American Oil and Gas Reporter - April 2017 - 106

ConventionSection: Tennessee Oil & Gas Association

TOGA Maintains Presence
In Tennessee Capitol
By Dan Larson
Special Correspondent
HELENWOOD, TN.-The oil and natural gas industry in Tennessee weathered
the price downturn and managed to fight
off opposition groups hoping to take advantage of the slowdown, say leaders of
the Tennessee Oil & Gas Association.
And, TOGA's leaders say, the association has taken necessary steps to reduce
costs while maintaining an effective presence in the state Capitol and providing
value for its members.
As the association prepares for its annual convention, May 15-16 at the Park
Vista Hotel in Gatlinburg, Tn., its members
are said to be optimistic that investments
and activity in the Volunteer State are on
the upswing.
Even the convention venue, in historic
Gatlinburg, is symbolic of the industry's
recovery from a difficult period, reflects
TOGA President Chuck Laine, who notes
that much of the town was destroyed by
a wildfire that swept down from neighboring Smoky Mountain National Park
last November, but already is well on its
way to recovery.
This year's convention, TOGA's 46th
annual gathering, will feature opportunities
for members to share experiences and
rub shoulders with state regulators in an
informal setting.
Strong Presence
Such networking occasions are an important part of the value TOGA provides
its members, suggests Chairman Gary
Bible.
He says TOGA leadership acknowledges the industry has taken a hit in the
price-driven slowdown. "The most remarkable accomplishment of this association in recent years is our survival," observes the president of Cougar Dome
LLC in Helenwood.
"When I took the board chairman role
last year, oil prices still were historically
low," Bible recalls. "We lost about half
our members in 2015, and even the largest
oil companies and service providers were
struggling."

With its membership eroding, he says
TOGA's leaders "knew environmentalists
would 'see blood in the water' and come
after us."
"What they were not prepared for was
our strong presence in the legislature.
Chuck Laine and several board members
were in the Capitol, telling our story,
hosting events, and meeting one-on-one
with legislators," Bible concludes. "I give
them all a lot of credit."
Adds Laine, "Our members understand
the importance of staying in touch with
those in the Capitol."
"The future of the oil business in Tennessee is excellent," Bible continues.
"Our wells are shallow and access to
our stacked oil bearing formations is
easy. I am confident we can make money
at $40-$50 oil today and well into the
future."
Completions Increase
New development in Tennessee is concentrated along the Highland Rim or the
Cumberland Plateau in the eastern half
of the state, according to an annual report
issued by the association.
Much of the TOGA annual report
originates with Oil and Gas Activity in
Tennessee, a report issued annually in
May by the Oil & Gas Program within
the Tennessee Division of Water Resources.
The 2016 report indicates that both
permitting and production were down in
2015 compared with the previous year.
At the same time, total well completions
and the completion success rate improved.
One caveat, points out the report's author, Elaine Foust, a geologist at the Oil
& Gas Program, as a result of changes
within the program and the industry
downturn, historical information on wells
is being entered into the program's database, and wells are being classified and
completed. "This was not being kept up
to date," she acknowledges. "I now am
keeping up with current information and
have more time to deal with historical
data that need to be updated and added.
Therefore, the classification numbers are
skewed."

106 THE AMERICAN OIL & GAS REPORTER

Having made that clarification, she
says, "Permitting activity decreased nearly
38 percent during 2015, the fourth year
in a row with a decline. A total of 86 permits were issued, compared with 138 in
2014."
Of permits issued in 2015, more than
half were in Overton County, Foust says.
Measured drilling footage declined in
2015 to 82,869 feet, down from 187,923
feet drilled in 2014 and below the 33year average of 427,415 feet.
The number of well completions in
2015 increased to 257 from 168 the year
before, the report notes. Successful completions hit an average 37.5 percent for
the year, down from the 35-year success
rate of 57.7 percent.
Production of oil reached 294,047 barrels in 2015, a decrease of 10.5 percent
from the year before. The state report
notes the average price per barrel for oil
sales slid to $46.77 for a total value of
$13.7 million in 2015. This was down
from the 2014 record high average of
$90.48 a barrel, for a total value of $29.7
million. The report includes an estimate
of more than $412,000 in severance tax
revenue generated by oil sales.
Natural gas production also declined
in 2015, the report notes. Gas production
for the year reached 4.3 billion cubic
feet, a decrease of 19 percent from the
year before. The average price for gas
produced in seven Tennessee counties
was $2.74 an Mcf, down from the average
$4.54 in 2014. Severance tax revenue
generated by Tennessee gas production
was estimated at $350,500.
Nearly half of the state's natural gas
production originated in Anderson County.
The trend toward increasing concentration of activity in eastern Tennessee
has continued recently. A review of state
records shows that all 30 oil and gas
drilling permits issued by the state between
September 2016 and March 2017 targeted
the Knox Group formation in four eastern
Tennessee counties. And of the 60 permits
issued since December 2015, eight were
in the Chattanooga Shale, two in the
Monteagle Limestone, two in the Fort
Payne, and the remainder in the Knox.

American Oil and Gas Reporter - April 2017

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