LEASE MAINTENANCE AND TITLE ISSUES ACROSS THE SHALE BASINS: OHIO SHALE UPDATE
| Jurisdiction | United States |
(May 2014)
LEASE MAINTENANCE AND TITLE ISSUES ACROSS THE SHALE BASINS: OHIO SHALE UPDATE
Partner
Vorys, Sater, Seymour and Pease LLP
Columbus, Ohio
614.464.6389 jkeller@vorys.com
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JOHN K. KELLER is a partner with Vorys, Sater, Seymour and Pease LLP in the Columbus, Ohio office and a member of the energy group. He provides general business representation, primarily to persons engaged in oil and gas development. He has significant litigation experience in all aspects of the oil and gas industry and has represented oil and gas operators in acquisitions, operational issues, banking, and business planning. Mr. Keller has acted as lead trial counsel in gas contract arbitration against a Fortune 100 company resulting in an award of more than $100 million, defended and negotiated favorable settlements in two Ohio gas royalty class action cases, and counseled lenders and borrowers in hundreds of millions of dollars in loans secured by Appalachian Basin petroleum reserves. He is a member of the Ohio State Bar Association, the Columbus Bar Association, the Energy and Mineral Law Foundation, the Rocky Mountain Mineral Law Foundation, and the Mountain States Legal Foundation. Mr. Keller is a frequent speaker on topics related to oil and gas leases and curative procedures, local regulation of mineral production, the governmental taking of mineral rights, creditor's rights in mineral industries, and seismic operations. Mr. Keller received his J.D. from Duke University School of Law and his A.B. from Indiana University.
May 1, 2014
Introduction
Brief history of oil and gas industry in Ohio
Ohio Shale Activities
Notable Statutory Provisions
State regulation - R.C. 1509.02
Unitization - R.C. 1509.28
Recording - R.C. 5301.09
Dormant Mineral statute - R.C. 5301.56
1989 version
2006 version
Affidavit of forfeiture - R.C. 5301.332
Mortgage priority statute - R.C. 1509.31(D)
Coal conflict issues - R.C. 1509.08
Statute of Limitations - R.C. 2305.041/R.C. 1302.98
Notable Litigation
Home Rule (Munroe Falls)
Hupp
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West
DMA
Royalty
Consent to assign
Notary
Litigation summary
Pending or Possible Legislation
Severance tax
Landmen
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1509.02 Division of oil and gas resources management - chief- oil and gas well fund.
There is hereby created in the department of natural resources the division of oil and gas resources management, which shall be administered by the chief of the division of oil and gas resources management. The division has sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state, excepting only those activities regulated under federal laws for which oversight has been delegated to the environmental protection agency and activities regulated under sections 6111.02 to 6111.028 of the Revised Code. The regulation of oil and gas activities is a matter of general statewide interest that requires uniform statewide regulation, and this chapter and rules adopted under it constitute a comprehensive plan with respect to ail aspects of the locating, drilling, well stimulation, completing, and operating of oil and gas wells within this state, including site construction and restoration, permitting related to those activities, and the disposal of wastes from those wells. In order to assist the division in the furtherance of its sole and exclusive authority as established in this section, the chief may enter into cooperative agreements with other state agencies for advice and consultation, Including visitations at the surface location of a well on behalf of the division, Such cooperative agreements do not confer on other state agencies any authority to administer or enforce this chapter and rules adopted under it. In addition, such cooperative agreements shall not be construed to dilute or diminish the division's sole and exclusive authority as established, in this section. Nothing in this section affects the authority granted to the director of transportation and local authorities In section. 723.01 or 4513.34 of the Revised Code, provided that the authority granted under those sections shall not be exercised in a manner that discriminates against, unfairly impedes, or obstructs oil and gas activities and operations regulated under this chapter.
The chief shall not hold any other public office, nor shall the chief be engaged In any occupation or business that might interfere with or be Inconsistent with the duties as chief.
