News Archives

October 2015

U.S. House of Representatives Votes to Lift Ban on Crude Oil Exports

October 14, 2015

FOR IMMEDIATE RELEASE:

October 9, 2015

(MIDLAND, TEXAS) Today, the U.S. House of Representatives passed H.R. 702 to adapt to changing crude oil market conditions, which repeals the outdated 1970’s-era ban on the export of crude oil produced in the United States.

The bipartisan bill, sponsored by Representative Joe Barton (R-TX), has 137 co-sponsors and comes after almost a year of hearings, deliberations, and reports from across the political and economic spectrum – all making the case that exporting crude oil will significantly boost the economy, create hundreds of thousands of new jobs, and empower our allies around the world.

In response to the passage of this historic legislation, PBPA President Ben Shepperd said the following:

“Amidst all the wrangling and partisanship in Washington recently, I am pleased to see Republicans and Democrats working together to end the ban on crude oil exports. We are grateful to Rep. Barton and Chairman Conaway, among others, for their tireless work to bring this bill to the floor. Hopefully the bipartisan nature of this effort will encourage the Administration to stop politicizing this issue and join the fight for American jobs.”

September 2015

PBPA v DOI Decision

September 2, 2015

U.S. District Court Finds for PBPA, Vacates Lesser Prairie Chicken Listing

(MIDLAND, TEXAS) Yesterday, the U.S. District Court for the Western District of Texas granted summary judgment in favor of the Permian Basin Petroleum Association and vacated the U.S. Fish and Wildlife Service (FWS) rule listing the Lesser Prairie Chicken (LPC) as threatened under the Endangered Species Act. In PBPA et al. v. Department of Interior et al, Senior U.S. District Judge Robert Junell concluded that the decision to list the LPC was arbitrary and capricious under the Administrative Procedure Act (APA) and that the agency failed to properly apply its Policy for Evaluation of Conservation Efforts When Making Listing Decisions (PECE Policy) to conservation efforts already undertaken on millions of acres across five states to improve habitat for and diminish threats to the LPC.

In response to the ruling, PBPA President, Ben Shepperd, issued the following statement: “The PBPA applauds Judge Junell’s decision in our suit against the U.S. Fish and Wildlife Service and the Department of the Interior. This ruling serves as vindication of the unprecedented stakeholder participation across the Lesser Prairie Chicken range. Our members’ good faith efforts to conserve LPC habitat and recover the species through the Range-wide Plan began long before this listing decision was made and will continue unabated now that the court has thrown it out.”

Under the LPC Range-wide Conservation Plan, more than 180 oil and gas, pipeline, electric transmission and wind energy companies have enrolled in conservation agreements to avoid, minimize, or mitigate impacts to the LPC from their operations. In the process, they committed $45.9 Million in enrollment and impact fees to cover off-site mitigation actions for unavoidable impacts and contribute to habitat conservation. Earlier this year, the Western Association of Fish and Wildlife Agencies, which oversees the conservation efforts under the Range-wide Plan, reported a 25 percent increase in the LPC’s population from 2014 to 2015, in part a result of industry’s conservation efforts.

About the Permian Basin Petroleum Association

Founded in 1961, the PBPA is the largest regional oil and natural gas association in the United States. The Association includes approximately 1,000 member companies that produce oil and gas in the Permian Basin of west Texas and eastern New Mexico. The Association advocates for the safe and responsible development of oil and gas resources. More information is available at www.pbpa.info.

June 2015

PBPA 84th Texas Legislative Session Report

Science, Emotion, and the Public Interest

June 16, 2015

It turns out hydraulic fracturing isn’t the root of all evil after all.

Over the years, opponents of domestic energy production have spent millions of dollars and thousands of man-hours maligning the oil and gas industry as a bunch of comic book villains bent on destruction of our land and resources. Typically, the chief culprit in these attacks is hydraulic fracturing, a well completion process that is central to the shale oil renaissance taking place in the Permian Basin and across the country.

Despite the game-changing turnaround in domestic oil and gas production – not to mention the hundreds of thousands of jobs and billions in tax revenue it generates – opponents blame this process for everything under the sun. Like many things in our popular culture, “fracing” is vilified by organizations with an axe to grind and something to sell.

In the past few months, we have seen a wave of reports and studies from the academic world and the Environmental Protection Agency setting the record straight on hydraulic fracturing, what it does and – perhaps more importantly – what it doesn’tdo.

Most recently, the EPA’s draft study, Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources, released this past week, concludes that they “did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States.” The study goes on to cite the extremely low percentage of hydraulic fracturing fluid (less than 2%, the other 98% is essentially water and sand) that contains chemicals of any kind. Also illustrated is the basic premise that successful extraction of oil and gas requires an absolute separation between those resources and groundwater. The simple fact is that mixing oil and water isn’t just bad for the environment, it’s bad for business, and drillers avoid it at all costs.

In addition to the EPA study, researchers from Southern Methodist University testified before the Texas House Committee on Energy Resources in Austin last month about their recent study on seismic activity in Texas. Contrary to the popular narrative, this study and others like it do not draw a link between hydraulic fracturing and earthquake activity. When asked if injection wells in the Azle area northwest of Fort Worth were causing earthquake activity, Matthew Hornbach, Ph.D, an Associate Professor of Geophysics at SMU responded by stating “that would be hard to believe”. Later on in the same hearing, Rep. Drew Darby from San Angelo asked if hydraulic fracturing is causing earthquakes and was told there is no correlation.

Media coverage of this report and the researchers’ testimony left out these important exchanges, focusing instead on the very narrow set of circumstances where there could be an impact if not properly managed, primarily injections of extraordinary pressure directly into a fault line. The fact is that the industry avoids those conditions and regulators have updated permitting to ensure that we do.

The oil business runs on facts, figures, and empirical data, and producers know that cleaner technologies and processes will lead to better results. That’s why companies like Pioneer Natural Resources and Apache Corporation are investing millions in water reuse and recycling technology. Operators like Fasken Oil & Ranch, a family-owned oil and cattle ranching company, now use 100% recycled water. That decision costs them as much as $1 extra per barrel, but ensures the sustainable use of their land for generations to come.

For those of us in the oil and gas business, these findings illustrate what we’ve known all along – safe, precise, responsible use of this revolutionary process is not only possible today, it is the reality. As the industry evolves and continues to innovate, the public can expect even more efficient production, higher yields, and a smaller all around footprint – which benefits everyone, both at home and around the world.

April 2015

A Sanction By Any Other Name…

April 2, 2015

Years of sanctions imposed on the sale and export of crude oil have wreaked havoc on Iran’s economy and helped force them to the international bargaining table to discuss their nuclear program. What has gone unreported in all the recent coverage is the link to our economy here at home. The US is suffering the effects of crippling economic sanctions as well.

This journalistic oversight isn’t intentional; it’s a problem of vocabulary.

Americans are familiar with the term, “sanction”, as an oft-used instrument in the US foreign policy toolbox. Recently, Secretary of State John Kerry has spent a good deal of time in negotiations with his international and Iranian counterparts over the future of Iran’s nuclear program and, consequently, the existing international sanctions prohibiting them from exporting crude oil.

According to news accounts as this issue goes to press, Iran could be rewarded for good behavior with the right to export one million barrels of crude oil per day, a move that would help to rebuild an Iranian economy that has been utterly destroyed by the current ban on exports. Our sanctions have worked. We have proof positive that preventing an oil producing-country from exporting oil will damage its economy.

Ironically, or maybe not, the Obama administration supports the export of Iranian oil and not the export of American oil. But we don’t call it a sanction on our turf. It’s “policy.”

Officially the Energy Policy and Conservation Act of 1975 amounted to self-imposed sanctions. At the time, the Arab Oil Embargo of the early 1970s reflected a dire situation. US crude oil production was in decline and tensions in the Middle East were on the rise.

But, times have clearly changed, and so has the state of US crude oil production.

The United States is now the largest global producer of crude oil, surpassing both Russia and Saudi Arabia. New technologies have enabled US producers to access shale oil once thought unusable, fundamentally changing the energy landscape in the process. Domestic crude oil production is now responsible for almost ten million jobs nationwide, with more than 500,000 right here in the Permian Basin. Further, a recent Senate hearing received testimony that lifting the ban could result in a GDP increase of as much as 1%, which would translate to another one million high-paying US jobs – no small feat in today’s economy.

In recent months we have seen report after report highlight the benefits of lifting the export ban and warning of the dangers of leaving it in place. Columbia University, Rice University, the Congressional Budget Office, the Energy Information Agency, noted economists like Larry Summers and Alan Greenspan, and many others, have all weighed in on this outdated policy. The consensus is clear that lifting the ban will lower prices at the pump for consumers, create jobs, and grow our economy.

This mountain of evidence begs the obvious question – how can we use an economic weapon like sanctions against Iran to such devastating effect, but not see the harm a similar policy is causing right here at home?

In my role as President of the Permian Basin Petroleum Association, I represent more than one thousand mostly small, family owned businesses. Our members work hard to support their families and grow their businesses. Despite bringing America closer to energy independence that at any time in the last century – producers here in the Permian and around the country are being punished with denial of access to the free market. They are being sanctioned. As the national conversation focuses on lifting sanctions abroad, let’s take a minute to deal with this outdated policy sanctioning energy production here at home. The time has come for Washington to end the ban on crude oil exports and empower our energy renaissance, rather than hamper it.

Ben Shepperd

President

About the Permian Basin Petroleum Association

Founded in 1961, the Permian Basin Petroleum Association is the largest regional oil and natural gas association in the United States. The association includes approximately 1,000 member companies that produce oil and gas in the Permian Basin of west Texas and eastern New Mexico. The association’s mission is to provide safety education, legislative and regulatory involvement and support services for the petroleum industry to promote members’ effectiveness. More information is available at www.pbpa.info.

March 2015

Texas Lawmakers Discuss Jobs & Economic Impact of Federal Crude Export Ban

March 11, 2015

FOR IMMEDIATE RELEASE:

This week in Austin, hearings were held in both the Texas Senate and House of Representatives to consider a resolution calling on the U.S. Congress to lift the outdated, unnecessary federal ban on crude oil exports. The bipartisan House and Senate bills, respectively dubbed House Concurrent Resolution 57 (HCR 57) and Senate Concurrent Resolution 13 (SCR 13), received broad support from both sides of the aisle as lawmakers work to preserve Texas jobs and economic growth.

In his opening statement before the joint Energy Resources and International Trade & Intergovernmental Affairs Committees, Chairman Rafael Anchia (D- Dallas) characterized the 1970s-era ban as a relic that “prevents Texas from taking part in the global free market. American crude, because of its 40 year old policy, has become a stranded commodity,” he said. “In fact, the two other commodities that are unable to be exported on the world market are wild mustangs by boat and red cedar.”

Railroad Commissioner Christie Craddick, who testified in both hearings, called the United States “the only advanced nation in the world with a ban on crude oil exports,” before warning that “US stockpiles are building and capacity concerns growing” due to the archaic regulation. She continued by listing some of the anticipated benefits of lifting the ban, namely an $18 billion annual drop in consumer prices at the pump, $135 billion increase in GDP, and $1.3 trillion addition to US revenues between 2016 and 2030.

Speaking to the uphill battle faced by Texas producers, Railroad Commissioner Ryan Sitton testified in the House that crude oil production has increased 200% in the past five years while pipeline infrastructure has only grown by 40% – forcing producers in the Permian Basin to discount their crude even below the already discounted West Texas Intermediate (WTI) price. That disparity was underscored by James LeBas, former chief revenue estimator for the Texas Comptrollers Office. Mr LeBas testified that despite five years of explosive growth, Texas producers have been forced to discount their product an average of $10.06 per barrel – amounting to $1 Billion in lost revenue annually.

The chilling effect this unfair burden places on producers amidst lower prices for crude oil on the world market was described by former PBPA Chairman Steven Pruett of Elevation Resources. Mr Pruett’s firm has idled five of the six rigs they had operating just a few months ago. At a loss of 150 direct and indirect jobs per rig, the devastating effects of this ban on the Texas economy are obvious.

“The good news is this will correct in about a year and a half to two years,” Pruett testified yesterday. However, he said, “two years is a long time in the state’s budget, it’s a long time in employment, and in the meantime a whole lot of damage, some irreparable, will be done to our crude oil production infrastructure.”

Today’s Senate hearing concluded with a 9-1 vote approving the Senate version and sending it to the Senate floor for debate.

###

About the Permian Basin Petroleum Association

Founded in 1961, the Permian Basin Petroleum Association is the largest regional oil and natural gas association in the United States. The association includes approximately 1,000 member companies that produce oil and gas in the Permian Basin of west Texas and eastern New Mexico. The association’s mission is to provide safety education, legislative and regulatory involvement and support services for the petroleum industry to promote members’ effectiveness. More information is available at www.pbpa.info.

January 2015

PBPA President responds to President Obama’s State of the Union Address

January 21, 2015

We have your middle class economics right here, Mr. President

Amid all the empty threats and hollow promises inherent to any State of the Union address, President Obama said something significant in this year’s speech. Did you catch it?

“At this moment — with a growing economy, shrinking deficits, bustling industry, and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth. It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come.”

“So the verdict is clear. Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.”

Booming energy production, expanding opportunity, middle class economics – these phrases are embodied in the economy of the Permian Basin of West Texas and New Mexico. As the ancestral home of the American oil and gas industry and the root of its current renaissance, we know the numbers by heart. According to a recent Texas Tech University study (The Economic Impact of the Permian Basin’s Oil and Gas Industry), Midland, Texas residents have experienced an 89.6% rise in per capita personal income since 2005, and the industry generates more than $137 billion in economic output annually. In fact, the oil and gas industry is responsible for more than 500,000 high quality, high paying jobs in West Texas and New Mexico alone.

These aren’t the kind of jobs that just put food on the table. They are the kind of high quality jobs that allow families to buy homes, save for retirement, and put children through college. They’re the kind of jobs all Americans deserve. The Permian Basin is middle class economics at work.

Beyond the obvious economic benefits at home, domestic crude oil production impacts global geopolitics. By increasing our supply of domestic crude, we can reduce our dependence on foreign oil and continue to put pressure on our enemies abroad. Recent articles in the New York Times, Washington Post, and others have credited America’s increased contribution to global oil supplies with having a greater impact on the economies of Iran and Russia than any sanctions levied by the world community to date.

Astonishingly, we’ve managed to do all this with both hands tied behind our collective backs. The current hardships faced by the industry are numerous. Between the outdated and unnecessary ban on crude oil exports, relentless attacks from litigious out-of-state special interest groups, and new proposed Environmental Protect Agency regulations that would assert federal control over countless ditches and dry creek beds across the West, it’s a wonder we’re still in business at all.

Yet here we are, producing the oil that’s lowering gas prices for consumers and finally pulling the economy out of the doldrums of the past six years. Countless studies have shown that lifting the ban on crude oil exports will only add to that momentum – further lowering prices at the pump while we create jobs at home. A win-win by any measure.

As the President of the Permian Basin Petroleum Association, representing 1000 mostly small family run businesses, I truly hope the President means what he said Tuesday night. I hope he lives up to his sentiment that “…at every moment of economic change throughout our history, this country has taken bold action to adapt to new circumstances, and to make sure everyone gets a fair shot.” That’s all we’re asking for, a fair shot. We don’t need a handout, or a break, or a subsidy. All we need is a level playing field and we’ll keep doing what we’ve always done, powering the American economy and creating opportunities for American families.

“That’s what middle-class economics is — the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”

Here in the Permian Basin we couldn’t agree more, Mr President.

Ben Shepperd

President

Permian Basin Petroleum Association

About the Permian Basin Petroleum Association

Founded in 1961, the Permian Basin Petroleum Association is the largest regional oil and natural gas association in the United States. The association includes approximately 1,000 member companies that produce oil and gas in the Permian Basin of west Texas and eastern New Mexico. The association’s mission is to provide safety education, legislative and regulatory involvement and support services for the petroleum industry to promote members’ effectiveness. More information is available at www.pbpa.info.

June 2012

FOR IMMEDIATE RELEASE: Statement by Ben Shepperd, president, PBPA, on Sand Dune Lizard Decision

June 13, 2012

FOR IMMEDIATE RELEASE: MIDLAND-ODESSA, SANTA FE, WASHINGTON BUREAUS NOTE

CONTACT: 432-684-6345

Statement by Ben Shepperd, president,

Permian Basin Petroleum Association

On U. S. Fish and Wildlife Service Decision

To NOT LIST AS ENDANGERED the Dunes Sagebrush Lizard

MIDLAND (June 13) — “Today’s historic decision is a victory for America’s consumers and her energy industry workforce. I applaud and endorse the U. S. Fish and Wildlife Service’s conclusion to let indisputable science, not politics, be the basis for the decision to not list the Dunes Sagebrush Lizard as endangered.

“The decision ends a hard-fought battle waged at all levels of our American government, and I firmly believe that our efforts played a critical role in stopping this proposal. We created a deep and wide coalition of local officials, private landowners, state and federal legislators, scientists, independent oil producers and major energy corporations with a clear mission — debunk the shoddy, so-called science on which the proposal was based. And we did.

“The PBPA’s coalition drove home the point that the best available scientific finds without a doubt that Dunes Sagebrush Lizard’s welfare is not threatened by agricultural or energy production.

