U.S. Oil Production Overcomes Imports — Don’t Mess it Up, Feds

This week, the U.S. broke yet another energy record. For the first month in almost twenty years, we produced more oil here at home than we imported. This has been a remarkable turnaround in our nation’s energy sector. Just a few years ago, Peak Oil theory reigned, and these theorists had convinced most of the country that it was only a matter of time until the U.S. ran out of oil completely. People scoffed at the idea of lowering America’s oil imports, let alone getting to a place where our country could become increasingly energy secure. So much for that.

Fracking sites and farmland outside Tioga, in the North Dakota’s oil-rich Bakken Formation. (National Journal)

Fracking sites and farmland outside Tioga, in the North Dakota’s oil-rich Bakken Formation. (National Journal)

Now, we are in the midst of what’s now called being called the “shale revolution,” brought on by advancements in the technologies of horizontal drilling and hydraulic fracturing. And this has unleashed a surge of production in the United States. Guess who are the pioneers of these technologies? You got it — independent producers, the wildcatters. These companies, such as Mitchell Energy which was acquired by Devon Energy, an IPAA member, risked everything to combine and develop horizontal drilling to a point where producers could extract oil and natural gas from tight, shale rock.

That risk paid off. Other independents followed suit, opening up oil and natural gas plays that the industry elites doomed were offline forever. Now, the majors are in on the game, with companies like ExxonMobil focusing increasing on the U.S. shale plays.

Washington Post

Now, the Energy Information Administration announced Wednesday that crude oil production, from the Bakken in North Dakota to the Eagle Ford in Texas, has topped more than 7.7 million barrels per day. The decreased imports and increased production has great implications for America’s economic and national security picture. For one thing, it is decreasing our trade deficit as we buy more energy here at home. Also, because of increased natural gas production and its associated low cost, manufacturing is coming back to the United States, which means thousands more jobs on top of the millions of jobs created by both oil and gas directly and the indirect jobs that come from development.

Of course, this week, White House Press Secretary Jay Carney has been touting these numbers as a demonstration of the administration’s own energy policies. But IPAA knows and has informed the country that increased production is occurring in spite of the President’s policies, not because of it. Take the President’s new proposed rule from the Department of Interior, which would impose a federal standard on hydraulic fracturing on federal lands, which the states have successfully regulated for years. This bodes major trouble for independent producers who have already been driven from federal lands because of additional burdensome regulations there.

One of IPAA’s major priorities is to fight this encroachment of federal government on the shale revolution and ensure that production increases and our imports continue to decrease. IPAA has submitted comments pushing back on this misguided rule and this was a major topic at IPAA’s 84th Annual Meeting last week, when our members gathered in San Antonio. After all, development of onshore oil and natural gas is occurring safely and responsibly and is already subject to many federal environmental regulations. Let’s not jeopardize this energy achievement with more bureaucracy from Washington.

Oil & Gas Should Transcend Party Politics

It’s been quite a week in Washington, D.C. As everyone and their cousin knows, the federal government has shut down due to Congress’ inability to pass a continuing resolution to fund the federal government. In the midst of party politics and tensions running high when it comes to just about every issue, it would be nice if energy at least could be seen as a more bipartisan issue.

Last week, as part of IPAA’s new Energy Leader series, Host Russ Capper spoke with  chemical and petroleum engineer Dr. Michael Economides, a professor at the Cullen College of Engineering, University of Houston, and an internationally renowned expert on energy geopolitics. He spoke to this exact frustration.

Dr. Michael Economides holds a PhD in Petroleum Engineering from Stanford and is a self-proclaimed liberal democrat who bemoans the fact that oil and gas is a controversial industry whose support is too often divided along party lines. In fact, Dr. Economides said, “Energy and energy abundance should actually be the most populist of all issues.” After all, it is a driver of economic growth, job creation, and energy security. He explained that if you took the entire oil and gas industry worldwide and it would be the biggest economic entity besides the United States. That is huge.

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More from the interview:

  • “The production of natural gas from shale is arguably the biggest and best story in the history of the American oil and gas business in the last 50 years. There is no doubt about that. This is an extraordinary feat — the quintessentially American character, the can-do attitude, innovation, private industry taking the lead, letting the economy function as it has without government interference. You put all of these things together and truly, shale gas should be one of the best stories — not just energy stories — but one of the best stories that an American would be proud of.”
  • “The bottom line for most people is this: Right now we have gas for 300 years. There goes in shambles this whole idea that we are running out of hydrocarbons. Oil is expanding also dramatically…every estimate right now suggests that the United States will surpass Saudi Arabia and Russia as the world’s largest producer of oil. What a dramatic turnaround.”
  • “The energy industry is no question generating the best-paying jobs. Let me shock you a little bit. From my university, a BS in Petroleum Engineering right now starts at $100,000 a year. That’s a 21 year old kid…A PhD in Petroleum Engineering will start at $125,000.”

