The Voice of the Independent Since 1959

October N E W S 2018 2018 Industry Accounting and Tax Seminar With the advent of Tax Reform service companies and profession- presentation. The passing in December 2017, it is als maximize tax and economic topics will be very more important than ever to be benefits. beneficial, timely familiar with the special Oil and Gas Each participant will have ample and exciting tax provisions. To ensure that our opportunity to introduce them- for participants members can take full advantage selves and their companies. Partici- regardless of of these new tax benefits available, pants will also be encouraged to of- their experience Arnett Carbis Toothman will present fer their thoughts about oil and gas in the oil and gas Don Nestor their updated annual Oil and Natu- and to ask questions. Multiple ACT industry. Arnett Carbis ral Gas Accounting and Tax 2018 presenters will utilize their years The topics will Toothman llp Seminar November 13, 2018. In of experience in the oil and gas be very beneficial, addition to providing in depth cover- industry to explain key tax benefits timely and exciting for participants age of oil and gas tax concepts, the such as the Marginal Well Credit regardless of their experience in the seminar will cover Federal and State as well as standard tax issues that oil and gas industry. tax updates and tax planning ideas everyone in the oil and gas indus- Register by Nov. 8 by using the and opportunities to help oil and gas try should be aware of and should form on page 23 or visiting www. investors, operators, royalty owners, plan for. Please plan to attend this iogawv.com.

I N S I D E Members, Guests Enjoyed Sports Weekend Brett Loflin / 2 Those attending the 2018 Sports the golf links or the shooting range. Weyland Group Mark Clark / 3 Charlie Burd / 4 Weekend activities enjoyed great Afterward, everyone enjoyed Corp. Scott Freshwater & weather, great football and great a terrific luncheon, prepared by Golf tourna- Bob Radabaugh / 5 food. Bridgeport Country Club. ment winners Mark Clark / 5 Saturday began with a tailgate were: 1st place Sports Weekend Sponsors / 8 party at Mountaineer Field, spon- Cody Gerhards, WV Oil & Gas sored by Bowles Rice. National Oil- Festival / 10 Then, Sports Weekend fans well Varco, Rob Industry Events / 12 Greg Kozera / 13 headed to the stadium to watch the Hunley, Tim Kevin Ellis WVU Mountaineers in their Big 12 Richmond and Sam McKown / 15 Vice President and Industry News / 16 opener against Kansas State. Using Jerrad Baldwin, Program Chair Ergon / 17 the luck of IOGAWV, and great all with Drill- Mark Taylor / 18 playing, the Mountaineers were ing Tools International; 2nd place Rick Toothman / 19 victorius by a score of 35-6. Nicholas Dent, Frank Montgomery, Charlie Burd / 19 Clay tournament winners were: Shawn Moyers and Wes Smith, all IPAA News / 20 Hugh Byers / 21 1st place, Nolan Smiley, Flying “W” with Flying “W” Plastics; and 3rd Tax Seminar / 23 Plastics; 2nd place, Tim George, place Jon Farmer and Jon Sheldon, On Friday, IOGAWV members Brown Edwards & Co., LLP; and both with Arsenal Resources, Jim and guests enjoyed a great breakfast, 3rd place (tie), Tracy Cappola, An- Fealy, and Phil Reale II, both with provided by SLS, before heading to tero Resources, and John Roberts, Sports Weekend Continued on page 6 2

Brett Loflin IOGAWV President

Report Your Production There is growing concern reports for conventional wells are adequate balance in the oil and gas throughout the U.S. regarding the due on March 31st for the previous reclamation fund. IOGAWV will number of abandoned oil and gas year’s production. Unconventional work to develop and recommend wells. More specifically the number production is now due on a quar- a funding mechanism that is not of orphaned wells, meaning there is terly basis and is due approximately detrimental to the fragile economic no identifiable responsible party or 45 days following the end of the conditions that exist for all of us in the last operator of the well is no previous quarter. This is a simple the low price environment we have longer in business. The West Vir- solution that can help to eliminate faced for the last several years. ginia Department of Environmen- the need for the state to take en- In the meantime, be sure and file tal Protection (WVDEP) has identi- forcement action or develop more your production reports in a timely fied 14,000 to 15,000 abandoned aggressive policies that may cause fashion. wells in the state and approximately financial hardship to the operator. 5,000 orphaned wells. Another option is to have any of The state does have the recla- your wells that may not produce mation fund that is administered for twelve consecutive months be by the Office of Oil and Gas. A designated inactive. This is accom- portion of the well work permit plished by requesting “Designation 2018-2019 OFFICERS fee ($150.00) goes toward this fund of Bona Fide Future Use” with the and is used for the plugging and Office of Oil and Gas. The proce- BOARD MEMBERS abandonment of orphan wells. Un- dure for inactive status designation Brett Loflin fortunately, there is only a little over can be found in the Code of State President $100,000 in the fund available for Rules, Title 35, Series 5. Inactive J. Kevin Ellis plugging. The state is only able to status can be granted for up to five Vice President/Program Chair/Government Affairs Co-chair plug one or two wells per year, but years. Unfortunately, at this time, Ben Sullivan more on that later. economics alone will not suffice Secretary-Treasurer/Finance Chair The other issue is the number to be granted inactive status. If Marc Moneleone of abandoned wells in the state. you find you have no other op- Immediate Past President Those are wells where a responsible tions and are required to plug your James W. Crews party has been identified and most Commerce Co-chair abandoned wells, the Office of Oil Jon Farmer likely has posted a performance and Gas will generally enter into Producers Issues Chair/Government Affairs bond to operate in . a consent order to plug with the Vice Chair The legislative auditors have been operator. The consent order will Jeff Isner paying attention to the number of dictate that the operator shall plug Commerce Co-chair/Communication and abandoned wells and have asked or put back in production a certain Education Vice Chair Mike McCown the Office of Oil and Gas why they number of wells per year over an Communication and Education Chair have not taken more aggressive agreed upon time frame. This may Sam McKown steps to force operators to plug the not be ideal but it does afford the Membership Chair/ abandoned wells for which they operator more time to plug or pro- Environmental Vice Chair are responsible. One way we can duce those wells that are considered Bob Radabaugh reduce the number of abandoned abandoned. Environmental Chair Sarah Smith wells is to make sure our operators Regarding the issue of orphan Government Affairs Co-chair file their production reports. Every wells, IOGAWV will be working Todd Tetrick year, more wells are added to the in conjunction with WVONGA Safety Vice Chair abandoned well list simply be- and the Office of Oil and Gas to Rick Toothman cause operators are not filing their develop a funding mechanism that Safety Chair production. Annual production will allow the state to accumulate an 3

