Ohio’s financial assurance requirements for oil and gas drilling are woefully inadequate and need to be raised, two groups said today.
Ohio bonding and liability requirements are insufficient to cover the cost and damage from drilling accidents and problems in the developing Utica shale, said Environment Ohio and Policy Matters Ohio.
They staged a teleconference to release the report "Who Pays the Cost of Fracking?" that looks at Ohio’s shortcomings. It was done by the Environment Ohio Research & Policy Center.
"From contaminated drinking water to long-term illness, who is going to be there to pay the piper after the new gas rush is over?" asked Julian Boggs of Environment Ohio.
Such financial impacts can be "significant…and quite staggering," he said.
"With Ohio’s weak bonding requirements, all too often individual residents and communities are going to be left with a heavy tab for fracking damage," he said.
Ohio’s current protections are "inadequate to protect the public…and will leave the public on the hook" for costly problems, he said.
In 2012, Ohio raised the bond to $5,000 per well from energy companies before drilling can begin.
Other states like New York require bonds of $250,000 per well, Boggs said.
The assurance requirements are Ohio’s way to protecting leaseholders or communities from being left with significant bills for damages after oil and companies are done.
Ohio also requires $5 million in liability insurance, but there is a loophole with that rule, he said.
That is $5 million per drilling company, regardless of how many wells they have. That is required for one well or 100 wells.
Ohio should require liability insurance of $5 million per well, he said.
"At a minimum, Ohio needs an adequate severance tax to fund impacts on communities and provide a cushion for long-term risk management," said Wendy Patton, director of Ohio Policy Matters.
The Ohio Legislature rejected a modest severance tax on the oil and gas industry in the state’s biennial budget.
The Ohio drilling industry took a dim view of the new report.
Such measures are unneeded, would make it more difficult financially for drilling companies to operate, and the liability provision being pushed is "nonsensical," said Thomas E. Stewart, executive vice president of the Ohio Oil and Gas Association that is based in Granville.
The issue is one that has not gotten sufficient attention, the speakers said.
"From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with," Boggs said. "Ohio’s weak bonding requirements are yet another reason why fracking (hydraulic fracturing) is taking us down the same disastrous path."
The report is available at www.environmentohio.org/reports/ohe/who-pays-cost-fracking.
Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.
Rig Count Interactive Map by Baker Hughes, an energy services company.
Shale Sheet Fracking, a Youngstown Vindicator blog.
The Ohio Environmental Council, a statewide eco-group based in Columbus.
Earthjustice, a national eco-group.
People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.
Concerned Citizens of Medina County, a grass-roots group.
No Frack Ohio, a Columbus-based grass-roots group.
Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.
Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
Allegheny Front, environmental public radio for Western Pennsylvania.