American Oil and Gas Reporter - July 2024 - 29

ConventionSec tion: Kansas Independent Oil & Gas Association
KIOGA Fighting On
For Independents
By Del Torkelson
WICHITA, KS.-Kansas Independent
Oil & Gas Association Chairman Dana
Wreath keeps returning to one analogy
about the implications of two major regulatory
moves out of Washington. Both
the U.S. Fish and Wildlife Service's decision
to list the lesser prairie chicken
and the U.S. Environmental Protection
Agency's methane emission regulations
and planned methane tax threaten to hurt
Sunflower State independent oil and gas
companies, he assures, but while the Endangered
Species Act listing will hobble
operators, the methane regulation threatens
to end many of them.
" In terms of severity, I view the
lesser prairie chicken listing as a sprained
ankle, but the methane rules and tax as
lung cancer, " compares Wreath, executive
vice president of Berexco LLC in Wichita.
" I say that almost every time I
speak to groups. "
Wreath no doubt will have another
chance to revisit that theme and others
when KIOGA gathers for its 2024 Annual
Convention and Expo, scheduled for Aug.
18-20 at the Hyatt Regency in Wichita.
KIOGA President Edward Cross notes that
the association is part of lawsuits litigating
both matters, and he points out that the
conference will include discussions on both.
The lawsuits reflect KIOGA's willingness
to fight tooth and nail against inappropriate
requirements to help make
sure the industry continues to outlast its
critics, Cross says. " Every time an expert
says the oil industry is dead, it comes
roaring back in some form or fashion, "
he reflects.
Colorado Comparison
Cross and Wreath cite calculations by
the Independent Petroleum Association of
America that estimate the methane regulations
EPA finalized in the March Federal
Register threaten to shut down 40% of
U.S. marginal wells. Cross says EPA is
aware of those estimates and a 2022 U.S.
Department of Energy study showing that
wells making no more than six barrels of
oil equivalent a day fall short of the
" There are no magic bullets, but good
operators try to reduce costs by looking
carefully at their electric bills and their
chemical programs and anything else they can
do to reduce downhole failures. "
- Dana Wreath
KIOGA Chairman
methane rule's de minimis threshold.
It seems purposeful that EPA's prescribed
protocol to obtain that exemption
entails using the same equipment required
of regulated facilities, Cross suggests.
" The logical thing to do is exempt
such wells, but EPA wants us to use
expensive monitoring techniques first, "
he muses. " It certainly seems like EPA
is targeting companies with small, marginal
wells. "
Wreath indicates that Berexco already
has experience with such rules based on
the company's operations in Colorado,
which two years ago adopted a state
methane emissions program very similar
to EPA's. " We know exactly how much
money we are spending to comply with
Colorado's rules, " he details. " If those
kinds of rules are imposed in Kansas and
other states, it will add $7,000-$10,000
worth of costs per year to each lease. In
eastern Kansas, where central tank batteries
often receive production from 30 wells
instead of three or four, those costs may
be even higher. "
Moreover, Wreath suggests, instead
of mere indifference to the rule's threat
to many marginal wells' viability, EPA
and many of the rule's supporters may
consider that one of its best features.
Again, he says, the company's experience
in Colorado has helped clarify that point,
as policymakers there have dismissed
marginal wells' significance.
" America produces about 13.2 million
barrels a day, and so wiping out 300,000
small wells that produce an average of
1.5 bbl/d eliminates 'only' 450,000 bbl/d, "
he calculates. " Yes, that would take the
United States down to about 12.8 MMbbl/d,
but some consider that insignificant. "
It will be much different at the companies
for which such wells are a prominent, perhaps
overwhelming, aspect of their portfolios,
Wreath contrasts. Losing the wells
also entails grave consequences for the
personnel those companies employ and
the communities in which they are headquartered,
he observes. The ripple effects
will be even more damaging, he warns.
" If we wipe out every vertical well
making under 2.5 bbl/d, it is going to
devastate the economies in portions of
Kansas, Oklahoma and Texas, " he intones.
" The same is true in parts of Ohio, West
Virginia, Kentucky and Illinois. Anytime
someone compares this to some of the
other federal threats that did not hurt the
industry as much as we warned, I point
out that people also said that a decade
ago in Colorado. We kept warning about
the storm clouds as they approached and
were ignored. Now it feels the same way
at the federal level. "
Cross says that the methane rule's
burdensome requirements for marginal
wells are unfounded, and expresses confidence
that the litigation in which KIOGA
is participating, which includes a call for
administrative review and reconsideration,
will prove that. " In May, the Michigan
Oil & Gas Association led the charge-
and our entire coalition joined MOGA-
JULY 2024 29
American Oil and Gas Reporter - July 2024

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