Montana Petroleum Association

Montana Petroleum Association
HEARD IT THROUGH THE PIPELINE

November 21, 2007

Governor’s Climate Change Advisory Council:
Department of Environmental Quality Director Richard Opper released the long awaited Climate Change Advisory Council report on Monday, November 11th. The report can be viewed on the MDEQ website at: http://www.mtclimatechange.us/CCAC.cfm.

In his press conference, Governor Schweitzer used the conference to announce several other initiatives, including that Montana will lead the nation in decreasing consumer use of hydrocarbons by:

1) decreasing electricity consumption in state buildings 20% by 2010;

2) implementing a 30 mpg fuel economy standard on state vehicles by 2010;

3) challenging the universities to reduce carbon consumption 20% by 2010;

4) challenging businesses and industries to reduce carbon 20% by 2010; and

5) Montana will sign the Western Climate Initiative--as recommended by the Climate Change Advisory Committee.

While the committee sent it’s report to the Governor, three members of the committee, who were the only members representing any industry, also gave the Governor a minority report alerting him of several issues. The minority report is attached. Special thanks to Mark Lambrecht, PPL Montana, Shane Mogensen, Nance Petroleum, and Tim Gregori, Southern Montana Electric for a great job representing Montana’s industry.

Montana State University Poll:
There have been several articles in the Billings Gazette recently that are based on findings on a recent poll done by MDU-B. There are some interesting findings in the poll which is attached for your review.

Broadcast website on Onshore Order #1:
This site has the video clips, transcripts, powerpoints, & PDFs for the OO#1 Broadcast if you missed it when we had it in September.
http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/Onshore_Order_no1.html

Articles of Interest:
The Economic Impact Study was presented to the Industrial Commission this week and received lots of statewide media attention. Below is the article from the Fargo Forum.
http://www.in-forum.com/Business/articles/181150

Another anti oil and gas development article ran on the front page in the Missoulian and also in the Helena IR on Sunday, November 18th.
http://www.helenair.com/articles/2007/11/18/montana/a08111807_01.txt

Montana Petroleum Association
HEARD IT THROUGH THE PIPELINE

November 9, 2007

Renee Taylor Sage Grouse Work Released:
Renee Taylor, Taylor Environmental, has been engaged in the sage grouse issue in Wyoming for some time. Ms. Taylor is a highly respected biologist and is involved in the debate on the impacts of energy development on wildlife, particularly sage grouse. MPA has electronic copies of the study available to members upon request. Hopefully, it will be available on a website early next week. Please contact Bobbie at mpa@montanapetroleum.org.

Energy and Telecommunications Interim Committee:
Richard Opper, Director of the Department of Environmental Quality, gave an overview of the recommendations coming from Governor Schweitzer’s Climate Change Advisory Committee. There is still a considerable level of discussion about what the final recommendations of the Governor’s Climate Change Advisory Committee will be given they are still under considerable discussion. The draft committee report can be found on the following website: http://www.mtclimatechange.us/CCAC.cfm . Additionally, here is the story in today’s Helena newspaper: http://www.helenair.com/articles/2007/11/09/montana/a011109_03.txt

Senator Greg Lind, Vice Chair (also Chair of Senate Natural Resources Committee in 2007) of the ETIC asked numerous questions about carbon sequestration model rules that have been developed by the IOGCC. The EPA is engaging in the issue and there is disagreement over what regulatory agency will be responsible for CO2 geologic

sequestration. Tom Richmond, Administrator of the Montana Board of Oil and Gas Conservation responded to questions about the work that IOGCC has done so far and reported that they gave unanimous approval to the IOGCC model rules earlier this year. Senator Lind asked for a more thorough review of the IOGCC model rules at the next ETIC meeting. This is an issue that merits our attention. The ETIC work including staff reports can be viewed on this website: http://leg.mt.gov/css/committees/interim/2007_2008/energy_telecom/default.asp

Montana Fish Wildlife and Parks Workshop:
On November 1, the Montana Department of Fish Wildlife and Parks, (FWP) sponsored a facilitated workshop titled, “Evaluating the Situation and Planning for the Future: Coordinating Habitat Conservation and Restoration in Montana”. This workshop is part of a national effort to develop Comprehensive Fish and Wildlife Conservation Strategies in every state. The goal overriding the entire effort is to avoid any particular species from being listed as Endangered Species.

