By JOHN P. TRETBAR

The Kansas Independent Oil & Gas Association has announced plans for its 27th Annual Mid-Year Meeting. The meeting is April 17th through the 19th at the Kansas Star Casino in Mulvane. You can find trade show contracts as well as sponsorship and registration forms at their Web site at KIOGA.org.

Independent Oil & Gas Service reported three active drilling rigs in eastern Kansas last week, up one, and 29 west of Wichita, which is unchanged. Operators are drilling on one lease in Barton County and one in Ellis County.

They’re about to spud new wells on one site in Barton County and two in Russell County.

Baker Hughes reported 1,049 active drilling rigs across the U.S., which marks an increase of seven oil rigs and a decrease of three seeking natural gas. Alaska and California each added four active rigs, while Texas dropped three and Oklahoma was down two. Canada reports 240 active rigs, which is down three.

Regulators approved 27 permits for drilling at new locations across the state last week, seven east of Wichita and 20 in Western Kansas. There are two new permits in Barton County and one in Russell County.
Independent Oil & Gas Service reports 18 newly completed wells in Kansas over the last week. Four were in the eastern half of the state, and 14 were west of Wichita. There were two new completions in Ellis County, one in Barton County and two in Stafford County.

The Kansas Geological Society recognized and named nine new oil fields in Kansas during its meeting February 5th. They also identified a new pay source in the existing “Wondra” field in Barton County.
The government’s weekly report on crude-oil imports showed an increase of 63-thousand barrels per day last week, to 7.1 million million barrels per day. The four-week average, 7.5 million barrels per day, is about 7.3% less than the same period a year ago.

Crude oil inventories increased by 1.3 million barrels last week. Total inventories last week across the U.S. reached 447.2 million barrels, about 6 percent above the five-year seasonal average.

U.S. crude oil production increased by nine thousand barrels per day last week. Total output for the week was 11.898 million barrels. That’s 1.6 million million barrels per day more than last year at this time.
U.S. and Canadian oil-by-rail traffic continued to increase last week because of pipeline constraints. According to the Association of American Railroads, nearly 13-thousand tanker cars moved petroleum and petroleum products across the U.S. during the week ending February 2nd. That’s up more than 20% over this time last year. Totals so far this year are up nearly 24% over last year. Canadian operators moved 8,602 tanker cars, an increase of 13.7% over last year. The cumulative total so far this year is more than 32 percent higher than the same figure last year.

Pipeline restraints and declining demand have natural gas prices in a tailspin, especially in West Texas. According to Reuters, prices in the Permian basin tumbled almost 90 percent to a record low last week.
TransCanada Corp. said its Keystone pipeline was likely the source of a 43-barrel oil spill in eastern Missouri that prompted two companies to shut down pipelines as a precaution. Enbridge said its nearby Platte crude line was returning to service over the weekend. TransCanada said cleanup is underway.

The North Dakota House defeated a move to increase the oil extraction tax, the second such proposal that has failed during this legislative session. A similar bill failed in the Senate. The legislation would have restored the oil-extraction tax from the current five percent to 6.5%, the level before lawmakers reduced it in 2015. But Republican opponents argued the oil tax overhaul in 2015 also removed price-based tax breaks for the industry, which has led to the state collecting an additional $942 million from the oil industry since 2016.

A measure introduced in the New Mexico Legislature to raise oil-and-gas royalty rates on state land would also charge royalties for natural gas being vented or burned off at oil wells. Industry experts say the legislation could end up pushing more development to federal lands by making state trust lands less attractive. The industry argues that venting and flaring are sometimes unavoidable given pipeline capacity shortages and other issues. But regulators under new Democratic leadership in Santa Fe are expected to begin cracking down on emissions in the patch.

Bankrupt oil companies in Canada must pay the costs of cleaning up their abandoned wells under a ruling from that country’s top court. Justices struck down a decision that allowed them to pass those costs onto an industry-funded group. The Supreme Court of Canada, in a 5-2 decision, said companies or their receivers cannot walk away from their environmental liabilities by invoking federal legislation regarding the order in which creditors are to be paid.

Another new deepwater oil-export facility could be coming soon to the Texas Gulf Coast, at least the third to be proposed in the last year. Enbridge and Kinder Morgan have applied to the U.S. Maritime Administration for the project called “Texas Colt.” The facility would be located off the coast of Freeport, Texas, and would go into service in 2022. The Oil & Gas Journal reports the facility could fully load a two million barrel Very Large Crude Carrier in about 24 hours.

Saudi Arabia cut its crude output in January by about 400,000 barrels per day. Reuters reports the kingdom has surpassed its promises to cut exports to balance the market and support prices.

