I would like to take a moment to reflect on past year and all that has materialized within the Ohio Oil and Gas Association in 2015. As I reflect on what we’ve seen over the year, the litany of issues the industry has faced this particular year have been seemingly insurmountable. I can't think of any time in the last 40-years where the hill to climb has seemed so high.
We have seen crude oil prices fall below $40 per barrel and natural gas prices are languishing at record lows, creating a general sense of gloom and doom among our industry on a global scale.
The price rut, brought to us mainly by Saudi Arabia, which is making an effort to control market share, is wreaking havoc on the United States’ domestic oil and gas industry. Decisions made half way around the globe are having real life implications right here in Ohio. Simultaneously, the collapse of the natural gas price in Appalachia, mainly due to lack of adequate infrastructure to get the gas out of the basin, is making life practically impossible for many members of the Ohio Oil and Gas Association.
All while this was going on, some of our elected officials in Ohio still believed that this would be a good time to increase the severance tax. After months of interested party meetings with the Administration, affected agencies and appointed House and Senate members to the 2020 Tax Policy Study Commission, I am pleased to report that it looks like we won’t have to discuss the severance tax for the next year or so.
The Association went through every aspect of oil and gas taxation from cost recovery to post production with the group. It was truly a thorough process, and we believe the Commission finally realized that the industry was not over exaggerating our dire situation.
And as if that wasn't enough, the well haters, mainly funded by left-leaning individuals and organizations, continued to declare war on the fossil fuel industry. Make no mistake, these groups, at their core, despise capitalism.
The OOGA spent a considerable amount of time dealing with local control initiatives, dubbed the “Community Bill of Rights,” that popped up in multiple areas from Medina to Athens, by some radical outfit based out of Pennsylvania—the Community Environmental Legal Defense Fund (CELDF). They started attempting to dupe folks over in Youngstown several years ago into placing these items on the ballot. Thankfully voters in Youngstown are smarter than what the CELDF had hoped and voted down the ballot initiatives for a fifth time this past November.
These groups also caught the attention of the Ohio Secretary of State Jon Husted, who issued an order to put a stop to this nonsense and keep these items off the ballot in Athens, Medina and Fulton Counties in November. The way the CELDF crafted their ballot language to ban oil and gas activities did not follow Ohio law, which states that you need to establish an alternate form of local government when you propose to change the current system. Of course the Secretary of State’s ruling did not sit well with the CELDF and their disciples so they ended up taking the matter to the Ohio Supreme Court.
But all in all, in dealing with these dishonest initiatives we successfully pushed back to defeat the majority of them. Columbus also sought for a similar initiative but came of short of having enough valid signatures for its petition, and the city of Akron and Portage County did not move forward with any action knowing they didn’t not have enough signatures to support.
If there was ever a time when the OOGA and this industry needed the full support of its entire membership, it is now. In light of the current situation it may seem difficult to donate your precious time and energy. But, if you're willing to help in this fight it is greatly important to stay involved with your state Associations to help get us through these challenging times.
Issues to Come:
In 2015 this Association has been actively engaging in stakeholder meetings on a number of rules packages stemming from the passage of several items of legislation over the years. Secondary containment, well spacing and incident notification rules are being discussed and should be sent out for comment early next year. It is our hope that the new well spacing rules open up new opportunities for both our shale and conventional operators.
The Association is still pursuing corrections to Ohio’s unitization laws that have caused our operators to stall all of their projects that include state lands. We remain committed to the passage of House Bill 8 and will hopefully see some movement on that issue early next year.
It is estimated that by the year 2050, there will be 10 billion people on planet earth. Please remember that it will be your industry, the oil and gas industry, which supplies the energy needs for those 10 billion people in 2050. Things are very dire as we stand here at the end of 2015. However, access to abundant clean energy will continue to improve the human condition around the world for decades to come, so hold your head high.
In conclusion, I really cannot remember a more difficult and challenging time facing the domestic oil and gas industry in my lifetime. In these miserable times, giving up and throwing in the towel is not the solution. We must remain resolute, we must all work together and we all need to share information and ideas on how to survive in this environment. Please remember there is a reason why we are called "independent" oil and gas producers. We are a resilient and independent lot of people. We will get through this—we always have. No one is saying it's going to be painless or enjoyable.
I have recently had the opportunity to go to a few Universities throughout Ohio and give a "state of the industry" speech to the geology students and staff. More often then not, the students are very polite and attentive, and much is able to come to light during the question and answer sessions. But what troubles me the most is that these young people were struggling to see how they were going to be able to monetize the geology degrees that they are in the process of earning.
I offered to arrange a tour of a Utica production pad, a Clinton production well and allowed them to tour one of my own UIC facilities. With each visit the students became more and more engaged in the discussion and each site lasted longer and longer as the questions kept popping up. As I reflected on the day with the group of students, it dawned on me that in light of what we’re currently facing, what we have to do is gain the interest of the next generation and to build the next defenders of the industry. When an opportunity presents itself to engage the next generation, we have to show them, explain to them and let them see the value in what it is that we do—it is what makes me and someday them, proud to work in the oil and gas industry.
As I always say to the OOGA membership, keep your heads held high and always remember that you are helping to produce clean, abundant, domestic, affordable, life-giving energy to a nation that is starving for more.