Says that in the recent year homeowners across Ohio have signed mineral rights agreements "and I understand that over a billion dollars worth of leases have been signed to date."
Michael Skindell on Wednesday, September 7th, 2011 in a news conference
State Sen. Michael Skindell says oil, gas companies in Ohio have spent $1 billion plus on drilling leases
Ohio Gov. John Kasich has enthusiastically cheered the money-making prospects of hydraulic fracking, a technique used to extract oil and gas from underground shale.
Eastern Ohio, with its energy-laden Utica and Marcellus shale formations, is high on the list of targeted areas where companies are looking buy up rights to drill for the lucrative resources below.
But many have voiced environmental concerns over the process, which pumps millions of gallons of chemical-laced water and sand deep into horizontal wells under high pressure.
The U.S. Environmental Protection Agency is studying hydraulic fracking’s effects on drinking water. And New Jersey Gov. Chris Christie, a Republican whose pugnacious and conservative style is often compared with Kasich’s, last month ordered a one-year moratorium on the practice so more information can be gathered. Enter Ohio State Sen. Michael Skindell.
Skindell, a Lakewood Democrat, this month introduced Senate Bill 213, which would institute a ban on hydraulic fracking until the EPA completes its study and lawmakers have time to digest it. A companion bill would require companies to disclose chemicals it uses when drilling.
Both pieces legislation are aimed at what Skindell sees as a fracking bonanza.
"In the recent year, we have seen the oil and gas companies go to homeowners throughout Ohio and encourage them to sign leases and turn over mineral rights for this process," Skindell said during a Statehouse news conference to promote the two bills. "And I understand that over a billion dollars worth of leases have been signed to date."
That billion-dollar figure caught PolitiFact Ohio’s attention, given the relatively fledgling fracking market. True, reports across Ohio have pegged the Utica shale formations in eastern Ohio as a new frontier of sorts. But $1 billion? We went to Skindell to learn his source.
Skindell shared with us a web link to a March story published by the Dayton Daily News. The newspaper focused on one company, Chesapeake Energy Corp. of Oklahoma City. Chesapeake, the article noted, "has reportedly spent $1 billion acquiring leases in Ohio without drilling a producing well, a figure reported by the Wall Street Journal on March 7."
By the time it left Skindell’s lips, it was a fact repeated at least third-hand. If it was a fact all. So off to the Wall Street Journal we went. The March 7 story attributed the $1 billion figure to Chesapeake. Journal reporter Ryan Dezember referred PolitiFact Ohio to earnings statements and other financial documents from the publicly held company. Mindful that the news at this point was 6 months old, Dezember theorized that the figure had likely grown.
Sure enough, a transcript of a July 29 conference call between Chesapeake executives, investors and analysts and Chairman and Chief Executive Aubrey McClendon confirmed this.
"... We’ve spent between $1.5 billion and $2 billion acquiring leasehold in the Utica," said McClendon, referring to the shale in eastern Ohio. And of course, Chesapeake wouldn’t have invested that amount if executives weren’t convinced the resources could yield much more.
In a financial report issued the day before the conference call, Chesapeake noted that officials believed the Utica shale play could add between $15 billion and $20 billion in value.
Chesapeake is not the only party interested in Ohio shale. Clif Little, an Ohio State University extension educator in Guernsey and Noble counties, said more than 1,200 property owners have taken his "leasing farmland for oil and gas" classes this year. Drilling companies, small oil and gas companies, landowner associations and attorneys all are attempting to secure deep drilling rights, Little added.
"The $1 billion figure is an old figure," Little wrote in an email. "The amount invested in the Utica and Marcellus would far exceed that number today, but I am no longer keeping track of investment figures."
Although he might not have been right on the money, Skindell was very much in the ballpark with respect to Chesapeake’s figures. If anything, he undersold the political point he was trying to make: that Ohio is on the cusp of a fracking boom.
Skindell’s words were "over a billion dollars worth of leases," and clearly that is the case.
As a result, we rate Skindell’s statement True.
Published: Tuesday, September 20th, 2011 at 6:00 p.m.
Ohio Capital Blog, State Sen. Michael Skindell’s news conference on hydraulic fracturing, posted to YouTube on Sept. 7, 2011
State of New Jersey, Gov. Chris Christie’s fracking moratorium, news release from Aug. 25, 2011
Ohio Senate, Senate Bill 212, which would require companies to disclose chemicals used in horizontal fracking, introduced by Skindell on Sept. 6, 2011
Ohio Senate, Senate Bill 213, which would establish a moratorium on horizontal fracking, introduced by Skindell on Sept. 6, 2011
Dayton Daily News, "Investments show Ohio could be part of oil bloom,"article posted online March 13, 2011
Wall Street Journal, "Shale Lifts Prospects in Ohio,"article posted online March 7, 2011
Chesapeake Energy Corp., news release on second-quarter financial and operational results, July 28, 2011
Thomson Reuters StreetEvents, Chesapeake Energy Corp. earnings conference call, July 29, 2011
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