American Oil and Gas Reporter - June 2018 - 118

advance HB 2641, by Representative Ponka-We Victors, D-Wichita, which sought
to restrict injection volumes and impose
additional reporting requirements (AOGR,
April 2018, pg. 141). He noted that the
bill's proponents included not only the
Sierra Club, but also the Southwest Kansas
Royalty Owners Association.
During his legislative testimony on the
proposal, Cross said, he told lawmakers
the bill "was predicated on some untrue
assumptions, including that injection wells
caused all seismic activity in Kansas and
that injection volumes were the sole cause."
Therefore, he continued, although
some committee members suggested the
bill deserved interim consideration, KIOGA representatives told House leadership
that further study would not solve the
legislation's underlying flaws.
"An interim committee would not resolve anything," Cross affirmed. "We still
would oppose anything such as that in
the future."
Late in the session, he continued, Victors and Representative Nancy Lusk, DOverland Park, introduced a legion of
bills backed by the Sierra Club, including
HB 2669, which sought to require injection
well operators to obtain liability insurance
coverage for induced seismicity damages,
and HB 2672, which Cross described as
"a particularly onerous bill." Not only
would it have restricted injection volumes,
he said, but it also would have:
* Prohibited injection within 10 miles
of faults;
* Required groundwater testing before, during and after injection activity;
* Imposed a $1,000 permit fee; and
* Created a fund for a citizens' injection board, into which operators would
have been required to pay $0.01 per 100
barrels injected.
When he met with the chairs of the respective committees to which those bills
were assigned, Cross said, he conveyed
that the proposals were inherently misleading, and neither received a hearing.
Cross also mentioned HB 2786, by
Representative Eileen Horn, D-Lawrence,
which would have created a task force to
study injection wells. Although it would
have allocated one task force position to
an industry representative, Cross noted,
that person would have been greatly outnumbered. "Oil and gas would have had
one seat, but so would have a lot of other
people without standing," he described.
The bill was referred to the House
Federal and State Affairs Committee,
chaired by Representative John Barker,
R-Abilene. Cross said he told Barker that
HB 2786 appeared to be an attempt by
activist groups to generate public anxiety
about oil and gas operations, and the leg-

KCC analysis of surface rights issues
called for by 2017 House Water and Environment Committee Chairman Tom
Sloan, R-Lawrence. "During each of the
previous three years, the Sierra Club
came out with a host of property rights it
wanted to pass in a bill about oil and gas
development. Each year the bills went
nowhere," Cross recounted.
However, Sloan asked the KCC to
study the interplay of surface rights with
oil and gas production and report back
this year. According to Cross, the KCC
analysis found that the issues the surface
rights legislation purported to address
"were exceptions and not the normal course
of business in the Kansas oil and gas industry. Nothing indicated the need for further regulatory/statutory requirements."
The Trump administration's bilateral trade
agreement with South Korea limits the
country's steel exports to the United
States at 70 percent of the 2015-17 average, notes KIOGA President Edward
Cross. Cross observed that the industry's
steel consumption was anomalously low
during that period, and suggested U.S.
producers could face a shortage of oil
country tubular goods if other countries
sign similar agreements.

islation never received a hearing.
Another bill from Horne, HB 2727,
related to notification and disclosure of
mineral interests in real estate contracts,
a concept to which KIOGA is not inherently opposed, Cross suggested. "Any
time properties are bought and sold, it
would be nice for the purchasers to know
whether they also bought the mineral interests, and what that means," he related.
Cross said White told lawmakers KIOGA was neutral about the bill, and it
passed out of committee, but never arrived
on the floor. "I went to the House speaker
and said that, while KIOGA did not
oppose the bill, we feared it could be
amended to add some of those (onerous)
bills' provisions," Cross recounted. "It
was pushed down the calendar, never got
worked, and was stricken from the calendar
before turnaround."
KIOGA also took an interest in a legislative resolution-requiring a two-thirds
vote of both chambers-to amend the
Kansas Constitution to give voters initiative
and referendum powers. With an eye toward how anti-development groups in
states such as Colorado and California
had pushed referenda to oppose oil and
gas, Cross said he told Senate leaders
that KIOGA opposed such an amendment.
He indicated the lawmakers also expressed
skepticism and the resolution never received a hearing.
Cross also mentioned the results of a

118 THE AMERICAN OIL & GAS REPORTER

First Tariffs, Now Quotas
With regard to the tariffs President
Trump's administration imposed on imported steel and aluminum, Cross pointed
to the bilateral trade agreement the United
States reached with South Korea as an
example of how a steel-intensive industry
such as oil and gas could suffer even in
the absence of a tariff.
That is because the agreement sets a
quota on future South Korean steel exports
to the United States of 70 percent of the
2015-17 average, he explained. "Exports
in 2015-17 were well below the prior
years because of the decline in oil and
gas development," Cross observed. "Development declined in those years, so
steel consumption did, too."
Moreover, he warned, the South Korean
bilateral agreement offered a pattern for
other countries, which may limit steel supplies beyond the ability of U.S. producers
to fill the gap. "Steel availability may
become a more critical issue than price increases from the tariffs," he considered.
Cross said KIOGA already had told
administration officials that the type of
steel used in oil country tubular goods
was a niche market that many U.S. steel
makers had left. Although it was possible
for oil and gas companies to apply for an
exemption, he continued, an industrywide
exception was the best course. "If (exceptions) are on a per product basis, it is
like regulations," Cross compared. "Large
companies have more resources to deal
with that process, whereas smaller companies lack the resources to apply for it
with every product."
He also considered the renegotiation
of the North American Free Trade Agreement, which the Trump administration
triggered last spring. According to Cross,
little progress was evident on core issues
such as rules of origin, dispute resolution
and sunset provisions.

American Oil and Gas Reporter - June 2018

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