I am the CEO of a small oil company and I have been in the oil and gas business for over 25 years. This is the third oil company that I have owned and I have also owned a well service company.
The biggest challenge the oil and gas industry faces today is the radical environmental movement. In fact, it is not only a challenge to the energy industry but is a threat to national security and an impediment to economic growth. It has been estimated that the cost of “environmental protection” is 2% of GDP. I believe the true cost to the economy is much greater when the handicaps placed upon the industries that drive our economy are considered.
The oil and gas industry is a case in study of the drain on the economy from the relentless efforts of the environmental protection racket.
The environmentalist work hand in hand with the EPA with “sue and settle” cases. When the EPA issues a decision on a proposed rule that does not sit well with the environmentalist they sue the EPA in federal court. All federal environmental laws allow virtually anybody standing in court. An environmental group will sue the EPA and the EPA will “settle out of court.” A federal judge approves the agreement and a new rule is created. The plaintiff’s legal fees are paid, as well. All this occurs without congressional approval or proper scientific research and peer review.
In recent years the major oil companies have begun to invest more in onshore oil and gas development in the continental United States. However, the vast majority of domestic oil and gas drilling and exploration is still conducted by small to medium sized companies. Large oil and gas companies can afford to avoid the wrath of the environmental movement. They donate land, appease the greens by squandering money and resources on green energy development and donate funds to various environmental causes. Chesapeake, for instance, donated $26,000,000 to the Sierra Club for their Beyond Coal campaign. Big Green is also the largest private owner of land in the country. Only the United States government owns more land than they do.
We address the challenges by Big Green just as most small to medium sized oil and gas companies do. We cannot afford to appease Big Green so we are often forced to make decisions that will minimize our chances of being hauled into court. Unfortunately, this sometimes results in lucrative oil and gas projects not being developed. Our company recently passed on an opportunity to develop prime acreage in Colorado. We passed on the opportunity because the federal government has placed the Lesser Prairie Chicken on the Threatened Species List. The leases were partially located on federal land and the risk of the EPA colluding with their green allies and entering into an out of court settlement was too great a risk for us to assume.
The EPA, at the behest of an administration financially beholden for campaign financing to the environmentalist, unfairly engages in the discriminatory prosecution of oil and gas companies. While the administration gleefully grants 30-year permits to the wind industry to kill protected species of birds their agents at the EPA will prosecute to the fullest extent of the law any oil and gas operator that kills any endangered bird. Oil companies have been charged under the Migratory Bird Treaty Act. The penalty for killing one waterfowl is six months in prison and a $15,000 fine. Meanwhile, the bird shredding windmills kill an estimated 400,000 birds a year!
President Obama all but avoided any mention of global warming/climate change during his reelection campaign and he has claimed credit for the growth in American oil and gas production. The truth is that oil and gas production increased in spite of his efforts and not because of them. Oil and gas production has increased by an amazing 61% on private land but decrease by 6% on federally controlled land.
In his efforts to fight the nonexistent threat of catastrophic anthropogenic global warming President Obama has been waging a war on fossil fuels in general and coal in particular.
He has used every tool in his arsenal to hamstring the industry. In doing so he has cost the US economy hundreds of thousands of jobs during the most anemic economic recovery since the great depression.
After the gulf oil spill in 2010 Interior Secretary Ken Salazar produced a report that was fraudulently altered by white house energy czar and former socialist Carole Browner to show that a team of scientists endorsed a moratorium on new oil and gas drilling in the Gulf of Mexico. After ignoring a court order to lift the ban, a federal judge held the administration in contempt for “a flagrant and continuous disregard of the court’s order.” An API study estimates that the duplicitous efforts to ban drilling in the gulf by the Obama administration resulted in $24,000,000,000 in lost investments and approximately 90,000 jobs lost.
Another front in the administration’s war on energy is the trumped up campaign against hydraulic fracturing. This is perhaps the greatest threat to the domestic oil and gas industry because the development of a great deal of America’s future oil and gas reserves depends on utilizing hydraulic fracturing in tight shale formations.
In every instance I am aware of no government agency has found the process to be a greater threat to the environment than wells drilled conventionally without employing a hydraulic fracturing technique. Oil and gas cannot migrate thousands of feet through layers of impermeable rock to reach the water table that is usually less than 500 feet from the surface. The only way for the gas or oil from a hydraulically fractured formation to reach the water table is the same as for a non-hydraulically fractured well: up the pipe or tubing and through the casing. With the exception of a few isolated incidents involving improperly cemented casings, there hasn’t ever been a problem with wells leaking oil and gas into the groundwater supply. Please bear in mind that there have been over 2.5 million wells drilled in the United States since 1950.
This non-problem was created by the environmental movement to support alternative energy. Green energy cannot compete with the less expensive fossil fuels in general and natural gas in particular. The natural gas industry was able to achieve what the government couldn’t while lowering energy costs for the consumer, generating jobs and turning a profit: exceeding our non-binding Kyoto Treaty requirements for the reduction of CO2 emissions. Instead of expressing gratitude the greens and their allies in Washington and supported by their friends in the mainstream media have resorted to a vile and idiotic junk science fueled war on fracking.
The environmentalists view more expensive green energy as necessary to fight global warming. Ironically, they are willing to destroy our economy in an attempt to save the planet even if the instability that followed caused a world war that destroyed the planet!
If the greens are successful in their campaign against fossil fuels it will, at the least, endanger America’s energy security and restrict America’s ability to compete in world markets. America’s reign as the world’s greatest economic power would come to an end and communist China would have the ascendancy.
All of this may come to pass just to fight a threat that doesn’t even exist. Hopefully, America will come to its senses before it is too late.