“We continue to offer new areas onshore and offshore for leasing, as we have over the last 3 years, and we also want companies to develop the tens of millions of acres they have already leased but have left sitting idle in order to further reduce our reliance on foreign oil as quickly as possible,” Interior Sec. Ken Salazar said.

But American Petroleum Institute Pres. Jack N. Gerard said the administration is reviving claims about idle leases to divert voters’ attention from how it has restricted oil and gas development, shortened lease terms, and move slowly on permit decisions.

“It’s absurd to contend the industry pays the government billions of dollars every year in bonus bids and rents to leave land idle,” he maintained. [The industry] develops leases as expeditiously as it can—often in the face of inordinate delays the administration’s own policies create. The administration is being willfully misleading when it identifies leases as idle when companies are seeking permits, doing exploratory drilling, or fighting lawsuits.”

Misrepresents process

Kathleen Sgamma, vice-president of government and public affairs at the Western Energy Alliance in Denver, said the administration continues to deflect blame for leases that are not producing onto the industry with rhetoric that misrepresents how oil and gas development on federal land works.

“We estimate that about half the nonproducing acreage results from [DOI’s] own redundant regulations and bureaucratic delays,” she said. “If the administration is really concerned about undeveloped leases and increasing domestic energy production, it would direct DOI to move forward with projects that companies have already proposed, and roll back some of the layers of bureaucratic red tape now imposed on western energy producers.”

The Independent Petroleum Association of America said in a statement that producers develop federal leases in a process that involves steps including financing, tract evaluation, getting permits, drilling exploratory wells, and finally producing the oil and gas.

“Leases in the exploration phase are considered by some to be ‘idle’ even though companies are actively exploring for oil and gas and risking hundreds of millions of dollars in the process, such as with seismic surveys and other tests,” IPAA said, adding, “Many offshore leases are 5 years old or less—with a moratorium in between, it’s not surprising that they aren’t producing energy yet.”

Article written by OIL AND GAS JOURNAL Washington Editor:  Nick Snow

In Michigan, fracking has become a concern for some people because the mineral rights of more than 100,000 acres of state-owned land is up for public auction Tuesday. The land includes 23,421 acres in Barry County, the most in the state.

Fracking is a method of extracting natural gas and oil by injecting water, sand and chemicals into a well at high pressure.

There were similar protests across the state Monday. Protesters in Kalamazoo called for investment in “clean” sources of energy, including solar and wind, that they say don’t put the environment at risk like drilling.

Glenn Grubb, of Plainwell, came to the protest because he said he does not want to see the environmentally sensitive areas up for auction in Southwest Michigan harmed.

“I don’t understand why the state should sell these rights,” Grubb said.

Ken Bowers, a Minnesota resident who said he is lecturing at Kalamazoo College, said a major concern of his is that leftover natural gas from the drilling would permeate cracks, mix with the water table and poison drinking water. There is also the possibility that fracking can lead to earthquakes, he said.

The protest march started at the city’s train station, moved to Congressman Fred Upton’s office on the Kalamazoo Mall, and ended up on the corner of South and Rose streets, outside the offices of the Miller Energy Company. The doors of the Miller Canfield building were locked and there were at least four Kalamazoo Department of Public Safety officers on hand.

Mike Miller, president of Miller Energy, said the company is not taking part in the state auction. The oil and gas exploration and production company has been based in Southwest Michigan since the 1930s and Miller said it has operations in northern and southeast Michigan, as well as south central Utah, Texas and Oklahoma.

He said there is a lot of bad information circulating about hydraulic fracking, and that numerous studies have found the method of exploring for oil has no adverse effects on the environment.

Fracking has been used as a method to get oil for the past 60 years, Miller said. In Michigan, there have been more than 12,000 wells and no reported incidents. State Rep. Aric Nesbitt, R-Lawton, has been a major proponent of opening more state land for fracking.

In the past decade, horizontal drilling has allowed further exploration and drilling of land. Miller said it lets companies set up a well on one section of land and drill horizontally underground to areas where it may own leases that do not allow development on the surface.

One of the largest areas up for auction is Yankee Springs in Barry County. While none of that land can have drilling performed on it, companies can buy the mineral rights to bordering parcels and drill from there. Miller said given the makeup of the ground in Yankee Springs, it would be unlikely for any fracking to be done.

Ben Ayer, a local activist, said at Monday’s protest that many environmentalists are concerned about the horizontal drilling and that the protest was aimed at letting Miller Energy know.

“These are our neighbors,” Ayer said. “We want them to know their community doesn’t support what they are doing.”

Fritz Klug is a government reporter for the Kalamazoo Gazette.

So with good news popping up all around about the enormous economic impact that American energy development is having on U.S. manufacturers (remember that 98 percent of all manufactured products use natural gas in their production), it is no surprise that the state known most for its cars, trucks, and workforce is also no stranger to shale.

Indeed, although most official histories identify the Barnett in Texas as the first major shale play to come online in the late 1990s, truth is, the real honor lies with Michigan’s Antrim Shale, which producers first started developing in the 1940s.

And according to a recent report produced by Michigan’s House of Representatives, the potential for new energy development in the state to translate into jobs, revenue and opportunity for Michigan residents is real. As the report’s lead author — Subcommittee Chairman Aric Nesbitt — told E & E News,

“Our hearings and visits throughout the state have shown us that natural gas is vital to Michigan’s economy…The growth of natural gas  means more energy independence and high-wage jobs.

“Michigan has some of the safest and most effective regulations in the nation, and we should work to maintain those so we can increase energy independence and create better jobs in a safe and responsible manner.”

As the report explains, Michigan began developing oil and gas from the Antrim more than 60 years ago – a trend that extends east to west (from Alpena to Manistee) across the northern part of the lower peninsula of Michigan. Investment in the play really took off, though, in the 1980s — and today, as operators explore the viability of what’s known as the Collingwood-Utica formation, Michigan has safely developed nearly 12,000 natural gas wells.

And as the state developed its natural resources, Michigan’s regulatory  system continued to keep pace, leading the nation in developing some of the strongest regulations  for oil and natural gas development.  From the report:

“Michigan is fortunate to have a long history of development in shale formations as our regulatory structure and industry have continuously balanced production with environmental stewardship…Michigan has led the nation in developing regulations for oil and gas exploration that continue to be modernized to ensure safe development of Michigan’s natural resources.

“In Michigan, the DEQ has not found any cases where well stimulation in either vertical or horizontal wells has caused adverse impacts to the environment or public health.”

From supporting Michigan’s extensive manufacturing base, to providing over 8,000 direct jobs and supporting over 23,000 in the state, natural gas production is providing the state with safe, clean, and affordable energy for many years to come.  In fact, estimates from the Department of Energy, increased domestic natural gas use could provide Michigan families with $2,400 in annual cost savings from lower energy price. That’s $2,400 for each and every family in Michigan:

“Providing access to safe and cost-effective natural gas can provide this needed relief {to Michigan families}…These savings are real dollars that our state’s struggling resident can use in these tough economic times.”

Nearly 80 percent of all households in Michigan rely on natural gas for home and space heating. And at the same time, Michigan has more natural gas storage capacity than  any other state in the U.S.  combined with extensive natural gas reserves and exciting estimates coming out of the Collingwood.  Michigan is endowed with the capacity to produce, transport, consume and store an abundant quantity of clean and reliable natural gas.

As an Encana spokesman told the Detroit News last week, “We’re encouraged.  We want to look at coming back to Michigan.” That’s good news for the state – and even better news for our country.  Welcome back, Michigan.

Article provided by ENERGY IN DEPTH

I am all for hearty and respectful discussion of this topic. Discussion that includes all sides making a presentation,  and these presentations being supported with factual information. Unfortunately this was not the case last evening. The discussion last evening was fueled by hysteria, emotion and factious information…half truths. Statements that fracking “might” have caused; or “likely” caused; or “might” cause. You get the picture. It was more like chicken little crying that the “sky is falling”.  When in reality the sky is not falling.

Fracking has not caused any environmental problems and has been in use for over 60 years. There are 12,000 wells in Michigan that have been fracked without incident.  The EPA has completed two very thorough studies on fracking only to find that it is a safe and advantageous practice. Not once but twice has the EPA come to this conclusion.

In December of 2011 the EPA came to a “preliminary” discovery that fracking had contaminated a fresh water source in Wyoming. Soon thereafter it was proved that the EPA errored in their testing and they then recanted the contamination claim. Of course this did not make the major news reports.

There is no evidence or factual information that links fracking to environmental harm. Fracking has an excellent track record over the entire 60 years of use. To ban fracking is an injustice to the American people in need of more domestic energy.  By banning fracking we are reducing our ability to gain more domestic oil and gas supplies. We are foregoing excellent jobs. We are stifling wealth to local communities in the way of royalties, purchase of supplies, jobs and taxes.

As responsible citizens it is our duty to study both sides and be knowledgeable in our decision making. Hysteria and factious information need not play a role. Please be responsible in making your decision.

In closing let me circle back to my opening statement. I use the word “pleasure” and I am sincere in doing so. It was a pleasure to be able to be in a room wherein I was the sole provider of information that was not in favor with the others. Yet the freedom to do so and the responsibility to do so made the challenge a real pleasure. Thanks to those that were there and allowed me this “pleasure”.

Michael J. Miller is President and CEO of Miller Energy Company.  

Information on Hydraulic Fracturing in Michigan can be found at this link.   Information provided by: MOGPEF (Michigan Oil and Gas Education Foundation, 124 West Allegan St., Suite 1610, Lansing, MI  48933.  (517) 487-1092 

The CWA for example, regulates the discharge of pollutants, including flowback from fracturing operations, into U.S. waters. It also provides regulatory structure mandating spill prevention control and countermeasures. Meanwhile, SDWA sets regulations for the disposal of brine and other wastes. This state-federal arrangement has brought about a successful track record for the technology’s use, a revival of U.S. energy production and massive economic benefits to our nation, its communities and consumers.

This isn’t just my view, it’s the opinion of EPA administrator Lisa Jackson who noted, “you can’t start to talk about a federal role [in hydraulic fracturing] without acknowledging the very strong state role.” Jackson also added, “We have no data right now that lead us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”

Yet in spite of established science and well documented experience, a vocal minority is urging the president to push for greater regulation of the practice. The pleas of this group are not based on facts, but on anecdotes and unfounded claims. In response, many federal agencies have drafted regulatory proposals in recent months.

Most of these proposals are either un-necessary, duplicative or both. Two examples include the EPA’s promulgation of regulations governing pre-treatment standards for produced fluids and the agency’s new source performance standards for hydraulically fractured wells. In its rush to regulate, the EPA missed that industry and state regulators are already addressing these issues. Specifically, independent operators are using water recycling and disposal wells for water and brine waste management. They are also using green completion techniques, and other measures, to significantly reduce emissions from development operations.

Pursuing additional regulations for actions that are already occurring is an unwise use of increasingly strained taxpayer dollars. This is exactly what our nation should avoid if it hopes to continue enjoying the economic rebirth of its steel and manufacturing industries, both of which benefit from access to clean burning, affordable natural gas and oil supplies harvested utilizing hydraulic fracturing.

