AM response to the budget

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"All budgets are fiction. This one is Fantasia." - Charles Krauthammer 2/26/09

"All budgets are fiction. This one is Fantasia." - Charles Krauthammer, 2/26/09

There is obviously much more to be said about the “New Era of Responsibility” that was released by the Obama administration.  But as I collect my thoughts, in case anyone doubted how bad the budget proposal would be to American oil and natural gas production, or how seriously we are taking the news at IPAA, see the following:

“This is a stunning choice of attacks, changes to take away capital from the American producers,” said Lee Fuller, vice president for government relations at the Independent Petroleum Association of America.
-Congress Daily

“I am just absolutely flabbergasted,” said Houston oilman Bruce Vincent, vice chairman of the Independent Petroleum Association of America. “It’s like putting a dagger in the heart of the oil and gas industry in America. If you actually did all these things, it would kill the industry.”
-Dallas Morning News

“Ninety percent of the oil and natural gas wells developed in the United States are done by small, independent businesses — not so-called ‘Big Oil’ — so tax increases hurt these companies most,” said IPAA President and CEO Barry Russell. “This budget hurts our ability to be competitive with other nations in the growing world energy marketplace.”
-Houston Chronicle

Budget Blues

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“President Obama delivered a devastating blow to the American oil and natural gas industry today by proposing an astonishing $30 billion tax increase (as part of his FY 2010 budget) on American energy producers, most of whom are small businesses.”

-Barry Russell, IPAA President and CEO

While we wait until April for the full release of President Obama’s budget proposal, what we’ve seen today is less than encouraging for America’s energy future.  Click here for a copy of what was released to Capitol Hill today.

What seems most interesting to me is the inclusion of royalties from oil and natural gas production from now until the year 2019.  According to a lot of the rhetoric and legislative proposals we have seen from Congress and the new administration, oil and natural gas should be almost a thing of the past by then.  Yet the budget plans to be receiving billions of dollars worth of royalties and taxes?

Is this a mea culpa from the Obama administration?  Is it an admission that, yes, oil and natural gas will continue to be an overwhelming part of our energy mix for at least the next 12 years (as IPAA and many other groups have been saying all along)?  Are they admitting that wind, solar, and other alternative fuels won’t be commercially available by then? If Congress and the administration are counting on oil and natural gas to be in production and available during the year 2019, then these tax provisions are not the way to go about promoting exploration and production.

Click here to see IPAA’s official statement regarding today’s budget release.

More evidence that American oil and natural gas is good for the economy

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The American Energy Alliance (AEA) released a new study about the benefits Americans could realize if Congress pushes forward with energy development on the Outer Continental Shelf (OCS). According to the analysis, over the life of the production offshore, access to these vast resources would generate: 
  • $8 trillion in additional economic output (GDP);
  • $2.2 trillion in total tax receipts;
  • 1.2 million new, well-paying jobs annually across the country; and
  • $70 billion in additional wages each year.

As AEA President Thomas J. Pyle said in a statement: “Unlike the $790-billion stimulus package lawmakers just passed, increased offshore activity would fuel our economy without squandering taxpayer funds.  In fact, oil and gas is one of the U.S.’s only industries in a position to put money into, rather than take money out of, the government’s piggybank.”

IPAA Director of Government Relations and Industry Affairs Joel Noyes provided comment on the study to the International Business Times and said, “We are hopeful that these figures will have an impact [on the Congressional decision]. We haven’t seen that impact yet but it is a message that we will continue to get out.” Continue reading →

IPAA Sponsors Competition at HISD Career & Technology Expo

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Last week, ten teams consisting of 9th and 10th grade students from the Lamar Global Energy Management Academy, Milby Academy of Petroleum E&P Technology and Westside Engineering & Geosciences Academy participated in a student oil and gas knowledge competition at the Houston Independent School District Career and Technology Expo.   IPAA sponsored the competition and provided gift certificates for the winning team, Westside High School Team #1 who delivered a presentation on the up-stream sector of the petroleum industry.

Winning team members included Khadijah Ray, Alex Barbieri, Bryan Corzo and Will Stevens. 

“The event was a great opportunity for the academy students to use their public speaking skills to demonstrate the knowledge they have gained about the oil and gas industry thus far in the school semester,” said IPAA Education Center Director Doris Richardson.

Presentation topics included the “Value Chain of the Petroleum Industry,” “Off-shore Drilling,” “Tar-Sands, History of the Natural Gas Industry,” “U.S. Oil Consumption,” and “Global Energy Supply and Energy Transportation.”

Participating students and topic themes were: Continue reading →

New Poll: Majority of Americans Support Offshore Development

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API released a new poll this week that shows a majority of the nation understand the importance of America’s offshore oil and natural gas.

The poll, conducted by Harris Interactive found that 61 percent of Americans who voted in the 2008 presidential election support access to offshore oil and natural gas resources. Only 26 percent of those polled opposed exploration and development of those resources.

To see the full results, click here.

Teaching an Old Dog New Tricks.

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3D-seismic imagery is used to locate oil and gas reservoirs. How can Facebook compete?

3D-seismic imagery is used to locate oil and gas reservoirs. How can Facebook compete?

Admittedly, the oil industry is often perceived as an aging industry whose heyday was in the 20th Century.   But perceptions sometimes don’t reflect reality.  And this is the case for the American oil and natural gas business.

Explorers and producers of oil and gas are among the top users of the world’s supercomputers and satellites.  A former secretary of Defense (with ties to the oil industry) once said that this industry’s technology matched that of the United States Navy.

