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Montana Petroleum Association
HEARD IT THROUGH THE PIPELINE
June 14, 2007
Greetings, for those you who might not be familiar with this newsletter I would like to take a minute and offer some comments. Heard it Through the Pipeline is the primary mechanism that Montana Petroleum Association (MPA) uses to keep its membership aware of issues affecting the industry in Montana. Furthermore, it is our primary tool for announcing meetings, both MPA sponsored and others that are important to your business. Please take a minute and scan the headlines to see if any topics are of interest. MPA does not publish this electronic newsletter during the Montana Legislature because we issue weekly legislative reports. This is the first issue on 2007, and there are numerous important items for you to review. Also please mark your calendars for the MPA Annual Meeting, August 27-29 in Billings…more details below. Thank You.
MPA Planning Meeting Report
The annual MPA Planning Meeting was held in Billings last week, June 6-7. We had a great turnout and several important issues were discussed and action items developed. This meeting is held every June, and is the opportunity to discuss issues affecting the industry in Montana and prioritize MPA activities for 2008. Draft meeting minutes are available through the MPA office. The topics below were discussed at the meeting.
Department of Environmental Quality Topics:
DEQ presented a formal department policy on potential to emit calculations. Please follow the link for the policy statement. http://www.montanapetroleum.org/docs/deq.pdf. This guidance should help those of you who are trying to determine if they need to register a well site.
Rulemaking before the Board of Environmental Review (BER) will be taken in the coming months on two issues. First, there needs to be clarification between the original rules for air quality permits that were done in December of 2005, and the final registration rules that were completed in March 2006. There are several areas that conflict in these rules and MPA will be working with the Department as they move forward. Secondly, the air quality per ton fees are adjusted by administrative rule after every legislative session. Based on 2008-09 budget figures, the per ton charge will increase from the current $22.30 to $29.96.
MT Department of Environmental Quality (MDEQ) staff, as well as Deputy Director Livers, were at the MPA Planning Meeting to discuss a pilot program that the Department is going to pursue with Montana Tech in Butte. This program will open a satellite permitting office in Butte, and work with the school to find student interns who are interested in an internship with the Department. They will focus on processing the back log of well registrations that were filed in 2006. This program will begin by focusing on the oil and gas program with the goal of better response time on our permits, as well as introducing students to applications and opportunities within the Department. The concept of moving air quality permitting to Montana Tech was part of a bill that nearly passed the 2007 Legislative Session. MDEQ was concerned about parts of that legislation, but they were interested in the concept of working with Tech students and having a satellite office in Butte. MPA is interested in the program, and will work with the Department as they expand their idea this summer.
Mineral Withholding Act:
The 2007 Montana Legislature passed a bill requiring any operator who produces more that 100,000 barrels of oil or 500 million cubic feet of gas to withhold 6% on the net royalty payment, and remit those funds to the MT Department of Revenue (MDOR). This withholding requirement applies to all royalty payments regardless of state of residency. There are exemptions for governments, Indian tribes, publicly traded partnerships and charitable organizations. MPA is working with the MT Department of Revenue to review and offer input into the forms and system requirements that MDOR will be building over the next few months. The withholding act is effective for the 2008 tax year. If you are interested in working on an MPA task form on the implementation contact the MPA office. The following link will take you to the bill.
http://data.opi.mt.gov/bills/2007/billhtml/SB0439.htm
Split Estates:
The 2007 Legislature also passed SB 19 dealing with increased requirements on split estate ownership of minerals and surface. SB 19 requires operators to give each surface owner a brochure that is being developed by the MT Legislative Council, and copies of Montana statute. There is a brochure that is already developed and the link below will take you to that site. The 2007 law changes have not been finalized yet. MPA will have the most current copy of the brochure and the laws sections in a packet available for members. SB 19 also extends the time requirement for notice. Operators must now give the surface owner a MINIMUM of 20 days notice and a MAXIMUM of 180 days before entering property to drill. These changes will become effective on October 1, 2007. MPA urges you to study the actual law, which you can access from the link below:
Law: http://data.opi.mt.gov/bills/2007/billpdf/SB0019.pdf
Brochure: http://www.montanapetroleum.org/
Fish, Wildlife and Parks Position Statement:
The issue of how wildlife and energy development interacts has been a controversial topic throughout our industry and with the press in the Rocky Mountains. Montana is no exception. Recently the Montana Department of Fish, Wildlife and Parks (MFWP) issued a position paper on changes to the current sage grouse conservation plan. The paper is attached. This topic was discussed at the MPA Planning Meeting last week, and will be a focal point at this year’s MPA Annual Meeting. Of particular concern are restrictions around sage grouse leks that are stated in the position paper and a statement by MFWP that they would like to “unify field development as a means of dealing effectively with mixed mineral and surface ownership”. MPA will be working with MFWP and other stakeholder groups to address these issues. Please take note of the MPA Annual Meeting comments in this newsletter and plan to attend, and be involved.
