Oil and gas industry supports communities
The Ohio Oil and Gas Association represents all of those who are in active in today’s oil and gas industry from drilling and completing wells of every size and scope, to the various pipeline and processing projects to the hopefully many end users. We have heard and perhaps more importantly seen the impacts, both positive and challenging, that occur when entering a community. The most fundamental message we deliver when beginning a project is, the industry is committed to protecting public health, safety and the environment. We are well aware that we can be the talk of the town and strive to keep everyone informed on our industry to keep those discussions fact based. We know that when we share information about who our members are and what they are doing it brings awareness. It is with that in mind that I write to respond to the recent article from March 26 regarding legislative efforts to secure funding for local road repairs.
From the inception of the severance tax on oil and natural gas in Ohio, the revenue has solely gone to support the oil and gas regulatory program, including plugging orphaned wells. These funds safeguard proper regulations over our industry to ensure the protection of public health, safety, and the environment. There have been recent policy discussions to distribute severance tax revenue away from the regulatory program.
The severance tax dollars paid by the industry are managed by the Ohio Department of Natural Resources, with the intention to be kept there to run a robust regulatory program that is fully staffed and equipped to carry out its long-standing mission to oversee the oil and gas industry. Part of those funds are designated to plugging orphan wells–and this measure is unique to Ohio and has full support from the oil and gas industry, putting Ohio in distinct position to eradicate historic orphan wells. Any taking of those funds, as noble as the cause might be, gives many of our members pause.
In 2018, it was disclosed that the Kasich Administration raided more than $62 million from the Oil and Gas Well Fund, despite great protest from our industry. This filled a state budgetary gap at the time, but that was money that did not go to plug orphan wells.
In addition to the severance tax, our members pay the ad valorem tax – simply put, a property tax. It is a tax directly paid to schools and communities where oil and gas activity exists. The Association released a report, using information gathered from public records requests, that showed from 2010 to 2015 oil and gas producers paid $43 million in property taxes across six Ohio counties where shale development is most active. When 2017 and 2018 are factored in, as well as two additional counties, that number jumps to $132 million. When the initial report was released we projected that ad valorem tax payments would reach $200-$250 million through 2026. We are well on our way to meeting and perhaps exceeding that projection.
The ad valorem taxes are going straight in the community coffers, the oil and gas industry is also exclusively spending millions on public infrastructure projects in the communities we are working in. Public records data from eight county engineers in Appalachia shows that 639 road miles have been improved to the tune of $302 million. That contribution comes directly from industry dollars, not taxpayer dollars via what is known as a Road Usage Maintenance Agreement.First, it establishes the route our trucks take from the interstate, to the county route, to the township road. We do this so we can avoid things like bridges that are too low or not built to withstand the traffic. Second, the RUMA establishes the road condition before the first truck leaves the bay. Regardless of its condition due to weather related slips or lack of ongoing maintenance, the industry often times proactively upgrades roads, before we begin hauling loads. We share these roads with neighbors in the community, trash haulers, other industrial trucks and anyone else. We are, however, going to continue to do our part. Is any other private sector industry signing RUMAs and investing hundreds of millions of dollars for road repairs?
The other number I will call your attention to is $70 billion. That is what the state of Ohio has calculated has been invested since 2011 in building out the necessary infrastructure to make the shale play happen. Those are dollars spent directly on construction jobs and the materials necessary to put pipe into the ground, construct processing plants and build well pads. We also know there is more investment coming as producers continue to develop the Utica Shale, build future pipelines, additional storage and processing capacity, and hopefully soon an announcement from PTT. All of this is in addition to the millions of dollars our companies have contributed to local charities, first responders, schools, healthcare facilities and sports teams.
Lastly, our commitment to you, our friends, landowners, officials and partners in southeast Ohio remain as important as ever. We will continue to do what we do best, which is find and produce oil and gas, and bring it to market all while making sure we are being good, responsible and transparent corporate citizens along the way. While we may disagree from time to time or perhaps come at the same issue from a different perspective, know that we take our partnership serious and will work to resolve issues as they arise and continue to have discussions at both the local and state level about how we can improve our engagement and support in your communities.