The Ohio Oil and Gas Association issued to the Columbus Dispatch the following, in response to a February 1, 2008 editorial.

To the Editor:
Dispatch readers need the facts about House Bill 357 rather than a simple dismissal of a provision to open state-owned property to energy development (In the Public Interest, February 1).

House Bill 357 seeks to expand the search for alternative energies beyond those being considered in Senate Bill 221, Governor Strickland’s energy proposal. While taking these bold steps, HB 357 also considers the role of traditional energies and attempts to answer the question, “What could Ohio do to help itself?” The answer can be found by looking to other producing states. Nearly every other oil and gas state that manages large publicly-owned tracts has in place a normalized method for leasing those lands for energy development. Ohio does not.

The Dispatch claims that HB 357 would strip the ODNR of oversight over oil and gas leasing on state property. That’s not true. In fact, the bill provides for an oversight board chaired by the Department’s expert on energy development – the Chief of the ODNR Mineral Resources Management Division.

The Governor appoints the ODNR Director, the Director appoints the Chief. The State is in total control. Also, the ODNR Chief of the Soil and Water Conservation Districts would be the vice chair. The board taps the expertise of a professional engineer, a public interest representative with plant and species expertise, and an oil and gas production expert. The Board would provide for a transparent process that assures taxpayers that Ohio is receiving the maximum value for use of their property, using a public bidding process while applying appropriate contractual lease term conditions to protect the public interest.

Beyond this misconception of HB 357, the Dispatch also unfairly undervalues Ohio’s oil and gas production. In Ohio there are over 60,000 wells producing crude oil and natural gas for local consumption. Natural gas is nearly 75 percent of the product mix and serves Ohio’s citizens by reducing price volatility and enhancing energy reliability. This saves Ohioans $60 million in avoided interstate transportation costs and $5 million in actual commodity costs. Recently in eastern U.S. cities, cold weather drove daily cash prices for natural gas to nearly $30 per Mcf. That didn’t happen in Ohio for one reason – 60,000 Ohio wells.

As for crude oil, it’s hard to beat world markets controlled by nationalized producing companies protected by multi-national cartels. But, every barrel of oil produced in Ohio and in the U.S. is a barrel we didn’t have to get from overseas and from people who have less than amicable views of America.

Some critics claim that this proposal serves only greed. How trite. This is about public policy and the best use of our state’s resources, particularly at a time of budgetary stress. The State is the largest landowner. The burden of maintaining these lands is a problem. So, what’s in it for the taxpayers? A reasonable energy development plan over time could generate for Ohio’s citizens $20 million in lease bonus payments, $300 million in royalties, $6 million in free natural gas, 300 billion cubic feet of additional natural gas and 2,400 jobs. No benefit for the public interest? This will be a tangible, substantial benefit to the residents of our state for years to come.

State government is sounding alarms about the economy and warning of budget shortfalls. The initial response has been to make funding cuts, strip state workers of their jobs and expand state-sponsored gambling. Why would the state not thoughtfully consider the economic benefits of local energy produced from public lands and use this to help itself while enhancing citizens’ energy security?

Of all the energy source issues being debated at the Statehouse, the state lands leasing provision is the only one that generates significant cash flow for the state, doesn’t require subsidies or mandates to make sense, and actually provides an immediate benefit to taxpayers. To dismiss it out of hand is foolish. This bill seeks balance among Ohio’s energy resources and reliability for consumers. It deserves thoughtful consideration from our legislators, and the media. The State of Ohio can contribute to the solution. For the benefit of all Ohioans, this provision deserves support.

Tom Stewart
Executive Vice President
Ohio Oil & Gas Association
Granville, Ohio