Information provided by:  Barry Russell,  President of the Independent Petroleum Association of America.  (IPAA)

“We’re pleased that the White House recognizes the need to coordinate the efforts of the 10 federal agencies that are reviewing, studying, or proposing new regulations on natural gas development and hydraulic fracturing,” American Petroleum Institute Pres. Jack N. Gerard said on Apr. 13 after attending a White House meeting on the executive order.

“We have called on the White House to rein in these uncoordinated activities to avoid unnecessary and overlapping federal regulatory efforts, and are pleased to see forward progress,” he noted.

Obama’s order established the working group and named his domestic policy advisor, Cecilia Munoz, or a designated representative as its chair. Its members will include deputy-level representatives or the equivalent from the US Departments of the Interior, Energy, Defense, Agriculture, Commerce, Health and Human Services, Transportation, and Homeland Security; the US Environmental Protection Agency; and the White House Council on Environmental Quality, Office of Management and Budget, National Economic Council, and Office of Science and Technology Policy.

The order said the working group will coordinate agency activities to ensure they are efficient and effective, and share scientific, environmental, and related information among the agencies where appropriate. It will make long-term plans and ensure coordination among federal entities on research, natural resource assessment, and infrastructure development; promote interagency communication with stakeholders; and consult with other agencies and offices where appropriate.

‘An important role’

“While gas production is carried out by private firms, and states are the primary regulators of onshore oil and gas activities, the federal government has an important role to play by regulating oil and gas activities on public and Indian trust lands, encouraging greater use of gas in transportation, supporting research and development aimed at improving the safety of gas development and transportation activities, and setting sensible, cost-effective public health and environmental standards to implement federal law and augment state safeguards,” Obama said.

Hours after he issued the executive order, DOI, DOE, and EPA announced a memorandum of agreement to coordinate their present and future scientific research and scientific studies on unconventional oil and gas resource development. They said a primary goal of this effort will be to identify research topics where collaboration among the three agencies can be most effectively and efficiently conducted to provide results and technologies that support sound policy decisions by the agencies responsible for ensuring the prudent development of energy sources while promoting safe practices and human health.

“Improvements in technologies like hydraulic fracturing are responsible for greatly increasing our capacity to develop America’s abundant unconventional resources in recent years,” Deputy US Interior Sec. David J. Hayes said.

“Through a close collaboration across the government that reduces redundancy and streamlines our research, we are positioning the Obama administration to best meet the critical need of increasing public understanding and public confidence of these critical technologies so that we can continue safe and responsible exploration and production for many decades to come,” Hayes continued.

Trade associations representing producers and other gas industry segments quickly responded to Obama’s action. Independent Petroleum Association of America Pres. Barry Russell said the executive order has a very good intent. “We hope [it] provides the administration with a more comprehensive understanding of the federal government’s increasing regulatory grasp on the industry,” he said. “A key mission of this new coordination effort should be to reach out to the state agencies that already regulate hydraulic fracturing and the industry’s other practices.”

On-the-ground expertise

America’s Natural Gas Alliance Pres. Regina Hopper and Natural Gas Supply Association Pres. R. Skip Horvath separately noted that the order, as it laid out a blueprint for coordinating federal agencies’ efforts to oversee growing US unconventional gas production on federal lands, also recognized the states’ primary overall role. “Each state has different geological conditions and state regulators have the on-the-ground presence and expertise to promulgate and oversee unique operating requirements,” Hopper said. “We look forward to continuing to work with both the administration and the states.”

Kathryn Klaber, president and executive director of the Marcellus Shale Coalition in Canonsburg, Pa., said fracing is essential to produce US unconventional gas resources. “To even further improve environmental performance, states like Pennsylvania continue to raise the bar on regulatory requirements,” she indicated. “As the interagency’s panel begins its work, we remain eager to provide real-time, on-the-ground insight in an effort to ensure that common sense regulations are in place.”

Other business and trade associations also commented. “With shale gas poised to play an important and growing role in the nation’s energy strategy, appropriate regulations and policies will be critical,” the American Chemistry Council said in a statement. “[Its] full potential…will only be realized with sound state regulatory policies that allow for aggressive production in an environmentally responsible way. A coordinated approach to regulation can certainly help. We will be watching closely as the president’s initiative develops.”

Business Roundtable Pres. John Engler called Obama’s executive order “a solid first step toward coordinating and, we hope, improving federal oversight of hydraulic fracturing.” Chief executives from businesses in the organization recently discussed with the president how overlapping rules and duplicative and unnecessary rules could make federal regulation of this technology burdensome, he said. “We hope this working group can cut through these complications and encourage further investment in the energy sector,” Engler said.

API’s Gerard emphasized that growing US gas resource development, as well as increasing US production of crude oil from tight shale formations, would not be possible without fracing. “The president’s support of natural gas reminds us that we are reliant on technologies developed by the industry that make it possible to develop this energy resource,” he said. “We have one of the world’s largest known gas reserves, and we need public policies based on sound science in order to develop this affordable source of energy.”

Article provided by OIL & GAS JOURNAL, Nick Snow: nicks@pennwell.com

Plethora of Definitions

There are different purposes behind the effort to define reserves. They range from near-term, high certainty, conservative estimates of what can be produced by an individual company that can be used as the basis for project planning and financing, all the way to blue-sky, long-horizon, inferred projections for a whole region or country of resources that may exist regardless of the current state of technology or economics.

Thus, many entities have their own definition of “reserves”—the U.S. Geological Survey, American Association of Petroleum Geologists, Society of Petroleum Engineers, the Society of Petroleum Evaluation Engineers, the World Petroleum Congress, not to mention the Securities and Exchange Commission, the Internal Revenue Service, and the United Nations Framework Classification. Geologists and petroleum engineers have various highly developed systems of categories and terminology, and have spent considerable effort coming up with definitions that can be applied repeatedly and consistently. However, to keep our analysis brief (and since we are neither engineers nor accountants), we’ll limit ourselves to distinguishing between “proved reserves” and “technically recoverable reserves.”

Proved Reserves

An example of proved reserves is the Securities and Exchange Commission (SEC) definition, effective in 2010, since public companies are required to provide reserves data in their 10-K reports.

“Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations.”

One key term is “reasonable certainty,” which is generally taken as 90% probability. It implies estimates are only for areas with solid data from existing wells and production history from which highly certain and reasonably precise estimates can be made. The term “economically producible…under existing economic conditions, operating methods, and government regulations” excludes any projection of future technology improvements, and implies that producing this resource must be economic with current market prices and other economic conditions.

In other words, “proved reserves” is an extremely conservative definition.  It has little downside risk and potentially a great deal of upside potential. With a bent towards precision and high certainty, it can exclude large amounts of oil and natural gas that are likely to exist but can be estimated less accurately and with less stringent requirements for certainty. In fact, “reserves growth,” a common industry phrase, is almost a foregone conclusion even in the “proved reserves” category, as existing producing areas undergo infill drilling, reservoir assessment, re-completions, work-overs, re-fractures, and refinements in development strategies.

Technically Recoverable Reserves

By contrast, the term “technically recoverable” is much more expansive. According to the U.S. Geological Survey, “Technically recoverable resources” are “resources in accumulations producible using current recovery technology but without reference to economic profitability.” This differs from “proved reserves” in many ways. It is less restrictive than the 90 percent probability point, often including a range of estimates with a corresponding range of probabilities; it includes estimates of yet-to-be-discovered oil and gas; and includes oil and gas that may not be producible with current prices and other economic conditions. Thus, it can be a much larger figure than “proved reserves.”

Technology Expands Estimates

A key point about “technically recoverable reserves” is that those estimates change as technology changes— sometimes changing in a major way, when, for example, horizontal drilling is combined with hydraulic fracturing.

This has been clearly illustrated as many shale gas and shale oil plays have become viable thanks to new technologies. For example, in 1995, the USGS estimated that the Bakken formation, discovered in the 1950s, held only 0.15 billion barrels of technically recoverable oil. In just under twenty years, in 2008, thanks to advances in tight oil technologies, it updated this to 3 to 4.3 billion barrels! The situation has changed rapidly enough that the USGS is working on yet another assessment (out of cycle) expected in late 2013. Meanwhile, other industry experts have put the figure for the Bakken much higher, closer to 20-24 billion barrels with total original “oil in place” (total volume present in a reservoir) nearing 1 trillion barrels.

Hardly a new hydrocarbon region with the first well drilled in 1921, the Permian Basin of Texas and New Mexico, has a production history of well over 30 billion barrels of oil since then. Yet technological advances have significantly altered assessments of its technically recoverable reserves. In 2007, USGS assessments for the region included for the first time “continuous resources,” a term which includes shale gas and shale oil plays. Without these added assessments, the Permian estimates of undiscovered technically recoverable resources would have been limited to the conventional plays, put at 5.2 tcf of natural gas and just under 1 billion barrels of liquids by the USGS. But the addition of “continuous resources” added another 35.4 tcf of gas and 1.3 billion barrels of liquids, putting the total estimate of undiscovered technically recoverable amounts at 41 tcf of gas and 2.3 billion barrels of liquids. Original crude oil in place is estimated at 95.4 billion barrels, with 33.7 billion barrels of that produced or in discovered, recoverable reserves.

Overall, the assessment of U.S. technically recoverable reserves of both oil and natural gas have grown markedly over the past decade, as the chart shows.

International Apples and Oranges

Before one compares U.S. “reserves” with other producing countries around the world, it’s important to know what is being compared. For example, some countries for political reasons may focus on more expansive definitions of “reserves” or even on “oil in place”— not all of which is commercially recoverable. Some countries may withhold detailed technical data, which makes independent assessment of reserves difficult. Knowing how and when to apply definitions to emerging technologies can also lead to differences. For example, Canada’s oil sands’ reserve estimates have been subject to different interpretations by various analysts, ranging from dozens of billions of barrels to well over a hundred billion barrels. Thus, comparing U.S. “proved reserves,” one of the most conservative definitions in use, with these broadly-defined figures distorts the comparison.

Caution: Future May Be Brighter Than Appears

From the beginning days of the industry, continued innovation has led to new, expanding assessments of “technically recoverable” oil and natural gas. Edwin Drake’s first well in 1859 astounded onlookers with production of all of 10 barrels per day as oil from surface seeps was quickly surpassed by the volumes of oil producible by simple drilling. From those early days onward, improvements in technology, geologic understanding, and operational experience have progressed as the industry moved to deeper prospects, differing geologies, and more challenging environments offshore. Independents have often been at the vanguard of technological innovations that have made these milestones possible—using ever evolving engineering, information processing, and innovative operational practices.

For shale oil and shale gas and other tight, low-permeability plays, the industry is only at the beginning of the technology story, with much room left to grow in recovery factors and depletion curves. Thus the final outcome is unknown—but may be brighter than experts could have ever projected in the past. The turnaround in U.S. oil and gas production, with independents at the helm, is concrete evidence of the growing commercial resource base of American oil and natural gas—and great encouragement for America’s energy future.

To review our past analyses and our latest data, please visit the Resources section at:   www.oilindependents.org.

All information for this article provided by IPAA – Declaration of Independents, 1201 15th Street, NW, Suite 300, Washington, DC 20005

Phone:  (202) 857-4722    Website:  www.ipaa.org

First of all, gasoline is not crude oil.  Before crude oil becomes gasoline, it must undergo a series of transformations, which refineries play a crucial role. Although gasoline is not the only petroleum product that helps keep the U.S. economy running, it does account for nearly half of U.S. petroleum consumption (which is understandably why it receives the most attention in the media). While petroleum products overall, including diesel fuel and jet fuel, make up 93 percent of energy used in U.S. transportation, gasoline alone accounts for more than 60 percent of U.S. transportation energy.

