IPAA celebrates 95 years of achievement in representing independents
KURT ABRAHAM, Editor-in-Chief
For 95 years, the IPAA has been on the front lines in its service to, and support of, America’s independent oil and natural gas producers. The association’s volunteer leaders, past and present, along with a highly skilled staff, have skillfully married business savvy with political skills to keep the independent producing industry alive through boom and bust, Fig. 1.
What two dozen determined independent producers started in the summer of 1929 has grown to an organization of thousands today. This second of two articles covers the last 30 years of IPAA’s history, from 1995 to today.
1995-2000
This five-year period saw IPAA dealing with concerns about oil imports, industry image, low commodity prices, depressed activity levels, and a contested presidential election.
1995. As the year got underway, the threat to U.S. national security of growing dependence on foreign oil imports had gained congressional attention, Fig. 2. It prompted Sen. Frank Murkowski (R-Alaska) to take to the floor of the Senate on Feb. 23, to rip what he called President Bill Clinton’s “do nothing—and I repeat, do nothing—response to the threat to our national security from the rising tide of oil imports.”
During September 1995, IPAA held its fourth annual Wildcatters’ Week in Washington, D.C., complete with a truck-mounted drilling rig parked on the Capitol Mall. Although we are uncertain of the origin of 1995’s rig on the Mall, we do know that the truck-mounted rigs featured in the 1992 and 1993 Wildcatters’ Weeks were brought in from West Virginia, Fig. 3.
Dozens of IPAA members, federal officials and association staff attended an outdoor rally as part of the week-long event.
In the fall of 1995, Lew O. Ward of Oklahoma was elected to succeed George A. Alcorn as IPAA’s 31st chairman, Table 1. During November 1995, IPAA and operators won another victory, when the Deepwater Royalty Relief Act of 1995 (DWRRA) was passed in Congress and signed into law by President Bill Clinton.
1996. At IPAA’s 67th annual meeting in 1996, two significant propositions emerged. One originated within IPAA. It called for a national program of environmental clean-up that would be financed by voluntary contributions from oil and gas companies. The idea was to improve the industry’s public image. The other proposal came from DOE’s Associate Deputy Secretary for Energy Programs, Kyle Simpson. He urged the industry to begin to pay attention to the then-emerging issue of climate change.
On the first item, IPAA and API had already formed a 17-member task force in July 1996, to study the proposed image program.
At the annual meeting that fall, Ward reported progress. The IPAA-API task force had a $375,000 budget for a feasibility study. Furthermore, IPAA’s Executive Committee had agreed that independent producers should pay half the cost of a $25 million-per-year, five-year program.
1997. By the spring of 1997, the IPAA-API image project had run into trouble. Some of the integrated companies among API’s members were concerned that they would wind up paying for most of the program, with no limits being imposed. Within weeks, in April 1997, API’s directors voted to not participate with IPAA in the image program. Many API members opposed the check-off funding mechanism that was included in the project.
The joint national project never proceeded any further. Meanwhile, Simpson’s advice to producers in 1996 did not result in any significant effort to address climate change.
During the Annual Meeting in the fall of 1997, George M. Yates of New Mexico was elected to succeed Lew Ward as IPAA’s 32nd chairman. At roughly that same time, the Asian Financial Crisis had begun, and it would cause headaches for U.S. producers over the next two years.
1998. For the second time during the decade, low oil and gas prices, spawned by the Asian Financial Crisis (which began in late 1997) threatened the U.S. domestic industry. IPAA organized rallies and marches and press conferences, to attract public and government attention to producers’ plight. The association spread the message that dirt-cheap gasoline was dangerous to U.S. energy security. Even OPEC suffered under the low prices.
In December 1998, IPAA Chairman George Yates (Fig. 4) demonstrated that the association was not afraid to take on anybody in an effort to support U.S. producers. Accordingly, Yates laid the blame for unusually low prices at the feet of the U.S. Federal Reserve and the International Monetary Fund.
IPAA’s efforts were rewarded, when state legislatures and Washington lawmakers in oil patch states began offering the industry a number of initiatives, including loan programs, efficiency studies and tax reforms worth tens of millions of dollars.
1999. As the first half of 1999 got underway, OPEC’s members finally began to reduce production, and by the end of the year, prices were returning to profitable levels. But the lost investment during those last two years would present new challenges, as the next century opened.
Indeed, as prices recovered in May 1999, IPAA Chairman George Yates declared, “What we need is an energy policy.” He went on to chastise the Clinton Administration by saying, “In fact, we do have an energy policy. Our energy policy for oil is simple: keep it cheap, keep the supply lines open with military force if necessary, and diversify supply.”
During the 1999 IPAA "Crude Awakening" Call-Up in Washington, D.C., the association asked the administration and Congress to refocus U.S. energy policy around major themes. First, the administration needed to say that cheap oil is not the message. Second, IPAA asked the administration to make changes to the U.N. oil-for-food deal.
At IPAA’s Annual Meeting in the fall of 1999, Jerry D. Jordan of Ohio was elected to succeed George Yates as IPAA’s 33rd chairman.
