PIPELINE the newsletter of Panhandle Producers & Royalty Owners Association • February 2016 Looking forward into 2016 .......................... 1 President’s letter......................................... 2 New member benefits ................................ 2 Winter association’s meeting ..................... 3 Benefits of building Keystone pipeline........ 4 Give me a break ......................................... 8 Casenote................................................... 10 Petroleum directory................................... 13 Locations & Permits ................................. 14 Markets ..................................................... 15 Monthly stats ............................................ 16 Looking forward into 2016 The Board and Staff of PPROA understand our members and their difficulties. Our industry, yet again, has had a rough 2015 and we have every reason to believe that 2016 could be just as difficult. We believe things will bottom out. No US drilling collapse has lasted more than 2 years in the oil and gas industry even during the 1980s. Uncertainty will fade. Markets will tighten and rebalance in 2016 setting the stage for growth. You’re asking “What’s this got to do with me?” In 2016 we are offering even more member benefits than ever before! Because you ARE important to us and we know these hardships will soon pass, we want to offer you some special renewal options during the month of January 2016. The opportunity to have your membership bank drafted monthly or Charged monthly to your debit or credit card And there is more & it is BIG….. Beginning in 2016 PPROA will offer members access to insurance programs that are designed specifically for the oil and gas industry. The programs include property, general liability, business auto, and pollution from BITCO (formerly Bituminous) Insurance Company. Excess liability and control of well insurance along with Excess CCC, oilfield property, real property, oilfield equipment and rig physical damage will be available from the Brit Syndicate. Health insurance is available through the Lone Star Energy Employee Benefit Trust and the insured must have an energy related business and requires a minimum of two unrelated employees. Also included is worker compensation through Texas Mutual Insurance Company. Discounted rates are given based on schedule credits and loss ratios and PPROA members have the potential to participate in very successful dividend* programs. Don’t want to lose your agent? No need – they can be an appointed** agent with this program! We at PPROA are not only here as an industry advocate representing your interests both at the state and federal levels of government but to assure energy policies will be those in which our members can survive, grow and prosper. We have also been working hard to increase member benefits. We hope you will continue your 2016 membership and the new added values. Contact our office for additional information! *Dividends are not guaranteed and past dividends are not a guarantee of future dividends. **Appointments are not guaranteed but agents can come to One Star Insurance Solutions, LLC to obtain quotes for qualifying entities.
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PIPELINE the newsletter of Panhandle Producers & Royalty Owners Association • February 2016
Looking forward into 2016 .......................... 1 President’s letter......................................... 2 New member benefits ................................ 2 Winter association’s meeting ..................... 3
Benefits of building Keystone pipeline ........ 4 Give me a break ......................................... 8 Casenote ................................................... 10 Petroleum directory ................................... 13
The Board and Staff of PPROA understand our members and their difficulties. Our industry, yet again, has
had a rough 2015 and we have every reason to believe that 2016 could be just as difficult.
We believe things will bottom out. No US drilling collapse has lasted more than 2 years in the oil and gas
industry even during the 1980s. Uncertainty will fade. Markets will tighten and rebalance in 2016 setting
the stage for growth.
You’re asking “What’s this got to do with me?”
In 2016 we are offering even more member benefits than ever before!
Because you ARE important to us and we know these hardships will soon pass, we want to offer you some
special renewal options during the month of January 2016.
The opportunity to have your membership bank drafted monthly or
Charged monthly to your debit or credit card
And there is more & it is BIG…..
Beginning in 2016 PPROA will offer members access to insurance programs that are designed specifically for
the oil and gas industry. The programs include property, general liability, business auto, and pollution from
BITCO (formerly Bituminous) Insurance Company. Excess liability and control of well insurance along with
Excess CCC, oilfield property, real property, oilfield equipment and rig physical damage will be available
from the Brit Syndicate. Health insurance is available through the Lone Star Energy Employee Benefit
Trust and the insured must have an energy related business and requires a minimum of two unrelated
employees. Also included is worker compensation through Texas Mutual Insurance Company. Discounted
rates are given based on schedule credits and loss ratios and PPROA members have the potential to participate
in very successful dividend* programs.
Don’t want to lose your agent? No need – they can be an appointed** agent with this program!
We at PPROA are not only here as an industry advocate representing your interests both at the state and
federal levels of government but to assure energy policies will be those in which our members can survive,
grow and prosper. We have also been working hard to increase member benefits.
We hope you will continue your 2016 membership and the new added values.
Contact our office for additional information! *Dividends are not guaranteed and past dividends are not a guarantee of future dividends.
**Appointments are not guaranteed but agents can come to One Star Insurance Solutions, LLC to obtain quotes for qualifying
entities.
2
As I sit down to write, my mind keeps wandering beyond the challenges of surviving the
current brutal downturn of the Oil & Gas Industry and the many in our area who are suffering
because of it - to what this could mean for the future of our communities, our states, and even
our country.