“The Permian Basin, a 53-county region in West Texas and eastern New Mexico, is the habitat of this lizard species, and moreover, is one of the only regions in our nation that actually has more high-paying jobs than it does men and women to fill them. This proposal by the federal government was sheer insanity. Indeed, a decision to list the lizard as endangered would have had dramatic and negative effects on our nation’s domestic energy industry at a time when gasoline prices are at an all-time high, record numbers of Americans remain unemployed and the Middle East continues to be in the throws of revolutionary instability.

“Like so many laws in America, the Act is based on noble intentions. The bison and the Bald Eagle are two animals that were nearly extinct and saved by prudent and appropriate public mandates.

“But the Endangered Species Act in current form is being exploited by activist groups that generate income for themselves while hiding behind a pretense of protecting the environment. Suing the U.S. Fish and Wildlife Service is a cottage industry for them. Regardless of the decision rendered in their manifold lawsuits, the groups receive legal fees — our taxpayer dollars — from the federal government. I call upon our Congress to re-examine both the letter and the use of this law. The Act must be modified so that its abuse is outlawed once and for all, and the U. S. Fish and Wildlife Service can get back to its mission of protecting truly endangered species.”

‘We cannot trust’ EPA on oil and gas development — state officials

June 5, 2012

Mike Soraghan, E&E reporter

Published: Tuesday, June 5, 2012

VANCOUVER, British Columbia — State officials say U.S. EPA and federal drilling restrictions are interfering with their efforts to foster oil and gas development in their states.

The midyear meeting of the Interstate Oil and Gas Compact Commission (IOGCC) kicked off here yesterday with U.S. governors and others casting the federal government under President Obama as the enemy of increased domestic production.

“It’s a sad commentary on where we are in this country when we cannot trust our agencies to implement the law in a reasonable, evenhanded and fair basis,” Alaska Gov. Sean Parnell (R) told state oil and gas officials as he opened the meeting.

Parnell said the state officials in the audience had maintained trust because they live in the communities they serve and try to ensure that oil and gas resources are recovered efficiently.

“You’re not in charge of greasing some political skids or blocking resource development,” Parnell said. “You’re in charge of achieving greater ultimate recovery, protecting people, minimizing impact and ultimately getting the right answers.”

State oil and gas agencies are different from EPA in that most of them have a mandate to not only regulate drilling but to promote oil and gas development in their states.

“Just so we remember, our mission is to promote the conservation efficient recovery of oil and gas, while protecting health safety and the environment,” said Bill Daugherty, managing partner of BlackRidge Resource Partners in Kentucky and vice chairman of IOGCC.

Alabama Gov. Robert Bentley (R), recently named to be the next chairman of IOGCC, had been scheduled to speak but missed the meeting because of a scheduling conflict. Explaining Bentley’s absence, Alabama State Oil and Gas Supervisor Nick Tew said, “He’s a strong believer that oil and gas agencies are the proper ones to regulate.”

Such sentiments are common among governors and state regulators, but support for having the states manage the country’s drilling boom has taken on a political tint in this election year.

Presumptive Republican presidential nominee Mitt Romney and congressional Republicans are highlighting their support for state regulation of oil and gas as a way to criticize the Obama administration’s handling of resources.

In North Carolina last week, Romney endorsed a state proposal to allow hydraulic fracturing in the state, and his campaign said Obama has “failed to lead” (EnergyWire, June 1).

On Capitol Hill, House Republicans held a hearing to press the case against federal regulation where one state regulator said the federal government should “back off” (E&E Daily, June 1).

The Obama administration has not taken up the call of many environmental groups for increased federal oversight of state regulation. The administration has repeatedly highlighted that domestic oil and gas production has increased during his tenure. And White House officials have tried to patch things up with the oil and gas industry in the wake of the moratorium following the BP PLC oil spill (EnergyWire, May 15).

But industry groups and state regulators have criticized EPA’s new air rules governing emissions from drilling sites and its proposed guidance for the use of diesel fuel in hydraulic fracturing fluid.

“I’m hearing from a lot of people here that you don’t like these fracking rules, and I don’t know why you should,” said Dick Stoll, a Washington, D.C., lawyer with Foley Lardner, in a presentation on EPA’s handling of energy issues.

White House has become ‘more reasonable’

Stoll, a former EPA general counsel and attorney for chemical manufacturers, said Obama environmental officials “take a very different view of the world than their predecessors” in the George W. Bush administration.

“Early on, there was no good news out of EPA if you’re from industry,” Stoll said. When it came to coal regulations, he said, “what EPA and [Administrator] Lisa Jackson wanted to do was roll over the states.”

More recently, though, he said, White House officials have been doing “more reasonable” things, toning down aspects of EPA proposals that industry didn’t like.

Parnell, who took over as governor when former Gov. Sarah Palin (R) stepped down in 2009, said that he and other governors are holding off on permit requests until after the November presidential election.

“From conversations with governors, we have said, essentially, right now, if you do not need a permit right now, do not ask for one,” Parnell said. “Let’s get past this November election, and let’s get some stability before we do this.”

Parnell, who won election in his own right in 2010, blamed Congress for not reining in agencies such as EPA.

“Our Congress is in gridlock and is broke,” he said. “They don’t have oversight they once did. They have no ability to mete out consequences for improper administrative or regulatory behavior.”

Fracking Trucks Hauling Sand Subject to Workday Limit, U.S. Says

June 5, 2012

Bloomberg Businessweek

Truck drivers hauling water and sand to U.S. oil and natural gas shale wells can’t extend their daily on-duty hours by using an exemption targeted for special oil- field service equipment, the govenment said.

Time spent waiting while water and sand are unloaded at well sites counts toward the maximum 14 hours a day that a truck driver can work, the Transportation Department said in a rule clarification to be published today in the Federal Register. Some drivers may be using an exemption for equipment such as pumps or gas separators that let operators subtract from the limit the time waiting for gear to be unloaded, said Boyd Stephenson, director of hazardous materials policy at the Arlington, Virginia-based American Trucking Associations.

The U.S. agency is targeting a boom in natural-gas drilling by hydraulic fracturing, a process that may require hauling as many as 1,000 truckloads of water and sand for every well. Limiting the exemption may force drillers to add drivers, Stephenson said.

“If you were an operator in the past that was utilizing this exemption for transporting sand and water then, yes, it means you’re going to have to have more drivers,” Stephenson said in an interview. “There were probably some that were utilizing this exemption for sand and water trucks in the past. How many is anybody’s guess.”

Shale Formations

A growing number of industries, from ready-mix concrete mixers to water-well drillers to agricultural retailers, have obtained or sought relief from rules including limits on truckers’ daily on-duty hours that the Department of Transportation announced in December. Consumer groups and the trucking association object to different parts of the rules and have gone to court to block them.

Hours-of-service exemptions were written into law for more than a dozen industries, including oil-field service equipment, before the final rule was issued.

Oil and gas discoveries in shale formations in states such as Pennsylvania and Ohio are bringing wells to rural areas that can often be reached using small rural roads not suited for heavy trucks. The anticipated expansion of drilling probably led the safety agency to issue guidance on who is eligible for the exemption, according to Henry Jasny, vice president of the Washington-based Advocates for Highway and Auto Safety.

Justin Nisly, a Transportation Department spokesman, didn’t return a phone call seeking comment.

“If you’re going to have thousands and thousands more sites, you’re going to have thousands more vehicle trips on rural roads which have the highest fatality rate to begin with,” Jasny said in an interview. “They’re not changing anything in the current exemption. They’re just trying to make it clear who gets which exemption.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

Company Aims to Desalinate Fracking Water, a $1.6 Billion Market

June 5, 2012

Forbes

Innovation in desalination was a feature at the Blue Tech Forum in San Francisco last week. Tyler Algeo, a research analyst at BlueTech Research, that patents for desalination technologies in 2010 were double the number filed in 2005. Desalination energy inputs have been reduced more than 50 percent in the past decade.

Markets for desal are broad: large water technology corporations, venture capital firms, Fortune 500 companies, research groups, consulting engineering practices, and government agencies.

On Thursday, I reviewed Porifera’s innovation: making a filter out of carbon nanotubes. Today I report highlights from a company working on radial deionization.

The startup Atlantis Technologies has created “a low-cost, chemical-free desalination system that can remove salt from oil, gas, mining, and industrial waste water,” according to its website. The company is calling the technology radial deionization.

To desalinate salt water, the technology passes it between two oppositely charged super capacitors, which attract charged ions. The ions pass through a charge-specific membrane and are adsorbed onto the surface of the electrode. When the capacitors have filled with ions, the system reverses the polarity, discharging the ions and removing them. (Learn more on the website.)

The two-and-a-half year-old company was a finalist in the 2011 ImagineH2O Competition.

The technology came out of funding from the Defense Advanced Research Projects Agency (DARPA) to develop a super capacitor to desalinate ocean water into drinking water for the troops.

The device has advantages in removing problematic salts, said CEO Pat Curran, and can clean water at up to 75 percent less cost than systems such as reverse osmosis and brine concentrators. The system can also handle silica, barium/calciumstrontium sulfate, produced water from fracking, and the waste from reverse osmosis processes.

Atlantis is “going after the 1 trillion gallons of salty wastewater in United States and North America” from the oil and gas industry, said Curran. With the boom in shale gas, the market is growing at 14 percent a year, he said, and is expected to be worth $1.6 billion in five years.

While the technology is pre-commercial right now, Atlantis has built full-scale, functional unit, he said. Patents have been filed, the senior team assembled, and letters of intent collected from Aera Energy (heavy oil), PERC Water (municipal wastewater), Filterboxx (oil sands in Calgary), and EPRI.

The technology is an attractive value proposition, he said:

  • Its operating expense is 40 to 70 percent less than existing technologies.
  • It can recover up to 95 percent of the water, depending upon salinity level.
  • It’s modular: It can plug and play into a plant or mobile trailer.
  • Its energy usage is low.
  • It can handle salinity up to 150,000 mg/L chlorides, which reverse osmosis technologies cannot.
  • It can remove some particulates than other systems cannot, such as organics, certain chemicals, sulfate, and silica, “which is a big problem up in oil sands,” said Curran.

Why We Should Keep Tax ‘Loopholes’ For Oil Companies

June 5, 2012

By Deborah Byers

Across Washington, D.C., the push to end so-called energy company “subsidies” has become a well-worn political trope – touted as a solution for everything from reducing the deficit to punishing oil companies for high gasoline prices.

The president himself said he was in favor of repealing “billions in tax giveaways” to energy firms during a much-publicized address in March. But is that really an accurate portrayal of the current tax code?

For the most part, energy companies are treated just like any other industry

when it comes to taxes. Much of what politicians call giveaways are simply

timing issues related to when particular items can be expensed – governed by

provisions in the tax code established decades ago to strengthen U.S. energy

production. These provisions are not tax credits, which allow for a dollar-fordollar reduction in tax liability.

For example, the president’s most recent budget proposal calls for the repeal

of a provision that details how energy companies account for intangible

drilling costs, or IDCs. U.S. tax law has long allowed oil and gas companies to

deduct IDCs – expenses for labor and services related to drilling a well – at the

time they are incurred, versus depreciating those costs over time.

Eliminating those deductions would have dramatic consequences on domestic

energy production. Despite lawmakers’ and the public’s perception of “Big

Oil,” approximately 90% of all wells in the U.S. are drilled by independent

6/04/2012 @ 11:28AM | 793 views

Why We Should Keep Tax

‘Loopholes’ For Oil Companies

Christopher Helman, Forbes Staff

Energy Source

HOW WE POWER THE WORLD6/5/12 Why We Should Keep Tax ‘Loopholes’ For Oil Companies – Forbes

forbes.com/sites/energysource/2012/06/04/why-we-should-keep-tax-loopholes-for-oil-companies/print/ 2/3

energy producers, most of whom are small or mid-sized companies.

To independent producers, IDCs are the equivalent of research and

development costs that technology and pharmaceutical companies incur –

up-front expenses with no guarantee that the investment will deliver results.

Even if a well is successful, it typically takes many months before revenue is

captured. Thus, the IDC provision simply accelerates the actual cash flow of

the project but does not eliminate the tax liability.

According to the Independent Producers Association of America, IDCs

typically account for about 20% to 35% of the capital expenditure budgets of a

well. Without the ability to expense these costs, many independents’ cash

flow would be significantly diminished and they would have to immediately

reduce their drilling budgets since they lack the cash flow to fund these

operations internally and their cost of capital would otherwise increase.

And as producers scale back, production from shale oil and natural gas, which

is heavily driven by independents, will be at risk. In recent years, the shale

boom has played a major role in providing jobs, boosting domestic supplies

and increasing state and federal tax revenues. It is not an exaggeration to say

that the IDC provision is one of the factors that has allowed the “shale

revolution” to ramp up so quickly.

But IDCs aren’t the only tax item under scrutiny in Washington, D.C.

Another provision slated for repeal in the president’s budget governs

percentage depletion, a calculation used to determine the decreasing value of

a mineral resource as it is produced. But its use is limited by guidelines that

make it applicable only to small companies and individual royalty owners, so it

has a minimal impact on federal tax revenues.

Proponents say repealing provisions that deal with IDCs, percentage depletion

and the domestic manufacturing credit – available to all industries but used

by just a small subset of the oil and gas industry – would bring in close to $40

billion in new tax revenues over a 10-year period.

That $4 billion a year figure – small as it is compared to the overall budget

deficit – is based on current levels of drilling. It doesn’t take into account the

fact that domestic activity would most likely decrease as independents cut

back on their capital budgets in response and investments in new production

dry up.

In other words, changing the current tax code might make lawmakers happy,

but it won’t achieve its hoped-for objectives and, in fact, will do the opposite:

Integrated majors won’t be affected meaningfully

Cash-strapped independents will be hit hard Domestic production will be depressed Job growth related to the shale boom will stall Tax revenue will fall The technology advancements that are driving the shale boom, coupled with

the existing tax code, have put the U.S. in a position not seen in years – one

where domestic production is high and new reserves are creating economic

opportunities across the country. If we want to increase security of supply,

keep retail energy prices low and create high-paying jobs, our energy policy

should encourage future drilling by allowing proven tax provisions to remain.

Shale gas could spark U.S. manufacturing revival

June 5, 2012

Houston Chronicle

The natural gas drilling boom spreading across the U.S. could spark a revival in U.S. manufacturing and may lead to more than 1 million jobs by 2025, according to a group of economists.

Robert McCutcheon, an economist with consulting group PwC, told The Cleveland Plain Dealer at a manufacturing summit in Cleveland that natural gas could provide manufacturing companies a cheap source of energy that ultimately could save them $11.5 billion in energy costs by 2025.

“If we save $11.5 billion, that’s investment capital that could be redirected elsewhere,” he told The Plain Dealer.

A study by PriceWaterhouseCoopers found low-cost energy could create as many 1 million new manufacturing jobs in the U.S. The report pointed to various projects, including several in Texas, as examples of an upward trend in the manufacturer sector.

“We believe that the factors are in place for these trends to continue, despite concerns and uncertainties over how, and to what extent, the United States should use its shale gas reserves,” the report concluded.

The report found inadequate infrastructure, current tax policies and uncertainty over the environmental impacts of hydraulic fracturing could hinder the rising trend in the manufacturer sector.

If a manufacturing revival does come to the U.S., Texas might be among the states that benefits the most from the change.

According to a survey by Pepperdine University’s Michael Shires, Houston, San Antonio, Austin and Fort Worth are among the top 10 cities who could power the manufacturing revival. Seattle’s aerospace sector helped power it to the top spot on the list.

Houston, which ranked fourth, is the third-biggest manufacturing center in the United States behind Chicago and Los Angeles, according to a Forbes story. It – like San Antonio and Fort Worth – made the list because of the booming energy sector.

The Bayou City also is one of the few cities who can boast about having more manufacturing jobs than before the recession. According to Forbes, Houston has seen a 0.5 percent rise in manufacturing jobs since 2006.

The number of jobs is likely to rise in the Houston area after Dow Chemical announced plans to build a new ethylene plant and Exxon’s plans for a multibillion expansion at its Baytown complex.

Both announcements in the past week will likely bring more energy-related jobs to the region, officials said.

Natural gas industry groups question EPA fracking rules

June 5, 2012

The U.S. Environmental Protection Agency overestimated methane emissions from hydraulic

fracturing, says a new survey from the American Petroleum Institute and America’s Natural Gas

Alliance.

BY CELIA AMPEL | Published: June 5, 2012 0

Oklahoman.com

Methane emissions from hydraulic fracturing are much lower than the U.S.

Environmental Protection Agency has estimated, according to a report released Monday

by two oil and natural gas industry groups.

The American Petroleum Institute and America’s Natural Gas Alliance found methane

emissions to be 50 percent lower than the EPA estimated when it issued the first federal

clean air standards for hydraulic fracturing in April.

Howard Feldman, API’s director of regulatory and scientific affairs, said the industry’s

report did not find fault with the EPA’s emissions factors, but rather its data on how

frequently hydraulic fracturing is used to release oil and gas from dense rocks.

“We’re just saying that, well, in fact, that process doesn’t happen as often as EPA

previously estimated,” Feldman said.

The industry survey focused on two large methane emissions categories: liquids

unloading, or the process of removing liquids from the wellbore, and well refracturing,

which helps existing wells keep producing.

The survey showed methane emissions from liquids unloading are 86 percent lower

than the EPA estimated, and emissions from well refracturing are 72 percent lower.

Craig Segall, an attorney with the Sierra Club’s environmental law program, said the

industry’s numbers, if they’re correct, still mean natural gas development is a major

contributor to greenhouse gas emissions.

He said most of the methane leaks from gas development are controllable, creating

another revenue source for producers if they make changes as prescribed by the new

EPA rules, which go into effect in 2015.