2000. In February 2000, IPAA Chairman Jerry Jordan testified before the U.S. Senate’s Committee on Energy and Natural Resources. He defended producers after people complaints about the sudden rise in crude and refined product prices during the back half of 1999. Prices had risen and recovered from severely depressed levels during the previous 24 months.
Then, on April 7, 2000, Jordan testified before the House Judiciary Committee on behalf of IPAA and the National Stripper Well Association (NSWA). The purpose was to offer solutions to the competitive problems in the U.S. oil industry. Jordan suggested that the two most productive actions that the federal government could take would be to “improve access to capital and access to domestic natural resources from government-controlled lands and waters.”
Just five days later, Jordan again testified on behalf of IPAA and NSWA before the House Resources Committee. His remarks were similar to comments he delivered to the House Judiciary Committee on the same issues.
The year 2000 was punctuated by the presidential election on Nov. 7, where Texas Gov. George W. Bush won a delayed, Supreme Court-decided win against incumbent Vice President Al Gore. During July, Jordan took issue with Gore’s proposed long-term energy policy, calling it nothing more than a "continuation of the current administration's refusal to adopt a meaningful action plan to address our over-reliance on foreign oil and dwindling exploratory land inventory."
2001-2010
This period could easily be called the “decade of natural gas,” given governmental and industry concerns about gas supplies, as well as anxiety overall about national energy security. The first year was punctuated by the terrorist attacks in New York on Sept. 11, 2001.
2001. As the industry entered 2001, natural gas became a greater issue. In April, Chairman Jordan told an industry audience in Washington, D.C., that “to produce enough natural gas to fuel the nation's growing demands, the North American gas industry, which has an adequate resource base, must be permitted access to lands as well as capital.”
Jordan again addressed the natural gas agenda on July 11, when he spoke to the Independent Oil and Gas Association of New York's summer meeting. The chairman predicted that U.S. natural gas prices would likely hold at near-current levels for as long as two to five years, rather than fall further. He said that producers could expect anti-development activists to continue blocking access to new sources of oil and gas supplies.
National energy security and the role of natural gas had been the centerpiece of remarks made by President George W. Bush during an address to a joint session of Congress on Feb. 27. “Many citizens are struggling with the high cost of energy. We have a serious energy problem that demands a national energy policy,” proclaimed Bush. “
The Sept. 11 terrorist attack on the twin towers at the World Trade Center in New York City and its subsequent effects put a new emphasis on national energy security, something that continued to influence oil and gas policy for years to come. During the Annual Meeting in the fall of 2001, Diemer True of Wyoming was elected to succeed Jerry Jordan as IPAA’s 34th chairman.
2002. In addition to issues surrounding natural gas, policy concerns on offshore oil and gas development came to the fore in 2002. Accordingly, on March 8, 2002, IPAA and six other industry associations submitted testimony to the U.S. Commission on Ocean Policy, New Orleans, La. Acknowledging that the Commission had a clear mandate to develop a coordinated, national ocean policy, the seven associations provided several key findings for commissioners to keep in mind.
On July 16, IPAA Chairman Diemer True presented testimony on behalf of several associations to the House Subcommittee on Energy and Mineral Resources. The hearing was directed at examining what was believed to be a growing natural gas supply and demand imbalance and the role that public lands and federal submerged lands could play in the solution. In his testimony, True reiterated the role of federal lands in meeting future natural gas demand.
2003. In today’s U.S. market, where natural gas supplies are plentiful and LNG exports abound, it’s hard to realize that in 2003, there was serious concern among industry executives and government officials about the perceived “natural gas imbalance.” Indeed, LNG was seen as a potential “panacea” to future gas shortages.
In its own analysis, IPAA concluded that “The LNG phenomenon will take time to develop. In regard to our developing natural gas picture, continued focus on our supply options is imperative. Lower-48, offshore, Rocky Mountain, and unconventional natural gas will continue to constitute the bulk of our supply for decades to come.” At that point in 2003, the shale revolution had not quite taken root.
The natural gas situation was part of the remarks delivered by U.S. Vice President Dick Cheney, when he visited IPAA’s Mid-Year Meeting in Boca Raton, Fig. 5. “Recent concerns about the supply of natural gas highlight the need for a balanced approach,” observed Cheney.
As the natural gas theme hung over the U.S., Bruce Thompson, Executive Director, Public and Industry Affairs, Forest Oil Corporation, testified before the Senate Energy and Natural Resources Committee in mid-July on behalf of IPAA and other industry associations.
Thompson told the senators that there were three key points to the gas situation. “First,” he said, “the natural gas price situation that is now being addressed was foreseeable and, in fact, was forewarned. Second, there are no simple, short-term solutions. However, what has happened can be the basis for making better policy choices in the future and those choices need to be made. Third, there will be some who will advocate the failed policies of the past— policies like limiting the use of natural gas or controlling its price. These choices must be avoided.”