Dissecting the relationship between crude and this popular product of gasoline is more like calculus and less like simple arithmetic, but here is a start. Some considerations that affect gasoline supplies and prices include:

Market Factors

• The U.S. market is a part of the global market. Just like every other market (food, technology, manufacturing), oil is traded on an international market. While U.S. petroleum consumption has fallen by some 2 million barrels per day since 2005, world demand for oil excluding the U.S. has risen by some 7 million barrels per day over the same period. That primarily reflects strong growth in the developing world, especially Asia. Because of the global nature of trade, increased U.S. crude oil production, which has significantly helped reduce U.S. oil imports, increase jobs and revenues, and enhance our energy security, is just one factor in a world market that is far from standing still. This is largely because the U.S. still imports about 45 percent of the petroleum it uses. International crises like the Libyan revolution of last summer and the recent Iranian threats to close the Strait of Hormuz have an impact on global oil supply. On another note, although some complain about the U.S. exporting diesel and gasoline, this actually helps offset some of the imbalance of trade that the U.S. has experienced in the past with regard to energy.
• Increased U.S. production does lower price of oil—regionally. American oil production has helped lower the price of many of our domestic crude streams in comparison to internationally-priced Brent and other imported grades. As a result, relatively abundant supplies in the mid-continent have in recent times put market prices for West Texas Intermediate (WTI) crude at some $10-$20/barrel cheaper than imported Brent crude. As of mid-March, the difference was running at about $20/barrel. Further up the supply chain, Bakken crude itself was trading some $17-18 below WTI several weeks ago. Because of increased U.S. oil production, mid-continent refiners have seen lower costs for increased domestically-supplied inputs, while East Coast (and Caribbean) refiners have largely been faced with the higher cost of imported foreign crude oil.

The chart shows how the spreads between Bakken, WTI, Louisiana Light Sweet (a Gulf Coast crude) and Brent have varied over time. Over this period, EIA data show that the average crude oil price paid by refiners (who also are subject to market conditions) has more than doubled, rising the equivalent of $1.35 per gallon, while retail prices of gasoline have risen by about 50%, or about $1.10 per gallon. One has to be careful in one’s expectations of price symmetry between the raw material and the product.

• U.S. oil market reflects supply and demand. Compared with the U.S., in Europe the norm has been for high fuel taxes, less individual mobility, and greater dependence on mass transportation. For example, in January, the average price of gasoline in the U.K. was about $7.80 per gallon – with nearly $5 per gallon of that in the form of taxes. With some 60 percent of the retail price going to taxes rather than to pay for the product itself, consumption responds less to changes in world petroleum prices because the percentage change in retail prices is damped. At the other end of the scale are a significant number of oil producing and/or developing countries around the world where petroleum prices are heavily subsidized, and consumers have less incentive to manage their usage patterns (i.e., Saudi Arabia and Venezuela). One could argue that U.S. market reflects the laws of supply and demand rather than price-setting mechanisms utilized in many other countries.

Energy Policy

• Taxes on Gasoline Matter. On a much smaller but still significant scale, local taxes vary within the U.S. While the Federal excise tax is the same across the country at 18.4 cents/gallon for gasoline (and 24.4 cents/gallon for diesel), state and local taxes vary considerably. According to tax data compiled by the Energy Information Administration and other sources, taxes range from over 65 cents/gallon for New York, including Federal excise taxes, to 26.4 cents/gallon for Alaska. The national average is around 46 cents/gallon.
• Burdensome Regulations Matter. Gasoline for sale in most major metropolitan areas is required by the EPA to meet tighter standards than gasoline sold in rural regions. Meeting these tighter standards can make that gasoline more costly to produce. Going further, California requires its own specific formulation of gasoline which must meet the most stringent requirements in the country. There are other various regional requirements, and by some counts, across the country there are at least 15 different gasoline formulations.
• Infrastructure matters. Consumers geographically farther from the source of production are likely to pay more because of the higher cost of transportation and the need for more storage terminals to buffer fluctuations in shipments along the lengthy supply chain. The East Coast accounts for over 36 percent of U.S. gasoline consumption, but with relatively few refineries, the region only accounted for 7 percent of refinery runs in 2011. This may help explain why retail prices in the high-demand, refinery-poor Northeast, even after adjusting for differences in taxes, are higher than on the Gulf Coast, where roughly half of the nation’s refinery capacity operates. Also part of the mix is how certain refineries have been tailored with specific crudes in mind, resulting in differences in the products refined. East Coast refiners have traditionally targeted lighter, lower-sulfur crudes, while Gulf Coast refiners have more often focused on heavier and sourer crudes. Thus, strategically-positioned energy infrastructure – such as the southern portion of the Keystone XL pipeline and the Seaway reversal for increasing Bakken oil production – is crucial to transporting crude from the place of production to the proper refineries.

The accompanying maps illustrate some of the geographic and demand-influenced variation in gasoline prices, based on selected state average retail prices from EIA. It shows California with the highest retail price in the group, followed by states in the Northeast which are among the most distant from Gulf Coast refineries and the most dependent on imported products. Lower average prices are found in Texas, near the refining hub of the U.S., and in areas closer to our top producing regions.

U.S. Oil Production Builds a Healthy Economy

Gains in American oil production have been an outstanding development for the United States – they have helped to reduce U.S. petroleum imports and increase U.S. energy security in a world where access to reserves is becoming more limited and where an increasing share of available supplies are being redirected for consumption elsewhere. However, because these domestic developments take place in a global market, the reality of the relationship between crude and product prices, as you can see, does not fit into a five-second sound bite.

However, the U.S. can and must have a comprehensive energy policy that not only addresses these issues, but encourages the American oil production that has a direct effect on jobs, economic revitalization, and energy security. While increased drilling may not equal direct major decreases at the pump, hitting our nation’s energy producers hard with increased taxes and burdensome regulations will certainly make producing – and consuming – American energy more expensive. This results in lost jobs and investment in the American economy, makes us more reliant on foreign imports and increasingly vulnerable to an oil supply shock.

The rising cost of gasoline is difficult for American consumers. America’s independent oil producers, who drill 95 percent of U.S. wells, are small businesses – employing 12 people on average. We understand the pain at the pump – and we’re trying to help. Demonizing and punishing the American oil industry, especially for political gain, hurts everyone – from blue-collar workers hired on rigs to restaurant owners in local communities, to citizens across the nation that rely on energy supplied by the U.S. oil industry every day of their lives.

Article provided by:  IPAA, Independent Petroleum Association of America, 1201 15th Street, NW, Suite 300, Washington, DC 20005                (202) 857-4722         Declaration of Independents, America’s Oil & Gas Producers.

“It is only March, and already Michigan families and businesses are feeling the pinch in their pocketbooks every time they go to the gas pump. It is a painful reminder of how urgently we need a domestic energy strategy to address this ever-growing problem,” said Upton. “Rising costs place a huge burden on local businesses, impeding their ability to create jobs and aid in our economic recovery. The fact is, when it comes to energy production, we need it all. By putting the premium back on North American energy production we can simultaneously help lower energy costs, create good-paying jobs, and reduce our nation’s dependence on foreign suppliers. While the administration has frequently touted the benefits of domestic energy production, the actual policies tell a different story. Michigan’s struggling families and small business owners deserve better.”

Upton is a leading supporter of the Keystone XL pipeline project, which would bring vital energy suppliers from Alberta, Canada to refineries in the United States. Construction of the project is estimated to create tens of thousands of U.S. jobs and would reduce America’s dependence on overseas oil by nearly 1 million barrels per day.

“Today’s rising gas prices place a tremendous burden on people and businesses in Southwest Michigan and across the country,” said Steward Sandstrom, President/CEO of the Kalamazoo Regional Chamber of Commerce. “It is an enormous issue for small businesses, who are as susceptible to increases at the pump as anyone else. Our local employers want to expand and grow their businesses, but the uncertainty caused by high energy prices is a growth killer. At the same time, businesses recognize that high gas prices are a major drag on consumer confidence, so in effect they are taking a hit for these costs twice. These challenges reinforce the economic need for a long-term federal response to our national energy crisis.”

What Local Job Creators Are Saying:

Steven Duisterhof, Gordon Water Systems

“Our nation’s current policy of little to no domestic energy development is hurting our working families the most. They are the ones paying the highest costs, and in turn it is hurting local small business. This unwillingness to develop North American energy is disproportionately harming the lower-income citizens of this country – the negligence is borderline unethical. It’s just flat out wrong.”

Luke and Michael Miller, Miller Energy Company

“As a fourth generation, family-owned, independent oil and natural gas company, Miller Energy and its 12 employees understand the burden higher gasoline prices place on small businesses. We recognize that high oil prices are primarily the result of supply and demand issues combined with geopolitical tensions. Part of the solution to stabilize prices is to create a national energy policy that encourages businesses like Miller Energy to provide more American oil and natural gas supplies to the marketplace. It is in our nation’s best interest to find new supplies of oil and natural gas across America. This will not only provide energy for our future, but also create thousands of jobs here at home.”

David Rhoa, Lake Michigan Mailers, Inc.

“We have a plan designed to help us manage the rising cost of fuel. Our customers did not ask us to develop this blueprint. We developed this plan because our customers expect us to provide them with cost-effective service regardless of the price at the pump. They have every right to expect that we would have such a strategy. Like our customers, the American people have every right to expect that their President will champion a national energy strategy that is comprehensive, cognizant of current economic realities, and viable in both the near term and long term.”

Aaron Zeigler, Harold Zeigler Auto Group

“As the economy is starting to gain steam again the major factor that could de-rail prosperity in the future is out of control gas prices. As gas prices rise, our costs rise and our suppliers’ cost rise and eventually the tremendous burden of cost is placed on Michigan families who are only now just beginning to recover from 38 months of double-digit unemployment. The solution is very simple. Expand energy production here at home with our vast resources and move forward with the proposed Keystone XL pipeline which would create an historic opportunity to increase our access to secure oil supplies.”

By DANIEL YERGIN

As in the 2008 presidential election—remember the chants of “Drill, baby, drill!”—rising oil and gasoline prices have become an issue in 2012.

But election-year politics aside, the forces driving up prices at the pump are very different today than they were four years ago. In 2008, it was primarily the surge in oil consumption in emerging markets, disruptions, and a belief that the world was running short of oil (the so-called peak oil crisis).

In 2012, the reason is mainly geopolitics. Last November, the United Nations declared that Iran was clearly developing nuclear-weapons capabilities. The West is responding with sanctions aimed at reducing Iran’s ability to export oil, on which it depends for more than half of its government revenues, to get it to halt its nuclear-weapons program. Tehran has answered by conducting large naval exercises and threatening to close the Strait of Hormuz, through which passes some 35% of the world’s oil exports.

Global oil prices and U.S. gasoline prices have both risen about 20% since mid-December. And all this is occurring in a world oil market that is already tight, tighter than it was last year, with no more than 2.5 million barrels of spare capacity. At least half a million barrels a day are currently out of the market because of disruptions in South Sudan and Yemen and civil war in Syria.

