Oil and gas are U.S. lynchpins

CHRIS CRAGG, PESA Chairman, and Senior Vice President, Operations, Oil States International, Inc.

The oil and gas business is at an unusual juncture in our long history. Business is good—oil prices are stable, we’re faster and more efficient than ever in solving sub-surface engineering problems, and our industry now has a decades-long inventory of known, productive drilling locations in the U.S. Yet today, despite our success, we find ourselves in a precarious situation.

To put it mildly, the oil and gas industry has a public relations problem which, gone unchecked, could cost us our ability to operate. Even more importantly, it could undermine our country’s economic growth and stability. I believe that people outside of our industry have a tremendous misunderstanding of what we do. Our industry is viewed as part of a problem, not part of a solution.

PESA, like many of our sister organizations, has made education of our stakeholders paramount. We have a great story to tell, and it must be told to the public and to our governmental representatives—and we believe we can do so by highlighting three key principles.

Jobs. The recession wreaked havoc on the U.S. economy and job market, losing more than 2.5 million jobs between 2005 and 2008. Virtually every industry in the nation contracted and shed workers in that period, but not the oil and gas industry. According to a survey compiled from governmental data, a conservative estimate of oil and gas job growth over the past five years is 30%. And these are not just any jobs—these are great jobs. I don’t believe there is an industry out there where a high school or college graduate can earn a better living. The average annual wage for all U.S. jobs in 2011 was $47,000. For oil and gas workers, it’s more than $98,000.

While many outside the industry assume that oil and gas jobs only exist in Texas, Oklahoma, and Louisiana, the reality is that our industry provides jobs in all 50 states. In California, oil and gas provides nearly 74,000 direct jobs at an average salary of more than $121,000. In the past decade, Pennsylvania’s oil and gas jobs have risen by 84%, now ranking sixth in the nation, while Colorado has added more than 15,000 oil and gas jobs.

And we do all of this without significant special tax breaks and incentives—independent producers simply need the ability to deduct the cost of intangible services. One big myth is that the industry pays virtually nothing in income taxes. The truth is that the industry provides more revenue dollars to federal coffers than any other source, other than income taxes.

Technology. From geoscience developments to well construction, our industry is on the cutting edge of creating solutions. It has been said that we don’t have a shortage of petroleum resources in the world—it is just a matter of time until we figure out how to produce them.

For those of us working in the industry, technology is a way of life. We’ve seen it every day of our careers, and we’re used to it. But if you step back and look at what we’re able to do from an outsider’s perspective, our industry is nothing short of a technological marvel.

We float rigs the size of a large building in the middle of the Gulf of Mexico, drop a mile or more before we touch the seabed, and then drill two to three miles further and hit a target within inches. On land, from a single pad, we can drill multiple wells more than a mile down, and then a mile or two horizontally in any direction, developing reserves from an area miles in diameter from a surface footprint smaller than a football field. Downhole technology provides real-time well characteristics, allowing us to alter the path of a drill bit.

Stability. While the oil and gas business will always be cyclical, true energy stability and security is now on the horizon. Ten years ago, billions of dollars were invested in importation infrastructure to supply the U.S. with natural gas from other countries; now we have a 100-year domestic supply. For decades, U.S. oil production declined, with no relief in sight; between 2008 and 2011, we added 1.4 million bpd of domestic supply.

This year, alone, the industry is on track for a 7% increase in domestic hydrocarbon supply, producing 10.9 million bpd, which represents the greatest year-over-year gain for the U.S. since 1951. The U.S. Energy Department expects further growth to 11.4 million bpd next year.

The consequences of our success are staggering—we’re on track to reduce energy imports from less-than-friendly nations for the seventh year in a row. Some experts have said that energy independence could be possible for the U.S.  Citibank forecasts that U.S. hydrocarbon production could possibly reach 13 to 15 million bpd by 2020, placing us close to par with our current oil consumption.

There are more immediate effects from the industry’s new-found energy abundance—a renaissance in American manufacturing. The increased availability, stability and affordability of natural gas have brought about the greatest changes seen in more than 40 years. Many heavy manufacturers, such as the steel industry, have slowly switched from coal as a primary power source to natural gas.

Our story of jobs, technology and stability must be told. We must educate elected officials at the city, state and federal levels. We must educate friends, families and foes, alike, as to what our industry means to every citizen of our country.