American Oil and Gas Reporter - September 2017 - 100

ConventionCoverage: Kansas Independent Oil & Gas Association

Key Association Issues
Remain In Limbo
By Bill Campbell
and Dan Holder

WICHITA, KS.-Nowhere and nothing
describe the status and progress the Kansas
Independent Oil & Gas Association has
made on two key issues facing the state's
industry this year, according to reports
made during the general membership
meeting at KIOGA's 2017 annual convention, held Aug. 13-15 at the Century
II Convention Center in Wichita.
"We are in limbo," said Environmental
Committee co-Chairman Jon Callen of
questions surrounding responsibility for
plugging orphaned and abandoned wells
in the state. "The Kansas Corporation
Commission doesn't really seem to know
what it wants to do."
As for obtaining any rate concessions
from the state's rural electric cooperatives
for production operations, "For every
step forward, it seems there are two steps
back," characterized Electric Chairman
Adam Beren. "This may never end."
Also during its membership meeting,
KIOGA feted several members and one
legislator for outstanding service, and
elected officers for 2017-18.
Plugging Liability
Callen traced the progress-or lack
thereof-on clarifying the KCC's plugging
policies since the Kansas Appeals Court
in January 2015 upheld a district court
ruling in John N. Denman Oil Co. v.
State Corporation Commission overturned
the commission's 2008 Quest Order,
which stated that a company acquiring a
new lease was not responsible for plugging
any orphan wells found on that lease as
long as the company did not attempt to
utilize the old wellbores, and none of the
company's subsequent operations caused
the orphan wells to become an environmental hazard.
"All they are giving us is that we
probably aren't going to like the order
they would come up with, which would
be that anybody who touches a new lease
could become responsible, including a
landman," he reported.
The KCC convened an informational

hearing in November 2016, at which,
Callen related, industry representatives
encouraged the commissioners to instruct
Conservation Division staff to work with
industry to draft a mutually acceptable
policy. However, "Based on the body
language of the three commissioners, it
is my personal belief that they had little
desire to address the issue," he expressed.
Callen noted that a staff analysis filed
May 30 concluded the Quest Order was
not supported by statute or legal rulings.
And he revealed that an eastern Kansas
operator had been advised that he had to
first perform a casing integrity test on
any new well he wished to temporarily
abandon.
"Of course, if (the well) doesn't pass
the CIT, it has to be plugged or repaired
then and there," Callen reflected, adding
that was not a policy that had been vetted
through the KCC's Oil and Gas Advisory
Board.
"The KCC is as unfriendly to work
with today as I have seen it since I
became involved in the industry in 1980,"
he commented.
During audience discussion, several
KIOGA members said the KCC appeared
to be subjecting transfers of ownership

100 THE AMERICAN OIL & GAS REPORTER

filings to additional scrutiny and requiring
extra substantiation for the accompanying
Form T-1.
Callen noted there had been some talk
of asking the state legislature to define
plugging responsibility, but he said that
would require opening all the KCC's
rules to scrutiny, which would create an
avenue for activists to lobby for more
onerous regulations. "So, I don't think
going to the legislature for a fix is our
answer because of the risk we would
run," he expressed.
He also mentioned that the American
Association of Petroleum Landmen had
pointed out in comments filed with the
KCC that the Quest Order had never
been revoked, remained on the books as
an official KCC order, and therefore
should be followed until changed. "It appears (Conservation Division) staff may
be trying to sneak around doing that,"
Callen opined. "We have to be ready to
stand up to them, and it may turn out that
somebody has to file a lawsuit in order
to get some definition to this."
Electric Rates
Electric Chairman Beren recalled
that after Americans for Electric Choice

KIOGA officers for 2017-18 pictured here are, from left, Vice Chairman Alan Banta, Vice
Chairman David Bleakley, Secretary Bill Anderson, Chairman Kenneth White, Treasurer
Scott Frazier, and immediate past-Chairman Nick Powell. Not pictured is Vice Chairman
Ed Nemnich.
American Oil and Gas Reporter - September 2017

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