May 2012

Texas Energy Network, LLC Closes $20 Million Equity Commitment

May 14, 2012

Capital to be used to support build-out of Permian and Eagle Ford wireless networks.

Houston, TX (PRWEB) May 11, 2012

Texas Energy Network, LLC (“TEN” of the “Company”), a provider of next generation carrier-class communication services to the oil and natural gas industry, announced today the closing of a $20 million equity commitment with an investor group comprised of several prominent individuals in the energy industry. In addition, Amegy Bank of Texas has agreed to provide a line of credit with TEN to support the Company’s growth. The proceeds of these financings will be used to build-out the Company’s fourth generation long term evolution (“4G LTE”) wireless network in the Permian Basin of west Texas and Eastern New Mexico and the Eagle Ford Shale of south Texas. The capital commitment will allow the Company to accelerate the development of its network and will provide TEN with the support needed to offer its clients a superior oilfield communications solution.

In addition to their equity commitment, the investor group provides TEN with a long track record of successful involvement in the oil and natural gas industry. Members are responsible for founding and operating numerous successful exploration and production and oilfield services companies. The investor group is excited about the opportunity to partner with management at TEN to bring a communications solution to the oilpatch that has the potential to revolutionize the transfer of information in the industry.

The equity commitment will fund TEN’s growth plans to roll-out an extensive wireless network across some of the most active oil and natural gas basins in the country. Gregory M. Casey, CEO and Founder of TEN, remarked, “We are very pleased to receive this level of commitment from our new majority owners who have strong ties to the oil and natural gas industry. Our intention is to quickly build-out our network in key areas of the Permian Basin and Eagle Ford Shale so we can provide our customers with the communications solution they require.” TEN has developed a robust product offering to serve the oil and natural gas industry’s growing bandwidth needs. Casey further stated, “our unique service offering allows energy companies to receive carrier-class communication service in the remote areas where they operate for the first time.”

By blanketing the oil and natural gas fields of the world with bandwidth, Texas Energy Network, LLC is positioned to become the dominant provider of 4G LTE broadband products and services to the oil and natural gas industry. For more information please visit TEN’s website at http://www.texasenergynetwork.com

FOR IMMEDIATE RELEASE: Statement from PBPA President Ben Shepperd

May 9, 2012

FOR IMMEDIATE RELEASE: MIDLAND-ODESSA NOTE

MAY 9, 2012

RESPONSE TO U.S. INTERIOR DEPARTMENT VISIT

ENCOURAGING PARTICIPATION IN CONSERVATION PLAN

AS PREVENTIVE TO LISTING

DUNES SAGEBRUSH LIZARD AS ENDANGERED

MIDLAND — “I have no problem with the theory of conservation plans when sound science supports a need. In this case, reputable science clearly indicates a conservation plan is uncalled for. The research finds resoundingly that the Dunes Sagebrush Lizard is not threatened or endangered.

“The federal government came to the Permian Basin today to dangle a carrot — we will not list the lizard as endangered if you will cede private and state lands to federal control.

“I’d like to remind the U.S. Interior Department of our Texas history. After annexation, the Compromise of 1850 allowed Texas to keep as her own the land inside the state boundary. We knew then what we still know today — it’s non-negotiable that Texas — not the federal government — retains jurisdiction over her oil-rich lands.

““The production from the Permian Basin fuels America. I see no need to surrender part of Texas to an administration in Washington DC that has shown only contempt for the oil it contains.”

-30-

MEDIA NOTE: In 2010, the U.S. Fish and Wildlife Service proposed listing the Dunes Sagebrush Lizard as endangered in response to litigation filed by environmental groups. The lizard’s habitat is generally considered to be in the Permian Basin, the vastest reserve of oil in the lower 48 states. The PBPA, the nation’s largest regional oil and gas trade association representing industry members in West Texas and eastern New Mexico, has vigorously fought the listing based on the lack of credible science supporting the proposal. A decision to list gravely threatens our nation’s domestic energy industry at a time when gasoline prices are at an all-time high, record numbers of Americans remain unemployed and the Middle East continues to be in the throes of revolutionary instability. A final decision by the federal government is expected by mid-June.

Endangered-species truce faces big test from little sand dunes lizard

May 7, 2012

By ,

Published: May 6

Washington Post

It wasn’t too hard for the Fish and Wildlife Service to decide the fate of 92 freshwater snails, or 17 dragonflies, or indeed more than 500 species over the past year. But when it comes to thedunes sagebrush lizard, trouble looms.

The small spiny reptile seeks refuge from the hot sun and potential predators in the shinnery oak dunes of southeastern New Mexico and West Texas. Ranchers have been clearing the oak shrubs, and oil and gas companies are drilling in the dunes. If the lizard is designated as an endangered species, some of those activities could be in jeopardy.

The lizard’s future is among the first in a series of wrenching tests threatening what has been a year-long cease-fire in the fight over endangered-species listings.

Since two environmental groups reached landmark settlement agreements last year with the Fish and Wildlife Service, the government has resolved dozens of long-standing cases. State and industry officials who spent years largely resisting conservation efforts are now scrambling to protect imperiled species in the hopes of keeping them off the federal endangered-species list.

But now the Obama administration must decide whether to provide federal protection to a handful of animals that share their habitat with oil and gas rigs, cattle and wind turbines. And groups on both sides of the debate are skeptical of whether federal officials can make fair decisions — several of which will have ramifications for swing states in the West — in a presidential election year.

“Clearly the notion that there’s a truce is very fragile,” said Defenders of Wildlife President Jamie Rappaport Clark, who headed the Fish and Wildlife Service under President Bill Clinton.

According to last year’s settlements, WildEarth Guardians agreed to curtail its petitions and lawsuits aimed at the Fish and Wildlife Service and the Center for Biological Diversity agreed to space out its litigation, in exchange for a commitment that the agency will issue protection decisions for 841 plants and animals.

“This settlement gave us the breathing room to really focus on conservation, which is really what the [Endangered Species Act] is about,” said Fish and Wildlife Service Director Dan Ashe. “We’re really able to focus our conservation effort.”

In fiscal year 2011, the agency made more positive listing decisions, 539, than in any year in the law’s 39-year history. But those decisions — that a species deserved federal protection or warranted further review — covered those whose conservation did not have huge economic implications, such as mollusks in the Pacific Northwest and springsnails in the West’s Great Basin region.

“It’s the calm before the storm,” said Sen. James M. Inhofe (Okla.), the top Republican on the Senate Environment and Public Works Committee.

The dunes sagebrush lizard

The storm may start with the dunes sagebrush lizard, first listed as a candidate for federal protection in 1982. Since then its habitat has been reduced by 40 percent. Fish and Wildlife proposed listing the animal, also known as the sand dunes lizard, as endangered in December 2010.

The agency was set to issue a final decision a year later but delayed doing so by six months in the face of fierce congressional resistance. Now it must decide by mid-June what to do about the lizard. Some of its habitat overlaps with the oil-rich Permian Basin, which produces 17 percent of the nation’s annual onshore oil supply.

Permian Basin Petroleum Association President Ben Shepperd, whose group represents 900 oil and gas producers in New Mexico and Texas, estimates that the association has spent between $500,000 and $1 million on consultants who have conducted their own census of the lizard and challenged several aspects of agency’s listing proposal.

“The evidence does not point to a threat to this species,” Shepperd said, adding that his members fear this decision — along with ones on the lesser prairie chicken and spot-tailed earless lizard, also mandated under the settlement agreement — could restrict oil and gas drilling. “We think the impact is in the billions of dollars.”

Rep. K. Michael Conaway (R-Tex.), who has threatened to block Fish and Wildlife from listing the dunes sagebrush lizard, said the agency needs to prove it can do a better job of taking economic considerations into account in listing decisions.

“We have to factor that into what we can and cannot do,” he said.

The agency cannot take economics into consideration when making a listing decision, though it can factor in economic impact when drafting plans to conserve listing species.

“The listing decision is a scientific diagnosis,” Ashe said. “Once that’s been made, you can take into account other factors.”

Advocates for the lizard call Shepperd’s dire economic predictions exaggerated. Its historic habitat accounts for just 2 percent of the Permian basin, said Center for Biological Diversity Executive Director Kieran Suckling, and federal officials have already indicated they will not prohibit energy exploration on that entire range.

One of the main reasons why the lizard may not mean economic doom for New Mexico and Texas oil and gas firms lies in the “candidate conservation agreements” they have just forged, under which they voluntarily agree to protect its range. New Mexico now has a plan for 93 percent of the lizard’s habitat. Private companies contributed at least $2.5 million to invest in sand dune lizard conservation and pledged to consider voluntary steps that include removing well pads and roads on abandoned wells and designating buffers of more than 600 feet around sand dune complexes where the lizards live. Texas is still assembling a program.

In Texas, the comptroller will enter into an agreement with private landholders; in New Mexico, a nonprofit organization will oversee the pact.

Ashe said the plans are encouraging, adding that it is not clear yet whether it will be enough to avoid listing the lizard.

The lesser prairie chicken

Western oil and gas drillers are not the only ones scrambling to protect vulnerable species as a way of keeping them from being added to the endangered list. Fish and Wildlife must decide by Sept. 30 whether to propose listing the lesser prairie chicken, a grayish-brown grouse that lives in Colorado, Kansas, New Mexico, Oklahoma and Texas. In 2015, it must decide whether to list the greater sage grouse, whose historic habitat traverses 11 states.

Tyler Powell, director of Oklahoma’s Office of the Secretary of the Environment, estimated that he spends a fifth of his time working to keep the lesser prairie chicken off the endangered-species list. The state hired two firms to develop a management plan that aims to minimize conflicts between the bird — which rams into ranchers’ fences and is deterred from nesting by tall wind turbines — and the energy and farming sector in northwest Oklahoma.

“We think we’ve started to get some room where we’ve shown we’ve taken this seriously and we’re going to take every effort possible to conserve the species,” Powell said.

Inhofe, who initially held up Ashe’s nomination as director over the issue, pressed Ashe last week over whether he would provide Oklahoma with “flexibility” in terms of the listing. In an interview, Ashe said that could mean a six-month delay in finalizing a proposed listing decision, which otherwise would come at the end of 2013.

Chermac Energy President Jaime McAlpine, who has developed three wind farms in the bird’s historic habitat and is considering three more projects in its range, recently agreed to pay $2.5 million for lesser prairie chicken habitat conservation as part of a transmission line deal with the state wildlife department.

“Needless to say, I reluctantly agreed to pay,” McAlpine said. “Economic development is hard enough as it is.”

Mark Salvo, wildlife program director at WildEarth Guardians, questioned whether these efforts will be enough to help the lesser prairie chicken.

“There is no reason why states shouldn’t have been working to protect and recover the species years ago,” he said, noting it has been on the candidate list for a decade.

Even when the law has produced successes, it is not without controversy. A year ago, Congress voted to take gray wolves in the northern Rockies off the endangered-species list, ratifying a decision by Fish and Wildlife that had been blocked by a federal judge. Idaho recently ended a hunting and trapping season in which nearly 40 percent of the state’s gray wolf population was killed.

Clark, of Defenders of Wildlife, described the gray-wolves situation as “a powder keg ready to go off.”

“You can’t just go from fragile recovery to open season in a blink of an eye, and that’s what’s happening,” she said.

March 2012

U.S. Inches Toward Goal of Energy Independence

March 23, 2012

By and

MIDLAND, Tex. — The desolate stretch of West Texas desert known as the Permian Basin is still the lonely domain of scurrying roadrunners by day and howling coyotes by night. But the roar of scores of new oil rigs and the distinctive acrid fumes of drilling equipment are unmistakable signs that crude is gushing again.

And not just here. Across the country, the oil and gas industry is vastly increasing production, reversing two decades of decline. Using new technology and spurred by rising oil prices since the mid-2000s, the industry is extracting millions of barrels more a week, from the deepest waters of the Gulf of Mexico to the prairies of North Dakota.

At the same time, Americans are pumping significantly less gasoline. While that is partly a result of the recession and higher gasoline prices, people are also driving fewer miles and replacing older cars with more fuel-efficient vehicles at a greater clip, federal data show.

Taken together, the increasing production and declining consumption have unexpectedly brought the United States markedly closer to a goal that has tantalized presidents since Richard Nixon: independence from foreign energy sources, a milestone that could reconfigure American foreign policy, the economy and more. In 2011, the country imported just 45 percent of the liquid fuels it used, down from a record high of 60 percent in 2005.

“There is no question that many national security policy makers will believe they have much more flexibility and will think about the world differently if the United States is importing a lot less oil,” said Michael A. Levi, an energy and environmental senior fellow at the Council on Foreign Relations. “For decades, consumption rose, production fell and imports increased, and now every one of those trends is going the other way.”

How the country made this turnabout is a story of industry-friendly policies started by President Bush and largely continued by President Obama — many over the objections of environmental advocates — as well as technological advances that have allowed the extraction of oil and gas once considered too difficult and too expensive to reach. But mainly it is a story of the complex economics of energy, which sometimes seems to operate by its own rules of supply and demand.

With gasoline prices now approaching record highs and politicians mud-wrestling about the causes and solutions, the effects of the longer-term rise in production can be difficult to see.

Simple economics suggests that if the nation is producing more energy, prices should be falling. But crude oil — and gasoline and diesel made from it — are global commodities whose prices are affected by factors around the world. Supply disruptions in Africa, the political standoff with Iran and rising demand from a recovering world economy all are contributing to the current spike in global oil prices, offsetting the impact of the increased domestic supply.

But the domestic trends are unmistakable. Not only has the United States reduced oil imports from members of the Organization of the Petroleum Exporting Countries by more than 20 percent in the last three years, it has become a net exporter of refined petroleum products like gasoline for the first time since the Truman presidency. The natural gas industry, which less than a decade ago feared running out of domestic gas, is suddenly dealing with a glut so vast that import facilities are applying for licenses to export gas to Europe and Asia.

National oil production, which declined steadily to 4.95 million barrels a day in 2008 from 9.6 million in 1970, has risen over the last four years to nearly 5.7 million barrels a day. The Energy Department projects that daily output could reach nearly seven million barrels by 2020. Some experts think it could eventually hit 10 million barrels — which would put the United States in the same league as Saudi Arabia.

This surge is hardly without consequences. Some areas of intense drilling activity, including northeastern Utah and central Wyoming, have experienced air quality problems. The drilling technique called hydraulic fracturing, or fracking, which uses highly pressurized water, sand and chemical lubricants that help force more oil and gas from rock formations, has also been blamed for wastewater problems. Wildlife experts also warn that expanded drilling is threatening habitats of rare or endangered species.

Greater energy independence is “a prize that has long been eyed by oil insiders and policy strategists that can bring many economic and national security benefits,” said Jay Hakes, a senior official at the Energy Department during the Clinton administration. “But we will have to work through the environmental issues, which are a definite challenge.”

The increased production of fossil fuels is a far cry from the energy plans President Obama articulated as a candidate in 2008. Then, he promoted policies to help combat global warming, including vast investments in renewable energy and a cap-and-trade system for carbon emissions that would have discouraged the use of fossil fuels.

More recently, with gasoline prices rising and another election looming, Mr. Obama has struck a different chord. He has opened new federal lands and waters to drilling, trumpeted increases in oil and gas production and de-emphasized the challenges of climate change. On Thursday, he said he supported expedited construction of the southern portion of the proposed Keystone XL oil pipeline from Canada.

Mr. Obama’s current policy has alarmed many environmental advocates who say he has failed to adequately address the environmental threats of expanded drilling and the use of fossil fuels. He also has not silenced critics, including Republicans and oil executives, who accuse him of preventing drilling on millions of acres off the Atlantic and Pacific Coasts and on federal land, unduly delaying the decision on the full Keystone project and diverting scarce federal resources to pie-in-the-sky alternative energy programs.

Just as the production increase was largely driven by rising oil prices, the trend could reverse if the global economy were to slow. Even so, much of the industry is thrilled at the prospects.

“To not be concerned with where our oil is going to come from is probably the biggest home run for the country in a hundred years,” said Scott D. Sheffield, chief executive of Pioneer Natural Resources, which is operating in West Texas. “It sort of reminds me of the industrial revolution in coal, which allowed us to have some of the cheapest energy in the world and drove our economy in the late 1800s and 1900s.”

The Foundation Is Laid

For as long as roughnecks have worked the Permian Basin — made famous during World War II as the fuel pump that powered the Allies — they have mostly focused on relatively shallow zones of easily accessible, oil-soaked sandstone and silt. But after 80 years of pumping, those regions were running dry.

So in 2003, Jim Henry, a West Texas oilman, tried a bold experiment. Borrowing an idea from a fellow engineer, his team at Henry Petroleum drilled deep into a hard limestone formation using a refinement of fracking. By blasting millions of gallons of water into the limestone, they created tiny fissures that allowed oil to break free, a technique that had previously been successful in extracting gas from shale.

The test produced 150 barrels of oil a day, three times more than normal. “We knew we had the biggest discovery in over 50 years in the Permian Basin,” Mr. Henry recalled.

There was just one problem: At $30 a barrel, the price of oil was about half of what was needed to make drilling that deep really profitable.

So the renaissance of the Permian — and the domestic oil industry — would have to wait.

But the drillers in Texas had important allies in Washington. President Bush grew up in Midland and spent 11 years as a West Texas oilman, albeit without much success, before entering politics. Vice President Dick Cheney had been chief executive of the oil field contractor Halliburton. The Bush administration worked from the start on finding ways to unlock the nation’s energy reserves and reverse decades of declining output, with Mr. Cheney leading a White House energy task force that met in secret with top oil executives.