A significant legislative action that eventually benefitted IPAA members was the U.S. Senate’s passage of the Energy Policy Act of 2003 (H.R. 6) on July 31, 2003. As IPAA President Barry Russell noted, the bill contained a number of tax measures and land use provisions that were of particular importance to independent producers. The Senate approval cleared the way for the bill to go to conference, which then enabled the legislation to be approved by the House on Nov. 18, 2003.
At IPAA’s Annual Meeting in the fall of 2003, John B. Walker of Texas was elected to succeed Diemer True (Fig. 5) as the 35th chairman.
2004. During March 2004, IPAA President Barry Russell commended the Interior Department for instituting a royalty rule that would encourage natural gas producers to drill new wells in the Gulf of Mexico’s Outer Continental Shelf.
In mid-August 2004, IPAA and representatives from several associations and companies met to discuss future actions regarding the EPA’s July 2002 Spill Prevention, Control and Countermeasure (SPCC) Plan regulations. EPA had recently extended, again, the compliance dates for the regulations. This extension followed a previous 18-month extension from April 2003.
The industry meeting initiated efforts to address the most problematic issues with the new regulations.
2005. As 2005 got underway, IPAA Chairman John Walker wrote a thoughtful piece to the association’s membership about the “surplus of challenges” that he felt independents would be facing. Citing a Wall Street Journal headline declaring, “Rising Oil Prices Lift Producer States,” Walker said that essentially, the Journal recounted how, because of higher oil prices, states like Alaska, Wyoming and New Mexico were pulling in an unexpected bonanza in taxes and royalties from oil and natural gas production. And much of that production came from IPAA members.
“Those producing states and others now confront large budget surpluses, when most other states stare at deficits,” continued Walker. “Alaska, Wyoming and New Mexico are on track to pull in $4.5 billion from production royalties and taxes in fiscal year 2004, up a whopping close-to-25% from the previous year… But now it’s 2005, and we have our work cut out for us….”
Indeed, IPAA followed up Walker’s observations with testimony in mid-February before the House Subcommittee on Energy and Air Quality. Representing not only IPAA but also more than two dozen national and state associations, Vice President of Government Relations Lee Fuller said that “Comprehensive energy legislation has been pending before Congress since 2001. Each passing year has shown that the failure to address this key national issue has resulted in increasingly more serious energy challenges.”
In 2005, the North American Prospect Expo (NAPE) added a second event/expo, hereafter known as “Summer NAPE,” Fig. 6.
A significant win for IPAA occurred, when the U.S. House passed the Energy Policy Act of 2005 in April 2005. As a comprehensive energy bill, one of its titles (sections) addressed a wide range of issues of concert to independent producers, including OCS provisions, hydraulic fracturing, production incentives, natural gas regulation streamlining, improved access to federal lands, etc. The Senate passed the conference version of the bill on July 29, and President Bush signed it into law on Aug. 8.
At IPAA’s Annual Meeting in the fall, Michael C. Linn of Pennsylvania was elected to succeed John Walker as the 36th chairman.
2006. In January, IPAA Chairman Mike Linn submitted extensive comments in response to the Section 1818 Natural Gas Shortage Study released by the DOE. For instance, he noted that the average decline rate for domestic natural gas production had increased from 16 %/year to over 28 %/year over the past decade. He also noted that despite recent legislation, access to the federal resource base remained one of the biggest challenges to developing domestic natural gas supplies, both onshore and offshore.
In February, IPAA member Tim Parker testified before the Senate Committee on Energy and Natural Resources, which was conducting a hearing on oil and gas leasing in the Gulf of Mexico. “Although the IPAA supports any effort to open additional areas of the OCS to exploration and production, it does not believe S. 2253 needs to include an arbitrary 100-mile buffer from the State of Florida,” said Parker.
Former Chairman John Walker wrote to DOE Secretary Samuel Bodman, to encourage him to take appropriate action “to help preserve the intellectual knowledge base of the nation by restoring DOE’s funding of research and education programs at petroleum engineering and geology universities and colleges.” Walker said the administration’s FY 2007 budget again proposed termination of the DOE petroleum and natural gas R&D programs.
IPAA’s 77th annual meeting in Dallas focused much of its attention on energy education, and California's Proposition 87 ballot initiative on alternative fuels. API had launched an Educational Advocacy (EA) program and asked IPAA to participate. At the annual meeting, API President Red Cavaney briefed IPAA’s Board of Directors on the program. IPAA Chairman Mike Linn, National Energy Education Committee Chairman Diemer True, and, key IPAA staff members were to work closely with API on the program, which was set to be funded entirely by API.
California's Proposition 87 would have established a state government agency to oversee investment of at least $4 billion over the next 10 years in alternative energy projects, principally biofuels including ethanol. Funding would have been obtained by imposing a 6% severance tax on California oil production. Fortunately, California voters defeated the proposition.
2007. In late March, IPAA and 12 other associations submitted a statement to the House Natural Resources Committee. They submitted this statement because of the importance of oil and gas resources under America’s multiple use public lands to the national economy. They also believed that the record demonstrated that the industry’s operations could coexist with other uses of multiple use public lands. IPAA and the others said this record also showed that it was untrue that industry’s operations on public lands in the Mountain West somehow denied access to other users of those lands.
