Joint Interest Committee report to 105th Meeting
Council of Petroleum Accountants Societies, Inc.
In conjunction with the Audit Committee, the Joint Interest Committee held a timely, informative and
productive meeting Thursday morning, September 26. Attendance included 66 individuals and 14
different Societies. As noted by Rick Stong, we have split the items that we are individually reporting so
that I am not repeating everything that he said.
Rick Jones provided an update from the CEPS Control Panel. By referencing a graph on historical pricing
and the CEPS pricing, he demonstrated how the CEPS Control Panel has managed to stay on top of
pricing fluctuations – both price increases and decreases. The 2014 HPM survey responses have been
received with 24 respondents –down from the 30 last year, but a vast improvement of 8-10 experienced
in prior years. The torch for the technology provider for the CEPS System has now been passed from
ABACI to WolfePack. The system “Go-Live” is expected with the new HPM’s on January 1, 2014. A
seamless transition is anticipated. Rick then explained the impact of the International Trade
Commission voting unanimously that there is a reasonable indication that the US industry was materially
injured by the “dumping” activities of nine countries (S. Korea). The case will now proceed to the U.S.
Department of Commerce.
Dalin Error provided an update from the Materials Subcommittee on the status of the MFI-XX Materials
project. The intent of this new document is the consolidation of the various Materials related
publications into a “one stop shop” for materials related issues, combining training and education
information, industry practice situations and data related to material pricing and movement. With the
consolidation of publications into a single document, it is expected that many publications will be
retired. The group is meeting every month or so, and are hoping for a first draft of the new document in
the Spring of 2014.
Bruce Lincoln provided an update on the re-write and re-classification of AG 25 Allocation of Rig Related
Expenditures to an MFI. The team is focusing on the chargeability issues around the proper allocation of
rig related costs. The discussion around the handling of costs associated with long term suspensions of
activity was active – especially when the remaining time associated with the rig contract is less than one
year.
Terry McMurray provided an update on the new MFI for Chargeability of Well Containment Systems.
The Bureau of Safety and Environmental Enforcement now requires most drilling permits to refererence
the well containment equipment that they have secured for the well. The only change from Draft 5 to
Draft 6 was associated with amount of the initiation fee for vendor B that is chargeable to the joint
account. The later draft indicates that the full amount of the initiation fee paid by the operator to
Vendor B are an allocable billable charge.
Another very timely issue is associated with Automotive Rates. After the Petroleum Motor Transport
Association (PMTA) advised us that they were disbanding, a task force was formed to review options
and determine an alternative methodology of providing rates for Operator owned field vehicles. After
working through options, the decision was made to pursue the use of Kelly Blue Book rates. Historically,
the KBB rates were fairly comparable to the PMTA rates. Ultimately, Tom Wierman worked with Kelly
Blue Book, and they have agreed to provide the information to COPAS for our use. An MFI has been
drafted, circulated for comments, updated by the drafting team, and put forth to the Joint Interest and
Audit Committees for a vote.
Following the Joint Session, the JI Committee additional items including several voting items.
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Sheri Sanseverino was acknowledged for her leadership over the last several years. Due to
changing job responsibilities, Sheri is retiring from COPAS, and as a result, she is stepping
down as Vice Chair. She served at the local level as Joint Interest Chair of Tulsa, Dallas, Fort
Worth and back to Tulsa. Nationally she served as Secretary of the Joint Interest Committee
from 10/09 until 07/10, and as Vice Chair from 07/10 until now.
Pat Wood was approved as Vice Chair.
Employee Benefit Limitation for 2014 approved at 34%. This is a reduction from the 2013
rate of 37%. It is noted that the Employee Benefits Subcommittee is aware of comments
raised about the calculation methodology that has been in place for many years and will be
looking into the possibility of updating.
The MFI on Automotive Rates was approved.
The MFI on Well Containment Service Provider Costs was approved.
The Materials Subcommittee advised the Joint Interest Committee that the Used Equipment
Percentages will not be changed, remaining at 75%-65%-50%.
Voting item presented to Council:
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2014 Employee Benefit Upper Limitation Percentage of 34% effective January 1, 2014
MFI-35 Charging of Training Costs to the Joint Account (2/3)
AG-XX Shared Well Pad Cost Allocation (majority)
MFI –XX Automotive Rates – motion to approve, waive 60 day waiver
MFI-XX Well Containment Service Provider Costs – motion to approve, waive 60 day waiver
All items presented to Council were approved.