THE SOURCE - Summer 2016 - (Page 14)

Q&A: Barry Russell A PGA discusses fracking and other industry issues with Barry Russell, the president and CEO of the Independent Petroleum Association of America (IPAA), the leading, national upstream trade association representing oil and natural gas producers that drill 90 percent of the nation's oil and natural gas wells. These companies account for 54 percent of America's oil production, 85 percent of its natural gas production, and support more than 2.1 million American jobs. Learn more about IPAA by visiting www.ipaa.org and following @IPAAaccess on Twitter. APGA: How would you describe the current state of natural gas production in the U.S.? Barry Russell: For years, coal and natural gas were in a dead-heat to be the leading fuel source for u.s. electricity generation. For decades, coal has been the leader. But, in February, the energy Information Administration (eIA) announced that natural gas had overtaken coal. Of course, while low prices of both products will create the tug-of-war we've been witnessing over the past few years, it is impressive that natural gas is the fastest growing fossil fuel. The latest data from eIA also shows oil and natural gas together supply around 65 percent of total u.s. energy demand. If you add coal, you get around 81 percent, although, as I mentioned, coal's share continues to fall. meanwhile, renewable shares constitute around 9.9 percent. so for those activists who call to keep fossil fuels "in the ground," they aren't looking at a realistic scenario. Thanks to new efficiencies and technologies, like hydraulic fracturing and horizontal drilling, u.s. shale gas production has dominated the increase in worldwide natural gas supply. New markets here at home for power generation or the manufacturing sector will create demand, and our producers of American natural gas have proven that we have plenty of reliable supply to meet and surpass that demand, while also supplying world markets. APGA: What do you expect production levels to look like this year and over the next three to five years? Barry Russell: According to BP's most recent, annual energy Outlook, u.s. shale gas is expected to grow around 4 percent annually, causing "u.s. shale gas to account for around three-quarters of total u.s. gas production in 2035 and almost 20 percent of global output." some other forecasts have that closer to 2 percent annual growth. The consulting firm IHs energy recently concluded a February study on North American natural gas reserves and production and found these results: "Approximately 1,400 Tcf of natural gas in the u.s. Lower 48 and Canada is recoverable at a current break-even Henry Hub price of $4/mmBtu or less (in real terms). This is a 66 percent increase over 2010 estimates. more than half of that (800 Tcf) can be produced at a current break-even price of $3/mmBtu or less. These quantities point to longterm low-cost energy supplies capable of meeting demand projections for at least the next 30 to 40 years." This is an opportunity, and a healthy market scenario for American natural gas production. Of course, there are some challenges that need to be considered- not just low commodity prices, but also government interference. APGA: Regulatory changes always seem to be looming for the production industry. Are there particular regulations that concern the industry? If so, what are they and what is your take on them? 14 THE SOURCE | THE vOICE and CHOICE Of pUblIC gaS Barry Russell: During the Obama Administration's seven years in office, there has not been cooperation between Congress and the White House. so, the Administration has increasingly used regulations and executive action that don't require congressional approval. In our industry, as many, the President has overreached his authority and in this final year, proven that politics is the priority, not common sense. right now, IPAA is tracking more than 45 federal regulatory proposals at various agencies. This is something unseen before. Literally this is about 20 years of new regulations condensed into one year. With so much under consideration, it is very difficult for natural gas producers to plan into the unknown regulatory future. many of our projects must be planned for years. It's the uncertainty that concerns us the most outside of commodity prices. some of the most sweeping regulatory proposals include new methane emission and ozone restrictions, offshore bonding requirements, higher royalty rates, rules for hydraulic fracturing on federal lands, endangered species and critical habitat http://www.ipaa.org

Table of Contents for the Digital Edition of THE SOURCE - Summer 2016

First Person
APGA Events
Expanding Your Network Through the Virtual Pipeline
Major Mergers
Q&A: Barry Russell
The Very Different Field of Commercial Foodservice Research and Development
Can Natural Gas Stay Cheap Forever This Time?
Home Fueling for Natural Gas Vehicles
Legislative Outlook
The Pipeline
Marketing Matters
Advertisers’ Index/ Advertiser.com
At Last

THE SOURCE - Summer 2016

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