American Oil and Gas Reporter - April 2017 - 99

ConventionSection: Kansas Independent Oil & Gas Association
proposals were beneficial to all the customers
and the utilities themselves. For us to shut
down wells doesn't help anybody. We will
keep trying to work with the utilities so
that we all will benefit for years to come."

KIOGA Leaders Like What They
See From Trump Administration

Oil And Gas Guide
Another cost-control effort by KIOGA
has a happier ending. Cross recalls an attempt by several county tax appraisers in
the state to assess private saltwater disposal
wells as commercial property for ad valorem
tax purposes. He says KIOGA proposed
that the 2017 Oil and Gas Guide published
by the Kansas Department of Revenue
Property Valuation Division define a commercial disposal well as one "that primarily
or exclusively takes water from producer
wells operated by someone other than the
operator of the disposal well."
The guide published in late January
flips that with a definition of a noncommercial disposal well that Cross says nevertheless satisfies KIOGA's intent. The
2017 guide also sets the price for general
Kansas crude at $43 a barrel and eastern
Kansas crude at $38. It sets the natural
gas market adjustment factor for 2017 at
1.2 times the price received in 2016.
While Cross acknowledges that some
operators may think those numbers are too
high, he says every year KIOGA graphs its
projected prices against actual. "We usually
are within about 5 percent," he declares.
That is important, he maintains, because
it gives industry's price projections credibility. "If we were way off every time,
(state officials) would have less confidence
in what we tell them," Cross surmises.
"While we like to keep the price low, we
don't want to be off too much. It isn't required that the state asks us, but it does."

MISSION, KS.-In the constantly
changing world of national politics, yesterday's intelligence may not survive tomorrow's developments, but indications
from the early days of the Donald Trump
administration and 115th Congress are
that while income tax reform is definitely
a priority, eliminating percentage depletion
as one means of paying for lower corporate
rates is less so.
"Late last year, I really was worried
about percentage depletion," imparts
Kansas Independent Oil & Gas Association
President Ed Cross.
But then House Ways and Means
Chairman Kevin Brady, R-Tx., convened
his committee to discuss tax reform and
assigned Congresswoman Lynn Jenkins,
R-Ks., whom Cross describes as a strong
proponent of retaining percentage depletion, to the energy tax work group. Cross
says that work group views expensing

Public Education
Another endeavor Cross draws attention
to is KIOGA's public relations campaign.
He remembers that in 2013, the association
launched a media campaign that emphasized how oil and gas enriched life experiences and enhanced quality of life.
This year, he says, "We are expanding
that to include messages about the reach
and magnitude of oil and gas, their contributions to everyday life, and all the
products that come from them-not only
the fuels people think about.
"We hope our efforts will raise awareness by illustrating the central role oil
and natural gas play in sparking invention, advancing technological breakthroughs, and enabling modern quality
of life," he says.
❒

intangible drilling costs as irrelevant because under Brady's master plan, businesses would be able to expense all capital
expenditures.
"Now they are talking about retaining
percentage depletion as well as master
limited partnerships," Cross says.
He says he met with Brady and Jenkins
in late January, as well as with House
Majority Leader Kevin McCarthy, R-Ca.,
along with Finance Committee Chairman
Orrin Hatch, R-Ut., and Kansas Republican Pat Roberts in the Senate. "That was
the most optimistic I have been about
percentage depletion in a while," Cross
assesses. "Of course, that is only good
the day you are there. It is dynamic and
ever changing."
Nevertheless, "It is looking like percentage depletion has a strong chance to
survive," said KIOGA Chairman Nick
Powell, president of Colt Energy, in March.

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APRIL 2017 99

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American Oil and Gas Reporter - April 2017

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