Enter Utica: The Fracking Industry Really Loves Ohio; Here's What's on Tap for All of Us

"Let's be clear here. The Ohio General Assembly has created a zookeeper to feed the elephant in the living room. What the drilling industry has bought and paid for in campaign contributions they shall receive. The oil and gas industry has gotten its way, and local control of drilling-location decisions has been unceremoniously taken away. ... Under this ruling, a drilling permit could be granted in the exquisite residential neighborhoods of Upper Arlington, Shaker Heights, or the Village of Indian Hill — local zoning dating back to 1920 be damned." — Ohio Supreme Court Justice William O'Neill, Feb. 17, 2015.

The dissent in last week's Ohio Supreme Court decision was as telling as the majority opinion. In a 4-3 vote, justices ruled in favor of state legitimacy, granting Ohio regulatory powers over the oil and gas industry and stripping municipalities of long-held "home rule" governance.

Thing is, Ohio now resides along the central nerve of the wealthiest industry in the world, and there is money to be made. With judicial approval, rampant state-sanctioned drilling will continue apace, and even with science and sob stories on their side, noisy grassroots activists aren't likely to nudge or sway their elected officials. The foolhardy Davids are beginning to comprehend the shape and monolithic size of this Goliath.

"We've been trying to say that all along," Tish O'Dell says from Broadview Heights, applauding O'Neill's dissenting opinion. She's the president of the Ohio Community Rights Network, which assisted in authoring a Community Bill of Rights for her city's residents and their opposition to the health hazards posed by fracking. Other communities have taken similar steps to have their voices heard. And others still, like Munroe Falls, the complainant in the recent Ohio Supreme Court case, have passed zoning resolutions to prohibit fracking within city limits. Those zoning resolutions mean bupkis now.

"This isn't about fracking though," Munroe Falls Mayor Frank Larson says two days after the decision. "This is about home rule. And I think people are beginning to realize that this is a lot farther reaching than oil and gas well issues. But I'll tell you, residents are concerned about the safety of their drinking water, and obviously the ODNR [Ohio Department of Natural Resources] and the EPA [Environmental Protection Agency] aren't."

Larson is referencing another peculiar aspect of Ohio's relationship with Big Oil and Gas: Beyond laying out and then vacuuming the red carpet, our very own state agency dedicated to natural resources has become, in a literal way, the public relations arm of the industry. It's helping to implement and expedite (and, more dangerously, to promote) the very activities which have residents across the state up in arms.

We've glanced through community newspapers and seen the frustration, confusion and widespread opposition to this industry, one which, despite assurances to the contrary, hasn't made good on promises made in the past. With no end in sight, we sought out reasons why in Ohio, this time around, things might be different; why in Ohio, the jobs will stay and the economy will prosper and the environment will thrive without blemish or smirch.

Here, in what is conceived as the first in an ongoing exploratory series, we present a guiding look at what the heralding of hydraulic fracturing means for all of us and what Goliath is planning for our state.

"I remember back in '05, there was an administrative appeal because the state legislature had rewritten the bill with permitting issues," Larson says. "And Justice O'Neill during oral arguments asked the lawyer for the oil and gas people, 'So what, are you guys God?' And as I remember it, their response was, 'Uh, yeah.'"

***

The conventional wisdom on oil and gas drilling trajectories goes something like this: There's a boom, and then there's a bust. No one much considers the bust amid the boom, and right now business is booming in Ohio.

Sometime in 1859, a blacksmith named William Jeffrey plugged the loamy earth in Trumbull County with Ohio's first oil well. There are now more than 200,000 oil and gas wells dotting the Buckeye State. Some are very small and localized operations. Others are behemoths in the most visual sense of the word, vomiting black gold and natural gas to export terminals along the Gulf, the Canadian provinces and locations more exotic.