In May, IPAA Chairman Mike Linn said in a trade journal interview that he found it ironic that other countries known to be particularly “green,” such as France, Norway and New Zealand, allowed drilling off their coasts, while the energy-hungry U.S. did not allow it on the East and much of the West coasts. He said another irony was that PDVSA was running TV ads in 14 U.S. states about its generous supply of discounted heating oil to U.S. consumers, yet it was basically nationalizing U.S. oil interests in Venezuela. "This doesn't seem fair to me," said Linn.
During late October, IPAA provided testimony to the House Oversight and Government Reform Committee for a hearing on oil and gas exemptions in federal environmental protections. IPAA noted that the role of independents was increasing in both the Lower-48 states and in the offshore areas, as major companies continued to look for larger fields in other countries.
Buddy Kleemeier of Oklahoma became the 37th chairman at the fall annual meeting in San Antonio, succeeding Mike Linn.
During August 2008, IPAA launched three new educational programs in Houston-area schools, including two high school engineering and geosciences academies and one Global Energy Management program. Thanks to a generous $27.5 million software grant from Halliburton, IPAA provided cutting-edge technology to the academies.
In the last several months of the year, IPAA staff and volunteer leadership prepared in Washington and across the country for “an extremely contentious 2009,” from a regulatory, legislative and economic standpoint. This strategy was confirmed in November 2008, when Barack Obama was elected as the next President of the U.S.
2009. The sudden drop in crude prices from the inflated levels of 2008 was the lead subject at IPAA’s Oil and Gas Investment Symposium during mid-April in New York. The seriousness of that topic attracted even The New York Times to attend the event. The NYT quoted Paul Vincent, manager of investor relations at Swift Energy, as saying, "We're well-prepared and have taken the necessary steps to protect the business." IPAA officials told the NYT that the Rocky Mountain and Mid-continent regions were among the most affected by the deceleration.
During mid-October, IPAA Vice Chairman Bruce Vincent of Texas delivered testimony before the House Natural Gas Caucus, Fig. 7. He attempted to explain who independents are and how the federal government can help – or hinder – their efforts to produce American natural gas. “Because independents’ revenues come from selling natural gas, federal government actions that reduce these revenues will reduce development of American resources,” explained Vincent.
At IPAA’s 80th Annual Meeting during the fall in New Orleans, Vincent was elected to succeed Buddy Kleemeier as the association’s 38th chairman.
2010. During February, as commodity prices increased and E&P activity improved, IPAA’s North American Prospect Expo (NAPE®) once again reported high numbers in attendance and booth participation at the George R. Brown Convention Center in Houston. In addition, the E&P Forum
and Prospect Preview that took place a day before the expo’s start set its own record turnout, with over 600 attendees.
In addition, more than 50 IPAA members from across the country gathered in Washington D.C. during March for the annual Call-Up to Capitol Hill. Virtually doubling the size and reach of 2009’s year’s successful efforts, the 2010 IPAA Call-Up resulted in meetings with nearly 70 congressional offices over just two days.
In mid-June, in the aftermath of the Deepwater Horizon blowout that occurred in April, IPAA, NOIA and API formed two new task forces to address oil spill preparedness and response.
As the fall-out from the Deepwater Horizon blowout continued into the summer, IPAA Chairman Bruce Vincent sat for an interview with National Public Radio in early July. Asked what the effects would be on operators, he had some direct answers. “What will happen is regulators will build in even more redundancy," said Vincent. “You'll need more equipment. You'll need to have it inspected more often. You'll probably need more people on site—certainly higher-qualified people—that will take more manpower. All of that will add cost and expense."
Toward the end of the year, IPAA said it now had more members than at any time in its 81-year history—more than 6,000 members in 740 cities and 45 states.
2011-2020
During this decade, IPAA continued to deal with fall-out from the Deepwater Horizon incident while also battling federal bureaucratic interference in industry operations. On the other side of the coin, IPAA members benefitted from the ongoing shale revolution.
2011. More than 15,000 people attended the NAPE conference and expo held in February, setting a record for the prospect expo that began in 1993 with only 800 attendees.
During the 17th Annual OGIS New York meeting in April, IPAA unveiled a new study that highlighted the economic impact of onshore American independent oil and natural gas producers on the U.S. economy. Independents were now drilling close to 94% of America’s oil and gas wells. The study showed producers working onshore accounted for nearly four million American jobs in 2010, representing more than 3% of the total U.S. workforce. The industry’s overall economic effect was nearly $580 billion in total economic activity, accounting for 4% of U.S. GDP.
As of the summer, more than 750 high school students at three Houston high schools in IPAA’s petroleum academies program had the opportunity for a head start in the oil and gas
industry. In the interdisciplinary four-year program, the high school students were immersed in advanced sciences, which were then practically applied to industry activities.
