LOGA Industry Report - Fall 2008 - (Page 39)

ON THE HILL /IPAA Grassroots Efforts Help Defeat Dangerous Energy Bill Independents Driving Rig Count While Congress is targeting the industry for not utilizing its entire lease inventory, in reality independent operators are playing a major role in pushing the rig count – the easiest measure of oil and natural gas development activity - to its highest level in 22 years. IPAA estimates that independents develop approximately 90 percent of the wells in the US. By this count, IPAA members are harnessing all their resources to provide more energy for America. Moreover, independents typically plow back more than 100 percent of their cash ﬂow into E&P operations, according to a study by John S. Herold (IHS). However, the cash does not go as far as it once did. An Ernst & Young study recently revealed that exploration costs have risen by 165 percent since 2003 and development costs have risen by 180 percent. According to Baker Hughes, which reports weekly rig activity, a total of 1,913 rotary rigs were active in June. Based on the Baker Hughes data, this rig count is the highest since January 3, 1986, when 1,915 rigs were active. Much of this growth is accounted for onshore; up 15 rigs to 1,827 with 20 percent oriented on oil and 80 percent for natural gas. Louisiana showed the biggest increase, This summer the Responsible Federal Oil and Gas Lease Act (H.R. 6251) was defeated in the U.S. House of Representatives. For a week, IPAA was in the middle of the debate on H.R. 6251, vigorously working to defeat the bill. Thanks to an aggressive response to our grassroots Call to Action and extensive efforts by the IPAA Government Relations department, American oil and natural gas achieved a major legislative victory. Several Democratic leaders had put forward the so-called “use it or lose it” bill. Ultimately, H.R. 6251 was so outrageous that most of the original bill’s most damaging items were stripped before it made it to the ﬂoor for a vote. Critical items removed before the bill went to the House ﬂoor included a reduction in the maximum years for an initial lease from 10 to ﬁve, and a doubling of the rental rate each year after ﬁve years for subsequently renewed leases. Although most of the key items opposed by producers were removed, the revised bill: • Would not have provided incentives to increase American energy production; • Would have harmed independent producers by adding layers of bureaucratic red tape for compliance and an allowance for more challenges and litigation against independent operators onshore; and • At best, would have been a reiteration of what current law has already established. In a testament to the effectiveness of successful grassroots efforts and aggressive Washington advocacy, House Speaker Nancy Pelosi’s phony arguments failed to pass. IPAA would like to thank you all for your strong, continued support of American oil and natural gas. We will continue to keep you posted as the industry faces important legislation in the months ahead. The more voices united together for our cause, the greater impact we can have. Thank you for being involved. www.loga.la | 39 http://www.loga.la

Table of Contents Feed for the Digital Edition of LOGA Industry Report - Fall 2008

LOGA Industry Report - Fall 2008 Contents Chairman's Corner President's Perspective Commissioner's Comments From the Pipeline... Supreme Court Upholds Act 312 LOGA Challenges Commission's Ad Valorem Tax Rules The Haynesville Shale - Waiting for the Gas to Come In 2008 Legislative Recap Gulf Coast Prospect Expo 2008 2nd Annual LAGCOE Open Golf Tournament Conservationist by Trade Katrina Relief Fund Update DNR Intent Natural Gas Production Surges: A Free Market At Work IPAA Washington Report Legal Updates New Members Index to Advertisers

LOGA Industry Report - Fall 2008

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