American Oil and Gas Reporter - April 2015 - 49

Kentucky Updating Oil And Gas Rules
FRANKFORT, KY.-Developed by a
coalition of interests in less than a year,
legislation to update Kentucky's oil and
gas regulations made its way successfully through the state General Assembly in
March, according to the state's industry
trade group.
The Kentucky Oil & Gas Association
was a leading participant in a stakeholder group formed in April 2014 by Kentucky Energy and Environment Secretary
Leonard Peters, according to KOGA Executive Director Andrew V. McNeill.
"There were a variety of interests around
the table," notes McNeill. "Our goal was
to find common ground, and after seven
months of hard work, I believe we have
something we can be proud of."
The work group included representatives of Secretary Peters' office, the Department of Natural Resources, the Division of Oil & Gas, Division of Water, and
the Environmental Quality Commission.
Other groups on the panel included the
Kentucky Resources Council, Farm Bureau, and Kentucky Chamber of Commerce, mentions McNeill, who also recognizes the contribution of Tom FitzGerald, executive director of the Kentucky Resources Council. With 35 years of experience working on environmental issues in
the state Capitol, FitzGerald has a "reputation as a pragmatic, consensus-oriented
advocate," McNeill says.
SB 186, the Kentucky Oil and Gas Regulatory Modernization Act of 2015, "makes
the first significant reforms to Kentucky's
regulation of the oil and gas industry in 20
years," according to a statement by the
Kentucky Chamber of Commerce, which
says the bill "balances a pro-investment,
pro-jobs approach with a commitment to
enhanced environmental protections."
As the convener of the work group, the

Energy and Environment Cabinet "worked
with a wide variety of interest groups and other stakeholders to recommend legislation that
modernized Kentucky's oil and gas statutes.
The cabinet is very pleased to support this legislation," says cabinet spokesman Dick
Brown, who notes that the cabinet urged its
passage by the general assembly.
According to a summary posted by the
Kentucky Chamber of Commerce, highlights of the bill include:
* Regulatory certainty for developing
deep shale resources;
* Use of best management practices
for well site reclamation;
* A program to reclaim abandoned
storage tanks across the state;
* A requirement for base-line and follow-up water quality testing; and
* Chemical disclosure of fracturing
fluids with trade secret protections.
McNeill notes that companion bills
were filed in both houses of the Kentucky
General Assembly. HB 386 passed the
House on a unanimous vote Feb. 25. The
following day, the Senate unanimously
adopted SB 186, which he says ultimately was the vehicle that passed both chambers, gaining final approval on March 11.
Rogersville Shale
"Kentucky's deep well statutes were
drafted 40 years ago," points out McNeill.
"At that time, no one anticipated the type
of deep horizontal drilling we are seeing
today in shale plays."
He notes that interest in deep oil and
natural gas development in the Bluegrass
State began two years ago with a pair of
exploratory projects involving the
Rogersville Shale.
The Rogersville Shale is described as
a Cambrian-age formation underlying
the Appalachian Basin and having "suit-

able thickness, mineralogy, organic content, and thermal maturity to potentially
produce gas or liquids if fractured to improve permeability," according to a paper
presented by David C. Harris, John B.
Hickman and Cortland F. Eble at the Eastern Unconventional Oil & Gas Symposium, Nov. 5 in Lexington, Ky.
Exploratory interest in the Rogersville
formation has centered in far eastern
Kentucky and in West Virginia, according to the paper. A well was drilled in late
2013 in Lawrence County, Ky., by a unit
of Cimarex Energy. Six months later, another test well was drilled into the formation by Cabot Oil & Gas in nearby Putnam
County, W.V. More recently, a hearing
was held for an exploratory well permit requested by EQT Corporation for a location in Johnson County, Ky., according to
published reports.
Results of the tests remain proprietary,
says McNeill, but with companies continuing to lease acreage and otherwise invest
in the state, "these companies appear to believe the Rogersville shows promise."

Unit Certainty
SB 186 was written, McNeill says, to
provide assurance that the state's Oil &
Gas Conservation Commission had the
statutory authority needed to form deep
horizontal drilling units.
"Our view always has been that the
commission has the authority to form horizontal units," he states. "SB 186 updates
that authority to provide certainty for
companies to invest in developing the resource. That was the most critical issue in
the bill for KOGA."
Along with the assurances for forming
units, McNeill says the bill includes enhanced protections for the environment and
transparency for neighbors. "These were

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