The Obama administration spent much of 2011 using federal budget negotiations to promote the elimination of key tax provisions of the oil and gas industry, mischaracterized by the president as “subsidies” or “loopholes.” IPAA linked the repeal of these provisions as not only detrimental to independent producers, but devastating to the greater U.S. economy. Along with industry allies, IPAA also submitted comments in May on the U.S. Fish and Wildlife Service’s Proposed Rule to list the Dunes Sagebrush Lizard as endangered.
In October, at IPAA’s Investment Symposium in San Francisco, Chairman Bruce Vincent declared, “The Obama administration is probably the worst administration in terms of energy policy." The administration, he continued, "is so anti-fossil fuels and coal, which supply 85% of the energy in this county." He believed producers should approach national energy policy "like a war that will go on and on."
During the Annual Meeting in La Quinta, Calif., in November, Virginia “Gigi” Lazenby of Tennessee was elected IPAA’s 39th chairman, succeeding Bruce Vincent.
2012. During the spring, IPAA studied the Obama Administration’s intention to revise the Intangible Drilling Cost and Percentage Depletion tax breaks that are so important to independents. In IPAA’s assessment, the proposed tax increases from the administration would result in a 25%-to-35% reduction in capital expenditures for independent producers.
As summer approached, research from IPAA’s “Declaration of Independents” project showed that horizontal drilling had become widespread across the country, with activity from the first quarter of the year spanning 21 states. Thanks to horizontal drilling and hydraulic fracturing, there was a significant tier of states after North Dakota and Texas, where crude oil production was increasing on a steady basis.
During the fall, IPAA said that an important regulatory issue was continuing to develop exponentially—the Endangered Species Act (ESA). During the past few years, there were a number of efforts in Texas, New Mexico, Colorado, Oklahoma and elsewhere to list species as endangered and set hundreds of thousands of acres of land off limits to development.
Fortunately, thanks to the work of IPAA and its members, these efforts were largely defeated. But a new, stronger wave of threats was expected.
2013. IPAA had a busy winter and spring, providing testimony to Congress on natural gas. In late February, Vice President Lee Fuller appeared before the Senate Committee on Energy and Natural Resources. He said, “the federal government can enhance or impede the development of American natural gas. Two areas that can have substantial impact are the regulatory framework for new production and tax policies that affect the capital essential to meeting future American natural gas demand.” Then, in late May, Fuller appeared before the same committee again, providing commentary on natural gas production in the U.S..
In a third appearance before Congress in 2013, IPAA provided testimony to the House Subcommittee on Energy and Minerals on bill H.R. 2728. IPAA said it supported H.R. 2728, because although the individual states and their oil and gas regulators had successfully regulated the process of hydraulic fracturing for decades, “many opponents of increased American oil and gas production were determined to have the long reach of the federal government make the regulatory process more complicated and difficult.”
During the Annual Meeting in November, in San Antonio, Michael D. Watford of Texas was elected as IPAA’s 40th chairman, succeeding Virginia “Gigi” Lazenby.
2014. During a significant snowstorm that shut down much of Washington in March, IPAA members convened once again, to attend the annual Congressional Call-Up. During the Call-Up, the association participated in 122 meetings on Capitol Hill.
In mid-May, IPAA Senior Vice President Dan Naatz testified before the House Natural Resources Subcommittee on Fisheries, Wildlife, Oceans & Insular Affairs Oversight. This testimony related to an advanced notice of proposed rulemaking (ANOPR) on Non-Federal Oil and Gas Development within the National Wildlife Refuge System (NWRF) that the U.S. Fish and Wildlife Service (FWS) released in February. “We believe this rulemaking is premature,” said Naatz.
The Waters Advocacy Coalition (of which IPAA is a member) in June issued a statement to the House Committee on Transportation and Infrastructure Subcommittee on Water Resources and Environment. The statement outlined its concerns on the proposed “Waters of the United States” rule. The coalition urged the Subcommittee and Congress to take action to halt the proposed expansion of federal authority under the Clean Water Act.
Also in June, IPAA submitted testimony to the Senate Committee on Energy and Natural Resources in support of S. 2440, the BLM Permit Processing Improvement Act of 2014. IPAA said the legislation would reauthorize and make reforms to the successful BLM pilot project started in 2005.
In the summer version of IPAA Access Magazine, IPAA President & CEO Barry Russell paid tribute to former Chairman C. John Miller (1973-1975), who passed away in March. “He will always be remembered for his character and dedication to our industry,” said Russell. “And his impact on defining independents at a critical time was enormous.”
2015. In early June, IPAA, on behalf of over two dozen national and state associations, provided testimony to the Senate Committee on Energy and Natural Resources. During this hearing on Energy Accountability and Reform Legislation, IPAA expressed support for bill S.1312, The Energy Supply and Distribution Act of 2015.
In the Fall 2015 issue of its IPAA Access Magazine, the association warned that the U.S. Department of Justice (DOJ) and U.S. Environmental Protection Agency (EPA) were re-doubling their efforts to target the upstream oil and gas industry. “In the last few years, DOJ and EPA have opened an unprecedented number of Clean Air Act investigations aggressively, using their investigative authorities to target alleged violations in all segments, from well sites to downstream storage tanks,” said IPAA.
