American Oil and Gas Reporter - December 2020 - 12

IndustryDigest
Pennsylvania Governor
Vetoes Bill To Address
Conventional Well Rules
WEXFORD, PA.-The Pennsylvania
Independent Oil & Gas Association has
expressed its disappointment with
Governor Tom Wolf for vetoing
legislation that would have eased
regulations on the state's conventional
oil and gas wells.
Wolf vetoed SB 790 on Nov. 25, a
few days after it passed the
Pennsylvania Senate 29-19. The House
approved the bill 109-93 in May.
PIOGA explains that Pennsylvania's
current regulatory structure as imposed
by Act 13 of 2012 was enacted as a
response to the rapid build-out of the
unconventional gas industry. Many of its
provisions are overkill for shallow oil
and gas operations, the association
contends, and SB 790 was drafted to
address those inequities. While some
provisions echo proven requirements
established by the original Oil and Gas
Act of 1984, many sections of SB 790
go beyond the earlier law to reflect
current industry practices, PIOGA notes.
It says the 76-page bill would have
regulated all aspects of conventional oil
and gas well operations: permitting,
bonding, drilling, production, waste
disposal, and plugging and
abandonment, as well as potential
problems such as leaks, spills and
damage to water supplies.
Many of SB 790's provisions
recognize the far smaller scale of
conventional operations and the
diminished potential for environmental
impacts, PIOGA points out. One of the
inequities the association says it
addresses is the industrial-scale site
restoration requirements of Act 13.
SB 790 also laid out different
requirements for assessing a potential
well's impact on public resources,
responding to spills and restoration of
water supplies that were damaged or
diminished, PIOGA mentions.
It adds the legislation originally
would have restored the practice of
allowing brine to be spread on dirt roads
as a dust suppressant, but this provision
was removed as a concession in the
House. Another concession was
lowering the minimum spill reporting
requirement from five to two barrels of
oil and from 15 to five barrels of brine.
" While the governor and the
12 THE AMERICAN OIL & GAS REPORTER

Department of Environmental
Protection acknowledge the need for
separate regulations for the
conventional oil and gas industry, they
continue to use Act 13 as their buildingoff point, " comments PIOGA President
and Executive Director Dan Weaver.
" We are particularly frustrated that the
veto was based on a false narrative
created by the DEP. The department
clams the legislation would roll back
protection for drinking water supplies,
while in reality the bill mandates that
replacement supplies meet Safe
Drinking Water Act standards or be
comparable to the quality of water prior
to impact. No other industry is held to
an unreasonable standard that would
require an operator to provide an
improved water supply.
" The conventional oil and gas
industry has operated for more than 160
years in an area of the state that is
touted for its pristine natural beauty, and
SB 790 would not have changed that, "
Weaver holds. ❒

Louisiana Governor
Vetoes Bill Providing
Severance Tax Relief
BATON ROUGE, LA.-Louisiana
Governor John Bel Edwards has vetoed
legislation that would have provided
temporary severance tax relief for new
wells, or shut-in or orphan wells placed
back into production.
The state legislature gave final
approval to HB 29 by Representative
Phillip DeVillier, R-Eunice, during its
Second Extraordinary Session on Oct. 21.
Governor Edwards vetoed it on Nov. 12,
the last day he could act before the bill
became law without his signature, notes
the Louisiana Oil & Gas Association.
" This legislation would have
stimulated some critically needed
economic activity in our state, and
while it did not pass, we remain hopeful
and optimistic, " expresses LOGA
interim President Mike Moncla. " We
believe Governor Edwards gave strong
consideration to the merits of the issue,
and it is our job over the next few
months to illustrate to the governor, the
Department of Natural Resources and
key legislators why this bill is so
important. We look forward to that
opportunity. "
HB 29 would have provided a

temporary severance tax exemption to
new wells, shut-in wells or orphan wells
placed in production between Jan. 1,
2021, and Dec. 31, 2023. According to
the text of the legislation, the exemption
would have lasted:
· Six months or until payout for
shut-in wells;
· Twelve months or until payout for
new wells; and
· Twenty-four months or until
payout for orphan wells.
At the time the bill passed the
legislature, the Louisiana Legislative
Fiscal Office estimated it could cost the
state nearly $25 million over three years,
according to published reports. But
LOGA points out that the state's
severance tax collections have fallen
from $328 million in 2018 to an
estimated $180 million this year, which it
attributes to the number of shut-in wells.
" (HB 29) is smart economic policy, "
Moncla argues. " After six months of
producing, the state then would begin to
reap the benefits of taxes on wells that
otherwise would just be shut in. Oil
companies have shut in 2,266 wells this
year. Louisiana has a total of 20,131
shut-in wells. Thousands of these shutins are candidates to be worked over. "
LOGA expresses its appreciation to
bill author Representative DeVillier as
well as Senator Rick Ward, R-Livonia,
who championed the bill in the Senate.
The association says it " will continue to
push for job-creating and revenuegenerating legislation next spring in the
regular session, as well as continue to
work with the state's leaders to consider
how we can improve our state's
economy. " ❒

Gulf of Mexico Lease Sale
Generates $120 Million
NEW ORLEANS-Regionwide Gulf
of Mexico Lease Sale 256 generated
$120 million in high bids for 93 tracts
covering 517,733 acres, the Bureau of
Ocean Energy Management reports.
The agency says 23 companies
participated in the sale, submitting $135
million in total bids.
Lease Sale 256 included 14,862
unleased blocks located from three to 231
miles offshore, in the Gulf's Western,
Central and Eastern planning areas in
water depths ranging from nine to more
than 11,115 feet, BOEM describes.
American Oil and Gas Reporter - December 2020

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