American Oil and Gas Reporter - June 2016 - 97

ConventionSection: Kentucky Oil & Gas Association
routinely drill and produce from shale
formations, which can have a higher natural radioactive level than limestone or
other formations.
A potentially complicating factor is
the requirement for open meetings this
time around, Vogt observes. Although
KOGA supports openness and disclosure,
closed meetings previously allowed for
frank discussion of issues among panel
members, he says.
"We have to be careful, now, about
what we say to avoid misunderstandings,"
Vogt says. "The press is going to be
there, along with environmental groups
and the public. We will see how this
works. We have high hopes for it. HB
563 is good in the sense that it will allow
the working group to really look at and
work through the issues involving
NORM."
Stratigraphic Tests
Vogt says his optimism for reasonable
waste management regulations is reinforced by the constructive work done on
SB 188, governing disclosure of geologic
data from stratigraphic tests.
"We had a very good bill go through
and be signed into law. It allows operators
to get a stratigraphic test permit and drill
wells, but also requires data obtained
from drilling those wells be released after
three years," Vogt says. "Before, there
was no way we could get the data from
stratigraphic tests released to the public.
This will get test information released,
which is good news for Kentucky operators."
Adds Barr, "The idea was to facilitate
drilling stratigraphic tests in areas where
additional scientific information was needed, and yet promote that type of testing
and allow those conducting the tests to
hold (the data) tight for a time, while
also requiring the information eventually
be released."
Modernization Act
The Kentucky Oil and Gas Modernization Act of 2015 became effective in
June 2015, but with activity stymied by
lower prices, the provisions have had
little impact on operators in KOGA's
ranks thus far, Vogt says.
"The new regulations that affect smaller
operators most have to do with location
reclamation plans, and I think that has
been fairly easy," he says. "It has gone
well."
Prior to the act being adopted, Vogt

says, operators were not required to file
reclamation plans with the state if minerals
rights were owned by the surface owner.
A plan was required if minerals were
severed, he says. Now, plans are required
to be filed with the state in either case,
prior to approval of permits.
"We basically are doing what we have
done all along with severed minerals.
When the surface owner didn't own the
minerals, the landowner had to sign off
on our reclamation plan prior to us getting
a permit. Now, we just have to do that
with all our wells," Vogt says.
SB 186 also established an abandoned
storage tank cleanup fund within the Kentucky Division of Oil & Gas to begin the
process of reclaiming abandoned tank
batteries. The legislation also defines best
management practices for well site reclamation, provides regulatory certainty for
deep horizontal drilling, and requires
chemicals used in high-volume horizontal
fractures be disclosed on FracFocus.org,
according to an overview from KOGA.
The act also establishes water quality
testing requirements and reclamation
bonding for deep horizontal wells.
Vogt says KOGA achieved its goals
of shielding smaller operators from excessive regulation, as well as new fees
and bonding requirements. Although
drilling is at a 22-year low in Kentucky
because of depressed prices, the act also
allowed KOGA to achieve its goal of
promoting future development of Kentucky's deep shale resources, he avers.
Injection Well Primacy
In mid-May, KOGA still was awaiting
word from the U.S. Environmental Protection Agency on Kentucky's application
for primacy over Class II injection wells,
according to Vogt, who notes the application has been in the works for almost
two years. The state's primacy has been
approved by EPA Region IV officials in
Atlanta, but Washington regulators also
must review and comment on the application, he adds.
The initial proposal was forwarded in
September 2014. Meetings on the issue
held in Frankfort, Ky., in mid-2015 drew
little interest outside the industry, Vogt
says. A notice in the Nov. 10, 2015,
Federal Register called for comments on
the proposal.
"Things are going slow, but going,"
Vogt assesses. "We still have high hopes
that we will have primacy for the state of
Kentucky for Class II wells this year."

A shift in oversight to the state should
speed approval of injection well permits,
which can take six months to obtain from
EPA's Atlanta office, which has experienced agency retirements that have delayed
the permit application process, Vogt says.
"The last permit I got through for a
new well was two and a half years ago,
and it took more than six months to get it
through Atlanta," he says. "Apparently,
there are five permits pending there now
from Kentucky, and some of them have
been there at least six months. It could
take a year or more to get them approved."
Kentucky is one of the few oil- and
gas-producing states that had not previously sought primacy under provisions
in the federal Underground Injection Control Act, Barr points out.
"We have looked at it as a state a
number of times," he recalls. "We have
been working hard on applications for
primacy for the past three years. In fact,
we are on draft number 10 of the application.
"Certainly, it takes longer to get a
Class II permit from the federal government than it would in most states with
primacy," Barr reasons. "That is the motivation behind our application. We hope
and believe state regulators will be able
to issue permits on underground injection
wells faster than Region IV can."
While most permitted wells are used
for waterfloods, injection wells also have
been used to dispose of frac water from
horizontal wells drilled into the oil-bearing
Berea Sandstone, which has elevated
Lawrence County in eastern Kentucky to
first place among Kentucky counties in
oil production, Vogt mentions.
Barr adds that most Kentucky oil production is in the western part of the state,
but the Berea has proven prolific and is a
likely target for an uptick in drilling when
prices recover enough to warrant additional
investment.
The Berea ranges from about 1,300
feet to 1,800 feet, and Barr says operators
are drilling laterals up to 5,000 feet. Reserves can range from 30,000 barrels to
perhaps as high as 70,000 barrels, he says.
Vogt says some companies have tested
the Rogersville Shale in eastern Kentucky
as well, but depressed prices have stymied
activity for the time being.
Liquids Pipelines
KOGA continues to support the use
of eminent domain when necessary to
JUNE 2016 97
American Oil and Gas Reporter - June 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2016