Hello from Topeka! The weather much like the Kansas legislature can be a bit of a challenge, as there have been several days of bitter cold, icy streets and snow only to give way to bright sun shine and temperatures near 50 degrees. Inside the statehouse, there has been much anticipation of several bills being introduced, but it looks like they may wait until next year, as the deadline for individuals to introduce legislation has passed, but there is still time for some select committees to do so if the need arises.

Probably the highlight of the last week was on Wednesday when Chief Justice Lawton Nuss delivered the annual State of the Judiciary in the courtroom of the Kansas Supreme Court. The Chief Justice spoke about the pay of district court judges, recognizing six district court judges who attended the address (Judge Mike Ward, El Dorado; Judge Bruce Gatterman, Larned; Judge Kelly Ryan, Olathe; Judge Mary Christopher, Topeka; Judge Sally Pokorny, Lawrence; and Judge Jeff Dewey, Wichita).

The Chief Justice shared positive progress for the Judicial Branch, focusing on e-filing, which enables court documents to be filed electronically. The Judicial Branch is working to connect e-filing with a centralized electronic case management system (eCourt). This integration will give judges, court staff, and attorneys “immediate, statewide electronic access to case information and records provided by the Kansas Courts. One of the many benefits cited by the Chief Justice is to: increase efficiency and effectiveness by streamlining some activities and automating others–like improving the ability to process electronic payments. The first “Go-Live” of this system will be in June in the 8th Judicial District (Dickinson, Geary, Marion, and Morris counties) and the 21st Judicial District (Clay and Riley counties).

Other successes mentioned by the Chief Justice were: the committee that investigated the state’s municipal courts, which came back with 18 recommendations; recently formed task force studying pretrial detention practices in district courts (“to see that no person is unconstitutionally or unnecessarily deprived of his or her liberty before a decision is made on guilt or innocence). Also cited were the Self-Help centers set up in the courts of five counties: Ellis, Miami, Johnson, Shawnee, and Wyandotte. Additionally, the Supreme Court has increased access to justice by increasing the number of lawyers who can provide pro bono, or free, legal services.

Also last week, the Family First Prevention Services Act, an important piece of Federal legislation, was signed into law. The Act aims to prevent children from entering foster care by allowing federal reimbursement for mental health treatment, substance abuse treatment, and in-home parenting skill training. In addition, the Act focuses on improving the well-being of children already in foster care through an incentive to states to reduce placement of children. The basic premise is to keep children safe and supported at home and ensure that children in foster care are in the least restrictive appropriate settings.

The House Children and Seniors Committee and the House Appropriations Committees discussed how Family First would be implemented in Kansas. The Children and Seniors Committee heard HB 2103. Under the Family First Prevention Services Act, states will have the option, beginning on October 1, 2019, to use Title IV-E funds, at a 50% federal match rate, for certain evidence-based prevention services and programs. Most of the changes that are required by the Act for the state of Kansas to receive the additional federal funding will be made on a policy and regulatory level by the Kansas Department for Children and Families.” There are statutory changes that need to be made so that Kansas can qualify for the new funds.

Testimony from the Department of Children and Families noted that the Act allows states to use Title IV-E (in Social Security Act) funding for time-limited prevention services for children at risk of being placed into foster care, for the children’s parents and kinship caregivers, and pregnant and parenting youth. The Act allows children who need special services and treatment to be placed in a Qualified Residential Treatment Programs (QRTPs), with specific requirements in place so that Kansas can receive federal reimbursement. A joint committee of members of the Kansas Supreme Court Task Force on Permanency Planning and the Judicial Council Juvenile Offender/Child in Need of Care Code Advisory Committee studied the Federal Act and HB 2103 results from their efforts. Further action is planned for the bill.

The House Appropriations Committee heard Tuesday February 5 from Laura Howard, interim Secretary for Department of Children and Families and Department of Aging and Disability Services. She presented an agency overview and budget summary for the Department of Children and Families. She indicated that the Governor included funding for 26 FTE positions in child welfare in the FY 19 budget and an additional 26 FTE positions in the FY 20 budget. In relation to the Family First Prevention Services Act: $8.8 million AF is budgeted for FY 20 for evidence-based prevention programs; $36K FY 19 and $73K FY 20 for children at substance abuse treatment; $502K FY 19 and $452K FY 20 for 3 FTE, background checks, and licensing.

