Chairperson's message for June 2009
Message from the
chair. . .
Dear Fellow SPE Members,
A recent report by the U.S. Department of Energy shows that the increased environmental regulation of the U.S. oil and gas industry could have a severe impact on the economics of operations affecting energy supplies and prices. The DOE study, “Potential Economic and Energy Supply Impacts of Proposal to Modify Federal Environmental Laws Applicable to the U.S. Oil and Gas Exploration and Production Industry,” estimates that the increased regulations and oversight some groups are urging Congress to impose on the industry would result in an increase of $10 billion spent annually by domestic oil and gas producers. According to Barry Russell, President and CEO of Independent Petroleum Association of America (IPAA), “if implemented, the proposals of anti-development interests would have a severe and negative impact on the nation's supply and economy at a time when we cannot afford either.” He continues “The analysis done by DOE is further proof of the importance of American oil and natural gas production, and the role this industry plays in driving economic growth.”
According to IPAA, some of the key findings of the Project BRIEF (Bringing Real Information on Energy Forward) report include:
- 1.2 million Americans are directly employed by domestic oil and natural gas producers
- In 2007 alone, the industry invested a record $226 billion in domestic exploration and production, driving countless state and local economies
- In 2007, the oil and gas industry paid public and private landowners $30 billion in royalties
- State regulation of the domestic energy activities protected the environment and public health for over a century
- Potential new regulations now circling around Washington could:
- Force the closure of more than half of America's oil wells and a third of gas wells
- Cost the federal government $4 billion in revenues, state treasuries would lose $ 785 million
- Slash domestic oil production by 183,000 barrels (7% of lower-48 Production) per day, natural gas by 245 billion cubic feet per year
For details, please visit DOE website:
http://www.fossil.energy.gov/programs/oilgas/publications/environment_otherpubs/Impacts_of_Modify_Fed._Environmental_Law.html
In order to grow, the US economy needs energy from all sources. As experts say, the promise of a green energy future is not going to be fulfilled overnight. America will continue to rely on petroleum for decades to come. There are 5,000 independent oil and gas companies in the U.S. with, on average, 12 employees. These independent oil and gas businesses (not the big one) develop 90% of the nation's oil and gas wells, produce 82% of American natural gas and 68% of American oil. If energy is the “lifeblood of the American economy,” then small businesses serve as its backbone creating new jobs, generating new revenues, and putting the economy on a path back to economic prosperity. In today's political climate, it is easy to forget that America's independent producers are small businesses too. Investment, jobs, and exploration and production of America's natural resources by independent energy producers, can help significantly restore the U.S. economic prosperity.
Currently, the oil and gas industry is at an intersecting crossroads. In the public policy arena, the industry is in transition. On one hand, our industry takes pride in its educational initiatives to increase public awareness and in the progress made over the past several years in bringing a better public understanding of the challenges facing the nation. On the other hand, we must face with the harsh realities of a political landscape in which the industry is under assault. However, our industry has a rare opportunity to reposition itself from the defensive and reactive posture of the past 30 years into a more positive, productive, and forward-looking force by working together to achieve our collective goals.
Jalal Torabzadeh
LASPE Chairperson 2008-2009