And the advancements will keep coming for well into the 21st Century. 

One of the latest trends in the industry is the use of social networking tools — much like this blog — to share information in the field and the office.  Earlier this week, the Microsoft Global Energy Forum got underway in Houston.  At the Forum, a new survey was released showing that 40 percent of industry employees feel that social networking will help with productivity and will help transfer knowledge from an aging workforce to a younger workforce (note: half of the industry is set to retire in the next decade).

The Houston Chronicle writes:

In a new survey, more than 40 percent of oil and gas professionals said social media technologies like blogging and instant messaging can improve productivity because they enable better collaboration.

The technologies also can be an important vehicle for transferring knowledge to younger workers as a wave of engineers and scientists prepares to retire in coming years, the survey said.

“A lot of time social networking has the connotation of talking to my friends and colleagues inside the company, but our survey found very strongly there is business-use value for using these types of tools,” said Craig Hodges, U.S. energy and chemicals industry solutions director at Microsoft.

So, I guess this blog was launched at just the right time. Now we just have to keep in touch with the trend — who knows, maybe you’ll soon see IPAA on Twitter, Facebook or YouTube!

“Ghost Rig”, a movie people have watched

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Not many shots like this in "Ghost Rig"...

Not many shots like this in "Ghost Rig"...

Until recently the only time I had seen an offshore rig in a film movie was during a few forgettable moments of “Armageddon,” a cable-edit classic where the nature of work on the rig and the character/ability/gumption of those on it were ultimately the catalysts for saving the world (hurray, hurrah).  But now I’ve seen “Ghost Rig”, a horror movie in which environmentalists seek to take over a rig, but end up trapped (storm) and in a fight with a non-specific evil demon or force. 

“This is a terrible inexcusable waste of film.”
-“Tom Servo”, Amazon reviews (not the character)

That was my introduction to “Ghost Rig” and enough to get me to buy.  I found it on Amazon while looking for relevant reading material and had to have it.  I watched it in the comfort of my home and almost immediately regretted it.  It turns out Servo was wrong; it’s not a terrible inexcusable waste of film, just a waste of time.  Besides, it’s not exactly “film” quality.  “Reviewing” it here is my attempt to redeem the fact that I paid to have it shipped and then watched it. Continue reading →

Boothby Named President of Newfield Exploration

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Recently Lee K. Boothby was named president of Newfield Exploration. Boothby will succeed David A. Trice, who plans to retire as chief executive officer at the 2009 Annual Meeting in May, at which time the Board expects to name Boothby to the additional role of chief executive officer.

Boothby joined Newfield nearly 10 years ago and most recently served as senior vice president – acquisitions and business development. Prior to this role, he served as president of the Company’s Mid-Continent division from February 2002 to October 2007. The Mid-Continent division, located in Tulsa, Oklahoma, has been the fastest growing division of the company over the last three years in terms of production and reserves. Boothby’s leadership is most evident in the success of the Woodford Shale Play, now the company’s largest asset. Boothby joined Newfield in 1999 with an international assignment as vice president and general manager of Newfield’s previous Australian business unit, managed from Perth, Australia.

Newfield Exploration is a member of the IPAA, and we congratulate him on his new role. For more information on Boothby’s selection, please click here for the full press release.

Invoking Cliff Claven.

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Yesterday, the House Natural Resources Committee held the first hearing of the 111th Congress on offshore drilling and the lapsed moratoria. The first panel, the liveliest to be sure, featured actor Ted Danson (Sam Malone, I sure did love Cheers) and Philippe Cousteau, grandson of the famed Jacques Cousteau. As I watched, I was struck by the passion and language used by the panelists. Clearly they care for the ocean environment and wish to see it protected, at all costs. And that last statement really gets at the crux of my disagreement with the panel: at all costs.

When I hear that statement I take pause to consider the gravity of such a position. I think about what energy means to America, what it means to businesses on Main Street, what it means to school districts budgeting for transportation costs, and on and on down the line. The goods and services that I take for granted because I have easy access to reliable and affordable energy. Continue reading →

IPAA Reacts to Salazar’s OCS Plan

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IPAA President and CEO Barry Russell

IPAA President and CEO Barry Russell

Yesterday U.S. Interior Secretary Ken Salazar unveiled his energy development strategy for the Outer Continental Shelf and according to Salazar, the Obama administration has rejected immediate action on Bush administration recommendations to expand exploration off the Atlantic and Pacific coasts. 

IPAA President and CEO Barry Russell immediately responded with a statement that was picked up by Oil & Gas Journal, ANH, Grant Daily, Cherry Hill Courier Post, Shreveport Times, Daily Advertiser, Pioneer Press, Houston Chronicle, Red Blue & Green, The Energy Daily, Denver Daily News, Grist Magazine, E&E PM, Easy Bourse, Bloomberg, Wall Street Journal, San Francisco Chronicle, and USA Today.

“While I welcome greater public input in the regulatory process, I am disappointed by the Obama Administration’s decision to delay moving forward on domestic energy development—especially at a time when our economy is struggling, unemployment is rising and state treasuries are suffering,” said Russell.

To view Russell’s full statement, please click here.

Salazar also announced that the period for public comment on the 5-year proposal to expand offshore oil and natural gas exploration would be extended by 180 days.  This extension brings the total comment period to 240 days, lasting into September.  Originally, the Bush administration had set a 60-day comment period.