Mark Clark Spilman Thomas & Battle, PLLC

WV DEP Issues Draft Storm Water General Permit for O & G On September 3, 2018, the West 6-8 p.m. on October 11, 2018, and the information required for large Virginia Department of Environ- written comments will be accepted construction projects (disturbing 3 mental Protection (“WVDEP”) until October 21, 2018. or more acres of land) and minor announced that it is accepting The Draft O&G Stormwater construction projects (disturbing 1 comments on its draft General Permit is the one of more interest to less than 3 acres of land). For Water Pollution Control Permit to IOGA members and will be the large construction projects the Stormwater Associated with Oil subject of this article. The WVDEP applications must be submitted and Gas Related Construction is proposing numerous revisions 60 days (increased from 45 days) Activities (“Draft O&G Stormwa- to the original O&G Stormwater before construction is anticipated ter Permit” or “Draft”). WVDEP Permit that was adopted in 2013. to begin, or 100 days (increased also issued a draft General WV/ For example, the 2013 Permit is 22 from 90 days) prior to anticipated NPDES Water Pollution Control pages and the Draft O&G Storm- construction commencement for Permit Stormwater Associated with water Permit is 33 pages. This projects requiring “public notice.” Construction Activities (“Draft article will highlight only some of For minor construction projects the NPDES Stormwater Permit”) the proposed revisions. application must be submitted 20 (jointly “Draft Stormwater Gen- The first significant change days (increased from 10 days) prior eral Permits”). The current ver- is new language providing “[a] to construction, unless “public sions of these stormwater general uthorization to discharge under this notice” is required in which case permits expired in May and January permit occurs upon the Direc- the application must be submitted this year, respectively, and were tor’s approval of the registration 100 days (increased from 90 days) extended by WVDEP through application.” Thus, some form prior to construction. Applications December 31, 2018. These Draft of express authorization appears for both types of projects require Stormwater General Permits are to be required from the Direc- Stormwater Pollution Prevention each open to public comment and a tor before discharges may com- Plan (“SWPPP”), Groundwater public hearing. The Draft NPDES mence. This is consistent with the Protection Plan (“GPP”), Detailed Stormwater Permit will be the elimination of the Notice of Intent Site Plan (Map) showing limits of subject of a public hearing from form previously used to “register disturbance and receiving waters 6-8 p.m. on October 9, 2018, and a minor construction project (one (see new definition), and a tem- written comments will be accepted that disturbs one to less than three plate for the required signage. The until October 19, 2018. The Draft acres).” Now all projects disturbing application for large construction O&G Stormwater Permit will be one acre or more must submit an projects also requires more design the subject of a public hearing from application. Section G.4. describes details, such as sediment basins, road, cut and fill cross sections,

and other engineered structural

design calculations. In addition,

the SWPPP and GPP must be

submitted for approval “as separate Homestead stand-alone documents,” in contrast Communications to the prior option to combine the getting YOUR message to the SWPPP and GPP into one docu- ment. The SWPPP must be pre- right people pared by a “qualified person.” through award-winning public relations The Draft contains new defini- homestead communications tions for: “access road,” “applica- po box 13604 | charleston, wv 25360 304.984.0308 | [email protected] DEP Changes Continued on page 22 4

Charlie Burd Executive Director, IOGAWV From the Burd’s Nest: Let Your Voice Be Heard! In just a few short weeks, Tues- House of Delegates members repre- work to advance the State of West day, November 6, 2018 (that first senting all 67 House districts. House Virginia. Because of these differ- Tuesday after the first Monday in of Delegates members are elected to ing opinions, it is important for you November), registered voters here in serve two-year terms and, as such, to learn as much as you can about West Virginia will go to their respec- are up for re-election each election the candidates and find and support tive polling place and cast their votes cycle, or every two years. those who most closely represent for those candidates who best repre- Also, as you read and study this your individual beliefs. By voting sent their interests. We should all be list, you will discover the GOpac for those candidates who hold your reminded that the importance and selection committee was very selec- same beliefs, you can improve the privilege of voting cannot be over- tive in its endorsements and even chances that your wishes are granted stated. Casting your vote is the same chose to avoid some Senate and and that elected officials will bring to as using your voice!! That is one of House races. This is not uncommon the forefront initiatives of impor- the beauties of democratic republic and nearly all such political action tance to you and hopefully the oil government: every individual is given committees follow this practice. If and natural gas industry. the right to vote on political, social you have questions on a particular In closing, please remember the and economic issues, particularly the candidate, or if you wish to discuss ballot you cast this November 6 representatives they want to be in the endorsement of an individual is important. Collectively, ballots charge of making major decisions,. not on the list, please call me at your send a message to everyone running Recently, all IOGAWV members earliest convenience. for an elected office. In addition, a received an email communication As someone who spends a great complete list of candidates running from GOpac, the Association’s Gas deal of time lobbying, and work- for all office can be found at:http:// and Oil Political Action Committee. ing with our elected Senators and services.sos.wv.gov/apps/elections/ This email communication listed Delegates, I take a lot of pride in the candidate-search/. Please also be re- over five dozen candidates who fact that I know all 134—mostly on minded the General Election Early either have a proven track record a first-name basis and, even though Voting Period is October 24, 2018 of supporting the interests of the some disagree with some oil and nat- through November 3, 2018. Let oil and natural gas industry, and ural gas issues, I still greatly respect your voice be heard! IOGAWV and its members, or have their commitment to service and indicated in one-on-one discussions their support of our issues. A repeat of that endorsement list is included in this issue of IOGA News on page 11. When you read and study this list, please note that each of West Virginia’s seventeen (17) Senatorial district has two elected senators who are elected to four-year terms. How- ever, only one senator is elected in each election cycle. That is why you may not see a very friendly and help- ful senator listed for endorsement in this election. Those not up for election in 2018 will be on the ballot in November 2010. The complete opposite scenario exists for all 134 5

