American Oil and Gas Reporter - June 2015 - 108

ConventionSection: Kentucky Oil & Gas Association

Rogersville Shale Boosts
Hopes In Kentucky
By Dan Holder

FRANKFORT, KY.-Despite increasing uncertainties with oil and gas prices,
regulatory threats targeting hydraulic fracturing and ongoing calls by some people
to reduce fossil fuel use, Kentucky's production community remains cautiously
optimistic, assesses Andrew McNeill, executive director of the Kentucky Oil &
Gas Association.
"For the state's Illinois Basin producers,
it's steady as you go," he says. "In eastern
Kentucky's Appalachian Basin counties,
operators continue to develop the Berea
Sandstone. They feel pretty good that
the prospect will continue the momentum
it has gained during the past year."
Speaking in advance of the association's annual convention, scheduled for
July 14-16 at the Lexington, Ky., Convention Center and Hyatt Regency, McNeill says operators continue to develop
the Rogersville Shale. Two test wells
have targeted the Cambrian-age formation
that underlies most of eastern Kentucky,
he says. If a legitimate play develops,
McNeill predicts it will transform the
state's industry.
KOGA President Rudy Vogt says the
Rogersville Shale can be a serious game
changer for the state. "East Kentucky
needs all the employment and tax revenue
it can get. The fall in severance taxes
that the state has seen with this downturn
in oil and gas prices is showing up in
county and state budgets, and will be a
big hit. So, Kentucky needs something
else," he offers.
Vogt, the member manager at Cumberland Valley Resources in Frankfort,
reports his company has production in
acreage near the play. Although he says
the company is too small to participate
in a Rogersville Shale well, what the
play could do for the industry and region
is exciting to consider.
According to the U.S. Geological Survey, the Rogersville demonstrates a new
petroleum system in the Rome Trough
under Kentucky and West Virginia. Total
organic carbon contents of four samples,
ranging from 1.2 to 4.4 percent, are the

highest reported in the trough's pre-Knox
section, the survey says.
"We all remain interested and curious
to see what comes from the Rogersville
Shale test wells," McNeill says. "It remains
to be seen whether it will turn into a legitimate reservoir. There are permits and
test wells that indicate companies remain
at least interested in that potential."

Kentucky Pipelines
As Kentucky operators wrestle with
low commodity prices, many of the challenges with getting their products to
market continue, McNeill says. He cites
as an example the 2014 decision by the
Williams Company and Boardwalk
Pipeline Partners LP to shelve their Bluegrass Pipeline project.
A natural gas liquids pipeline that
would have run from the Marcellus/Utica
production area to the Gulf Coast, the
companies say, the Boardwalk Pipeline
effectively died when a circuit judge disallowed the use of eminent domain for
the project (AOGR, May 2014, pg. 34).
According to media sources, the Kentucky
Court of Appeals is reviewing the judge's
decision, including questions about the
legal standing of the plaintiff, a Franklin
County landowner, and the group representing her, Kentuckians United To Restrain Eminent Domain Inc.
Despite the setback and ongoing legal
questions surrounding eminent domain,
McNeill says there is evidence of new
Kentucky pipeline activity. He points to
Kinder Morgan Inc.'s plan to build the
Utica Marcellus Texas Pipeline, which
will move natural gas liquids from the
Northeast to the Gulf Coast along a
planned route that includes 18 Kentucky
counties.
According to the company, the project
entails converting 964 miles of the Tennessee Gas Pipeline Company's 100 and
200 lines, which now are used to move
gas north, to NGL service, and adding
200 miles of pipeline from the southern
terminus at Natchitoches, La., to Mont
Belvieu, Tx. Kinder Morgan says the
project, with a planned in-service date of
late 2018, also includes NGL interconnects

108 THE AMERICAN OIL & GAS REPORTER

in Ohio, Pennsylvania and West Virginia.
In mid-May, Kinder Morgan said route
planning for the pipeline had not used
eminent domain.
"The Kinder Morgan repurposing project continues to draw attention and opposition from local communities and environmental activists," McNeill says.
"The process is going through the Federal
Energy Regulatory Commission. There
are no indications it will not secure final
approval. It raises concerns for KOGA
that pipeline infrastructure has become
such a flash point in the state and nation.
That is something on which the association
continues to engage."
Annual Meeting
Most Kentucky operators are pleased
with the way 2014 ended, but since natural
gas and oil prices have tailed off, Vogt
says most KOGA members have developed a wait-and-see attitude toward the
markets, and that mood is likely to carry
over to the Lexington meeting.
"In my small company, we have had
to make some serious cuts, and so we are
one of those that are waiting," Vogt says.
He predicts KOGA's convention will
have a strong attendance, pointing to the
association's meeting in eastern Kentucky
that drew a large crowd.
"The KOGA membership showed up
in droves to hear about the new regulations
that are coming this way-the new legislative package in SB 186 that passed
and the regulations that are being drawn
up from that," Vogt says. "I really was
impressed with the number of people
there. It seems the association is seeing
bigger crowds all the time."
He adds that the July meeting will
have similar sessions that aim to update
KOGA members on industry events, with
speakers touching on technology developments, commodity markets and legal
issues.
Vogt says the lunch on Wednesday,
July 15, will include announcing the association's new Board of Directors.
"KOGA has a good slate of potential
and current members who hopefully will
be elected to the board," he says. "The

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