A market this tight would already be susceptible to upward price pressures. But the market is operating on expectations that supplies will become even tighter as new U.S. and European sanctions against Iran take effect and the risk of military conflict increases. Put simply, the oil market is reading the front page.

Given these circumstances, there’s not much Washington can do in the short term to reduce prices at the pump. Indeed, the picture would look much worse were it not for the nearly 20% increase in U.S. oil output since 2008. More efficient permitting could get more U.S. oil fields up and running faster, but even then there are lead times. Moreover, new oil flows from Canada, North Dakota and elsewhere are hobbled by an outdated pipeline system.

The market is clearly responding to what it sees as dangers ahead. Still, charges of speculation and price manipulation are already being resurrected from 2008. This is nothing new. As early as 1923, Sen. Robert “Fighting Bob” LaFollette, chairing highly charged Senate hearings on gasoline prices, warned that if companies were permitted “to manipulate oil prices . . . the people of this country must be prepared, before long, to pay” the unheard-of-level of at least “a dollar a gallon.” As it turned out, within a few years gasoline was as low as 10 cents a gallon.

Read the rest of the story at: http://online.wsj.com/article/SB10001424052702304459804577281580476174366.html

WASHINGTON, DC— The Obama administration’s recent decision to reject the Keystone XL Pipeline has another set of unintended consequences with particular importance to U.S. independent producers. The pipeline’s construction would have been a significant boon to the regional infrastructure needed to loosen the growing crude oil bottleneck in the Midwest, caused, in part by the surge in Bakken crude oil production led by America’s independent producers.

Bakken Benefits

In North Dakota, crude oil production has more than quadrupled since 2007. Based on current trends (see graph below), North Dakota will probably surpass California as the number three U.S. producer within the next few months, overtaking Alaska not long after.  One benefit of this surge in supply is that, because crude oil from the Bakken tends to be light and sweet, it is easier to refine and easier to convert into the lighter products (gasoline, diesel, jet fuel) that are in high demand both at home and globally.

The economic benefits are enormous. Unemployment in North Dakota stood at 3.3 percent in December, the lowest rate in the entire country. Home foreclosures are also among the lowest in the nation. The state government’s tax revenues from oil and gas production have risen from a little over $100 million in fiscal 2005 to $1 billion for fiscal 2011. In addition, over the past three years, lease revenues and royalties have added over $800 million to state revenues and close to half a billion dollars to federal revenues.

Growing Pains

In light of this rapid growth, the logistical landscape has shifted markedly. Traditionally, imported and American crude moved north from the Gulf Coast to the Midwest’s refineries, which can currently handle about 3.5 million barrels per day. Now, with increasing crude from North Dakota and Canada, Midwest refineries’ demand for crude from the Gulf Coast has greatly diminished, and the net movement northwards between the two regions has dwindled to not much more than 500,000 barrels per day.

Now, more crude runs in the other direction, and with these challenges of moving Midcontinent crude out of the region, crude oil prices there have become sharply discounted compared with elsewhere. One symptom of this imbalance can be seen in the price spread between Brent, an international crude, and West Texas Intermediate (WTI), a Midcontinent crude stream. This differential, which was often a negative $2 to $3 per barrel in the early 2000s, flipped in 2010 with the most recent differentials in  the $15-20 range as the imbalance has returned due to takeaway limitations.

Regional Markets Reflect Bottlenecks

An even more telling symptom for Bakken producers, in particular, is the recent shift in the differential between Bakken crude priced at Clearbrook, Minnesota and WTI priced at Cushing, Oklahoma. The Bakken quotes earlier had been tracking roughly with WTI — already at a sizeable discount to Gulf Coast and world crudes. But in February, with the regional supply imbalance persisting and in-place capacity to deliver crude oil outside the region apparently topping out, it has developed a sharp discount even relative to WTI — on the order of over $20 per barrel as of early February.



These regional imbalances have led to various efforts to adapt and reconfigure the distribution system, ranging from a planned reversal and expansion of the Seaway Pipeline between Cushing, Oklahoma and the Gulf Coast, to increased barging of crude oil down the Mississippi River. The Seaway reversal is already underway and reportedly could be shipping 150,000 barrels per day before mid-year, with further expansion planned. Among other possible projects, TransCanada says it is considering building U.S.-only segments of the Keystone XL pipeline. There has been a revival of rail transportation to fill in some of these gaps. As is shown in the accompanying graph, shipments of Bakken crude by rail now exceed 125,000 barrels per day and account for some 23 percent of total shipments.

East Coast refiners have been at an even greater logistical disadvantage with respect to these burgeoning American supplies. Getting Midwest crude to Eastern refineries is costly and problematic, and as a result East Coast refineries have largely continued to rely on more expensive, Brent-priced, imported crude. The result has been the closure of some East Coast refineries, others being put up for sale, and some companies exiting the refining business altogether.

Infrastructure Essential to Success

Overcoming underground geologic and engineering challenges have turned U.S. shale plays into technological energy success stories. Unfortunately, above-ground challenges remain. Because energy infrastructure has, for decades, lagged behind the expansion of energy production, the full benefits remain yet to be realized. U.S. policymakers must realize that the oil and natural gas industry relies on working energy infrastructure to connect the production, refining, and consumers. With those solid links in place, America’s independent producers can continue to do what they do best – explore, develop, and deliver the energy our economy needs now and in the years to come.

Article written by: Nicole Daigle,  (IPAA) Independent Petroleum Association of America

The President tried to take credit for increased oil production, yet the amazing “shale revolution” has occurred largely on private lands (like the Bakken play of North Dakota) – not on public, government-controlled lands. Despite the President’s claim to open access to vast areas for energy development, the fact is that the administration has restricted access to an incredible amount of federal offshore and onshore lands. In fact, the administration has sought to encroach upon the progress of even private land development through instructions to virtually every agency to hyper-regulate hydraulic fracturing, the very technology that has unlocked the oil and natural gas reserves from shale.

President Obama repeated the usual misleading rhetoric against the oil and natural gas industry, when he claimed that the government has “subsidized oil companies for a century.” What President Obama calls “subsidies” are actually typical business deductions that every manufacturing industry receives. These tax provisions—intangible drilling costs and percentage depletion—give smaller independent producers the ability to take on the enormous risk of exploring new oil and natural gas reserves. They also encourage much-needed economic reinvestment into new American projects. For their part, America’s independent oil and natural gas producers reinvest 150% of their cash flow into these projects—which creates new American jobs and supplies more American energy. Rather than the government shelling out to the oil and natural gas industry, the industry’s production contributes significantly to the government through sizable royalty payments and a wealth of revenues that replenish state and federal budgets.

Last fall, IPAA battled for the independent producers’ very livelihoods when Congress, at the behest of President Obama, tried to repeal these provisions. Thankfully, these elimination efforts fell flat and the business deductions that encourage crucial industry investment survived. However, there will certainly be more battles on taxes to come in 2012 as President Obama continues to misrepresent the productivity of the American oil and natural gas industry.

It is crucial that the Obama administration recognizes the truly amazing benefits of a healthy oil and natural gas industry to jobs, a vibrant manufacturing sector, and renewed economic growth. IPAA stands ready to work with the President on empowering the states to continue their responsible regulation of the industry. After all, without a vibrant American oil and natural gas industry – it’s impossible to have an “America built to last.”

Article written by:  Barry Russell, President, of the Independent Petroleum Association of America (IPAA)

At Miller Energy, you will be part of a dynamic and highly successful company with exciting career opportunities and a world-class work environment. We hire exceptional people, and encourage our employees to think independently, take initiative and be innovative. You will enjoy a team-oriented culture in which you will collaborate with talented professionals in a collegial, community atmosphere where learning and growth are valued.

From the time you join our team, you will have important responsibilities helping to fulfill today’s energy needs and build a sustainable energy future. You will be able to see where the company is going and feel good about your role in getting us there. With diverse assignments, you will have a myriad of opportunities to learn, grow and achieve your professional goals.

Job Purpose:

The Lease Analyst will review, interpret, setup and maintain complex Oil and Gas Leases, contracts, instruments and agreements, working within the Bolo land system. This position will ensure procedures are followed for the physical filing and image processing for all Petroleum Contracts that are setup in Bolo.  In addition, this position includes the preparation of reports and exhibits along with assisting the Land Department in the research of the records systems.  Furthermore, this individual will be involved in land activities with related departments to ensure smooth workflows and maintain efficient business controls.

Duties:

• Independently analyze, interpret and map applicable Petroleum Contracts to calculate accurately and provide timely set-ups, payments, and obligations.
• Construct and maintain Petroleum Contracts in the Bolo land system including the management of a systematic reporting process.
• Evaluate monthly expiration reports and enter updates into the system database to maintain the integrity of the leasehold.
• At any one time, support a number of Petroleum Contract opportunities across the full life-cycle including leasing, file maintenance, title curative, acquisition and divestitures, laws, and regulations.
• Internally interface with other company departments and personnel regarding Petroleum Contracts.  Externally interface with land owners and/or government(s) regarding Petroleum Contract issues/matters.
• Review special obligation reports and update system to ensure that all title information is up to date and correct.
• Review and circulate monthly rental reports to ensure that rent payments are made on time and accurate.  Update information and maintain the database as the need arises.
• Review monthly expiration reports; investigate and resolve discrepancies in those reports to maintain the integrity of leasehold information and data.
• Research and prepare Memorandum of Lease Extensions, Release of Oil & Gas Leases, & Assignments of Oil & Gas Leases that have been deemed necessary to ensure ownership is reflected correctly from the record title.
• Evaluate and determine status of leases for the properties being shut-in, plugged, temporarily abandoned, etc., and advise and coordinate with Land Manager as to what must be done to maintain the property.
• Support due diligence activities related to oil & gas property acquisition, divestiture, and merger.

Skills/Qualifications:

• 1 – 5 years of professional experience in analysis of land records, leases, deeds, contracts, agreements, title, division orders or land administration is required.
• Bachelor’s degree or expected equivalent in experience.
• Excellent written and verbal communication skills.
• Self motivated, highly organized individual with strong analytical skills and critical attention to detail, who enjoys working in a challenging, fast paced environment.
• Able to effective manage time and prioritize projects in order to meet established deadlines.
• Proficient computer skills, including experience with Microsoft Office applications.  Experience with land software systems and GIS mapping is a plus, but at a minimal must have a willingness to learn company specific software.
• Knowledge of standard industry contracts and of oil and gas vocabulary as well as the ability to understand and read legal descriptions for a track of land and have the ability to interpret land title information.

Applications will be accepted by fax or e-mail to the following:

Fax: (269) 324-3584 or: lmiller@miller-energy.com

Subject Line:   Lease Analyst Administration

By Mail:

Miller Energy Company

Attention: Luke Miller

277 S. Rose Street, Suite 3300

Kalamazoo, MI 49007

This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the [DOS] from gathering the information necessary to approve the project and protect the American people,” Obama said as he announced his agreement with DOS’s rejection recommendation. “I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil.”

Obama noted that in the coming months, the administration would look for ways to work with the oil and gas industry to increase US energy security, including potential development of a crude oil pipeline from Cushing, Okla., to the Gulf of Mexico, as it also sets higher fuel efficiency standards for cars and trucks and invests in alternatives to oil such as biofuels and natural gas.

The action immediately drew heavy fire from congressional Republicans and others who support the project, and praise from environmental organizations and others who oppose it.

