Kansas

 Kansas 

Population: 2.8

Energy Production

·         780.1 Trillion Btu total energy production

·         41,503 Thousand Barrels of crude oil

·         309,124 Million cubic feet of natural gas

·         37.0 Thousand short tons of coal

·         47,923,762 Thousand MWh electricity produced

Energy Consumption

·         1,162 Trillion Btu total energy consumption

·         80.1  Million barrels of petroleum

o   30.6  Million barrels of gasoline

·         278,972 Million cubic feet of natural gas

·         21,087 Short tons of coal

State Government Profile

Governor: Sam Brownback (R); first term; elected in 2010; Governor is limited to 2 terms

Legislature:

Speaker of the House: Ray Merrick (R)

Speaker Pro Tem: Peggy Mast (R)

President of the Senate: Susan Wagle (R)

 

Bicameral Body: House is under Republican control; Senate is under Republican control

125 House Members: 33 Democrats, 92 Republicans

40 Senate Members: 32 Republicans, 8 Democrats

 

Energy Issues

Renewable projects took center stage this past legislative session as Kansas is making an attempt to become the “Renewable State.” Following big pushes in the legislature in 2009 in which Kansas passed the Renewable Energy Standards Act, requiring major utilities (not municipal utilities or most Rural Electric Cooperatives) to have 10% of their energy capacity from renewable sources by late 2010, 15% by 2016, and 20% by 2020.  Similar to other pushes in state legislatures and at the federal level, the utilities can purchase Renewable Energy Credits or generate their own power. This practice is now experiencing abuses in the program where some credits simply do not exist or are worth nothing. Discussion has been focused on how to improve the program. There has also been focus in the legislature to eliminate tax credits and deductions. The repeal of current oil and gas tax provisions will have an estimated $3.9 billion negative impact on the Kansas economy within an estimated four years of enactment, when and if that occurs. The tax provisions are important to small, independent oil and gas producers and royalty owners, not just “Big Oil.” Independents produce 92% of the oil and 63% of the natural gas in Kansas. Elimination or reductions in intangible drilling costs (IDCs) deductions are also a major concern for Kansas.

The other tax provisions that have been debated are: (1) repealing the passive loss exception for working interests in oil and gas properties (Investors in drilling programs are called working interest owners and they must share in the costs of the risky venture. The tax code, in effect, allows working interest owners who have a loss to be classified as an active loss that could be used to offset any type of active income instead of being treated as a passive loss.) (2) geological and geophysical (G&G) amortization. G&G costs are incurred in the beginning of the exploration process, and are very expensive with no guarantee of recouping the costs if the venture fails. Like IDCs, the faster the independent can recapture his G&G costs the more wells he can drill and find more oil and gas.

Currently, G&G costs must be amortized over two years for independents and seven years for major oil companies, but the change would increase amortization to seven years for everyone. Again, it is the independent that gets hurt.

 

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