American Oil and Gas Reporter - August 2016 - 91

Venting And Flaring
Wyoming is caught in the middle of
that federal/state conflict on several issues,
and Harris points to venting and flaring
regulations as one example of how the
fight is playing out. The Department of
the Interior announced plans in mid-January to revise its 30-year-old flaring regulations. According to the agency, the
new rules will limit flaring on public and
tribal lands, require periodic well and
tank inspections, and clarify when operators owe royalties on flared gas.
The Wyoming Oil & Gas Conservation
Commission issued rules on how long
wells could be flared and what gas analysis
was required on Feb. 9 (AOGR, March
2016, pg. 16).
PAW President Bruce Hinchey says
the proposed federal regulations are very
stringent and onerous, and notes that they
seek to raise royalty rates if an operator
flares for lack of pipeline access.
"I am not sure how you can have a
regulation that changes a lease agreement,"
he poses. "There are a lot of restrictions
in the federal regulation. If an operation
is next to a pipeline it is not an issue, but
when you are drilling a well in the middle
of nowhere and you produce natural gas
with the oil, that creates a situation where
you will have to deal with flaring or pay
the royalties."
Harris adds that PAW's position on
the proposed venting and flaring regulations is identical to the one it adopted
when BLM released its hydraulic fracturing rules. "This is not a one-size-fitsall type of issue, and the states are much
better suited to oversee those particular
areas," he holds.
Robitaille says federal workers in state
field offices often are caught between
their agency's mandates and local circumstances. Some understand industry
problems and sympathize, but their Washington bosses limit their options. In addition to an inability to make one solution
fit all problems, he points out, federal
agencies don't have the staff or resources
to adequately address the issues.
Industry Conditions
Market conditions are providing PAW's
members with at least hints of optimism,
Hinchey says, pointing to an increase in
natural gas prices thanks to higher demands
for gas-fired electricity. There is not as
much cheerfulness over oil, he adds. Out
of seven rigs running in Wyoming, four
are targeting natural gas, Hinchey says.
"The times are good to drill because
service prices are low," he assesses. "I
think $60 a barrel would be a lot more
attractive to operators, if it was stable.

Certainly $3.50 or $4.00 gas would help
as well. Some Wyoming companies are
ready to ramp up once prices recover. It
may take them a while because budgets
have been set, at least for this year."
Many service companies have reacted
to the price downturn by laying off significant numbers of employees or moving
them out of Wyoming, Hinchey says.
Because of those staffing cuts, there will
be a lag before industry responds to improving market conditions, he predicts.
"It may take a little time to get ramped
up, but this industry is very resilient and
it can ramp up rapidly," he offers.
"Wyoming's pipeline infrastructure is
pretty good right now. We just need to be
able to drill more."
Casper Meeting
Harris predicts a majority of PAW
members will come to the annual meeting
with an optimistic attitude, pointing out
that industry veterans rely on that attitude
to continue working. "If we can continue
to see crude oil and natural gas prices
take baby steps in the right direction,
that provides encouragement. I am hopeful
that people are feeling good about prices
at least going in the right direction," he
says.
The meeting opens on Monday, Aug.
15, with PAW's annual fishing tournament,
Hinchey details. The association will hold
committee sessions Tuesday morning at
the Parkway Plaza in Casper, with the
PAW PAC golf tournament set for the afternoon. On Wednesday, concurrent sessions will be held, with speakers from
several state and federal agencies. A general session will follow, which will include
election of the PAW Board of Directors
and a congressional update from Wyoming
Senators Mike Enzi and John Barrasso,
and Congresswoman Cynthia Lummis,
all Republicans.
"After that, the meeting offers a luncheon, which will feature Patrick Day with
the Holland & Hart group," Hinchey says.
"He will talk about how the Clean Power
Plan will affect the oil and gas industry.
That is an important topic because the
plan will have a negative effect on the oil
and gas industry. It will be good to have
him explain how bad the plan really is."
❒

Coming In September
The annual Tubulars Technology
special reports, featuring the latest
developments in coiled tubing technology for drilling, stimulation and
workovers.
AUGUST 2016 91

American Oil and Gas Reporter - August 2016

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