July 20 2021
Your Source for Updated and Breaking Oil & Gas News For Members of the Kansas Independent Oil & Gas Association
KIOGA Members:

           Greetings!   KIOGA continues to stay engaged providing updates and resources for the Kansas oil and gas industry.

Important Marginal Well Production Credit Information for Marginal Natural Gas Wells

If you have marginal natural gas wells, be sure to take advantage of the Internal Revenue Service (IRS) credit for production of natural gas from marginal wells during taxable years beginning in calendar year 2020. 

IRS Notice 2021-34, page 1194 provides the applicable reference price for qualified natural gas production from qualified marginal wells during taxable years beginning on the calendar year 2020 for the purpose of determining the marginal well production credit (MWC) under Section 451 of the Internal Revenue Code. The applicable reference price for taxable years beginning in calendar year 2020 is $1.94 per 1,000 cubic feet (Mcf).

This notice also provides the credit amount used for the purpose of determining the MWC for taxable years beginning in calendar year 2020. The credit amount is determined using the 2020 inflation adjustment factor of 1.3245 and the application reference price of $1.94 per Mcf. The credit amount for taxable years beginning in calendar year 2020 is $0.66 per Mcf.

You can find the full IRS Notice HERE

 KIOGA Submits Comments to EPA on Oil & Gas Methane Proposal

President Biden’s Executive order 13990 called on EPA to consider issuing a proposed rule by September 2021 to strengthen standards for methane emissions from new, reconstructed, and modified oil and natural gas sources and to address methane emissions from existing sources. 

The EPA held general public listening sessions on June 15th-17th. Former KIOGA Chairman Nick Powell provided oral comments on June 16th and KIOGA President Edward Cross provided oral comments on June 17th. EPA also established a Small Business Advocacy Review (SBAR) Panel to review oil and natural gas New Source Performance Standards (NSPS). KIOGA President Edward Cross was invited to participate as a “Small Entity Representative” (SER) on the SBAR. In addition to Cross’ representation of Kansas, other SERs include representatives from the oil and gas industry in West Virginia, Pennsylvania, Michigan, Indiana, Kentucky, Oklahoma and two national associations (DEPA and IPAA). The SBAR met with EPA in a Zoom meeting on June 29th and again on July 6th

The EPA has been ordered by President Biden to come up with proposed oil and gas methane regulations by the end of September 2021. The EPA will come out with a proposal by the end of September, which will then open another comment period. The final EPA methane rule will likely come out in late spring to early summer 2022. The EPA asked the SER’s for information to justify provisions to help small businesses 

The EPA asked each of the SER’s of the SBAR panel to submit written comments regarding our concerns and suggestions for EPA’s proposed new rule to regulate methane. Cross submitted comprehensive written comments on behalf of KIOGA to the EPA on July 8th. KIOGA’s comments focus on the significant cost-of-compliance issues and the need for EPA to recognize the low production well emission profile. KIOGA’s comments emphasized the Kansas oil and gas industry’s recognition of the importance of environmentally sound, cost-effective regulations to manage methane emissions. KIOGA encouraged EPA to find a regulatory pathway designed for the sources it regulates. Big new oil and natural gas wells and low producing older wells have differing emission profiles. KIOGA told the EPA that any regulatory actions should recognize the differences between these existing small operations and newly built large facilities. You can find a copy of the July 8th comments KIOGA submitted to the EPA HERE
Cross will meet with the EPA again on July 29th to discuss the comments.