American Oil and Gas Reporter - June 2015 - 16

IndustryDigest
'exempt' aquifers-but it is important to
understand that produced water is never
injected into drinking water aquifers."
The group goes on to say it is
considering how and where to engage
the lawsuit. ❒

IRS Offers Guidance
On Fracturing MLPs

WASHINGTON-The Internal
Revenue Service has published
proposed regulation REG-132634-14
that would clarify that income from
certain oil and natural gas fracturing
services is "qualifying income" for
purposes of determining whether a
master limited partnership qualifies for
"pass-through" federal tax status, the
Tax Group at attorneys BakerHostetler
reports.
BakerHostetler notes that an MLP
generally qualifies for pass-through tax
status if at least 90 percent of its gross
income is qualifying income, which
includes certain income from natural
resource-related activities.
The firm advises that although the
regulations proposed May 6 provide
detailed guidance, "it could prove
challenging to apply them in practice."
Under the proposed regulations, the
firm says, income from fracturing
services is qualifying income only if the
services represent an "intrinsic
activity," which involves meeting a
three-part test:
* The services must be
"specialized" to support a natural
resource-related activity described in
Section 7704(d)(1)(E).
* They must be essential to the
development activity.
* They must be "significant."
"The proposed regulations provide
much-needed guidance and confirm that
certain frac services give rise to
qualifying income," BakerHostetler
assesses. "However, they arguably
heighten the requirements for income
from frac services to be treated as
qualifying income. For example, the
proposed regulations indicate that
income from delivering water, and
recovering and recycling flowback for
fracturing natural gas is qualifying
income. However, income from mere
water delivery is not qualifying income
because it does not satisfy the
'specialized' requirement.
16 THE AMERICAN OIL & GAS REPORTER

"Furthermore, the IRS
acknowledged that although the
proposed regulations largely are
consistent with past IRS rulings, the
new guidance may narrow the range of
permitted activities," the firm adds.
The proposed regulations were
published in the May 6 Federal
Register. ❒

Resource Development
And State Authority Are
Favored In Voter Poll

DENVER-Americans strongly
support using resources on public lands
to produce energy and giving states
more control over those activities,
indicates a poll commissioned by the
Western Energy Alliance. The group
says the survey finds that 60 percent of
likely voters support increasing energy
production on multiple-use public lands,
which do not include national parks and
wilderness areas.
The Alliance says it commissioned
the Tarrance Group to conduct a
national telephone survey of 1,000
likely voters from April 12-16. The
margin of error is 3.1 percent.
On other matters relating to oil and
natural gas production, the Alliance
reports that voters express
overwhelming support for states to take
the lead with regard to wildlife
conservation, including endangered
species. Support also is strong for
Congress to overturn the crude oil
export ban, the poll finds, with
majorities across both political parties
favoring repeal.
The Alliance says highlights from
the survey include:
* A combined 77 percent of
respondents support giving states
complete or shared authority with the
federal government in managing and
regulating activities on public lands.
* 62 percent think state and local
governments should have primary
authority for overseeing energy
development on public lands, with 34
percent preferring federal oversight.
* 73 percent favor state agencies
managing wildlife within their
boundaries.
* 79 percent support updating the
Endangered Species Act to give state
wildlife agencies more control over
managing and recovering species.

* 57 percent agree Congress should
overturn the 1975 crude oil export ban
to allow trade with allied nations.
* Majority support for reversing the
export ban exists across political
parties, at 65 percent of Republicans
and 51 percent among both Democrats
and independents.
"Americans continue to have a
favorable impression of how oil and
natural gas are produced in the United
States. For that reason, they support
boosting energy development on public
lands by transferring authority to state
agencies, which have a better track
record of protecting the environment
than federal regulators," says Alliance
President Tim Wigley. "People trust
states to make the right decisions.
Voters understand that states across the
West continually review and update
regulations. That is why there was such
a visceral reaction to federal fracturing
rules in places such as Wyoming,
Colorado and North Dakota." ❒

PIOGA Sets Program
For Summer Seminar

WEXFORD, PA.-"Hard Times-
Unique Solutions" will be the theme of
the conference portion of the
Pennsylvania Independent Oil & Gas
Association's 2015 pig roast, equipment
show and technical seminar. PIOGA
says its popular summertime event takes
place July 28-29 at Seven Springs
Mountain Resort in Champion, Pa.
The opening day includes morning
golf and sporting clays competitions,
followed in the afternoon by an outdoor
equipment show and a new feature at
PIOGA's major events called the
product and services showcase.
Presenting in the showcase, according
to the association, will be AEREON,
CleanAir Engineering, Golder
Associates, and New Pig Energy.
The much-anticipated pig roast,
entertainment and fireworks shot from
the top of the Seven Springs ski slope
round out the day, PIOGA adds.
The technical seminar on July 29
runs from 9 a.m. to 3:15 p.m. and
includes lunch. Among the
presentations scheduled, PIOGA says,
are:
* "Analysis of Brine Disposal in the
Appalachian Basin-Linking Injection
Operations and Geologic Reservoirs,"
American Oil and Gas Reporter - June 2015

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