And just yesterday, the Wall Street Journal reported that the U.S. is overtaking Russia as the largest oil and gas producer. U.S. imports of natural gas and crude oil have fallen 32 percent and 15 percent respectively in the past five years, narrowing the U.S. trade deficit.

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Adam Siemenski, head of the U.S. Energy Information Administration said, “This is a remarkable turn of events. This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn’t in a million years have dreamed about.”

Red or blue, the shale revolution is something we can all celebrate.

American Shale Is Reviving the Economy

In the midst of a troubling week as our nation’s lawmakers contemplate how to respond to the chemical weapon attack in Syria and discern our role on the international stage, our country received some much-needed, heartening news regarding the U.S. energy picture, which holds great hopes for our economic future.

The Energy Information Administration reported that last week’s oil production more than two decades of daily production. The U.S. produced an average of 7.621 million barrels of crude oil per day last week, the highest daily average in 24 years.

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IPAA’s chief economist Fred Lawrence affirmed the independents’ part in this economic success story on The Energy Makers’ 100th epsidode. “The independents played the key role in the transformation taking place…twining two very important technologies hydraulic fracturing and horizontal drilling to access new geological horizons for both shale gas and tight oil.”

Fred continued, “The specific DNA of the independent was critical because they had the entrepreneurship and the technological acumen to figure out how to develop these wells. They drilled a lot of wells and did a lot of tests and they weren’t afraid to take risks and that led to the development of the Barnett shale and since then a proliferation of shale gas plays and now, tight oil plays.”

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That was the beginning of the story, a story that is only getting bigger and better.

Newspaper headlines from around the country echoed the same rally this week: This eruption of U.S. oil and natural gas production is huge, and it’s rescuing our economy.  

An IHS Cera report released  by the U.S. Chamber of Commerce brought new findings of the vast economic benefits to light. The expanded energy development resulting from horizontal drilling and hydraulic fracturing now supports 2.1 million jobs, directly and indirectly. This number is only expected to grow. By 2020, oil and gas activities will support 3.3 million jobs. For people struggling to find work, this is welcome news.

The shale revolution contributed $163 billion to U.S. households last year. But what does that mean for the average family? IHS found that the oil and gas boom added about $1,200 to the average American household income, thanks to lower energy costs brought about increased natural gas production. These added savings are also only expected to grow. By 2020, IHS projects that shale energy production will contribute just over $2,700 to the average household. By 2025, it will reach $3,500 a year. In a time when many families are living paycheck to paycheck, this added money makes a world of difference.

Check out more great headlines:

USA Today: U.S. energy lifting economy more than expected

Bloomberg: Fracking Boom Seen Raising Household Incomes by $1,200

San Antonio Business Journal: Recent rise of U.S. shale plays an economic game changer

Fox News: Energy Boom to Help Boost American Jobs, Salaries

National Journal: Let Us Frack or the Economy Will Suffer

The Hill: Booming oil production boosted GDP estimate, White House advisers say

IPAA Ranks Top 10 U.S. Oil & Natural Gas Records

The past few years has been an incredible time for America’s independent producers and the entire upstream oil and natural gas industry. The shale revolution, spurred by horizontal drilling and hydraulic fracturing, has propelled the United States to be one of the biggest energy plays in the world. Take a look at some of the most amazing industry records, compiled by the Independent Petroleum Association of America’s economic team, Fred Lawrence and Ron Planting.

