What landowners should consider if offered a gas well for “free”

William Ziegler,

Field Supervisor

ODNR – Division of Oil and Gas Resources Management

Jan 14, 2014

History of Ohio’s Oil and Gas Industry

Drilling for oil and gas in Ohio began in the 1860s

By the 1880s, Ohio was the world’s leading oil producer

Natural gas was initially considered a by-product, but usage began in the 1880s

Oil and Gas Fields of Ohio

• More than 225,000 wells drilled in Ohio during last 150 years

• In 2012, there were 64,570 active wells in Ohio

Division of Oil and Gas

In the early 1960s, oil discovery in Morrow County started a drilling boom

No spacing or conservation measures in place Caused a national stir – wasting of resources Under pressure, Ohio’s governor and state

legislature passed laws and rules in 1965 and created the Division of Oil and Gas

ODNR – Division ofOil and Gas Resources Management

Since 2000, the Division of Mineral Resources Management was responsible for regulating all minerals extraction activities including oil and gas, coal and industrial mineral mining

In Oct. 2011, the oil and gas program became stand-alone division at ODNR

Re-named Division of Oil and Gas Resources Management

Responsible for regulating all oil and gas activities from permitting to plugging.

Ohio Laws and Rules

Chapter 1509:1 of the Ohio Revised Code– The section of Ohio

Law that regulates Oil and Gas activities

Chapter 1501 of the Ohio Administrative Code– Rules associated with

Ohio Oil and Gas Law

Registered Wells

In 2012 there were 5,836 registered well owners in Ohio– 4,368 domestic owners – 1,468 commercial owners

Exempt Domestic Well

Definition (1509.01):– Owned by the landowner– Used primarily for owner’s domestic use– 200 feet from a dwelling– 200 feet from a public building, etc.

What landowners need to consider if offered a gas well for “free”

Understand the liability Count the cost Process for becoming an exempt well owner

Understand the Liability

Well must maintain yearly production Plugging responsibility Restoration responsibility Emergency plan for a spill or gas leak Insurance

Count the Cost

Purchase of the well Brine disposal Well maintenance Cost of plugging Cost of restoration Non-refundable $100 application fee Annual $60 fee

Process for becoming an Exempt Well Owner

Meet the exempt domestic well owner requirements (1509.31):– Owned by the owner of the land– Used primarily for the owner’s domestic use– Minimum of 200’ from a private dwelling or public building– Release of Lease– Minimum of 5 acres– The current well owner is required to submit the

application and fee to the Division

Additional Sources

Division of Oil and Gas Resources Management website– http://oilandgas.ohiodnr.gov/

Central Office – Ohio Department of Natural Resources,

Division of Oil and Gas Resources Management

– 2045 Morse Road, Building F2, Columbus, Ohio, 43229-6693

– (614) 265-6922