Scott Freshwater and Bob Radabaugh GOpac Co-chairs GOpac Endorsements Released for Nov. Election GOpac, the Gas and Oil Political Geoff Foster District 15 Joe Statler District 51 Action Committee of the Indepen- District 17 Debbie Warner District 51 dent Oil and Gas Association of District 18 Gary G. Howell District 56 West Virginia (IOGAWV) has en- District 21 Daryl E. Cowles District 58 dorsed 64 candidates for legislative District 22 Jason Barrett District 61 races in the upcoming West Virginia Joe Jeffries District 22 Eric Lee Householder District 64 2018 General Election on Novem- Rodney Miller District 23 District 65 ber 6, 2018. Joe C. Ellington Jr. District 27 District 66 John H. Shott District 27 Riley Moore District 67 West Virginia District 27 House of Delegates Roy G Cooper District 28 Name District Jeffrey Pack District 28 Name District Mark Zatezalo District 1 District 32 Ryan Ferns District 1 District 1 District 33 Charles Clements District 2 Erikka Storch District 3 District 34 District 3 David Pethtel District 5 District 35 District 4 David Kelly District 6 Charlotte R. Lane District 35 District 5 Jason S. Harshbarger District 7 Eric Nelson District 35 Mark R. Maynard District 6 Bill Anderson District 8 Dianna Graves District 38 District 7 Ray Hollen District 9 Dean Jeffries District 40 Ed Gaunch District 8 District 10 Bill Hartman District 43 Mike Oliverio District 13 Frank Deem District 10 Carl “Robbie” Martin District 45 David Sypolt District 14 John R. Kelly District 10 Patrick Martin District 46 Charles Trump V District 15 Martin "Rick" Atkinson District 11 District 48 District 17 District 12 District 48 IOGAWV encourages you to vote District 13 District 48 and to vote for those candidates District 13 District 49 who best represent your personal Jim Butler District 14 Guy Ward District 50 and business needs. A complete list of candidates for all offices can be found at: http://services.sos. wv.gov/apps/elections/candidate- search/. The General Election Early Voting Period is October 24, 2018 through November 3, 2018. 6

Sports Weekend Continued from page 1

the Law Office of Philip A. Reale. Individual winners were: Phil Reale II was closest to the pin on the first shot; Steve Davis with A.W. Chester- ton, closest to the pin on the second shot; Tim Richmond, Drilling Tools International, had the longest putt; and Ryan Holcomb, Thrasher Engi- neering, had the longest drive. At right, Chris and Marc Monte- leone and their daughter, Allisyn, served as hosts at the pre-game tailgate party. Below, folks enjoyed a barbecue Friday afternoon. Bottom right, our attendees en- joyed a tailgate party, sponsored by Bowles Rice. As always, everyone had a terrific time!

Sports Weekend Continued on page 7 7

Sports Weekend Continued from page 6

Shown here are four of our golfing groups, with all players named from left to right. At right: Dale Fidurko, HG Energy II; Greg Hadjis, J F Al- len; Rick Smith, C & J Energy; and Trevor Schaffer, EnerVest Operating.

Jim Pritt, EnerVest Operating; Steve Shriver, Shriver Trucking; Dave Noss, Dominion Energy; and Tony Thomas, Dominion Field Services.

George Patterson, Bowles Rice; Kevin Ellis, Antero Resources Corporation; and Dave Cava, Antero Resources.

Jon Farmer, Arsenal Resources; Phil Reale II, Law Office of Philip A. Reale; Jim Fealy, Law Office of Philip A. Reale; and Jon Sheldon, Arsenal Resources. 8

Sports Weekend Sponsors Thanks to Our Sports Weekend Sponsors

2018 Sports Weekend Diamond Sponsors

2018 Sports Weekend Gold Sponsors

2018 Sports Weekend Silver Sponsors 9

Sports Weekend Sponsors Thanks to Our Sports Weekend Sponsors

2018 Sports Weekend Silver Sponsors

Homestead Communications 10

West Virginia Oil and Gas Festival 2018 Oil & Gas Festival Honors Freshwater

David Freshwater of Reserve Oil and Gas was honored as the 2018 West Virginia Oil & Gas Man of the Year. Shown above is the Freshwater family. From left are Scott Freshwater, Sara Freshwater, Ava Freshwater, Suzanne Fresh- water, Allegra Keaton, David Freshwater, Isaac Freshwater, Derek Freshwater, Ella Childress and Amy Childress.

At left, 2017 honoree Charlie Burd enjoys the privilege of introducing the 2018 Oil and Gas Man of the Year, David Freshwater.

Below left, Vincent presents the 2018 Oil & Gas Man of the Year plaque to David Freshwater.

