Ohio bonding and liability requirements are insufficient to cover the cost and damage from a drilling accident or problems in the developing Utica shale and need to be raised, two groups said Thursday.
Environment Ohio and Policy Matters Ohio held a teleconference to release the report Who Pays the Cost of Fracking? that looks at Ohio’s shortcomings. It was done by the Environment Ohio Research and Policy Center.
“From contaminated drinking water to long-term illness, who is going to be there to pay the piper after the new gas rush is over?” asked Julian Boggs of Environment Ohio.
Such financial impacts can be “significant … and quite staggering,” he said.
“With Ohio’s weak bonding requirements, all too often individual residents and communities are going to be left with a heavy tab for fracking damage,” Boggs said. He called the current level of protection “inadequate to protect the public … and will leave the public on the hook” for costly problems.
In 2012, Ohio raised the bond to $5,000 per well from energy companies before drilling can begin.
New York requires a bond of $250,000 per well, Boggs said.
The assurance requirements are Ohio’s way of protecting leaseholders or communities from being left with significant bills for damage after oil and gas companies are done drilling on a parcel of land.
Ohio also requires $5 million in liability insurance per drilling company, but, Boggs said, there is a loophole with that rule: That $5 million is a flat cost regardless of how many wells a company operates.
Ohio should require liability insurance of $5 million per well, he said.
“At a minimum, Ohio needs an adequate severance tax to fund impacts on communities and provide a cushion for long-term risk management,” said Wendy Patton, director of Ohio Policy Matters.
The Ohio legislature rejected a modest severance tax on the oil and gas industry in the state’s biennial budget.
The Ohio drilling industry took a dim view of the new report.
Such measures are unneeded, would make it more difficult financially for drilling companies to operate, and the liability provision being pushed is “nonsensical,” said Thomas E. Stewart, executive vice president of the Ohio Oil and Gas Association that is based in Granville.
The financial security issue has not gotten sufficient attention, the speakers said.
“From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with,” Boggs said. “Ohio’s weak bonding requirements are yet another reason why fracking [hydraulic fracturing] is taking us down the same disastrous path.”
The report is available at www.environmentohio.org/reports/ohe/who-pays-cost-fracking.
Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.