“Ramping up production was a high priority,” said Gale Norton, a member of the task force and the secretary of the Interior at the time. “We hated being at the mercy of other countries, and we were determined to change that.”

The task force’s work helped produce the Energy Policy Act of 2005, which set rules that contributed to the current surge. It prohibited the Environmental Protection Agency from regulating fracking under the Safe Drinking Water Act, eliminating a potential impediment to wide use of the technique. The legislation also offered the industry billions of dollars in new tax breaks to help independent producers recoup some drilling costs even when a well came up dry.

Separately, the Interior Department was granted the power to issue drilling permits on millions of acres of federal lands without extensive environmental impact studies for individual projects, addressing industry complaints about the glacial pace of approvals. That new power has been used at least 8,400 times, mostly in Wyoming, Utah and New Mexico, representing a quarter of all permits issued on federal land in the last six federal fiscal years.

The Bush administration also opened large swaths of the Gulf of Mexico and the waters off Alaska to exploration, granting lease deals that required companies to pay only a tiny share of their profits to the government.

These measures primed the pump for the burst in drilling that began once oil prices started rising sharply in 2005 and 2006. With the world economy humming — and China, India and other developing nations posting astonishing growth — demand for oil began outpacing the easily accessible supplies.

By 2008, daily global oil consumption surged to 86 million barrels, up nearly 20 percent from the decade before. In July of that year, the price of oil reached its highest level since World War II, topping $145 a barrel (equivalent to more than $151 a barrel in today’s dollars).

Oil reserves once too difficult and expensive to extract — including Mr. Henry’s limestone fields — had become more attractive.

If money was the motivation, fracking became the favored means of extraction.

While fracking itself had been around for years, natural gas drillers in the 1980s and 1990s began combining high-pressure fracking with drilling wells horizontally, not just vertically. They found it unlocked gas from layers of shale previously seen as near worthless.

By 2001, fracking took off around Fort Worth and Dallas, eventually reaching under schools, airports and inner-city neighborhoods. Companies began buying drilling rights across vast shale fields in a variety of states. By 2008, the country was awash in natural gas.

Fracking for oil, which is made of larger molecules than natural gas, took longer to develop. But eventually, it opened new oil fields in North Dakota, South Texas, Kansas, Wyoming, Colorado and, most recently, Ohio.

Meanwhile, technological advances were making deeper oil drilling possible in the Gulf of Mexico. New imaging and seismic technology allowed engineers to predict the location and size of reservoirs once obscured by thick layers of salt. And drill bits made of superstrong alloys were developed to withstand the hot temperatures and high pressures deep under the seabed.

As the industry’s confidence — and profits — grew, so did criticism. Amid concerns about global warming and gasoline prices that averaged a record $4.11 a gallon in July 2008 ($4.30 in today’s dollars), President Obama campaigned on a pledge to shift toward renewable energy and away from fossil fuels.

His administration initially canceled some oil and gas leases on federal land awarded during the Bush administration and required more environmental review. But in a world where crucial oil suppliers like Venezuela and Libya were unstable and high energy prices could be a drag on a weak economy, he soon acted to promote more drilling. Despite a drilling hiatus after the 2010 explosion of the Deepwater Horizon in the Gulf of Mexico, which killed 11 rig workers and spilled millions of barrels of crude oil into the ocean, he has proposed expansion of oil production both on land and offshore. He is now moving toward approving drilling off the coast of Alaska.

“Our dependence on foreign oil is down because of policies put in place by our administration, but also our predecessor’s administration,” Mr. Obama said during a campaign appearance in March, a few weeks after opening 38 million more acres in the gulf for oil and gas exploration. “And whoever succeeds me is going to have to keep it up.”

An American Oil Boom

The last time the Permian Basin oil fields enjoyed a boom — nearly three decades ago — Rolls-Royce opened a showroom in the desert, Champagne was poured from cowboy boots, and the local airport could not accommodate all the Learjets taking off for Las Vegas on weekends.

But when crude prices fell in the mid-1980s, oil companies pulled out and the Rolls dealership was replaced by a tortilla factory. The only thriving business was done by bankruptcy lawyers and auctioneers helping to unload used Ferraris, empty homes and useless rigs.

“One day we were rolling in oil,” recalled Jim Foreman, the general manager of the Midland BMW dealership, “and the next day geologists were flipping burgers at McDonald’s.”

The burger-flipping days are definitely over. Today, more than 475 rigs — roughly a quarter of all rigs operating in the United States — are smashing through tight rocks across the Permian in West Texas and southeastern New Mexico. Those areas are already producing nearly a million barrels a day, or 17 percent more than two years ago. By decade’s end, that daily total could easily double, oil executives say, roughly equaling the total output of Nigeria.

“We’re having a revolution,” said G. Steven Farris, chief executive of Apache Corporation, one of the basin’s most active producers. “And we’re just scratching the surface.”

It is a revolution that is returning investments to the United States. Over several decades, Pioneer Natural Resources had taken roughly $1 billion earned in Texas oil fields and drilled in Africa, South America and elsewhere. But in the last five years, the company sold $2 billion of overseas assets and reinvested in Texas shale fields.

“Political risk was increasing internationally,” said Mr. Sheffield, Pioneer’s chief executive, and domestically, he was encouraged to see “the shale technology progressing.”

Pioneer’s rising fortunes can be seen on a 10,000-acre field known as the Giddings Estate, a forsaken stretch inhabited by straggly coyotes, rabbits, rattlesnakes and cows that forage for grass between the sagebrush. When Pioneer bought it in 2005, the field’s hundred mostly broken-down wells were producing a total of 50 barrels a day. “It was a diamond in the rough,” said Robert Hillger, who manages it for Pioneer.

Mr. Hillger and his colleagues have brought an array of new tools to bear at Giddings. Computer programs simulate well designs, minimizing trial and error. Advanced fiber optics allow senior engineers and geologists at headquarters more than 300 miles away to monitor progress and remotely direct the drill bit. Subterranean microphones help identify fissures in the rock to plan subsequent drilling.

Today, the Giddings field is pumping 7,000 barrels a day, and Pioneer expects to hit 25,000 barrels a day by 2017.

The newfound wealth is spreading beyond the fields. In nearby towns, petroleum companies are buying so many pickup trucks that dealers are leasing parking lots the size of city blocks to stock their inventory. Housing is in such short supply that drillers are importing contractors from Houston and hotels are leased out before they are even built.

Two new office buildings are going up in Midland, a city of just over 110,000 people, the first in 30 years, while the total value of downtown real estate has jumped 50 percent since 2008. With virtually no unemployment, restaurants cannot find enough servers. Local truck drivers are making six-figure salaries.

“Anybody who comes in with a driver’s license and a Social Security card, I’ll give him a chance,” said Rusty Allred, owner of Rusty’s Oilfield Service Company.

If there is a loser in this boom, it is the environment. Water experts say aquifers in the desert area could run dry if fracking continues expanding, and oil executives concede they need to reduce water consumption. Yet environmental concerns, from polluted air to greenhouse gas emissions, have gained little traction in the Permian Basin or other outposts of the energy expansion.

On the front lines in opposition is Jay Lininger, a 36-year-old ecologist who drives through the Permian in an old Toyota Tacoma with a hard hat tilted on his head and a federal land map at the ready.

A former national park firefighter, he says he is now battling a wildfire of a different sort — the oil industry.

Nationally, environmentalists have challenged drilling with mixed results. Efforts to stop or slow fracking have succeeded in New York State and some localities in other states, but it is spreading across the country.

In the Permian, Mr. Lininger said, few people openly object to the foul-smelling air of the oil fields. Ranchers are more than happy to sell what water they have to the oil companies for fracking.

Mr. Lininger and his group are trying to slow the expansion of drilling by appealing to the United States Fish and Wildlife Service to protect several animal species, including the five-inch dunes sagebrush lizard.

“It’s a pathetic little lizard in an ugly desert, but life needs to be protected,” he said. “Every day we burn fossil fuel makes it harder for our planet to recover from our energy addiction.”

Mr. Lininger said the oil and ranching industries had already destroyed or fragmented 40 percent of the lizard’s habitat, and 60 percent of what is left is under lease for oil and gas development.

The wildlife agency proposed listing the lizard as endangered in 2010 and was expected to decide last December, but Congressional representatives from the oil patch won a delay. Oil companies are working on a voluntary program to locate new drilling so it will not disturb the lizard habitat.

But for Mr. Lininger’s group, the Center for Biological Diversity, that is far from sufficient.

Brendan Cummings, senior counsel of the center, said protecting the lizard was part of a broader effort to keep drilling from harming animals, including polar bears, walruses and bowhead whales in the Alaskan Arctic and dwarf sea horses and sea turtles in the Gulf of Mexico.

“When you are dealing with fossil fuels, things will always go wrong,” Mr. Cummings said. “There will always be spills, there will always be pollution. Those impacts compound the fragmentation that occurs and render these habitats into sacrifice areas.”

A Turn Toward Efficiency

If the Permian Basin exemplifies the rise in production, car-obsessed San Diego is a prime example of the other big factor in the decline in the nation’s reliance on foreign oil.

Just since 2007, consumption of all liquid fuels in the United States, including diesel, jet fuel and heating oil, has dropped by about 9 percent, according to the Energy Department. Gasoline use fell 6 to 12 percent, estimated Tom Kloza, chief oil analyst at the Oil Price Information Service.

Although Southern California’s love affair with muscle cars and the open road persists, driving habits have changed in subtle but important ways.

Take Tory Girten, who works as an emergency medical technician and part-time lifeguard in the San Diego area. He switched from driving a Ford minivan to a decidedly smaller and more fuel-efficient Dodge Caliber. Fed up with high gasoline prices, he also moved twice recently to be closer to the city center, cutting his daily commute considerably — a hint of the shift taking place in certain metropolitan areas as city centers become more popular while growth in far-out suburbs slows.

“I would rather pay a little more monthly for rent than for just filling up my tank with gas,” he said, after pulling into a local gas station to fill up.

Mr. Girten is one of millions of Americans who have downsized. S.U.V.’s accounted for 18 percent of new-car sales in 2002, but only 7 percent in 2010.

The surge in gasoline prices nationwide — they are already at a record level for this time of year — has contributed to the shift toward more fuel-efficient cars. But a bigger factor is rising federal fuel economy standards. After a long freeze, the miles-per-gallon mandate has been increased several times in recent years, with the Obama administration now pushing automakers to hit 54.5 m.p.g. by 2025.

As Americans replace their older cars — they have bought an average of 1.25 million new cars and light trucks a month this year — new technologies mean they usually end up with a more efficient vehicle, even if they buy a model of similar size and power.

California has long pushed further and faster toward efficiency than the rest of the country. It has combated often severe air pollution by mandating cleaner-burning cars, including all-electric vehicles, and prodded Washington to increase the fuel efficiency standards.

Thousands of school buses, trash trucks, tractor-trailers and street sweepers and public transit buses in the state run on natural gas, which is cheaper than gasoline and burns more cleanly. That switch cuts the consumption of foreign oil, as does the corn-based ethanol that is now mixed into gasoline as a result of federal mandates.

Longer-term social and economic factors are also reducing miles driven — like the rise in Internet shopping and telecommuting and the tendency of baby boomers to drive less as they age. The recession has also contributed, as job losses have meant fewer daily commutes and falling home prices have allowed some people to afford to move closer to work.

The trend of lower consumption, when combined with higher energy production, has profound implications, said Bill White, former deputy energy secretary in the Clinton administration and former mayor of Houston.

“Energy independence has always been a race between depletion and technologies to produce more and use energy more efficiently,” he said. “Depletion was winning for decades, and now technology is starting to overtake its lead.”

Clifford Krauss reported from Midland, Tex., and Houston and Eric Lipton reported from Washington and San Diego. John M. Broder contributed reporting from Washington.

Rare Texas lizard population has oil industry sweating bullets

March 5, 2012

By Natalee Blanchat

The Battalion Online

Published: Monday, February 27, 2012

Updated: Tuesday, February 28, 2012 01:02

Adding the dunes sagebrush lizard to the endangered species list would render parts of the Permian Basin region off-limits to exploration and agricultural activities.

Ecological conservation researchers at Texas A&M paved the way for legislation that could help save a Texas underdog from extinction.

Texas Fisheries and Wildlife Services recommended adding the dunes sagebrush lizard — a small lizard native to the Mescalero andMonahan sandhills in the West Texas Permian Basin region — to the endangered species list in December 2008. Since then, A&M researchers partnered with state and academic organizations around Texas to dream up solutions to restore the lizard’s habitat.

The lizard has been the focus of study of Lee Fitzgerald, professor of wildlife fisheries and sciences, for more than 18 years.

“If nothing is done to conserve the habitat then the lizards will continue to suffer,” Fitzgerald said.

He said the demand for industry growth is hurting many domestic creatures, including salamanders, snails and birds that reside in the arid area.

“When you take away the shinnery oak or you cut it up into pieces that are really small, that geological distribution degrades and the lizards that have to have that for their habitat disappear,” Fitzgerald said. “I don’t think that anybody who is sitting around the table talking about conservation, whether they’re from industry government or universities, really disputes that.”

Tom Buckley, public information officer for the Texas Fisheries and Wildlife Southwest Region, said two proposed state policies would ensure that the animal receives protection in Texas.

“Ranchers and gas companies have been coming to us and saying that we would like to get involved to develop these plans so they can do their grazing and they can do their oil drilling, and we can still have protection we think is necessary to keep the lizard from going extinct,” Buckley said.

Buckley said the goal is to prevent the lizard from being another animal added to the endangered species list. If the lizard does become the 64th animal in Texas on the list, the Texas Conservation Agreement will morph into a habitat conservation plan.

Currently, there are 460 working oil rigs in the Permian Basin area — half the rigs in Texas, and one-third of the rigs in America — that make up more than 20 percent of the nation’s oil supply.

Ben Sheppard, president of the Permian Basin Petroleum Association and Class of 1990, said adding the lizard to the endangered species list will render parts of the region off limits to exploration and agricultural activities, causing significant delays in production.

“These moratoriums and delays will have a significant negative impact on these industries and our Texas economy,” Sheppard said. “This … represents hundreds of jobs, millions of dollars in investment and tens of millions of dollars in property and school tax revenue that keeps these counties alive.”

Since 2011, Sheppard said the company has spent $100,000 on scientific and legal research on the sand dune lizard, including environmental toxicology, lizard genetics and impacts from oil and gas operations on soil.

“Our research indicates that the habitat has not declined significantly in the last 50 years,” Sheppard said.

Taylor McKinnon, public lands campaign director for the Center of Biological Diversity, said the center filed a petition with the U.S. Fish and Wildlife services in 2002 to add the dunes sagebrush lizard to the Endangered Species list.

He said that reasons for the petition are long-winded, ranging from its distribution size to its population.

“Those last slivers of habitat are being threatened by various land uses like oil and gas drilling, herbicide spraying, cow-grazing and other things,” McKinnon said. “These animals have a right to exist and we don’t think an entire species should be driven [to] extinction — driven off the face of the planet.”

February 2012

The University of Tulsa – Master of Energy Business Program

February 29, 2012

Please take a moment to learn about the University of Tulsa’s Master of Energy Business program. The program is an online course, competitively priced, and directly geared directly towards professionals working in the energy sector in the Permian Basin. To learn more, visit www.utulsa.edu/meb.

Texas oil production is making a comeback

February 27, 2012

By JIM LANDERS

JIM LANDERS The Dallas Morning News

MIDLAND — “Texas tea” is back.

Some of the leading oilmen in the Permian Basin say they expect to double oil production in Texas within five to seven years.

Dry holes are a thing of the past. Practically every well drilled in the basin produces oil.

“I’ve been totally surprised by the amount of oil we’re finding out in the shale zones. … The resurgence has been amazing,” said Scott Sheffield, chairman, president and CEO of Irving-based Pioneer Natural Resources Co.

This West Texas region has long been the most oil-prolific part of the state. In the last eight years, however, oilmen like Sheffield and Midland’s Jim Henry of Henry Resources LLC have found that dense, oily rock would yield to hydraulic fracturing — pumping large volumes of highly pressurized water down the wells.

First they arrested the decline in Permian Basin production. Then they started increasing total oil production in Texas, which climbed back above 1 million barrels a day last year for the first time since 2001.

Now they have loftier goals.

“Right in the basin, we could get up to 2 million barrels a day,” Henry said.

Tim Leach, chairman, president and CEO of Midland-based Concho Resources Inc., described the Permian Basin as one of the world’s hottest oil plays.

“We have 30 billion barrels of new oil discoveries,” he said. “It can be hard to get your mind around that.”

The latest Texas oil bonanza brings concerns about the industry’s huge appetite for water in a time of severe drought. Drillers, meanwhile, worry that the federal government will trip them up by raising their taxes and limiting land use by declaring local critters such as the dunes sagebrush lizard an endangered species.

For now, having unlocked the secret of “tight oil,” Sheffield, Henry, Leach and others are drilling as much as they can. With wells costing $1.7 million on average, companies are spending more than $1 billion a month on drilling, said Ben Shepperd, president of the Permian Basin Petroleum Association.

The rush to drill also has a lot to do with the price of oil, which is near $100 a barrel. Last year, Leach said, Concho realized profits of $50 a barrel. As long as prices stay above $70 a barrel, hydraulic fracturing and horizontal drilling will remain profitable pathways into the Permian’s dense rocks.

