American Oil and Gas Reporter - June 2014 - 167

ConventionCoverage: Texas Alliance of Energy Producers
of drilling permits was on a modest skid,
which was likely to suppress rig count
growth for the immediate future. He speculated that many proposed projects were
held up as operators monitored oil prices.
"If you lose five dollars a barrel in terms
of the price of crude oil, some of those
projects have to go by the wayside because
they are no longer economic," he said.
Ups And Downs
Since he launched the Texas Petro
Index in 2000, the composite look at the
oil and natural gas industry's health has
seen three complete cycles, with a fourth
in the making, Ingham reported. With
the state analysis beginning in January
1995 for comparative purposes, he said
the ups and down started with a cycle of
growth ending in the fall of 1997, with
that decline reversing and climbing until
June 1999.
After a period of decline through 2001
and 2002, he said six years of remarkable
market events brought the price of crude
oil from the $20 range to nearly $150 a
barrel.
That price spike prompted great concern from the producing community, he
recalled, with lots of media attention
about the causes of the increase and its
beneficiaries. Fears also arose about the
public's ability to survive in the new
pricing environment, with energy costs
expected to pinch household budgets and
businesses staggering under the weight
of heavy transportation and feedstock
costs.
"Increasing energy prices are inflationary, and ultimately will lead to a virtually unworkable inflation scenario," Ingham described. "While none of that
turned out to be the case, there were all
manners of policy hue and cry at that
time. Although there was a certainty that
this was going to kill our economy, none
of that turned out to be the case."
Although crude prices went up spectacularly during the 2002-08 cycle, Ingham
said the Texas Petro Index's upward trend
was mainly attributable to natural gas.
Throughout most of those bullish six years,
he pointed out, 80 percent of the rigs operating in Texas were drilling for gas.
The steep oil and gas price collapse
from October 2008 to December 2009
set up the next upturn, he said. "Whereas
the expansion of 2002 to 2008 was gas
driven, the expansion from late 2009/early
2010 to the present has been very much
a crude oil driven expansion, with frankly

The Texas Alliance of Energy Producers closed out April 22, the first day of its annual
convention and expo, with a barbecue inside Yeager Coliseum at the Multi-Purpose
Events Center in Wichita Falls, Tx. The event, with food provided by the Mavericks social
organization, fed more than 2,000 people.

very little help from the gas side of the
equation," Ingham asserted.
While the oil and gas picture across
the state is dramatic, he pointed to the
Eagle Ford and Permian Basin plays as
the star performers.
"For years, the Texas share of U.S.
crude oil production was about 20 percent,"

Ingham concluded. "Since 2009, that number is approaching 35 percent. Thirty-five
percent of all crude oil produced in the
United States comes from Texas. This is
while we are increasing crude oil production
in other parts of the country, in the Bakken
and other shale activity areas."
❒

Alliance's Government Adviser
Urges Education For Legislators
WICHITA FALLS, TX.-Washington's
political system is broken and there is
little likelihood that anything productive
will emerge from Congress this session,
Charles Stenholm predicted at the Texas
Alliance of Energy Producers' Board of
Directors meeting that closed the Alliance's
annual convention on April 23.
"Everything will be waiting on the
elections this year. Depending on how
they come out and what may change in
the 2016 presidential election, not much
is likely to happen," said Stenholm, a
member of the Alliance's government relations team.
Both the House and Senate chairmen
of the finance committees have issued
versions of tax reform, with the House
proposal slightly better for the oil and
gas industry, Stenholm assessed. However,
he recommended, operators must continue

to educate congressional members.
It is extremely important for everyone
in the oil and gas industry to talk to their
members of Congress, he urged. Stenholm
suggested operators take the time to participate in the Alliance's Washington callups. While the association's government
relations advisers carry the industry's
message to the House and Senate, Stenholm said, nothing is more effective than
industry members telling those elected
officials about the impact votes have on
their companies.
Stenholm said he also had spent a
significant amount of time keeping oil
and gas interests aligned closely with the
agricultural industry.
"Whether we are talking about water
issues, or tax issues or the Endangered
Species Act, the problems are the same
and the opportunities to fix them are the
JUNE 2014 167

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