American Oil and Gas Reporter - January 2016 - 138

on for most of 2015. On a positive note,
talk of raising the tax has ended . . . for
now. Amazingly however, the discussion
likely is not over.
Leasing Opportunities
Another positive development has been
movement in the possibility of leasing
federal lands in Southeast Ohio, in particular Monroe and eastern Washington
counties. These areas of interest lie in
Wayne National Forest, a patchwork of
federally owned lands interspersed with
privately held property.
Despite the fact that oil and gas development has occurred in the Wayne
for more than 100 years, privately held
mineral rights have, in a sense, been held
hostage by the slowness of the Bureau of
Land Management's leasing process.
SOOGA has been working hard to speed
the process. Fortunately, with the success
of the Utica Shale and the southward
shifting of the "sweet spot" of the play, it
has gotten the attention of landowners
who own minerals among the federally
owned lands.
There have been high levels of support
in the Washington and Monroe county
areas to develop the Utica in and around
Wayne National Forest. Hopefully, timely
movement will continue at the federal/BLM
level so landowners, the local community,
and oil and gas companies holding leases
can realize the benefits the Utica has to
offer.
The wide array of issues facing our
membership has certainly been a challenge,
but SOOGA will continue to do all it can
to help its membership navigate through
these difficult times. Our industry, unfortunately, has become a victim of its
own success. The natural gas unlocked
from shale source rocks certainly has
been a revolutionary advancement and
boon to our nation's economy and energy
security, but the gas boon has led us to
the current bust. As in the past, rational
economics must ultimately prevail before
a balance in supply and demand is
achieved.
The time of rational economic decision
making is at hand. The question now is,
how long must the industry remain hunkered down before prices recover? With
a large excess of gas to work off, potential
for continued strengthening of the U.S.
dollar, and thus a continued weakness in
the price of oil, it appears it may be a
while before that happens. In the meantime,
SOOGA will remain on the front lines
serving our industry as best as possible,
doing all the association can to help its
members endeavor to persevere!
❒

Tennessee Oil & Gas
Association
WILLIAM GOODWIN II
President
W.D. Goodwin Inc.
Brentwood, Tn.

FROM THE CHAIRMAN
As oil prices continue their extended
slump, Tennessee operators are looking
to get the most out of their resources by
concentrating on developing secondary
recovery projects and experimenting with
enhanced recovery techniques.
Since its beginning in 1958, nearly all
of Tennessee's oil production has been
in primary recovery. Resource development was slow until the mid-1960s, when
the Fort Payne fields in Morgan and Scott
counties were discovered. These primary
fields remain the workhorses of the state's
production, although according to leading
geologists, there is excellent potential
across the state.
Despite the lure of undiscovered oil
fields, $40-$50 oil does not generate
much enthusiasm for Tennessee wildcats.
So, operators began looking to enhanced
oil recovery to exploit their resources.
Eastern Oil Services (EOS), a Tennessee-based firm, has conducted some
limited carbon dioxide injection tests.
Results were encouraging, but not sufficient to justify the expense at today's oil
prices. EOS is considering additional
CO2 tests early this year, and is studying
injecting liquids stripped from Tennessee
gas before it is sold into the pipeline.
Tennessee has one gas injection project,
the Indian Creek storage field. Until 2015,
gas was injected to pressure the field and
produce additional oil. However, low crude
oil prices forced the operator to cease injections. A Fort Payne field that was being
pressured with gas has changed hands and
now is nearly dormant.
At this time, Citizens Gas Utility is
managing the Indian Creek Field and
withdrawing gas to meet local demand.
Several years ago, Citizens funded a study
that identified several additional Fort
Payne fields that could be converted into
enhanced oil recovery and gas storage
fields, but low prices have kept these
projects on the back burner.
Secondary Recovery
Tennessee operators also began to look
favorably at secondary recovery projects

138 THE AMERICAN OIL & GAS REPORTER

in 2015, in part because of a regulatory
change within the state.
Before last year, the state lacked primacy over injection wells, which was a
major barrier to building secondary recovery projects. Instead of working with
state regulators, operators had to deal directly with the U.S. Environmental Protection Agency. This process easily could
be summarized as a "slow no," if an operator got an answer at all.
As a result, there were only three small
waterflood projects operating in Tennessee.
Jarvis built the first two-small Monteagle
floods in Fentress County, and KTO built
another in Morgan County.
The state made changes in its regulations to take over underground injection
control primacy in 2000. It submitted its
application package in 2006. A second
round of regulatory changes took place
in 2010 and two years later, the Federal
Register published proposed rules for
Tennessee. But, the proposed change to
give Tennessee primacy was lost in the
federal morass until 2015.
Chuck Laine, president of the Tennessee Oil & Gas Association, pointed
out the delay to the Tennessee congressional delegation. With its backing, Laine
got the UIC primacy paperwork moving
again. Thanks to his efforts, Tennessee
took over primacy in June.
During the 2015 TOGA convention,
the Tennessee Division of Water Resources' new UIC manager, Scotty Sorrells,
explained the program to association
members. He asked that TOGA provide
a team to work with him as he began
managing the program. TOGA named
Bill Goodwin, W.D. Goodwin Inc., and
John Nisbet with Enrema Resource Management, to a committee formed to satisfy
that request.
Both Enrema, which operates one Fort
Payne flood in Morgan County, and W.D.
Goodwin plan to file for additional Class
II injection wells in the near future. Other
projects still are in planning and funding
stages, but Sorrells expects several applications this year.

American Oil and Gas Reporter - January 2016

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