American Oil and Gas Reporter - January 2012 - 235

ginia Department of Environmental Protection, which oversees gas drilling; and
reporting figures reflecting the residency
of workers at West Virginia sites, were
among the issues under consideration. Hiring local workers has been a contentious

issue in the debate.
Having said all this, oil and gas companies must continue to be good stewards
of the environment, and must be committed
to being a good corporate citizens and
neighbors. We must continue to educate

Tennessee Oil
& Gas Association

JIM WASHBURN
Owner
Washburn Geologic Services
Cookesville, Tn.

from the president
Last year saw changes for Tennessee's
oil and gas industry. The political landscape
changed, with a new Republican administration and increasing Republican majorities in both the Tennessee House of
Representatives and Senate.
The attitudes of the environmental
groups that oppose the oil and gas industry have changed also, and not for the better. The aggressiveness of a coalition of environmental groups opposed to oil and gas
drilling has taken many in the industry by
surprise. This, in turn, has forced the oil
and gas industry to change its tactics in response.
Government Activity
On the national level, no one is certain
what is going to come out of Washington
these days. Plans for a carbon tax are not
likely to make it through Congress. The
fate of plans to take away the depletion tax
deduction is a little less certain. I urge all
members of the oil and gas industry to oppose this.
As we in the business know all too well,
drilling for oil and gas is not a sure thing.
The old saying around these parts is, "If
you got an oil well, you earned it."
The few tax breaks oil and gas producers get are needed to help justify the investment. I urge all members of the oil and
gas industry to support the depletion allowance. Contact your congressmen and
senators to express your feelings about this.
The uncertainty over the direction our
national economy takes probably will affect oil prices as much as anything. A slow
national economy will lower oil demand
and prices. However, a slow world econ-

omy may push more investors into commodities such as oil and gas. In any case,
from what we have seen out of Washington lately, I expect little help on the economic front.
Proposed air quality regulations may
force electric utilities to use more natural
gas and finally reverse the price
drops of the past
few years. At the
same time, air quality regulations
could affect gas compression and stripper
well production. It would be beneficial to
the oil and gas industry to have a coherent energy policy out of Washington. We
don't need more regulations; we need access to more places to drill.
In Tennessee, the political outlook is
better than at the national level. Bill
Haslam took over as governor of Tennessee
in January last year, as did the new state
legislature with Republican majorities in
both houses.
The mandate from the voters is to create more jobs with less government regulation. Most representatives and senators
from both parties realize this. However,
some holdover regulators from the past administration apparently did not get the message, or chose to ignore it. The oil and gas
industry has been inundated by new regulations proposed by Water Pollution
Control last year. No sooner does one set
of regulations get vetted and approved, than
more are proposed, even before the last set
are in place. This may be in response to
probable changes within the various regulatory agencies within state government.
Water Pollution Control
The Haslam administration is in the
process of evaluating the various departments of state government. The Tennessee
Department of Environment and Conservation is supposed to be reorganized.
Tennessee's oil and gas industry is regulated by the Division of Water Pollution
Control. We would like to be moved back
to the Division of Geology for regulatory
and permitting purposes. The oil and gas

the public about our industry, provide facts
and science to dispute the many false
claims that adversely affect our industry,
and aid and assist in providing training for
those who are seeking employment in a depressed economy.
❒
industry was moved from Geology to Water Pollution Control a few years ago at the
behest of some environmentalists who had
influence with the previous administration.
To this end, TOGA has engaged the
services of a lobbyist to plead our case
with the new administration.
The people at Water Pollution Control
are nice enough and competent at what
they are charged to do, which is to prevent
surface water pollution. However, they
lack technical and economical understanding of the oil and gas industry. This
has resulted in an emphasis on regulations
to prevent erosion and contamination of
surface waters. Their casing policies are
designed mainly to prevent large surface
discharges of formation water.
The oil and gas industry has had to endure a series of public meetings intended
as a forum to present new regulations and
receive public comments. The atmosphere
has been antagonistic, to say the least.
These meetings were held at the Water Pollution Control office in Knoxville, Tn.
This proved convenient for the environmentalists, many of whom are headquartered in East Tennessee. They had
demonstrators and television crews present for some of these meetings. Even
though none of the rules proposed or presented had anything to do with hydraulic
fracturing, that topic dominated a rulemaking meeting held by the Tennessee Oil
& Gas Board on Aug. 25 in Knoxville.
The board managed to pass several new
rules. These included:
* Increasing plugging bond fees based
on depth;
* Establishing new requirements for
survey plats;
* Clarifying erosion control methods;
* Extending the time requirements on
permits from 90 to 365 days;
* Requiring shut-in gas well tests
every three years instead of every year;
* Extending the time in which an
abandoned well has to be plugged to one
year;
* Increasing the site reclamation period from 30 to 90 days; and
* Adopting several definitions covering oil and gas terminology.
At the close of the rule-making hearing, a list of possible new regulations to
be considered in the future was discussed. These included possible liability
insurance requirements for operators,
new casing regulations, and some sort of
JANUARY 2012 235

American Oil and Gas Reporter - January 2012

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