MPA Annual Meeting
Please mark you calendars for the MPA Annual Meeting at the Crowne Plaza Hotel in Billings, Montana, August 27-29, 2007. The meeting will start on the afternoon of August 27th with a panel of wildlife experts. Also, there will be a MPA Board of Directors meeting at 3:30pm on Monday afternoon. August 28th will have a presentation from Bureau of Land Management on On-Shore Order #1 followed by golf and fishing. We will have several presentations on Wednesday morning, August 29th culminating with the Petroleum Industry Appreciation Luncheon at noon. Please mark your calendars, we will have details and registration forms out in a few weeks. It is MPA’s intention to use this time to bring to the membership key leaders involved in the most pressing industry issues in Montana. I encourage you to mark your calendar and plan to attend.
MT Petroleum Association (MPA)/MT Board of Oil & Gas Conservation (MBOGC) Essay Contest
The 2007 MPA/MBOGC essay contest was a complete success this year. Eight cash prize awards were given to Montana high school age students from across the state. Local newspapers ran some great articles about the effort, and from my perspective, many students and teachers learned of the complex issue America faces dealing with energy. Steffanie Robertus, a first year home school student from Bozeman, will be awarded her second place prize of $1,000 at the Montana Board of Oil and Gas Conservation (MBOGC) meeting on June 14th. This has been an exciting effort and one that will continue next year. The MPA Board of Directors moved to sponsor the contest again in 2008. In addition, the MBOGC moved to contribute $3,000 towards prize money. Members of the MBOGC have offered to help market the contest at local high schools. We can use your help getting the word out to Montana schools when we announce the contest details this September. If any MPA member would be interested in being involved in the contest, please contact Dave Galt at dave@montanapetroleum.org. Please note the attached article that was in the Helena Independent Record. Also the top eight essays are on the MPA website, www.montanapetroleum.org if you are interested.
2008-09 Montana Legislative Interim Committees
Various Interim Committees have been formed and are beginning to hold meetings. Please visit http://leg.mt.gov/css/committees/interim/2007_2008/default.asp to get a look at the different committees. There will be several issues that are of concern to our industry that will be discussed over the next 16 months in the interim committee process. Water policy, carbon emissions, climate change and tax policy are a few that come to mind. The Montana Environmental Quality Council will hold its first formative meeting on June 28th and 29th in Helena. MPA will be monitoring and reporting on these meetings that affect our business.
BLM Request for Assistance
Bureau of Land Management (BLM) needs your assistance in trying to compile some data to show the range of oil and gas reclamation costs being incurred by the industry on oil and gas projects. BLM records are somewhat dated, and we were hoping some of you may be able to provide more current costs which may not be proprietary to your specific companies. We would typically consider costs related to the removal of production facilities, pumping units or miscellaneous equipment as part of these costs. In addition, these costs could include the following:
Reserve pit closure
Earthwork for establishing approximate original contours and refilling pits
Seed
Seedbed preparation
Soil amendments
Mulch
Fencing
This information will be used for internal use only to come up with a range without disclosing where the data came from (i.e. XYZ Company etc.). We do see copies of AFE's provided at oil and gas hearings which are made public, but do not always see oil and gas reclamation costs.
Any assistance is greatly appreciated!
Please send this information to Pascual Laborda at plaborda@mt.blm.gov