 Domestic Liquids Production and Net Imports

U.S. Records in 2012

  1. U.S. crude oil production rose by the largest volume ever in its history, nearly 850,000 barrels per day, or 14.9 percent. Natural gas liquids production rose by over 180,000 barrels per day, or 8.3 percent. For the first time ever, the combined increase for all liquids exceeded 1 million barrels per day, a 13.1 percent rise. U.S. crude oil production averaged 6.5 million barrels per day, and with natural gas liquids output, total liquids output was the highest since 1991 at 8.9 million barrels per day. (Energy Information Administration)
  2. U.S. output of natural gas liquids reached an all-time high. Natural gas liquids output averaged 2.4 million barrels per day, up nearly 40 percent from 2005’s 1.7 million barrels per day. (EIA)
  3. U.S. marketed production of natural gas set another all-time record, at 25.3 trillion cubic feet. That was up 34 percent from 2005. (EIA)
    Domestic Natural Gas Production and Net Imports
  4. In just a few years, the U.S. has greatly reduced its reliance on oil imports.  In 2005, 60 percent of U.S. oil consumption was supplied by net imports; in 2012 that share dropped to just under 40 percent, the result of increased U.S. production and reduced U.S. consumption. ”In 2005, the US and EU imported similar amounts; in 2012, US net imports were nearly one-third below those of the European Union.” (BP)
  5. In just a few years, the U.S. has favorably reversed its trade balance on refined products.   In 2005, the U.S. was a net importer of nearly 2.5 million barrels per day of products. In 2012, it was a net exporter of over 1 million barrels per day of products. Gross exports of products exceeded 3 million barrels per day in 2012 for the first time ever. (Energy Information Administration)
  6. U.S. proved oil reserves were 26 percent higher than a year ago. “Overall, proved oil reserves were 26 percent higher than a decade ago, and 60 percent higher than in 1992 – despite the production of nearly 600 billion barrels of oil over the past two decades. Proved gas reserves are up 21percent over the past decade and 59 percent compared to 1992.” (BP)
  7. The share of natural gas in U.S. energy consumption has grown faster than for any other energy source in the past two years, while coal’s share has declined the most.  U.S. natural gas consumption rose to a record 25.5 trillion cubic feet in 2012, up 5.9 percent from 2010. Compared with 2005, natural gas’s share of total energy has risen from 23.7 percent to 27.3 percent, while coal’s share has fallen from 24.0 percent to 18.3 percent, largely because of displacement of coal by natural gas for electricity generation. (EIA)
    Change in Electric Power Inputs Since 2005
  8. U.S. consumption of natural gas reached an all-time high of 25.5 trillion cubic feet, while consumption of natural gas liquids was the highest since 2000. Natural gas consumption was up 4.6 percent from 2011’s level. NGL consumption rose close to 1 percent to 2.32 million barrels per day, 4.5 percent below the all-time high of 2.43 million barrels per day reached in 2000.
  9. U.S. exports of natural gas reached an all-time high of 1.62 trillion cubic feet, up more than 7 percent from 2011 and double the level of five years earlier. More than 98 percent of these exports were by pipeline to Canada and Mexico, with the remainder exported as LNG to other parts of the world. With declining imports and rising exports, U.S. net imports of natural gas sank to 1.52 trillion cubic feet, the lowest since 1990.
  10. Increased demand for U.S. natural gas (a less carbon-intensive fuel for power generation) helped bring about the lowest energy-related carbon dioxide (CO2) emissions since 1994. With the exception of 2010, emissions have declined every year since 2007. (EIA)

World Records in 2012

  • The U.S. had the largest increases for both oil and natural gas production of any country in the world. “Driven by tight oil growth, US production has  expanded by 2 Mb/d over the last five years,  the largest increase in the world and twice  that of Iraq (1 Mb/d), which accounted for the  second largest increment.” (BP)
    Top 10 Oil Producers BOTH CHARTS
  • The U.S. is the largest producer of natural gas in the world, and third largest oil producer. U.S. oil production is exceeded only by Saudi Arabia and by the Russian Federation.  The U.S. has become the largest producer of natural gas in the world when it overtook the Russian Federation in 2009. (BP)

Top 10 Natural Gas Producers BOTH CHARTS

  • The Non-OECD accounted for all the net growth in world energy consumption.  China and India accounted for 90 percent of the net increase in world energy consumption. “Over the last ten years, global energy consumption increased by 30%, almost all of which outside the OECD. Then, over the last 2 five years, OECD consumption fell – four out of these last five years, to be precise, and in three of these four despite positive GDP growth.” (BP)
  • Energy consumption for the OECD declined as it has for four of the past five years. “…the OECD is now back to where it was in 2002 – despite cumulative GDP growth of 26% over that same period.” (BP)
  • Organization of the Petroleum Exporting Countries controlled 72.6 percent of the world’s proved oil reserves (BP). North America (U.S., Canada, and Mexico) accounted for 48.2 percent of non-OPEC proved reserves.

 

International Perspectives:

