IPAA to Push for More Access To Restricted Lands
The Independent Petroleum Association of America won an
"impressive" victory when Congress amended the Energy Policy and
Conservation Act, a victory that may change where exploration and
production development takes place in the future. The changes, said
IPAA at its recent annual meeting in San Antonio, require the
Department of Interior to begin a comprehensive inventory of
government-controlled lands on which oil and gas are found.
The EPCA amendments are "an important first step in achieving a
key association goal --- better access to natural resources." Part
of that access to natural resources already has opened up in the
Gulf of Mexico and has improved the bottom line for a lot of
Advocating a continuation of royalty incentives to encourage
more drilling in the deepwater Gulf of Mexico, IPAA Offshore
Committee Chair Robert S. Boswell of Forest Oil said the expiring
Deepwater Royalty Relief Act needs to be extended. His sentiments
were echoed by Minerals Management Service director Walter
Rosenbusch, who praised the success of the soon-to-expire act,
saying it had "turned the Gulf of Mexico from a Dead Sea into a
world-class producing province."
But the improved Gulf production has done little so far to solve
the tight supply situation. In fact, the high demand for natural
gas in the United States has led to a predicted supply shortage and
the expectation of continued high energy prices --- both being
criticized not just by the public but by government officials as
Pointing a long finger at the Clinton Administration, which he
said restricted growth by limiting access to public lands, J. Larry
Nichols, CEO of Devon Energy Corp., said that for the past eight
years, the administration "was able to have its cake and eat it
too" and has not had to answer to anyone about restricting
exploration by limiting access. However, the public now wants
answers --- and solutions --- as energy prices remain high and
supplies remain tight, he said.
Dynegy Inc. CEO Chuck Watson painted an even bleaker picture.
"When eastern cities with large populations start browning out and
blacking out, people are going to start understanding this is a
real problem." Watson said that the demand was "real," and
predicted it would become "real important politically."
To reduce problems associated with exploration and development
both onshore and offshore, the Texas Justice Foundation also is
considering a lawsuit to remove several species from the U.S.
Endangered Species Act, which make oil and natural gas development
MMS also is expected to appeal a federal judge's decision in
IPAA v Armstrong that a lessee can deduct transportation costs from
federal natural gas royalty payments. IPAA's Poe Legette told
attendees that the Interior Department royalty program managers may
use the U.S. False Claims Act to attempt to find anyone who has
tried to either avoid or reduce his royalty liability.
Companies and government leaders from across North America,
including Canada and Mexico, were represented at the conference.
Anglica Fuentes, Mexico's natural gas IPAA president, said Mexico
"likely would not become a net natural gas exporter any time soon."
Fuentes said that Mexico's natural gas production cannot keep pace
with 4.7 Bcf of new demand, which means the country will have to
import 10% of its natural gas needs into the foreseeable future.
On a more positive note, Canada's IPAA president, William
Friley, said that his country can supply 15% of U.S. gas demand
because there is a "strong reserve base" there. Still, neighboring
Alaska's natural gas potential faces problems getting the product
to market. Choices still remain on transcontinental routes to ship
the gas to U.S. and Canadian markets.
Predicting that natural gas was "going to lead the future for
the independent producer," Dynegy's Watson said he expected growth
to be in peaking demand in the summer months instead of the winter
months. "That's pretty exciting because it allows us to use the
existing infrastructure we already have."
Carolyn Davis, Houston