This past week, Kansas Farm Bureau had their day at the statehouse and was glad to welcome: Myndi Krafft and Doug Zillinger from Phillipsburg and Chris Tanner from Norton and Miranda Atchison from Kirwin. There were also days focused on economic development and tourism, it was good to see Roger Hrabe from Rooks County. Speaking of Rooks County, the group from Stockton made their annual trip to Topeka and I believe had a productive couple of days. Also, Leading Edge Kansas held meetings and we were able to catch up with Jay Shelton from Norton and Amber Atkisson from Stockton.

I enjoyed being co-host of “SportsTalk” with Tad Felts Saturday morning on My Phillips County Online and saw lots of friends at the Phillips County Livestock Association Annual meeting and banquet in Phillipsburg.

If you come to Topeka during the session, my office is in Room: 149-S. My phone number is 785-296-7463 and email is: [email protected] and you can always try my cell number is 785-302-8416.

I look forward to seeing you around the 110th District. It is my honor to by your representative.

Rep. Ken Rahjes (R-Agra), is the 110th state representative and chairman of the Higher Education Budget Committee. House District 110 includes Norton and Phillips counties as well as portions of Ellis, Graham, and Rooks counties.

Last Tuesday we passed SB9, 40-0, which is the KPERS bill that pays the missed payment from 2016 with interest. In 2016 the legislature postponed a $97.4M payment and promised this payment would be made in 2018 with interest.

The executive director of KPERS calculated interest to make the payment actuarily sound for FY 2018 for a total amount of $115M. By not making this payment it caused an increase of $630,000 to unfunded liability/interest expense monthly or $20,712.32 per day.

In 2018, the legislature opted to postpone the payment, to see what future revenues produced. Kansas’s revenues ended FY18 with $317M more than expected in the 4th quarter. This left the approved ending balance at $905M.

Since the payment was postponed 30 months ago it has already cost KPERS $18.9M.

I argued that it was irresponsible to build our ending balance with KPERS money and also questioned why we wouldn’t meet our obligation. There is no reason to not make this payment unless it is going to be used for something else. We made a promise we need to keep our promise.

According to KPERS, the actuarial effect of repaying the contribution would be a net savings of $186.1M from all funds over 30 years. Making the payment would result in meeting the actuarial required payment for the first time in 25 years.

The House will hold a hearing on SB9 Tuesday morning at 9:00. I am scheduled to testify in support of this bill and will encourage the House to move swiftly to pass this legislation on to the Governor. I will encourage the Governor to sign this bill.

SB22 was passed out of the Senate on Thursday by a vote of 26-14. SB22 would prevent a tax increase for middle class Kansas families and small businesses.

When Congress made changes to the Federal tax code last year, it triggered the need for states, like Kansas, to take action so families in our state wouldn’t be penalized.

That’s what this bill is about. It updates the Kansas tax code so that middle income Kansans can continue to write-off their medical expenses, charitable contributions, property taxes and mortgage interest. For individuals and small businesses, SB22 adjusts the Kansas tax code so that Kansans with itemized deductions that total between $7,000 and $24,000 can continue to itemize on their state income taxes even if they no longer itemize on their federal income tax.

Some middle-income tax filers might not itemize at the Federal level this year due to recent changes Congress made to the Federal tax code to raise the standard deduction. Without this bill, these middle-income tax filers will no longer be able to itemize at the state level, triggering a higher state income tax liability for these families and small businesses. This would be a tax increase for these families and small businesses.

Kansas is one of only seven states that have not de-coupled from the Federal government tax code.

For multi-national companies, SB22, clarifies language in the Kansas tax code so that changes in the federal tax code do not trigger unintended tax hikes at the state level for business owners.

Right now, Kansas companies that do business outside of the United States pay taxes on those profits at the federal level. Those profits are not taxed at the state level and never have been. Without this bill, these Kansas companies would be subjected to additional taxes at the state level, making Kansas a more expensive state for businesses to operate in.

Congratulations to Kansas Farm Bureau who were recognized on the Senate floor to celebrate the bureau’s 100th anniversary.

Thank you to the students, educators and program directors for presenting an overview of the JAG-K program. The success of this program is shown by the 97% graduation rate in school year 2016-2017.

I would like to thank all of the visitors who stopped by my office this week or held receptions in Topeka.

I am honored and grateful to represent the 40th Senate District in Kansas. Please do not hesitate to contact or call me with your questions and concerns, my office number is 785-296-7399 or my cell is 785-899-4700. If you are in Topeka stop by my office at 236-E.

Sen. Rick Billinger, R-Goodland, is the Kansas state senator for the 40th District, which includes Cheyenne, Decatur, Ellis, Gove, Graham, Logan, Norton, Rawlins, Sheridan, Sherman, Thomas, Trego and Wallace counties as well as portions of Phillips county.