Ohio regulators begin collecting production data on quarterly basis

Operators in Ohio must submit production data for horizontal wells to the Ohio Department of Natural Resources more frequently in 2014, thanks to a measure contained in the state's biennial budget bill signed into law by Gov. John Kasich (R) last summer.

ODNR now requires operators to submit production data quarterly, a change from the annual reporting requirement of the past.

ODNR spokesman Mark Bruce said the final quarter of 2013 is the first full quarter for which operators must submit production data to the regulatory agency under the new system. Reports are due 45 days after the last day of the quarter. The rule change excludes the roughly 60,000 conventional vertical wells in the state.

Regarding the agency's reasoning for the decision, Bruce said: "People just want the most up-to-date and accurate information, and part of our mission is to provide that."

Collecting more-current production data will give state regulators a better picture of drilling activity, where it is happening, and how many regulators, like geologists and inspectors, are needed to oversee it. Bruce said the agency has also heard from a variety of people interested in seeing more-frequent production updates.

"We heard from everybody. We heard from the industry itself, we heard from landowners, we heard from analysts, reporters, and frankly internally from our regulatory staff as well," Bruce said. "Information is power, and we feel this will benefit many people."

Shawn Bennett, of Energy in Depth-Ohio, said the information will

be valuable to companies interested in developing the Utica shale in Ohio. "Getting numbers in on a quarterly

basis lets you build a better decline curve," he said. The decline curve of a particular area is one factor companies consider when deciding where to invest.

ODNR was working to streamline its reporting system in December. Bruce said the agency had a defacto trial run after some operators submitted production information for the last few days of the third quarter of 2013—a mistake that resulted from a misunderstanding about the effective date of the law.

"Right now we're working out the kinks with operators regarding how they report it to us and how we take in the information," he said.

No date has been set for the release of fourth-quarter production statistics as DNR is still learning how long it will take to compile and verify the information. Bruce said the information likely will be posted on the agency's website in a spreadsheet form, similar to the way annual production reports were posted in the past.

The rule change comes as unconventional drilling activity is increasing in Ohio. The number of horizontal permits issued by the state topped 1,000 in December. Bruce said ODNR is preparing for the expected ramp up in horizontal drilling by updating its rules and lobbying the state to update laws—such as the recent change to quarterly production reporting.

"We try to stay ahead of the game, and this reporting update is another way that we have done that," he said. "We strive to be proactive."

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