As numerous problems arose between landowner/lessors and the oil and gas companies in the development of the Hugoton Gas Fields in the 1930's and 1940's, A. E. "Gus" Kramer, a practicing lawyer of Hugoton (now deceased), and longtime Stevens County resident, recognized the need for an organization to protect the rights of landowners in the Field.
In late 1947 and early 1948, Kramer arranged for meetings with landowners in the the nine southwest Kansas counties then encompassing the Hugoton Field. Following those meetings and a meeting in Hugoton with all of the 27 county commissioners of the nine southwest Kansas counties, (the original nine counties included: Finney, Grant, Hamilton, Haskell, Kearny, Morton, Seward, Stanton & Stevens. Greely County was added in1982.) a group of landowners formed a nonprofit corporation designed as the Southwest Kansas Royalty Owners Association.
Articles of Incorporation were filed in February, 1948, with the Kansas Secretary of State. The stated purpose of the corporation is "to foster, protect and further in all proper respects the rights and interests of the mineral owners."
The following persons, all highly respected farmers or business leaders in Southwest Kansas, were the SWKROA incorporators: A. E. Kramer, Harry L. Lightcap, and John Persinger of Hugoton, Stanley Julian of Johnson, Fred Shore of Big Bow, I.C. Wiatt and Cecil Tate of Lakin, Frank G. Boles and Oliver S. Brown of Liberal, Claude F. Wright and F. S. Williams of Garden City, L. O. Stanley and John C. Jones of Satanta, R. H. Joyce and Dan C. Sullivan of Ulysses, A. W. DesMarteau of Syracuse, Neil Bishop of Kendall, and Delmas Littell and Howard Drew of Rolla, Kansas. All of the SWKROA incorporators are deceased with the exception of Oliver S. Brown formerly of Liberal, now residing in Amarillo.
Activities and Achievements
SWKROA is the strongest landowner organization in Kansas and one of the most successful mineral owner groups in the United States. SWKROA is totally devoted to representing mineral and royalty owner rights by the oil and gas industry, the Kansas legislature, and the news media as the authority on subjects dealing with mineral owners.
SWKROA is a nonprofit membership corporation existing under the laws of the State of Kansas and is recognized by the Internal Revenue Service as a business league. Members of the Association are owners of mineral interests and of royalty payable to them as oil and gas lessors. The purpose of the Association is to promote the common business interests of such members.
SWKROA members are kept informed of matters of general interest and concern to mineral owners through timely newsletters and special bulletins throughout the year. The Executive Secretary's office is also available to respond to inquiries of SWKROA members, either by telephone or by correspondence.
The Association has established guidelines for payment of compensation for pipeline easements and for wellsite damages. It also has available for its members pipeline easement and seismograph permit forms, the terms of which are generally accepted by the oil and gas companies operating in the Hugoton Fields.
Shortly following its formation in 1948, the Association filed proceedings with the Kansas Corporation Commission requesting the Commission to establish a uniform minimum price at which gas may be taken in the Hugoton Field as a conservation measure. As a result of the proceedings, the Commission established a minimum wellhead price for natural gas at 8 cents per Mcf, followed by a subsequent order which established a minimum price of 11 cents per Mcf. The KCC order was later struck down by the United State Supreme Court in 1958, but by that time, most of the gas producers in the Hugoton Field had adjusted their prices upward, benefiting all royalty owners in the Field through higher royalty prices.
The Association successfully opposed a state severance tax for 35 years, thus saving royalty owners millions of dollars in taxes. SWKROA was the first mineral owners organization in the United States to fight the windfall profit tax placed on royalty owners on oil production.
The Association actively participated in the support of infill drilling in the Hugoton Field in proceedings had before the Kansas Corporation Commission in 1986. The KCC issued an order permitting the drilling of infill wells (second wells) in the shallow Hugoton pay formation. The courts affirmed the KCC's right to make such an order. There are presently over 5,600 gas wells in the Hugoton Field including 1,400 infill wells.
During the natural gas shortage in the mid-1970's, the Federal Power Commission (FPC) (predecessor to the Federal Energy Commission (FERC) issued a curtailment order and classified natural gas used for irrigation as an industrial use, thus placing its use on an interruptible basis. Shortly after issuance of the order, SWKROA protested such action to the President, all Congressional members, and governors of the states located within the affected area. The Association also alerted its member irrigation gas users and irrigation associations in Kansas, Oklahoma and Texas about the problem. Through their concerted efforts, the FPC changed its order, thus protecting irrigation gas users from any interruptible service.
In 1977, SWKROA officials learned that producers selling gas in the Hugoton Field in interstate commerce were passing on their share of local ad valorem taxes to their pipeline purchases and in turn to the consumers but were not seeking reimbursement for such taxes on behalf of their royalty owners. The Association successfully applied pressure on the producers to seek such reimbursement for royalty owners. This action resulted in a benefit of almost four million dollars each year for the royalty owners, for a total tax savings of over 40 million dollars over a 11-year period.
Recognizing the need for exploration and development of the nonproducing deeper zones underlying the Hugoton Field, the Association approached the Kansas Legislature, beginning in 1976 to secure the passage of a "deep horizons" bill confirming the implied covenants required of the lessee under an oil and gas lease to reasonably explore and develop nonproducing zones. Through efforts of the Association, the bill became law in 1983, putting pressure on lessees operating in the Hugoton Field to explore and develop the deeper zones underlying the field.
In 1991, the Association was successful in its efforts to obtain passage by the Kansas Legislature of a bill requiring payment of interest on royalties held in suspense and a bill providing a security lien for royalty owners in the event of bankruptcy by a producer or oil or gas purchaser.
In the 1992 Kansas legislative session, the Association valiantly fought against the statewide school tax levy on the grounds of loss of local control and the already heavy tax burden on royalty owners and producers operating in the Hugoton Field. SWKROA is presently participating in hearings pending before the Kansas Corporation Commission to determine the need, if any, to change the Basic Proration Order of the Hugoton Field.
In 1997, the Association successively lobbied for a bill referred to as the "Truth in Royalty" bill. The bill specifies information to be included with royalty remittance statements. The bill further requires the payor upon request, to submit to the interest owner a listing and explanation of the amount and purpose of other deductions or adjustments. The information sought to be obtained would have to be requested by certified mail and the company must respond in writing within 60days of receipt of the request.
Also in 1997, the Association in conjunction with irrigators and a coalition of independent producers fought valiently to achieve "price transparency" on the rates charged for the gathering of natural gas in Kansas.
Board of Directors