Brine fees pump $1M into state’s funds in ’11

By Karl Henkel


Ohio has made $1 million off brine-injection wells during the first nine months of 2011, according to figures from the Ohio Department of Natural Resources.

Brine is a byproduct of gas and oil drilling including hydraulic fracturing, or fracking, in which water, chemicals and sand are blasted into rocks thousands of feet below the ground to unlock natural oil and gas. The injection wells are constructed with steel casing and cement to protect against contaminated water entering the ground.

The fee, which the state implemented last year with the passage of Senate Bill 165 in 2010, levies a 5-cents-per-barrel tax on all injected brine that originates from Ohio.

It also imposes a 20-cents-per-barrel tax on injected brine from out of state.

The latter fee was implemented under the theory that it would deter oil and gas drilling operations in Pennsylvania and West Virginia from transporting brine water to the Buckeye State.

So far, that hasn’t happened.

Pennsylvania in May banned brine from wastewater treatment plants, so drilling companies began shipping the liquid to Ohio.

“That wasn’t anything we would have predicted,” said Heidi Hetzel-Evans, a spokesperson for ODNR. “That has certainly led to an increase in out-of-district disposal.”

Nearly 53 percent of the 8.7 million barrels of brine accepted by injection wells throughout Ohio came from out of state. The state does not document the specific state from which brine originates.

One barrel is equal to 42 gallons, which means injection wells have accepted more than 368 million gallons of brine.

That’s the equivalent of 558 Olympic-sized swimming pools.

There are 185 injection wells in Ohio, said Tom Tomastik, geologist at ODNR. Seven others aren’t drilled yet.

Tomastik said that he’s already permitted 25 new injection wells this year, the highest single-year total since 1983, when ODNR received primacy status as an injection well regulator from the U.S. Environmental Protection Agency.

The reason for the uptick in injection wells is a result of drilling in the Utica and Marcellus shales. Brine used to drill wells and frack can be disposed in one of three ways; the most popular is by injection well.

Injection-well companies such as Youngstown-based D&L Energy Inc. recently have built multiple wells, including one on Ohio Works Drive in the city.

The maximum the state can make on an injection well is $100,000 annually, if that well accepts strictly out-of-state brine. The state can tax wells only a maximum of 500,000 barrels of substance per injection well in a calendar year. The owner of that well is entitled to keep 3 percent of any levied taxes.

Hetzel-Evans said several injection wells will reach their fee limit sometime before the end of the year.

That taxed money, according to SB 165, goes to the Oil and Gas Well Fund and is used for the Division of Oil & Gas Resources Management, which receives no general-revenue funding and operates solely on fees and severance taxes.

Other fees and taxes include brine and oil and gas-well application fees, which range from $250 to $5,000 each; well change-of-owner fees, which cost $100; and per-barrel natural oil and gas fees.

The Oil and Gas Well Fund, according to SB 165, is used for three things:

For certain plugging, restoration and corrective activities.

For the expenses of the division associated with administering the Oil and Gas Law and the Underground Storage of Gas Law.

For expenses that are critical and necessary for the protection of human health and safety and the environment related to oil and gas production in the state.

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