US Sen. Richard G. Lugar (R-Ind.), the primary sponsor of legislation which set a deadline for a decision, said that the administration misled the American people on the pipeline. “In the face of Iranian threats against oil affordability, [it] once again is trying to blame Congress and the State of Nebraska instead of taking responsibility for American jobs and security,” he said during an appearance at a Greenwood, Ind., instruments and gauges manufacturer who potentially would be doing work for the project.

Dismisses Energy Realities

American Petroleum Institute Pres. Jack N. Gerard said, “This is not leadership. It’s a genuflection to extreme elements who somehow believe America will be stronger turning its back on secure supplies of oil the president’s own energy department says will be needed for decades to come. The president may dismiss these energy realities and may even believe keeping his job is worth the cost of the thousands of jobs that won’t be created. But we don’t think most Americans will agree.”

National Petrochemical & Refiners Association Pres. Charles T. Drevna said TransCanada Corp.’s proposed crude oil pipeline from Alberta’s oil sands to US Midcontinent and Gulf Coast refiners has been studied exhaustively for more than 3 years, and has been shown beyond any doubt to be safe and in the US national interest. “The United States already relies on a network of more than 168,000 miles of liquid pipelines to safely and efficiently transport oil, and the Keystone XL pipeline would be a valuable addition,” he said.

US Chamber of Commerce Pres. Thomas J. Donohue said, “This political decision offers hard evidence that creating jobs is not a high priority for this administration. By placing politics over policy, the Obama administration is sacrificing tens of thousands of good-paying American jobs in the short term, and many more than that in the long term.”

Under an attachment to a bill extending a payroll tax holiday, Obama had until Feb. 21 to act on the 1,600-mile pipeline. His administration earlier had deferred a decision on the project until 2013, but congressional Republicans hoped to force him to choose between labor union supporters, who back Keystone XL, and environmental groups, which oppose it.

In response to challenges by environmental groups to industry estimates of jobs associated with Keystone XL construction, TransCanada provided its own estimates on Jan. 10 of 13,000 US jobs in construction and 7,000 in manufacturing.

It said construction would require 17 US pipeline spreads with 500 workers each. The project’s 100 pump stations would require 100 workers each. And 600 jobs would be created at six construction camps and in tank construction at Cushing, Okla. Construction, management, and inspection oversight would create a further 1,000 jobs, TransCanada said.

‘Enormous Mistake’

“Blocking the Keystone pipeline would be an enormous mistake by the Obama administration,” said National Center for Policy Analysis Senior Fellow H. Sterling Burnett. “We need the oil and we need the jobs it would bring. This is as ‘shovel ready’ as anything Obama has proposed, yet because his radical environmental constituency objects, he’s apparently halting the pipeline.”

The Industrial Energy Consumers of America, meanwhile, said, “We are strongly disappointed with President Obama’s decision. There is no excuse that this administration can provide that justifies this delay. The US government has been reviewing the Keystone XL pipeline since 2008. Delay-delay-delay is keeping 20,000 workers from a paycheck.”

The project’s opponents were pleased, however. “Today, the Obama Administration rejected a dirty and dangerous tar sands oil pipeline, refusing to be bullied by the oil industry into approving the project in 60 days without even knowing where it would be built,” said Henry A. Waxman (D-Calif.), the US House Energy and Commerce Committee’s ranking minority member. “Despite intense and misleading oil industry lobbying, Americans understand that what’s good for the oil industry is not necessarily good for the American people.”

Natural Resources Defense Council Pres. Frances Beineke said, “The pipeline was rejected for all the right reasons. President Obama put the health and safety of the American people and our air, lands, and water—our national interest—above the interests of the oil industry. His decision represents a triumph of truth over Big Oil’s bullying tactics and its disinformation campaign with wildly exaggerated jobs claims.”

Information provided by: Oil & Gas Journal, Nick Snow OGJ Washington Editor

“Energy is a game changer for the United States,” Donohue maintained on Jan. 12. “With the right policies, the oil and gas industry could create more than 1 million jobs by 2018. Not only can we create jobs, but we can cut our dependence on overseas imports while adding hundreds of billions of dollars to government coffers in the coming years.”

Donohue’s recommendations came as part of the nation’s largest business organization’s American Jobs and Growth Agenda, which also urges infrastructure improvements beyond energy; trade, investment, and tourism expansion; regulatory and legal reform; improved intellectual property protection; and immigration, tax, and entitlement reforms.

Regarding Keystone XL, Donohue said the proposed project “has passed every environmental test,” adding, “There is no legitimate reason—none at all—to subject it to further delay. Labor unions and the business community alike are urging [US President Barack] Obama to act in the best interests of our national security and our workers and approve the pipeline. We can put 20,000 Americans to work right away and up to 250,000 over the life of the project.”

Donohue’s call for Obama to promptly approve TransCanada Corp.’s cross-border permit application for Keystone XL came a day after the American Petroleum Institute submitted a letter with the same request from itself and 105 other associations, only 28 of which were part of the domestic oil and gas industry.

Biggest foreign supplier

“With the current situation in the Middle East, and tensions in the Strait of Hormuz continuing to rise, approving this pipeline is the right energy and national security policy for America,” the Jan. 11 letter from API said. “Canada is already our largest supplier of imported oil—almost 2.4 million b/d, or one fourth of our imports. With this proposed pipeline, our crude imports from Canada could reach 4 million b/d, twice what we currently import from the Persian Gulf.”

The project also would transport 100,000 b/d of crude from North Dakota’s Bakken shale to refineries, US Sen. John Hoeven (R-ND) noted during a Jan. 11 appearance in Bismarck with Alex Pourbaix, president of TransCanada’s energy & oil pipelines division, and Terry Hildestad, chief executive at MDU Resources Group Inc., a Bismarck utility, pipeline, and exploration and production company.

Hoeven said Tad True, vice-president of True Companies Inc., has indicated that the Casper, Wyo., company plans to build feeder pipelines in North Dakota contingent on Keystone XL’s approval, which would translate into a reduction of nearly 50,000 truck-miles/day, or 17 million truck-miles/year, in the state.

Lynn D. Helms, director of North Dakota’s Mineral Resources Department, has said the new pipeline’s capacity would also reduce the discount on crude produced in the state, giving producers another $4/bbl, the senator added.

“Business in the Bakken is growing for every one of MDU Resources’ businesses because of the infrastructure needed to support oil production, which just exceeded 500,000 b/d,” said Hildestad. “We currently have roads and other infrastructure projects in the works, including over $60 million of work on the books for our Knife River construction materials business.”

Article provided by:  Oil & Gas Journal (Nick Snow, OGJ Washington Editor)

Throughout the interview, as accusations of environmental dangers from natural gas development were addressed, Lee urged the panel and the public to put these accusations in a broader context of industry’s historic record of environmental safety and compliance. To listen to the full segment, please click here.  Here are some highlights:

On Hydraulic Fracturing

• “It’s important to put this in some context. The context is we’ve probably done a 1.2 million or so hydraulic fracturing jobs in the United States since it was initiated and the success record for that effort has been extraordinary—to the point where we’re now looking for one or two instances to try to suggest that there is some sort of systemic problems with fracturing.”

• “In fact, all of the analyses that have been done suggest that fracturing is safely managed now and continues to be safely managed.”

On Pavillion

• “It hasn’t been peer reviewed. It’s very important that we not jump at conclusions with respect to Pavillion until there is a better chance for questioning to be made.”
• “Even EPA Administrator Jackson has been very cautious taking a position on the quality of this report. Secretary Salazar of the Department of Interior has been very critical. The state of Wyoming is concerned about the quality of the data.”
• “In fact, one of the monitoring wells that EPA drilled may well have been drilled into a natural gas formation. The reason why they’re seeing various chemicals and compounds there may have been from their own well operations.”

On Landowners

• “We have about a million oil and gas wells that are in operation today in the United States and around 8.5 million leaseholders. The process for actually going through the leasing activity is one that has been working in general quite well.”
• “As the industry has moved into areas like the Marcellus in Pennsylvania and New York…the familiarity with the industry is not as extensive. There probably needs to be a better mechanism to share information with the potential leaseholders as that contract is being negotiated.”

As environmental groups instigate hysteria about oil and natural gas development, it is vital for IPAA to represent America’s independent producers with sound reason and facts.   For more information on these and other hydraulic fracturing issues, please visit Energy in Depth (EID), EID Ohio, and EID Northeast Marcellus.

This information provided by Barry Russell, President of  IPAA (Independent Petroleum Association of America).

“When considered together with other lines of evidence, the data indicates likely impact to ground water that can be explained by hydraulic fracking,” said the EPA report, referring to the drilling process that blasts water and chemicals into shale rock to release oil and natural gas. The news caused elation among environmentalists and many in the media who want to shut down fracking.

More than one-third of all natural gas drilling now uses fracking, and that percentage is rising. If the EPA Wyoming study holds up under scrutiny, an industry that employs tens of thousands could be in peril.

But does it stand up? This is the first major study to have detected linkage between fracking and ground-water pollution, and the EPA draft hasn’t been peer reviewed by independent scientific analysts. Critics are already picking apart the study, which Wyoming Governor Matt Mead called “scientifically questionable.”

The EPA says it launched the study in response to complaints “regarding objectionable taste and odor problems in well water.” What it doesn’t say is that the U.S. Geological Survey has detected organic chemicals in the well water in Pavillion (population 175) for at least 50 years—long before fracking was employed. There are other problems with the study that either the EPA failed to disclose or the press has given little attention to:

• The EPA study concedes that “detections in drinking water wells are generally below [i.e., in compliance with] established health and safety standards.” The dangerous compound EPA says it found in the drinking wells was 2-butoxyethyl phosphate. The Petroleum Association of Wyoming says that 2-BE isn’t an oil and gas chemical but is a common fire retardant used in association with plastics and plastic components used in drinking wells.

• The pollution detected by the EPA and alleged to be linked to fracking was found in deep-water “monitoring wells”—not the shallower drinking wells. It’s far from certain that pollution in these deeper wells caused the pollution in drinking wells. The deep-water wells that EPA drilled are located near a natural gas reservoir. Encana Corp., which owns more than 100 wells around Pavillion, says it didn’t “put the natural gas at the bottom of the EPA’s deep monitoring wells. Nature did.”

• To the extent that drilling chemicals have been detected in monitoring wells, the EPA admits this may result from “legacy pits,” which are old wells that were drilled many years before fracking was employed. The EPA also concedes that the inferior design of Pavillion’s old wells allows seepage into the water supply. Safer well construction of the kind normally practiced today might have prevented any contaminants from leaking into the water supply.

• The fracking in Pavillion takes place in unusually shallow wells of fewer than 1,000 to 1,500 feet deep. Most fracking today occurs 10,000 feet deep or more, far below drinking water wells, which are normally less than 500 feet. Even the EPA report acknowledges that Pavillion’s drilling conditions are far different from other areas of the country, such as the Marcellus shale in Pennsylvania. This calls into question the relevance of the Wyoming finding to newer and more sophisticated fracking operations in more than 20 states.

***

The safety of America’s drinking water needs to be protected, as the fracking industry itself well knows. Nothing would shut down drilling faster, and destroy billions of dollars of investment, than media interviews with mothers afraid to let their kids brush their teeth with polluted water. So the EPA study needs to be carefully reviewed.

