American Oil and Gas Reporter - February 2020 - 69

through another period of depressed commodity prices, particularly in the Appalachian Basin," he reflects.
According to Hammond, companies
throughout the Utica and the region are
assessing whether to sell assets, as Ohio
has joined the nationwide trend toward
industry consolidation. "We have been
talking a lot about that during the last
year, and I think the industry is going to
look a lot different during the next twofive years," he forecasts. "We will see
fewer horizontal shale operators working
in Ohio, and that will impact development.
We are going to have fewer companies
drilling fewer wells and production is
likely to tail off."
In early January, the break-even price
for Utica gas was $1.94, Downey says,
with the basis differential amounting to,
at best, about a $1.90 net.
"That does not account for the operating
cost," he observes. "Your break-even price
is at $1.94, and you are not even at $1.90,
based on the New York Mercantile Exchange and the basis differential, so it is
a struggle. We enter 2020 in a commodity
price environment that is a big concern
for producers. Operators are looking at
drilling fewer wells, lowering rig counts
and operating within cash flow, which
they probably need to do."
Nevertheless, since 2010, OOGA's
producer members have contributed to
the $142 million in ad valorem taxes in
eight of the Utica Shale's top producing
counties, Hammond points out, citing an
updated report OOGA and Energy In
Depth released in October. He notes that
it shows that by 2025, the industry is ex-

pected to pay at least $200 million-$250
million in ad valorem taxes, of which
schools will get 60-65%, he says.
"We probably will exceed that, which
is a huge benefit for local communities,
whether directly from ad valorem tax
payments or indirectly from the property
taxes paid by the power generation facilities that are linked to Utica development,"
Hammond says. "New schools have been
built, there have been a lot of repairs and
upgrades in an area of the state that really
needs it."
In all phases of the industry's upstream,
midstream and downstream segments,
JobsOhio, the economic development arm
of the governor's office, reports that more
than $78 billion was invested in Ohio between 2011 through 2018, with upstream
and midstream accounting for a combined
$73 billion, Downey says.
"The amount of money we have put
back into the economy is astronomical,"
he comments. "I don't know if Ohio's
population really understands it. Some
may glaze over it and move on, but the
savings associated with lower home fuel
costs, alone, are incredible."
OOGA has a renewed sense of coordination with the Ohio Oil & Gas Energy
Education Program, Hammond adds.
"We want to make sure we are in lock
step with OOGEEP on the Ohio oil and
gas industry's communications," he confirms. "We have been working on that
already throughout last year and we are
going to see it unfold in 2020. It's a
great organization and program with a
great mission and we look forward to
continued cooperation."
❒

NEPA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FROM PAGE 26
to simplify and accelerate the NEPA
process, CEQ proposes to:
· Establish time limits of two years
to complete EISs and one year to complete EAs;
· Specify presumptive page limits;
· Require joint schedules, a single
EIS, and a single record of decision,
where appropriate, for EISs involving
multiple agencies; and
· Strengthen the role of the lead
agency and require senior agency officials
to timely resolve disputes.
To clarify the application and scope
of NEPA reviews, CEQ says it is proposing, among other things, to:
· Provide direction regarding the
threshold consideration of whether NEPA
applies to a particular action;
· Simplify the definition of environmental effects, and clarify that effects

must be reasonably foreseeable and have
a reasonably close causal relationship to
the proposed action;
· State that analyzing cumulative effects is not required under NEPA;
· Clarify that a "major federal action"
does not include nondiscretionary decisions and projects with only minimal
federal funding or involvement; and
· Clarify that "reasonable alternatives"
requiring consideration must be technically
and economically feasible.
CEQ says it will accept comments on
the NPRM until March 10. Comments
may be submitted at https://www.regulations.gov/, by faxing them to 202-4566546, or mailing them to Council on Environmental Quality, 730 Jackson Place
NW, Washington, D.C. 20503, Attn: Docket No. CEQ-2019-0003.
❒

Current

website exclusives:
'Swaption' Strategies
May Create Financial
Reporting Challenges
by Matt Smith
director, ﬁnancial
instruments group

Opportune

Power Generation
Important Part Of
Wintertime Gas
Demand
From U.S. Energy
Information
Administration reports
What's popular at aogr.com:

Frac Facts:
The latest in delivery
systems & proppants.

Oil & Gas Prices:
Cash and 3-month
futures, updated every
11 minutes.

North America
1-800-847-8301
International
001-316-788-6271

www.aogr.com
FEBRUARY 2020 69

http://www.aogr.com https://www.regulations.gov https://www.regulations.gov http://www.aogr.com

American Oil and Gas Reporter - February 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2020