American Oil and Gas Reporter - August 2017 - 105

ConventionSection: Eastern Kansas Oil & Gas Association
In western Kansas, where McGown
acknowledges the wind and oil industries
have worked out some accommodation,
wells typically are sited on 10-acre spacing.
"But in our area," he points out, "we potentially need to drill four producers and
one injection well in 10 acres. If you
start drawing concentric circles around
the easements and setbacks these wind
leases were requiring, it becomes very
difficult for us to site any oil wells."
Fortunately, McGown reports, "Between some political pressure and some
landowners refusing to cooperate," the
proposed wind farm in Anderson County
never got off the ground.
However, a report that appeared in
late June in the Chanute Tribune, reveals
another wind company has leased 14,000
acres in Neosho County with a goal of
leasing as much as 26,000 acres more.
The article also says the same company
is interested in developing another wind
farm in Bourbon and Crawford counties.
Located north of Parsons Lake, west
of Highway 59 and east of Highway 169,
Cornish says the Neosho County wind
farm would cover most of the southern
half of the county, including "the southwest
corner, which has quite a bit of (oil) production."
As soon as he saw the newspaper article, Cornish says, he asked EKOGA
Executive Director Janelle Aikins to send
copies to all board members. "This is
something everybody needs to be aware
of," he avers. "Most of the leases in
southeastern Kansas have been around
for heaven knows how long. They may
not have all their bases covered. Our
producers need to go over their leases to
protect themselves as much as possible."
Operators also need to pay attention
to what is going on around them, adds
McGown. "These wind energy lease guys
are going to be in the courthouse. People
are going to know they are out and about,"
he reasons. "We need to communicate to
our landowners that it is going to be very
difficult for them to continue to maximize
their oil and gas royalty income and double-dip on wind energy royalty income."
As to EKOGA's role, McGown continues, "We want to stay ahead of this
and educate our members. If we don't
voice our concerns about the impact it
can have on our operations, one day we
may be trying to operate in an environment
that is very detrimental to our standard
operating procedures."
r

Educating Freshmen Legislators
Important to EKOGA's Success
TOPEKA, KS.-Start with a revenue
shortfall and a court mandate to retool
public school finance. Mix in a number of
new, less conservative legislators-many
of whom campaigned against the incumbent
governor-and it was easy for the Eastern
Kansas Oil & Gas Association to determine
its priorities for the 2017 Kansas Legislature,
says lobbyist Tom Bruno, proprietor of
Bruno & Associates in Topeka.
"It was defensive posturing," he reveals.
"There was a lot of concern with the
number of tax issues that could impact the
industry specifically: severance and property
taxes, and some loss carry-forward issues."
Happily, he reports, "We were very
successful in those areas."
Although property tax hikes were never
discussed in open hearings as a solution
to the state's budget problems, Bruno
says they did come up in private conversations. But, he says, they "generally were

dismissed as a solution when rural industry
lobbyists-including EKOGA-explained
the negative impacts of such moves."
Ditto for oil and gas severance taxes,
and especially the low-production exemptions that he notes are so critical for
eastern Kansas operators. "That was a
big priority (for EKOGA), but there was
almost no conversation around that."
When it came to income taxes, Bruno
says EKOGA joined the Kansas Independent Oil & Gas Association and remained neutral on the exemption for passthrough entities included in the tax reform
package engineered by Governor Sam
Brownback in 2012. Instead, he says, the
association focused on making sure the
loss carry-forward provision that was
eliminated when nonwage business income
was exempted was returned for limited
liability corporations and sole proprietors.
"When those businesses invest in the

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AUGUST 2017 105
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American Oil and Gas Reporter - August 2017

Table of Contents for the Digital Edition of American Oil and Gas Reporter - August 2017
