Howdy folks, The infamous Open Choke column is now a “Blog” whatever the hell that means… They (meaning Steve Michener, the awesome Website and Content Manager at Drillinginfo) tell me that I can just put my thoughts down as they come to me, where ever I am! Plus, as an added bonus, You, the reader can respond to my rantings and call me on my BS or add some of your own, on an ongoing basis (Just scroll to the bottom and click the small "comments" link). What fun!
I attended a very interesting roundtable discussion a couple of weeks ago in Denver at the annual Colorado Oil and Gas Association meeting. The discussion, entitled “Smart Development”, was comprised of a panel of speakers that included Joe Jaggers of Williams, Ron Hogan of Questar, Reeves Brown of Club 20, Dr. John Beckman of the Wildlife Conservation Society, and Dr. Patricia Limerick of the Center of the American West from UC Boulder.
Jaggers and Hogan talked about the difficulties of drilling and producing on federal lands, and the tightening noose of interlocking breeding seasons, and the clever, industrious ways they had found to both address the concerns over winter-time mule deer mating habits posited by the plethora of environmental concern groups while still being able to drill and develop the Pinedale Anticline, thought to contain over 20 Trillion Cubic Feet of natural gas.
Dr. Beckman then rose to speak. He described his organization, the Wildlife Conservation Society, as NOT a rabid environmentalist group. In fact, he said, it was comprised of PhD ecologists, and was, in reality, the New York Zoological Society, who presumably adopted the nom de guerre Wildlife Conservation Society for its hipper, more modern and sensitive mien than the archaic "New York Zoological Society", which connotes caged-in suffering yankee animals. In any case, Dr. Beckman's group is studying the large mammals along the Pinedale area to determine if there is anything unusual about them that could demand some sort of "protected status". To their great surprise, a group of pronghorn sheep in the area has a migration route of some 330 miles. In fact, it is the 2nd or 3rd longest existing (by the way, notice how you cannot tell if I am writing this in 1972 by looking at the superscripts I am using?) large mammal migration route in North America and the 5th to 7th longest in the world. Why the range? Because, honestly, I don’t remember the actual rankings, but I'm pretty sure I'm in the ballpark. On the basis of this spectacular finding, the Scientifically-Based Wildlife Conservation Society feels that this special group of Pronghorn Sheep and its migratory route be assigned a (presumably Scientifically-Based) "World Treasure" designation. It is not immediately clear what worldwide regulatory body, in fact, is in charge of "World Treasure" designations, and whether said regulatory body would consider 20+ Trillion Cubic Feet of Gas worth $100 billion dollars a "World Treasure".
I any case, the Wildlife Conservation Society's proposal, which the Scientifically-Based group considers to be a “Win-Win”, is to remove the minerals along the migratory route from any future development ever.
Are you marvelling at the flawlessness and beauty of the Scientifically-Based study and its proposal? A few things helped clarify their reasoning. Upon questioning from the audience, Dr. Beckman stated, that, AT ITS PEAK, the migratory herd contained some 400 members. Since this is 400 of some 4 million in the state, membership in this group is harder to come by than a Skull and Bones knock on the door at Yale. Apparently, the Wildlife Conservation Society has not been taking to heart the constant refrains from Friends of the Earth Al Gore and John Edwards, who keep advocating against TWO AMERICAS in speeches around America recently. Shouldn't this include wildlife as well? A federally-protected subset of Pronghorn Sheep? I have visions of a caste-like stratified Pronghorn Sheep society with Mayflower descendant-like exclusivity. Wasn't there a Dr. Seuss book about this? In any case, I agree with Gore and Edwards on this... there are TWO AMERICAS... one populated by East and West Coast Nincompoops (politicians, entertainers, never-worked-a-day-in-their-lives inheritors who have never created a real job) and The Rest of Us Who Keep It Running.
On a more serious vein, a scientific study made with the sole purpose of finding unique characteristics that can then somehow be classified as a Treasure Needing Preservation is not science at all. When the end result is pre-ordained… how do we keep dirty (CHOOSE ONE: Big Oilmen, Big Mining Conglomerates, Timber Interests, etc) from (CHOOSE ONE: Wrecking, Wasting, Pillaging, Raping, etc) our pristine wilderness... the reasons found are incidental.
Not covered in Dr. Beckman's talk was 1) why a 330 mile migration pattern is valuable? 2) of the several other pre-historic migration patterns identified, what caused their eventual extinction and how did those extinctions negatively impact the ecosystem? 3) exactly how many pronghorn sheep today are migrating? 4) can we build the remaining Pronghorns a light rail system?
It boggles the mind what the "Win-Win" proposal would be had they discovered a herd of tap-dancing antelope...
Some real good comes from this... it has described a near perfect Direct Hydrocarbon Indicator tool, first noted by Drillinginfo's Garrett Mayer. If more than two endangered species habitats, and/or more than one mating ground or migratory route overlap, you have a statistically phenomenal likelihood of encountering oil and gas! Ignoring, for the moment, sampling issues (ie that oil and gas areas of interest are sampled far more robustly by the resource exploitation slayers than trailer house developments, farmland/ranchland, scout camps, etc. even though no compelling evidence that E&P operations have EVER significantly negatively impacted wildlife in the past), we might have finally found a way to remotely locate big oil and gas accumulations!
