November 2016

In This Issue...

Message from KOGA Executive Director

KOGA Election Summary

IPAA Annual Meeting Summary

EPA Information Collection Request Update

William "Bill" Wynn Kelly

Christmas Party Invitation


Mark Your Calendar! 2017 Annual Meeting Location and Date Announced!

The 2017 KOGA Annual Meeting will be July 19-20 at the Marriott Griffin Gate in Lexington.


Upcoming Events:

KOGA Christmas Party
December 16
Bodley-Bullock House, Lexington
Registration Coming Soon

KOGA Eastern Kentucky Meeting
April 27, 2017
Jenny Wiley State Park, Prestonsburg

KOGA Annual Meeting
July 19-20, 2017
Marriott Griffin Gate, Lexington


Advertisers
(click on logo to visit website)



 

 

 

 

A Message from KOGA Executive Director, Matt Sawyers

Dear KOGA members and friends,

My goodness, what a time to be alive! I hope everyone has fully recovered from the election and is ready to celebrate a peaceful holiday season with friends and family.

From KOGA HQ, Laura and I wish each of you well as we close out 2016 and look forward to a successful new year.
We have quite a bit of content in this month's newsletter, so I will cede my time for the following items worth your attention:

  • KOGA's official election 2016 summary. We will of course be tracking developments as the new Republican House majority in Kentucky and the Trump administration begins to take shape.
  • A brief summary of the IPAA annual meeting, November 16-18 in Georgia.
  • An update for the EPA's oil and gas industry Information Collection Request.
  • A cordial invite and registration information for KOGA's annual Christmas party at the Bodley-Bullock House in Lexington.

Finally, it is with sadness I must inform you of the death of Bill Kelly. His obituary is posted below.

We hope to see each of you and your significant others at the Christmas party next month. I know it will be a great opportunity to catch up with old friends and have a wonderful time... As always, please feel free to call Laura or myself with any questions you have. Or better yet, stop by and visit us in Frankfort!

- Matt
Matt@kyoilgas.org


2016 Election Summary

Overview
It can be easy to fall into hyperbole when national elections take place, but election night 2016 delivered truly significant change to Washington, D.C. and Frankfort, KY. Republican Donald Trump will soon take office as the 45th President of the United States, and for the first time in nearly a century, Republicans will be in charge of Kentucky's House of Representatives. Jeff Hoover of Jamestown, KY will be the new Speaker of the House, taking over for longtime Frankfort power player Greg Stumbo (Democrat - Prestonsburg), who was defeated in his home district. 

In Frankfort, we have a tremendous challenge to form strong relationships with new members and committee chairs. We are losing friends of the industry and welcoming a number of new faces. But change brings challenges AND opportunities. We are incredibly fortunate to have members with the relationships, experience, and commitment to advocate successfully on our behalf. And that is our commitment at KOGA HQ as well. We truly are your voice in Frankfort and are excited for the opportunity AND challenge we have in front of us.

Federal
Republicans will once again be fully in charge of the executive and legislative branches of government. Despite the predictions of some, Republicans held power in the U.S. Senate, where Kentucky's Mitch McConnell serves as Majority Leader. The Republicans will also continue to hold the U.S. House of Representatives.

The biggest national story of course is the election of Donald Trump. Most political observers believed Democrat Hillary Clinton held a lead going into election day and expected her to become the first female President of the U.S. That of course did not happen. Mr. Trump received a sizable majority of the electoral college by winning upper-Midwest "rust-belt" states that had most recently gone to President Obama. Mrs. Clinton, however, did win the national popular vote, further evidence of the nation's partisan divide.

We will provide more analysis of the implications of a Trump presidency in the coming months. To say it was a hot topic at last week's IPAA annual meeting would be a gross understatement. Our opinion as of now is to be cautiously optimistic. Candidate Trump rode a populist wave into office that defeated the establishment of both parties. We must continue to keep close communications with our interstate partner associations as the Trump administration takes shape. And we must continue to use our opportunities to educate Kentucky's federal delegation on our industry's importance to the economy and our concerns with regulatory overreach.

State
Although the federal regulatory landscape is one of our industry's most significant concerns, KOGA's first and foremost priority must be to advocate for our members' interests at the state and local levels. This is where we can have our most significant impact given our resources, our office base in Frankfort, and our members' relationships throughout the state.  

Kentucky Republicans have taken the majority in the state House for the first time in almost 95 years, picking up 18 state House seats, while losing only one seat, giving them 64-36 supermajority.  The Kentucky House was the last legislative chamber in the entire South that was still controlled by Democrats. Donald Trump's huge presidential victory in Kentucky, Governor Matt Bevin's commitment to seeing the House flip and Senator Mitch McConnell's leadership and strategy overwhelmed local state House races in the eastern coal counties and in the western farm areas, with Trump's coattails sweeping Republicans into state legislative victories.  Republicans now control the three key legs of government in Kentucky - the state House, state Senate and Governor's office.  

