American Oil and Gas Reporter - April 2018 - 142

midyear meeting, especially on broader,
general issues," Cross poses. "If legislators
concentrate more on big issues, such as
school financing, the smaller nonissues,
including injection wells and seismic activity, could fall by the wayside. That is
fine with us."
Electric Rates
KIOGA continues its discussions with
electric cooperatives about their rate structures for western Kansas operators, Cross
says, adding KIOGA established an Electric Committee led by Adam Beren specifically to address the issue. Starting in
2017, the committee began asking the
cooperatives to add marginal well load
and load control riders to contracts, and
to classify oil producers as industrial
rather than commercial customers (AOGR,
September 2017, pg. 100).
KIOGA met with the chairmen of the
Senate Utilities and House Energy committees, and persuaded them to call on
the co-ops to respond to the association's
request unless they want the legislature
to develop its own, Cross says. "Nothing
probably will happen this session on that,
but that means the chairmen of those
committees will be looking for a legislative
solution to help the oil and gas industry.
I don't think that is what the cooperatives

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want," he notes.
The co-ops have not responded to
those January conversations with legislative
leaders, White reports, although there
may be some signs of activity by the
midyear meeting.
"The co-ops are likely to come up
with a response, just so it doesn't look
like they completely ignored the legislators," Cross predicts, adding that legislative
urging for talks lacked any penalties for
noncompliance.
During the first half of the legislative
session, KIOGA also played defense on
some minor concerns, including a late
attempt by the Sierra Club to reintroduce
several anti-industry bills, an action Cross
notes the Sierra Club tries every year.
None of its legislative proposals received
a committee hearing, he points out.
Working With KCC
The Kansas Corporation Commission
is studying the legality of some saltwater
injection well applications filed after October 2008, Cross says. It has opened a
generic docket to allow KCC staff to
work with operators providing 15 days
of public notice before beginning well
activities instead of the 30 days that the
agency has required since 2008.
"When you submit an injection well
application to the KCC, one of the steps
is to print a newspaper notice to satisfy
the obligation for public comment," he
describes. "The agency changed that requirement, but a lot of operators kept
using the old forms and so some injection
well applications went through with only
a 15-day notice. The KCC itself did not
catch that problem."
In March, the KCC began talking to
the operators who applied with a 15-day
notice, asking them to file briefs on what
they should do in their specific cases, he
says. Those suggestions will be used by
commission staff to develop recommendations for KCC action. Cross points out
all of those injection wells satisfied permit
requirements and protect water sources
and correlative rights.
"Those wells have met all regulatory
requirements. KIOGA considers this to
be a harmless error, and I hope KCC will
see it that way too," he says.
The association also continues to monitor the KCC's proposal to increase the
conservation fee fund. Cross says the
agency's revenue stream has decreased
along with the state's declining oil and
gas production, and KCC now projects it
needs a 58 percent increase in the fees
operators pay into the fund.
"KIOGA has shared some cost data
with the KCC, because it had some different information regarding the state's

142 THE AMERICAN OIL & GAS REPORTER

production decline rate," he says. "KIOGA opposes the fee increase on the scale
KCC is proposing. There very well may
be a need to increase the fee, but the association thinks some things can be
done-not only in KCC's operating structure but in other things-that would
suggest the need for a much smaller fee
increase."
Cross notes the conservation fund also
has been victimized by legislators sweeping money into the state's general revenue
fund, adding it is unlikely those funds
will be returned.
McPherson Meeting
KIOGA's April midyear meeting will
be held at the CHS Refinery in McPherson,
Program Committee Chairman Brett
Nowak says, adding the association last
met there five years ago. He says highlights
of the meeting include tours of the refinery,
seminars on lifting costs and the KCC's
KOLAR operator management module,
and golf and sporting clays tournaments.
Nowak adds the tour of the refinery,
which runs 100,000 barrels a day, will
be preceded by some classroom time.
"The head of the CHS Refinery laboratory, Darrel Colaw, will offer a Refinery
101 class before the tours, so we offer
little refinery education and put KIOGA
members on the bus for a refinery tour,"
he says.
The McPherson meeting also will offer
KIOGA members the opportunity to tour
McPherson College's antique car restoration department. Nowak points out the
college is the only school in the country
to offer a bachelor's degree in restoration
technology.
Cross says when he talks to those involved in the oil and gas industry, people
are more optimistic. "The federal regulatory noose has loosened a bit, and oil
prices have stabilized at a level that people
can work with," he notes. "The Kansas
rig count has not increased a lot, but
people are seeing a recovery. I anticipate
the meeting will be optimistic as well."
The industry response in Kansas also
can be attributed to low commodity prices,
he notes, adding there has been a slight
but steady increase in the state's drilling
activity.
"To me, just the stabilization of oil
prices since October really has helped
the industry mood," Cross indicates. "Right
now, Kansas operators are trying to keep
on recovering. Many operators are reporting
delays in working with service companies,
simply because those companies have had
to lay off employees. The service companies are trying as hard as they can to get
to the drilling sites, but it is hard to rehire
people or train new workers."



American Oil and Gas Reporter - April 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2018

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