Galt’s forecastMPA executive director talks about key Montana oil and gas issues Mike Ellerd For Petroleum News Bakken
In a talk titled “A Montana Forecast,” Montana Petroleum Association Executive Director Dave Galt’s addressed his membership at MPA’s annual meeting in Billings on Aug. 28 outlining what he sees as key issues facing the oil and gas industry in Montana over the next year. Galt also took time to review what MPA has been doing over the past year, believing it’s important to look back in order to look forward. “I’m a firm believer that in order to talk about what’s going to come you need to understand where we’ve been.”
With that, Galt first addressed tax issues. Taxes, he said, are always important to the MPA, from production taxes on the upstream side to property taxes on the downstream side. Of particular concern to MPA is how the Montana Department of Revenue evaluates industry assets. He reminded his membership that the three refineries in the Billings and Laurel area pay one quarter of the city and county property taxes in Yellowstone County. Those are issues that MPA has and continues to work on.
Montana does have attractive drilling incentives, Galt noted, with what he referred to as a very “competitive” production tax. That tax is 0.76 percent for the first 12 months on a vertical well and 18 months on a horizontal well. Looking back at what was going on in the industry in 1993 when those incentives were first put in place Galt believes those policy decisions still make sense today.
Environmental and wildlife MPA has been actively involved in a number of environmental issues, including sulfur dioxide emissions in the Billings area. Following a sulfur dioxide exceedance in one of several monitors in the county, MPA worked with other industrial groups in the Billings area as well as the Montana Department of Environmental Quality, DEQ, and the governor’s office in proposing that EPA designate that area as unclassifiable. However, Galt said, EPA rejected that proposal and has designated a small portion of Yellowstone County as a non-attainment area despite progress in lowering emissions. “That’s a significant issue when you look at what’s happened in Billings and Yellowstone County for the last 30 years and the reductions that have been put in place.”
Another environmental issue MPA is actively dealing with is nitrogen and phosphorus in receiving waters that affect MPA downstream members who discharge because of the impact that nitrogen and phosphorus can have algae growth. Galt made clear, however, that nutrient issues are a water clarity matter related to algae, not a public health issue.
One problem related to nutrient loading, Galt said, is that numeric water quality criteria have been suggested for nutrient concentrations that everyone agrees are not achievable, but those criteria are being pushed forward by EPA. MPA, he said, continues to work with DEQ and the legislature, but the state is running into opposition from EPA. Galt said the issue not only affects MPA members but also every city and town in the state with discharge permits.
Naturally occurring arsenic in the Yellowstone River is yet another environmental issue facing MPA. Galt said discharge permits require a lower arsenic concentration in discharge water than the concentration of naturally occurring arsenic in the incoming water at a plant from the Yellowstone River. “So if you think about that, we’re actually cleaning up what’s coming out of Yellowstone Park.” Galt said MPA is taking that issue before DEQ.
Sage grouse habitat is another industry issue in Montana. Galt said MPA is involved with the governor’s sage grouse council, which has been meeting for three days every two weeks since May to address sage grouse conservation issues. He said MPA is hoping that a state-wide comprehensive sage grouse plan can be developed similar to Wyoming’s plan which has been accepted by the U.S. Fish and Wildlife Service.
Water use Water is a critical issue for the oil and gas industry in Montana and Galt noted that there is a belief that the industry uses inordinately large quantities of water. In Montana, he said, the industry does use more than 1 billion gallons per year, which he said sounds like a lot of water. But putting that quantity into perspective, he noted that normal water usage in Montana is 10.4 billion gallons of water per day.
Water planning is another area in which MPA is actively involved. Galt said that it’s important for industry to understand Montana’s water rights laws and know how water rights are acquired so that industry stays in compliance. “It’s important for us to recognize that as water becomes a hot topic and a talked about topic in the western United States, that we’re paying attention to how our industry uses it and how we are in compliance with those regulations.”
Access Because access is also an important issue facing industry, Galt said MPA has been working with the Montana Department of Natural Resources and Conservation and the state Land Board on easements. “Across state lands, that’s important to us. It’s important to every gathering system, it’s important to every pipeline system.” Terms on easements, Galt said, have been improving, and by working with the Land Board he hopes to make those terms even better.
In addition, Galt said he has been working on surface use since taking over as MPA’s executive director eight years ago and that those issues are as important today as they were then. Surface use issues, he said, tend to manifest themselves in eminent domain concerns during legislative sessions. “So they’re important to MPA and they’re important to the membership and we’re active in those issues, and we work with the legislature and we work with the landowners to try to make those issues go away.”
Impacts to communities MPA continues to address the economic and social impacts that oil and gas development have on communities in eastern Montana. Galt said MPA supported a bill that was passed in the last legislative session which provided money from the federal mineral royalty share to eastern Montana communities. However, that bill was ultimately vetoed; a similar bill was vetoed in an earlier legislative session. “That was the second time that bill was passed in my tenure with MPA, and both times it was vetoed,” Galt told his membership.
In addition, Galt said it’s important to recognize that many of the impacts on communities in eastern Montana are being driven by activity not in Montana but across the border in North Dakota. “We had a good solution that didn’t quite make it,” he said in regard to the vetoed bill.
Social impacts also affect eastern Montana communities, but Galt said those impacts are more difficult to discuss because they are less tangible than economic impacts. In that regard, he said he’s spent time talking to federal and state law enforcement agencies about their concerns in eastern Montana, and said it’s important for MPA to pay attention to those concerns. He commended MPA members for the “meticulous level of detail” they go through in hiring their employees, but noted that concerns remain.
Anti-industry activism In closing, Galt discussed anti-industry activism issues. Those issues, he said, include hydraulic fracturing, the Keystone XL pipeline, how wildlife interfaces with energy development, water use, and even whether oversized loads of oil and gas equipment should be allowed to travel on Montana highways.
With numerous activist organizations focused on oil and gas development in western states, Galt said it’s important for organizations like MPA to continue to reach out to the public and provide a voice for industry. To that end, Galt told his membership that he and Jessica Sena, a contract MPA communication advisor, have and will actively continue to travel the state speaking to groups presenting facts about the oil and gas industry.
“A strong MPA is what gives us a little pushback on some of these other activists groups,” he told his membership. “So if you’re sitting here at a table and you’re looking around and you’re a member of MPA and you don’t see other people in the business that are working in Montana, you need to help me ask them why and bring them to this meeting next year.”
The Montana Petroleum Association is based in Helena and always holds its annual meeting in Billings in August.
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