  • The IEA forecasts a reduction in the need for OPEC oil in 2014, even with rising world demand, as U.S. and Canadian output rise 1 million barrels per day. Smaller production increases for some other non-OPEC producing countries are also forecast. (IEA July release). OPEC itself has also forecast (July 2013) a decline in 2014 for the need for OPEC oil with an increase in non-OPEC supplies of 1.1 million barrels per day offsetting a OPEC production decline of 0.3 million barrels per day. (IEA, OPEC)
  • It is interesting to note that in their World Oil Outlook, OPEC did not truly recognize the U.S. unconventional revolution until the 2010 issue – “whether shale gas is a ‘game-changer’ remains unclear. However, its potential is undisputed.” In earlier editions, they focused primarily on the impact of U.S. fuel efficiency standards and biofuels and even in the 2011 edition they viewed the Caspian, Brazil and Canada as the main drivers of non-OPEC supply growth. However, in the 2012 edition, they did note that “shale gas has large potential but mainly in the U.S. for now” and noted that “replicating U.S. success internationally requires key challenges including water shortages, lack of infrastructure, higher population densities, shortage of skilled labor and the NIMBY effect.” (OPEC World Oil Outlook)
  • The IEA forecasts world natural gas consumption will rise 17 percent between 2012 and 2018, aided by the revolution in shale gas production.  It forecasts that the U.S. alone will account for over one-fifth of the worldwide increase in gas production, “benefiting from technological developments and cost-efficient field services.”  The IEA also noted that the U.S. could become “the world’s biggest producer in a decade” and “the exploitation of ‘unconventional’ fossil fuels represented the biggest redrawing of the energy map for decades.” (IEA)
  • Russia’s view on the U.S. shale revolution has transformed from denial to skepticism. Putin originally denounced shale for ‘costing too much and ruining the environment’ while the head of Gazprom described the shale revolution as a ‘myth’ and ‘a bubble that will burst soon.’ Now, with more numbers to back up the sustainability of shale and tight oil, Putin admits that there may indeed be a ‘real shale revolution’ after all and he is monitoring the situation carefully and has urged Russia’s energy companies to ‘rise to the challenge’ of shale. (The Economist) Given the dependence of Europe on Russian natural gas (and oil) and the rising sensitivities to energy security from Poland to the U.K., the Russian interpretation of the U.S. unconventional revolution and export policies bears further study. Meanwhile, EIA has put Russia at the top of its list of countries with technically recoverable shale oil resources.

Technology — and Policy — Transforming American Energy Outlook

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It’s no secret that the American energy picture is undergoing a transformation. The advent of multi-stage hydraulic fracturing combined with horizontal drilling has enabled independent producers to reach deeper, wider, and into once impenetrable shale rock, unleashing millions upon millions of barrels of new oil and natural gas supplies. This technology has allowed producers to tap into new plays such as the Marcellus in Pennsylvania and the Bakken in North Dakota.

IPAA’s oil education campaign, the Declaration of Independents, has been profiling the most prominent shale plays in the U.S. Most recently, they gave the history and the current outlook of the Permian Basin in West Texas. This is a region that encompasses plays upon plays, or “stacked plays” such as the Bonespring, Cline, Spraberry, Wolfcamp, and the combination plays nicknamed the “Wolfberry” and the “Wolfbone.”

What’s most notable about this play is its rich history. The first commercial well in the Permian was drilled in 1921. As the analysis noted, “This [first] discovery set off further drilling activity, with several notable finds, including Yates Field (1926), which is still producing today, and is still one of the top 50 fields for proved oil reserves in the United States. A number of major fields discovered in the 1930s, such as Wasson, Slaughter, and Seminole are still producing today, and are still ranked by the Energy Information Administration among the top 20 in the U.S. for remaining proved reserves.” 

Permian map 5-1-13

The Permian truly exemplifies the renewed life cycles that new technology and new generations of industry minds have given to these historic plays. As the profile concludes, the Permian Basin “is a story about combining the various talents of independents, majors, and service companies in using advancing technologies to sustain the lifespan of existing fields, to tap into zones that were previously uneconomic or inaccessible, and to increase the Permian’s proven reserves in a remarkable fashion.”

Check out these recent news articles that exemplify the state of shale in the United States.

  • Associated Press: Oil Drilling Technology Leaps, Clean Energy Lags. Technology created an energy revolution over the past decade — just not the one we expected…Oil companies big and small have used technology to find a bounty of oil and natural gas so large that worries about running out have melted away. New imaging technologies let drillers find oil and gas trapped miles underground and undersea. Oil rigs “walk” from one drill site to the next. And engineers in Houston use remote-controlled equipment to drill for gas in Pennsylvania.
  • Bloomberg News: Oil Shockwaves From U.S. Shale Boom Seen by IEA Ousting OPEC. The International Energy Agency (IEA) reported this week that North America will provide 40 percent of new supplies to 2018 through the development of light, tight oil and oil sands, while the contribution from the Organization of Petroleum Exporting Countries (OPEC) will slip to 30 percent.
  • CNBC: US Oil Production Nearly Even With Imports. The amount of oil produced in the U.S., now at a 21 year high, is nearly even with the amount being imported, and the gap is narrowing. The Energy Information Administration said Wednesday in its Short-Term Outlook that U.S. oil production averaged 7.1 million barrels per day in the first quarter, and that should rise to 8.5 million barrels per day by the fourth quarter of 2014.