But the EPA’s credibility is also open to review. The agency is dominated by anticarbon true believers, and the Obama Administration has waged a campaign to raise the price and limit the production of fossil fuels.

Natural gas carries a smaller carbon footprint than coal or oil, and greens once endorsed it as an alternative to coal and nuclear power. But as the shale gas revolution has advanced, greens are worried that plentiful natural gas will price wind and solar even further out of the market. This could mean many more of the White House’s subsidized investments will go belly up like Solyndra.

The other big issue is regulatory control. Hydraulic fracturing isn’t regulated by the EPA, and in 2005 Congress reaffirmed that it did not want the EPA to do so under the Safe Drinking Water Act. The states regulate gas drilling, and by and large they have done the job well. Texas and Florida adopted rules last week that followed other states in requiring companies to disclose their fracking chemicals.

But the EPA wants to muscle in, and its Wyoming study will help in that campaign. The agency is already preparing to promulgate new rules regulating fracking next year. North Dakota Governor Jack Dalrymple says that new EPA rules restricting fracking “would have a huge economic impact on our state’s energy development. We believe strongly this should be regulated by the states.” Some 3,000 wells in the vast Bakken shale in North Dakota use fracking.

By all means take threats to drinking water seriously. But we also need to be sure that regulators aren’t spreading needless fears so they can enhance their own power while pursuing an ideological agenda.

Article provided by The Wall Street Journal/Review & Outlook/December 19, 2011

Of course, before you can answer the second question, it’d be helpful if you had a good answer for the first. And the truth is, as we sit here today, less than 20 hours A.P. (After Pavillion), we simply don’t. What we do know, however, even at these early stages, is that several of the assertions put forth in EPA’s report yesterday don’t quite square with the facts as they actually exist on the ground out there. Because of that, a number of folks are starting to ask some pretty basic questions about what the agency found and how it went about finding it. Below, a few of the most obvious:

1) Why the huge difference between what EPA found in its monitoring wells and what was detected in private wells from     which people actually get their water?

• Contrary to what was reported yesterday, the compounds of greatest concern detected by EPA in Pavillion weren’t found in water wells that actually supply residents their water – they were detected by two “monitoring wells” drilled by EPA outside of town.
• After several rounds of EPA testing of domestic drinking water wells in town, only one organic compound (bis (2-ethylhexyl) phthalate) was found to exceed state or federal drinking water standards – an additive in plastics and one of the most commonly detected organic compounds in water. According to EPA:  “Detections in drinking water wells are generally below established health and safety standards.”
• Bruce Hinchey, president of Petroleum Association of Wyoming: “Let me be clear, the EPA’s findings indicate that there is no connection between oil and natural gas operations and impacts to domestic water wells.”
• In contrast, EPA found “a wide variety of organic chemicals” in its two monitoring wells, with greater concentrations found in the deeper of the two. The only problem? EPA drilled its monitoring wells into a hydrocarbon-bearing formation. Think it’s possible that could explain the presence of hydrocarbons?
• According to governor of Wyoming: “The study released today from EPA was based on data from two test wells drilled in 2010 and tested once that year and once in April, 2011. Those test wells are deeper than drinking wells. The data from the test wells was not available to the rest of the working group until a month ago.”

2) After reviewing the data collected by Region 8, why did EPA  administrator Lisa Jackson tell a reporter that, specific to       Pavillion, “we have absolutely no indication now that drinking  water is at risk”?

Of note, Administrator Jackson offered those comments to a reporter from energyNOW! a full week after Region 8 publicly released its final batch of Pavillion data. In that interview, Jackson indicates that she personally analyzed the findings of the report, and was personally involved in conversations and consultations with staff, local officials, environmental groups, the state and the operator.

• After reviewing all that information, and conducting all those interviews, if the administrator believed that test results from EPA’s monitoring wells posed a danger to the community, why would she say the opposite of that on television?
• And if she believed that the state of Wyoming had failed to do its job, why would she – in that same interview – tell energyNOW! that “you can’t start to talk about a federal role [in regulating fracturing] without acknowledging the very strong state role.” A week later, why did she choose to double-down on those comments in an interview with Rachel Maddow, telling the cable host that “states are stepping up and doing a good job”?

3) Did all those chemicals that EPA used to drill its monitoring wells affect the results?

• Diethanolamine? Anionic polyacrylamide? Trydymite? Bentonite? Contrary to conventional wisdom, chemicals are needed to drill wells, not just fracture them – even when the purpose of those wells has nothing to do with oil or natural gas development.
• In this case, however, EPA’s decision to use “dense soda ash” as part of the process for drilling its monitoring wells could have proved a bad one.
• One of the main justifications EPA uses to implicate hydraulic fracturing as a source of potential contamination is the high pH readings it says it found in its monitoring wells. But dense soda ash has a recorded pH (11.5) very similar to the level found in the deep wells, creating the possibility that the high pH recorded by EPA could have been caused by the very chemicals it used to drill its own wells.
• According to Tom Doll, supervisor of the Wyoming Oil and Gas Conservation Commission: “More sampling is needed to rule out surface contamination or the process of building these test wells as the source of the concerning results.”

4) Why is the author so confident that fracturing is to blame when    most of his actual report focuses on potential issues with   casing, cement and legacy pits?

• The report singles-out old legacy pits (which the operator had already voluntarily placed in a state remediation program prior to EPA’s investigation) as the most obvious source of potential contamination. These decades-old pits, which are obviously no longer used, have nothing to do with hydraulic fracturing.
• From the report : “Detection of high concentrations of benzene, xylenes, gasoline range organics, diesel range organics, and total purgeable hydrocarbons in ground water samples from shallow monitoring wells near pits indicates that pits are a source of shallow ground water contamination in the area of investigation. Pits were used for disposal of drilling cuttings, flowback, and produced water. There are at least 33 pits in the area of investigation.“
• From the report’s concluding paragraph: “[T]his investigation supports recommendations made by the U.S. Department of Energy Panel on … greater emphasis on well construction and integrity requirements and testing. As stated by the panel, implementation of these recommendations would decrease the likelihood of impact to ground water and increase public confidence in the technology.”

5) 2-BE or not 2-BE?  That is the question.

• EPA indicates that it found tris (2-butoxyethyl) phosphate in a few domestic water wells. What the agency doesn’t mention is that this chemical is a common fire retardant found in plastics and plastic components used in drinking water wells. It’s not 2-BE, which, although also a common material is sometimes associated with the completions process.
• According to EPA, in one of the eight samples collected, a small amount of 2-BE was detected. Interestingly, two other EPA labs that measured for the same exact compound reported not being able to detect it in the duplicate samples they were given.
• According to Wyoming Governor Mead: “Members of the [Pavillion] working group also have questions about the compound 2-BE, which was found in 1 sample … while other labs tested the exact same water sample and did not find it.”

6) Is EPA getting enough potassium?

• Several times in its report, EPA notes that potassium and chloride levels were found to be elevated in its monitoring wells. But just because you have potassium and chloride doesn’t mean you’ve got potassium chloride, a different chemical entirely and one that’s sometimes associated with fracturing solutions. Nowhere in its report does EPA suggest that potassium chloride was detected.
• According to several USGS studies of groundwater quality in the area, variable — and in some cases, high — concentrations of potassium and chloride have been detected in Pavillion-area groundwater for more than 20 years.
• Interestingly, the potassium levels detected in EPA’s first monitoring well declined by more than 50 percent from October 2010 to April 2011, while the potassium level in EPA’s second monitoring well increased during that same period. Only natural variations in groundwater flow and/or composition could have account

Information for this article provided by:  ENERGY IN DEPTH, please use this link for additional information: Six Questions for EPA on Pavillion.

The surprise has taken the form of a solid increase in American liquids production and a shift towards declining imports. In addition, natural gas plant liquids (NGPL) output has been exceeding 2 million barrels per day for the first time ever, providing additional feedstock for the industry at home. In fact, both petroleum product and natural gas exports are even increasing – a topic we will more fully address next time. The import trends are also occurring on the natural gas front, with a turnaround that has put American natural gas production in position to reach an all-time high this year. It’s worth a detailed look at the significant impact all these positive developments have had on U.S. trade, as well as some thoughts on where this might lead.

On the liquids side, imports have declined some 2 million barrels per day since 2005, while product exports nearly tripled over that period. In fact, product exports in August exceeded 3 million barrels per day for the first time ever, according to Energy Information Administration (EIA) data. As a result – in a positive trend for energy security –our reliance on foreign petroleum has shrunk from over 60 percent in 2006 to under 50 percent last year.   A slow economy surely results in lower demand, which accounts for part of the shift away from imports. However, the effect of a slow economy is insufficient to explain the entire shift. American liquids production – including both crude oil and natural gas liquids – has jumped roughly 1 million barrels per day between 2008 and so far in 2011. Much of that has come from the increased production of the onshore lower 48 and reflects the significant contributions of America’s independent producers.

On the natural gas side, the reversals brought about by increased American energy production have also been striking. Even with natural gas consumption increasing over the past five years by more than 2 Tcf, or nearly ten percent, net imports have fallen by 1 Tcf, from 3.6 Tcf in 2005 (and a peak of 3.8 Tcf in 2007) to 2.6 Tcf in 2010. What enabled that remarkable development was the work of the American oil and gas industry, which through innovative technology brought about a jump in U.S. natural gas production of nearly 20 percent in just five years.  As a result, the net import percentage for natural gas was at its lowest point in seventeen years at 10.8 percent,  down from a peak of 16.4 percent in 2005.

The impact on trade in dollar terms of the takeoff of natural gas production has been even more dramatic, if one allows that the increasing abundance of America’s resources has contributed to lower market prices for natural gas. Lower prices have greatly reduced the cost of what natural gas the U.S. still imports, even as the need for imports has declined. In 2005, the cost of U.S. net trade in natural gas was about $32 billion.  For 2010, that had fallen to $12 billion, with roughly a third attributable to lower net imports and the rest to lower prices. So far in 2011, the net cost on the natural gas balance has fallen even further from a year ago, trailing 2010’s January-September dollar figure by nearly one third. Rising U.S. supplies have also led to increasing interest in the prospect of LNG exports, with one new project recently approved and several more under review – contrasting with the many dozens of licenses being pursued just a few years earlier to import, rather than export, LNG.

Where do things go from here? To the degree that the U.S. experiences a much-needed economic recovery over the next several years, American energy demand is likely to rise with economic recovery.  Also, on the flip side, we have demonstrated that petroleum consumption is a key component to economic growth.

One thing is clear in the larger world energy picture: an ever-increasing share of Middle East petroleum is heading to supply burgeoning developing economies in the East, rather than Western economies. In fact, roughly three-fourths of Middle Eastern petroleum now already goes to Asia. Thus, supplies from the Western Hemisphere and from the U.S. in particular, are of increasing strategic value. This is especially true, given that some 80 percent of the world’s oil reserves are already controlled by government-owned national oil companies that are not always subject to market-based behavior. The United States is in a great position. According to a recent Goldman Sachs study, the U.S. is on target to be the world’s top producer of oil,   bypassing Russia and Saudi Arabia in just five years.  The U.S. – especially its policymakers – cannot neglect the tools in its own hands that can enhance American energy security and increase the availability and affordability of energy essential to our economy.

