American Oil and Gas Reporter - April 2018 - 141

ConventionSection: Kansas Independent Oil & Gas Association

Markets, Legislature Offer
Good News In Kansas
By Dan Holder
WICHITA, KS.-The global increase
in crude oil prices is good news for
Kansas producers, although those positive
feelings don't extend to natural gas, which
has not seen a similar jump, assesses
Kenneth White, chairman of the Kansas
Independent Oil & Gas Association.
Speaking in advance of the association's
midyear meeting, set for April 19 in McPherson, Ks., White notes that while many in
the industry are hailing oil prices north of
$60 a barrel, Kansas producers are putting
a lot less than that in their wallets.
"I anticipate that we will have a higher
level of activity in 2018 and 2019, thanks
to the increases in oil price," says White,
president of White Exploration Inc. in
Wichita. "I see cautious optimism in the
industry. The service companies are slightly busier, but nothing really substantial.
If Kansas sees a substantial increase in
activity, that will be a real problem for
the service companies. Everyone I talked
to says they are having trouble adding
employees."
There also are reasons on the legislative
front for the Kansas oil and gas industry
to cheer, says KIOGA President Edward
Cross. The bills of highest concern to
KIOGA did not make it out of their originating chambers. Most of the legislation
being monitored by KIOGA deals with
injection wells, he adds.
"The association is watching very
closely to see if legislators try to amend
some of those bills into other bills," he
says. "I don't think that will happen, because legislators are concerned about taxes
and school finance. A lot depends on how
legislators intend to address those concerns,
so that could become an issue for the industry. But I do not anticipate any specific
bill targeting oil and gas issues."
Cross calls HB 2641, one of the bills
that failed to advance, "the uninformed
injection well/earthquake bill." He says
it was predicated on two assumptions:
that injection wells caused all induced
seismicity in Kansas, and that injection
volumes are the only factor causing that
seismic activity.

KIOGA Midyear Meeting
McPherson, Ks.
Wednesday, April 18
5-5:45 p.m. PetroPro Training Class, CHS
Refinery, McPherson
6 p.m. Cocktail Party, The Fieldhouse

Thursday, April 19
8 a.m. Registration, CHS Refinery
9 a.m.-4 p.m. Trade Show, CHS Refinery
9-10 a.m. Refinery 101, CHS Refinery
Darral Colaw, CHS
10-11 a.m. Managing And Reducing Artificial Lifting Costs
Eric Macias, LORENTZ, and Will Darrah,
Darrah Oil
10 a.m.-2 p.m. Tour of CHS Refinery
Bus Will Run Every 30 Minutes
11:30 a.m.-1:30 p.m. Lunch, CHS Refinery
1:30-2:30 p.m. McPherson College Antique
Car Restoration Tour
Bus from CHS Refinery
1:30-3 p.m. KOLAR Operator Management
Module
Ryan Hoffman, Kansas Corporation Commission
4-5:30 Board and General Membership
Meeting, McPherson Museum
6-7 p.m. Cocktail Party, McPherson Museum
7-10 p.m. Dinner, McPherson Museum

Friday, April 20
8 a.m. Golf Tournament, Turkey Creek
Golf Course, McPherson
Registration at 8 a.m.
Shotgun Start at 9 a.m.
Lunch to Follow
9 a.m. Sporting Clays Tournament, Gypsum
Valley Sporting Clays, Gypsum, Ks.
Lunch to Follow

White says HB 2641, written by the
House Water and Environment Committee,
sought to set disposal limits for fluids
from oil and gas operations for the specific
goal of reducing seismic activity. It failed
to advance in the House.
"Committee members realized that
there was absolutely no science involved
in the writing of this legislation," White

says. "What has surprised most of us is
the general public's fear of earthquakes,
and its pointing the finger at the industry
for those earthquakes, when in reality
the earthquake issue has involved only a
very, very small geographical area in the
state. KIOGA is having a hard time
getting the word out that the other parts
of the state really are not at risk."
School Financing
Most of the state's political focus still
centers on funding public schools, although
Cross says any action must wait until a
legislative report recommending the proper
amount or formula for financing education
is complete and the Kansas Supreme
Court issues its ruling on what the state
must do to properly fund its schools. He
points out some legislators have proposed
doubling the state's property tax rates in
an effort to raise $600 million for schools,
although the election-year suggestion
failed to garner any support.
"The court ordered the legislature to
come up with something by April 30.
That tells me the court wants to rule on
what the legislature comes up with before
July 1, the start of the state's fiscal year.
So if legislators come up with something
by April 30, they have time to call a
special session," Cross says.
"We are closely monitoring how the
legislature addresses education funding,
to make sure the oil and gas industry is
not singled out for a tax increase," Cross
says, "If there is a silver lining about the
past few years' oil and gas prices, it is
that legislators don't see the industry as
a big revenue generator right now."
Nevertheless, it may raise red flags if
legislators start looking at oil and gas tax
provisions, including some low-volume
well exemptions, he cautions. In addition,
a state study that compares how Kansas
evaluates tax incentive programs against
the practices of other states shows Kansas
lagging in regularly evaluating its tax incentives and changing policies, Cross reports. He says the state may act on the
study in the 2019 legislative session.
"It will be an interesting few weeks
for the legislature before the KIOGA
APRIL 2018 141

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