American Oil and Gas Reporter - April 2016 - 30

Wyoming Rejects Severance Changes
CASPER, WY.-Two major pieces of
legislation that would have affected
Wyoming's oil and gas industry failed to
advance in the statehouse this year. Bruce
Hinchey, president of the Petroleum Association of Wyoming, attributes the lack
of interest in voting on those measures to
legislators' focus on budget items.
"Neither of the two bills I really was
interested in made it to a vote," he says.
"They were big issues, and I don't think
legislators really wanted to deal with
them. They focused on the budget, since
the state does not have much money. At
the end of the session, a lot of the discussion
was on how to raise additional revenues."
HB 125, introduced by Representative
David Miller, R-Fremont, would have
adjusted an existing low-price tax incentive
for marginal wells by providing another
2 percent reduction in the severance tax
rate in addition to the current 2 percent
cut, changed the trigger points for classifying stripper wells, and added natural
gas stripper wells to the exemption list.
Under the bill's language, a well would
have been classified as a stripper if it produced less than 10 barrels a day during a
calendar year when the average oil price
was $30 a barrel or more, a $10 increase
in the trigger price. If prices were below
$30, the well could produce as much as 15
bbl/d and retain its stripper classification.

A natural gas well would have received
the stripper well exemption if it produced
50 Mcf a day or less during the preceding
calendar year and the average gas price
was less than $2.50 an Mcf, the bill says.
"Of course, stripper wells are the ones
that get hurt most (when prices fall).
Maybe next year, legislators will have a
little more enthusiasm to do something
like this, but there certainly was not much
enthusiasm this year," Hinchey relates.
Another PAW priority was House Revenue Committee bill HB 64, which
Hinchey says would have allowed operators to pay ad valorem taxes monthly instead of at the end of the year.
"Usually, the state is a year to a year
and a half out from whenever the operator
pays those taxes," he says.
However, he advised, the initiative
was opposed by coal companies, many
of which, he noted, have declared bankruptcy. "They are trying to work through
those bankruptcies, and they don't want
to have to deal with those types of issues
now," he reasons. "We will continue to
work on it this summer, and see if we are
able to come up with something that will
make it more palatable to those people."
Hinchey predicts HB 64 may resurface
in the 2017 legislative session, and adds
that PAW is considering again seeking
additional severance tax relief for stripper

wells.
Other Legislation
Wyoming legislators approved SB 28,
Hinchey goes on, which is a measure
dealing with carbon capture and sequestration introduced by the Joint Minerals
Committee. "The bill was brought by the
Department of Environmental Quality to
transfer (ownership of) carbon dioxide
recovery wells when operators are injecting
for tertiary recovery," he says.
Under the terms of the bill, he details,
"If a company decides to turn a well
over for a sequestration project, it will
go through a process with the Oil & Gas
Commission to determine whether the
well is appropriate. DEQ then can take
over the well.
"The likelihood of that ever happening
is probably slim," Hinchey allows. "I do
not know any oil or gas company that
would ever do that because the liabilities
are pretty high. But it is set in place in
case it ever happens."
During an interim session that preceded
the 2016 regular session, Hinchey reports
Wyoming legislators considered a bill that
would have allowed produced water to be
sold outside the state. SF 80 was sponsored
by Senator Larry Hicks, R-Albany. Hinchey
says it is a policy decision on whether the
state would allow such a transaction. ❒

Two States Take Different Energy Paths
Two western states are taking their
energy policies in different directions.
On March 16, Idaho Governor C.L.
"Butch" Otter signed legislation to streamline the state's oil and natural gas permitting process. On March 12, Oregon
Governor Kate Brown signed legislation
to eliminate coal as a power source in
the state while increasing Oregon's renewable fuel requirements.
S 1339, which passed the Idaho Legislature on March 10, creates a five-member
Oil and Gas Conservation Commission
within the Idaho Department of Lands.
The bill grants the Department of Lands
initial responsibility for permitting decisions
while allowing the Conservation Commission to oversee the department's decisions.
It grants the Department of Lands authority
over and enacts procedures for creating
spacing units and integrating tracts.
S 1331 requires the Department of
Lands to approve or deny applications
for permits to drill or treat wells within
30 THE AMERICAN OIL & GAS REPORTER

15 days of receipt, and establishes permit
fees. It also prohibits any local government
entity from passing laws prohibiting oil
and gas extraction activities, with the exception "that extraction may be subject
to reasonable local ordinance provisions,
not repugnant to law, (that) protect public
health, public safety, public order, or
which prevent harm to public infrastructure
or degradation of the value, use and enjoyment of private property."
Published reports note that for the past
three years, Idaho lawmakers have been
passing bills in expectation of increased oil
and gas activity. They point out that three
years ago, Idaho established rules for exploration, drilling and production, and hired
a petroleum engineer to oversee seismic
testing in the western part of the state.
No More Coal
In Oregon, meanwhile, SB 1547, which
received final legislative approval on March
1, orders electric companies to "eliminate

coal-fired resources from (their) allocation
of electricity" on or before Jan. 1, 2030.
The bill also increases Oregon's renewable portfolio standard, which currently
stands at 15 percent and is scheduled to
rise to 20 percent in 2020. Under the
terms of SB 1547, the state's RPS will
increase to 27 percent in 2025, 35 percent
in 2030, 45 percent in 2035, and 50
percent in 2040.
According to published reports, the
coalition supporting the Clean Electricity
and Coal Transition Plan include the state's
two largest utilities-Pacific Power and Portland General Electric-as well as environmental, public health and ratepayer groups.
"This is a sensible approach that reflects
our customers' values, while maintaining
the affordability and reliability of electric
service," PGE President Jim Piro is quoted.
The reports note that Oregon currently
gets a third of its power from coal, but that
PGE operates the only in-state coal-fired
plant, which is scheduled to retire in 2020.❒
American Oil and Gas Reporter - April 2016

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