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Mullennix talks 'the good, the bad and the ugly' of the oil and gas industry

April 04, 2019
OIPA-OKOGA Co-Chairman Berry Mullennix told the Wildcatter Wednesday Luncheon crowd about the good, the bad and the ugly of the regulatory, environmental and production worlds at both the state and national level.

Mullennix was the featured speaker at the April 3 event in Tulsa.

“We’ve had a significant number of rollbacks of regulations,” he said, citing the good. “That’s not to say that regulation is not good. Reasonable, thoughtful regulation is good for our industry, but it went a little overboard.”

New regulations have dropped, and the Trump administration made 65 deregulations in fiscal 2018 affecting the energy sector, at a projected savings of $5 billion.

On the bad side, there were nearly 4,000 EPA regulations issued under the Obama administration, which are almost impossible to remove once in place.

Environmental groups filed suits on more than 1,000 species of animals and plants under the Endangered Species Act, more than the total number of species currently under the act.

The after-effect of the Obama administration continues, with permitting on federal lands still down.

“The ugly is an Oklahoma one. The county commissioners in Kingfisher County are trying to regulate water lines or flow lines in ditches on private land,” Mullennix said.

“The Supreme Court ruled against the county commissioners and said only the Corporation Commission can make those decisions.”

On the production side, the U.S. has hit an all-time record for production, is now a net exporter for the first time in 60 years and is exporting to more than two dozen countries.

But the process for exporting LNG is antiquated, he said, and needs to be streamlined. A lack of infrastructure is also a headwind facing the industry on the production side.

Political opposition to new natural gas pipelines in places like New York and New England has led to those regions actually importing Russian natural gas.

Wind is displacing natural gas while costing taxpayers in tax credits, he said.
 
“The state of Oklahoma still owes a couple of hundred million dollars to all the wind companies that are here,” he said. “We stopped the rate of the increase, but we still owe all the rebates that were promised in the last few years.”

“I saw a chart last year that listed the best and worst places in the world to do business in this industry,” he said. “Colorado was in the second column under Libya.”

Pushes against oil and natural gas development continue in Colorado and have spread in New Mexico, where a ban on hydraulic fracturing was proposed in this year’s legislature.

“The legislator proposing the New Mexico bill use the same old, tired accusations about fracking polluting groundwater, which has been debunked so many times it’s not even funny.”

On the environmental front, the U.S. is enjoying the cleanest environment of any economic power in modern history, CO2 emissions are at the lowest point in 25 years, and the U.S. withdrew from the Paris Climate Accord that would had the nation putting billions of dollars into a pool that could have been drawn on by economic powers like China and countries in Europe.

“They don’t need our help to build wind turbines,” Mullennix said.

Challenges include worldwide pollution from nations with lower standards, with the gains in the West almost entirely offset by increasing coal use in other countries. Also of concern is Russia’s targeting of the oil and natural gas industry, particularly during the recent debate over the Dakota Access Pipeline and in the 2016 election.

Heading the ugly column is the Green New Deal, which could cost the U.S. as much as $93 trillion — or $600,000 per household, he said.

“The Green New Deal is based on relatively little science,” Mullennix said. “The people pushing it are anti-fracking, anti-fossil fuels, and it’s not science-based. The ex-governor of Colorado, Hickenlooper, who is a Democratic candidate for president, is being lynched publicly by the environmental groups because he says he supports fracking as a science-based way to get us from fossil fuels to the next generation of power beyond solar and wind.”

On a hopeful note, the Green New Deal was voted down in the Senate, 0-57.

 
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