American Oil and Gas Reporter - April 2020 - 74

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IssuesUpdate: Kansas Independent Oil & Gas Association

Federal, State Tax Relief
On KIOGA's Radar
By Dan Holder
TOPEKA, KS-Although many events
and meetings have been cancelled, Kansas
Independent Oil & Gas Association Chairman David Bleakley says the organization
will stay strong amid uncertainty.
"Those of us who have been in the oil
and gas business for many years have
seen dark clouds gather on our industry
before, only to see it thrive again once
the storm clouds pass," assures Bleakley,
executive vice president at Colt Energy
Inc. in Mission, Ks. "Unfortunately, this
is life in the oil and gas industry, and any
other cyclical industry for that matter.
Oilmen and women are optimistic realists;
we know the sun will shine on our industry
again, but we also know the pain we will
have to endure to reach that point."
Because of the coronavirus, KIOGA
had to cancel this year's mid-year meeting
scheduled for April in Garden City, Ks.
Bleakley adds that KIOGA is not alone
in cancelling an association event and is
already planning for next year and looking
forward to returning to Garden City.

"KIOGA continues to monitor all
issues and inform its members and our
industry of new developments," he says,
adding "KIOGA continues to fight for
our members through the agony of this
price war and pandemic."
As part of those efforts, KIOGA President Edward Cross says the association
continues to work on federal and state issues confronting Kansas operators.
Marginal well producers across the
country will see relief if Washington
eliminates the net income limitation on
percentage depletion on those wells, Cross
notes.
"In the past, whenever legislators suspended that provision, they only suspended it for specific tax years," he
recalls. "In discussions with members
of the Senate Finance Committee and
the House Ways and Means Committee,
I have offered a different idea. I asked
why not suspend or eliminate it any time
West Texas Intermediate prices dropped
below $55 a barrel. That is $45 for
Kansas producers."
Cross also provided a briefing paper

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74 THE AMERICAN OIL & GAS REPORTER

on the current oil market situation, he recounts, and policymakers asked him to
provide preliminary draft language for a
proposed elimination of the net income
limitation provision. Several policymakers
agreed to include the proposal in the
master list of options for consideration.
"I know a lot of things are going on at
the federal level, but this is a critical
issue that will help producers," Cross
points out. "If producers are losing money,
which many of them are, they cannot use
percentage depletion to help their bottom
lines, unless the government eliminates
net income limitation. It is critical for a
lot of Kansas producers."
Electric Rates
KIOGA also continues its discussions
with electric cooperatives across Kansas,
Cross says, noting electricity is the highest
operating cost for most producers. He is
seeking to persuade co-ops to lower the
rates charged for electricity delivered to
well sites. He reports KIOGA Electric
Committee Chairman Adam Berens has
talked with Kansas Electric Cooperatives
(KEC), the association of cooperatives.
"With oil prices and the market situation we are in, there will be a lot of oil
wells shut in or plugged, and those cooperatives will lose electric load," Cross
warns. "If those loads disappear, all the
cooperatives' fixed costs will have to be
spread out over fewer well sites and residential customers. Those cooperatives
may want to consider some of these proposals to help producers keep as many of
their wells operating as possible, which
will help everyone."
Cross adds KEC still is asking KIOGA
members to apply directly to their local
cooperatives for electric rate relief. "The
co-op association seems much more open
now to these proposals and seems to be
considering at least some of them. We
will see if that comes about," he offers.
Electricity rates are the subject of a
two-part study of the retail rates used by
the state's electric public utilities, authorized under 2019's SB 69. The bill
calls for one portion submitted to the
Kansas House and Senate utilities com-


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American Oil and Gas Reporter - April 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2020

Contents
American Oil and Gas Reporter - April 2020 - Intro
American Oil and Gas Reporter - April 2020 - 1
American Oil and Gas Reporter - April 2020 - 2
American Oil and Gas Reporter - April 2020 - Contents
American Oil and Gas Reporter - April 2020 - 4
American Oil and Gas Reporter - April 2020 - 5
American Oil and Gas Reporter - April 2020 - 6
American Oil and Gas Reporter - April 2020 - 7
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