The new administrator of the U.S. Environmental Protection Agency had a smile on his face for his first day on the job on February 21, but he signaled huge changes for the agency.  He was given a perhaps surprisingly warm introduction by Catherine McCabe, the acting administrator put in place by President Barack Obama.  She commended Administrator Pruitt for his efforts in the past to work with a variety of stakeholders in complex situations, like negotiating water rights between native American tribes.  He has been more adversarial for most of his career, though, especially in recent years as Oklahoma's attorney general.  He has led several lawsuits suing the EPA to stop its regulations.  His welcome speech struck a conciliatory tone, however, saying that he seeks to learn, listen, and lead alongside the career staff of the EPA. 
 
            Administrator Pruitt said his first principle will be that “regulations ought to make things regular.”  In other words, companies that work in a regulated environment should know what is expected of them so they can plan and allocate resources to comply with those regulations.  He said the agency should avoid making rules through informal guidance documents or through making settlements in litigation that bypass the normal notice-and-comment procedures.  He also argued the agency should stick closer to the authority granted to it by Congress, and not exceed its mandate.  The states and regional EPA offices will be given a more prominent role under Mr. Pruitt’s leadership as well.  He did not mention climate change once in his speech, and that has been a major focus of the agency in past years.  So despite his conciliatory tone, the focus of the agency will likely be completely changed. 
 
            The bottom line is that Administrator Pruitt says he will try to make the EPA “both pro-energy and pro-environment.”  If that pans out, it could be a major boost for the industry that already seems to be trending upwards.  The experts at Cimmaron Land are standing by to help companies hoping to expand their operations with any land services needs. Just give us a call to learn more. 

             You will occasionally hear politicians talking about how the oil and gas industry is not paying its fair share, but the industry group Energy In Depth recently released a report that showed how much the industry does pay.  The report was titled “Ohio’s Oil and Gas Industry Property Tax Payments,” and it paints the picture of an industry that is making major contributions to Ohio’s economy.  The group used Freedom of Information Act requests to get tax-collection data from the six counties that have significant Utica Shale production: Belmont, Carroll, Guernsey, Harrison, Monroe, and Noble. 
 
            The report found that the oil and gas industry paid $43.7 million in direct property taxes on oil and gas wells from 2010 to 2015, and that projects out to an expected $200 to $250 million between 2016 and 2026.  The report also points out that this direct tax is just one very direct way that the industry contributes to its communities.  Oil and gas companies also pay in other less direct ways: road use maintenance agreement costs, sales taxes, commercial activity taxes, severance taxes, income taxes, fuel use taxes, and more. 
 
            Though Gov. John Kaisich (R) is seeking to increase severance taxes, the Ohio oil and gas industry has not faced increased tax rates in recent years.  Instead, it has increased its amount of taxes paid through increased activity.  Ohio’s oil production increased about 496% and natural gas 852% just from 2013 to 2015.  Carroll and Harrison counties have increased their tax income more than the other counties, and the report notes that all of these countries lack a major metropolitan hub that could attract investment.  That means the tax base from energy production is vital to funding local government services, and most importantly that means schools. 
 
            If your company is looking to secure leases in Ohio or throughout the region, you should work with a company that knows the area and understands the importance of oil and gas to the local communities.  Call the experts Cimmaron Land for help with all your leasing needs. 

             E&P companies in the Marcellus and Utica regions should soon have more opportunities to send gas from their land to market through a number of major new pipelines, but the projects will lack the normal federal oversight for some time.  The Federal Energy Regulatory Commission approves pipelines that run between states, and it is going through an unusual transition.  FERC is supposed to have five Commissioners to guide its work, and by law it needs at least three Commissioners to make any decision.  Since Friday, February 3, only two Commissioners have been on the job.  It is unclear when the Commission will return to its normal work.
 
            FERC did have a productive last week before former Chairman Norman Bay resigned, leaving behind only new Chair Cheryl LaFleur and Commissioner Colette Honorable.  The three used their last day together to approve the Atlantic Sunrise pipeline.  This 180-mile, $3 billion effort will expand an existing system to better connect Northeast Pennsylvania’s gas fields to Mid-Atlantic and SouthEastern customers.  The project has become controversial, as activists have hoped to derail it to throw cold water on the hydraulic fracturing business.  Companies that operate in the area, saw an immediate stock price bump from the approval.
 
            FERC also signed off on a $455 million natural gas project called Northern Access 2016, which will improve connections between Pennsylvania and customers in the Northeast U.S. and Eastern Canada.  Around the same time, FERC also approved the Rover Gas Pipeline, which is a $4.2 billion project that will cover 550 miles and take gas from Pennsylvania, Ohio, and West Virginia into Northern Ohio and Michigan.  FERC may be waiting awhile until it gets new Commissioners nominated by President Donald Trump.  Congress has been slow-walking his nominees, and it may take some time until the lower-profile FERC Commissioners get a chance to be confirmed.  In the meantime, these pipeline projects will move forward but Mr. Trump’s efforts to speed up infrastructure approvals could be stalled by an understaffed FERC.
 
If you are a company looking to benefit from these pipelines, give Cimmaron Land a call.  We are experienced throughout the Utica/Marcellus region and we can help with all of your land services needs.

             Republican Governor John Kasich released his annual budget proposal on January 30, and he is looking to increase taxes on oil and gas production.  He has long been critical of Ohio’s “severance” tax, which is a tax charged for removing a natural resource from the ground (i.e. severing it).  Gov. Kasich has said that Ohio’s tax is so low that it is a “total and complete rip-off” for taxpayers, as outsiders come in and drill on Ohio’s land for minimal fees.
 
            Ohio’s current tax is 20 cents per barrel of oil and 3 cents per million cubic feet of natural gas.  Over thirty states in total have some kind of severance tax, and Ohio currently comes out on the lower end but it is not unusually low.  Pennsylvania, for example, has no severance tax (though the state’s governor wants to impose one).  West Virginia, on the other hand, has a five percent severance tax on oil and gas.  Gov. Kasich wants to put Ohio’s tax at 6.5 percent for most oil and gas, with a lower rate of 4.5% on natural gas liquids (e.g., ethane and butane). 
 
            Gov. Kasich hopes the new tax regime would bring in about $310 million per year when it is fully in place.  This money would all go into the state’s general fund and would help with other priorities.  Most notably, he hopes to slightly increase school funding and drastically cut income taxes for individuals.  He has proposed the increased severance tax before only to have state legislators reject it.  At this time it appears unlikely that the tax increase will pass.
 
 Cimmaron Land supports the needs of Ohio operators. Give us a call today to let us know what we can do for you: (412) 212-7517.