American Oil and Gas Reporter - June 2024 - 36

ConventionSec tion: Kentucky Oil & Gas Association
which governmental efforts to force an
energy transition keep turning down blind
alleys, and cites the example of electric
vehicles, for which sales are falling. " The
government pushed in its chips and made
a bet on electric vehicles, but that has not
panned out, " he says. " It was an ill-informed
bet based on the hope we can
electrify everything. "
Moreover, Cate intones, a continued
governmental push in that direction may
exacerbate electricity constraints. " I commissioned
a fractionation plant in Eastern
Tennessee, and part of the project is to
supply ethane to a utility for a fivemegawatt
power plant, " he details. " The
Tennessee Valley Authority is short-powered
and the utility strongly suspects
there will be blackouts between 2025
and 2030 as TVA tries to bring more
power on the system amid the move to
electrify everything, even though the grid
is not set up for it and there is not enough
power to meet the demand. "
Unfortunately, Watts muses, it is almost
unthinkable that the people who promote
such electrification will acknowledge any
responsibility in the event of such blackouts.
" Pride is one of the deadly sins, and being
wrong about something like that will
sting, " he considers. " It is our job to work
in a bipartisan manner to seek common
ground for smarter policy. "
State Priorities
Although most of the public policy
threats to the industry originate in Washington,
Watts indicates the association is
hard at work on numerous state undertakings.
" We are doing a lot of proactive
things with oil and gas, and have done so
for more than a decade to benefit the environment,
regulatory structure and operators, "
he relates.
Many of those proactive efforts have
their roots in Kentucky's Oil and Gas
Workgroup, Barr notes. Since its 2014
inception, he recounts, the committee
of representatives from KOGA, the Energy
and Environment Cabinet, environmental
groups, attorneys, geologists and
other stakeholders has tackled numerous
subjects to modernize the state's oil and
gas regulations.
" In those 10 years, the workgroup has
drafted and endorsed several pieces of
legislation. In all that time, there has
been only one 'no' vote against any of
them in the entire general assembly, " he
notes. " It is an effective example of how
to bring bills to legislative assemblies on
36 THE AMERICAN OIL & GAS REPORTER
a collaborative, consensus basis. "
As a member of the workgroup, Barr
is helping craft a permit by rule for land
application of drilling fluids, he says,
an undertaking the workgroup launched
in 2019 before it was sidelined by the
Covid-19 pandemic. " A company that
is closing a drilling operation pit does
not have time to seek an individual
permit every time, so we are trying to
develop a self-executing permit by rule, "
he describes. " To do that, it is necessary
to know the constituents contained within
the typical pit. "
Although drilling techniques vary
widely between project types, he acknowledges,
Kentucky wells fall under
four broad categories. " Most Appalachian
Basin drilling is on air, where the only
fluids you encounter are those already in
the formation, " he details. " The opposite
is true in the Illinois Basin, where you
encounter a lot of fluid and use drilling
mud to shut those fluids off.
" South-Central Kentucky-an area
basically outside of both basins-is drilled
on air as well, " he continues. " Then,
starting in 2010 or 2011, we began
drilling horizontal Berea wells in eastern
Kentucky, and the approach is atypical
from a conventional well in the Appalachian
Basin, with some surfactants
and other additives added to the water
because the lateral sections can't be
drilled with a hammer bit. "
According to Barr, the workgroup
seeks chemical constituent test results
from each of those areas and drilling
techniques, with the necessary quantity
varying according to early data. If initial
tests yield fairly homogeneous results,
he suggests, fewer tests are likely to be
necessary, but it is important to get started.
" The sampling is voluntary. It involves
using certified labs with certified sample-takers
using that lab's standard operating
procedures to test for a group of
minerals and elements that have been established
by the workgroup, " he says.
" We asked for volunteers at the Western
Kentucky spring meeting, and we will
ask again at the annual meeting. The impact
on the operator, at $300 or so, is
very nominal compared with the total
cost of the well. Those results will go directly
to the operator and the Kentucky
Division of Oil and Gas. "
Barr predicts the effort will obtain
sufficient data, but notes if it does not,
testing may become less voluntary. " The
state often asks for samples to be collected
and sent in to the Kentucky Geological
Survey, " he observes. " That could be the
next step, in the event that we have trouble
getting volunteers from a certain area. "
Legislative Session
According to Watts, two bills got most
of KOGA's attention in the 2024 Kentucky
Legislature:
· HB 581 prohibits subdivisions from
banning new gasoline fueling stations.
· SB 349 forms an energy commission
to study Kentucky's energy policy and
the future decommissioning of the state's
power plants.
Watts says the impetus for HB 581
originates in some local Kentucky governments'
bans on gasoline fueling stations.
" Areas such as Lexington and
Louisville have been discriminating against
gasoline, " he recounts. " KOGA supported
the bill, and, after Governor Andy Beshears
vetoed it, the legislature overruled him. "
Meanwhile, he says, KOGA took no
stance on SB 349. Under the new law,
KOGA will have one representative on
an 18-member nonvoting commission,
but a coal industry representative will be
awarded one of the executive committee's
five voting seats. " Voting members really
have all the say, " Watts says.
" Our friends in the legislature talked
about it as a fossil fuels protection bill,
but the 18-member commission has no
authority other than to examine and
study power generation and related issues,
and submit an annual report with
recommendations to the legislature,
governor and Public Service Commission, "
Barr concurs. " All authority regarding
retirement of existing fossil
fuel electric generating units lies within
the executive committee. "
In addition to someone with the education,
training or experience necessary
to lead a coal production company, the
bill requires that the executive committee
include an electrical utility expert. Two
members of the executive committee
are drawn from the nonvoting commission,
which includes representatives of
the coal, oil and gas, nuclear and renewable
sectors, as well as members
who are supposed to speak for the broader
Kentucky economy and electricity
consumers. The director of the University
of Kentucky Center of Applied Energy
Research serves as the fifth member of
the executive committee and as executive
director of the commission until an executive
director is hired.
American Oil and Gas Reporter - June 2024

Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2024
