MOUNT VERNON, Ill., Feb. 1, 2021 – The Illinois Oil and Gas Association (IOGA) announced Robert Stewart of Mt. Vernon, IL, as the new Executive Vice President. Stewart’s employment with IOGA will commence on February 1st.
Stewart succeeds Seth Whitehead, who will continue his Executive Director role at the Illinois Petroleum Resource Board.
The oil industry is a family tradition for Stewart, whose grandfather, Edward Stewart, started in the 1890s. His current company, Stewart Producers, was established in 1951 by Stewart’s father as an operating company for Stewart Oil. It expanded into well servicing in 1966 and got into exploration after Stewart Oil dissolved in 1968.
“I’ve been on the IOGA board of directors for over 25 years,” Stewart said. “I’m looking forward to expanding my relationship with IOGA in this new role and continuing to help IOGA advocate for our members.”
Stewart has been a long-standing member of IOGA. He was awarded the IOGA Petroleum Professional of the Year in 2019 and his company, Stewart Producers, Inc., was awarded the IOGA Wildcatter of the Year award in 2016.
“Robert has been a great asset to our association throughout the years,” said IOGA President Bryan Hood, “He always brings forward great ideas and viewpoints to issues.”
Stewart graduated from Mt. Vernon Township High School in 1975. He attended the University of Texas and graduated with a B.S. in petroleum engineering with honors. He worked with Exxon Company USA until he joined Stewart Producers, Inc. in 1984, before being named president in 1992.
“This group has made a tremendous impact on our industry,” Stewart said. “Time and time again, IOGA has been on the frontlines, advocating for and educating our members.”
Stewart has served on the following boards: the Society of Petroleum Engineers, American Association of Petroleum Geologists, Illinois Oil and Gas Association, State of Illinois Petroleum Advisory Board, and the Petroleum Technology Transfer Council. He is married to Dee Ann and is the father of Cameron and Paisley.
The Illinois Oil and Gas Association is a group of oil and gas producers, landowners, royalty owners, service producers, and others in the Illinois Basin area. For more information, visit www.ioga.com.
WASHINGTON – The U.S. Small Business Administration, in consultation with the Treasury Department, announced today that the Paycheck Protection Program will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said Administrator Jovita Carranza. “Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”
“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin. “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19. We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”
Key PPP updates include:
- PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
- The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
- The PPP provides greater flexibility for seasonal employees;
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
- Has no more than 300 employees; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
The new guidance released includes:
- PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act
- Interim Final Rule on Second Draw PPP Loans.
By Craig R. Hedin, Gesell’s Pump Sales & Service, Inc.
The U.S. Environmental Protection Agency (USEPA) on Aug. 13 issued two final rules related to the New Source Performance Standards (NSPS) for the oil and natural gas industry. The policy rule revisions were published in the Federal Register on September 14, 2020, and the technical rule revisions were published in the Federal Register on September 15, 2020. With these publications, the rules became effective.
But as expected, environmental groups and various states, including Illinois, filed petitions in the Circuit Court of Appeals for the District of Columbia on Sept. 15 to review both of the rules. Emergency motions were filed to stay (hold in abeyance) the Policy Rule and this motion was granted with the court stating it was “to give the court sufficient opportunity to consider the emergency rule for stay and should not be construed in anyway as a ruling on the merits of that motion.” The states then also filed a motion to stay the proceedings.
A coalition of state oil and gas associations that includes IOGA have been parties to the various regulatory and legal proceedings. It is contemplated that the coalition will intervene in the District of Columbia Circuit proceedings for purposes of opposing the motions for the stay.
In considering the foregoing, the implementation of the rules are on hold for the time being.
The foregoing final rules would exempt low production wells from fugitive emissions monitoring requirements as long as the well maintains production at or below 15 barrels per day. This will relieve most Illinois operators from the unreasonable burden of fugitive methane emissions monitoring and repair.
Illinois operations are primarily low producing marginal wells. In fact, it is estimated that more than 90 percent of Illinois oil wells are “stripper” wells that produce one to two barrels per day. Stripper wells are estimated to be responsible for just 6.5 percent of total U.S. oil and natural gas production methane emissions. Implementing the technology to limit methane emissions from these wells would be cost prohibitive and would make most leases uneconomical. The industry has always advocated for relief from the requirements of emission limitations as to marginal wells.
The following is a statement from the USEPA, which highlights the final policy and technical rules for the industry:
Highlights of the Final Policy and Technical Rules for the Oil and Natural Gas Industry
On August 13, 2020, the EPA announced two distinct final regulations for the oil and natural gas industry that streamline requirements, reduce regulatory burden and save the industry millions of dollars in compliance costs each year, while maintaining health and environmental protection from sources that the Agency considers appropriate to regulate.