This article provided by:  IPAA (Independent Petroleum Association of America). To learn more about America’s independent producers and to review our past economic analyses, please visit the Resources  section of www.oilindependents.org.

All were at least partially paid for by Michigan’s Natural Resources Trust Fund.

Established in 1976 (albeit, with a different name) the Michigan Natural Resources Trust Fund (MNRTF) this year celebrates 35 years of strategically acquiring property and improving recreational facilities for the benefit and enjoyment of Michigan’s residents and visitors.

The MNRTF was established, following a spirited debate, after oil was discovered in the Pigeon River Country State Forest in the northeastern Lower Peninsula, a pristine wilderness that serves as the home range of Michigan’s elk herd. At the time of the discovery, some people believed that Pigeon River Country was too important a resource to jeopardize by allowing energy development. Others thought the oil was too valuable an asset to sit underground unutilized.

The MNRTF was the result of the compromise agreed upon by both sides: it allowed the development of energy resources, but dedicated the revenues and royalties derived from mineral development to the acquisition of additional land to compensate the public for the disruption energy development caused.

And it embodied an important principle for the management of Michigan’s non-renewable natural resources: The resources belonged to all generations of Michigan residents – not just those who were around when the minerals were exploited. So instead of just funneling the money into the general fund, as had long been the practice, the Kammer Recreational Land Acquisition Fund (named for then Sen. Kerry Kammer, Oakland County) was established.

By 1978, the Trust Fund, which was set up with a $100 million cap to generate interest, was funding the acquisition of public land, not just for ownership by the state of Michigan, but for other governmental bodies as well: cities, townships, counties. The Trust Fund was so successful that it became a target for legislators who sought to use some of the money it brought in to solve Michigan’s other financial problems. By 1983, more than $100 million had been diverted to other purposes.

Then in 1984, the voters of Michigan approved a constitutional amendment that created the MNRTF, increased the cap to $200 million and protected the fund from raids. In addition, it allowed for up to one-third of the revenue to be used to purchase land for environment protection and recreation and the development of recreation facilities. But there was also a provision that allowed the diversion of $20 million annually to the state’s economic development fund – something that many believed was not in the spirit of the fund’s original intent.

So a decade later, the question was brought before the voters once again. The public overwhelmingly approved Proposal P, which removed the diversion provision, raised the cap to $400 million and created the State Parks Endowment Fund, which receives $10 million annually for the maintenance and capital improvement of state parks.

But the public wasn’t finished improving the MNRTF. In 2002, the voters raised the cap to $500 million, which was reached earlier this year, and where it remains today. Since the cap has been reached, oil and gas revenues now go to the Parks Endowment Fund to pay for a portion of the numerous, much-needed infrastructure repairs at Michigan’s state parks and recreation areas.

Since its inception, the Trust Fund has granted more than $900 million to local units of governments and the Department of Natural Resources to acquire land and develop recreational facilities. Roughly 80 percent of those grants has been spent on land acquisition, the rest on recreational project development. The spending has been split almost 50-50 between projects nominated by local governmental bodies and DNR initiatives.

“The Natural Resources Trust Fund has, without question, improved the lives of Michigan’s citizens,” said Steve DeBrabander, who oversees the DNR’s Grants Management section. “I believe you would be hard pressed to find a Michigan citizen who has not enjoyed a park or trail that was acquired or developed by this fund.”

Projects funded range from small (restroom improvements at a local park, for instance) to grand, such as the purchase of development rights of Kamehameha Schools lands – $16 million spent on a conservation easement that allows timbering and public access to nearly a quarter-million acres of Upper Peninsula land spread across several counties.

Projects have been funded in every county of the state, from launch ramps on local lakes to expansions of state wildlife areas.

The Trust Fund is overseen by a five-member board, which includes the DNR director or a member of the Natural Resources Commission and four state residents appointed by the governor to four-year terms.

The Grants Management section of the DNR administers the fund. It accepts and scores applications for grants and passes them along to the MNRTF board for its consideration. Specific criteria,ranging from the resource protection and recreational opportunities a project affords to where the project is located (urban area recreational opportunities get a priority) to the availability of matching funds for a particular project, help guide the review process. The board makes recommendations for funding to the Legislature, which approves all expenditures.

Currently, the board is chaired by Bob Garner of Cadillac, who, interestingly enough, was a legislative aide in the 1970s (to Sen. Kerry Kammer) and attended the first meeting to develop the Trust Fund.

Playground equipment at Keith J. Charters Traverse City State Park was purchased with Natural Resources Trust Fund money.

“None of us from back then can even believe how wildly successful the Trust Fund has been,” Garner said. “We’re just in awe of it. Think about this: The Trust Fund has provided more money for land acquisition than the federal duck stamp program and that’s been around since 1937.”

Periodically, the board identifies priorities. Current priorities include trails and greenways, wildlife corridors and deer wintering yards, and projects in urban areas.

Development grants range from $15,000 to $300,000. There is no limit to acquisition grants.

DNR Director Rodney Stokes said he believes the MNRTF program is “one of the most important pieces of natural resources legislation of the last 35 years.

“Citizens all over the state, as well as our many visitors, have benefited from this amazing program.”

To learn more about the Natural Resources Trust Fund, visit www.michigan.gov/dnr-grants.

Well worth your read, the article talks about the successful drilling and the resulting boost to the economy for the state of North Dakota, which boasts of a 3.5% unemployment rate,  and a housing shortage.   All due  in large part to the presence of Continental Resources and the  oil boom from the Bakken discovery.

However, a recent invite to the White House for Mr. Hamm did not come as a result of his knowledge of the oil and gas industry and his vision to replace OPEC, but rather he was invited for a “giving summit” with other wealthy Americans.   His brief encounter with President Obama is shared in the article and leads one to agree with Mr. Hamm’s assessment that our President has the energy story in America wrong.

Miller Energy encourages you to take the time to read the complete article:

WALL STREET JOURNAL/HOW NORTH DAKOTA BECAME SAUDI ARABIA , written by:  Stephen Moore, Wall Street Journal

However, as President Obama touts the importance of a viable transportation infrastructure, he threatens to devastate the American oil and gas industry, which makes both the infrastructure and the transportation possible. As he outlines his plan to create jobs, President Obama threatens to overhaul the historic tax structure that encourages industry investment— the source of jobs for millions of Americans.

We heartily agree that a “world-class transportation system” and the mobility it brings is an essential piece of our nation’s economic greatness. But here’s what President Obama missed: energy, with petroleum in the lead, is the common denominator in our nation’s transportation system. We need petroleum products and energy to create the asphalt and concrete which builds our roads, bridges, and tunnels—unless of course we are content with the dirt roads of a bygone era. Most importantly, according to the Energy Information Administration (EIA), transportation made up almost 28 percent of our entire energy demand in 2010. Moreover, petroleum leads the way in making transportation possible as it comprises an overwhelming 93 percent of the energy demanded for transportation.

FACT: Even with increased diversification of transportation fuels, petroleum is likely to make up more than 88 percent of U.S. transportation fuels in 2035.

America’s highways have given us the ability and freedom to move, trade, and connect across the vast United States. It is absolutely crucial that we maintain and improve this infrastructure that has given our nation the mobility that is a mark of the freedom of movement so intrinsic to the American way of life. Our nation is not slowing down.  By the EIA’s Annual Energy Outlook (AEO) model, the vehicle miles traveled in the United States are set to increase between 1.6 – 1.9 percent per year out through 2035. Depending on which vehicle class is analyzed, that’s a 44 – 50 percent growth rate. We need petroleum to maintain this growth in mobility. We must not be slowed by policies that hamper the development of petroleum.  As the charts above clearly portray, petroleum makes up the lion’s share of transportation demand. Experts duly note this demand is not going to radically change anytime soon. Based on projections by the EIA’s AEO, which assumes a static policy scenario, petroleum demand will continue to increase by the year 2035, even while we further diversify the U.S. energy portfolio.

Fortunately, America’s petroleum demand is far from yesterday’s supply challenge thanks to our nation’s abundant source of oil reserves—and the American producers are ready to unlock them. In fact, according to the most recent report by the National Petroleum Council (NPC), America’s oil resources are proving to be much larger than previously thought. For example, due to increased technologies, oil producers can now access tight oil, which resides in the Bakken play for example, and have increased production to about 400,000 barrels per day just within the past three or four years.

Unlike the EIA’s AEO report, the NPC report takes policy changes into account. The report projects that depending on access to new plays and other factors, this type of oil production is likely to grow to between 2 and 3 million barrels per day. The National Petroleum Council, which is an official advisory committee to Energy Secretary Steven Chu, also emphasized the point that even with increased efficiency and cheaper alternatives,  ”Americans will need natural gas and oil for much of their energy requirements for the foreseeable future.”

This week, Daniel Yergin, chairman of IHS and renowned petroleum economist, released an article appropriately entitled “There Will Be Oil,” in which he gives the technologic, geologic, and economic explanations of the world’s increasing oil reserves. In particular, he highlights the unconventional oil found abundantly in the U.S.  Now, due to more sophisticated technology, he writes that “overall U.S. oil production has increased more than 10 percent since 2008.”  Net oil imports reached a high point of 60 percent in 2005, but today, thanks [in part] to increased production, imports are down to 47 percent.”

Petroleum is the fuel of America—our consumers want it, our economy and infrastructure require it, and our companies have the technology to supply it from home. It’s the fuel of the present, and now it’s proving to be the fuel of the future. But if President Obama overthrows the historic tax structure to punish America’s oil producers, then Americans will be forced to purchase more expensive imports from foreign nations who are often hostile to the United States’ free way of life. However, if lawmakers enact policies that promote the industry investment necessary to unlock these plentiful oil reserves, then our nation can truly be on a path to energy security and a viable infrastructure. Not to mention, it will actually achieve the goal of President Obama’s plan—creating millions of sustainable, well-paying American jobs.

This information provided by:  www.oilindependents.org For more information on how America’s independent oil producers are supplying American energy, jobs, and security to the United States please visit this website.

Although analysts are hopeful that the fall of the Gaddafi regime will enable production to increase to about 300,000 barrels per day in a few months, most are doubtful that it will return to pre-conflict levels until after 2013.

However, despite these concerns, the headlines are missing the real story: The United States’ gains in domestic production, including NGPLs, is impressive compared to Libya’s losses in production.



Although all Middle Eastern conflicts make us question the future stability of the oil market, the real answer lies within our own borders. The United States, due to shale and tight oil discoveries cropping up throughout the lower 48 states, is more than making up for Libya’s decreased oil production.

The industry is ready and willing to increase its oil production at home in proximity to U.S. consumers, the largest users of crude oil. Independent producers in particular are taking the lead on these onshore liquid plays. Increased technological expertise, facilitated by key lessons learned from the natural gas shale revolution, has enabled producers to unlock vast reserves in new and old fields alike. The potential for domestic job creation and economic growth is enormous – these are not just political talking points, but critical building blocks to America’s economic recovery. Many studies project that these plays will completely transform the economic outlook of many states which contain these reserves. The entire nation will benefit, not only in increased jobs and economic growth, but through increased energy security because we can better protect ourselves from uncertainty abroad.

