Compact Comments
January/February 2007

IOGCC officers discuss 2007 priorities

IOGCC Chairman Gov. John Hoeven repeated the themes of the 2006 Annual Meeting -- manpower shortages, increased domestic oil and gas research and follow-up on a recently finalized report on the Rocky Mountain crude oil market -- at a meeting with IOGCC officers.

Gov. Hoeven hosted the January meeting in Bismarck, N.D., where the officers discussed goals for 2007 and the chairman reiterated his priorities.

Photo Caption: Ryan Bernstein, legal counsel and policy advisor to the governor; Victor Carrillo, IOGCC vice chairman; Christine Hansen, IOGCC executive director; North Dakota Gov. John Hoeven, IOGCC chairman.

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Regional oil market report released

A regional task force formed last year by former IOGCC Chairman Gov. Dave Freudenthal released its final report analyzing crude oil market dynamics in the Rocky Mountain Region.

In May 2006 Gov. Freudenthal created the task force to identify reasons that domestically-produced crude oil within the region was receiving significantly lower wellhead prices that could serve to dampen production.

During the past few months, the task force investigated the crude oil market dynamics and made both near and long-term recommendations that should be taken to correct the situation.

The task force included representatives from Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming, the Province of Alberta, the U.S. Department of Energy and the Federal Energy Regulatory Commission.

Read the full report.

IOGCC members nominated for DOE committees

The IOGCC nominated recently three members to serve on the U.S. Department of Energy’s Ultra-Deepwater Advisory Committee (UDAC) and Unconventional Resources Technology Advisory Committee (URTAC), both established under the Energy Policy Act of 2005.

Alaska Oil and Gas Conservation Commissioner Dan Seamount, IOGCC official representative for Alaska, was nominated to serve as a member of UDAC. This committee will advise the secretary of energy on the development and execution of programs related to ultra-deepwater natural gas and other petroleum resources.

Nick Tew, oil and gas supervisor for the Alabama State Oil and Gas Board; Victor Carrillo, commissioner for the Texas Railroad Commission; and William Daugherty, president and chief executive officer of NGAS Resources Inc. were nominated to serve as members of URTAC. Tew serves as Alabama’s official representative. Carrillo is IOGCC’s vice chairman and official representative for Texas. Daugherty serves as Kentucky's official representative.

URTAC, comprised of up to 25 members, will advise the secretary of energy on development and implementation of programs related to onshore unconventional natural gas and other petroleum resources, and review and comment on the program's annual plan.

Appointments are to be made in March.

Texas cities to hold NORM training event

After last year's success, the IOGCC will sponsor another Naturally Occurring Radioactive Materials (NORM) training event for the Railroad Commission of Texas (RRC).

Last June’s session consisted of a full-day training session with course topics of: basic health physics, radiation terms, risk assessment, field operations, regulatory overview, instrumentation and field training exercises. Twenty-eight employees attended the event in Austin.

This month more than 110 employees will attend the February sessions in Midland, Corpus Christi and Kilgore, Texas. Scott Winters of Chase Environmental Group will be instructing all meetings.

Marginal wells highlighted in Washington D.C.

James Martin discussed the importance of marginal wells to domestic production in a presentation to Senate Finance Committee staffers January, in Washington D.C. Martin, a member of IOGCC’s Environment and Safety committee, presides as chief of the West Virginia Department of Environmental Protection’s Office of Oil and Gas.

Marginal wells produce less than 10 barrels of oil a day, and less than 60,000 Mcf of gas per day. However, these small producers account for 17 percent of domestic onshore crude oil production and 9 percent of domestic natural gas production.

According to Martin, the report was brief and highlighted important facts from IOGCC’s 2006 Marginal Well Report. In addition he commented on production operations and discussed the regulation of oil and gas in West Virginia.

View his presentation.

Former IOGCC chairmen running for president

Two former IOGCC chairmen have announced plans to seek their parties' presidential nomination. 2002 Chairman Mike Huckabee of Arkansas is seeking the Republican nomination and 2004 Chairman Gov. Bill Richardson of New Mexico is seeking the Democratic nomination.

