American Oil and Gas Reporter - May 2017 - 85

ConventionSection: Oklahoma Independent Petroleum Association

Regulatory Winds Blowing Favorably
OKLAHOMA CITY-The Sooner State's
regulatory environment has been calm the
past 12 months, and A.J. Ferate, vice president of regulatory affairs for the Oklahoma
Independent Petroleum Association, predicts
neither federal nor state rules will disturb
the tranquility.
With few significant rule-making issues
emerging on the state level, the Oklahoma
regulatory environment is positive for industry, Ferate assesses, terming it as
"really boring rule making here." He adds
that at the federal level, OIPA is chasing
a ball downhill, and has not yet been
able to catch it.
"That is in a good way," he says. "We
gave not had to go on offense, because
the Trump administration has been three
steps ahead of us on everything. That has
been great on things such as the (Environmental Protection Agency's) methane
information collection request, which the
administration canceled; the Clean Power
Plan, which harmed natural gas producers
in addition to coal producers, which the
White House got ahead of; and the Bureau
of Land Management's venting and flaring
regulations, which the White House is
looking at also."
Ferate notes there are signs the Trump
administration also could derail Subpart
OOOO air quality regulations, back away
from an expansive definition of "waters
of the United States" subject to Clean
Water Act regulation, and reinterpret
methane emission rules.
He adds that oil and gas operators can
expect a positive relationship with new
Environmental Protection Agency Administrator Scott Pruitt, the former Oklahoma attorney general. "I know him well
and have spent time in his office since he
got to Washington," Ferate says. "The
biggest challenge EPA is facing now is
that it doesn't yet have people in places
where it needs them to make these largescale things that probably will come down
the pike happen."
Seismic Activity
The number of seismic events in Oklahoma during the first few months of 2017
decreased significantly from levels seen
in 2015 and 2016, Ferate says. The exact
reason for the decrease-natural cycles,
less water being injected into faults, or
any other factor-is unknown, but the drop
has been enough to lessen the public's

interests in oil and gas activities, he holds.
The Oklahoma Corporation Commission's lowered total wastewater injection
volume limits on 67 Arbuckle disposal
wells in seismic "areas of interest" last
September from 75,000 to 35,000 barrels
a day (AOGR, October 2016, pg. 91).
OIPA Chairman Jeffrey McDougall
says the lessening of public concern about
seismic activity speaks well to how operators reacted. "When things come up
in any business, public concerns depend
how those companies respond," he lays
out. "The oil and gas industry responded
immediately to the seismic activity, and
sought to understand it better. The industry
worked with the state and figured out a
plan. The good news is there are a lot
fewer earthquakes."
Oklahoma's producers should thank
regulatory agencies such as the OCC and
the Oklahoma Geological Survey, as well
as individuals, including OIPA Vice President Kim Hatfield, who led the association's efforts, for their work on mitigating
the seismic issue, contends OIPA President
Mike Terry.
"Kim has spearheaded an industry-led
study of pressure in Oklahoma's Arbuckle
formation. We hope the study can provide
the OCC with data that will help in its response to seismic activity," Terry says.
Ferate points out that most of the
impact from the OCC injection restrictions
fall on smaller- and medium-sized operators
working the Mississippian Lime play in
Oklahoma's north-central counties.
"The larger producers have moved a
little west, and have been drilling in the
SCOOP and STACK plays, where the
volume and salinity of the produced water
is much different than it is in the Mississippian," he says.
Companies have moved quickly to
comply with injection restrictions, even
though that has cost some operators hundreds of thousands of dollars to either
cut production rates or find other wastewater disposal options, Terry says.
"It is not over, but great strides have
been made and we have learned a lot," he
reflects. "OIPA has been in the forefront.
For the most part, it has been a positive
experience working with regulators. They
realized the industry had a lot to give,
from a scientific standpoint, and they listened to us. It is great to finally see that
seismic activity come down."

Federal Issues
Ferate hails EPA's decision to withdraw
its methane information collection request
covering equipment and emissions at oil
and gas facilities. Aside from the fiscal
pain inflicted on companies spending resources to collect data, he says, there were
concerns the warehoused information would
be available the next time a Democratic
administration sat in the White House.
"Then the government could say,
'Maybe we do need to look at these producers. We already have the data, so we
do not need to request the survey again.'
"This way, while a few producers have
reported, the agency will have to issue
the request again if it plans to review
regulations on wells," he says.
Washington also is re-evaluating BLM's
venting and flaring rules for operations
on federal lands, and may be seeking to
adapt a legal position on WOTUS that is
less restrictive to industry activities, Ferate
comments.
"Changes to BLM's Onshore Orders
No. 3, 4 and 5 have been delayed because
BLM is not quite ready," he continues. "I
don't know if there is a plan to amend or
repeal them; companies are preparing to
move forward with them. OIPA has offered
training sessions in Oklahoma led by
BLM for operators and regulatory staff
on what to expect and how to respond to
the rules."
Ferate says he expects the U.S. Fish
& Wildlife Service to re-evaluate its plans
for protecting the lesser prairie chicken
and the American burying beetle.
Results from the latest LPC aerial
population survey should be available by
fall, and an update on the beetle-even
possibly its delisting as an endangered
species-is expected before that, Ferate
says. He points out the beetle is found
east of the SCOOP and STACK plays,
and is more of an issue for pipelines than
well operators.
❒

Coming In June
AOGR special reports review operator's high-graded drilling and development projects in tight oil resource
plays in the red-hot Permian Basin, including the prolific Wolfcamp Shale
and its world-class drilling economics.
MAY 2017 85



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