First oil: How the U.S. election goes will shape future O&G policy

BOCA RATON, Fla.—Greetings from southeastern Florida, where the Independent Petroleum Association of America (IPAA) has been holding its 95th Annual Meeting. It has been a lively, information-packed event, punctuated by explanations of both threats and opportunities for the operations of independent producers. But if you think about it, hasn’t that always been the mission of IPAA since its founding in 1929—to protect its members from federal regulatory overreach, to the best of its abilities. 

Perhaps the difference between now and the early days of IPAA is that there seem to be so many more ways for the federal government to create havoc for independent producers, most of them intentional. And at the Annual Meeting, those of us in attendance were presented with quite the laundry list of issues for now and into 2025. More on that, further down in this column. 

But hanging over this meeting, just like many industry events of the last several months, has been the specter of the presidential election. As this column is being written, the election is just a week away, and most people in the U.S., who are not on the political extremes, just want the whole process to be over. It has been a miserable, grinding election season, full of name-calling, ridiculous policy stands and endless inaccuracies.  

From an oil and gas angle, the Republican nominee, former President Donald Trump, has consistently voiced a pro-industry stand and plan. That having been said, it may take him longer than he has indicated to unravel some of the Executive Branch’s bureaucratic mischief, a good example being the various regulations issued by the Environmental Protection Agency (EPA). One can only conclude that the excessively punitive regulations were designed to make life as difficult as possible for the upstream industry and independent producers, in particular.  

Also, while the former President likes to campaign on the slogan, “drill, baby, drill,” the reality that this editor has heard in talking with various producers is that operators are not likely to ramp up drilling overnight, if he is elected. Instead, a slower, smaller, more deliberate increase in drilling is likely to occur, as we get into 2025. A number of factors play into this, including commodity prices, the cost of equipment and services, many operators still prioritizing returns to shareholders, and the uncertainty over where federal regulatory actions are heading. 

Where incumbent Vice President Kamala Harris stands on oil and gas is harder to pin down, because there is a lack of information from her campaign, and she has not said very much on the subject while out on the stump. Ms. Harris says that she is not against fracing, but given her long history of anti-fracing rhetoric until recently, is anyone really buying that stand? And one could easily make the statement, “does she even know what fracing is?” I would wager that the Vice President does not understand what fracing does, but she knows that it’s “something good” for the industry.  

And speaking of multiple flip-flops on oil and gas, the Vice President historically has been against offshore drilling, but she has waffled on the subject of late, indicating that she will continue the Biden administration’s policy. Furthermore, during her debate with Mr. Trump in September, Harris bragged about the Biden-Harris administration overseeing “the largest increase in domestic oil production in history because of an approach that recognizes that we cannot over-rely on foreign oil.″ Well, let us set the record straight on that item. Biden and Harris cannot take credit for any part of the increase in U.S. oil production. Instead, the credit all goes to the upstream industry, thanks to technological innovations and astute decision-making, period.  

Then we have the situation recently, when a Harris spokesperson clarified to Politico that the Vice President “is not promoting expansion” of drilling and fracing. On the other hand, Harris has repeatedly mentioned that she did cast the deciding Senate vote for the Inflation Reduction Act (IRA) in 2022. That particular piece of legislation mandated that the Interior Department (DOI) must comply with the Federal Lands Leasing Act to restart the leasing program (especially offshore) that it had suspended, even in the face of several court orders to comply. Of course, Harris has not mentioned that DOI under her and Biden has not acted on the IRA requirement, only giving lip service to possibly conducting three offshore lease sales over the next five years. I think it’s a fair comment to say that no one really knows what would happen to oil and gas in a Kamala Harris presidency. 

Nevertheless, mercifully, this election will come to an end shortly, and U.S. citizens will get their normal television schedules back.  

Interesting, urgent topics at IPAA’s annual meeting. As mentioned at the beginning of this column, IPAA’s 95th Annual Meeting has been an effective, interesting forum, replete with a couple of important announcements. During the meeting, IPAA officials announced that board of directors member Michael Hillebrand will take over as chairman of the association on Jan. 1, 2025, when current Chairman Steven Pruett steps down. Hillebrand is President and CEO of Huntley & Huntley, LLC, based in Pennsylvania. Pruett is President and CEO of Elevation Resources LLC, an operator in the Permian basin of Texas. 

In addition, in what this editor thinks is an excellent move, IPAA has brought back the annual Chief Roughneck Award, which was interrupted by the Covid-19 pandemic and had not been given out since 2019. This year’s recipient is David Kimbell, President and CEO of Burk Royalty Co. Ltd, based in Wichita Falls, Texas. David is part of a multi-generational family that has run and controlled Burk Royalty for many years and operated in a commendable fashion. He has been active in the local community and charities for a long time and has been a vital member of IPAA. The association could not have picked a better example of what independent producers are all about. Congratulations to David Kimbell! 

Meanwhile, a number of important regulatory and operating topics were covered at the IPAA gathering. These included access to capital; where the wave of M&A activity is headed; what effect artificial intelligence will have on producers; the challenges posed by federal methane mandates; and what the results of the election will be and how they will affect the energy agenda on Capitol Hill. 

The ongoing methane problem is particularly onerous. After listening for 80 minutes to a discussion of the situation with the EPA and all the methane reporting requirements that independent producers will have to meet, I can truly say that I developed a strong headache. Part of the problem is that the EPA is putting new limits and thresholds for methane reporting into effect on Jan. 1, 2025, and it will cause some independents to have to scramble. Examples of topics that producers must address are pneumatics, gas lift and compression, and gas flaring, in general. And then, there’s the proposed “waste emission charge.” I won’t try to explain that right now. Plus, there’s a provision for “large release/super emitter” events. And the list goes on and on. 

One could make the statement that the EPA has deliberately changed the thresholds to “ensnare” more companies into doing methane reporting. And why would they do that? I think it’s fair to say that the current administration, via EPA, the Interior Department or wherever in the Executive Branch, has the goal to mess with the domestic oil and gas industry as much as possible, in pursuit of their misguided ideological agenda. We will have more on the methane reporting situation in an upcoming issue of World Oil. 

IN THIS ISSUE 

Special focus: Advances in Drilling. This month’s lead theme features four excellent articles. In the first, authors from Nabors Drilling Solutions talk about how technology advances in casing running extend the reach of automation. Continuing investment is delivering technologies that are transforming those labor-saving devices into complete, automated systems. In a second feature, SLB authors discuss the process of improving drilling performance through intelligent and automated operating parameter planning. Meanwhile, an author for Altitude Energy Partners explains how U-lateral drilling innovations are making breakthroughs possible for directional projects. Finally, yours truly provides some analysis of the trend toward more footage drilled per well in a number of states in the U.S. 

Decommissioning: Oil's well that ends well: Recovering value, managing costs and reducing emissions during decommissioning.  In this article, an OSSO author says North Sea decommissioning costs are escalating and could exceed £20 billion, but the deployment of separation technologies represents an opportunity to significantly reduce costs and emissions while recovering valuable resources. 

Regional report—Middle East: Investment in key projects continues. Contributing Editor Gordon Feller says that in addition to numerous conventional oil and gas production projects, several Middle Eastern countries, including Saudi Arabia, are investigating the potential for production from unconventional resources. If sufficient resources are present and can be extracted, the additional production could offset declines in older conventional fields. There also is a growing focus in the Middle East on low-carbon energy and decarbonization. 

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com