At the 86th Annual Meeting in New Orleans, in November, Mark K. Miller of Louisiana was elected as IPAA’s 41st chairman, succeeding Mike Watford.
On Dec. 18, IPAA President and CEO Barry Russell thanked the U.S. Senate for passing legislation that set federal spending levels for Fiscal Year 2016, which included a provision that lifted the outdated trade restrictions on U.S. crude oil exports, Fig. 8. “This is a priority for America’s independent produce…,” said Russell.
2016. In early March, IPAA Chairman Mark Miller spoke with the Women’s Energy Network while in Lafayette, La. “Is it worse than 1986?” Miller asked rhetorically. “I think it is,” he responded on whether the 2014-2016 downturn in upstream prices and activity was worse than 1986. Miller basically said that industry companies were victims of their own success. He was referring to the industry’s ever-improving efficiency and productivity.
In mid-June, IPAA and API provided a Joint Statement to the Senate Committee on Energy and Natural Resources regarding the BLM Planning 2.0 Initiative. The associations noted that many of their members hold existing leases that might be directly affected by BLM’s management decisions. Furthermore, they said the Proposed Planning Rule showed a bias against oil and gas interests.
On June 21, IPAA won another regulatory victory. U.S. District Court Judge Scott Skavdahl struck down the Bureau of Land Management’s (BLM) final rule on hydraulic fracturing. Judge Skavdahl agreed with IPAA and other entities that BLM does not have the congressional authority to regulate hydraulic fracturing on federal lands.
IPAA Senior Vice President Dan Naatz released a statement on July 14 regarding the Notice to Lessees on new financial assurance requirements issued by the Bureau of Ocean Energy Management (BOEM). “Today’s Notice to Lessees will change how the oil and gas industry provides financial security for its offshore operations…The Bureau’s new mandatory financial requirements will force each lease owner to fully insure upfront all of its exploration wells, despite the fact that these wells may never be drilled. This mandate unfairly places the burden on independent offshore producers…”
IPAA members took some comfort and hope for regulatory relief, when Republican nominee Donald Trump narrowly won the presidential election on Nov. 8.
Looking to deregulate the energy industry, new U.S. President Donald Trump ordered the government in 2017 to weed out federal rules “that unnecessarily encumber energy production.” One of Trump’s most effective reformers on offshore matters was Secretary of the Interior Ryan Zinke, Fig. 9.
IPAA Senior Vice President Dan Naatz appeared before the House Subcommittee on Energy and Mineral Resource during mid-October. Naatz said that IPAA welcomed “the efforts of the House Natural Resources Committee and the Trump Administration to encourage safe and responsible American energy production on federal lands.” He also stated that “IPAA strongly supports efforts to delegate primary regulatory authority for oil and natural gas activities on federal land to the states.”
At its 88th Annual Meeting during November in Naples, Fla., IPAA elected Michael Watford as its 43rd Chairman and Steven Hinchman as Vice Chairman. Watford previously served as IPAA Chairman during the 2013-2015 term.
A major victory for IPAA occurred during December 2017, when sweeping tax reform was passed in the form of the Tax Cuts and Jobs Act. President Donald Trump signed it on Dec. 22. Overall, the final law was positive for U.S. oil and gas producers.
2018. On March 23, IPAA President & CEO Barry Russell publicized a rare disagreement that the association had with the Trump Administration. “On March 8, 2018, President Trump announced the imposition of tariffs on imported steel and aluminum,” explained Russell. “IPAA had requested that the administration exclude Line Pipe and Oil Country Tubular Goods from any tariffs.”
On June 4, the United States Court of Appeals for the Tenth Circuit in Denver brought further closure to IPAA’s efforts to fight misguided attempts by the Obama Administration to add additional regulatory hurdles for independent producers operating on federal lands. IPAA had filed suit in March 2015, challenging hydraulic fracturing regulations that Obama officials issued in that month. On June 4, the U.S. appeals court denied the last procedural motions that remained pending in IPAA’s original lawsuit.
During mid-July, IPAA’s Director of Government Affairs, Samantha McDonald, testified before the U.S. Congressional Western Caucus Legislative Forum about the Endangered Species Act (ESA) Modernization Package. After being passed in 1973 to save species on the verge of elimination, McDonald said ESA had “evolved into one of the most litigious statutes on the books.” McDonald advocated for changes to ESA, to bring it back closer to its original mission.
2019. In April, IPAA President & CEO Barry Russell alerted members to the pending Mexico-Canada Agreement, or USMCA—the would-be successor to the North American Free Trade Agreement. This deal, which required congressional approval, would help open up and strengthen the industry’s partnerships with neighboring markets to United States oil and gas supplies. “This treaty is important to the entire business and manufacturing community in the U.S.,” said Russell.