The U.S. is in a critical position. Policymakers have a choice – either encourage this amazing rebirth of homegrown energy that the industry is safely developing or choose to turn away from this hopeful energy picture. Two critical issues are facing the Obama administration this month: the future of natural gas exports and hydraulic fracturing regulation on federal lands.

President Obama has said that he must make a decision soon (and we agree) on the future of LNG exports. Radical environmentalists urge to ban natural gas exports because it will increase the use of hydraulic fracturing. It’s no coincidence they are targeting the very technology that has spurred this shale revolution and expanded development of fossil fuels across the nation. Putting an artificial ban on the market of natural gas would hurt not do any favors to the American people, because it would restrict expanded development of natural gas. It would especially hurt independent producers, who seek a larger market for America’s natural gas supplies. Additionally the Department of Energy has stated in a report released in December that exporting natural gas to U.S. allies would be a net economic positive for the United States. It’s thought that the White House will adhere to DOE and approve at least some LNG export facilities in the coming weeks.

Additionally, the Department of Interior is set to release the Bureau of Land Management’s hydraulic fracturing and well construction rules for federal lands. IPAA came out strongly against the first version of the rule, originally released last May, which would cause unnecessary confusion for independent producers who are already struggling to operate on federal lands. The rule is expected to take into account some of industry’s concerns, but IPAA holds that any federal rule to regulate hydraulic fracturing, when the states are already successfully doing so, is burdensome and duplicative. Different plays in different states have varying geology and environmental issues – putting a one-size-fits-all blanket rule on top of the existing state regulatory regimes makes no sense, will only cause more bureaucracy and confusion, and will certainly further drive producers from federal lands. That rule is set to drop this week (possibly today).

Don’t Hold Oil & Gas Hostage for Political Points

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Washington is buzzing about the upcoming deadline for sequestration on March 1, which is just a little over one week away. Sequestration refers to a number of automatic spending cuts that will be made across the board unless they are renewed by the House, the Senate, and the White House.

The effects of sequestration are no joke. They would mean real cuts to programs and budgets that would translate into a loss of jobs for thousands of workers employed by the federal government. However, this deadline is being used inside the Beltway as a political contest – a game of chicken, if you will – whose ultimate end is to deflect blame onto the other political party. The White House and Democratic leaders in the Senate and House want to paint the Republicans as obstructionist and have called for a plan to raise taxes, again. Speaker John Boehner and House Republicans, by contrast, are trying to demonstrate to the American public that the Democrats are crying wolf – bemoaning a budget crisis that their spending policies got the U.S. into in the first place.

Yesterday, Rep. Markey, a liberal Democrat from Massachusetts known as an unceasing assailant against oil and natural gas development, used sequestration as a political flamethrower. He called Republicans “hypocritical” for not adhering to the White House’s proposal to avert the sequestration, because, he argued the effect of looming budget cuts would hamper the Department of Interior’s ability to issue permits for drilling. The White House affirmed this argument and has pushed to increase taxes on the industry.

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“Republicans say they want to ‘drill baby drill’. Yet by letting the sequester go forward, Republicans in Congress will put the brakes on oil and gas development on public lands in America and reduce our ability to protect against another offshore drilling disaster.”

First of all, when has Markey been concerned about the Interior Department’s faulty record on issuing permits to drill? Markey is probably the most vocal opponent of natural gas and oil development in Congress.

Second of all, let’s address the as of now fully-funded Department of Interior’s record under President Obama. (Thanks to the House Natural Resources Committee on this one). Mind you, this is all according to government data from the Energy Information Administration.

  • Oil and natural gas production on federal lands is down by more than 40 percent compared to 10 years ago. The real increase in oil and gas production has occurred on private land, from the Eagle Ford in Texas to the Marcellus in Pennsylvania to the Bakken in North Dakota.
  • Under the Obama administration’s watch of the Department of Interior, 2010 had the lowest number of onshore leases issued since 1984.

The Democrats’ logic (ahem, politics) has a third fatal flaw. Markey, President Obama, and other Democrats in Congress have ignored the fundamental link between oil and natural gas development and government revenues. Just last week, Louisiana State University economist Joseph Mason published a study commissioned by the Institute for Energy Research that found that opening up restricted drilling areas on federal lands and offshore waters would add $35.8 billion dollars in the short run, and $99 billion dollars in the long run to the federal government. This is thanks to the millions of dollars paid by America’s oil and natural gas companies each day in taxes and royalties to the federal government from exploration and production of U.S. oil and natural gas. Republican leaders touted the study as a reason to utilize energy development to help raise revenue for the federal government.

To put the icing on the cake, President Obama announced today that he will speed up the permitting for renewable energy projects despite the looming sequestration and budget cuts. You decide where the hypocrisy stands in this round of politics.

