American Oil and Gas Reporter - June 2014 - 155

ConventionSection: Kentucky Oil & Gas Association
cation."
McNeill adds that he expects KOGA
members will be excited about the
prospects for 2014, and will show up at

the convention with a healthy dose of
optimism.
"Louisville tends to be a great location
for our meetings," he says. "People are

ready to get together and evaluate where
the industry stands and celebrate its success, and continue to push the association
forward."
r

Berea Play Seeing Renewed Interest
FRANKFORT, KY.- Traditional Kentucky permit numbers have been reversed
over the past couple years, with operators
who formerly were drilling wells for natural gas switching to targeting oil, reports
Andrew McNeill, executive director of
the Kentucky Oil & Gas Association.
"Industry activity across Kentucky is
steady," he says. "Some of the larger
companies have come back to the state
in a big way over the past several years.
But even the smaller mom-and-pop operators really are starting to see some
prospects that are generating what I would
call cautious optimism. Things are moving
forward, and I really expect we will see
growth in the industry and the association
in the coming years."
Unlike many states that are seeing
public concerns arise when operators
move into new discovery areas or urban
growth surrounds drilling sites, McNeill
says Kentucky's future production potential
lies in currently producing areas. He adds
Kentucky has trailed behind other states
in developing unconventional shale plays.
The state's most promising developments
in the past year have been the shallow
Berea Sandstone play in northeastern
Kentucky
"Everything I am hearing from producers is that they are very bullish on the
prospects there, and there have not been
any significant hurdles or barriers to investing in growth," McNeill reveals. "It
is an area that has historical production,
so those local communities understand
and appreciate what the industry means.
Some of these counties are facing unemployment rates well above the state and
national averages, and so they are excited
to see the investment, job creation and
local tax revenues that this oil and gas
investment is generating."
Producers are starting to employ advanced horizontal drilling technologies
in the state. McNeill says that while Kentucky operations are not on the scale of
those in the Marcellus or Utica plays,
they are poised to unlock the full potential
of the Berea Sandstone.
Kentucky's smaller operators in the

Berea Sandstone are embracing fracturing
technologies and are very much in the
forefront of the movement, he says, following the lead of larger independents
that have been drilling horizontally in
the Lower Huron for the past decade.
McNeill adds that KOGA has a strong
role to play in educating its members on
the benefits of the techniques new to the
state, and the association uses events
such as the annual meeting to offer presentations as well as networking opportunities to disseminate that information.
The state's regulatory structure is in
place to handle the new practices in the
Berea play, McNeill asserts. He says the
oil and gas industry enjoys a good relationship with the Kentucky Division of
Oil & Gas and Department of Natural
Resources.
"KOGA certainly doesn't expect serious push to drastically change the regulatory structure here in Kentucky," he
predicts.
Clean Air And Water
On the federal front, McNeill says
there are three areas in which Kentucky
has been engaged over the past year: new
clean air and water regulations, and the
potential listing of species in the state
under the Endangered Species Act.
The Kentucky Division of Air Quality
is working with industry to implement
the New Source Performance Standard
for storage tanks contained in Quad O
regulations, he says. The regulations cover
sites with tanks or other vessels holding
crude oil, condensate, hydrocarbon liquids
or produced water with the potential to
emit six tons a year of volatile organic
compounds. Other emission controls may
be required on natural gas processing
equipment, such as compressors or dehydrators (AOGR, June 2012, pg. 24)
"The division will be managing that
program for the U.S. Environmental Protection Agency," he says. "Ultimately,
the requirements for Kentucky operators
under those regulations will be a very
light touch. That is largely because of
KOGA's work with the division so that it

understood the industry and how that
translated into the level of emissions.
With KOGA engaged, air quality regulators have developed what I think could
be a model state program for meeting
EPA requirements while not overburdening
the industry."
The state's coal industry traditionally
has been more involved with the Clean
Water Act, especially the provisions of
Section 404, which regulates discharging
fill or dredged material into waters of the
United States. However, McNeill warns
oil and gas producers should be concerned
about those regulations beginning to
impact their programs. He says the U.S.
Army Corps of Engineers has reached
out to KOGA to discuss educating association members on Clean Water Act requirements.
KOGA continues to monitor the U.S.
Fish & Wildlife Service's supervision of
ESA listings, McNeill reports, including
proposals to list aquatic species in eastern
Kentucky. If additional listings are made,
the oil and gas industry will be able to
continue operating, but he cautions the association must remain vigilant about any
potential threats from such actions.
r

Rex Energy Announces
Results From Ohio Wells
STATE COLLEGE, PA.-Rex Energy
Corp. says it has placed its three-well
Ocel pad in the company's Warrior North
Prospect into sales from its resting period
at an average five-day sales rate of 1,472
barrels of oil equivalent a day per well,
assuming full ethane recovery and an average natural gas shrink of 18 percent.
The three wells produced with an average casing pressure of 1,560 psi during
the five-day sales period on an average
26
⁄64-inch choke, Rex Energy says. They
were drilled to an average total measured
depth of 12,700 feet, with an average lateral length of 4,400 feet, and completed
with an average of 29 stages. Based on
compositional analysis, the company
says the produced gas averaged 1,282
Btu.
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JUNE 2014 155

American Oil and Gas Reporter - June 2014

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