- EPA issued the final rules at the same time to provide clarity to the industry and to streamline compliance. Combined, the two final rules are projected to result in net benefits of $750 to $850 million over the period from 2021 to 2030, the annualized equivalent of about $100 million a year.
- The regulations are final policy amendments to the 2012 and 2016 New Source Performance Standards (NSPS) for the oil and natural gas industry and final technical amendments to the 2016 NSPS for that industry.
- The Obama Administration promulgated regulation of methane from the transmission and storage segment of the oil and gas sector without taking the appropriate steps to justify such an action. These amendments reflect the Trump Administration’s position that EPA must make a finding that a pollutant, like methane, contributes significantly to air pollution anticipated to endanger public health before regulating it.
- These amendments not only follow the text of the Clean Air Act, but also reduce regulatory burden to the industry and streamline other requirements. Protection of human health and the environment will continue through controls for smog-forming volatile organic compounds for the production and processing segments of the industry, reducing methane at the same time.
Final policy amendments
EPA is issuing the policy amendments in response to President Trump’s Executive Order on Promoting Energy Independence and Economic Growth. The order directs agencies to review existing regulations that potentially “burden the development or use of domestically produced energy resources,” including oil and natural gas, and to rescind or suspend regulatory requirements if appropriate.
○ Key aspects of the policy amendments:
- Remove the transmission and storage segment from the regulated “source category.” EPA has determined that it was not appropriate to include this segment in the source category in the 2012 and 2016 amendments to the NSPS.
- Rescind all NSPS requirements that applied to the transmission and storage segment.
- Rescind methane standards for the production and processing segments of the industry. Standards for smog-forming volatile organic compounds (VOCs) continue to apply for the production and processing segments. Because the controls to reduce VOCs and the controls to reduce methane are the same, methane emissions will continue to be reduced from these segments.
- Finalize EPA’s position that the Clean Air Act requires, or authorizes, EPA to make a “significant contribution finding” for any particular pollutant as a predicate for setting performance standards for that pollutant.
○ What the policy amendments mean for existing sources:
- Because EPA has rescinded methane standards for the production and processing segments of the industry, EPA is no longer required or authorized to issue emissions guidelines to address methane emissions from existing sources.
Final technical amendments
○ EPA is issuing the technical amendments to address a range of technical and implementation issues in response to administrative petitions for reconsideration and other issues brought to EPA’s attention since the 2016 NSPS was issued. These include fugitive emissions requirements, recordkeeping and reporting requirements, provisions to apply for the use of an alternative means of emission limitation (AMEL), pneumatic pump standards, storage vessel standard applicability determination, and engineer certifications. The final amendments will significantly reduce regulatory burden and save the industry hundreds of millions of dollars in compliance costs each year.
○ Key aspects of the technical amendments:
- For Fugitive Emissions Monitoring, the technical amendments:
- Reduce the frequency of required fugitive emissions monitoring for gathering and boosting compressor stations from quarterly to semi-annually.
- Exempt low-production wells from fugitive emissions monitoring requirements, as long as the well maintains production at or below 15 barrels of oil equivalent (boe) per day.
- Retain the schedule for fugitive emissions monitoring for non-low production wells at semi-annual. EPA had proposed to change this schedule but retained it after finding that semi-annual monitoring for VOCs at non-low production well sites remained costeffective.
- Allow owners/operators to determine the best means to ensure that all components are monitored, rather than having to include a site map and an observation path in their monitoring plans.
- Streamline recordkeeping and reporting requirements.
- Revise the schedule for making fugitive emissions repairs.
- Clarify the actions that constitute a modification for a well site that is a separate tank battery surface site.
- For Alternative Means of Emissions Limitations (AMEL), the technical amendments:
- Incorporate state fugitive emissions standards for well sites and compressor stations in California, Colorado, Ohio, Pennsylvania and Texas, and for well sites in Utah, and simplify recordkeeping for some owners/operators who choose to comply with those standards. The final rule incorporates an alternative for gathering and boosting compressor stations in Texas; in the proposal Texas was included only for well sites.
- Streamline the process to request new alternative emissions standards as state, local, and tribal fugitive emissions programs continue to develop.
- Recognize that new technologies that are expected to enter the market could help locate the source of fugitive emissions sooner and at lower costs than the current technologies required in the NSPS.
- Amend the application requirements for requesting to use an AMEL for monitoring and reducing fugitive emissions from well sites and compressor stations to allow any person to apply.
- Notes that EPA has discretion in certain circumstances to allow for broad approval of alternatives and will work with applicants throughout the approval process as appropriate.
- For Pneumatic Pumps, the technical amendments:
- Expand an existing exemption from control requirements to cover pumps at greenfield sites.