Signs of new boom

Downtown Midland hasn’t changed much since the mid-1980s, when several skyscrapers were built to celebrate earlier oil boom days. The Petroleum Museum on the south end of town has its own frozen-in-amber ambiance. There are displays recalling how drillers dropped silver torpedoes of nitroglycerin down wells to break up the hard rock of the basin. An old film debunks urban rail projects as overly expensive alternatives to commuting by car.

You can see the latest boom from the air. The ancient marine reefs and cliffs that form the basin are thousands of feet beneath the flat West Texas plains. But thousands of new drilling pads sit amid the mesquite brush and the red-clay cotton fields. North of downtown, new housing developments and shopping malls line the Interstate 20 loop road. Long Union Pacific freight trains loaded with oil pipe roll slowly into town from the east.

In this frenzy, the Midland-Odessa economy grew 13.5 percent last year, said Amarillo economist Karr Ingham. Employers are recruiting nationwide to fill jobs in the region. Oil service companies try to lure roughnecks away from rivals with ads on country radio stations.

Retail sales are booming. Houses, apartments, hotel rooms and rental cars are scarce.

Oil taxes and royalties, which the industry claims account for 25 percent of the state government’s revenue, are pouring into Austin.

Similar oil booms are under way in the Eagle Ford shale area near San Antonio and in the Bakken shale zone in North Dakota and Montana. Oil production is also climbing rapidly from the tarry sands of western Alberta, Canada, which is now the largest source of U.S. oil imports.

“I could paint a scenario for you where we are producing 3 million more barrels per day by 2016, which would almost get us to the point where we could eliminate 60 to 70 percent of our OPEC imports,” said Texas Railroad Commissioner Barry Smitherman. “With that greater control over our own energy security , we could care less about what happens in the Strait of Hormuz” — the narrow mouth of the Persian Gulf that serves as a seaway for 22 percent of the world’s oil supply.

For now, global tensions over Iran’s nuclear program reverberate quickly through the Permian Basin. Prices for West Texas Intermediate, the signature crude oil of the basin, are climbing as countries vow to boycott Iranian oil, and Iran threatens to close the Strait of Hormuz.

America still imports 45 percent of the 19 million barrels a day we consume, but that’s down sharply. Imports accounted for nearly two-thirds of all liquid fuels consumed in the United States in 2005. Last year alone, imports fell 4 percent, according to the U.S. Energy Information Administration.

“The United States is very fortunate to have two new sources of oil in the Permian Basin and the Bakken,” said Concho’s Leach. “For 30 years, our entire foreign policy has been based on trying to keep the flow of oil going around the world. Now we have the opportunity to be energy-independent if we choose to be that way.”

Forces of nature Water is the key to keep all of this moving. Hydraulic fracturing requires millions of gallons of water, and West Texas is a dry country.

Ken Kramer, director of the Lone Star Chapter of the Sierra Club, points out that “none of us truly have a complete handle on the issue of water use in the hydraulic fracturing process.”

Shepperd, the president of the Permian Basin Petroleum Association, agrees.

“We use a lot. We need to do a better job,” Shepperd said.

The petroleum association is surveying its membership to measure water usage. The University of Texas’ Bureau of Economic Geology is working on the issue. A preliminary look at hydraulic fracturing by the bureau found that the process was using 1 percent of the state’s water consumption. In a drilling boom, however, backward-looking measurements don’t reflect rising demand.

The oilmen worry about the dunes sagebrush lizard because its being listed as an endangered species would stall drilling by as much as two years, Shepperd said. New permits would be needed. Habitat conservation plans would have to be implemented.

It’s not the first fight over whether local animals are endangered. Leach and other oilmen see in this a campaign by some environmentalists to shut down the petroleum industry because of climate change, air pollution, spills and other ills laid at the industry’s feet.

The Sierra Club’s Kramer said the industry is making a “tempest in a teapot” out of the issue and should concentrate on conservation plans.

“There are ways of working this out,” he said.

January 2012

Don’t Frack Me Up: Correcting Misinformation On Hydraulic Fracturing

January 25, 2012

Marin Katusa, Contributor

To many walking the planet, fracking has a seriously bad reputation. Thanks to hyperbole and misinformation, fracking opponents have convinced a lot of people that the operators who drill and then hydraulically fracture underground rock layers thumb their noses at and even hate the environment.

Anti-fracking claims may be twists on reality – for example, that a legislative loophole makes fracking exempt from the America’s Safe Drinking Water Act, when really this federal legislation never regulated fracking because it is a state concern. Then there’s the completely absurd, such as the idea that frac operators are allowed to and regularly do inject frac fluids directly into underground water supplies.

We decided to set the record straight by using facts, not playing on emotion like many of the frac-tivists do. It’s important because unconventional oil and gas constitute an increasingly pivotal part of the world’s energy scene. In the United States, where shale gas abounds but imported energy rules the day, this is especially true.

America’s shale deposits hold a heck of a lot of gas. According to the United States Geological Survey, the Marcellus Shale alone is home to 84 trillion cubic feet (TCF) of technically recoverable natural gas. Estimates of the amount of recoverable gas contained in all of America’s shale basins range as high as 3,000 TCF.

To access this gas, fluids made of water, sand, and chemicals to increase lubrication, inhibit corrosion of equipment, and possessing other qualities are pumped into the shale formation. When the pressure from the fluids exceeds the strength of the rocks, the rock fractures, and in a demonstration of might by the mighty small, the granules of sand prop the fractures open. Once the fracturing is completed, the internal pressure from the formation pushes the injected fluids to the surface again.

Frac wells are only open to the surrounding rock at the depth of the target formation. Starting at 250 feet (76 meters) or thereabouts above the producing interval – it varies a bit from state to state – the production casing must be cemented. This graphic, borrowed from the Texas Oil and Gas Association, shows what the procedure entails.

Casings are the liners that isolate the inside of the well from the surrounding rock, and from any water that might be contained in that rock. The surface casing is the first line of defense, while the production casing provides a second layer of protection for the groundwater.

Casings do require proper cementation to be effective: the cement seals the annular spaces between successive casing layers to provide a barrier to vertical and horizontal fluid movement. A poor cementation job was a significant factor in the Deepwater Horizon well blowout, and that transpired because deepwater regulations were insufficient. On land, however, cementation is highly regulated, and inspections of wells in progress, announced and unannounced, are common.

Unlike deepwater drilling, fracking is not new. Nor is fracking specific to natural gas or to the United States. Drillers frac many thousands of oil and gas wells around the world every year. In America, oil and gas producers have been using hydraulic fracturing since at least the 1940s to enhance recoveries from older oil wells and to access the oil in tight reservoirs, such as the Bakken.

Click here to read rest of story.

Fourth Annual Energy Symposium

January 16, 2012

The Texas Wesleyan Law Review will host the Fourth Annual Energy Symposium on March 29 and 30, 2012. The event is sponsored by XTO Energy and will feature 20 speakers representing 9 different states. In addition, we will be distributing a first-of-its-kind 23-State Annual Survey on Oil & Gas free of charge with registration.

The symposium will offer 12 CLE credits for attorneys, and cost $75 for single day registration or $140 for both days. Please see the attached ad.

December 2011

IPAA Announcement

December 19, 2011

TO: All Permian Basin IPAA Member Companies

On December 6, the Independent Petroleum Association of America (IPAA) emailed important information to all IPAA members concerning the new EPA reporting requirements for Greenhouse Gases, requiring action by virtually all oil and natural gas producers by January 3, 2012 in order to avoid more stringent reporting requirements in future years.

Last Friday, the Permian Basin Petroleum Association, as part of its strong working relationship with IPAA, sent IPAA’s information to all its members, conveying the same urgency.

There is a lot of useful information attached to IPAA’s Dec.6 email on this subject, which can also be accessed through the PBPA’s recent email. Registering with EPA’s e-GGRT site is relatively straightforward. To access some of the other links requires right-clicking on individual items, then clicking on “open hyperlink.”

IPAA also has a link on its web site to help producers navigate through the recent changes in reporting and compliance with SPCC plans which were finalized this year.

It is practical information like this, together with the intensive lobbying that IPAA does in Washington to minimize the extent and ultimate financial impact of these regulations, that makes your investment in IPAA absolutely invaluable. The same can be said of PBPA and its efforts in both Austin and, increasingly, in Washington.

I am frequently baffled when I visit with independent producers who say they don’t see the benefits of paying as little as $450 a year for IPAA membership. What is described above only scratches the surface of what IPAA and PBPA provide in the way of value to their members.

So, next time your IPAA and/or PBPA membership renewal comes due, smile when you write the check, realizing that this is the biggest bargain you will get this year. You might even consider moving your membership to a higher level to help fight these never-ending regulatory and tax issues.

After eight years as Regional Director for IPAA- Texas Permian, I am term limited and have handed the reins over to Jeff Sparks with Discovery Operating Company. Discovery and the Sparks family have a long association with IPAA, and you’ll be in good hands.

Merry Christmas!

November 2011

Lizard letter hits legislative dead end

November 10, 2011

BY GABRIELLA LOPEZ

Things have reached a legislative dead-end for opponents of the dunes sagebrush lizard’s endangered species listing.

“I’m not encouraged by where we are right now,” U.S. Rep. Mike Conaway (R-Midland) said.

He said he and area representatives submitted a letter Nov. 1 urging the Appropriations Committee to adopt an amendment bringing a temporary halt to the listing process. But that may not come to pass.

“It’s an uphill battle,” Conaway said.

There is support for an amendment, but it is unlikely that the committee will have an opportunity to vote on it, Conaway said. The U.S. Fish and Wildlife’s final decision on the lizard is scheduled to be announced Dec. 14.

The letter, written by Conaway, and U.S. Representatives Steve Pearce (R-Hobbs), Francisco Canseco (R-San Antonio) and Randy Neugebauer (R-Lubbock), advised the Committee that a yearlong pause in the U.S. Fish and Wildlife’s regulatory action would allow additional scientific research to be conducted on the lizard.

Further research would prove that the listing is not warranted, Ben Shepperd of the Permian Basin Petroleum Association said in an email.

“The PBPA maintains the position that the listing of the (dunes sagebrush lizard) is not warranted due to a complete lack of any evidence of endangerment,” Shepperd said in an email.

The lizard has been a candidate for endangered species status since 2001, according to Odessa American records.

In the past, U.S. Fish and Wildlife said federal protection for the lizard was warranted, but its situation was precluded by species with a more urgent endangerment concern.

Then environmental group WildEarth Guardians stated that no animals had received protection under the Endangered Species Act in 2007 and informed U.S. Fish and Wildlife that they would sue the government for failing to enforce the Act, with the sagebrush lizard’s proposed listing coming subsequently.

While the extra year may not come to pass, Conaway encouraged West Texans to continue their own efforts at getting the issue out there.

For now, those in Washington D.C. are simply waiting for U. S. Fish and Wildlife’s verdict.

“We’ve run out of options at a legislative standpoint,” Conaway said.

@OAhealth

City of Midland Prepared to Sue Over Lizard Listing

November 10, 2011

Nick Lawton

NewsWest 9

MIDLAND – A new pipeline project to the City of Midland’s well field at TBar Ranch in Winkler County could be on the chopping block, if the dunes sagebrush lizard is listed and the field is on its habitat.

If the lizard makes the list in December, and if the project is compromised, the Tall City could take legal action, suing the U.S. Fish and Wildlife Service.

“What we’ve heard, if that does come into play, that we won’t be able to build a water line to our TBar Ranch Field. That’s your worst case scenario,” City of Midland Mayor, Wes Perry, said. “So, we’re preparing, if that does happen, then we’re going to have to get more proactive about how do we protect our water supply.”

The pipeline project is set to cost $140 million and will bring in 20 million gallons of water a day.

Perry said while the city doesn’t intentionally want to destroy the lizard, the future of their water supply has to be protected and they will ask other cities to join them in the suit if it happens.

“We’ll talk to CRMWD. We’d love to have them as partners,” Perry said. “Abilene and San Angelo, we’re very close with them in developing a long-term, 100-year water plan.”

The cities of Odessa and Big Spring told NewsWest 9 they defer to the Colorado River Municipal Water District when it comes to a potential suit.

CRMWD Director John Grant told NewsWest 9 over the phone that the district has been hindered by the U.S. Fish and Wildlife Service in the past.

When the O.H. Ivie reservoir was constructed back in the 1980s, the district had to follow rules to protect the concho water snake, which ended up costing the district $3 million and delaying the project two years.

Grant told NewsWest 9 at the moment the district is watching and waiting to see if the lizard makes a negative impact.

Despite the lizard listing still not official yet, that TBar Ranch pipeline project is officially in the works.

Perry told NewsWest 9 the proposal was sent out on Wednesday to have companies approach the city with their offers to build it and the deadline for that is around Thanksgiving.

Big 2 Energy Exclusive: “The Fracing Facts”, Part 2

November 4, 2011

Reported by: Mycah Glover

Thursday, November 03 2011

Midland – Hydraulic fracturing is a process that’s been under a lot of scrutiny here recently. But it’s been around for decades. The fact is that without it, oil wouldn’t be produced. All of this had me wanting to learn more. I followed Henry Resources and Pro-Petro to learn how the process works and to clear up any misunderstandings.

I started this series last week with the first step in the fracing process. It all begins in the office, where a team of geologists and engineers closely examine a log that’s obtained after the well has been drilled. They work together to identify intervals within the wellbore that they believe to be hydrocarbon productive. This is where they’ll set the perforations so the well can be fraced. Once these locations have been identified and their design is finalized, the frac job can begin.

For Henry Resources, a typical frac job lasts two days and begins with the frac crew setting up the equipment on location. Once everything is rigged up, tested, and ready to go, it’s time to turn the engineers’ red ink marks on the log into actual perforations.

They begin with the first stage which is the deepest in the well, and in this case, around 11,000 feet underground.

“There’s 40 explosive devices individually placed inside that steel container and then that fire shoots through the steel container into the casing and out into the formation,” says George Miles, Henry Resources frac specialist.

Next, it’s time to stimulate or “frac” stage one. But before the hydraulic fracturing process can begin, the crew concocts the perfect cocktail using a small amount of chemicals, a defined volume of water, and a very specific type of sand, which varies according to the depth of the stage.

“We pump the water from over there (frac pit near location) into the tanks on location,” says Miles.

Water is then pulled out of the tanks into a hydration unit where it’s mixed with gel. After that, the gelled water is mixed with some chemicals and sand in the blender.

“That truck (the blender) pushes the mixture into the high pressure units (also known as the pump trucks).The high pressure units then pump it down the well,” says Miles. And by high pressure, he means 30 barrels a minute. That’s 1,260 gallons every 60 seconds.

The speed, resultant pressure and gel-like formula help to fracture the formation, propagate the fracture away from the wellbore and connect any natural fractures that may exist.

The next task is keeping the fractures open.

“What you got going on here is the sand-laden phase where we start introducing the proppant into the fluid that’s going down the hole and what that does is help propagate the formation. Helps it stay propped open after we stimulate the well,” says Adam Munoz, Pro-Petro District Technical Mgr.

In the end, “the gel will break from the sand (and) return to a water phase. The sand will stay in place and allow that porosity to increase from the wellbore all the way out to the tip of the frac,” says Miles.

This allows the oil, gas, and water to flow freely to the wellbore where it can be pumped to the surface.

Keep in mind, all of that is only stage one.

At this point, a bridge plug is set between the zone that is now complete and the entire process repeats itself until each stage is fraced. For Henry Resources, it’s usually anywhere from nine to eleven stages.

When all the zones are complete, the frac crew rigs down and leaves and a pulling unit is brought in. It’s main purpose is to drill out all of the bridge plugs that were used during the frac and install the tubing, rods, and pump needed for production.

After this, a flow line is used to connect the well-head to the appropriate tank battery so the oil, gas, and water can be separated, stored, and eventually sold or disposed.

And with that, production can finally begin.

We’ll continue this special series next Friday by addressing some of the hotter topics associated with hydraulic fracturing. For example, a lot of concerns have been raised over the chemicals that are used, and some even say they fear their water supply is being contaminated. We’ll talk through all of these issues and more and kill a lot of rumors next Thursday at 10pm on Big 2 News.

Big 2 Energy Exclusive: “The Fracing Facts”, Part 1

November 4, 2011

Reported by: Mycah Glover

Friday, October 28 2011

This is the first of four reports that take a look at the hydraulic fracturing process, how it works, and how local companies are doing it in a safe and environmentally friendly way. Join Mycah Glover Thursday nights at 10pm for each report. To view part 1, click on the video.

October 2011

Big 2 EXCLUSIVE: Lizard Meeting w/ FWS

October 25, 2011

Reported by: Mycah Glover

Monday, October 24 2011

Midland – It was a big day for West Texas as the oil, gas, and agriculture industries continue to fight the listing of the Dunes Sagebrush lizard. Senator John Cornyn set up a meeting with U.S Fish and Wildlife. Director Dan Ashe traveled to Midland to hear from West Texans concerned about the possible listing. Although the meeting was closed to the public and the media, Big 2 caught up with several people, including Fish and Wildlife, to find out what was said and to get the latest information as we near the listing deadline of December 14.

“We had about 15 different stakeholders ranging from oil and gas operators to ag interest, farm bureau, local and county officials, all of which expressed deep concern about the proposed listing of the sand dune lizard,” says Ben Sheppard, PBPA president.

