One Year After Earthquakes, New Injection Wells
YOUNGSTOWN, Ohio -- For almost a year, Robert Barnett waited. The Ohio Department of Natural Resources, spooked by earthquakes in the Mahoning Valley it tied to D&L Energy Inc.’s injection well in Youngstown, stalled the awarding of any new permits for wastewater disposal sites -- including his, he claims.
“They just put a moratorium on everything,” he says. “Basically, it was because of the earthquakes.”
Meanwhile, his small gas exploration company, American Energy Associates Inc. of Cortland, was feeling the financial squeeze from some of the international oil and gas giants that have entered this part of northeastern Ohio to drill in the Utica shale.
Barnett’s answer was to diversify his business by developing injection wells, betting that companies such as BP, Consol Energy, Chesapeake Energy Corp., Royal Dutch Shell, Hilcorp and Halcon Resources would require wastewater storage wells near their drilling operations.
“The big companies are chewing us up,” he remarks. “We can’t compete with them, and we’re trying to survive. That’s why we’re doing this.”
On Feb. 21, a backhoe operator was busy clearing a site along state Route 87 in Greene Township in Trumbull County. By the end of February, Barnett expects to have a rig in place to drill an 8,300-foot deep injection well here that will accommodate wastewater from Utica and Marcellus shale drillers. He projects the well will be operational by April.
It’s taken nearly a year for American Energy to secure a permit for the new well – a process he says was slowed because of the reckless actions of one company, D&L Energy Inc. of Youngstown.
“He’s given everybody a black eye,” Barnett says of D&L’s owner, Ben Lupo, as he walks along a clearing where the company’s new injection well is planned. “We’ve waited a year. I’ve been so frustrated.”
In 2012, a D&L Energy injection well in Youngstown – Northstar No. 1 – was linked to 12 tremors that rocked the Mahoning Valley throughout 2011. The well was shut down and a moratorium imposed on injection wells within a five-mile radius of the Northstar site in the Ohio Works industrial park.
Since then, Barnett says, it’s been difficult to secure a new disposal-well permit – even for a well as far north as Greene Township some 40 minutes away.
Operations at all of D&L’s injection wells came to a screeching halt Feb. 13. That day federal authorities charged Lupo with violating the Clean Water Act because an employee of one of his companies, Hardrock Excavating, was caught Jan. 31 discharging drilling mud and wastewater into a storm sewer that empties into the Mahoning River.
Lupo has admitted to directing Hardrock employees to dump the waste, and all of Hardrock and D&L’s operating permits have been revoked. He pleaded “not guilty” to the charges and is free on $50,000 bond.
Barnett says his American Energy owns and operates about 90 small gas wells in Ohio and Pennsylvania. However, the price of natural gas is so depressed that small companies such as his find profits elusive. “Since the price has gone down, we’ve been struggling,” he reports.
Investment in smaller natural gas wells exploring the Clinton sandstone formation has also dried up, much of the money now flocking to big energy companies searching for “wet” gas and oil in the Utica, Barnett says.
But investors are also receptive to new injection wells, he continues, because large energy companies – using a combination of horizontal drilling and hydraulic fracturing – require on average about five million of gallons of water to complete each well. Wastewater generated from drill sites needs to be disposed of, and the state of Ohio has sanctioned that the safest, most efficient method is to store this waste is in deep injection wells.
Much of the wastewater is contaminated with high concentrations of salt, naturally occurring radiation and chemicals used during hydraulic fracturing. The state gets its cut: the Ohio Department of Natural Resources collects $1 for every barrel of water injected into a disposal well. There are 176 wells active in Ohio.
Moreover, American Energy’s new well stands to get additional business from well sites in Pennsylvania, where only a handful of injection wells are permitted. “Ohio is more open to this kind of stuff,” Barnett says, “so a lot of people will bring water from Pennsylvania.”
Like Barnett, other companies are looking to develop new injection wells in Trumbull County. American Water Management Inc., a division of Avalon Holdings, plans to develop two new disposal wells in Weathersfield Township, while Kleese Development Associates of Warren has applied for a permit to construct a well along state Route 7 in Hubbard Township, according ODNR data.
And, Ray Pander Trucking Inc. of Diamond, Ohio, has a permit pending for an injection well in Fowler Township along state Route 193, according to ODNR records.
Although it’s been a long and frustrating wait for his company and its investors, Barnett believes the state has taken great measures to regulate the disposal process. “There really is a need,” he remarks. “The only safe place to put this is back in the ground.”
The company has tested the drinking water within a mile radius of his well site, Barnett says, and will test it again once the well is drilled. “We’ll sample it periodically after the disposal well is in production. But there’s virtually no way that the wastewater is going to get up into the drinking water, unless you do something that’s not according to good practices.”
Barnett intends to develop another three or four wells in the region as drilling ramps up over the next several years.
“This is all kind of working out for us as far as timing goes,” he says.
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Copyright 2013 The Business Journal, Youngstown, Ohio.