American Oil and Gas Reporter - September 2019 - 93

ConventionCoverage: Kansas Independent Oil & Gas Association

Kansas Makes Progress
On Regulatory Issues
By Bill Campbell
WICHITA, KS.-Although they yet remain a long way from the finish line,
progress is being made on a variety of issues important to Kansas oil and gas producers, leaders of the Kansas Independent
Oil & Gas Association reported during
the association's annual convention general
membership meeting, Aug. 11.
KIOGA held its 2019 annual convention
Aug. 11-13 at the Century II Convention
Center in Wichita. Among updates regarding
ongoing issues it was reported:
· A Kansas Corporation Commission
working group on abandoned and orphan
wells has released a draft of legislation
intended to be presented to Kansas lawmakers in 2020.
· A study of the state's electric rates
also is moving forward.
· At least one KIOGA member is
challenging an apparent attempt by the
Kansas Board of Tax Appeals to change
the effective date of ad valorem tax exemptions for low-producing leases.
Observing that, "It is going to take a
legislative effort to revise (the KCC's orphan and abandoned well) regulations,"
KIOGA outgoing Chairman Ken White,
president of White Exploration Inc. in
Wichita, advised that Oil & Gas Conservation Division staff presented a working
draft of proposed legislation at a July 23
meeting of the orphan well work group.
"The hope is to have something ready
to take to the legislature in the 2020 session," he advised, adding, "I can't imagine
we will get everything we want, but it
has been a really good conversation."
Noting the confusion surrounding plugging responsibility since the Kansas Appeals
Court in January 2015 overturned the
KCC's Quest Order and Conservation Division staff's ensuing attempt to deal with
it on case-by-case bases, White remarked,
"We are trying to get a set of rules so
everybody knows who is responsible."
Those rules, he promised, will address
"unplugged wells you know are there
and wells you don't know are there that
suddenly show themselves."
One key issue, he said, is exceptions

and "having really specific language on
who is not responsible."
Another, he added, is combining the
two state funds earmarked for plugging
orphan wells and somehow preventing
lawmakers from sweeping them for other
purposes. "We are trying to build that
into the legislation," White said.
Electric Rates
Recalling that on July 9, the Legislative
Coordinating Council failed to award a
contract for a study of Kansas electric
rates that the legislature authorized this
year, KIOGA President Ed Cross reported
that stumbling block was removed on July
29 when council members awarded the
contract to London Economics in Boston.
That study is to include whether the
rate-making processes for electric cooperatives and municipal utilities are in the
public interest, and whether retail electricity
markets would benefit Kansans. And even
though it has taken three years of effort to
get to this point, KIOGA Electric Power
Committee Chairman Adam Beren characterized any legislation that may ensue
as only the beginning. "Really, the fight is
only getting started," he said.
Beren called Substitute for SB 69, which
authorized the study, "a good bill. The

things we want studied will be studied."
But, he warned, "If you thought it
was hard to get to this point, the real
fight is going to begin when we get to
the point of advancing legislation. This
is going to be a grass-roots dogfight. It is
going to require us to step up and be in
contact with our legislators."
Already, Beren said, the state's electric
cooperatives are attacking the study as
an attempt by the Kansas Chamber of
Commerce and "big business" to shift
electric costs to other consumers. "We
are going to have to get involved and
demonstrate this is about helping all
Kansans," he urged.
Ad Valorem Exemption
Under Kansas statute, pointed out KIOGA State and Federal Tax Committee
Chairman Andrea Krauss, the ad valorem
tax exemption for leases producing less
than five barrels a day per well becomes
effective on "the date of first exempt use."
Historically, that has been interpreted
as Jan. 1 of the year the leases cease to
produce more than five bbl/d per well,
noted Krauss, who works as controller
for John O. Farmer Inc. in Russell, Ks.
For example, she illustrated, an exemption
application filed with an ad valorem tax

Incoming
Chairman
David Bleakley (left), executive vice president
of Colt Energy Inc. in
Mission, Ks., pauses
with outgoing Chairman
Ken White, president of
White Exploration Inc.
in Wichita, Ks., during
the Kansas Independent
Oil & Gas Association's
2019 annual convention,
held Aug. 11-13 at the
Century II Convention
Center in Wichita.

SEPTEMBER 2019 93

American Oil and Gas Reporter - September 2019

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