POLITICS

Local control is an issue as Utica Shale drilling ramps up

YOUNGSTOWN, Ohio -- A new "anti-fracking" initiative has been put on this city's municipal ballot for a November vote, as environmental activists attempt to block development of the Utica Shale play before production accelerates next year in eastern Ohio.

Backers of the proposed "Community Bill of Rights" charter amendment here hope to capitalize on public reaction to the ongoing prosecution of a firm accused of dumping thousands of gallons of fracking wastewater into the city's storm sewer last winter. State inspectors were tipped off about the dumping by an anonymous phone caller last January but only after repeated alleged violations.

The Ohio Department of Natural Resources (ODNR) has revoked the operating permits of Hardrock Excavating LLC and D&L Energy, whose Youngstown facility was the site of the alleged dumping. D&L also operated an underground injection well used to dispose of drilling wastes, which was linked to a series of earthquakes in Youngstown in 2011 and early 2012. A recent study concluded that the brine wastes pumped underground lubricate existing faults, triggering the seismic activity (EnergyWire, Aug. 21).

The incidents should be a warning to residents, said Susie Beiersdorfer, a geologist running as a Green Party candidate for City Council president in Youngstown and an organizer of the ballot initiative.

"We don't believe he is just the one bad apple," Beiersdorfer said, speaking of the owner of the company accused in the dumping case, who has pleaded not guilty to violating federal anti-pollution law.

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Another case in point is the discovery of leaks of brine and other drilling fluids from well pads in Harrison and Belmont counties south of Youngstown, Beiersdorfer said. The well operator, Gulfport Energy Corp., agreed to pay a $250,000 fine and to prevent future incidents after a state inspector found the leaks. The company said there were no long-term consequences from the leaks (EnergyWire, Sept. 12).

"I believe it can't be done safely," Beiersdorfer said of the deep horizontal drilling and hydraulic fracturing operations underway or planned for eastern Ohio. "The risks are not worth it. The regulations are too weak."

But she and other opponents of shale gas development face several hurdles. A previous attempt to ban fracking within the city failed last May by a 57 percent to 43 percent margin in the face of heavy opposition from area businesses and unions. Although Ohio is studded with old gas wells, the development of deep horizontal wells is so new that the debate is largely over what may happen, not what has happened. Ohio state officials pledge to make their safety regulation the nation's best.

And environmentalists must overcome Ohioans' hopes that their long-depressed economy will rebound with the help of more than a billion dollars invested already in gas and oil drilling, pipeline infrastructure expansion and steel pipe production.

Local control at stake

The challenge mounted by the Bill of Rights backers frames a question heard in other Ohio cities, as well: Do local governments have the right to ban shale gas development within their borders?

Ohio's Supreme Court has taken a lower court case involving an intervention by officials in Munroe Falls in 2011 to block drilling operations by Beck Energy Corp. in city limits. Beck had received a state drilling permit from ODNR, but Munroe Falls said it must also comply with local zoning and permitting requirements and issued a stop-work order.

The dispute reached Ohio's 9th Appellate District Court with the court ruling this year that Munroe Falls' authority was trumped by a 2004 state law giving oversight of oil and gas operations exclusively to ODNR.

Judge Mary Jane Trapp said that although the "burden of potential risk and harm" is local, the Legislature had clearly recognized the energy sector's statewide impact and vested responsibility at the state level.

The Ohio cities of Broadview Heights, Euclid, Mansfield and North Royalton and the village of Amesville filed an amicus brief in the case in support of Munroe Falls, saying: "It is imperative for the protection of community character and the general welfare that municipalities be able to exercise their traditional land use authority over industrial activities such as oil and natural gas drilling."

Joining Munroe Falls, a group of small businesses called on the Supreme Court to uphold the home rule powers of local government. "If a municipality chooses to roll the dice with oil and gas drilling ... that should be their prerogative," said the brief for the businesses, filed by the Ohio Environmental Council and the Environmental Law Center.

"This case cannot be viewed in a vacuum of one drilling operation in one small town, but in the greater context of the new world of oil and natural gas drilling in Ohio. Drilling is not new to Ohio; nor, for that matter, is hydraulic fracturing. What is new is the sheer industrial scale of these operations," the brief said.

It is exactly the potential scale of the shale gas development in Ohio that excites its supporters in the state business and labor sectors, lined up against Youngstown's environmental activists.

The breadth of those interests was on display last week at an oil and gas conference in Youngstown's municipal arena. The conference hall was filled with displays from more than 60 oil and gas sector vendors from inside and outside Ohio's borders, including Youngstown Pipe and Supply; Cleveland's Northeast Lubricants; Texas-based HE Steel and Consulting; American Waste Management in Warren, Ohio; Evets Oil and Gas Construction Services, in Girard and Hubbard, Ohio; and Pioneer Pipe Inc., a pipe assembly manufacturer from Marietta, Ohio.

One speaker, M. Judson Wallace, president of Vallourec Star, announced completion of the final stage of a $1 billion expansion of the company's mill in Youngstown that produces seamless steel drilling tubes. The project's last piece enables Vallourec to cut coupling threads into the pipe ends, instead of having to ship pipe to Houston for that process. The entire facility can produce nearly 1 million tons of pipe a year.

"You are just in the beginning of a nice, long growth spurt," Wallace said.

Construction of the plant provided jobs for 1,200 workers, he said. The new expansion adds 350 workers, given the plant's extensive automation -- a far cry from steel plant employment during Youngstown's industrial heyday a generation ago. But the pipe threading equipment, for example, was produced by companies within a 75-mile radius of Youngstown, Wallace said, an example of the plant's regional impact.

"There was a lot of money spent here locally," Wallace said. "It's going to be a big deal, or we wouldn't be building a steel plant here, I can tell you that."

Another conference speaker, David Mustine, an official with JobsOhio, an economic development organization, said the job creation from the shale exploration has been modest so far. Direct employment numbers are in "in the thousands of jobs," he said. The total grows to tens of thousands if indirect employment triggered by the drilling and infrastructure is counted, he said. The jobs are still coming, he said.

Slow start

Development of the Utica Shale has started slowly because of the scarcity of pipeline links and processing facilities needed to deliver gas products to market. That will change in the coming year, as new pipeline paths for gas liquids open to the Gulf Coast, Canada, and export terminals serving European markets. Other projects will expand shipments of dry household gas, possibly as far as Chicago and St. Louis, if regulators approve.

Seizing on the vision of future growth, a united front of business organizations and unions has branded the referendum a job killer, Beiersdorfer said.

Her husband Ray, a professor of geology at Youngstown State University, said the referendum backers were decidedly outweighed in the May voting.

"This is the most profitable industry in the history of the world. Then they also had the unions behind then, the local Democratic Party; even my university was for this. I was shocked when I heard the university took a stand on this," he said.

The referendum language has been amended for the November election, Susie Beiersdorfer said, to make it clear that the Vallourec pipe mill would not be affected if the ban on oil and gas operations is approved -- an issue in the May contest.

It remains to be seen how Youngstown responds. Seventeen percent of the city's eligible voters participated in the May primary, a typically low turnout when the contests are purely local.

"It was complicated," Susie Beiersdorfer said of the referendum contest in May. "But it's also the apathy. People have been down so long. Apathy is the enemy."

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