American Oil and Gas Reporter - August 2019 - 128

them in KIOGA's plan, or whether it is
limited to Kansas employees only.
Local Intervention
An issue that Cross says popped up
since KIOGA's midyear meeting is a
notice sent to water well drillers by the
Northwest Local Environmental Protection
Group (NWLEPG), saying they would
have to obtain a local permit and pay a
$500 fee on top of the Kansas Department
of Health and Environment's fee to drill
water supply wells for oil field use.
KDHE established NWLEPG in 1990
as part of its Local Environmental Protection Program to enable local authorities
to develop water protection plans that
complemented the water quality efforts
of state and federal agencies. According
to Cross, LEPPs primarily focused on
county environmental codes with an emphasis on onsite wastewater systems and
private water wells. He adds that the
NWLEPG consists of Cheyenne, Decatur,
Gove, Greeley, Lane, Logan, Scott, Sheridan, Sherman, Thomas, Trego, Rawlins
and Wallace counties, Ks.
KDHE discontinued funding for LEPP
in 2012, Cross says, although its Watershed
Management Section continues to support
it by providing technical assistance to
counties.
Several KIOGA members responded
to NWLEPG's notice-Cross cites Lance
Shepard with Woofter Pump & Well,
Nick Hess with Cobalt Energy LLC and
Bo Farr with Murfin Drilling Co. As a
result, he reports, "The Sheridan County
Commission agreed NWLEPG had overstepped its jurisdiction and voted to
remove itself from the group. The
NWLEPG decided to table the permit
and asked that industry put attention to
making sure water supply wells either
are transferred to landowners or plugged."
Cross says it is common practice for
companies to give water supply wells to
landowners after the oil or gas wells have
been drilled, and frequently work with
landowners on siting.
More recently, Cross continues, in early

July the Kansas Board of Tax Appeals issued a notice changing the effective date
for personal property tax exemption orders
from the date of first exemption purposes
to the date taxes are assessed.
"In the past, oil and gas property tax
filings made in the first quarter of the
year often were based on prior-year production," he points out. "Later in the
year, when current-year production was
better defined, many operators found their
properties should have been exempt and
would file for property tax refunds."
The new BOTA language, Cross says,
is intended to push the effective date of
exemption requests to the date property
taxes are assessed (basically Jan. 1 of
each year) in order to try to eliminate refund requests later in the year.
"This could result in operators overpaying their ad valorem taxes," "Cross
observes, adding that KIOGA's State and
Federal Tax Committee, chaired by Andrea
Krauss, is looking into the matter.
Orphan Wells
Another, long-running problem, for
Kansas operators may be nearing a satisfactory solution, White and Cross report.
They note that both the industry and
the Kansas Corporation Commission have
been plagued by the question of who is
responsible for plugging orphan wells
since the Kansas Appeals Court in January
2015 overturned the Quest Order. The
court held that a company acquiring a
lease was not responsible for plugging
any orphan wells found on it as long as
the company did not attempt to utilize
those wellbores and subsequent operations
did not cause those abandoned wellbores
to become environmental hazards.
A year ago, the KCC created four state/industry working groups to address a quartet
of issues, including responsibility for orphan
wells (AOGR, September 2018, pg. 123).
But it soon became evident to him, White
says, that working all four issues simultaneously was a bit much for the commission
to handle in a timely manner.
"I asked them numerous times to work

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128 THE AMERICAN OIL & GAS REPORTER

on the abandoned well issue first," he says.
That appeared to pay off the second
week of July, White reveals, when the
Oil & Gas Conservation Division released
to the abandoned well working group a
draft proposal to review.
White says the working group was to
discuss the draft at a meeting July 23,
after which, he says, he expected it to be
forwarded to the KCC Oil & Gas Advisory
Committee for broader industry vetting.
If ultimately approved, White says, the
path forward likely includes seeking statutory
language during the 2020 state legislative
session to clarify responsibility for abandoned
wells, as well as combining the state's two
plugging funds. He adds that, "I really am
tickled that we have seen the draft already.
I didn't expect it this year."
KCC Chairman Dwight D. Keen vows
the commission is committed to resolving
the problem. "Coping with abandoned
oil and gas wells has been and will remain
a top priority for the commission," he
promises.
In a report to industry sent to KIOGA
and the Eastern Kansas Oil & Gas Association, he says the KCC has undertaken
several measures to address abandoned
wells in the past year, including:
· Initiating an effort to inform the
industry and public about the nature and
scope of the abandoned well issue;
· Dedicating specific staff in Conservation Division district field offices
throughout the state to focus on identifying
and plugging abandoned wells;
· Meeting with well-plugging contractors to encourage competitive bidding
on plugging projects;
· Promulgating compliance agreements with operators to provide for timely,
staged and supervised plugging of inactive
wells; and
· Dedicating a greater portion of the
KCC's Conservation Fee Fund to expand
well-plugging efforts.
Induced Seismicity
Meanwhile, White mentions, progress
also is being made in KCC's induced
seismicity work group.
He recalls that several earthquakes
around Hutchinson, Ks., in March and
April 2018 sparked public concern. At a
meeting in May 2018 in Hutchinson, a
report by the Kansas Geological Survey
attempted to place the blame on saltwater
injections into the Arbuckle formation
from Class II wells migrating northward
from Oklahoma to southern Kansas, but
ignored any contribution by high-volume,
high-pressure Class I municipal disposal
wells in the vicinity of the earthquakes
(AOGR, August 2018, pg. 117).
Since then, however, White reports, "It
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