During late May, IPAA shared the results of a study that showed the substantial economic impact that its membership has on the nation. The study, “The Economic Contributions of Independent Operators in the United States,” was conducted from November 2018 through May 2019. Some key findings included: 1) Independent companies account for 83% percent of U.S. oil output and 90% of its gas and NGL production; 2) Independents drill close to 91% of U.S. oil and gas wells; 3) In 2018, independents accounted for nearly 3% of U.S. GDP and supported 4.5 million American jobs; and 4) From 2016 to 2025, capital investment by independents was projected to increase 87%.
In an end-of-year statement to members during mid-December, IPAA President & CEO Barry Russell advised them of challenges lurking in the coming year. “Critical elections will determine who occupies the White House and Congress,” said Russell. “Some candidates threaten the progress of our industry–calling for bans on hydraulic fracturing, halting federal lease sales, banning offshore production and over-regulating emissions.”
2020. In mid-February, IPAA representative Will Allison testified at the public hearing held in Denver by the Council on Environmental Quality. He said that IPAA’s members commended the Trump Administration for proposing a “much-needed reform of the National Environmental Policy Act (NEPA).” Noting that NEPA underwent its last major update in 1978, Allison said it had become outdated and burdensome, while actually making environmental outcomes worse. He said the Trump Administration’s proposal to streamline the review process and designate a lead agency for NEPA review was a positive step that needed to be implemented.
As federal and state governments took actions to respond to the Covid-19 virus, one issue had been what businesses were considered critical. The Department of Homeland Security in late March released a list of essential critical infrastructure that included petroleum drilling, extraction, production, processing, refining, terminal operations, transporting, and retail for use as end-use fuels or feedstocks for chemical manufacturing.
In April, IPAA President & CEO Barry Russell updated members on two key issues. On one, IPAA was working with federal government agencies to assure that producers had access to key lending programs, and that the industry was not excluded from participating in them. On the second item, Tariffs and Quotas, IPAA was Supporting a Section 232 Analysis for the industry on whether oil imports pose a significant threat to national security.
Given the impact and uncertainty that COVID-19 was creating in the industry and communities, IPAA cancelled its annual meeting, scheduled for June 29-July 1, 2020.
In the Nov. 3, 2020, presidential election, former Vice President Joe Biden (D) defeated incumbent President Donald Trump (R). His win foreshadowed a fresh, four-year cycle of hostile federal government actions toward the U.S. upstream industry, including independents.
During the fall, James “Jim”H. Wilkes of Texas was elected IPAA chairman, succeeding Steve Hinchman.
2021-2024
During this period, IPAA found itself having to repeatedly repel anti-oil-and-gas maneuvers by the Biden Administration and its allies in Congress. Some relief was gained in January 2023, when the Republicans took back control of the House.
2021. During April, IPAA submitted materials to the House Subcommittee on Environment and Climate Change. The materials regarded provisions of the CLEAN Future Act. Executive Vice President Dan Naatz said the bill had provisions that are unrelated to its stated objective—to achieve net zero greenhouse gas pollution, combat the climate crisis, put Americans back to work, and rebuild the economy—but would adversely affect America’s ability to produce its essential energy.
IPAA and the industry won an important victory on June 15, when Judge Terry Doughty in the Federal District Court for the Western District of Louisiana issued a ruling, placing an injunction on President Biden’s federal leasing ban. The lawsuit, brought by the state of Louisiana and other states, challenged the legal authority used by the Biden Administration through an Executive Order issued on Jan. 27 to cancel leases under the Administrative Procedures Act.
In November, IPAA President & CEO Barry Russell updated members on two key methane-related issues. First, the “methane fee” continued to be part of the Build Back Better budget reconciliation bill in Congress. He said IPAA had fought this tax on natural gas since its inception and would continue to do so. Second, the Biden Administration released its new strategy and regulatory framework for reducing methane emissions, including EPA-proposed regulations that IPAA would be addressing in coming months.
2022. During May, IPAA COO Jeff Eshelman issued a statement in response to the Department of Interior’s announcement of the cancellation of remaining offshore oil and gas lease sales for the year: “The Biden Administration’s national energy strategy is not strategic, and it doesn’t benefit the nation. What it does do is drive energy costs up, put our national security at risk and further push the nation into high inflation and a failing economy. Ignoring the benefits of American natural gas and oil production is misguided and potentially against the law.”
On Sept. 1, IPAA announced that long-time President and CEO Barry Russell was retiring, effective that day. Russell had served in leadership roles with the association for more than 43 years. Accordingly, as part of a planned succession process, COO Jeff Eshelman assumed the role of President & CEO, while Executive Vice President Dan Naatz retained that position and added the role of COO to his duties. “Barry Russell built the modern IPAA,” said Chairman Jim Wilkes. Barry Russell was elected President of IPAA in in March 2000, guiding the association through 22 years of industry booms and busts and regulatory and legislative challenges. Prior to being named President, Russell served as Executive Vice President, General Counsel and Corporate Secretary.
