American Oil and Gas Reporter - January 2017 - 32

State Legislative Report

KOGA Prepares For New GOP House
FRANKFORT, KY.-During recent
decades, as Republicans began to win legislative majorities in a growing number of
southern states that previously had relegated the GOP to minority status for generations, Democrats continued to hold a
numbers advantage in Kentucky. That
ended with the 2016 elections.
Kentucky Oil & Gas Association Executive Director Matt Sawyers indicates
voters in the South's last remaining holdout against the trend of Republican regional dominance not only have handed control to Republicans for the first time in 95
years, but have done so in a big way.
Now, going into the 2017 session, Republicans control the Bluegrass State Senate, the governor's mansion, and their new
House majority stands at 64-36 in a state
where, published reports note, Democrats
held a 65-35 majority as recently as 2010.
Almost every vulnerable House Democrat lost last year, Sawyers says, including

longstanding Speaker Greg Stumbo, D-Prestonburg, a former Kentucky attorney
general who won his first House seat in the
early 1980s. "That was a stunning upset,"
Sawyers describes. "The biggest surprise
was not that Republicans flipped the
House, but the extent to which they won."
Kentucky's oil and gas industry has a
history of working well with both parties,
he says, so the immediate policy implications for KOGA's legislative strategy are
unclear. "How the session is going to play
out is anybody's guess, but we have to keep
a close eye on it," Sawyers relates. "Our industry has enjoyed pretty broad bipartisan
support in Kentucky. Traditionally, we have
done fairly well during legislative sessions."
Thanks to KOGA's success in persuading the 2015 Kentucky Legislature to pass
SB 186, the Kentucky Oil and Gas Regulatory Modernization Act, he says KOGA
sees no need to push any specific bills in
2017. Even so, he assures, the group will

follow statehouse proceedings closely.
"If tax reform bills are filed, we will
have to look into their effects on our industry," Sawyers says. "Our priority will
be introducing ourselves to new members,
building relationships, and educating legislators on our issues, concerns and priorities. That is not going to be very different from how KOGA traditionally approached the legislative session, except for
the fact that a lot of the faces will be new."
According to Sawyers, the upper chamber's leadership is going to remain unchanged under Senate President Robert
Stivers, R-Manchester, and Senate President Pro Tempore, David Givens, RGreensburg. The incoming house speaker will be Representative Jeff Hoover, RJamestown. "There is a pretty good sense
of who will make up the rest of the leadership team, but several folks have thrown
their hats in the ring and that has to play
out," Sawyers said in late November. ❒

Hanks: 2017 Offers Hope For Industry
By Bryan J. Hanks
LAFAYETTE, LA.-2016 was another
rough year for the Louisiana oil and gas
industry, with low crude oil and natural gas
prices, new lawsuits, more federal regulations and a new gubernatorial administration. The minimal quantity of drilling permits pulled from the Louisiana Department
of Natural Resources signaled to the
state's workforce that, yet again, Louisiana
would raise a record-few number of rigs.
As the global jobless numbers pushed
beyond 350,000, those new to the oil and
gas industry might have thought all hope
was lost. But seasoned oil patch veterans
know that what goes down, usually comes
back up-eventually. And they seem to be
right. The $40 a barrel crude oil and $2 an
Mcf natural gas of 2016 now look like $52
crude oil and mid-$3 gas. While these
prices do not translate into a profit for all
operators, they certainly move the needle
in the right direction.
So how could drilling be great again?
First of all, no matter one's political persuasion or candidate preferences, it usually means good things for the fossil fuel
industry when a Republican assumes the
Oval Office. Additionally, it appears that
some pro-oil-and-gas individuals will occupy some key cabinet positions. With the
nomination of an oil- and gas-friendly
32 THE AMERICAN OIL & GAS REPORTER

nominee to head the Environmental Protection Agency, the agency's regulatory
clearing house that has cost the industry
billions of dollars in compliance during the
past eight years is likely to be scaled back.
The global outlook includes the fact
that, after more than two years, the Organization of Petroleum Exporting Countries has agreed to scale back production.
Since 2014, OPEC has ramped up output
to record numbers. This massive supply inundated the market and was the major factor in the crash that began around Thanksgiving 2014. The market saw the price for
a barrel of crude oil drop from $110 to as
low as $27. The U.S. oil industry simply
could not afford to produce oil at such a
rock-bottom price, and the bankruptcy of
notable oil and gas companies became an
all-too-familiar headline. Mergers and
acquisitions saved some companies, but a
huge number of operators and service companies did not make it through.
On the home front, operators with
enough strength in the financial bullpen
kept exploring, despite the low prices.
Houston-based Apache discovered a play
in West Texas that spans five formations.
Around 8 billion recoverable barrels of oil
and 75 trillion cubic feet of rich natural gas
could be the ultimate outcome of the
play affectionately known as Alpine High.
Right off Louisiana's coast in the Gulf

of Mexico, BP kept doing its homework
on a play that was discovered in 1998, the
Mad Dog Field. This play has a potential
of 4 billion barrels of oil equivalent and appears to be worth the $9 billion that BP
plans to invest toward further development.
Ultimately, the Louisiana oil and gas industry still has to jump many hurdles to be
successful again. The state's legal environment needs an overhaul, and crude oil and
natural gas prices need to climb some
more, but it is time for the men and
women of this great state to hold their
heads high again. Hope and drilling rigs
could both be on the horizon for 2017. ❒

BRYAN
HANKS

Bryan Hanks is chairman of the
Louisiana Oil & Gas Association
and president and chief executive officer of BETA Land Services LLC in
Lafayette, La.

American Oil and Gas Reporter - January 2017

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