Richardson, has worked to make New Mexico the Clean Energy State by requiring utility companies to produce energy through renewable resources and reduce carbon emissions. He hopes to create more energy awareness if voted into office.

Huckabee created a bond program for road reconstruction in Arkansas as well as used 1/8 of state tax to reconstruct state park’s systems and natural resources.

On the hill

U.S. Senate News
In recent testimony given to members of the U.S. Senate Committee on Energy and Natural Resources, energy market experts emphasized the shifting power in global energy markets, particularly on the changing roles of Iran and China. The experts called for a crash program to reduce U.S. reliance on foreign oil suppliers by boosting domestic production, increasing transportation fuel efficiency and expanding use of alternative fuels.

With very little of the world’s oil owned by American companies, Sen. Pete Domenici, outgoing chairman, said there is “no question private investors are at a disadvantage.” Currently three-fourths of the world’s oil reserves are owned by governments such as Russia, Iran, Saudi Arabia and Venezuela.

The experts advised that the United States needs to increase its domestic oil production and energy efficiency particularly in the transportation sector. Linda Stuntz, who served on the Council of Foreign Relations’ Independent Task Force on Energy and U.S. Foreign Policy, said committee members “will not find support for energy independence in this country.” Policy changes such as a gasoline tax or reducing the speed limit would not be economically advisable, she said.

Read or listen to the experts’ full testimonies on the Senate Web site.

U.S. House of Representatives News
More than $6 billion in oil and gas revenues could be recouped by the Federal Treasury under legislation adopted by the U.S. House of Representatives in January. Introduced by Rep. Nick J. Rahall, House Natural Resources Committee chairman, the legislation would curb taxpayer-funded subsides to oil and gas companies, and invest those funds in renewable and alternative energy. The bill passed with bipartisan support by a final vote of 264-163 on January 18th.

The CLEAN Act (H.R. 6) includes two components that would roll back tax benefits and federal oil and gas leasing provisions included in the Energy Policy Act of 2005. The legislation would also correct botched leases issued by the Interior Department between 1998 and 1999.

The core of the issue lies in the Deep Water Royalty Relief Act of 1995, which sought to encourage oil companies to drill offshore in the Gulf of Mexico by allowing them to avoid paying royalties to the American taxpayers for the extraction of publicly-owned resources. However, the Interior Department erred in the administration of the law by failing to outline a threshold in leases issued between 1998 and 1999 to cut off royalty relief when market prices were high.

The CLEAN Act would impose a fee on the holders of the royalty-free 1998 and 1999 leases unless the companies agree to renegotiate them to include royalties. The bill would also repeal the extension of the original 1995 royalty relief provision contained in the Energy Policy Act of 2005.

Currently the bill is on Senate's Legislative Calendar under General Orders.

FY 2008 Budget Request

President Bush’s FY 2008 budget request, presented to Congress in early February, asked for a total of $24.3 billion for the Department of Energy (DOE), approximately 3 percent more than last year’s request. Congress has yet to appropriate FY 2007 funding for DOE.

Under the FY 2008 proposal, DOE's Office of Fossil Energy would receive $863 million, a 33 percent increase from last year’s request, but most of the funding would be directed to coal research and development, as well as expanding the Strategic Petroleum Reserve. In a repeat from last year, the administration proposes to zero out all funding for research and development related to oil and gas technology. Budget justification documents note that the Fossil Energy program staff "will continue to work toward an orderly termination of the program in FY 2008.”

Briefs

• Mark your calendars! IOGCC’s Midyear Issues Summit will be May 6 – 8, 2007, in Point Clear, Ala. Register online today.

• The Oklahoma Independent Petroleum Association (OIPA) named Mike Terry its new president. Terry is a past chairman and current member of IOGCC’s Public Outreach committee.

• Thomas D. Shope has been named principal deputy assistant secretary for fossil energy at the U.S. Department of Energy. Shope brings years of leadership experience and expertise in the coal area to the position.

• Former director Kathleen Clarke has left the Bureau of Land Management’s Department of the Interior. Clarke was formerly with the Utah State Government and has spoken at IOGCC meetings.



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