Ohio, Pennsylvania Put Pressure on Oil and Gas Supplies

Published October 1, 2003

Directional drilling for oil and natural gas under Ohio’s portion of Lake Erie will be banned until at least 2006 as a result of an executive order signed by Republican Governor Bob Taft. The Ohio ban supplements a federal ban due to expire in 2005.

Although Taft signed the order on July 14, nobody outside his administration learned of it until the subject of directional drilling was raised in an August 19 press conference. Critics suggested Taft feared the move would not sit well with fellow Republicans.

The secrecy surprised Democrats as well. “That guy sneezes and he puts out a press advisory,” chided House Minority Leader Chris Redfern, a Democrat. “I would think this is something he would be proud of.”

Directional drilling for resource recovery under the Great Lakes is more feasible than ever–economically, scientifically, and environmentally–as new technologies allow land-based wells to access submerged oil and natural gas reserves. Drilling from land virtually eliminates the risk of environmental damage to the lakes during the resource recovery process.

Energy experts estimate directional drilling from Lake Erie’s Ohio shore could yield 20 billion cubic feet of natural gas every year. With natural gas prices rising as a result of a recent supply crunch, natural gas recovery could yield significant economic benefits to Ohio citizens. Several petroleum companies had already inquired about obtaining drilling permits prior to Taft’s ban.

Opponents of the ban pointed out that widespread oil and gas drilling, from on and off shore, will continue in Lake Erie and other Great Lakes despite the federal and state ban. “They (the Canadians) have drilled right up to the border,” observed Thomas Stewart, executive vice president of the Ohio Oil and Gas Association. “They are out there today drilling in Lake Erie.”

Pennsylvania May Ban Shallow Wells

The Buckeye State’s eastern neighbor is also considering action that would constrict oil and natural gas supplies. The Pennsylvania Department of Conservation and Natural Resources has taken up a forest management plan that would ban construction of new wells in state-owned forests for drilling oil and natural gas.

The proposed ban would have a significant effect on the oil-rich state’s budget, which benefits from $2.7 million in direct royalties every year as well as significant tax revenues generated by the energy industry and its employees.

“We’re very concerned that this is shortsighted given the budget the state faces and the energy problems the country faces,” said Stephen Roads, president of the Pennsylvania Oil and Gas Association. “In light of growing demand, it strikes me as odd for the commonwealth to take a significant resource completely off the market.”

Permitting Backlog Constricts Supplies

The Ohio and Pennsylvania bans couldn’t come at a worse time for American consumers. According to an August 4 energy analysis by Standard & Poors, natural gas companies are struggling to supply enough energy to meet consumer demand. According to Standard & Poors, depletion rates are near 30 percent in most parts of the country, and existing wells are approaching maximum output.

A major reason for the natural gas shortfall, according to petroleum industry experts, is a growing backlog in permitting requests. Marc Smith, executive director of the Independent Association of Mountain States, reported that permitting applications to drill for oil and natural gas on federal lands in the Rocky Mountains took 84 days to process in 2001, but more than twice as long–175 days–in 2002. Smith pinned most of the blame on “extreme environmentalists and anti-development groups.”

Natural gas is unusually plentiful in the Rocky Mountains, said Smith, on lands owned largely by the federal government. The backlog of Rocky Mountain permits has induced energy suppliers to focus their recovery efforts in Oklahoma, Texas, and Louisiana, where less than 3 percent of the land is owned by the federal government. Federal studies show natural gas is twice as plentiful in the Rocky Mountain region as in the other three states.

James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].