Bottom right, David Freshwater, along with former Men of the Year, from left, J.B. Simonton, Don Nestor, Mike McCown and Charlie Burd are surrounding Festival Queen Madison Campbell. 11

West Virginia Oil and Gas Festival 2018 Oil & Gas Festival Honors Freshwater

Above, J.B. Simonton and Doug Douglass visit with David Freshwater and other luncheon attendees.

Right, Festival Board Chair Barbara Vincent shares the plaque of all prior honorees. The plaque was presented to her and the Oil & Gas Fair Board by IOGAWV.

Below right, David Freshwater accepts the 2018 Oil & Gas Man of the Year honors.

Below, a crowd of industry supporters, along with friends and family, gathered in Sistersville to celebrate David Freshwa- ter contributions to entire natural gas and oil industry. 12

Industry Events Upcoming Events

October 10-11, 2018 Governor’s Energy Summit Stonewall Resort Roanoke, WV October 17, 2018 Entering the Shale Gas and Chemical Supply Chain Cabela’s - Wheeling Triadelphia, WV

October 23-25, 2018 Shale Insight Conference Lawrence Convention Center Pittsburgh, PA November 7-8, 2018 Marcellus Utica Houston Conference JW Marriott Houston Galleria Houston, TX Info: www.marcellusuticahouston.com November 11-13, 2018 IPAA Annual Meeting Ritz-Carlton New Orleans, LA Info: www.ipaa.org November 13, 2018 IOGAWV Tax Seminar Marrott Town Center Hotel Charleston, WV Info: www.iogawv.com January 22-23, 2019 IOGAWV Winter Meeting Marriott Town Center Hotel Charleston, WV Info: www.iogawv.com April 8-9, 2019 Marcellus to Manfacturing Conference Waterfront Place Hotel Morgantown, WV 13

Greg Kozera Learned Leadership LLC Tired of Low Prices? Try Marketing I have worked in sales in some make a commitment to come to this producers still have to pay transpor- manner for most of my life. My first Region takes a lot more than seven tation. It is much better to sell your sales experience was selling candy touches. A good marketing program gas and liquids here. for my Little League team when I can make some of the touches. A How can you do this? It starts was nine years old. Selling light bulbs compelling marketing program for with marketing. Shale Crescent USA, for my Boy Scout troop followed consumer items can drive people the organization, has branded Ohio, that. Even when I was a Regional buy via phone or internet. Ultimately Pennsylvania and West Virginia as Manager for Halliburton, I loved marketing drives sales. The Shale Crescent USA. Interna- spending time with my custom- During my years in corporate tionally people know where New ers and helping them solve their America I have seen organizations York City, Texas and Hollywood problems. Now I’m selling an entire fail because the VP who was respon- are. When we were in Japan and I Region helping companies to expand sible for sales and marketing for the said I was from West Virginia or or relocate here and use our energy. organization didn’t understand they Ohio (where the Shale Crescent Maybe this is what all of my previ- are not the same thing. One VP told office is) people were clueless. The ous work was meant to prepare me me, “We don’t need a marketing Gulf Coast is our main competitor for. plan. Just get out and sell.” The poor for petrochemical business. This Everyone understands sales. They guy never understood the impor- is important because, until Shale know what it is to buy a product tance of marketing in creating sales. Crescent USA started marketing, or service. Companies have sales When the economy slowed, it almost most people thought of Texas when people that seek out and approach destroyed the organization. it came to oil and gas. In Japan, the prospects to buy their product or The producers who read this may most frequent comment we heard service. Marketing is a different be thinking. “Who cares about sales was, “We thought all of the gas in story. Since I became a profes- and marketing? I sell a commod- the USA was in Texas.” In 2017 the sional speaker and a member of the ity into a market.” This is true. A Shale Crescent USA passed Texas in National Speakers Association over farmer doesn’t do sales and market- natural gas production. In 2010, we 15 years ago, I have had the oppor- ing. He takes his corn to market and produced 3% of the USA’s natural tunity to learn about marketing from gets paid whatever the market price gas. In 2017, we produced 30% some of the top marketing experts is, over which he has no control. and we are still growing, while gas in the country. Simply put, marketing What if you could influence the production in the rest of the USA is about creating awareness. An ad market? What if you could increase is flat. in a trade journal is marketing. A TV demand for your product? What The Shale Crescent USA Region is commercial is marketing. A spon- if you could increase demand for unique because it has: sorship is marketing. A trade show your product in this region close to • Economical and abundant natu- booth is marketing. The people that where you produce it? That would ral gas and NGLs; staff it and try to get people to buy eliminate some of the transporta- • Abundant water resources; are in sales. tion costs you pay now. Increased • Proximity to 50% of the US and Marketing is essential. Awareness demand will increase price if supply Canadian market; always comes before someone buys. is constant. Of course, increased • Proximity to 70% of US and You can have a great product or supply can also influence price. Jerry Canadian polyethylene demand; service, but if no one knows about James, president of Artex Oil and • An experienced workforce; it, you will fail. A good marketing former OOGA president told me, • The most profitable place on program opens the door for sales “The only way out of this low-price earth to build a petrochemical people. Research shows that it takes situation producers find themselves plant, Shale Crescent USA, ac- at least seven touches or contacts in is increased demand close to cording to an IHSMarkit 2018 to make a sale. Most sales people the wellhead.” Increased overseas study; and quit after two. To get a company to demand for LNG can help, but local Try Marketing Continued on page 14 14