Holding our nation’s energy supply in hostage to score a political point is a dangerous policy move. Instead of demonizing the oil and natural gas industry and blaming policymakers who want to avoid raising taxes on the American people and small businesses, President Obama should expand access to America’s vast oil and natural gas reserves. This would raise much-needed federal revenue to help avoid the sequester. Not to mention, it would create millions of jobs and add billions to the U.S. economy in the process. Any real solution our nation’s budget crisis includes a hefty policy pillar that encourages U.S. oil and natural gas development.

God Made a Roughneck

Every year, Americans tune into the most watched television event of the year – the Super Bowl. Every year, companies spend millions on advertisements that will evoke praise and elicit emotion from the millions of people watching. Every year, people look forward to these commercials that stand above the rest – that cleverly twist a conventional idea or tap into something deep inside each one of us. This year, that commercial was Chrysler’s “So God Made a Farmer” for Dodge Ram pickup trucks.

farmerThe advertisement resurrects the speech that radio broadcaster Paul Harvey delivered to the Future Farmers of America convention in 1978. It picks up the Genesis creation story on the 8th day and props up farmers as the caretakers of the Earth.

The advertisement plays this speech over gorgeous pictures of tilled land and close shots of real, human faces – faces that have been wrinkled through toil and weathered through seasons.  It makes you realize the work, passion, and unrelenting work that goes into farming. The upkeep of a family farm is perpetual and enormously expensive. Due to tough economic times, many family farms have gone under as people no longer can make ends meet, let alone turn over a profit. It breaks people’s hearts when they are forced to sell their land that has been in the family for generations.

However, in recent years, there has been a silent savior of family farms. It’s called natural gas. Across the country, from Pennsylvania to Colorado, people’s farms are being turned around – due to abundant natural gas reserves lying untapped on the land. There are countless stories of farmers, whose livelihoods have been saved, because a natural gas company has turned up on their door, offering them a way out and developed the energy on their land. They receive thousands of dollars in a signing bonus and a share in the production from the well. This money enables farmers to update their farming equipment, weather tough crop seasons, and pass on their farms to their children.

The opposition claims that natural gas is somehow an enemy of landowners. In fact, the very opposite is true. Natural gas is often the one thing saving their farms and the life the American farmers have built around them. Natural gas doesn’t destroy the farming legacy – it preserves it.

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There’s another American worker that deserves an ode. Here’s an unworthy homage for the worthy workers of America’s oil and natural gas industry:

On the 9th day, God Made a Roughneck.

And on the 9th day, God looked down at his planned paradise and said “I need energy to make this world run.” So God Made a Roughneck.

God said, “I need somebody to develop the home-made energy that powers our homes, fuels our cars, and heats our homes. I need somebody to work outside, in all kinds of weather – snow, sleet, scorching hot weather for 12 hour shifts. I need someone with fortitude – someone who isn’t afraid of the unknown, who can take on challenges and fix problems.” So God made a roughneck.

God said, “I need somebody who will sacrifice. I need someone who will separate himself from the comforts of his own home, not to abandon his responsibilities but to fulfill and exceed them – to provide his family with a future that is bigger and brighter than his own.” So God made a roughneck.

“I need somebody with arms strong enough to lift steel and power machinery, but eyes watchful enough to prevent accidents and protect the safety of his crew. I need somebody who doesn’t quit – who doesn’t cut corners and puts safety ahead of everything. Someone to pump mud, trip pipes, and come back – not to his warm home and home-cooked meal, but to man camps, just to wake up the next day and do it all over again for two weeks at a time.

“I need somebody who will trade glamour for danger. I need somebody to travel thousands of miles from home – onto dusty, frigid plains and deep waters out on the open sea. Somebody who can tough it out in cramped, uncomfortable beds and fix problems when they arise. I need somebody who can do the hard, dirty, perilous work that comes with unleashing the energy buried deep in the earth.” So God made a roughneck.

“I need somebody who loves nature. Somebody to cherish the land they work on every day with careful preservation of the environment around them. I need someone to be surrounded day after day in the forests, the plains, and the mountains. Who can bring up energy from the bottom of the earth and then look up at the stars in quiet awe, realizing with solemn gratitude the great blessings we’ve been given in our land.

“Somebody who, after two straight weeks away from home, doing intense work that stretched him to his physical and mental limit, can be as patient, kind, and loving with his wife and family as if he’d spent two weeks on vacation. I need somebody to pick up his son at school and encourage him to do his math and science homework before baseball practice. Someone who will nod and tell his daughter, “Yes, you too can work in this industry. You can be an engineer or a geologist and can explore, find and develop the natural gas and oil that America runs on.” So God made a roughneck.