Last week in Houston, at the industry-wide NAPE® conference, oil and gas companies were abuzz with the latest highlights about these emerging plays. Pete Stark of IHS CERA opened up the conference “Shale Gale Part II – ‘Tight Oil’ Game Changer” noting that the industry could be adding 3 million barrels per day to our production by the end of the decade. Tom Ward, chairman and CEO of Sandridge Energy, discussed his company’s increased activities on the Mississippi Lime and the importance of handling the water associated with the play. Petrohawk expressed optimism about its prospects in Texas’ Eagle Ford with a specific focus on high-density porosity and opportunities in the Hawkville region. Marathon outlined its exploration plans in the Bakken in North Dakota in the context of the upstream portion of the company splitting from the downstream, and Apache described its progress in 5,000 potential locations in the Permian Basin in Texas – stressing the need for new workers as it gains further information in the Central & North Basin Platforms, the Eunice, New Mexico Area and the “crown jewel” in the Deadwood Area.

Disruptions in oil supply are unfortunate and unavoidable, especially as long as we limit American energy companies’ access to our own rich reserves. The more we rely on foreign oil imports, the more disruptions will affect our market. The lesson to learn from Libya is that our nation needs to increase its energy security—and increased domestic supply is the best defense to insulate our nation from volatile conflicts overseas. The United States is fortunate to have abundant oil and gas reserves. Our country must promote a domestic energy policy that enables the oil and gas industry to produce more at home, which in turn strengthens our foreign policy, shielding our nation from trouble overseas.

This article provided courtesy of:  IPAA Declaration of Independents.

WASHINGTON, DC – The White House announced that President Obama will propose new ideas to create jobs in a speech scheduled for just after Labor Day. While the nation’s unemployment numbers indicate that the President’ leadership on this issue is sorely needed, it’s no secret that America’s independent oil and gas producers are holding up their end of the bargain.

Here is what they’re saying about the growing number of high-paying jobs being created every day thanks to domestic oil production:

• “More Jobs, More Revenue, More American Energy”: A Bipartisan Opportunity”: Washington is so stuck in partisanship and ideological warfare that our representatives are missing easy opportunities for bipartisan solutions that would actually make things better for all Americans. …Virginia Democratic Senators Mark Warner and Jim Webb have created such a bipartisan opportunity for a small building block toward success. …Senators Webb and Warner introduced legislation last month that would force the federal government to move forward with offshore drilling in Virginia in an area still known as Lease Sale 220. …Offshore oil development could add more than 15,000 jobs in Virginia and add $3.2 billion to the Commonwealth’s economy, according to a  2009 report published by the American Energy Alliance. …Offshore drilling has enormous potential to be a first step toward breaking gridlock in Washington and toward a real plan to American Energy for Prosperity. (Human Events, Newt Gingrich op-ed,  8/17/11)

• “More Records for North Dakota’s Booming Oil Economy”: Oil-related employment in North Dakota has more than doubled in just two years, from 6,900 jobs in June 2009 to a new record of 15,600 jobs in June of 2011. While the national economy struggles with another “jobless recovery,” North Dakota has continued to add jobs, and not just oil-related jobs. … Bottom Line: North Dakota‘s impressive economic success clearly illustrates some of the benefits of domestic energy production: ongoing job growth, a jobless rate close to 3%, record-setting economic growth, and a bubble-resistant housing market. There’s no reason that the economic success of North Dakota can’t be duplicated elsewhere, if we would only open up more U.S. land and off-shore areas to domestic energy exploration and drilling. (Seeking Alpha, 8/15/11)

• “Let the U.S. Oil and Gas Industry Create New Jobs”: In recent days, the markets have signaled concern about the economy.  Amid disappointing employment figures and lagging economic indicators, consumers, investors and businesses are searching for some bright spot in the market. The oil and gas industry, which has consistently shown strength during this lengthy economic downturn, has the potential to help lift our economy if the right energy policies are in place. One way to help restart our economic engine is to encourage new investment and growth in the energy sector, which currently supports more than 9.2 million American jobs. We stand ready to create thousands of new jobs and generate billions of additional dollars for the economy by safely developing new energy sources right here at home. (Fox News, op-ed by Chevron’s Bobby Ryan, 8/10/11)

• “Oil, gas employment sets record”: Looking for good news in the Texas job market? An 18-month-long expansion of the Texas oil and gas economy has propelled estimated petroleum industry employment beyond a milestone achieved in late 2008, contributing to the creation of about two-thirds of all jobs added in-state in the past year. This news comes from Karr Ingham, an economist who created the Texas Petro Index (TPI), which is a service of the Texas Alliance of Energy Producers. “Post-recession job growth in Texas has been among the strongest in the nation, and the oil and gas industry in Texas deserves most of the credit for that,” Ingham said at a recent Texas Alliance news conference in Houston. (San Angelo Standard Times, Alex Mills column, 8/13/11).

• “Oil and gas jobs are waiting, Mr. President”: Each new oil rig translates to between 800 and 1,400 new jobs, everything from additional manpower on the rigs themselves to jobs at refineries and transportation centers to process and move the oil. …Already, the U.S. oil and natural gas industry supports 9.2 million jobs and contributes more than $1 trillion annually to the nation’s economy. A lot more can be added with the government simply liberating U.S. resources for producers and consumers. What is unacceptable is settling for the status quo. (Houma Courier, IER’s Rob Bradley op-ed, 8/13/11)

Information for this article was provided by:  IPAA Declaration of Independents.

One way to help restart our economic engine is to encourage new investment and growth in the energy sector, which currently supports more than 9.2 million American jobs. 

We stand ready to create thousands of new jobs and generate billions of additional dollars for the economy by safely developing new energy sources right here at home.  

According to a recent analysis by the American Petroleum Institute, oil and natural gas companies contributed more than $470 billion to the U.S. economy in spending, wages and dividends in 2010.  This is more than half the size of the 2009 federal stimulus package – yet this stimulus did not require a Congressional vote or taxpayer dollars.  Additionally, our industry is a tremendous revenue source for cash-strapped federal, state and local governments – paying about $86 million a day in taxes, fees and royalties.  

The U.S. is an energy powerhouse.  Estimates of our resource potential are considerable.  For example, many experts believe the U.S. could have enough oil offshore to power more than 130 million cars for 25 years and enough natural gas for 70 million homes for 90 years.

With the advent of new technologies, we are constantly improving our abilities to access more supply safely.  For instance, the Gulf of Mexico continues to present new opportunities. 

Early in my career, drilling in 600 feet of water was just about the limit of our capabilities.  Now, we are drilling in 10,000 feet of water down to a total depth of nearly 30,000 feet – five miles beneath the water’s surface.  As a result, the Gulf of Mexico now accounts for more than a quarter of U.S. oil supplies and more than 10 percent of our natural gas supplies.  We can grow our offshore supply by expanding beyond the areas where we are able to explore and produce. 

Additionally, our industry’s advances in technology are leading us to previously unimagined supplies of natural gas that have the potential to transform the energy landscape of our nation. Thanks to the new application of drilling technology that produces previously unrecoverable gas from shale, the U.S. now has the potential to access trillions of cubic feet of natural gas.  A recent study by experts at Pennsylvania State University indicates the Marcellus shale formation running through New York and Pennsylvania to West Virginia could be the second largest natural gas field in the world. During 2009 alone, Marcellus gas producers spent $4.5 billion to develop those resources, generating an estimated $389 million in tax revenues and creating more than 44,000 jobs. Going forward, the Marcellus could provide a 20-year supply of natural gas to the U.S. and could generate $6 billion in local, state and federal tax income while employing up to 300,000 people by 2020.  And that’s just one of the new shale gas plays in the U.S. 

While we debate over what types of energy are best for our economy and the environment, the reality is that the U.S. will need all forms of energy, including fossil fuels, nuclear and renewable, along with increased energy efficiency. Globally, energy demand will nearly double within the next 25 years and oil and gas will continue to play a particularly critical role. Every day the U.S. consumes nearly 20 million barrels of oil, more than one-fifth of what the world uses.  But we also generate 25 percent of the global gross domestic product.  Meeting the challenges of our energy future will not be easy; if any of these sources fails to deliver, we won’t meet demand. 

In addition to the challenge of meeting that demand, the president has called for a 30 percent reduction in oil imports by 2025.  That’s only 14 years away.  In an industry with long exploration and development cycles, meeting this challenge will require us to start exploring for these new resources now. 

As we face lengthy and difficult economic times, jobs are everyone’s priority.  The oil and gas industry can play a key role in lifting our economy by creating high-paying jobs, generating billions of dollars in economic activity and delivering much needed revenue for local, state and federal governments struggling with budget shortfalls.  Increased access to domestic oil and gas will provide safe and reliable domestic energy and can help our nation become an economic and energy powerhouse.

Opinion provided by:  Bobby Ryan, Vice President of Global Exploration for Chevron.  (www.chevron.com)  and published by FoxNews.com. 

Much has been said about the elements of a compromise to address the forthcoming expiration of the statutory debt ceiling and the challenges of reducing the federal deficit. Among the issues that have been raised are targeted tax increases on specific industries. President Obama targeted the oil and natural gas exploration and production industry in many of his recent statements. As the most active advocate for America’s independent producers, the IPAA requests that these proposals to target a specific industry for tax increases be rejected.

Massive, billion dollar tax increases will put thousands of jobs in jeopardy and deepen our nation’s dependence on unstable regions of the world to fuel our economic recovery and future growth. Such a change would have an adverse effect on America’s independent oil and natural gas producers’ ability to invest in new, American energy production – which also means fewer jobs and less economic growth.

Political rhetoric describes tax provisions related to oil and natural gas production as “loopholes” or “subsidies.” Two key issues that affect independent producers relate to drilling costs and percentage depletion. These are neither loopholes nor subsidies. They are mechanisms – like depreciation – that provide for capital recovery. Independent producers historically have reinvested as much as 150 percent of their American cash flow back into new American projects. Changes that limit this capital will affect the 4 million jobs associated with just America’s independent onshore investments.

Selectively taxing America’s oil and gas producers would put tax revenue at risk, jobs in peril, and put America further at the mercy of foreign energy suppliers.

Along with IPAA, Miller Energy Company would like to urge you to write your Members of Congress in both the House and Senate to urge them to support America’s energy producers, job creation, and sound business tax policy by opposing all efforts to raise energy taxes on America’s consumers.

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Information provided by the Independent Petroleum Association of America, 1201 15th St., NW, Suite 300, Washington, DC 20005

HR 2375 would require DOI officials to identify 200 onshore leases with the most energy potential and move them through the permitting process within 180 days. Companies currently complain that the permitting process takes years to go through. The bill has the support of the Colorado Oil and Gas Association and the Western Energy Alliance. Miller Energy Company supports this bill, which clarifies and streamlines the permitting process for producers.

Many lawmakers and business groups question the judgement of the administration, which is tapping into our supply of oil reserved for emergencies while delaying and denying permits for the exploration and production of our abundant domestic reserves.

Independent Petroleum Association of America (IPAA) President and CEO, Barry Russell criticized the administration for sidestepping the real long-term solution, which is to increase the production of oil at home:  ”Today’s action is not a solution, but yet another decision that will only prolong the nation’s vulnerability to swings in oil prices.  Drilling for more oil at home will not only increase American oil supplies, but will also create jobs and increase government revenues through taxes and royalties.  Releasing oil from our strategic reserves cannot accomplish these other important goals.”

Read the full statement from Mr. Barry Russell and  also view an article mentioning the IPAA  response in The Wall Street Journal.