Try Marketing Continued from page 13

• The only place on Earth Imagine how much natural gas these you? In April, a little website called where wells, manufacturing, crackers can use along with the build YAHOO Finance was one of the petrochemical facilities and out of plants for propane, butane first internet sites to call The Shale the converters who make the and other molecules. How much nat- Crescent USA “a second petrochem- products we all use can all be ural gas usage can the expansion of ical hub.” When this region becomes in the same area drastically converters create because of these a second petrochemical hub, what reducing transportation costs. plants? What about demand from would that mean to you? Unfortunately, unless manufactur- manufacturing moving back into More information is available at ers and petrochemical companies are the region? What about increased www.shalecrescentusa.com. Our goal aware of our advantages, they aren’t residential demand as our population is to bring high wage jobs back to coming; so there is no sale. Mar- grows again? this region by marketing our abun- keting is creating awareness. Shale If you are in the E&P business, dant and economical natural gas and Crescent USA has over 250 million what does significant local demand NGLs to companies with high ener- global internet impressions. We have growth mean for natural gas and gy use. You can help this happen by been on radio, TV and in national NGL prices? Can selling more natu- using the Shale Crescent USA brand magazines. We have been on the ral gas locally and avoiding transpor- to describe this region and help your main stage at the World Petrochemi- tation costs help your business? If organization in the process. We are cal Conference in Houston. We have you are in the service industry, can on a great journey. You are making a one foreign company coming to more prosperous E&P clients help difference! the Region. We are creating aware- ness, but we need your help to grow brand awareness. This region is currently branded R.L. Laughlin & Co., Inc “Providing Gas Measurement Services since 1970” as: • Appalachia: not the best brand Site Automation  Electronic Chart Integration for a region that drills some of Meter Sales  Meter Installations Gas Analysis  Calibrations & Repairs the most technically sophisti- NOW SERVING YOU IN 3 LOCATIONS: cated wells in the world. • The Northeast: people tell us 125 State Rt. 43 5012 Washington St., W. Hartville, OH 44632 Charleston, WV 25313 they think of Boston and New 330-587-1230 304-776-7740 York when they hear north- 1205 Buckhannon Pike east. They are great places to Nutter Fort, WV 26301 visit but not for manufacturing. 304-969-0033

They have high energy costs, in part because they don’t like our industry and pipelines. • The Tri- State Region: every place in the USA where three states come together is a tri- state. Which one is this one? The Shale Crescent USA brand was created to overcome these prob- lems. We are having global success but we still have a lot of work to do. To help bring industry here, it is important for you to refer to this region as “The Shale Crescent USA,” instead of the three de- scriptions above...starting today! Imagine how much NGLs four ethane crackers can use every day. 15

Sam McKown Membership Committee Chair IOGAWV Board Approved Nine New Members in September Please welcome these new mem- Chem FlowTronics, Inc. ALL Glenn O. Hawbaker, Inc. ALL bers approved in September: Kevin Mooney Colleen Williams PO Box 4635 1952 Waddle Road American Petroleum POP Wyne, NJ 07474 Suite 203 Partners, LLC 195 Paterson Ave. State College, PA 16803 Mark A. Acree Little Falls, NJ 07424 Phone: (814) 237-1444 4600 J. Barry Court Phone: (973) 785-0001 Cell: (814) 574-7935 Suite 310 Cell: (973) 220-1996 [email protected] Canonsburg, PA 15317 [email protected] www.goh-inc.com Phone: (724) 271-8748 www.Chem-FlowTronics.com Cell: (330) 418-4211 JR Contracting ALL [email protected] Core Industrial Group ALL Morgan Mayberry www.app-lp.com Scott Wheeler 810 Rt. 519 1027 Stewart Street Eighty Four, PA 15330 Aspire Energy ALL 1603 Newmans Branch Phone: (724) 229-1439 Mark Isner Milton, WV 25541 Cell: (813) 849-3816 309 Tracey Bridge Road Phone: (304) 390-4077 [email protected] Orrville, OH 44667 Cell: (304) 419-1378 www.jrcont.com Phone: (330) 749-4958 [email protected] Cell: (330) 749-4958 Pesco Energy GOM [email protected] Craig T. Provenzano ww.aspireenergyco.com 100 Commerce Drive Newark, DE 19713 Phone: (330) 639-8967 [email protected] www.pescoenergy.com

Tallman Energy LLC STU Christian O. Tallman 501 13th Street Parkersburg, WV 26101 Phone: (304) 422-1890 Cell: (304) 966-4270 [email protected]

EXTENDED White’s Energy Services ALL STAY OPTIONS Ashley DiFante 325 Meadowlands Blvd. Washington, PA 15301 YOUR HOME AWAY FROM HOME Oglebay is easily accessible to major Cell: (724) 833-4542 highways between Pennsylvania and Ohio • Lodging • Breakfast Available [email protected] • Multiple Dining Venues • In-Room Refrigerator whitesenergy.com • 24-Hour Fitness Center • Meeting Space • Year-Round Recreational Activities