With Trump heavily sweeping Kentucky's eastern coal country, a slew of key state House Democrats were taken out in a massive Republican wave.  Heading the list of Democrat casualties was House Speaker Greg Stumbo.  Meanwhile, Republicans swept the rest of the ballot in Kentucky as well with big winners, including U.S. Sen. Rand Paul, four of the state's incumbent Republican congressman, one new Republican congressman in an open seat. The only Democrat of significance to win was Louisville Congressman John Yarmuth.   

Expected leadership in the State House and Senate
House Speaker: former Republican Minority Floor Leader Jeff Hoover (http://lrc.ky.gov/legislator/h083.htm) will now become Speaker of the House.  A practicing attorney from Central Kentucky, Hoover is completing his 20th year in the House, the past 16 of which as Minority Leader.  

Senate President: Senator Robert Stivers (http://lrc.ky.gov/legislator/s025.htm) is entering his fifth year as Senate President, having previously served as Majority Leader from 2009-2012.  
 
Surprise of the night
The surprise of the night was the sheer magnitude of the Republican wave.  Prior to the election, Democrats held a narrow 53-47 majority.  As recently as March of this year, Democrats had overcome efforts to flip the House by winning 3 of 4 open seats.  Most observers believed this was finally the year Republicans would take the House.  Going into the night, conservative estimates were for a Republican majority with numbers from 51 to 54 seats.  Numbers like 57-58 seats were discussed, but even party insiders would have considered those wildly successful.  In the end, the Trump wave and anti-Obama/Democrat sentiment, in many cases driven by a backlash against EPA and the "War on Coal," propelled Republicans to a new 64-36 majority.        
 
Political landscape
Heading into 2017, Republican Gov. Matt Bevin now has the votes in the House to execute his vision for economic growth and fiscal reform in Kentucky.  His hard-fought 2016 biennial budget cut spending by nearly $1 billion, applying much of the savings to the state's untenable pension fund.  Perennial issues such as right-to-work and prevailing wage can now move through the House, and the Governor now has a willing partner to tackle the much discussed issue of broad tax reform, with a goal of moving Kentucky away from an income-based model to a more consumption-based tax model.   Education reform, particularly higher-education, will also be a much discussed topic in 2017.   While social issues featured in some campaigns as examples of pushing back against Washington overreach (gay marriage, same sex bathrooms, etc.), the sentiment of many legislators is that such issues will bog down the new Majority, although issues like funding for abortion and religion in schools may enjoy new traction.  

Conclusion

It is too early to tell how much will change specifically for Kentucky's oil and natural Industry, but we should be hopeful and ready for opportunities to help shape public policy and opinion. Now is the time for KOGA to plug-in, focus, and provide leadership to move toward a better future.

We will continue to keep our members updated and involved as always... See you soon!


IPAA Annual Meeting Summary

Issues that affect our industry are more complex than ever. It would be impossible for one organization alone to stay on top of all issues related to the oil and natural gas industries. That is why being part of our association is so critical for you and your business. It is also the reason KOGA must stay plugged into organizations like the Independent Petroleum Association of America. We are able to leverage the relationships we develop with organizations like IPAA and industry colleagues we interact with at various meetings and forums to bring you timely, useful information. And we are able to extend our reach when advocating for our members' interests by pooling resources with cooperating state associations.

KOGA President Maurice Royster and Executive Director Matt Sawyers represented the association at IPAA's Annual Meeting in Georgia last week. The best descriptor for the mood was cautious optimism. Following the election just last week of Republican Donald Trump, there was a sense that the challenging regulatory environment created by the Obama administration could be walked back in several practical ways. There was also, however, the fear of the unknown. As IPAA executive VP Lee Fuller declared, the demand from certain environmental groups to more heavily regulate the oil and gas industry is not going away. Ultimately, the optimism for potential regulatory relief was somewhat muted by the sobering market realities and the temporary fear of the unknown.

During the Cooperating Associations' Meeting, Lee Fuller and attorney Jim Elliott led a detailed discussion of all EPA related issues. Unfortunately, outside of updating the group on current issues relevant to our organizations, there was not a great deal of practical guidance due to the evolving situation with the change in administration. What you do need to know, however, is that the oil and gas industry Information Collection Request has been approved for issuance by the EPA. The next section of the newsletter should provide you a thorough briefing of this specific issue. Please feel free to call KOGA HQ if you have questions.

In other news of note from IPAA, industry legend Harold Hamm (CEO, Continental Resources) was named Chief Roughneck by U.S. Steel at the industry luncheon. If you are looking for a positive takeaway, consider the fact that Mr. Hamm has briefed President-elect Trump numerous times on industry issues and has been mentioned as a potential presidential appointment at the highest levels of the incoming administration.


EPA Information Collection Request Update

As you are likely aware, on November 10, 2016 the EPA released its final 2-part oil and gas industry survey. To the best of our knowledge, the largest majority of Kentucky producers will not be mandated to respond to the ICR. Unfortunately, however, several of you will.

Should your organization have been selected to comply with the survey, the following is the latest update from IPAA's Lee Fuller, as well as an ICR fact sheet. We understand the enormous challenge it will be to respond to either part of the survey, so please give us a call if you need further guidance and we will do our best to help.