Ohio's modern oil and gas drilling kicked off with boom cycles in the 1960s, where the Trempealeau Dolomite "play" brought prospecting corporations out to Morrow County, that bucolic stretch of I-71 between Mansfield and Columbus. (In industry vernacular, a vast, unified stretch of resource-soaked bedrock is called a "play.") Since then, the drilling has never really stopped. As the Trempealeau Dolomite began coughing up millions of barrels of oil, profiteers tapped the Rose Run reservoir in Ashland County and then set sights on southeast Ohio's Trenton and Clinton Sandstone plays.

What we're witnessing now is the ravaging of the Marcellus formation, which, when discovered and probed with 21st-century horizontal-drilling technology, shifted gravitational centers from Texas and the Dakotas toward bedrock sprawled across western Pennsylvania. The Utica, a deeper play with a greater concentration of rich, wet natural gas in eastern Ohio, is where the action's been lately. Since 2000, the Ohio-Pennsylvania border and surrounding acreage has become the hottest drilling tip in the world.

"Fracking," though, has become something of a dirty word in the executive circles that like to use euphemisms to disguise unsavory ideas ("eliminating redundancies" as opposed to "firing," for example). But it's true that "fracking" is slang for "hydraulic fracturing," and it's the process whereby water, sand and assorted chemicals are injected underground at extreme pressures to dislodge and release the oils and gases trapped inside.

Only lately has fracking taken off in a way that's completely restructured the energy industry as a whole. When combined with horizontal-drilling technology, companies can drill into shale plays and extract huge amounts of natural gas. Gas extraction and transportation is measured in billions of cubic feet per day, and estimates of the Utica play put the possible take at 38  trillion cubic feet of natural gas (and 940 million barrels of oil), according to a 2012 U.S. Geological Survey.

The big arguments in favor of fracking are that 1) it creates beaucoup jobs and manufacturing infrastructure; 2) it dramatically increases domestic production of oil and gas, thereby decreasing U.S. reliance on imports; and 3) at least according to industry literature, it actually helps in the crusade against climate change because it's a lot less harmful than coal.

On the flipside, environmentalists and most experts divested from politics say that 1) the global warming benefits are either overhyped or downright false; 2) the industry itself enjoys exemption from major EPA laws and is poorly regulated across the board; and 3) it has led to air and water pollution, to say nothing of earthquakes (like the 3.0-magnitude quake felt in Poland Township last year and others in far Northeast Ohio). The stories of nosebleeds, rashes, miscarriages and assorted undiagnosable ailments are all becoming commonplace in communities living near fracking sites nationwide.

New York Gov. Andrew Cuomo enacted a statewide ban on fracking in December; in Ohio, however, no such statement from the top man exists. The same studies notably are available to Kasich as were available to Cuomo.

A hypothesis-driven study conducted by Yale University in September 2014, for instance, found "increased reporting of upper respiratory symptoms" and "dermal" problems in well-saturated southwest Pennsylvania, just across the state line. Symptoms reported at atypically high rates included: chronic bronchitis, itchy eyes, sore throats, high blood pressure, ulcers and such ilk.

"Our findings of increased reporting of upper respiratory symptoms among persons living [less than] 1 kilometer from a natural gas well suggests that airborne irritant exposures related to natural gas extraction activities could be playing a role," according to the researchers. "Such irritant exposures could result from a number of activities related to natural gas drilling, including flaring of gas wells and exhaust from diesel equipment. Because other studies have suggested that airborne exposures could be a significant consequence of natural gas drilling activity, further investigation of the impact of such activities on respiratory health of nearby communities should be investigated."

In and around Washington County, where the study was focused, there are 624 natural gas wells, which compares to 294 in Ohio's Carroll County. Statewide, drilling permits remain on the rise, and sheer ubers of wells are on tap.

From the shale-rich counties in the east to the transportation routes slipping across Summit, Medina and Lorain counties and other points west — well, Ohio is right in the heart of it all. But Ohio is not calling the shots on this one.

***

The David L. Lawrence Convention Center in Pittsburgh takes on a different personality depending on the conference it is hosting. While most are dotted with off-the-rack sports coats and dressy suits, in December four Texans emerge from the elevator in cowboy boots. One of them is wearing a 10-gallon hat.