465 LODGE DRIVE | WHEELING, WV | 304-243-4060 | WWW.OGLEBAY.COM 16

Industry News Industry, Business Leaders Hope to Avert Hike in Severance Tax Flush with success in finally seeing teacher pay raise and shore up the Burd noted that the last two a long-awaited “co-tenancy” bill en- Public Employees Insurance Agency, quarterly reports on the state’s tax acted after years of effort, the West a proposal surfaced that would have collections “have been very positive, Virginia oil and gas industry now has funded teachers’ health care through and that seems likely to continue,” a new priority — heading off any an increase in the severance tax on thus perhaps easing the pressure for increase in the state’s severance tax natural gas. seeking new revenue. on natural gas. House Finance Chairman Eric “Moreover, any increase in the “That is our biggest concern,” Nelson, R-Kanawha, and Senate severance tax couldn’t come at a said Anne C. Blankenship, executive Finance Chairman , R- worse time,” he said. “The natu- director of the West Virginia Oil and Berkeley, both turned thumbs down ral gas industry in West Virginia is Natural Gas Association, follow- on the idea, which ultimately was primed to create a manufacturing ing her Sept. 17 presentation to an nixed. boom. Natural gas liquids are the interim session of the Legislature’s “When you’re dealing with some- building blocks for creating plastics Joint Committee on Finance and thing as important as employee and other products we use every day. Energy. pay and benefits, you need a solid, Consider that the enormous amount Both Blankenship and Indepen- reliable stream of revenue to ensure of natural gas we are sitting on can dent Oil and Gas Association of that you have enough money to pay be kept right here in West Virginia, West Virginia attorney Phil Reale those costs,” said Nelson. “His- creating tens of thousands of jobs warned lawmakers against enacting tory clearly shows that a natural gas in downstream opportunities, like any increase in the severance tax on severance tax is too volatile to use as manufacturing, and pulling West Vir- natural gas. a foundation to pay for employees’ ginia out of last place in the nation’s As a low-income state that is rich benefits.” business rankings.” in natural resources, the revenue col- State government’s share of PEIA The West Virginia Chamber of lected through the severance tax on costs comes from the General Commerce opposes any increase resources like coal and natural gas Revenue Fund and a mix of other in the state’s severance taxes, said plays an important role in funding taxes — mostly sales and income Chamber President Steve Roberts. education, health care, infrastructure tax — but also the severance tax and “State revenues are trending and other services provided at the tobacco tax. upward,” Roberts said, “We have sig- state and local level. “The truth of the matter is, we nificant rainy day funds, and our gas West Virginia currently levies a 5 have a dedicated revenue stream to and coal industries must be competi- percent severance tax on the value fund PEIA — it’s called the General tive in a world marketplace.” of natural gas produced in the state. Revenue Fund,” said Blair. “It’s di- In addition to the severance tax, Ninety percent of the revenue is versified and ensures that volatility in the state’s oil and gas industry also used by state government, while 10 one sector doesn’t hinder our ability pays tens of millions of dollars percent is distributed back to county to fund important programs.” every year in property taxes. and local governments. Even though any increase in the A bipartisan bill that would have In her remarks, Blankenship com- severance tax was sidetracked at the rolled back and eventually eliminate pared the severance tax on natural 2018 Legislature, the oil and gas the state property tax on industry gas in West Virginia with similar industry worries that — with gas inventory, equipment and machinery taxes in Ohio and Pennsylvania. production booming — the industry was high on the 2018 Legislature’s Ohio’s severance tax, she said, is will remain a tempting target for agenda but the clock ran out before approximately 1.25 percent, while state lawmakers and others looking it could come to a vote. Pennsylvania uses an “impact fee” for new tax revenue. House Finance Chairman Nelson levied on natural gas operators. “I certainly hope we don’t see any has said West Virginia is just one of At this year’s legislative session, such effort,” commented Charlie 10 states that tax business inventory as lawmakers struggled to fund a Burd, executive director of IOGAWV. Averting Tax Continued on page 18 17

Ergon Monthly Appalachian Basin Crude Oil Prices

TIER 1 - 150+ net barrels of crude oil. No more than 2% BS&W (if the BS&W is over 2%, it will then qualify for Tier 2 pricing.) One stop location (one or more tanks at a single location). TIER 2 - 60-149.99 net barrels of crude oil. Two stops within five miles. TIER 3 - 30-59.99 net barrels of crude oil. 18

Mark Taylor WeatherBELL Analytics What to Expect For Winter 2019 A weak El Niño is expected to evolve over the next few months, with the warmest waters centered in the central Pacific. Those types of El Niños tend to bring cold and stormy weather to the eastern part of the country. The Heating Season may begin on the warm side in November, but it is expected to turn colder by Decem- ber. The most likely month to see cold and snowy weather is February, but long-range forecasts are inher- ently lower confidence. Stay tuned to WeatherBELL en- For more information about WeatherBELL’s services and to get the hot-off-the-press ergy services for the latest monthly HDD forecasts, please visit our website www.weatherbell.com or contact Mark Taylor at and weekly forecast updates as the (770) 855-1585/[email protected]. quickly developing situation unfolds.

Averting Tax Continued from page 16

and has called the personal property tax as a major impediment to job NCWV Media Business Editor tax on business inventory the biggest creation in West Virginia,” he said. John Dahlia can be reached at 304- single hindrance to bringing eco- By James Casto CORRESPON- 276-1801 or by email at jdahlia@ nomic development and jobs to the DENT ncwvmedia.com. state. He says legislative leadership is committed to reducing the tax. The oil and gas industry is hopeful that 2019 will prove to be the year that happens. In working to reduce Remember: the inventory tax, the industry has an important ally in the state Chamber of Commerce. “The West Virginia Chamber of 2019 IOGAWV Directory Commerce would like to eliminate the tax on inventory and equipment because we would like to encour- Advertising Requests age investment in industries in West Virginia that provide needed wages, are due salaries and the tax revenues that come from an economy that creates November 2, 2018. jobs and economic activity,” said Chamber President Roberts. “Most states do not tax inventory and equipment and our state De- velopment Office has identified this Full details will be mailed shortly. 19

Rick Toothman Safety Chair Appalachian Steps Network Accepting New Members The Appalachian Steps Network health, and environmental improve- (ASN) is a network comprised of ment in the exploration and produc- operators and contractors in the oil tion of oil and gas in West Virginia and gas exploration, production, and to foster a work environment and product transmission indus- that relies upon open communica- try. This network encompasses the tion and trust. geographic region of West Virginia Please view our NEW WEBSITE and welcomes participation and for updates: membership from those in Ohio https://appalachiansteps.com/ and Pennsylvania. The goal of this Next Meeting: (Meetings will be held every 3rd organization is to promote safety, November 15, 2018 Thursday on Odd # Months)