EPA Information Collection Request Update from Lee Fuller:

On November 10, 2016, the Environmental Protection Agency (EPA) released the final Information Collection Request (ICR).  Detailed information can be found at the following website: https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/oil-and-gas-industry-information-requests. I have also attached an ICR Fact Sheet. Some changes were made since the ICR was sent for final review.  Most notably, the deadlines for submitting information were extended.  For Part 1, the deadline is now 60 days; for Part 2, it is 180 days.  Additional information from the Fact Sheet follows:

EPA carefully considered comments on both drafts of the ICR and has made a number of changes that are reflected in the final ICR to improve the information the agency receives and to reduce the burden on industry. Those changes include:
-Providing additional time to respond to both surveys. The final ICR provides owners/ operators 60 days to respond to the operator survey and 180 days to respond to the facility survey. Under the second draft ICR, owners/operators would have had 30 days to respond to the operator survey and 120 days to respond to the facility survey.
-Categorizing wells based on their gas-to-oil ratio (GOR). The GOR indicates whether the primary product of a well site is likely to be oil or gas, which, in turn, will give EPA information about the types of equipment likely to be located at the site. For each GOR category, the ICR seeks information on low-production wells, which produce 15 barrels of oil equivalent per day on average over a 12-month period, and wells that are not low production.
-Shifting certain questions from the operator survey to the facility survey. Under the final ICR, questions about access to electricity, the number of facilities that are manned or unmanned, liquids unloading, and hydraulic fracturing have been moved from the broader operator survey to the facility survey, which will reduce the reporting burden for the industry.
-Splitting the gathering and boosting segment of the industry into two segments to reduce confusion. The final ICR splits the gathering and boosting segment into compressor stations and pipeline facilities (pipeline facilities are defined as the 3 collection of pipelines and associated equipment on a county basis). These segments are covered by the facility survey. Owners/operators will be asked to enter basic information about all of all of their gathering and boosting compressor stations and pipeline facilities and provide more detailed information for about 10 percent of those, which will be randomly selected.
-Changed the required methods for pressurized liquids sampling. This sampling, which applies to separators with a throughput of more than 10 barrels per day, will provide information on potential flashing emissions when pressurized liquids enter atmospheric storage tanks. The final ICR requires owners/operators to use one of three Gas Processors Association sampling method, depending on the type of liquid they are sampling. The methods are specified in the ICR.
-Asks owners/operators to voluntarily provide information about costs such as the cost of controls -- that will help EPA better understand the economics of oil and natural gas wells. Making a number of clarifications, including:
      oWho is responsible for responding: The final ICR makes clear that the person or entity owning or operating a facility at the time the ICR letter is received is responsible for responding.
      oHow owners/operators must report information on wells at surface sites and the centralized production areas those wells feed.
      oThe portion of wells the facility survey covers: The final ICR clarifies that the facility survey will not request detailed information on every well in the industry; rather, it will focus the detailed information request on randomly selected wells, asking for details on those wells, other wells and equipment at that same surface site as the randomly selected well(s) and the centralized production sites those wells feed.


William "Bill" Wynn Kelly

It is with great sadness that we deliver to you today the news of KOGA member Bill Kelly's passing. On behalf of all of us here at KOGA, we send our most heartfelt condolences and sympathy to his family and friends.

Kelly, William "Bill" Wynn, Jr., 65, husband of Lezlei Swanson Kelly, died Oct. 18, 2016.

Born Sept. 18, 1951, in Harlan, KY, he was the son of the late William Wynn Kelly, Sr. and Leatrice Carter Kelly. Mr. Kelly was a 1973 graduate of Virginia Tech University, and was the Co-founder and President from 1977-1980 of the Virginia Oil and Gas Association (VOGA). He had numerous memberships in the energy industry including: the Kentucky Oil and Gas Association (KOGA), the Independent Oil and Gas Association of West Virginia (IOGA), the Appalachian Geological Society, the Society of Petroleum Engineers, and the American Association of Petroleum Geologists.

Survivors other than his wife include a son, Michael Douglas Kelly, Lexington, KY; two daughters, Kristen (Chris) O'Quinn, Johnson City, TN and Kara (Todd) Robinson, San Antonio, TX; three grandchildren, Brady and Logan Robinson, and Emerson O'Quinn; one brother, Timothy (Chris) Kelly, Newton, NC; two nephews and one niece.

Memorial contributions are suggested to Fisher House Foundation, Inc., 111 Rockville Pike, #420, Rockville, MD 20850 (www.fisherhouse.org) or Mission of Hope, P.O. Box 51824, Knoxville, TN 37950 (www.missionofhope.org).


You Are Invited!

To the annual KOGA Christmas Party!

Date & Time:
December 16, 2016
Cocktail Reception: 6:00pm - 9:00 pm

Location:
The Bodley-Bullock House
200 Market Street
Lexington, KY 40507

Overnight Accomdations:
Gratz Park Inn
120 W. 2nd Street
Lexington, KY 40507
(859) 231-1777
Reserve by November 23rd!

Register Now by Clicking Here!