American Oil and Gas Reporter - July 2018 - 107

ConventionSection: Western Energy Alliance
Trump administration introduced a final
rule in December 2017 that postponed
the portions of Obama's rule that had not
been implemented, they argue that BLM's
decision to suspend compliance with the
regulation is logical, and that the states
and U.S. Environmental Protection Agency
were the proper authorities to handle
methane emission regulations.
"We are anticipating a final rewrite
of the rule by August or early September
at the latest," Sgamma says. "Invariably,
we will be in court defending that new
rule because the environmentalists will
sue. We still have a ways to go on it, but
we are very optimistic. It is very hard to
argue in court that a new administration
cannot come in and change policy through
a full rule-making process. There is no
question that the federal government has
the discretion to change policy; it just
has to do so through the rule-making
process, which BLM is doing."
Fracturing And ESA
The Western Alliance also continues to
monitor federal hydraulic fracturing regulations on BLM lands and actions being
considered under the Endangered Species
Act, Sgamma says. Like the venting and
flaring regulations, she notes, environmentalists attacked immediately after the Trump
White House released a rule rescinding
Obama-era fracturing regulations.
"As soon as the hydraulic fracturing
rule came out, the environmentalists sued,"
she says. "The Alliance is anticipating
the same thing with the venting and flaring
rule. The environmentalists will sue; they
will do so in the San Francisco federal
court because they know there are biased
judges there who don't care about the
impacts on the economy and industry.
But, again, we like our chances. It is hard
to argue in court that a new administration
cannot change policy, as long as it goes
through a full rule making."
The White House also still is preparing
plans to rework the greater sage grouse
land-use plans, Sgamma reports, with the
comment period open through the summer.
She says the Alliance is preparing detailed
comments on the proposal.
"That eventually will lead to some
court activity too, and the Alliance will
be there to defend the rewritten plans as
well," she says. "There is a pattern here:
No matter what happens, that action will
be sued, and the industry will have to defend these policies in court. The Alliance
will have to help the government defend
these policies in court, because frankly,

our lawyers are better."
Sgamma says one of her group's ongoing
concerns is securing funds for its legal program. She points out that President Trump
is doing for environmental groups what
President Obama did for gun manufacturers.
"The environmental groups are flush
with cash," she asserts. "So, they are pursuing every minor legal maneuver that
they can possibly pursue, because they
know that if you throw enough against
the wall, some of it will stick. We need
companies to stand up and help us in this
fight. It always is a struggle to raise
money. Companies understand that these
issues matter, and that they need to be
engaged legally."
Working With Legislators
Western Energy Alliance Chairman
Richard Frommer says that in addition
to its legal work, the group has spent
considerable time and effort building relationships with Democratic legislators
who support the oil and gas industry.
"Over the past year, we have built a
coalition of energy-county Democrats
who get the industry's message," he describes. "There actually are some congressman on the consumer side and not
the producer side who have come to understand the value of our industry. That
has been surprising. We have focused
not just on the legislators who support
us, but we have spent a lot of time also
on those who are on the other side of the
aisle, which typically has not been an
area of support. We have seen those numbers increase over the past 12 months."
Sgamma points out the industry also
has a strong ally in the White House, with
indications that President Trump understands
why it is better to develop oil and gas
plays in the United States than overseas.
She says this administration appreciates
the strategic values contained in U.S. natural
resources, including shale plays that provide
liquefied natural gas for export to Europe,
which reduces its dependency on Russia,
and oil formations that help minimize the
impacts of decisions made by the Organization of Petroleum Exporting Countries.
"The Obama administration was all
about the environmental agenda; it fought
us on LNG and crude exports; luckily the
industry was able to overcome that," Sgamma says. "The United States now is the oil
and natural gas powerhouse of the world,
with projections that its crude oil production
will overtake Russia's in the near future.
The Trump administration knows it is not
about keeping oil or gas in the ground, it is

about using that energy, which we need
fundamentally in our society, but which
we also can use as a strategic resource."
Frommer says the Alliance remains
aligned with President Trump's "agenda
of energy dominance for this country,
and the values that brings, not only to
the industry but to every person who
benefits from affordable energy."
Steel Tariffs
Although the tariffs imposed by the
White House on June 1-25 percent on
steel imports and 10 percent on aluminum-are disconcerting, Frommer says
they have not yet had an impact on oil
and gas operations.
"We have seen minor increases in steel
prices for tubular goods, but it has been
manageable," he assures. "The tariffs introduce a bit more uncertainty into business,
but I don't think it is an overwhelming
concern. We do not think it will be longlasting, and it will be negotiated out to a
reasonable balance on tariffs."
According to Sgamma's back-of-theenvelope calculations, the oil and gas industry uses more than 22,000 miles of
steel pipe underground in pipelines and
wells every year, in addition to large
amounts in machinery and equipment. She
muses that the handful of jobs that the
tariffs protect are overwhelmed by the hundreds of thousands of jobs in independent
industries that potentially could be lost.
Across the industry, Frommer says
some companies are seeing infrastructure
constraints but most producers in the Rockies have not experienced significant issues.
"As the area's production grows over time,
that could be a problem, but our takeaway capacity always has managed to remain ahead in the Rockies. Currently,
there is excess take-away capacity for natural gas, and sufficient capacity for crude.
We continue to monitor that closely, and
hope to keep ahead of that," he says.
Frommer praises the technological advances that continue to drive oil and gas
activities to new depths.
"That technology has allowed us to
reduce the costs of drilling and completion," he says. "My company has drilled
many three-mile-long laterals. Three miles
gets pretty far out there, and completion
techniques will need improvement to get
stages placed further than that. I think
there are advances coming, but we are
not quite there yet. It is staggering when
you really think about it: 15,000 feet out
and anywhere from a mile and a half to
two miles down."
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American Oil and Gas Reporter - July 2018

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