American Oil and Gas Reporter - January 2016 - 139

The Presidential Papers
Most Tennessee operators agree that
oil prices will not recover until 2017, but
they don't plan to wait on the sidelines.
Hornet Corp., based out of Hendersonville,
Tn., continues to be one of state's top oil
producers. Hornet's Ray No. 1 well,
which was Tennessee's top producer in

2014, has produced more than 33,850
barrels. In addition, early in 2015, Hornet
hit the Stover No. 1 well in Fentress
County, which came in at an initial production rate of more than 40 barrels a
day. Hornet also has had several other
good producers in North-Central Ten-

Texas Alliance of
Energy Producers
GEORGE ROGERS
President
Bettis, Boyle & Stovall Inc.
Graham, Tx.

FROM THE CHAIRMAN
There has never been a year like 2015.
With the issue of its Blueprint for a
Secure Energy Future on March 30, 2011,
the Obama administration decided making
policy changes through Congress would
not be effective. The White House lost
Capitol Hill battles that preserved oil and
gas tax provisions and killed the prospect
of a greenhouse gas cap-and-trade tax
program.
The regulatory process, the administration
theorized, would be much easier, and it
could write the regulations as it wanted.
The Environmental Protection Agency
wrote most new regulations and amended
other rules. However, the Department of
Interior, Bureau of Land Management,
U.S. Fish & Wildlife Service, Securities
and Exchange Commission, and others
all began reviewing regulations that cover
the oil and gas industry.
Washington's aggressive push forced
our state regulatory agencies to intensify
their own regulations. The Texas Commission on Environmental Quality implemented new Subpart OOOO air quality
regulations after EPA issued its own. The
Texas Railroad Commission also revised
rules dealing with drilling, completion
and cementing.
Federal Concerns
The Texas Alliance of Energy Partners
continues to monitor Washington as legislators work on taxes and federal regulators consider environmental issues, in-

cluding changes to the Endangered Species
Act.
On the tax front, the future of deductions for percentage depletion and expensing of intangible drilling costs remains
under discussion. The Senate Finance
Committee resumed its tax reform debate
when the 114th Congress opened in January 2015, building on earlier committee
proposals to repeal both deductions. In
the House, the Ways & Means Committee
has issued tax reform priorities that threaten percentage depletion.
Meanwhile, USFWS's decision to designate the lesser prairie chicken as threatened will impact oil and gas activities in
Texas, Oklahoma, New Mexico, Colorado
and Kansas. Moreover, oil and gas producers must prepare for a possible ESA
listing for the monarch butterfly.
The Alliance continues to participate
in lawsuits against federal regulators
about the "sue-and-settle" arrangements
the government has reached with environmental groups. The association will
keep working with members of Congress
to change ESA provisions regarding those
arrangements.
After EPA issued a 998-page preliminary report on hydraulic fracturing's environmental impacts, the Alliance released
comments that the analysis confirmed
our assessment that state regulatory agencies had done excellent work in regulating
fracturing. Therefore, the Alliance reasoned, state regulatory agencies should

nessee, including the Green No. 2 and
Hensley No. 1. Hornet continues to aggressively expand its leaseholds in this
region.
Whether it's from new or existing resources, expect to see continued activity
from the Volunteer State in 2016.
❒

retain primary oversight over this, and
all aspects of, oil and gas production.
In other federal fracturing news, the
Department of Energy has concluded the
practice is safe, while BLM has issued
regulations regarding stimulation on federal
lands.
The Alliance also is monitoring EPA
as it issues new regulations for wetlands,
including an expanded definition of "waters of the United States" under the Clean
Water Act, a proposal to amend methane
emissions standards, and a new oil field
practices report. In a setback for the
agency, the U.S. Supreme Court ruled its
ozone regulations did not meet federal
standards, and sent a case back to the
U.S. Court of Appeals for the District of
Columbia.
Oil and gas producers also await possible actions by the U.S. Geological
Survey as it studies seismic events in
Parker County, Tx., and federal regulators
have begun considering federal oversight
for gathering lines. Then there is the
White House's climate action plan, which
includes the president's Clean Power
Plan, which will have a range of impacts
on the U.S. energy industry.
State Regulations
In 2016, the Texas Railroad Commission will implement changes to drilling,

Consulting Petroleum Engineers
Water Flooding - Evaluations
Cost Estimates - Design - Installation
Reservoir Studies - Simulations

STEPHENS & JOHNSON OPERATING CO.
Drilling & Completion
Supervision - Lease Operations
811 6th Street - P.O. Box 2249
Wichita Falls, Texas 76307-2249
(940) 723-2166

JANUARY 2016 139

American Oil and Gas Reporter - January 2016

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