Approximately 140 people were in attendance including 5 that represented industry. Attendees included many sportsmen’s groups, environmental organizations, local conservation districts, land trusts, etc. FWP Director, Jeff Hagener, opened the meeting emphasizing the need to look at all species, not just those that are threatened or endangered. Hagener continued that the focus must be on habitat conservation across the landscape. The three primary threats that FWP sees are real estate development, energy development and climate change.

Groups were formed to offer ideas on how to “sell” a statewide comprehensive habitat conservation strategy. Everybody agreed that any effort had to include all stakeholders and be as inclusive as possible. For example, no one from the real estate or builders associations were invited to participate. FWP intends to take comments received from this meeting and update their current Comprehensive Fish and Wildlife Conservation Strategy.

It is also note worthy that FWP mentioned that funding is a significant problem. So far these efforts have been funded by a combination of federal and private grants; however, these planning efforts are much less expensive than efforts to conserve habitat. Land trust organizations are seen large potential funding sources, but FWP would like to see their conservation efforts more coordinated. The other major funding source that was mentioned numerous times was the oil and gas industry.

Attached is a synopsis of the wildlife grant program that developed this program. Included in this summary are all the rivers and locations where FWP will focus its conservation efforts.

BLM guidance Memo for Wildlife Issues:
The Montana Department of Fish, Wildlife and Parks department continues to expand its involvement in leasing actions on state and federal lands. Montana BLM Director, Gene Terland, issued guidance on October 26, 2007 that outlines their policy on coordination with Montana FWP comments during the parcel review process and identifies timeframes for the tentative sales scheduled for calendar year 2008. Please see the attached BLM guidance document for details.

Montana’s Northeast Land and Mineral Owners Association:
The NELMO Association held their annual meeting in Sidney, Montana on November 3. MPA Executive Director, Dave Galt was one of two speakers. MPA expressed a willingness to participate in the NELMOA meetings and hope to open a dialogue with land and mineral owners. Galt discussed changes to Montana law enacted by the last legislature. Specifically split estates and mineral royalty withholding. NELMOA members were appreciative that MPA visited them in Sidney and expressed a few concerns. First and foremost, they were not in favor of mineral royalty withholding. They felt they were better able to handle their own money and their own taxes. Secondly, they asked me to spread the word that some companies are not in compliance with the requirements in Montana law to list all deductions on royalty checks. This link will take you to the Montana requirements for listing deductions: http://data.opi.mt.gov/bills/mca/82/10/82-10-104.htm . Lastly, one issue was on the minds of all members and that was the issue of dust control. Their complaints centered around the heavy dust that occurs along gravel roads used by all residents, in particular, our industry.

DEQ Rulemaking regarding underground storage tanks:
The Montana Department of Environmental Quality has scheduled a rule hearing on November 28 on the following administrative rule changes:
http://deq.mt.gov/dir/legal/Notices/17-264pro.pdf Please review these rules carefully and contact Dave Galt at dave@montanapetroleum.org if you have any comments you would care to submit through MPA. If any MPA members intend to file their own comments, or if these rules merit more thorough discussion please contact Dave.

Montana depertment of revenue mineral royalty withholding rules:
the hearing on rules for the implementation of mineral royalty withholding is set for November 15th and written comments are due to MDOR by November 26. MPA has received two suggested changes from MPA members on these rules and plans to submit these suggestions at the hearing on the 15th. Please review the attached letter carefully and let Dave know immediately if you have any concerns. Also if additional comments need to be filed please let Dave know as well. The rule can be viewed at: http://mt.gov/revenue/formsandresources/administrativerules/upcomingevents_proposedrulenotices/42-2-778pro-arm.doc

Articles of Interest:
Political reporter Charles Johnson comments on Montana’s Governor’s race between incumbent Brian Schweitzer and challenger, Senator Roy Brown:
http://www.billingsgazette.net/articles/2007/11/04/news/state/42-horsesense.txt

Billings Editorial Board expresses concern for public land hunters because of increased oil and gas leasing. http://www.billingsgazette.net/articles/2007/11/02/opinion/guest/50-permits.txt

Attached is an interesting analysis of the occupations of the Montana State Legislature prepared by the Montana Business Leadership Council. MBLC is a non-profit organization dedicated to improving the business environment in Montana. See attached article: “Are We Really Represented in Helena? “

News Wire: For those of you who are interested in energy and political news in Montana, I suggest you explore the following website: http://sos.mt.gov/News/digest/2007/November/10-8-07.htm This service is provided by Brad Johnson, Montana Secretary of State, free of charge, and does a good job listing daily articles in a variety of newspapers across the State.