While economics are not taken into consideration when it comes to putting a species on the Endangered Species List, U.S. Fish and Wildlife says it’s important they hear these concerns. “The number one job of the administration right now and the number one concern of the whole country, Congress, the President’s office, is jobs. And we work for the administration, so we certainly are not going to do anything to threaten jobs and that’s never been our goal,” says Charna Lefton, U.S. Fish & Wildlife spokesperson.

But the final decision will come down to science, and that was the main concern at today’s meeting. Sheppard says, “Their science is erroneous and conflicts itself in many cases.”

“I think there was a major concern that the quality of science, the actual hard core experimental design and quality of the science was insufficient to a decision that has that much economic impact on this region and New Mexico,” says Dr. Robert Baker, TTU biological scientist.

Although Fish and Wildlife received two new scientific studies today, according to Dr. Baker, it would take years to determine whether or not drilling would impact the lizard’s habitat. “It’s a five year study or four year. It needs some multi-year thing that involves variables in rain and variables in environmental factors as well. That experimental design has not been done and is hard to do.”

Sheppard says the two studies that were submitted today refute claims that were made in the federal register. He thinks when Fish and Wildlife review this new science, the only decision they’ll have to make is to keep the lizard off the list.

Although we weren’t able to attend today’s meeting, we are working to get an audio link so you will be able to hear exactly what was said. When we receive that, we’ll post it on http://www.permianbasin360.com.

Senator Cornyn released the following statement:

“I want to thank Director Dan Ashe for accepting my invitation to come to Texas so he can hear directly from our landowners, employers, and local governments about the potential impact of the proposed Sand Dune Lizard listing as an Endangered Species. It’s essential that the job creators who will be directly impacted have the opportunity to have their concerns heard before this potentially devastating listing goes forward. I’m hopeful Director Ashe will take these concerns into consideration and allow for additional time for review before a final decision is reached.”

ENDANGERED SPECIES: Cornyn urges more time before lizard listing

October 25, 2011

Phil Taylor, E&E reporter

Sen. John Cornyn (R-Texas) yesterday urged Interior Department officials to postpone their decision on whether to offer federal protections to a small Southwest lizard so the agency can consider potential impacts to landowners and oil and gas drillers.

Cornyn’s plea comes months before the Fish and Wildlife Service is expected to finalize a proposal to list the dunes sagebrush lizard as an endangered species. The move would require federal agencies to consult with FWS to ensure actions in west Texas and southeast New Mexico won’t lead to the species’ demise.

“It’s essential that the job creators who will be directly impacted have the opportunity to have their concerns heard before this potentially devastating listing goes forward,” Cornyn said through a spokesman.

Cornyn spoke by teleconference to a meeting yesterday in Midland, Texas, where FWS Director Dan Ashe and Southwest Region Director Benjamin Tuggle addressed about 40 industry and ranching representatives and local elected officials, according to those who attended.

Cornyn in June filed an amendment to stop FWS from offering Endangered Species Act protections for the 3-inch lizard, saying the move would cripple the oil and gas industry in West Texas (Greenwire, June 8). The chamber never voted on the measure.

“I’m hopeful Director Ashe will take these concerns into consideration and allow for additional time for review before a final decision is reached,” said Cornyn, who requested yesterday’s meeting.

Ben Shepperd, president of the Permian Basin Petroleum Association, said he fears some operators in the area will face delays of up to 18 months to drill on both public and private lands that could cost thousands of jobs. He estimated that 440 rigs — roughly one-fifth of all rigs on U.S. soil — were operating in the basin, which produces about 20 percent of domestic oil production.

He asked FWS to consider additional scientific studies, including from Texas Tech University and Texas A&M University, before finalizing its rule.

“They’re only required to use best available science, but we believe there is better science out there,” he said.

Conservationists balked at the suggestion and said the proposed rule was based on a peer-review scientific process that included public comment.

“The oil and gas industry and its representatives are putting an enormous amount of pressure on Fish and Wildlife Service here that threatens the integrity of the listing process,” said Taylor McKinnon, public lands campaign director for Center for Biological Diversity.

McKinnon said the meeting, which was closed to the media, appeared to be a “sneak attack” to influence the listing decision. He said his group was not aware of the meeting until asked about it yesterday afternoon.

A Cornyn aide said conservation interests were represented but did not provide any names.

The dunes sagebrush lizard was among more than 700 species for which FWS must address listing proposals under court-approved settlements with CBD and WildEarth Guardians.

Critics of the listing warn that the area in Texas that could become protected habitat for the lizard produces 300 million barrels of oil a year, nearly half of the state’s total production and 14 percent of total U.S. production.

FWS has said the blunt-nosed lizard, which has bright yellow eyes and brown, camouflaged skin, faces “immediate and significant threats due to oil and gas activities, and herbicide treatments” and should be listed as endangered.

Monahans Fights Sand Dune Lizard

October 20, 2011

Reported by: Mycah Glover

Wednesday, October 19 2011

Monahans – The West Texas economy is booming thanks to the oil and gas industry. In most booms, the main concern is that the price of crude will plummet. But those concerns have been pushed aside and fears over the possible listing of the sand dune lizard have taken center stage.

Today, the fight to keep the lizard off the endangered species list was taken to Monahans. The chamber of commerce hosted a summit with state, national and local leaders to discuss the issue.

Monahans has experienced more growth this year than they have in the past 25. It’s due to the increase in drilling thanks to continued advances in drilling technology. With more growth expected in Monahans, they’re fighting with everything they have to make sure a tiny lizard doesn’t stop their town from having a big future.

“We see several thousand jobs in the next few years in Monahans, Texas because this is kind of the center. The boom you’re talking about now, which is the fracking of the shale out here…Monahans is the center. So we’re ground zero out here,” says David Cutbirth, Mayor of Monahans.

That means that they have a lot to lose. Nathan Sawyer, president of the Monahans Chamber of Commerce says, “73 percent of the economy in Ward County is based to oil and gas and something like the dunes sagebrush lizard being listed could greatly effect the viability of this community.”

So today, the chamber hosted this summit to help Monahans residents understand exactly what is at stake.

“I’m worried for my job, my family, my neighbors. Our entire industry… everybody that lives out here will be effected by it. It’s worse than a drought,” says Richard Erwin, Monahans resident.

Unfortunately for people like Richard, the battle is far from over. Rep. Tryon Lewis says, “It will be a major battle. There are a lot of extremist environmental groups that want to use the Endangered Species Act to stop oil and gas drilling.”

Rep. Lewis says says it won’t be won without the help of West Texans. That’s why events like this are so important. Ben Sheppard, president of the Permian Basin Petroleum Association, agrees. “I think this is a fabulous example of what local communities can do and what they need to do when faced with such regulations from Washington, D.C..”

And Erwin is one of many West Texans ready for battle. “They need to go back home from wherever they came from ”

The Andrews Chamber of Commerce has also been proactive in fighting the listing of the lizard. They’ve started an online petition. If they get enough signatures, the issue will be up for review by policy experts in Washington. They need 5,000 signatures by October 28 to make that happen. If you would like to sign that petition, you can click on the following link.

https://wwws.whitehouse.gov/petitions/%21/petition/hault-job-killing-regulations-favor-real-jobs-plan/fPVfnLjm

PBPA Announces 2011 Top Hand Award – Tim Leach

October 20, 2011

PBPA has announced the 2011 Top Hand Award, Mr. Tim Leach of Concho Resources. Congratulations, Tim!

The annual Top Hand award ceremony will take place January 19, at the Petroleum Club of Midland at 7:00 p.m.

Tim Leach has served as the Chairman and CEO of Concho Resources since its formation in 1997. Tim grew up in an oil and gas family. His father was an engineer at Shell and by age eight, Tim had lived in six different cities throughout Louisiana, Texas, Colorado, Ohio and New York. Tim graduated from Spring High School near Houston, Texas where he met his wife Amy. He attended Texas A&M University and graduated with a Bachelor of Science degree in Petroleum Engineering in 1982. He and Amy also married that year and moved to Midland, Texas where Tim worked at Midland National Bank in the Energy Lending Department. He earned an MBA from The University of Texas of the Permian Basin in 1984. He met many of the industry’s leaders in his position at Midland National and left in 1989 for a Vice President of Engineering position at Parker and Parsley. During his time at Parker and Parsley, he was involved in the acquisitions of MGF, Damson, Graham, Bridge Oil and the Permian assets of Mobil as well as Parker and Parsley’s merger with Mesa into Pioneer Natural Resources. In 1997, Tim, Steve Beal, Dave Chroback and David Copeland left Pioneer and formed Concho. Since going public in 2007, Concho has grown to become one of the leading public companies in the energy industry. Concho’s major acquisitions include Chase, Henry Petroleum and Marbob. Today, Concho employs over 550 people in Midland and other areas of the Permian Basin.

Tim and Amy have two sons, William, 22, and Patrick, 20. Both boys currently attend Texas A&M University. Tim serves on the Dwight Look College Engineering Advisory Council at A&M and was honored as the Outstanding Alumnus of the Dwight Look College of Engineering in 2011. He was active in the formation of Midland Classical Academy in Midland that has grown to include both a primary and secondary school. He is passionate about land conservation, hunting and fishing and has recently planted two commercial vineyards in Real County, Texas.

EPA Announces Schedule to Develop Natural Gas Wastewater Standards

October 20, 2011

Announcement is part of administration’s priority to ensure natural gas development continues safely and responsibly

WASHINGTON — The U.S. Environmental Protection Agency (EPA) is announcing a schedule to develop standards for wastewater discharges produced by natural gas extraction from underground coalbed and shale formations. No comprehensive set of national standards exists at this time for the disposal of wastewater discharged from natural gas extraction activities, and over the coming months EPA will begin the process of developing a proposed standard with the input of stakeholders – including industry and public health groups. Today’s announcement is in line with the priorities identified in the president’s Blueprint for a Secure Energy Future, and is consistent with the Secretary of Energy Advisory Board recommendations on steps to support the safe development of natural gas resources.

“The president has made clear that natural gas has a central role to play in our energy economy. That is why we are taking steps — in coordination with our federal partners and informed by the input of industry experts, states and public health organizations — to make sure the needs of our energy future are met safely and responsibly,” said EPA Administrator Lisa P. Jackson. “We can protect the health of American families and communities at the same time we ensure access to all of the important resources that make up our energy economy. The American people expect and deserve nothing less.”

Recent technology and operational improvements in extracting natural gas resources, particularly shale gas, have increased gas drilling activities across the country. Production from shale formations has grown from a negligible amount just a few years ago to almost 15 percent of total U.S. natural gas production and this share is expected to triple in the coming decades. The sharp rise in domestic production has improved U.S. energy security and created jobs, and as with any resource the administration is committed to ensuring that we continue to leverage these resources safely and responsibly, including understanding any potential impact on water resources.

Shale Gas Standards:

Currently, wastewater associated with shale gas extraction is prohibited from being directly discharged to waterways and other waters of the U.S. While some of the wastewater from shale gas extraction is reused or re-injected, a significant amount still requires disposal. As a result, some shale gas wastewater is transported to treatment plants, many of which are not properly equipped to treat this type of wastewater. EPA will consider standards based on demonstrated, economically achievable technologies, for shale gas wastewater that must be met before going to a treatment facility.

Coalbed Methane Standards:

Wastewater associated with coalbed methane extraction is not currently subject to national standards for being directly discharged into waterways and for pre-treatment standards. Its regulation is left to individual states. For coalbed methane, EPA will be considering uniform national standards based on economically achievable technologies.

Information reviewed by EPA, including state supplied wastewater sampling data, have documented elevated levels of pollutants entering surface waters as a result of inadequate treatment at facilities. To ensure that these wastewaters receive proper treatment and can be properly handled by treatment plants, EPA will gather data, consult with stakeholders, including ongoing consultation with industry, and solicit public comment on a proposed rule for coalbed methane in 2013 and a proposed rule for shale gas in 2014.

The schedule for coalbed methane is shorter because EPA has already gathered extensive data and information in this area, EPA will take the additional time to gather comparable data on shale gas. In particular, EPA will be looking at the potential for cost-effective steps for pretreatment of this wastewater based on practices and technologies that are already available and being deployed or tested by industry to reduce pollutants in these discharges.

This announcement is part of the effluent guidelines program, which sets national standards for industrial wastewater discharges based on best available technologies that are economically achievable. EPA is required to publish a biennial outline of all industrial wastewater discharge rulemakings underway. EPA has issued national technology-based regulations for 57 industries since 1972. These regulations have prevented the discharge of more than 1.2 billion pounds of toxic pollutants each year into US waters.

More information: http://water.epa.gov/lawsregs/lawsguidance/cwa/304m/

Sign Petition to Hault Listing of Dunes Sagebrush Lizard

October 19, 2011

Prevent US Fish and Wildlife Service from listing the Dunes Sagebrush Lizard on the Federal Endangered Species List. The proposed listing is simply one more attempt by the Federal Government to place the interests of a creature they hypothesize to be endangered above a bona fide “endangered species” – the American Worker.

The Federal Government should not be in the business of killing jobs. It’s time to put an end to over-regulation and reign in those agencies bent on destroying the ability of the American people to subsist.

If approved, the listing will severely undermine attempts to reduce America’s dependency on foreign oil by limiting exploration and production in an area responsible for 20% of America’s domestic oil production – this listing will adversely affect all of us.

[button link=”https://wwws.whitehouse.gov/petitions/!/petition/hault-job-killing-regulations-favor-real-jobs-plan/fPVfnLjm” type=”big” color=”green” newwindow=”yes”] Sign This Petition[/button]

Annual Meeting Meeting Advisory

October 10, 2011

MEDIA ADVISORY

FOR IMMEDIATE RELEASE

JoAnna Robertson

Permian Basin Petroleum Association

415 West Wall, St. 103

Midland, Texas 79702

432-684-6345

joanna@pbpa.squirescompany.com

www.pbpa.squirescompany.com

October 10, 2011

Permian Basin Petroleum Association celebrates 50 years of service with Annual Meeting

The Permian Basin Petroleum Association will be hosting its Annual Meeting October 13, celebrating the association’s 50th year. The event will kick off at 7:30 at the Petroleum Club of Midland , followed by new technology sessions and a membership luncheon featuring keynote speaker the Honorable Susana Martinez, Governor of New Mexico.

PBPA has created an excellent lineup of speakers including Commissioner Barry Smitherman, Railroad Commission of Texas; Secretary John Bemis, of the New Mexico Energy, Minerals, and Natural Resources Department. Randy Krall of Wellkeeper; Dr. Bob Trentham, Center for Energy and Economic Diversification; and Laura Roman, CPA, CMAP, Weaver will highlight our mid-morning program.

WHO: Permian Basin Petroleum Association

WHAT: Annual Meeting

WHEN:

October 13th: 7:30 AM- Kickoff Breakfast with Commissioner Barry Smitherman, Railroad Commission of Texas and John H. Bemis, Secretary of New Mexico Energy, Minerals and Natural Resources Department

New Technologies Sessions:

  • “Remote Servicing”- Randy Krall, Wellkeeper
  • “Hot Plays/Residual Oil Zone Update”- Dr. Bob Trentham, Center for Energy and Economic Diversification
  • “2011 American Jobs Act”- Laura Roman, Weaver
  • 11:30 AM- Luncheon with Keynote Speaker, the Honorable Governor Susana Martinez of New Mexico

WHERE: Petroleum Club of Midland, 501 West Wall Street, Midland, TX 79701, (432) 682-2557

###

Lizards Found In Andrews Risk Economy

October 3, 2011

Nick Lawton

NewsWest 9

ANDREWS COUNTY – A report done by Texas A&M researchers back in June surveyed 19 sites in Andrews County, finding the dunes sagebrush lizard in all of them.

The report said the little guy’s presence is found in more than 31,000 acres of land from Andrews County to New Mexico.

If the endangered species list makes those acres “No Man’s Land” for oil and gas, operators said it doesn’t look good for Andrews.

“If you lay down one drilling rig, you affect a line of jobs that reaches close to probably 1,000 people,” Andrews County Independent Oil and Gas Operator, Jackie Gillispie, said. “It could be devastating for us, there’s no question about that.”

Other businesses said they’ll suffer too, some that people may not realize.

The local Holiday Inn Express said they’ll lose the majority of their business if they’re not housing oil and gas workers.

“The bulk of the business is oil-related, oil and gas-related,” General Manager, William Gonzales, said. “We’ll have to really ramp up any events that come to town, any weekend events. We’ll really have to work with those people that are coming in to try to make up for that business.”

In Andrews County, dunes sagebrush lizards were found at all 19 sites surveyed by the report, but with that many lizards, some local oil businesses say that doesn’t sound endangered to them.

Dr. Lee Fitzgerald, who was on the team of researchers, told NewsWest 9 Andrews County has so many lizards because its land is their perfect dunes habitat.

That’s why lizards were found at all sites as opposed to 8 out of 12 sites for Winkler County and only one site in Ward County.

Whether or not those large numbers classify the lizard as endangered, Fitzgerald said that’s up to the standards of U.S. Fish and Wildlife Service.

“It actually shuts down drilling rigs which is the heart and soul of the oil business,” Gillispie said. “It will make the oil worker the endangered species, simple as that.”

The Andrews Chamber of Commerce has put up a petition to stop the lizard’s listing online.

If you’d like to sign it, you can go to wh.gov/4mj.

Public hearing set on proposed hydraulic fracturing disclosure rules

October 3, 2011

Mella McEwenMidland Reporter-Telegram

Tasked earlier this summer with crafting new regulations

overseeing disclosure of chemicals used in hydraulic fracturing,

the Railroad Commission is wrapping up the public comment period on

its proposed rules.