To be an executive in the oil and gas industry, at least in Texas, from whence a huge percentage of the attendees at Hart Energy's Marcellus-Utica Midstream conference sprang, one needn't stand on ceremony. One needn't favor designer suits. What one does need is an obsession with heavy machinery bordering on the sexual. One must be conversant in valves. One must be deeply uneasy about oil prices' recent plummet and its portents for 2015 CAPEX (Capital Expenditures) at the major oil and gas conglomerates. On that note, one must be intimate with acronyms — PADD, MMBTU, GSC - — and even more intimate with the streets and office complexes of metro Houston, where everyone seems to work or have once worked. And one must, obviously, have total faith in fracking's value.

Cleveland certainly does. Optimistic execs from Team NEO, a regional organization lately merged with advanced energy-focused NorTech that's tasked with big-ticket economic development, have focused on shale and its offshoot industries as a key cluster to target, in terms of business attraction to Northeast Ohio. Along with biomed "and one or two others," shale has been beeping on the radar as a job and money generator for Cuyahoga and the 17 Northeast Ohio counties under Team NEO's auspices for awhile, but specifically and publicly since Jan. 1, when it unveiled its new "Go Big" job attraction strategy.

If the shale-Cleveland relationship sounds unusual to you — isn't fracking just out on farms? — you're not alone. But Team NEO and the economic projectionists to whom they're listening can't even begin to predict the bounty of jobs Cleveland stands to grow — "grow" being the preferred verb associated with added jobs, as opposed to "gain" or just "get" — if fracking takes off the way it sure looked like it was going to before the recent crash. We're not just talking about transient construction-type stuff either, they say. We're talking executive tier. Quote unquote "Case grads."

"No matter where we are in the cycle, we will rebound," Barry Davis says again and again during his keynote speech on the first day of the Pittsburgh conference. Energetic and commanding at the lectern — presenting himself as, say, Tim Cook at a launch event — the CEO of Enlink Midstream Partners has every reason to be optimistic: The Utica play is "a winner," and though the biggest companies will continue to ease up on research and exploration dollars, in lockstep with the crude market, the heart of the play here in western Pennsylvania and surrounding areas is ripe.

As though he were rattling off the stats of a rising NBA star, Davis tells the crowd that the Utica and Marcellus plays hold 10 of the 19 best cost-value ratios in the American oil and natural gas game. He describes his own company, Enlink Midstream Partners, as being the "right team to execute." Most of the other event speakers, each of whom represents his or her own major midstream operation, pretty much say the same thing.

(The oil and gas sector is commonly divided into three stages: upstream, midstream, and downstream. Upstream deals with exploration and production. Midstream is all about transportation and storage. Downstream's the final phase, focusing on the refining and processing of oil and natural gas, and then of course marketing and distributing derivative products. The high-level jobs that Team NEO hopes to attract in the Cleveland area are likely within the downstream umbrella — petro-chemical manufacturing, fertilizer production, metal and glass industries, to name a few.)

But at the midstream conference, equipment is front and center.

Everyone's very impatient and eager to drill and to ship and to sell. There is no room for debate over what will happen when wells dry up or when errors occur. It sounds reductive, but there's really no consideration for anything other than profit.

***

In September 2011, former Chesapeake Energy CEO Aubrey McClendon — Chesapeake being the granddaddy of domestic fracking — told a crowd in Columbus: "This will be the biggest thing to hit the state of Ohio economically since maybe the plow or the seed or something like that. This is going to be truly, truly extraordinary."

He was speaking of the Utica shale formation, which was then newly discovered as a haven for natural gas liquids (NGLs). Think of NGLs as "the plow or the seed or something like that." NGL extraction is a paradigm shift for the industry, and it's what Ohio is bending over backwards to accommodate.