It is no secret that the Obama Administration is no friend to, or fan of, our industry. They
have engaged in regulatory overreach and policies that have very negatively impacted the
ability to operate in this country, which of course, has hit the small, independent producers
the hardest. The current Administration, and others before, have failed to adopt a national
energy policy that would free us from dependence on foreign oil, particularly from unfriendly
countries. The American Oil & Gas Industry is currently UNDER ATTACK from OPEC, particularly Saudi
Arabia, in order to regain the 11% market share which they lost during the U.S. shale boom. It seems to me
that we are losing a HUGE opportunity to discontinue our practice of buying oil from countries who want to
harm us, build up stockpiles of oil, and issue permits for refineries, all of which would obviously help support
industry and jobs in the US while at the same time looking out for national security interests. My concern is
that potentially, many American producers and service companies could be out of business by the time the
price recovers, that the current glut may disappear very quickly causing prices to skyrocket and then the U.S.
could be more dependent on foreign oil than ever before. Of course, there is no political will or public outcry
to plan ahead and tackle this problem while oil and gas prices are low. Start asking our elected officials and
those running for office how they will tackle this challenge. Use your voice, use your vote.
Until next month,
PPROA President
Stacey Ladd
New Member Benef i ts
As you can see from our front page letter, PPROA has expanded our member benefits through a joint venture
with the Texas Alliance of Energy Producers. We were formerly aligned with the Texas Oil & Gas Association’s
Worker Compensation Insurance Program but after much negotiation with both groups we were able to better
serve our members with additional services through the Texas Alliance group.
Now you have available health & life, property, general liability, business auto and much more in addition to
large savings and dividend program! Please call with any questions!
However, there is so much more we are working on for you in “perks”!
Amarillo Club Membership Special - *Save over $250 on Club membership*
Membership fee of $375, reduced from $500!
- Tax to be added to these costs.
The $100 application fee is waived for PPROA members!
Value - $420
Coming soon!
Discounted corporate gym memberships and more!
3
Winter Association’s Meeting I just returned from the TXOGA winter meeting. This is a meeting between the larger oil companies
and the peer oil and gas associations to discuss and prepare for issues our industry currently and will
face especially in the 2017 Texas legislature.
Downturns and pricing do not prevent or relieve our need to stay “on top” of the necessity to protect
our industry. There is always some diversity when it comes to the differences between “big oil” and
the “independents” but in the end we both serve the same industry and the same communities. The
following are key issues facing our industry going forward:
Key Emerging Legal Issues 2016 Key Issues
Local Government Regulation Post HB 40. After successful passage of HB 40 limiting regulation of oil
and gas activities by local governments, look for local governments to test just how far they can go to regulate and
limit oil and gas activity.
Allocation Wells. Issues regarding allocation wells remain after unsuccessful efforts to pass allocation well legislation.
Opponents of allocation wells continue to argue that allocation wells cannot be drilled without express approval from
all lessors. Current litigation regarding allocation wells has been settled, but new disputes are likely to arise.
Oil & Gas Lease Agreements or Litigation. There are myriad of issues that arise regarding oil and gas lease terms.
Significant issues to watch include royalties (pricing, deducts, measurement), lease termination (production in paying
quantities, savings clauses and shut-in royalties).
Subsurface Trespass. This includes two general forms (1) incidental intrusion (such as hydraulic fracturing or
migration of injected fluids), or (2) intrusion by a wellbore that crosses property lines. Any harm labeled as “trespass”
poses significant legal concerns.
Surface Use. Surface issues have been leveraged as a key point to burden or prevent mineral development,
particularly in areas of intense mineral development. The superior right of the mineral estate to make reasonable use of
the surface is under constant attack by surface owners, who typically acquire their land with the minerals severed.
Water 2016 Key Issues
Saltwater Disposal Wells (SWDs). Groundwater Conservation Districts (GCDs) continue to protest SDWs at the RRC.
The GCDs question the RRC expertise and ability to protect groundwater from contamination. The GCDs believe they
should have standing at the RRC regarding permitting of SDWs.
Groundwater Contamination. Federal agencies and academia continue to study the impact of hydraulic fracturing on
water resources with environment groups and liberal media citing any finding or non-finding as unfavorable.
EVP Judy Stark
Winter cont’d p. 12
4
The Benefits of Building the Keystone XL Pipeline
1. Building pipelines creates jobs for hardworking American families Directly connecting the world’s third largest oil reserves with the world’s most sophisticated refining hub
would bring about strong economic benefits including jobs, increased tax revenues and energy security.
The Keystone XL Pipeline is projected to create approximately 9,000 well-paying jobs for American men and
women as well as thousands of spin off jobs in communities along the pipelines route. Building the Keystone
XL Pipeline through Nebraska, South Dakota and Montana is expected to create millions of hours of labor.
These hours represent real jobs, and are critical to helping American families qualify for health insurance,
retirement benefits and improve the quality of their lives. Construction jobs expected to be created by
Keystone XL in each state: Montana: approximately 4,000 jobs; Nebraska: approximately 2,700 jobs;
South Dakota: approximately 3500 jobs.