A public hearing is set for 1 p.m. Wednesday at the commission’s

headquarters at 1701 N. Congress, Room 1-111. The hearing also WILL

be webcast at www.texasadmin.com/txrail.shtml. The commission will

continue to receive comments, either written or electronic, until

noon Tuesday, Oct. 11.

Under the proposed new regulations, operators must submit

information about the chemicals and volumes of water used in

hydraulic fracturing to FracFocus, the hydraulic fracturing

chemical registry web site of the Ground Water Protection Council

and the Interstate Oil and Gas Compact Commission. A supplier,

service company or operator is not required to disclose ingredients

not disclosed by the manufacturer, supplier or service company or

that were not intentionally added to the hydraulic fracturing

treatment or ingredients that occur incidentally or are otherwise

unintentionally present or may be constituents of naturally

occurring materials.

To alleviate industry concerns about trade secrets being

disclosed, the new regulations provide that the Attorney General’s

office will rule on what chemicals are entitled to trade secret

protection. That protection may be challenged by owners of the land

where the well was drilled or adjacent to the well or departments

or agencies, such as health care professionals, emergency

responders, epidemiologists or others to whom the information is

relevant. Those challenges also will be decided by the Attorney

General’s office and those who are told the trade secret must keep

the information confidential.

“We’re comfortable with the legislation” that prompted the new

regulations “and want to make sure the regulations track the

legislation,” said Ben Shepperd, president of the Permian Basin

Petroleum Association. “We’re comfortable that the proprietary

information will be safe, that the attorney general will work to

keep it confidential. This has to be workable and not slow down

operations.”

He continued, “Our main concern is how it will be implemented.

We’re OK with the concept of ensuring the public trusts us about

what we put down the hole. But we don’t want the process to hurt

especially small operators, who can’t afford their own crews and

hire a frac crew. The frac company tells the operator what’s in the

hydraulic fracturing solutions and the operator has to file the

information. We don’t want operators to be punished unfairly, we

want a reasonable turnaround in filing the information.”

Commented officials with Apache Corporation, which has worked

with the commission on developing the rules, “Apache is pleased

with the progress made by the Railroad Commission to develop

regulations regarding disclosure – at a detailed level – all of the

chemical ingredients intentionally added to frac fluids while

protecting legitimate confidential business information.

“The disclosure law enacted by the Texas Legislature last spring

will help assure Texans that hydraulic fracturing is regulated

effectively at the state level. This disclosure program also will

permit producers to continue to fuel Texas’ economic growth by

developing the state’s resources in a safe and environmentally

responsible manner. The Texas model for frac fluid disclosure is

the basis for discussions of new regulations by other states.”

There will be no news, Shepperd said, in disclosing how much

water is used in hydraulic fracturing, pointing out that other

industries use much larger volumes. But that disclosure could help

ease public concerns about the volumes used in the process. He

pointed out that a lot of companies are working to develop

technology to recycle the water, reducing the amount of fresh water

used in hydraulic fracturing.

“That’s where the industry is headed,” he said. “As the

technology is perfected, we’ll see a lot more recycling.”

The new rules, Shepperd said, “are a big step, but as far as

disclosing the chemicals used, the industry has nothing to hide.

But we’re under a lot of public criticism, so shining a light on

this aspect of the industry can only be beneficial.”

September 2011

Endangered Species Act Lacks Fair Confrontation

September 29, 2011

Albuquerque Journal

By Dennis Kintigh / Republican, Roswell on Thu, Sep 29, 2011

America’s citizens should be able to assume that Endangered Species Act listings are based on “best science,” as determined by an altruistic scientist – an honest arbiter. Sadly, this ideal model isn’t how it works in real life.

My background is engineering and law enforcement. When the proposed ESA listing of the dunes sagebrush lizard threatened my community’s well-being, I got involved.

It was my first in-depth involvement with the ESA process. It was interesting and enlightening. More important, it was disturbing.

Over the last several months I worked with a group of scientists to conduct a detailed review of the proposal to designate the dunes sagebrush lizard as an “endangered species.” On Aug. 15 we presented a 20-page critique of this proposal to Rep. Steve Pearce.

In the criminal justice system, science is critical. Because of its importance, it is getting increased scrutiny. Likewise, the concept of the “wise man” scientist decision-maker, isolated from politics or outside influences, has to be questioned. This is what we did with the proposed listing for the dunes sagebrush lizard.

The U.S. Supreme Court has set the standard for examining assertions and claims by scientists. In the case of Melendez-Diaz v. Massachusetts, the courts established the need for scientists to be subject to confrontation. The court concluded “… Nor is it evident that … neutral scientific testing” is as neutral or as reliable as respondent suggests. Forensic evidence is not uniquely immune from the risk of manipulation the suggestion that this category of evidence is uniquely reliable and that cross-examination of the analysts would be an empty formalism.” Confrontation brings clarity, and confrontation is missing in the existing system.

Currently when there is a proposition to designate a species as “endangered” the case is presented in a “proposed rule” prepared by U.S. Fish and Wildlife Service staff. “Proposed rule” is an interesting term because it is in fact an advocacy document much like an affidavit. However, unlike an affidavit no one stands in front of a judge, raises his or her hand and swears that everything is true. Nor is the author subject to confrontation to explain the basis for his or her claims and assertions.

In my law enforcement days, I have written many affidavits for search warrants, arrest warrants and wiretaps. I knew I would probably be sitting in a chair answering all kinds of questions. I assure you it is not a pleasant experience, but one which ensured accuracy in my statements. We need something like this in the ESA process.

Furthermore, the confrontations must occur before a truly independent decision-maker. It makes no sense for the head of the organization (in this case the director of the USFWS) which prepares the advocacy document to be the evaluator of the criticisms of that position or its basic validity. The analogy would be, if while I was the Roswell chief of police, my detectives had written an affidavit for an arrest warrant and then I, as chief, conducted the preliminary hearing. The inherent conflict is glaring.

Confrontation before an independent decision-maker is at the heart of the American justice system. It is ominously missing from the ESA process and that needs to be corrected because that is how we truly get “best science.”

When decisions are being made that have potential grave consequences to communities and the industries that support them, as is the case of the dunes sagebrush lizard listing, the science behind the proposal must be held to the highest possible standards. As our review of the dunes sagebrush lizard proposed rule discovered, neither best science nor high standards have been met.

Dunes Sagebrush Lizard: Watch video of New Mexico House Judicary Committee Hearing on House Memorial

September 22, 2011

Please click on the link below to watch the video!

http://governor-nm.granicus.com/MediaPlayer.php?view_id=2&clip_id=76

SPCC 101 for Production Webinar Invitation

September 20, 2011

Members:

Below you’ll find an invitation from Wendy Kirchoff, director of federal resources and legislative affairs for IPAA. The inviatation is for a webinar on the forthcoming implementation of the new SPCC rule, which IPAA has asked EPA to put together for their members. PBPA encourages our members to join. Also, attached is the toolkit IPAA has put together for the SPCC rule. IPAA worked with EPA on the document as well and they will be referring to some of it during the webinar. If you have any question/concerns, please don’t hesitate to let me know. This information will also be posted to our website.

Thank you,

JoAnna Robertson

Communications Coordinator

________________________________________

Click to download SPCC Toolkit Development Memo 1 17 11

SPCC 101 for Production Invitation:

The purpose of the Spill Prevention, Control, and Countermeasure (SPCC) rule is to help facilities prevent a discharge of oil into navigable waters or adjoining shorelines. A key element of the SPCC rule requires facilities to develop, maintain and implement an oil spill prevention plan, called an SPCC Plan. These plans help prevent oil spills, as well as control a spill should one occur.

If a facility is subject to the SPCC rule, they are required to comply with the rule requirements by November 10, 2011 (unless they met the requirements to comply by November 10, 2010). To raise awareness of the SPCC rule and the upcoming compliance date within the production community, a train the trainer package was developed by EPA specifically for the (upstream) production sector. The train the trainer package includes a SPCC 101 for Production presentation. A website with additional resource materials, such as fact sheets, will be available in the near future.

We are asking for your assistance with this outreach effort. We hope that you will be able to utilize the materials we provide to you to hold training in conjunction with existing events, or as a stand-alone training that may reach the production community. These training materials were developed to be offered in person, or virtually as a webinar. Additionally, any link information, documents or sample plans that we can post on our website or provide links to the material would be appreciated. We would also like to know how or if you would like us to work in the guidance document you have produced to the webinar.

We invite you to join us on September 22, 2011 via webinar. During this session we will go over the SPCC 101 for Production presentation and will discuss further how you can help!

To participate, please register by clicking the link below. A limited number of phone lines are available and registration is on a first come, first serve basis.

Date: September 22, 2011

Time: 1:00pm – 3:00pm EDT

Click to register! http://www.eventbrite.com/event/2187783720

Please contact Michelle Rudy (michelle_rudy@sra.com) for any questions regarding registration.

Mark W. Howard

USEPA OEM

Ariel Rios Building (Mail code 5104A)

1200 Pennsylvania Ave., N.W.

Washington, D.C. 20460

(202) 564-1964

Is the Obama administration protecting lizards at expense of jobs?

September 20, 2011

The Daily Caller– Mon Sep 19, 12:18 am ET

A little lizard is creating big concerns for Texas.

The Dunes Sagebrush Lizard, also known as the Sand Dune Lizard, inhabits the Permian Basin, one of America’s top energy producing regions. It contains more than 20 of the nation’s top 100 oil fields and, in the counties identified with lizard habitat, is keeping an estimated 27,000 jobs intact.

Despite the White House’s laser focus on jobs, the administration has its sights on putting these lizards on the Endangered Species List — a move which would severely limit oil production and kill area jobs in order to make the Permian Basin a protected habitat for the lizard.

“The wolf at the door is the lizard; we’re concerned listing it would shut down drilling activity for a minimum of two years and as many as five years while the service determines what habitat is needed for the lizard. That means no drilling, no seismic surveys, no roads built, no electric lines,” said Ben Shepperd, president of the Permian Basin Petroleum Association (PBPA).

According to the government, with the species on the verge of extinction, it needs to be protected. Various threats to the lizard include loss of habitat, “fragmentation and degradation as a result of oil and gas development and shinnery oak removal.”

If the U.S. Fish and Wildlife Service (FWS) adds the lizard to the Endangered Species list, a decision expected to be made in December, Shepperd noted it “would shut down activity and be devastating not only to Permian Basin economies but to the national economy. We are the one bright spot month after month; in our economic turnaround, the main driver is the oil and gas industry.”

Despite the apparent economic impact, the FWS is solely focused on the well being of the lizard.

“The law says we need to look at the science,” Michelle Shaughnessy, assistant regional director at the Fish and Wildlife Service, told ABC News.

While the lizard appears to be strained, there are many who believe the science is not settled.

The University of Texas Board of Regents commented to the FWS that the decision to list the lizard as endangered is “at best premature and currently unsupported in law and fact. The proposal is based on faulty science, inadequate data, and seriously erroneous assumptions.”

According to Texas Republican Sen. John Cornyn, since much of the land in question is private, only a small portion has officially been surveyed.

In a letter to the FWS, Texas Comptroller Susan Combs explained that there is not enough information to inflict that much economic damage on the state.

“There is not sufficient scientific and commercial evidence to warrant listing of the species at this time,” Combs wrote. “Additionally, the benefits of current voluntary conservation efforts to enhance the status of the species should be considered.”

Cornyn has been throwing his weight around on Capitol Hill to block the proposed listing in order to save jobs, the area’s economy, and efforts to bring additional water sources to an areas hard hit by the state’s drought — efforts which could be harmed if the lizard becomes a protected entity.

“If oil and gas reserves are put out of bounds because of this little lizard, it would put people out of work and make us more dependent on imports,” Cornyn told TheDC. “It seems to me to be a false sense of priorities.”

Cornyn has proposed legislation to exempt the Sand Dune Lizard from the Endangered Species Act.

“With reptilian ability, the Obama Administration changes its colors on domestic energy from one day to the next based on the political environment,” Cornyn said in June. “Though the President recently claimed he was all for expanding domestic energy production, to see his true colors, meet a little-known species: the Sand Dune Lizard.

Cornyn also has also agreed to release his hold on the president’s nomination of Dan Ashe to be the director of U.S. Fish and Wildlife Service under the following conditions: that Ashe look at the scientific uncertainties of the proposal, have more surveys of the lizard in Texas, post all the information the FSW will use to make the decision online, and hold and attend meetings in the impacted areas to fully understand the cost.

Texas Leaders on “Reptile Dysfunction”

September 16, 2011

Reported by: Mycah GloverPermian Basin 360 – Energy Report Thursday, September 15 2011

Midland – The fight against the sand dune lizard continues. It was the topic of conversation at the Petroleum Club earlier this week when the Permian Basin Petroleum Association hosted their September luncheon. Land Commissioner Jerry Patterson came in to speak about the reptile that continues to raise concerns among the oil industry.

“It became it’s own species in 1992. Here we are, less than 20 years later and it’s endangered,” says Texas Land Commissioner Jerry Patterson.

It’s a problem Patterson likes to call, “reptile dysfunction.” But all joking aside, it’s a serious problem facing the entire oil industry.

“The endangered species act has become a favorite tool for abuse by those pushing a political agenda, and the dunes sage brush lizard has us all concerned, ” says Ben Sheppard, PBPA president.

Former Railroad Commissioner Michael Williams believes it is, “another indication of how this administration is over-reaching and over-reaching in a way that’s killing jobs, that is going to reduce our ability to produce American energy and also weaken our nation’s energy security. Another indication that this administration just doesn’t get it.”

“This is very serious. We need to mobilize and do everything we can to stop designation of any species where there is no science to base that designation on,” says Patterson.

As of now, U.S. Fish and Wildlife has until mid-December to make their final decision. And if they choose to add the lizard to the Endangered Species List, Patterson says oil producers and those working in the industry aren’t the only ones who’ll have a problem.

“20 percent of the production in the U.S. is in the Permian Basin. This impacts everyone in the country. At a time when we should be focused on more energy production and less dependency on foreign oil, we’re doing things that have the opposite effect.”

Patterson adds that the sand dune lizard is one of five species we need to keep an eye on here in Texas. Locally, we need to watch out for the lesser prairie chicken and the spot-tail earless lizard. There’s also a butterfly and a mussel that could have an impact on the state if put on the list.

For the latest on these species and the impact they could bring to Texas, check out http://texasahead.org/texasfirst/ .

PBPA continues effort to fight sage brush lizard listing

September 15, 2011

Mella McEwen

Midland Reporter-Telegram

Though not present, the little brown sand dune lizard was the main topic at Wednesday’s Permian Basin Petroleum Association membership luncheon.

PBPA President Ben Shepperd estimated 80 percent of his work the last few months has been addressing the lizard and the possibility it will be named an endangered species. And he cautioned his audience there are 80 to 200 more species also lined up to be named.

“The lizard has us all very concerned and we’re doing everything and anything we can to prevent its listing and ensure operations will continue,” he said, citing research from Texas A&M and Texas Tech done on behalf of the PBPA and Texas Oil and Gas Association that, he said “show, as we suspected, that the data Fish and Wildlife Services is using is flawed.”

Four counties in New Mexico and four counties in Texas, along with the Sand Hills Soil and Conservation District and city of Monahans have adopted a coordination strategy, said Dan Byfield, chief executive officer of American Stewards of Liberty, which is working with local governments on the issue. By adopting the strategy, he said federal agencies are required by federal statute to give equal consideration to local policies and plans when developing their own policies.

Texas Land Commissioner Jerry Patterson, the keynote speaker at Wednesday’s luncheon, said his job is to manage 13 million acres of state-owned land, including 700,000 surface acres for public schools, 2.5 million acres in the Gulf of Mexico up to 9 nautical miles from the shore, and more than 2 million acres as chairman of the Board for Lease of University Lands.

“All revenues are constitutionally allotted to the Permanent School Fund or the Permanent University Fund,” he said, as well as manage the Veterans Land Board. In his job as fiduciary caretaker, he said the disruption potentially caused by listing the sand dune lizard as endangered is a concern.

He noted that Texas Comptroller Susan Combs is developing a conservation plan, which he said he is not a party to, though he has asked for a copy to review. He said he has concerns with the plan he saw in August.

“We need a plan,” he said. “The question is will the plan be equally as bad as the designation? What are the details in this plan? When the designation occurs, and I hear rumors it will be delayed six months, if it’s listed we’re going to court.”

Among its contentions, he said, will be insufficiency of evidence the lizard is endangered. But, he said the plan he saw in August agrees the lizard is endangered. “If we go to court and say there’s an insufficiency of evidence, opposing counsel can say our plan says there is evidence,” he said.

He stressed, “The comptroller is in a difficult spot, doing the job given her by the Legislature. I’m not criticizing her effort but I want to ensure it’s right. What will it cost? Where does the money go? Will it work? My No. 1 concern is there be nothing in the document to hurt us if we go to court and the plan I saw had things that would hurt us.”

Efforts to reach the comptroller’s office to confirm the plan’s details were unsuccessful.

“When you’re trying to make people aware of what’s going on, in this age of blogs and cable news, to get their attention you have to break out of the chatter,” he said.

“The lizard is a classic case of reptile dysfunction,” he said. “And I’m not sure there’s a little blue pill to fix it.”

The problem, Patterson said, is much larger than the lizard, which he pointed out wasn’t even a species until 1992 “and now, not 20 years later it’s endangered?”

