New Fracking Rules in OH

Tuesday, June 12, 2012 @ 03:06 PM gHale

Debate over hydraulic fracturing in Ohio doesn’t end with Gov. John Kasich’s signing of new drilling rules Monday.

A fellow Republican in the Ohio House said he and some GOP colleagues plan to revisit the governor’s proposed tax increase on the industry before the session ends in December, setting up a potential dispute between lawmakers, the governor and the oil and gas industry.

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Hydraulic fracturing, or fracking, involves blasting millions of gallons of chemically laced water into the earth to fracture shale formations and release oil, natural gas and natural gas liquids such as propane.

The energy measure signed by Kasich lays out rules for disclosing the chemicals used in the process, construction of wells and reporting of water sources and amounts used as drillers develop the Utica and Marcellus shale formations.

The legislation also makes changes to Ohio’s clean energy standard, affecting the types and percentages of renewable energy phased in by utility companies.

But lawmakers chose to leave out the governor’s plan to raise severance taxes on high-producing oil and gas wells tapped using high-pressure fracking.

Kasich wants to funnel proceeds from his proposed tax increase into modest statewide income-tax relief in two or three years, after a grace period in collections that would allow well operators time to recover their startup costs.

Studies have diverged on the tax’s economic impact on the growing industry, but polls show voters support Kasich’s proposal.

Ohio Oil and Gas Association executive vice president Tom Stewart said his organization of energy producers is largely supportive of the sweeping energy bill Kasich signed Monday at Echogen Power Systems in Akron.

But Stewart said he believes Kasich’s proposal to increase the tax to 4 percent singles out large oil and gas producers over smaller ones, raising a potential legal question.