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 |  | | << Back to Wellhead | | Industry presses Congress as Obama continues battle March 2010 | |
| By: Brook Simmons, OIPA federal lobbyist OIPA leaders joined dozens of independent producers from across the nation in early March for a series of Capitol Hill meetings and events to remind Congress that the crude oil and natural gas industry will create good paying U.S. jobs and fuel America’s economic recovery.
The meetings coincided with a broad call-up of producers by the Independent Petroleum Association of America, Independent Petroleum Association of Mountain States, Independent Oil and Gas Association of Pennsylvania, Panhandle Producers and Royalty Owners, Permian Basin Petroleum Association, North Dakota Petroleum Council, Michigan Oil and Gas Association, Illinois Oil and Gas Association, California Independent Petroleum Association, and the Texas Alliance of Energy Producers.
OIPA Federal Issues Co-Chairman Bob Sullivan Jr., Board Member Pete Brown, President Mike Terry, Vice President of Regulatory Affairs Angie Burckhalter, and Oklahoma Secretary of Energy Bobby Wegener thanked the Oklahoma congressional delegation for their steadfast support of independent producers and discussed front-burner industry issues.
At the top of the list remain President Barack Obama’s continued effort to raise industry taxes and fees, Democrat efforts to regulate hydraulic fracturing under the federal Safe Drinking Water Act, and financial reform proposals that would add costly red tape when producers hedge to manage risk.
Generally, independent producers are in a stronger position than they were a year ago, but Obama and his anti-industry allies continue to press forward as if deaf to voter concerns about proposals that kill jobs or result in additional federal intrusion into the prerogatives of the states. Deficit concerns are resulting in Democrat calls to raise taxes.
Obama is now working to achieve complete victory on the Democrat health care plan and signaled in early March that he intends to pivot to energy and climate legislation and rebrand the effort as a jobs and energy security bill.
For months on the Senate side, Democrat John Kerry of Massachusetts, Independent Joe Lieberman of Connecticut, and Republican Lindsay Graham of South Carolina have discussed ways to advance legislation to address climate change. After receiving Obama’s blessing at a bipartisan 14-senator meeting on March 9, the trio has begun drafting a sector-by-sector bill that will include cap-and-trade provisions for utilities that Lieberman now calls “pollution reduction targets” and a new fuels tax.
Obama has ordered that the bill’s authors not take an incremental approach. They are not to divide energy security and domestic production efforts from environmental provisions. While this approach may well result in the familiar “compromise in search of a constituency” it cannot be ignored.
China, India, and Brazil are playing the political hand America dealt them – pressing the U.S. to limit energy consumption, GHG emissions, and economic growth.
Readers would be forgiven for thinking 2010 is shaping up to look a lot like 2009. There is one exception. Democrats now fully understand the political jeopardy they face in November.
However, the truth cannot be overstated. Democrat leadership intends to sacrifice rank-and-file members from conservative, rural, and energy producing states to achieve the goals of the liberal base. They intend to let nothing stand in their way. This is a dangerous on many fronts.
Obama will frequently be out of Washington and on the road this year campaigning for his priorities. He will fan his liberal base to press reluctant Democrats to support him. Obama’s struggle is not with Republicans. It is with fellow Democrats from more conservative states.
What the Administration cannot achieve in Congress, it will work to achieve at the agency level.
In February, the House Energy and Commerce Committee, led by Chairman Henry Waxman (D-Calif.) and Energy and Environment Subcommittee Chairman Edward Markey (D-Mass.) launched an investigation of hydraulic fracturing.
The probe followed on the heels of EPA testimony wherein the top EPA drinking water official admitted that no scientific evidence exists to show that HF poses a threat to drinking water and that states are already regulating the process. Meanwhile, EPA Administrator Lisa Jackson said she hopes to begin EPA’s in-depth HF study this year. The agency requested $4.3 million for the study in its Fiscal Year 2011 budget. Jackson said EPA intends to spend $1.8 million this year on the study.
Producers and especially the states and intergovernmental bodies must remain active on this issue. Environmental extremists will work this issue hard.
Producers must remember the attack on hydraulic fracturing is not about the process itself. It is an attempt to limit domestic production that focuses on the nexus between oil and gas operations and water. Producers who think they are not immediately at risk from Washington’s disclosure strategy should think again.
This is not merely an attempt to go after well service companies. Disclosure will mean putting in the public domain not only what goes down hole, but also what fluids come up as HF operations terminate. Producers are on the hook as well.
Financial market reform discussions and their impact on legitimate hedging continue in the U.S. Senate. Independent producers are making progress in work to prevent the imposition of cash or cash-equivalent collateral requirements.
The most contentious issue remains the creation of a Consumer Financial Protection Agency (CFPA), which Democrats envision as a stand-alone agency and Republicans believe should be housed within an existing agency.
Senators are exchanging proposals. Agriculture Chairwoman Blanche Lincoln (D-Ark.) said she expects to release draft legislation on derivatives – the aspect of financial reform that falls under the Agriculture Committee’s jurisdiction – in late March or early April.
Though all parties seem committed to pursuing financial market reform, an agreement is unlikely to pass the Senate until late spring and must be merged with the House bill before becoming law. The House version features a stand-alone CFPA.
There’s not a lot of time for the majority to accomplish its goals. In the weeks ahead, Congress will move to a Tuesday-Thursday work period, thus allowing vulnerable incumbents to spend more time in their home states. Big ticket priorities not well on their way to passage by mid-June may be delayed until after the November elections or be discarded on the political battlefield.
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