The problem is that it may be placed on a list that continues to grow. Until 1997, he said, about 20 petitions to list a species were filed annually. From 2007 to 2010, 400 petitions a year were filed. “The Fish and Wildlife Service can’t handle that number, and they’re required by statute to issue a decision within 12 months. If they can’t comply, they violate their own statutes and so they’re sued. Not only do we have a system that can’t work, we pay money to those groups that sue us to put a species on the list. It is a quintessential racket of the highest order and needs to be fixed.”

Construction indicates growth in the Permian Basin

September 13, 2011

Odessa American

BY CELINDA HAWKINS

For the 17th straight month economic indicators show growth in Odessa and Midland continuing at a staggering pace indicating impressive growth for the Permian Basin, which continues to be driven by the booming oil and gas industry.

“The growth numbers are impressive across the board, and there is simply little room for complaint in any area of reliable measurement in the Odessa-Midland combined metro area economy,” reported Karr Ingham, the Amarillo economist who prepares the monthly Midland-Odessa Regional Economic Index.

Building permits valued at $47.6 million issued in July in Odessa and Midland were up a whopping 251 percent for residential, commercial and remodels. This is a staggering increase over last July when permits valued at $13.5 million were issued, according to Ingham’s report.

“Historically it is the biggest July number we’ve had,” Ingham said. “It is safe to say we’ve got a booming construction industry in Midland and Odessa in 2011.”

The year-to-date growth for issuance of permits is not as staggering, but still significant, Ingham said. During the last seven months just more than $242 million in building permits were issued, which is up only three percent compared to the same period in 2010 when $235 million in permits were issued.

All of the numbers mean construction jobs for the area, Ingham said.

“What high building numbers mean is that people are put to work in the construction business and the nature of these projects that means you’ve got some large commercial activity,” Ingham said.

Commercial permits have been issued for Best Buy to be located at Highway 191 and more permits are expected to be issued for other retail outlets.

“We foresee more permitting coming in the next few months,” said Mitchell Meyers, vice president of business development for W.B. Kibler Construction of Dallas, the contractor for the Best Buy.

Contracts for other retailers like Marshall’s department store, an Ulta that sells skincare and hair care products, and a Kirkland’s furniture store have already been signed by W.B. Kibler Construction Co. and will be built next to the Best Buy, according to Odessa American archives.

“We are excited about the opportunities,” Meyers said. “And clearly we want to work with companies that are in Odessa.”

New housing permits were up for Odessa and Midland by 50 percent with 69 permits issued in July compared to 46 issued last July. For the first seven months of the year, the totals are up 30 percent. A total of 523 new housing permits issued in Midland and Odessa since January, which is down from 404 permits issued during the first seven months of 2010. During the same period in 2008 considered a peak period for construction, there were 524 permits for new home construction.

“The unique thing is that there are not many metro areas where this is occurring: most metro areas are down sharply in 2011 on new housing permits,” Ingham said. “It is doing much better in Midland-Odessa than anywhere around the state.”

Existing home sales are up, but they could be up higher if there wasn’t a housing shortage, Ingham said.

And housing prices are higher than they’ve ever been, with the average sale price of a home in Odessa and Midland set at $199,734 — the highest monthly average on record.

“When you’ve got strong demand and not huge numbers available to sell then that drives up the numbers (prices),” Ingham said. Plus it is more difficult to get a mortgage in 2011 than it was in 2008, Ingham said.

Taxable spending is up 29 percent in July, as compared to July 2010. Year to date, general spending is up 28 percent, heading to record territory, Ingham says.

Auto purchases for July were $73.5 million in July, up 27 percent over last July, when auto sales reached $58 million. More than $500 million in auto sales has been recorded for the first seven months of 2011, up an impressive 35 percent for the same period in 2010.

The tax receipts on hotel/motel stays in the Permian Basin are up almost 47 percent for the first seven months of 2011, with $4.6 million in hotel/motel tax receipts reported, up from $3.1 million during the same period in 2010.

“You have a huge increase in business travel,” Ingham explained. “Service companies are using the hotels and motels for work week housing.”

The unemployment rate was 6 percent in July for Odessa-Midland, down 10.4 percent from last July when it was 6.7 percent. This is down slightly from peak levels in 2008, but Ingham said employment will trend upward in coming months and into 2012.

The Texas Permian Basin Petroleum Index indicates a flattening of the market, but not a drop, Ingham predicts.

“Crude oil prices have slipped a bit in recent weeks, though pricing certainly remains at favorable levels in terms of generally maintaining current high levels of activity and continued growth,” Ingham reported. Crude oil settled up $2.02 at $90.21 per barrel Tuesday.

“Even if prices (per barrel) remain above $80, the dynamics of industry growth in the Permian Basin may begin to change as the statewide oil and gas industry comes closer to reaching its pre-downturn peak levels of 2008,” he said.

The Midland-Odessa Regional Economic Index and Texas Permian Basin Petroleum Index are sponsored by the Midland Development Corporation and Security Bank.

Endangered listing for dunes sagebrush lizard opposed by speakers at local meeting

September 7, 2011

By Stella DavisEl Paso Times

Current-Argus Staff Writer

CARLSBAD — Opponents of the proposed listing of the dunes sagebrush lizard as an endangered species told U.S. Fish and Wildlife Service representatives on Tuesday that the agency does not have enough scientific evidence on the lizard to warrant its listing.

The Eddy County Commission held a public meeting with the Fish and Wildlife Service at the Pecos River Village Conference Center that was attended by representatives from the oil and gas industry, the ranching community, local government leaders and academics.

The oil and gas industry said the listing of the lizard would be extremely detrimental to the industry and has strongly voiced its opposition to the proposed listing.

The dunes sagebrush lizard is a small, light brown lizard found in southeastern New Mexico and adjacent west Texas. Its habitat is in the shinnery oak dunes extending from San Juan Mesa in northeastern Chaves County, Roosevelt County, through eastern Eddy County and southern Lea County.

Wally “J” Murphy, from the U.S. Fish and Wildlife Service New Mexico Ecological Services Field Office, opened the door for criticism of the agency’s proposal to list the lizard when he answered the question by an audience member concerning the science that led to the proposed listing of the lizard.

Murphy said there is only one study that has been done by an outside entity that determines the lizard as a distinct species.

“It’s the only study out there and the best information available to us,” he said.

Commissioner Jack Volpato, a local pharmacist, said if he were in the position to approve a drug and was to base it on just one study, he would be told to go back and get more evidence that the drug was safe. He said that scenario should also apply to the Fish and Wildlife’s action of basing its findings on one study.

“You need more evidence,” Volpato said, addressing Murphy. “You said the lizard does not migrate. It lives and dies in one sand dune. I think it is premature to list the lizard without more evidence that it is endangered.”

Murphy said that on Dec. 14, the Fish and Wildlife Director in Washington will make the decision whether to list, not to list or postpone the listing of the lizard.

Commissioner Lewis Derrick said people from numerous sectors sat down and worked their “tails off” for more than three years to come up with a resource plan to prevent the listing of the lizard, yet it appears that their work was for naught.

In 2008, the Fish and Wildlife Service, the Bureau of Land Management and the Center of Excellence for Hazardous Material Management in Carlsbad partnered to develop a Candidate Conservation Agreement and The Candidate Conservation Agreement with Assurances for the conservation of the lesser prairie chicken and the lizard.

The CCA is a voluntary conservation agreement between Fish and Wildlife and one or more public or private parties. The CCAA expands on the success of the traditional CCA by providing non-federal landowners with additional incentives for engaging in voluntary proactive conservation through assurances that limit future conservation obligations.

Murphy said federal agencies, such as the BLM and the Natural Resource and Conservation Service, will be required to consult with Fish and Wildlife Service on projects that may affect the lizard.

Oil and gas companies and private ranchers enrolled in the CCA and the CCAA receive regulatory assurances or a level of certainty that if the lizard is listed, they will not be required to do anything beyond what is specified in their agreement.

However, once a species is listed, enrollment in the two programs is no longer possible for that species.

“It seems to me that what is set at the local level goes out the window at the national level,” Derrick said.

Murphy said the lizard was warranted for listing in 2001, but because of a backlog of other listings, the lizard’s listing was not addressed until now.

“It’s (the lizard’s) time in line rose to the top of the list,” Murphy said.

Derrick asked Murphy if the reason the lizard came to the top of the list was a result of a threatened law suit by Wild Earth Guardians — formerly known as Forest Guardians. Murphy replied that it was related to a court settlement that included the lizard.

He said initially Wild Earth Guardians had petitioned for some 400 species to be listed, but it was narrowed down to 60 through the court settlement.

Tom Buckley, Fish and Wildlife public affairs specialist, said his agency understands the concerns of the oil and gas industry and the ranching community. However, to delay making a decision could result in the extinction of the species.

“We are using the best available science to us. We go where science takes us,” he said. “Ideally, we would love to have more time, but extinction is forever. Once it’s gone, it’s gone.”

Murphy said although the official comment period ended in April, the agency would considered additional comments only if there was new science brought to its attention before the Dec. 14 listing decision

New Mexico Special Session

September 6, 2011

New Mexico special session has begun and the Permian Basin Petroleum Association is closely monitoring the activities.

The primary purpose of the special session is New Mexico redistricting. Policymakers are tasked with redrawing political boundaries for state legislative seats, the Public Regulation and the Public Education commissions, the state’s three seats in the U.S. House of Representatives based on the 2010 Census numbers.

In addition to redistricting, Gov. Martinez has called to address the following issues:

  • Gov. Martinez has demanded that lawmakers overturn a 2003 law allowing New Mexico to issue driver’s licenses to noncitizens.
  • Gov. Martinez also wants the Legislature to end social promotion of third-graders who lack sufficient reading proficiency.
  • Gov. Martinez wants to give local authorities the power to ban fireworks.

The packed agenda may also include consolidation of state government agencies in an effort to save money.

PBPA is working hard to protect our producers. At this time, it doesn’t appear any critical issues effecting oil and gas will appear.

Petrash: Economy needs less regulation, more logic

September 6, 2011

Times Record News features PBPA Chairman Doug Robison and DSLLarry Petrash

The more you dig into what President Obama and his administration have accomplished over the past two and a half years the more you have to ask what part of his “change” is good for America? Since the advent of the Obama Administration in 2008, there has been growth. But it’s not in the economy nor in jobs. It’s in federal regulations and the burden it places on small business!

Since 2008, regulatory agencies have seen their combined budgets grow almost 20 percent, topping $54 billion, according to the annual “Regulator’s Budget,” compiled by George Washington University and Washington University in St. Louis. Can anyone say “raise the debt-ceiling.” Employment at these agencies has grown some 13 percent, since Obama took office, to more than 281,000, while private-sector jobs shrank by 5.6 percent.

It is estimated that the Obama administration’s imposition of new major rules has cost the private sector more than $40 billion, according to a Heritage Foundation study. “No other president has imposed as high a number or cost in a comparable time period,” noted the study’s author, James Gattuso. This July, regulators imposed a total of 379 new rules that will cost more than $9.5 billion, according to an analysis by Sen. John Barrasso, R-Wyo.

And much more is on the way. The Federal Register notes that more than 4,200 regulations are in the pipeline. That doesn’t count impending clean air rules from the EPA, new derivative rules, or the FCC’s net neutrality rule.

Excessive regulation is an albatross around the economy’s neck. According to a 2010 study issued by the Small Business Administration, the cost of complying with federal rules and regulations exceeds $1.75 trillion a year. Worse, the SBA found that small companies, which account for most of America’s new jobs, spend 36 percent more per employee to comply with these rules than larger firms.

The EPA wrote in February that “in periods of high unemployment, an increase in labor demand due to regulation may have a stimulative effect that results in a net increase in overall employment.” Perhaps, but, only in the federal government. What’s their productive output? More regulations and more financial burden on small business owners. Result: less jobs. Here’s an example of the EPA at work.

Conservation groups want the Dunes Sagebrush Lizard, a tiny 3-inch lizard, added to the Endangered Species List. In October 2001, the lizard was added as a candidate to be listed as endangered. Under the Bush administration a decision was delayed, but last year, under the Obama Administration, the lizard moved up the list.

The Dunes Sagebrush Lizard lives off a shrub called shinnery oak in the Permian Basin, which cuts through New Mexico and West Texas. This happens to be one of the richest resources of oil and gas in the United States. Environmental groups say that oil production has destroyed much of the lizard’s shinnery oak, the lizard’s habitat, which has led to a dramatic decline in the lizard’s population.

Putting the lizard on the list will impose new restrictions on oil drillers and ranchers. Oil company owners say they support conservation, but fear damage to the economy if the brakes are put on local oil production. “This could cripple what is now a very healthy job environment,” said Douglass Robison, president of ExL Petroleum in Midland, Texas.

Conservation groups that want the reptile added to the Endangered Species List are pointing to a new study by the Center for Biological Diversity showing that the reptile’s habitat is so small that protecting it won’t impact drilling.

But Rep. Mike Conaway, R-Tex., disagrees with the report.”They have seen 1,000 drilling locations that would be potentially inaccessible,” he said. “They have only looked at 1 percent of potential habitats,” he said. He says giving the Dunes Sagebrush Lizard federal protection status wouldn’t be threatening just Texas, it would be damaging to the entire United States because of less domestic drilling, resulting in higher gas prices.

Rep. Steve Pearce, R-N.M., said if the lizard ends up on the list, it would shut down any industry that interrupts the land, including oil drilling and ranching. “Almost every job in the affected counties are at risk,” Pearce told FoxNews.com. “Workers will have to go someplace else.”

State Sen. Craig Estes, R-Wichita Falls, says common sense needs to prevail on this issue. Oil production is too vital to the Texas economy. I agree. There’s a need for time to vet compromise on this issue on how to use the land without disrupting the lizard or its habitat. With more than 4,200 regulations in the federal pipeline, the cost of the imposition of restrictions, compliance, and their enforcement by regulators, the $1.75 trillion a year cost is merely the “tip of the iceberg!”

August 2011

‘Legendary’ oilman Cy Wagner dies

August 31, 2011

Mella McEwen | Posted: Tuesday, August 30, 2011 8:28 pm

Longtime Midland oilman Cy Wagner Jr. died Tuesday in Midland at the age of 77.

His survivors include his wife, Lissa Noël Wagner and their five children. Funeral services are pending.

Born and raised in Tulsa, Wagner earned a degree in geology from the University of Oklahoma and developed an extensive background in geologic work in the Permian Basin. In 1962, he and Jack Brown famously formed Wagner & Brown Ltd. on nothing more than a handshake, building the company into a successful privately held independent exploration and production company.

“Cy has been my partner in business and my best friend for almost 50 years,” said Brown in a statement. “He was a very astute businessman who was always thinking and planning on the next move before we had completed the effort before us — a true visionary. He was an outstanding geologist and businessman who had the uncanny ability to combine his knowledge and insight in bringing so many successes to Wagner & Brown. His planning and efforts will continue to be the foundation blocks for the future of Wagner & Brown. My prayers and deep love go to Cy’s dear family and friends.”

State Rep. Tom Craddick said in a statement, “Nadine and I are devastated by Cy’s passing and our thoughts and prayers go out to Lissa and the entire family, including his devoted staff at Wagner and Brown who he considered his extended family.

“Not only have we lost a dear friend, but Midland and the West Texas area have lost the most generous and selfless man who served as an inspiration to all around him. Cy’s legacy will include his success in oil and gas exploration and production, how he educated generations about the business he loved, and his leadership that modeled best practices in the industry. Most notably his legacy will also include Cy’s philanthropic spirit and ability to inspire others to give that will live on in Midland College, the (Wagner Noel) Performing Arts Center, the Petroleum Museum, the Advanced Technology Center, the Center for Energy and Economic Development (CEED), and throughout our entire community. Cy will be missed, but never forgotten.”

Ben Shepperd, president of the Permian Basin Petroleum Association, commented, “Everybody in the PBPA family and the oil and gas industry are deeply saddened. Cy was a true legend in the oil and gas industry and in the Permian Basin. He will be deeply missed. Our thoughts go out to the family.”

In the mid-1980s, Wagner and Brown drew national attention when they invested in T. Boone Pickens Jr.’s bids to acquire Gulf Corp., Phillips Petroleum and Unocal Corp.

“Cy was certainly a legendary oilman,” Pickens said in a statement. “He and Jack Brown found a lot of oil. But he didn’t just make money; he was generous with it as well, and a significant giver to the University of Oklahoma.”

Officials at the University of Texas of the Permian Basin also mourned Wagner’s passing. Through endowed scholarships, building donations and other offerings, the Wagners helped raise the profile of the school. His vision for West Texas was “a major impetus behind the construction of the CEED building, which has brought in over $30 million in federal and state grants since it opened, and serves as an important unifying force for Midland and Odessa,” according to a press release from UTPB.

School officials also credit the Wagners for their leadership during the fundraising campaign for the Wagner Noel Performing Arts Center.

UTPB President David Watts commented, “Cy Wagner was a giant in terms of his influence on West Texas. UTPB would not be the university it is today without the Wagner and Noel families’ generosity. The spirit of the entire region has been lifted and Midland and Odessa are miles closer because Cy Wagner saw opportunities for building positive change.”

Wagner served on the board of visitors for the International Programs Center at the University of Oklahoma and on the Development Board of the University of Texas of the Permian Basin.

The business partners were named to the Petroleum Museum Hall of Fame in 1999 and were the 2010 Permian Basin International Oil Show Honorees.

© 2014 Permian Basin Petroleum Association

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