The Kiowa County Commissioners are close to approving a sweeping resolution that would enact permitting regulations on utilities operating inside the county. County officials say the resolution is necessary to cover county costs associated with an anticipated increase in oil and natural gas production.
Commissioners John W. Unruh, Ron Freeman and Don Richards along with county councilor Dawn Hayse, county clerk Carmen Renfrow and county road and bridge supervisor Gunnar Stauth spoke with current Harper County road and bridge clerk Sonja Feist during a conference call last Tuesday about their permitting system.
Currently, Kiowa County has no right-of-way by utilities ordinance, which governs permitting for incoming utility companies.
County officials have been speaking with Feist and Harper County road and bridge supervisor John McClure since June, borrowing heavily from their utilities permit resolution passed by the Harper County commissioners in August 2011.
Many Kansas counties have seen the same trends that Kiowa County has seen, following the same patterns that lead to an increase in mechanical drilling, beginning with an increase in mineral lease research at the Register of Deeds Office’s, followed by lease purchases and finally mechanical extraction.
The Kiowa County Register of Deeds office began to see dramatic increases in researchers beginning in April 2011.
During the 20-minute call Feist said that Harper County had received about $278,000 in permitting fees since the resolution took effect, averaging about $30,000 per month and mentioned an increase in recent activity.
In the past 180 days, Harper County has issued 94 permits relating to the use of county right-of-way by the approximate six oil and natural gas sub-contractors operating inside the county.
Feist, addressing the seemingly large amount of fees collected, said that it had allowed the county to recoup expenses from damages done by companies and their sub-contractors.
“They have a lot of money to spend on everything else,” said Feist. “We don’t feel like we should have to pass [the expense] on to the taxpayer when they leave, and they will eventually leave. When we figure in all of the staff time and roads we’ve had to [fix], we are right even with what we’ve collected. I don’t feel like we’re unreasonable at all with our prices. They tear up a lot of culverts, they have lots of turnover and lots of young drivers and they cut a lot of corners. We have to fix those and I know our bridges are taking a big toll.”
The region has been targeted by wind energy, oil companies and natural gas companies that employ hydraulic fracturing or “fracking” to extract natural gas from subterranean reserves using a mixture of water, sand, gravel and chemicals.
Page 2 of 3 - Feist said that the county had been “caught off guard” by the influx of mineral companies and passed their resolution after the fact.
All three commissioners and supervisor Stauth asked questions about Harper County’s resolution and the impact it has made on their county.
Commissioner Freeman asked if there were any problems dealing with any of the oil or natural gas companies, in regards to permitting.
Feist said that two of the companies; Sandridge Energy and Chesapeake Energy were never a problem, but that “Shell makes big promises, but they haven’t paid for one road to be rocked, to date.”
Harper County, in addition to fees, asks the oil companies to split the costs to re-rock unpaved roads along production routes.
Feist said it costs Harper County about $13,200 per mile to re-rock a road, with the county contributing a third of the cost with the remaining costs split between the mineral companies.
“We don’t have the moisture to keep them packed down,” said Feist. “When they frack, it is not uncommon to have 100 semi-trucks. If they are drilling on a road, they pay a third. So far that has worked really well.”
Commissioner Unruh mentioned that during a symposium in Dodge City earlier in the year, a representative form Chesapeake said that they had been happy with the Harper County resolution and that they contributed to the formation of that document.
Feist denied that Chesapeake representatives played a part in drafting the resolution.
She also said that a majority of the companies are accepting of the resolution, despite fears that such a system would discourage exploration or land leases.
“Select Energy is the only one that complains about our permits and I finally got it out of him that they didn’t account for permit costs in their contract with Shell,” said Feist. “That’s not our fault. I feel like we all really work well together. You might be hearing complaints more than I do, but I talk with them quite a bit. I like to call their bluff because I don’t think they are going to not come to a county because of permitting.”
Three of the five surrounding counties have some type of permitting for utilities in place.
Ford, Stafford and Edwards counties all have permitting systems. Ford County passed a similar large permitting system in August. Edwards County also passed a resolution to create permitting this year, though county officials say that the number of permits issued has been minimal.
Stafford County road and bridge officials said that they have had a permitting system in place for more than twenty years, but it was unclear whether it was as comprehensive as the proposed resolution in Kiowa County.
Page 3 of 3 - Neither Pratt nor Comanche County has resolutions in place.
Comanche County Commissioner Larry Harvey said that the commissioners had taken up the issue earlier in the year, but declined to pass a resolution for fear it would discourage mineral leases on local properties and also was unsure how the county would enforce such a resolution.
None of the officials contacted could say if production had been positively or negatively affected by either the lack of a permitting system or the presence of one.
Unruh and Freeman both asked if Harper County had trouble with enforcement of the permits and how much additional work an ordinance had placed in road and bridge employees.
“Yes, we have some companies that ignore it,” said Feist. “But, when they find out we have this system they are fine with it. [If they do not get permits] usually it’s because they didn’t know about it. You have to be firm with them and let them know what to expect or they will run over you.”
Harper County has three road and bridge clerks employed in their office, Kiowa County has one.
“As far as the extra work, it’s overwhelming at first, but it gets much easier. We didn’t have any of this in place when they started coming. We didn’t even known which permits we needed to have. If it gets real busy it can take 3-4 hours a day. They come in a lot and they want good maps. It’s helped us a lot to know county borders, so they can pay each county properly. Once we got it down it got a lot easier.”
The proposed ordinance creates a framework of rules when using county right-of-ways, including permitting procedures, compliance with county law, damage to county right-of-ways and outlines fees.
There would be a permit fee of $100; an excavation fee of $500; a $200 per unit fee for equipment on county roads (renewable every 30 days), A $250 per mile poly pipe fee, plus a $300 fee for using a culvert or bridge.
A violation of the resolution would be a Class C criminal misdemeanor charge with a maximum $500 fine per violation.
Stauth asked for an additional provision for entrance installation.
The commissioners did not approve the resolution during the meeting, but are expected to approve the final version at their Sept. 17 meeting.