Charlie Burd IOGCC Work Group Releases Report on Gas Storage Regulatory Issues Natural Gas Storage Work Group The work group, which was led by the regulatory framework of under- released a report in September on states from across the country and ground gas storage, risk manage- underground gas storage that evalu- was organized by the Interstate Oil ment, state permitting, well drilling ates potential vulnerabilities at gas and Gas Compact Commission and and construction, well integrity, storage operations and identifies Ground Water Protection Council, reservoir integrity, monitoring, and prospective regulatory responses for developed the report “Underground emergency response planning among consideration by state and federal Gas Storage Regulatory Consider- other topics. agencies. ations” to serve as a resource for “A lot of thought and expertise Most underground gas storage regulatory agencies and includes went into this report,” said Hal facilities have safe histories of opera- input from experts in academia, in- Fitch, Work Group co-chair and tion and allow large supplies of gas dustry, non-profit organizations, and division director for Michigan’s Oil, to be stored during times of low other state and federal agencies. Gas, and Minerals Division, Depart- demand and withdrawn from storage Underground storage of natu- ment of Environmental Quality. when demand for natural gas is high; ral gas is a critical element in the “We believe it will be a great re- thereby reducing the need for larger U.S. energy supply and distribution source for state and federal agencies transmission pipelines and allow- system and plays an essential role in as they work to enhance their over- ing for continuous supply of gas in maintaining the reliability of natu- sight of gas storage in the U.S.” the event of supply interruptions. ral gas supplies and ensuring stable To read full report, go to file: However, when an accident occurs it prices for consumers, according to ///C:/Users/cburd/AppData/ can have dramatic impacts to public the report Local/Microsoft/Windows/INet- health, safety and the environment. The 130-page report addresses Cache/IE/NRGZDPYH/FINAL_ UGS_report_2017-05.pdf 20

IPAA News O & G Updates from Interior Dept. and EPA Interior Department Finalizes they work, IPAA member companies The proposed improvements New Waste Prevention Rule strive to explore for and produce include: aligning requirements be- The new rule re-establishes long-standing as much American oil and natural tween EPA's rule and existing state requirements and eliminates duplicative gas as possible, while always be- programs; modifying the frequency regulations that hurt States and Tribes. ing mindful of the need to protect for monitoring leaks (also known as On September 19 the Department public lands and the environment. "fugitive emissions") at well sites and of the Interior's Bureau of Land The Trump Administration's rule compressor stations; and making it Management (BLM) announced a recognizes this fact and acknowl- easier for owners and operators to final rule that revises the 2016 Waste edges the cost burden placed on use emerging measurement tech- Prevention Rule (also known as the companies that work and explore on nologies in their leaks monitoring Venting and Flaring Rule). The new federal lands." surveys. rule, which included a 60-day public "America's oil and natural gas comment period, will reduce unnec- EPA Proposes Oil and Gas Tar- producers understand the impor- essary burdens on the private sector geted Improvements Package tance of fair, commonsense regula- and restore proven regulations at Proposal to save $484 million in regula- tions. But, for too long, the federal a time when investment in Federal tory costs bureaucracy has buried our industry onshore oil and gas is skyrocketing. On Tuesday, September 11, the in unnecessary and often duplica- "Sadly, the flawed 2016 rule was U.S. Environmental Protection tive red-tape," said Independent a radical assertion of legal author- Agency (EPA) proposed targeted Petroleum Association of America ity that stood in stark contrast to improvements to the 2016 New President and CEO Barry Russell. the longstanding understanding of Source Performance Standards for "Today's EPA proposal reverses the Interior's own lawyers," said BLM the oil and gas industry that stream- growing mistakes of the past. This Deputy Secretary David Bernhardt. line implementation, reduce dupli- proposal not only reassures Amer- "The Trump Administration is cative EPA and state requirements, ica's continued path toward global committed to innovative regulatory and significantly decrease unneces- energy leadership, but also contin- improvement and environmental sary burdens on domestic energy ues to protect the environment and stewardship, while appropriately producers. This oil and gas targeted communities where energy produc- respecting the clear and distinct improvements package is expected tion is located. It is important for authorities of the States, Tribes, as to save up to approximately $484 the states to play an important role well as the direction we receive from million in regulatory costs from 2019 in decisions that affect their citizens, Congress." - 2025 or $75 million annually. industries and natural resources. This The BLM reviewed the 2016 rule IPAA will be analyzing the pro- proposal does just that: it empowers and found that it had considerable posal and will submit comments be- the states to work with the federal overlap in existing State, Tribal and fore the 60-day comment deadline. government on the best regulatory Federal regulations. Additionally, the "These common-sense reforms approaches. IPAA welcomes these agency determined that the previous will alleviate unnecessary and dupli- proposed changes and is encouraged administration underestimated the cative red tape and give the energy by these reasonable actions." cost in the 2016 rule. sector the regulatory certainty it IPAA President and CEO Barry needs to continue providing af- Russell said, "IPAA applauds the fordable and reliable energy to the Department of Interior for taking American people," said EPA Acting action to fix this highly-flawed rule. Administrator Andrew Wheeler. The Obama-era rule was crafted "Removing these excessive regula- with an unrealistic understanding tory burdens will generate roughly of the real impact to our member $484 million in cost savings and companies. As environmental stew- support increased domestic energy ards and businessmen and women production - a top priority of Presi- who live in the communities where dent Trump." 21

Hugh Byers Direct Energy Nymex Natural Gas Futures Contract 12-Month Forward Strip Average Prices Through 9/18/2018 22