IPAA in October said it opposed the Biden Administration’s announcement of the latest release of oil from the Strategic Petroleum Reserve and possible future releases. President and CEO Jeff Eshelman said, “The Strategic Petroleum Reserve (SPR) is meant to protect consumers against emergency supply disruptions, not politicians during an election year.”
On Dec. 6, the IPAA board of directors met and appointed Steven H. Pruett of Texas (Fig. 10) as chairman for the 2022-2024 term.
2023. During March, IPAA sent a letter to House Natural Resources Chairman Bruce Westerman (R-Ark.), saying that the association was pleased to support H.R.1335, the Transparency, Accountability, Permitting, and Production of American Resources Act, referred to as the TAPP Act. IPAA believed that many of the reforms laid out in the TAPP Act would help to revitalize oil and gas production on federal lands and waters.
On March 9, IPAA President and CEO Jeff Eshelman (Fig. 11) responded to President Biden’s FY 2024 Budget that would repeal many long-standing oil and natural gas tax provisions. “The changes in President Biden’s proposed budget to oil and natural industry tax provisions are a direct attack on America’s smaller independent producers, who develop most of the nation’s natural gas and oil wells, and particularly the small marginal operators,” said Eshelman.
In mid-July, IPAA responded to the release of Bureau of Land Management’s proposed rule, revising oil and gas leasing regulations including increases to bonding requirements, royalty rates, and minimum bids. “Interior’s proposed rule is another attempt by the Biden administration to reduce oil and natural gas production on federal lands,” said IPAA COO and EVP Dan Naatz.
During late September, the Department of the Interior released its final, proposed, Five-Year Offshore Leasing Program. In rebuttal, IPAA President & CEO Jeff Eshelman said, “IPAA is disappointed by the content of the Biden Administration’s offshore five-year leasing program released today. It’s clear that the Biden Administration has chosen to align its policy decisions with environmental activists rather than put the best interest of American consumers first.”
IPAA, as part of the “Producers Associations,” issued a statement on Dec. 2 in response to the release of the EPA’s Subpart OOOOb and OOOOc methane regulatory package. “The new source requirements will impose complicated new requirements, and the 2022 proposed existing source requirements have been estimated to lead to the shutdown of 300,000 of the nation’s 750,000 low-production wells; wells that are essential to our country’s energy production.”
2024. IPAA and 25 organizations in early February sent a letter to congressional leaders, telling them that EPA’s methane regulations are “unfair, unworkable, and uneconomic.” In their letter, the groups expressed “serious concerns regarding the impact of the Environmental Protection Agency’s (EPA) new methane emissions regulations (Subparts OOOOb and OOOOc) and the Methane Emissions Reduction Program (Methane Tax) on oil and natural gas marginal well owners.”
During early April, IPAA held its spring, board of directors meeting in Washington, D.C. and At-Large Director, Justin Cope (Arkansas), President & CEO of Flywheel Energy, LLC was formally announced as Vice Chairman of IPAA, effective immediately.
In mid-September, IPAA and five other major trade association condemned a ruling that could shut down oil and gas operations in the Gulf of Mexico. They issued statements after Maryland federal Judge Deborah Boardman’s decision to vacate the 2020 Gulf of Mexico Biological Opinion (BiOp). With the current ruling, a wide and substantial swath of offshore oil and gas operations and activities could be shut down on Dec. 20, 2024, unless a legal, regulatory or legislative solution is in place before then.
LOOKING AHEAD
After 95 years of operation, handling the interests of U.S independent producers in federal regulations, IPAA has grown into a large, many-faceted lobbying organization that provides exemplary representation in Washington, D.C. With the changes to leadership in the last two years, the association is in excellent hands and stands ready to handle any challenges thrown to it by the bureaucracy. Of course, the near-term picture for IPAA depends to some extent on which side wins the presidential election just around the corner. Nevertheless, the outlook over the next four years and beyond is bright for IPAA and its independent oil and gas producers.
ACKNOWLEDGMENT
The author would like to thank the IPAA staff for their assistance and contributions to both parts of this article, particularly President & CEO Jeff Eshelman and Senior Director of Public Affairs and Communications Jennifer Pett Marsteller
IPAA’s traditional Chief Roughneck Award returns
For 65 years, from 1955 through 2019, IPAA’s Chief Roughneck award (Table 2) recognized one individual whose accomplishments and character represented the highest ideals of the U.S. oil and natural gas industry. While some of the executives recognized have been former IPAA chairmen, others have been heads of member companies demonstrating excellence.
Lone Star Steel Company, later U.S. Steel Tubular Products, established the Chief Roughneck Award with IPAA to honor the lifetime achievements of the upstream industry’s leading independent producers.
Presentation of the Chief Roughneck Award by a representative of Lone Star Steel/U.S. Steel, at the fall meetings of IPAA, traditionally included a distinctive bronze bust. However, this annual event was interrupted by the Covid-19 pandemic. Now, after a four-year hiatus, IPAA is pleased to bring back the Chief Roughneck Award. The next winner will be announced at IPAA’s 95th Annual Meeting in Boca Raton, Fla., on Oct. 29, 2024, during the Membership Luncheon.
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