American Oil and Gas Reporter - June 2016 - 103

ConventionCoverage: Kansas Independent Oil & Gas Association
sociation to garner support for that measure," he said.
Regulations From Washington
The oil and gas industry also must
continue its scrutiny of proposed federal
regulatory changes, Cross urged. He pointed to news out of Washington regarding
methane and carbon dioxide emissions
as potential trouble.
But not all the news is bad, he said,
pointing to a federal court ruling that vacated Endangered Species Act protection
for the lesser prairie chicken. On Feb.
29, the U.S. District Court for the Western
District of Texas denied the U.S. Fish &
Wildlife Service's motion to change the
court's original order vacating the LPC's
threatened status because the agency
failed to properly consider state conservation efforts. (Editor's Note: In May,
the federal government dropped its appeal.
See story page 16.)
However, Cross advised, the USFWS
has the option of restarting the listing
process. "If the agency does that, it could
look at whether people still are involved
in conservation agreements," he said.
"The agency could argue that if the bird
is not listed, people won't participate in
those agreements."
KIOGA submitted comments to USFWS on Feb. 17 about its methodology
for listing species under the ESA, he
added. The comments encourage the
agency to base decisions only on the best
available scientific data, and to avoid
basing decisions on speculative, incomplete
or unreliable information, Cross said.
Cross reported that the White House
announced in March that it planned to
expand its authority over methane emissions, moving beyond its August 2015
proposal to regulate emissions from new
oil and gas wells to also cover existing
facilities. (Editor's Note: On May 12,
the EPA announced finalized New Source
Performance Standards for emissions of
methane, volatile organic compounds and
toxic pollutants from oil and gas sources.
See story page 34.)
"The U.S. Environmental Protection
Agency has flip-flopped completely its
position on the success of oil and gas industry measures to reduce methane emissions," Cross told KIOGA, commenting
that methane emissions from production
activities accounted for a little more than
1 percent of total U.S. greenhouse gas
emissions.
"The Obama administration continues

to adhere to the last-century mindset that
increased oil and gas production and
achieving climate goals are not compatible," he posed. "Clearly, that is not the
case. This administration is catering to

environmental extremists."
KIOGA has submitted comments to
EPA asserting its methane emission regulations are unnecessary, Cross said. ❒

Electric Committee Challenges
State Utilities On Several Fronts
GREAT BEND, KS.-While the oil and
natural gas industry has seen many of its
service companies and vendors agree to
share some of the pain of low commodity
prices, electric utilities and co-operatives
across western Kansas have proven less
supportive, Adam Beren, chairman of the
Kansas Independent Oil & Gas Association's Electric Committee reported at the
association's midyear meeting.
"We have seen, on average, 25-50 percent cost reductions from most vendors
serving the industry, including drilling
companies, completion vendors, roustabouts and pulling companies, water
haulers, and just about everyone else.
Without reductions on electric bills, overall
meaningful cost reductions for oil operators
is very difficult, since electricity represented 33 percent of my company's operating costs in 2015. It is easy to forget
that the most expensive vendors are the
electric utilities," pointed out Beren, president of Berexco LLC in Wichita, Ks.
"The utilities are not easily able-and

Adam Beren, chairman of the Kansas
Independent Oil & Gas Association's
Electric Committee, tells the association's
midyear meeting he is asking electric
utilities and co-operatives to help the
state's oil and gas operators survive by
reducing electricity costs.

so far have been unwilling-to adjust rates
during this downturn," he stated. "Two
Sunflower Electric co-operatives have
raised rates in the past several months,
and a third (was to) host a board meeting
in May to seek approval for a rate increase.
It is critical for the oil industry to work
closely with utilities to find ways to lower
costs now and in the long run."
In discussions with utilities and cooperatives that serve most of the electric
load in western Kansas, Beren said he
highlighted the differences between oil
producers and other utility customers.
Many oil field loads run 24 hours a day,
365 days a year with very high load
factors, and represent the base load for
the utilities. He added that base load was
the cheapest for utilities to serve.
"The cruel irony about our loads is
that our older leases do not use less
energy, but more," he described. "In the
latter stages of field development-whether
it is water-drive Arbuckle and Mississippian wells, or Lansing Kansas City waterflood wells-most (older) wells make
more water, use more energy, and produce
less revenue. The utilities need to understand the characteristics of our loads."
Beren said a study of his company's
electric rates during the past decade
showed an average 18 percent increase
by Sunflower co-ops and a 27 percent
increase on accounts served by Midwest
Energy. Wheatland Electric's rates have
gone up 41 percent during the same
period, after its recent rate change, which
its oil-producing customers are likely to
challenge before the Kansas Corporation
Commission, he noted.
Beren pointed out that rates charged
by Kansas utilities were higher than any
other utility serving Berexco's operations
in surrounding states.
"Many utilities' rates will continue to
increase 1-2 percent a year, almost like a
cost of living increase," he said. "We have
tried to encourage utilities to reverse that
trend and work toward a 20 percent decrease
JUNE 2016 103

American Oil and Gas Reporter - June 2016

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