All moneys collected by the chief pursuant to sections 1509.06, 1509.061, 1509.062, 1509.071, 1509.13, 1509.22, 1509.222, 1509.28, 1509.34, and 1509.50 of the Revised Code, ninety per cent of moneys received by the treasurer of state from the tax levied in divisions (A)(5) and (6) of section 5749.02 of the Revised Code, all civil penalties paid under section 1509.33 of the Revised Code, and, notwithstanding any section of the Revised Code relating to the distribution or crediting of fines for violations of the Revised Code, all fines imposed under divisions (A) and (B) of section 1509.99 of the Revised Code and fines Imposed under divisions (C) and (D) of section 1509.99 of the Revised Code for all violations prosecuted by the attorney general and for violations prosecuted by prosecuting attorneys that do not involve the transportation of brine by vehicle shall be deposited into the state treasury to the credit of the oil and gas well fund, which Is hereby created. Fines imposed under divisions (C) and (D) of section 1509.99 of the Revised Code for violations prosecuted by prosecuting attorneys that involve the transportation of brine by vehicle and penalties associated with a compliance agreement entered into pursuant to this chapter shall be paid to the county treasury of the county where the violation occurred.
The fund shall be used solely and exclusively for the purposes enumerated in division (B) of section 1509.071 of the Revised Code, for the expenses of the division associated with the administration of this chapter and Chapter 1571. of the Revised Code and rules adopted under them, and for expenses that are critical and necessary for the protection of human health and safety and the environment
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related to oil and gas production in this state. The expenses of the division in excess of the moneys available in the fund shall be paid from general revenue fund appropriations to the department.
Amended by 130th General AssemblyFile No. 25, HB 59, §101.01, eff. 9/29/2013.
Amended by 129th General AssemblyFile No.125, SB 315, §101.01, eff. 9/10/2012.
Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 9/29/2011.
Amended by 128th General AssemblyFile No.27, SB 165, §1, eff. 6/30/2010.
Effective Date: 06-14-2000; 09-16-2004
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1509.28 Order providing for unit operation of a pool or part thereof.
(A) The chief of the division of oil and gas resources management, upon the chief's own motion or upon application by the owners of sixty-five per cent of the land area overlying the pool, shall hold a hearing to consider the need for the operation as a unit of an entire pool or part thereof. An application by owners shall be accompanied by a nonrefundable fee of ten thousand dollars and by such Information as the chief may request.
The chief shall make an order providing for the unit operation of a pool or part thereof if the chief finds that such operation Is reasonably necessary to increase substantially the ultimate recovery of oil and gas, and the value of the estimated additional recovery of oil or gas exceeds the estimated additional cost incident to conducting the operation. The order shall be upon terms and conditions that are just and reasonable and shall prescribe a plan for unit operations that shall include:
(1) A description of the unitized area, termed the unit area;
(2) A statement of the nature of the operations contemplated;
(3) An allocation to the separately owned tracts In the unit area of all the oil and gas that is produced from the unit area and is saved, being the production that is not used in the conduct of operations on the unit area or not unavoidably lost. The allocation shall be in accord with the agreement, if any, of the interested parties. If there is no such agreement, the chief shall determine the value, from the evidence introduced at the hearing, of each separately owned tract in the unit area, exclusive of physical equipment, for development of oil and gas by unit operations, and the production allocated to each tract shall be the proportion that the value of each tract so determined bears to the value of all tracts in the unit area.
(4) A provision for the credits and charges to be made in the adjustment among the owners in the unit area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributed to the unit operations;
(5) A provision providing how the expenses of unit operations, including capital investment, shall be determined and charged to the separately owned tracts and how the expenses shall be paid;
(6) A provision, if necessary, for carrying or otherwise financing any person who Is unable to meet the person's financial obligations in connection with the unit, allowing a reasonable interest charge for such service;
(7) A provision for the supervision and conduct of the unit operations, in respect to which each person shall have a vote with a value corresponding to the percentage of the expenses of unit operations chargeable against the interest of that person;
(8) The time when the unit operations shall commence, and the manner in which, and the circumstances under which, the unit operations shall terminate;
(9) Such additional provisions as are found to be appropriate for carrying on the unit operations, and for the protection or...
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