God said, “I need somebody who understands the dignity of work—work that isn’t pleasant or easy, but is rewarding, who takes pride in what they do, for they know that the work they do will save family farms, send children to college, and make our country safer. I need somebody to keep our economy growing, keep our country safe, and give people the power to run their own lives—to deliver the American energy that gives people the lifestyle they may even take for granted.”

I need somebody with strength and fortitude. So God made a roughneck.

New Year Brings Opportunities and Obstacles for Industry

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IPAA President & CEO Barry Russell’s reflects on the opportunities and challenges of the year ahead:

“As 2013 begins, IPAA is optimistic that the great benefits of natural gas and oil development are gaining traction with leaders in Washington. Despite political gridlock that Washington seems to be characterized by these days, leaders on both sides of the aisle are recognizing that energy development environmental protection can and do work together to the benefit of the American people. IPAA has had several productive meetings with Congressional leadership and the White House on how development of oil and natural gas resources, particularly from shale, is boosting jobs, government revenue, and economic growth all across the nation. Below are some of the issues that IPAA will be working with Congress and the administration on.

TAXES.         

“Although major bills will likely be stymied in Congress, IPAA’s major area of legislative concern is taxes. Although comprehensive tax reform may not be undertaken immediately, tax policy will inevitably be in the spotlight. The call to end industry’s provisions of intangible drilling costs and percentage depletion and the passive loss exclusion will inevitably resurface. This is a dangerous political rallying cry that ignores the enormous risk that independent producers face in exploring for energy and threatens the continued investment in America’s vibrant and growing energy sector. IPAA continues to educate lawmakers and their staff on why these provisions are in the tax code. We will continue to warn against the unintended consequences that eliminating these provisions would have on future oil and natural gas production.

REGULATION.

“Due to the standstill in Congress, environmental issues will be addressed by regulations.  In fact, the legislative gridlock could embolden the Obama administration’s agencies to take major steps to federalize oil and natural gas regulation, with particular focus on hydraulic fracturing. Traditionally, the states have had jurisdiction of energy regulation and, time and time again, have proved themselves more than capable of doing so. From the EPA’s proposed national source performance standards to BLM’s drilling regulations to EPA’s regulatory guidance and studies on hydraulic fracturing rules, IPAA will be keeping a close watch on the administration’s actions in regard to oil and natural gas development.

ESA.

“In particular, the Endangered Species Act, which the anti-development activists use to try to shut down development of all kinds, is a top priority for IPAA in 2013. Specifically, IPAA will be pushing back against the listing of the Lesser Prairie Chicken. A listing could threaten oil and natural gas production in resource-rich states, states which have already made special conservation coalitions to protect this species.”

 

Shale Bringing Joyful Tidings

This tool in oil and natural gas extraction, known as “Christmas tree” for its resemblance, comes with a major present: New jobs

 

It’s the holiday season which means a lot of things. Holiday parties, holiday shopping, holiday food. All of this involves a great deal of money, which is why this time of year can be just as stressful as it is festive. The added financial pressure of the holidays is especially rough for those folks who are out of work – struggling to put food on the table and give their kids the best Christmas possible.

The good news is that many are finding well-paying work that enables them to provide for their family in the oil and natural gas industry. Because of the shale boom that is sweeping the United States, jobs are being created from Pennsylvania to California, from Louisiana up to Michigan.

Yesterday, the U.S. Chamber of Commerce’s Institute for 21st Century Energy released a new study, done by IHS Cera, that detailed the economic benefits of shale development by state. And these benefits are enormous.

You wouldn’t think that snowy Michigan would be counted among the major energy producing states. But shale development, which hinges on the critical hydraulic fracturing process, accounted for 38,000 direct or spinoff jobs in Michigan in 2012 and is set to create 79,000 jobs and contribute more than $8 billion to the economy.

In Ohio, whose economy has struggled for decades with the departure of manufacturing companies, is experiencing oil and natural gas development due to the Utica shale play. The abundance of affordable natural gas is causing a huge comeback in manufacturing. Towns like Youngstown which has been stagnant for decades is breathing new life again. About 39,000 jobs in Ohio are linked to oil and natural gas production. This good news is just the beginning — that number is projected to triple by the end of the decade!

Now, Texas has had a long and rich history in energy development. In popular culture, cowboy hats and boots pretty much go hand in hand with the idea of oil companies. But the shale plays are energizing the state in a way that is unprecedented. The Barnett and Haynesville shale plays are a flurry of industry activity. Jobs are being created by the thousands as people rush to take advantage of golden opportunities.