TEXAS RAILROAD COMMISSIONER RACE
Allen Gilmer, Drillinginfo’s Chairman, invited both candidates for Texas Railroad Commissioner, Victor Carrillo, (Incumbent Republican), and Tom Scarborough (Democrat) to provide a statement to the Drillinginfo membership, and he begged me to include it in this column. I agreed, because if you operate, explore, or own minerals in Texas, this position is arguably the most important to your livelihood than any other. Please take the time to study BOTH candidates... links to both campaign websites are included.
BOB SCARBOROUGH, DEMOCRATIC CHALLENGER, TEXAS RAILROAD COMMISSION (www.For-All-Texans.org)
In my opinion, the Texas Railroad Commission is not doing for all Texans what it was originally established to do. As I understand it, the Commission was established to insure that the economic interests and well-being of all Texas citizens would not be jeopardized or dominated by the monopolistic and manipulative practices of unusually powerful corporations or special interests doing business in Texas. It was a bold move with far reaching consequences. It catapulted Texas into the forefront of the antitrust spirit of the times.
Originally, of course, the Commission’s responsibilities were focused on the abusive practices of the railroads. Later, as the unprincipled and destructive practices of the developers in the oil fields of East Texas rose to general consciousness, the Commission was called upon to introduce order into the chaos that prevailed there. Facing almost unbelievable forms of opposition, the Commission did a commendable job. It established rules and regulations and set limits on what could and could not be done. These rules seemed to benefit developers, the fields and all involved citizens.
Through the years, when it has acted, the Commission has generally acted commendably for the benefit of all. Historians suggest that the Commission has tended to favor the industry and particularly the independent producer, but that generally its efforts have been a benefit to all.
Today there is a chorus of critical voices focused on the work of the Commission. Citizens covered by the Commission’s regulations and citizens who are considered “outsiders” are voicing a wide range of concerns about being treated fairly by the Commission.
There is growing concern about the Commission’s lack of attention to “the abuse of monopoly power by pipelines.” These concerns are being voiced by long-term and leading players in the industry—not the lunatic fringe. This abuse has been called “the greatest threat to the health of the natural gas market in Texas.” The impact of this abuse is not limited to those within the industry—producers or royalty owners. It spills over on to the general public in the form of a reduction in severance taxes collected by the State and by an unnecessarily high price for natural gas and electricity. For the benefit of all, interstate pipelines have limits put on their charges. Distribution lines are closely regulated. It appears that the whole intrastate trip of natural gas from the well head to the city gate needs attention for the benefit of all citizens.
From within the industry I also hear concerns about the unfairness to all (except the pipelines) about the complaint based system of the Commission. Even the informal complaint system has been called “more show than substance.” Apparently legitimate complaints about injurious practices are not encouraged. It is hard to see how this furthers the original intent of the Commission. I think Governor Hogg would be turning over in his grave if he could hear some of these stories.
Concerns about environmental issues are frequently voiced by persons within the industry as well as many outside the industry. From within, the concern is focused on the impact on water resources by faulty plugging practices. Operators who are also land owners also voice concern about the impact of water-flooding on water resources in certain areas. “Those damned environmentalists” are not the only ones voicing concern here. Many operators are quick to claim every bit as much concern about the environment as those outside the industry.
The most insistent and persistent concern about the environment and public safety comes from those outside the industry. Just as every oil operator is not an “arrogant fat-cat with the money and political muscle to get anything he wants”, every one concerned about the environment safety is not an “ignorant, atheistic tree-hugger, dead set on destroying our industry.” Demonization of the opposition may be effective in politics but it does not produce effective policy. There are intelligent men and women of principle concerned about the environment in the industry and out of the industry. As I see the situation here, no one interest in this area deserves undue privileges. A fundamental. principle of our governmental contract is a balance of powers. Special privilege is antithetical to the American spirit and good human relations. Environmental issues are a legitimate concern for all of us. Common concerns, openly and rationally expressed, seriously addressed and respectfully considered can lead to common goals that benefit all.
Within the industry there also seems to be considerable concern about the status, management and use of the Oil Field Cleanup Fund. Questions are frequently heard about how ineffectively it is being used and protected by the Commission. Everyone seems to be concerned about developing the fund, protecting it and using it effectively.
The advent of the bonding program should in no way diminish or detract from attention given to this fund.
It is the persistence of complaints like these, and others, that prompt me to raise my voice on behalf of all Texans. Producers –integrated or independent, large or small-- and royalty owners may be the ones most effected by the work of the Commission, but all the citizens of this State have a stake in this play also. Their concerns need to be heard also.
The history of regulatory agencies suggests that with the passage of time these agencies tend to get “co-opted” or “captured” by the industry they are called upon to regulate. The agency becomes “a means by which the industry regulates itself in its own interests.”