In addition to methane, the "wet" natural gas of eastern Ohio's Utica play contains compounds like ethane and butane. These NGLs can be separated and transported via any means available (including pipelines and trucks) to any ends conceivable. Ethane, for example, can be turned into ethylene, which can be turned into polyethylene, which is then converted to plastics for a nearly infinite array of industrial and commercial products.

That's one reason Team NEO's so excited: "It's happening very quickly, and it's happening in a big way," Paul Boulier, vice president of business attraction for Team NEO, tells us one day prior to the conference in Pittsburgh. Judging by the industry's tone — the unbridled optimism surrounding all that talk of valves and Houston-based conglomerations — that's the truth of it.

The latest estimates show some $18 billion in investment into the state's shale industry. Beyond that, Boulier tells of something closer to $135 billion in trickle-down derivative investment. Somewhere in there is the industry's collective promise of jobsjobsjobs for the OH-PA-WV region.

But where, exactly? One big problem is that industry job projections always turn out to be outlandish exaggerations. (They smack of the sin-tax promoters promising thousands of permanent jobs downtown due to Gateway development.) In 2011, for instance, John Kasich's spokesman Rob Nichols said that shale was expected to create 200,000 jobs in Ohio "over the next four years." But according to Team NEO, in 2015 only 40,000 jobs (direct and indirect) have been supported by shale. They're now anticipating 146,000 by 2020 and 267,000 by 2035.

And those may be low, we're assured.

But these aren't white-collar gigs. The Ohio Oil and Gas Association's claims that eastern Ohio job growth leapt more than 50 percent over the past year don't account for the transient nature of most of the jobs. Neither the out-of-state drillers and truck drivers setting up camp in Carroll County, for instance, where there are more than 400 active horizontal wells, nor the waitresses and concierges working at diners and hotels to accommodate the influx, will likely have jobs when the wells run dry. (And no one seems to know when that will be: Some sources — BP, Forbes — put the Utica's remaining productive lifespan at under 20 years. Barry Davis and midstream execs were throwing out lofty numbers in the 40- to 80-year range.)

Feel free to have a look at the coal mining boom towns all over West Virginia and southern Ohio to gauge whether or not the fracking boom will have an enduring economic impact.

In theory, that should ruffle the feathers of Ohio's Department of Natural Resources. But they've done little but encourage expansion, racking up dollars themselves as they issue drilling permits without much discretion across the state. (Since the second quarter of 2011, ODNR has issued 1,743 of them.)

Then there's the propaganda: In the summer of 2012, ODNR circulated a 13-page internal memo that outlined specific and general measures to support fracking in Ohio. (This is the opposite of what a regulatory government agency should be doing). Using "precise messaging and coordination," the ODNR planned on combating "zealous resistance by environmental-activist opponents who are skilled propagandists," making their work sound more like Cold War-type paranoia than natural resources oversight. The department used language like "allied audiences," "neutral audiences" and "opposition groups and forums." Northeast Ohio's own State Rep. Nickie Antonio found herself on the bad list; Halliburton was listed as a friend.

But look: Halliburton employs 80,000 people worldwide. And if Ohio can grow (or steal, as the case may be) any of those jobs, that's a net positive for the region, development folks would say. Those are numbers. Those are some of 146,000 that they'll need over the next five years to validate their projections.

And that's part of the problem. "Jobs" are being viewed as data points, independent of the people who actually work them. The new "regional economic competitiveness strategy" seeks to "accelerate the pace of job creation," by 50 percent, and, again, it aims to do that by "going big."

So forget about startups or enterprising alternative energy companies. Forget about the non-profits with 10 to 20 employees with a stake in the region, companies that may to do cool things here but don't have all the resources. Instead, "go big," facilitate and incentivise the increased growth of existing goliaths, companies that contribute millions every year to political campaigns to ensure that policy continues to go their way, companies that have zero compunction about laying off every last locally grown job if the profit margins told them to do so.

These are the sort of companies that call John Kasich a liberal democrat because he wants to raise the severance tax for fracking operators. His current budget proposal notches a 236-percent increase — from 2.75 percent to 6.5 percent. Industry mouthpieces are not pleased: "Karl Marx would be proud," read an op-ed in Marcellus Drilling News earlier this month.

