As some in Columbiana County watch their neighbors receive huge payments for oil-and-gas leases, another group may receive only $200 a year, if anything, in royalties.
These residents live within the Brinker Storage Field owned by Columbia Gas and now are trying to get legislation approved that would provide a minimum-royalty payment.
Properties within the storage field are subject to decades-old storage leases, which means no lease bonus and royalties of only $200 a year if a gas storage tank is buried on the property and nothing if the tank is not present. Some of the residents believe a state law is the only way they will receive any payment for drilling on their land.
Property owners within the storage-field area received a letter stating the company is “in the process of developing a plan regarding the oil and gas potential in the area in a way that protects the integrity of the storage facility that serves the region’s critical energy needs.”
The letter further states the property owners will receive royalty payments per the terms of their lease and Ohio state law.
Ross Porter, who owns 71.5 acres within the Brinker Storage Field, said the state needs to do something about the situation with all the natural-gas storage fields within the state.
“These leases were written to include none of the land protections of current leases and anything about the drilling methods used now,” he said.
The idea of a minimum-lease payment is something Ohio should do to provide its residents the same protections that other states provide, Porter said.
“I sent letters down to Columbus, and I only got one response,” Porter said. “He [the legislator] said he would look into it.”
Since purchasing his property, Porter said he has been in contact with Columbia multiple times.
During the last conversation, a request was made to talk to someone about the lease, he said.
“They said they would send a local landman, but I haven’t seen anybody,” Porter said. “They just seem to pass you off.”
State Rep. Mark D. Okey of Carrollton, D-61st, introduced a bill that would require a minimum-royalty payment of 15 percent of gross revenue on all wells drilled at or below the depth of the Marcellus Shale, which would include all Utica Shale wells.
Okey was not available to comment Thursday.
Texas, West Virginia, Pennsylvania and New York among other states have minimum-royalty payment laws. Most of them place the minimum royalty at 12.5 percent of gross revenue.
The Ohio Oil and Gas Association would not support any law that would create a minimum royalty. The situation with Columbia Gas is something that should be worked out between the parties, said Jerry James, association president.
Typically, Ohio law allows the owner of the surface rights to reclaim mineral rights if the company that possesses the mineral lease has not done anything to develop minerals for 20 years. The Ohio Dormant Mineral Act does require the property owner to contact the leaseholder via mail or publication to reclaim mineral interests.
The landowners from the Brinker Storage Field are taking different actions in their efforts.
A group of residents met Thursday to discuss legal action that has been started against Columbia in Columbiana Common Pleas Court. Two lawsuits have been filed against NiSource, the parent company of Columbia Gas, and include a total of 18 plaintiffs. The cases were filed by Youngstown attorney Sean Scullin. Scullin’s office stated they do not comment on pending litigation.
It may end up costing a lot of money, but the court system may end up being the only way anything gets done, Porter said.
Columbia did not respond to questions by deadline Thursday, but previous comments from the company about Utica Shale have been released.
NiSource Midstream Services announced during its first-quarter earnings statement it intends to pursue opportunities in the liquids-rich portion of the Utica play in eastern Ohio, including proposals to provide gathering services, as well as cryogenic natural-gas liquids processing, which takes the natural-gas elements and separates them. The gas is more valuable separated.