The Texas Railroad Commission was created to protect the interests of all Texans, certainly not the interest of any one industry or group in an industry. I am running for a seat on the Commission because I want to get the Commission back on the track of attending to and helping all Texans—whether they are operators, royalty holders or just “plain old every day” citizens.
VICTOR CARRILLO, REPUBLICAN INCUMBENT, CHAIRMAN-TEXAS RAILROAD COMMISSION, CHAIRMAN-TEXAS ENERGY PLANNING COUNCIL (www.victor2004.com)
When asked by the Dallas Morning News Editorial Board what qualified him to be a Railroad Commissioner overseeing the Texas energy sector, my opponent responded that he was a native Texan and that he inherited some interest in a few wells. The citizens of Texas deserve more.
As a geologist, geophysicist, oil & gas and environmental attorney, and twice elected local official (Abilene City Council, Taylor County Judge), I have the requisite education, experience and vision to continue to serve you. I have been serving as your Railroad Commissioner for 18 months since Governor Perry appointed me in February 2003. For over a year now, I have been Chairman, having been chosen by my two statewide elected colleagues. I am also Chairman of the Texas Energy Planning Council.
With key endorsements from Governor Perry, Lieutenant Governor Dewhurst, U.S. Senator John Cornyn, U.S. Senator Kay Bailey Hutchison, and every statewide elected (non-judicial) official, along with the Texas Oil & Gas Association, Texas Independent Producers & Royalty Owners, Texas Association of Business, and others, I am the right man on the right team to continue to lead the Texas Railroad Commission.
Last year, in the face of rising energy prices and uncertainty in the Middle East, I was urging that we launch an effort to craft a Texas energy plan. Today, that plan is well underway as we move to develop action steps to strengthen our current energy portfolio of oil/gas/coal, and lay the foundation for emerging energy technologies like renewable energy (wind power, solar, biomass, etc.) to carry us into the future. Texas remains the world’s leader in energy innovation and technology, and we need to ensure that the energies of the future create jobs and opportunity here at home.
Governor Perry appointed me to lead the Texas Energy Planning Council and we will submit a full report with our recommendations by year end. I am excited about the ideas we are generating that will make a real difference in meeting our state's future energy needs.
High energy prices have both positive and negative impacts on our state. With over 21 million residents, Texas is a leading energy consumer. We rank first in total energy consumption and second in gasoline consumption among the states. High energy prices cost employers and families money, shifting funds away from more productive endeavors such as plant expansions, job creation and family savings.
On the positive side, the outlook in the Texas oil patch is brighter than it has been in many years. More than 250,000 Texans are employed in the oil and gas and chemical sectors. Texas is the world’s leader in energy exploration, production and innovation expertise. Our schools, colleges and many local governments depend on energy tax revenues. Texas is the leading energy producer in the nation, producing almost 360 million barrels of crude oil and 5.7 trillion cubic feet of natural gas last year.
Today’s energy prices encourage new energy exploration and development as worldwide demand for energy is increasing at unprecedented levels. Most indicators suggest that these price levels will remain relatively stable so we won't see the extreme boom and bust cycles of the past. While Texas is considered a mature petroleum province, I am encouraged by new production activities such as in the Barnett Shale near Fort Worth. Innovative technology developments have transformed the Barnett Shale into the most prolific onshore gas field in Texas and one of the most exciting natural gas plays in the entire country.
Other key indicators of the Texas energy industry's health include the growing number of active operators and active rigs. In February 2003 when I first joined the Railroad Commission, there were only about 6,200 Texas oil and gas operators. Over the last 18 months there has been a steady month-to-month increase to over 6,600 operators -- a positive trend not seen in the last 20 years. We are also seeing the highest active rig count in several years. From a low of 488 total active rigs in the U.S. in 1999, we are now at well over 1200, with Texas alone having over 500 or over 40% of our nation’s active rigs.
The Texas Railroad Commission is working hard to streamline our permitting process, to help our economy and environment at the same time, and provide easier access to our data. Most drilling permit applications can now be made online and in most cases you can get your permit back electronically within one business day. Internet access to production records has also been improved with our new Production Data Query system that includes operator history and product disposition information. Soon, producers will be able to file their monthly production reports via the Internet, saving both time and money. Visit our website at www.rrc.state.tx.us to see some of these ongoing improvements for yourself.
We are also committed to ensuring that development of our petroleum resources does not occur at the expense of our surface and groundwater resources. In addition to ongoing efforts at inspection, pollution prevention, and enforcement, we go the next step and oversee the plugging of abandoned wells and remediation of abandoned sites via the Oil Field Cleanup Fund. Every year of the last five years shows increased numbers of wells plugged and sites being remediated. Since 1991, almost 20,000 wells have been plugged and almost 3,000 sites cleaned up. I am committed to seeing these positive trends in surface and subsurface clean up continue during my tenure.
Overall, the Texas oil and gas industry is poised to be a significant contributor to the world’s energy needs for many years to come. I am proud to be a part of the effort to help satisfy our growing thirst for affordable and abundant energy while protecting our precious groundwater resources and I look forward to serving my fellow Texans in that capacity for many years to come.