2. Economic Benefits and Taxes paid by TransCanada means a boost for local communities Keystone XL will contribute more than $3 billion towards U.S. GDP. Investments made in the form of taxes
and other contributions will help communities big and small afford infrastructure improvements, such as
roads, bridges, schools and local programs.
Once the pipeline is in operation, neighboring communities will continue to benefit from the surplus tax
revenues accumulated during construction, the spending associated with ongoing operations and
maintenance, as well as property taxes levied on the pipeline. Property tax revenue expected to be created by
Keystone XL in each state: Nebraska: approximately $20 million; South Dakota: approximately $23
million; Montana: approximately $67 million.
3. Support for U.S. manufacturing
Low energy prices are a benefit to everyone especially U.S. manufacturers. The International Energy
Association recommends that countries should look to use “indigenous sources” of energy to improve
efficiency and reduce transportation costs. Efficient and competitive markets can minimize the cost of
energy to an economy. Lower gas and electricity prices in the United States, relative to Europe, equated to
estimated savings of close to $130 billion for the entire US manufacturing industry.
4. Keystone XL will play a significant role in America’s energy future and security
Energy security is about safe, reliable access to diverse and abundant energy resources. Keystone XL
connects the largest most sophisticated refining hub in the Gulf Coast with the third largest oil reserves on the
planet and the second largest oil-producing region in the United States. Safe, secure access to domestic crude
oil is key to ensuring long-term energy security.
5. Keystone XL will support energy independence
By creating a link between booming domestic U.S. production and growing supplies of Canadian oil and the
U.S. Gulf Coast, Keystone XL will be critical in helping the United States decrease its dependence on oil
from less-friendly, less stable regimes in a safe and environmentally responsible manner. It’s about making
sure that oil production is connected to the right markets with the right infrastructure at the right time. It’s
also about having the choice of how those resources will be procured, used and distributed.
The Keystone XL is not only about transporting Canadian oil, which would displace higher-priced
Venezuelan crude oil. Keystone XL will safely transport growing oil production from North Dakota and
Montana, as well as provide market access for crude at Cushing, Okla. This will contribute to maintaining
stable energy prices and boosting the competitiveness of U.S. Gulf Coast refiners.
Keystone cont’d on P. 6
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6. Environmentally Responsible
The State Department’s Final SEIS and four previous environmental impact statements written over the past
five years, containing more than 17,000 pages of scientific research, all reached a similar conclusion: Keystone
XL would have minimal impact on the environment. Multiple scientific studies have also shown that Keystone
XL and the development of the oil sands will not put the global climate in jeopardy.
7. Safety It has been well-established that pipelines are, by far, the safest mode of transportation for crude oil and
natural gas. A recent Fraser Institute study shows that pipeline workers are less likely to be injured on the job
and pipelines have fewer incidents per mile than trains and trucks. The State Department environmental impact
reports have concluded that Keystone XL would have a degree of safety greater than any other crude oil
pipeline in operation in the U.S. The pipeline has agreed to 59 additional special safety conditions that go
above and beyond federal regulations. Crude oil needs to move from wells to the refineries. We have the
responsibility to do that in the safest and most efficient way possible, no compromises.
Drilling Permits By County - Dist. 10 12/15/15 – 1/14/16 DrillingInfo.com
Operator Lease Date TD
OKLAHOMA Beckham Nomac Atalaya Ellis Nomac Le Norman Roger Mills Nomac Le Norman TEXAS Hardeman Steinberger Buffco Hemphill Nabors Apache
Data provided by RigData.com
Hemphill—cont’d Nomac Le Norman Nomac Le Norman Nomac Le Norman Unit BP America Unit BP America Ochiltree Cactus BP America Potter Unit Apache Roberts Unit BP America
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PPROA PIPELINE 3131 Bell St., Suite 209 Amarillo, TX 79106 (806) 352-5637 [email protected]
Published ten times a year by the Panhandle Producers & Royalty Owners Association
PRSRT STD U.S. POSTAGE
P A I D Permit No. 664
Amarillo, TX
OFFICERS President Stacey Ladd WBD Oil & Gas, Inc. Past President Greg Graham Kismet Properties, Inc. Vice Presidents Todd Lovett Mewbourne Oil Company Thomas G. Ladd Laddex, Ltd. Secretary Doug Saunders Taylor/Herring Co. Treasurer Jeffery A. McCarn Brown & Fortunato, PC
EXECUTIVE COMMITTEE Bill Aikman Tascosa Land Resources Preston Boyd Valero Energy Corporation D. Clay Holcomb F.G. Dragons, LLC Juanita M. Malecha Pantera Energy Company Jason Manning Manning Land, LLC Scott Peeples Fortay, Inc. Leon Roberts CRL Pump & Supply, Inc. Currie Smith ACS-ODS Oil & Gas Patrick Weir Underwood Law Firm
STAFF Judy Stark - Executive V.P. Cynthia Johnson - Office Manager
RRC District 10 Production Data January 2015—December 2015
source: http://webapps.rrc.state.tx.U.S./PDQ
County Oil (BBL) CH Gas(MCF) GW Gas (MCF) Cond. (BBL)