The drilling is under way. What comes now is a massive coordinated effort to get this gas out of here. Trucks. Trains. Pipelines. A spiderweb of midstream infrastructure in Ohio.

***

Looking ahead, a growing litany of pipelines with neat-sounding names will begin to cross our region: NEXUS (proposed cost: $1.5 billion), Rover ($4.3 billion), Leach XPress ($1.75 billion), Mountain Valley ($3 billion) and so on.

NEXUS, for instance, a 42-inch pipeline proposed by Houston-based Spectra Energy Corp., will cruise through Summit, Medina and Lorain counties en route to export terminals in Canada (not even pausing to dump some of its fuel in Ohio for Buckeye State customers, mind you). The final route has not yet been finalized, but property owners from Kensington, Ohio, to Toledo have been contacted for land right-of-way and easement transactions. Unnamed and contracted "landmen" are presently negotiating terms with wary residents.

"What's happening in Medina County," local organizer Kathie Jones says, "the landmen come out — and they don't work for Spectra, they work for a private company. They come out and they threaten landowners, saying, 'You have to allow a land survey,' which they don't have to do, 'and if you don't, we're going to take your property through eminent domain.'" These unannounced pressure-cooker situations with landowners take place all along the pipeline's 250-mile route. Nevermind the fact that oil and gas leases typically and technically prompt a default on a homeowner's mortgage.

Public meetings hosted by Spectra took place as recently as mid-February in small towns along the suggested NEXUS route. Maps foretold a major pipeline project, free of real context and explanation. Splayed out on tables amid dozens of booths, the same well of conference trinkets was represented in fine form — Spectra-branded chip clips, et cetera.

Much like the drilling process itself, pipeline infrastructure comes with a wide net of environmental concerns. These are the concerns — these risks of leaks and explosions, groundwater contamination — that plague the midstream encroachment into Ohio and that most certainly do not make it onto the agenda of open house-style public meetings. These are the problems that thousands of Ohioans are working to avoid or even counteract.

Still, land negotiations are under way. Pending Federal Energy Regulatory Commission approval, construction on the NEXUS pipeline is expected to begin in 2017.

Then, as now, the gold rush continues.

What Ohio is left to confront is the dissonance between its regulatory arm — the ODNR, aided and abetted by the state legislature — and the encroaching industry, regardless of benefits pitched to property owners or environmental threat. Without any real vetting of the process, and with billions of dollars in the crosshairs, this wealthiest industry in the world and all of its out-of-state executives are given carte blanche with our state. Ohio's leadership is publicly all too willing to lend its assistance.

Just this week, House Speaker Pro Tempore Ron Amstutz suggested that taxes and permit fees drawn from oil and gas drilling on state land — state-owned parks and nature preserves, of all places — could help offset Kasich's proposed income tax cuts.

When Ohio Supreme Court justices signalled their assent to state regulation, some wrote that it will ultimately fall to lawmakers to put the power of control back in local municipalities' hands. With words and actions like those of Amstutz and others, however, that doesn't appear to be happening anytime soon.

"[State code] not only gives ODNR 'sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations' within Ohio; it explicitly reserves for the state, to the exclusion of local governments, the right to regulate 'all aspects' of the location, drilling, and operation of oil and gas wells, including 'permitting relating to those activities.'"

— Ohio Supreme Court Justice Judith French, Feb. 17, 2015

About The Authors

Sam Allard

Sam Allard is the Senior Writer at Scene, in which capacity he covers politics and power and writes about movies when time permits. He's a graduate of the Medill School of Journalism at Northwestern University and the NEOMFA at Cleveland State. Prior to joining Scene, he was encamped in Sarajevo, Bosnia, on an...

Eric Sandy

Eric Sandy is an award-winning Cleveland-based journalist. For a while, he was the managing editor of Scene. He now contributes jam band features every now and then.
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