American Oil and Gas Reporter - July 2017 - 104

ConventionSection: Texas Independent Producers & Royalty Owners
promulgated by EPA and the U.S. Army
Corps of Engineers.
"I provided the committee with a list
citing 40 problematic regulations for our
industry, though it certainly wasn't inclusive of all the new or proposed regulations facing the oil and gas sector," he relates. "It's important our officials realize
that since 2009, the EPA alone has published nearly 4,000 final rules, totaling
more than 34,000 pages. That included
more than 100 rules specifically relating
to greenhouse gas emissions, which I emphasized had an economic impact measured
in the billions of dollars with negligible,
if any, environmental benefit."

Summer Policy Meeting
Updates on federal energy policy as
well as the outcome of the 2017 Texas
legislative session are among the presentations scheduled for TIPRO's upcoming
summer policy meeting, to be held Aug.
9-10 in San Antonio.
A highlight, according to Longanecker
and Gilmer, will be a talk titled "Energy
Disruptions, Aspirations versus Reality,"
by Mark P. Mills, whom Gilmer describes
as "an incredibly good speaker and probably the most well-versed person on U.S.
energy policy I ever have met."
Mills, who early in his career worked
as an experimental physicist and development engineer, today is a senior fellow
at the Manhattan Institute and CEO of
the Digital Power Group, a technologyfocused capital advisory group. He is coauthor of The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and
Why We Will Never Run Out of Energy.
Also during TIPRO's summer conference, Longanecker and Gilmer add, a panel
of experts will discuss innovations in the
oil patch, including leaders from RigUp.com,
a bidding, compliance and invoicing platform that connects operators and service
companies for efficient and safe operations;
Alphabet Energy, which Longanecker says
"is doing some pretty innovative things in
power generation and reduced flaring;"
and SCF Partners co-President David C.
Baldwin, who will speak on what he is
seeing in oil field innovations.
Natural Resources Chairman Larson
has been invited to lead the state legislative
discussion at the TIPRO meeting, Longanecker continues, and Porter Bennett,
president and CEO of Ponderosa Advisors
LLC and founder of Bentek, will present
an oil and gas market outlook. Another
convention topic will be anti-oil-and-gas

campaigns and related industry initiatives
and efforts to respond, he adds.

Chairman's Corner
Much of Gilmer's first year at TIPRO's
helm was focused on preparing for and
then navigating Texas' legislative session.
As he contemplates his second year
serving as chairman of the association,
Gilmer says he wants to focus on "defining

TIPRO's highest and best use."
"I think we have done a good job representing the independent oil and gas industry in Texas, and being a big-tent organization with regard to mineral owners,"
he asseses. "I look forward to spending
my second year helping all those constituencies really sharpen the pencil so
we can be even more effective at the
things we want to do."
r

Abundant Supplies Are Creating
New Paradigm For Oil Industry
AUSTIN, TX.-Even as federal and
state governments come to grips with
the policy implications of a domestic oil
and gas industry driven by an abundance
of supply rather than scarcity, the companies responsible for that new model
face their own paradigm shifts wrought
by the unconventional resource revolution
they led, suggests Allen Gilmer.
In addition to being chairman of the
Texas Independent Producers & Royalty
Owners Association, Gilmer is co-founder
and executive chairman of Drillinginfo
Inc. in Austin, where he is recognized
for his industry leadership and vision.
One of the changing paradigms industry
faces, Gilmer says, is the potential inability
for the first time in nearly half a century
to not be able to move product to market.
Much of the oil industry's transportation
infrastructure, he points out, was built in
the 1950s through the mid-70s. "From
the time crude oil production began dropping from its peak in the early 1970s, no
matter what we did, we had a manageable
way to get it to market because the infrastructure had been built already," he says.
But as Texas crude oil production
climbs to new highs, Gilmer calculates
existing take-away capacity in West Texas
will be sufficient to meet demand only
until about 2020. "We are going to have
to build a lot more pipelines to be able to
get this really valuable product to market,"
he states.
And that raises the question: Who
builds that infrastructure? "U.S. producers
have been conditioned to think in terms
of infrastructure abundance, which translated into low cost and short contract periods. Either the producer alone or in cooperation with other area producers is
going to have to pay for it up front by
getting into the transportation business,"

104 THE AMERICAN OIL & GAS REPORTER

Gilmer answers, "or those producers are
going to have to provide enough contractual assurances there actually will be
something there to move to the groups
they want to take on the investment obligations necessary to move it.
"These are things that happen in any
marketplace," Gilmer allows. "We just
have not had to deal with them in this
marketplace for a long time because we
had the sweet situation of producing into
an abundance of gathering infrastructure
capacity in the past."
Gravity Paradigm
The other paradigm shift resulting from
unconventional resource development,
Gilmer continues, is an overabundance of
50-65 gravity crude oil. So much so, he
says, that "people are talking now about
creating a new grade-a 'West Texas Superlight'-because there is so much of it."
And that, he avers, creates an opportunity for conventional oil industry players
to re-examine older conventional fields
for the 25-40 gravity crude that "our refineries hunger for more every day in
order to be able to make their crack spreads.
"There likely is going to be a bigger
and bigger (price) spread between crude
oil gravities," Gilmer predicts. "It can't
help but happen."
While crude oil price differentials historically have moved in a band with
higher grades receiving a premium over
lower, Gilmer says, "You now are starting
to see breaks in that value band. They already are manifesting themselves in a
pretty interesting way."
He says he anticipates the larger independents that have snatched acreage
positions in the shale plays will continue
their "factory operation" production of
superlight crudes. But that creates an op-

http://www.RigUp.com

American Oil and Gas Reporter - July 2017

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