But nothing beats the massive Eagle Ford shale that spans the southwestern region of Texas. This week’s Declaration of Independents did a major profile of the Eagle Ford play, which could now be more prolific than the outstanding Bakken in North Dakota that is revolutionizing that snowy state. It detailed the history of the play, the technologies being utilized there, and the targeting trends of natural gas and, increasingly, oil.

IPAA economists also highlighted the economic contributions of the Eagle Ford in the analysis, whose job creation matches those of entire states.

“Direct employment has been boosted by increased demand for workers to drill and complete wells, to provide the geophysical and engineering analysis to guide projects, and to build pipelines and processing facilities. This in turn, has increased diverse jobs for workers who provide housing, transportation, and consumer goods and services of all kinds for the larger regional workforce. This also means a workforce with rising wages with more money to re-inject into the local economy. According to analysis by the Dallas Federal Reserve Bank, the average weekly pay in the entire region rose 14.6 percent annually from the first quarter of 2010 to the third quarter of 2011, more than double the 6.3 percent rate for the U.S. as a whole. According to a study by the Institute for Economic Development at the University of Texas at San Antonio (UTSA), Eagle Ford activity supported 38,000 jobs in 2011. That figure was forecast to grow to over 82,000 jobs by 2021. In that year, it is estimated that the boost in economic activity will add more than $1.5 billion to state revenues and $888 million to local government revenues.”

And as the IHS study detailed, Texas accounts for almost half the nearly 1.3 million industry jobs associated with shale oil and natural gas production. Some 576,000 Texans were in jobs connected to shale oil and gas in 2012. By the end of the decade, the analysis projected that 930,000 people in Texas will have oil and natural gas industry jobs. Seriously, everything is bigger in Texas.

It’s not an exaggeration to say that the oil and natural gas industry, because of the amazing well-paying jobs it is creating, is giving hope to hundreds of thousands of people across the nation. These jobs give dignity to those employed, as the jobs empower them to provide for their families and give them a kind of security that is especially felt around the holiday season.

Click here to read the full Declaration of Independents article: The Eagle Ford – Texas Shale Star

Click here to read the Chamber’s IHS Cera study: The Unconventional Oil and Gas Revolution and the U.S. Economy

Thanksgiving for American Energy Renaissance

With Thanksgiving tomorrow, it’s important to reflect upon – and be thankful for – the incredible American oil and natural gas renaissance.

The cornucopia is a symbol of abundance.

1. The U.S. is energy abundant.

The United States is one of the most resource-rich countries in the world. This is an incredible blessing and we are lucky to be accustomed to the lifestyle that energy abundance gives us. Overall, we have relatively low-cost energy for consumers in this country. Even gasoline, which does become a burden to families paying the bills, is much lower than it is in other countries. Just look at Europe. The shale revolution of recent years have further increased our access to our rich resources, with the advanced technologies of hydraulic fracturing and horizontal drilling unlocking vast reserves of oil and natural gas. As Ken Hersh, CEO of NGP Energy Capital Management said, the shale oil and gas boom will be “the redefining global phenomenon, from a finite world to a surplus world.” Each year, production levels in North Dakota, Ohio, and Pennsylvania shale plays are topping themselves and setting new records.

2. Our industry is creating jobs and strengthening the economy.

In a struggling economy, the oil and natural gas sector is providing much-needed, well-paying jobs to people across the United States. These are well-paying jobs. On average a worker in the oil and gas industry makes more than $35 per hour. The average wages in the general economy are about $23 per hour. Petroleum engineers make over $100,000 on average starting out. Oil and natural gas development also supplies amazing blue-collar jobs. Roughnecks, roustabouts, and land men do not need advanced education. These jobs pulls people out of poverty, gives hope to families, and strengthen the middle class. It’s also bringing manufacturing back to America’s shores. America’s oil and natural gas sector is also bringing enormous amounts of revenue into state, local, and federal treasuries.

3. America’s energy security is strengthened every day.

The United States is becoming the global leader in energy production. The Paris-based International Energy Agency reported last week that the U.S. will be the number one producer of oil by 2020 and the number one producer of natural gas by 2016. This would put us ahead of Saudi Arabia as the world’s top producer of oil. IHS Vice Chairman Dan Yergin, renowned energy historian, recently said “The growth of unconventional oil and gas production is creating a new energy reality for the United States.”  Our increased self-sufficiency will insulate us from shocks abroad and protect us from relying on foreign countries for our oil. After all, oil imports are down from 57% in 2008 to just 45% today. Within a decade, the IEA forecasts that U.S. oil imports will drop by more than half to just four million barrels a day, from 10 million barrels a day currently.

America’s energy boom, made possible by the oil and natural gas industry and the great men and women who are employed by our companies, is surely something to be thankful for.