DEP Changes Continued from page 3

tion,” “appropriate,” “contaminated protective of the environment than requires “the installation and mainte- soil,” “detailed site plan,” “elec- those routinely employed to qualify nance of a rain gauge located within tronic submission system (ESS),” for coverage under this permit.” In 3 miles of the active operation” and “enhanced best management addition, section C.12. expands the inspection within 24 hours of any practices,” “erosion,” “inlet protec- enhanced BMP requirement to ap- storm event of greater than 0.25 tion,” “landowner requested trails,” ply to: “projects discharging to any inches of rain per 24-hour period “large construction activity,” “limits waters other than Tier 1 or where which is half of the prior require- of disturbance,” “linear project,” BMPs are found to be inadequate to ment of 0.5 inches in 24 hours. This “qualified person,” “soils report,” protect water quality.” These defini- change will significantly increase the “steep slopes,” “total maximum daily tions may have significant impact frequency of inspections based on load (or TMDL),” “water quality on the expense and time required rain events. Also, “critical potential standards,” “1-year, 24-hour pre- to prepare an application under the slope failure areas” must be inspect- cipitation event,” “2-year 24-hour Draft. ed by a “Registered Professional precipitation event,” and “10-year The WVDEP appears to have felt Engineer or other qualified person 24-hour precipitation event.” The compelled to add language clarifying acting under the direction of the definitions for “notice of intent,” activities that are not authorized by professional engineer once every 7 “sediment” and “site registration ap- the Draft even though the limita- days for actively disturbed areas. plication forms” were omitted in the tions may seem obvious including: Lastly, a new 4-page Appendix A Draft. The definition of “qualified • Sediment laden stormwater provides detailed instructions for person” required for preparation of that has not gone through and “Construction Site Inspections,” SWPPPs includes “a person who is appropriate best management including inspection frequency of knowledgeable in the principles and control; every 7 calendar days and within practices of sediment and erosion • Wastewater from washout or “24 hours of the occurrence of a controls, pollution prevention, and concrete, bituminous asphalt, precipitation event of 0.25 inches or post construction stormwater man- unless managed by an appropri- greater, or the occurrence of runoff agement controls and possesses the ate control; from snowmelt sufficient to case a education and abilities to assess the • Wastewater from washout and discharge.” effectiveness of proposed storm- cleanout of stucco, paint, form The foregoing is not a compre- water controls to meet the require- release oils, curing compounds hensive review of the changes in ments of this permit.” It is not clear and other construction materi- the Draft O&G Stormwater Permit. how one may be determined to be a als; You are urged to review the Draft “qualified person.” Another defini- • Fuels, oils, or other pollutants and provide any information, con- tion of significance is “detailed site used in vehicle and equipment cerns or comments to Bob Rada- plan” which is required in all ap- operations and maintenance; baugh, Chair, Environmental Com- plications and includes “drawing of and soaps or solvents used in mittee, or Dave Yaussy at DYaussy@ sufficient scale to depict proposed vehicle and equipment washing. Spilmanlaw.com or Mark Clark at construction activity, surface drain- In other provisions of the Draft, [email protected]. Remem- age patterns, erosion and sediment the permittee is required to “retain ber that the deadline for comments control BMPs, limits of disturbance records required by this permit for is October 21, 2018, which may be boundary, cut and fill areas, north a period of 3 years from the date filed by e-mail atDEP.Comments@ arrow with drawing, oriented north, permit coverage is terminated.” The wv.gov. and containing surface contours on maintenance language in G.4.e.2.D. minimum 5-foot contours.” Fur- ther, “enhanced best management practices” are required for project Register now: where disturbed areas discharge to Tier 3 Waters or to state waters for IOGAWV Tax Seminar which a TMDL for Total Recover- able Iron is approved and includes November 13, 2018 “activity schedules or sediment Charleston Marriott Town Center Hotel and erosion controls that are more 23

Tax Seminar Registration Form

Oil and Natural Gas Accounting and Tax 2018 Registration Town Center Marriott, Charleston November 13, 2018, Registration 8:00 a.m., Class 9:00 a.m.-4:00 p.m.

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Please mail registration with payment by November 8, 2018 to: 300 Summers St., Ste. 820, Charleston, WV 25301 NO REFUNDS AFTER November 8, 2018 About this course: Program: Oil and Natural Gas Accounting and Tax 2018; CPE Credits for Accountants: 7.0; Field of Study: Accounting (1.0); Taxes (3.0); Information Technology (1.0); Specialized Knowledge (2.0). The following course has been approved for 7.2 CLE credits for attorneys. by the WV CLE Commission. After the seminar is completed please report completion of the activity within 30 days though the WV State Bar Membership portal at www.mywvbar.org. Course Name: 2018 Annual Oil and Gas Tax and Accounting Seminar; Course Date: 11/13/2018; Click here to view your course details. Instructors: Don Nestor, Charlene Tenney, Ryan Nestor, Bill Phillips, Marlin Witt, Benjamin Ellis, and Scott Stone; Instructional Delivery Method: Group Live; Program Level: Update; Prerequisites: None; Advanced Preparation Needed: None; Who Should Attend: Oil and gas investors, operators, royalty owners, service companies and professionals; Program Description: This year’s presentation will include an update on Tax Reform and updates on not only various federal, state and local taxes, but will approach each area to explain how oil and gas investors, operators, royalty owners, service companies and professionals should maximize tax and economic benefits. Planning for current and future opportunities and challenges will be emphasized. ACT presenters will utilize their years of experience in the oil and gas industry to explain key tax benefits such as the Marginal Well Credit as well as standard tax issues that everyone in the oil and gas industry should be aware of and plan for; Learning Objectives: After completion of the course, participants will be able to address current accounting and tax issues in the oil and gas industry for themselves and their companies, have increased awareness of IT security issues, and maximize their tax benefits. Arnett Carbis Toothman LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. For more information regarding refunds, program cancellation policies, or for any other concerns, please contact Jenny Meade at 304.346.0441, ext. 3492. www.iogawv.com 300 Summers Street | Suite 820 | Charleston, WV | 25301 P: (304) 344-9867 F: (304) 344-5836 Presort Standard U.S. Postage 300 Summers Street, Suite 820 PAID Charleston, WV 25301 Charleston, WV 25312 Phone (304) 344-9867 Fax (304) 344-5836 Permit No. 175