- Expand the types of monitoring that owners/operators may use to demonstrate that closed vent systems associated with pneumatic pumps are operating with no detectable emissions
- For Engineer Certifications for Closed Vent Systems, the technical amendments:
- Allow either a professional engineer or in-house engineer with appropriate knowledge of the closed-vent system design to certify that the system is designed and operated as required
- For Storage Vessels (Tanks), the technical amendments:
- Clarify how to calculate potential VOC emissions for individual storage tanks to determine whether standards in the rule apply.
- Establish separate criteria for calculating potential VOC emissions from individual storage vessels that are part of a controlled tank battery.
By Craig R. Hedin
The Illinois Department of Natural Resources/Office of Oil & Gas Resource Management has made significant revisions as to how oil wells are spaced and located. The primary purpose is to increase the locations where wells can be drilled in hopes of spurring further development. The goal is to give operators more options as to how to develop a particular reservoir.
For many years, spacing regulations were static. They were based on standard governmental survey tracts and uniform density setback measurements. These methods were arbitrary and not based on any determination of drainage patterns. Spacing regulations were developed in the 1940s to prevent waste that resulted from over drilling and over production. The ability to drill unabated prevented the proper development of reservoirs to maximize the recovery of oil. The prevention of waste is the backbone of the Department’s regulations.
Historically, spacing and well location (density) regulations for oil wells were as follows:
- 10 acres of surface area lying within the quarter-quarter section of lands for wells drilled or deepened for the production of oil from a reservoir other than limestone/dolomite, the top of which lies less than 4,000 feet beneath the surface. The location of the well shall be not less than 330 feet from the nearest external boundary lines of the drilling unit nor less than 660 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir.
- 20 acres of surface area lying within the east-west or north-south one-half of a quarter-quarter section of land for wells drilled or deepened for the production of oil from a limestone/dolomite reservoir, the top of which lies less than 4,000 feet beneath the surface. The location of the well shall be not less than 330 feet from the nearest external boundary lines of the drilling unit, nor less than 660 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir.
- 40 acres of surface area lying within a quarter-quarter section of land for wells drilled or deepened for the production of oil from a reservoir, the top of which lies between 4,000 and 6,000 feet beneath the surface. The location of the well shall be not less than 330 feet from the nearest external boundary lines of the drilling unit, nor less than 660 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir.
The historical regulations created a distinct pattern for the primary development of a reservoir. Spacing created drilling units with required setbacks from the boundaries of the unit and from other wells producing from the same reservoir. Exceptions to the spacing configuration and well locations could be granted but generally, a petition and hearing were required. The exceptions included horizontal wells, modified drilling units, special drilling units, and pool wide drilling units. This slowed development because of the time and expense necessary to obtain the exceptions.
A further variance to the spacing and location requirements was the initiation of secondary recovery operations. Once injection of water commenced for secondary operations, the location of wells in the reservoir within a lease boundary was waived. But, a setback of 330 feet from the lease boundary was still required.
Over the past two years, the regulations as to spacing and well locations have been revised. The revised regulations now provide as follows:
- 10 acres of surface area lying within the quarter-quarter-quarter section of land for wells drilled or deepened for the production of oil from a reservoir other than limestone/dolomite, the top of which lies less than 5000 feet beneath the surface or the top of the Trenton Formation, whichever depth is greater. The location of the well shall not be less than 330 feet from the nearest lease boundary line except any lease boundary line located within a pooled unit. The location shall be no less than 330 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir. The location shall be no less than 10 feet from the nearest drilling unit boundary line.
- 20 acres of surface area lying within the east-west or north-south one-half of a quarter-quarter section of land for wells drilled or deepened for the production of oil from a limestone/dolomite reservoir, the top of which lies less than 5000 feet beneath the surface or the top of the Trenton Formation, whichever depth is greater. The location of the well shall not be not less than 330 feet from the nearest lease boundary line except any lease boundary line located within a pooled unit. The location shall be no less than 330 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir. The location shall be no less than 10 feet from the nearest drilling unit boundary line.
- 40 acres of surface area lying within a quarter-quarter section of land for wells drilled or deepened for the production of oil from a reservoir, the top of which lies at or below 5,000 feet beneath the surface or the top of the Trenton Formation, whichever depth is greater. The location of the well shall be not less than 330 feet from the nearest lease boundary line except any lease boundary line located within a pooled unit. The location shall be no less than 330 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir. The location shall be no less than 10 feet from the nearest drilling unit boundary line.
The revisions greatly enhance the ability of an operator to develop in the following respects:
- 20 acre spacing is now allowed for wells down to 5,000 feet or the top of the Trenton Formation, whichever is greater, as opposed to a limitation of 4,000 feet (with no reference to the Trenton Formation). This allows for more drilling units because of the reduction from 40 acres to 20 acres.
