universities – for oil-and-gas exploration or drilling. (The law exempts state nature preserves.)

Under previous Ohio law, state universities already had the option of leasing their land for drilling or other uses. Sub. H.B. 133 created a new process for handling oil-and-gas leases, and a new board to oversee it.

The law requires OU, like other state agencies, to produce an inventory of all its land holdings, and to classify each parcel under one of four different categories, based on such factors as deed restrictions and the size of the property. (Horizontal fracking requires large tracts of land, and often, individual properties must be "pooled" to make drilling feasible.)

The law allows for any "owner" – this apparently includes the owner of the mineral rights, which are often severed from the land ownership – to apply with the Oil and Gas Leasing Commission for a drilling lease.

The commission would then rule on the lease "nomination," basing its decision on factors including potential economic benefits; whether the drilling project is compatible with the current uses of the land; environmental impact; objections by the state agency that owns the land and by members of the public; and any other factors it deems relevant.

If the commission approves a lease, however, according to a bill analysis by the Ohio Legislative Service Commission, the new law "generally requires the state agency that owns or controls the parcel of land… to enter into a lease" with the highest bidder, as chosen by the commission.

A spokesman and lobbyist for OOGA said Friday that he believes no lease is likely to be approved by the commission if a public university's trustee board opposes it.

"The way the bill is crafted, the (state) entity would have a say," suggested Brian Hickman, the group's communications director and governmental affairs manager. "If the university did not want drilling to take place, they would have a say… And if the university didn't want leasing of their land, it would be hard to get over that."


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