- Wells can be located as close as 10 feet to a drilling unit boundary line as opposed to the previous requirement of 330 feet. But, note that the well is still required to be at least 330 feet from the boundary line of the lease. This revision greatly increases where wells may be located and enhances the possibility of in-fill development of a reservoir.
- The density of well locations has been increased. A well may now be not less than 330 feet from a well producing from the same reservoir. Previously, the well was required to be at least 660 feet from a well producing from the same reservoir. This increases the number of wells that can be developed.
All of the foregoing have increased the ability of an operator to develop a reservoir. The trend continues as the Oil and Gas Advisory Board has recommended to the Department that the spacing for all wells be a uniform 10 acres within a quarter-quarter-quarter section. The Department has indicated agreement and it is contemplated that the regulatory revision process will begin.
Dan Reitz | Lobbyist
Illinois lawmakers will return to Springfield next week, May 20th through the 22nd to resume a spring session interrupted by the coronavirus pandemic.
The House will relocate to the Bank of Springfield Center. All House Democrats are being asked to sign a pledge to follow IDPH precautions when they return. They include getting tested before the session resumes, getting a temperature check on session days, wearing a mask at all times and traveling alone. He asked that all House Republicans also sign the pledge.
The Speaker’s office issued a memo to members advising them of how session will be conducted in a location remote from the Capitol. The Illinois State Police will provide security at the building and only a limited number of the public will be admitted.
Committee hearings will be conducted on the floor. The House clerk will conduct roll call votes when they are required.
The Senate will meet in the Capitol. The Senate is expected to operate under normal rules.
On Tuesday, Gov. JB Pritzker said he wanted lawmakers to return to Springfield to act on economic relief measures for the coronavirus pandemic.
“The legislature must convene so that we can begin to put our financial and economic house back in order even as we battle this terrible virus,” he said during his daily briefing. “The General Assembly needs to pass a comprehensive plan to support families, small businesses and small towns.”
He said he wanted increased rent and mortgage assistance for families, grants and loans for small businesses and tax credits for small business job recovery. He also wanted assistance for small cities and towns to help with their first responder costs.
Lawmakers have been involved in working groups for weeks trying to negotiate legislation that absolutely must be passed during the spring session. Foremost among them is approval of a state budget. However, it will be a budget that could lose more than $4 billion of revenue that was anticipated before the pandemic hit, forcing businesses to close and putting people out of work. At the same time, there will be pressure to increase spending on programs to help those who have been hurt by the virus and its effects.
Beyond the budget, lawmakers are pushing to get other bills heard. It is unclear if the General Assembly will hear any legislation that is not directly related to the pandemic during an abbreviated session.
Domestic Energy Producers Alliance
Make your voice count.
If your company was impacted by the trading irregularities on April 20, 2020, join us in demanding an immediate investigation.
We are asking that the Commodities Futures Trading Commission (CFTC) begin an investigation without delay of the WTI crude oil futures traded on the Chicago Mercantile Exchange (CME). The investigation needs to include the possibility of market manipulation, failed processes and systems or computer programing errors in the WTI prompt month of May 20 and oil contract futures on the CME. This can never be allowed to happen again.
Steps you can take now.
- File a complaint with the CME on behalf of your company.
- Call (312) 341-7970 or send an email.
- File a complaint online here: https://www.cmegroup.com/market-regulation/file-complaint.html
- Reach out to the CFTC and ask them to investigate the CME.
We want to hear your story.
Additionally, we would appreciate hearing your personal stories about how you/your company have been impacted by the price crash and crude oil trading below $0. This includes job losses, layoffs, furloughs, budget cuts, amount of shut-in production, etc. Maintaining your anonymity, it is so important we have the statistics and data to share with policymakers so they understand the real-life impact this has had on our industry.
Click here to download a sample letter to CTCF Chairman Talbot
IOGA sent the following letter to Daniel Brennan and Ernest Kierbach at the Illinois Department of Natural Resources Office of Oil & Gas Resource Management. The letter expresses IOGA’s concern about low oil prices and requests that the IDNR consider a moratorium on the issuance of NNCs and NOVs.
Daniel Brennan responded to IOGA following our letter. His response said the IDNR’s Office Oil and Gas Resource Management has instituted the following changes.
“As of April 1, 2020, for any matter that results in the issuance of a NNC, the permittee with be automatically granted an extension of the maximum time allowed to return the well, facility or site to compliance. Additionally, the Office is reviewing all relevant sections of the Illinois Oil and Gas Act (225 ILCS 725 et al.) and Illinois Administrative Code (62 Ill.Adm.Code 240 et al.) to determine how best to address all non-emergency violations.”