American Oil and Gas Reporter - December 2019 - 97

ConventionCoverage: The Petroleum Alliance of Oklahoma
commodity prices, noting the present was
only one of the cycles experienced in the
life of an industry veteran.
"We have our best opportunities in
the worst of times. What I would say to
a young person is remember that you
are in the business, one that you can tangibly point to as making an impact. You
are making a difference and you can
continue to make a difference. You have
to work through these cycles and believe.
Right now, young people are bringing
innovation and technology that we didn't
have," he said.
Crawley Petroleum CEO Kim Hatfield
recalled hearing that millennials were not
interested in oil and gas careers because
of a perception that the industry was all
about making money, while they were
more focused on improving peoples' lives.
"There is no (better) way you can improve the standard of living for any group
than by providing cheap, reliable energy,"
he asserted. "Look across the globe:
Access to energy is correlated to political
stability and reduced rates of poverty and
childhood mortality. We make a difference,
and that is something we have not done a
great job of communicating."

He said Oklahoma's producers sought a
collaborative approach when working
with regulators.
A number of challenges-including
seismicity and hydraulic fracturing-and
newer concerns, such as shallow saltwater
disposal wells-could have become more
serious if operators took an "us versus
them" approach, he observed. "But regulators have been open to working with
us, and a number of Alliance members
have been great representatives, not just
for our industry but for our community,"
Hatfield said.
Oklahoma should streamline the regulatory process for approving drilling permits,
urged Haddican. "We see some time frames
that run as long as getting the same permit
issued on federal lands in New Mexico,"
he compared. "I want to state clearly this
has nothing to do with the people working
on the Oklahoma Corporation Commission.
They are working very hard. The problem
is the process they must work under causes
so much time to go by before you get approval. You hear all the time about how in
Texas you go online and get approval
within a week. We need to do that in
Oklahoma to be competitive."

Drilling Incentives
Looking at other challenges, Le Norman asked the panel what incentives
Oklahoma could offer to encourage companies to drill in the state. Reynolds
pointed to the importance of certainty in
attracting capital.
"When you create uncertainty, say
through the regulatory environment, that
is the last thing you want. Our big brother
in the Permian Basin is an example. If you
are looking for that next investment, it is
the one with the lowest risk and the highest
chance of getting returns," he described.
When the state's legislative or regulatory situation shifts, the likely result is
decreased rig activity and revenues,
Reynolds indicated. He praised the Alliance's continuing efforts to minimize
those disruptions, recalling a proposal to
boost severance taxes several years ago.
"I remember specifically legislators
telling me not to worry about it, because
someone still would drill in the state.
That isn't happening, because of uncertainty. If you take an industry that has an
element of risk to begin with, and you
throw more risk on it, it is going to be
challenging to attract capital," he said.
Hatfield pointed to Colorado and Ohio
as examples of where state regulatory
policies had dampened industry activities.

Tribal Sovereignty
An Oklahoma murder case involving
the Creek Nation has the potential to
revise the way tribal sovereignty is viewed
in the state, Continental Resources' Shelby
reported during the panel discussion on
legal issues. She explained that unlike
other states, Oklahoma lacked traditional
Native American reservations with mean-

ingful boundaries and defined jurisdictional
areas (AOGR, October 2018, pg. 101).
If a 10th Circuit Court ruling upholds
an appeal filed to get Patrick Murphy out
of prison, Shelby said essentially Oklahoma would not have jurisdiction over
most of the eastern half of the state,
which legally would be viewed as Native
American property.
"There is a lot of focus on the criminal
aspects, because arguably there are thousands of convicted felons whose pleas
will be in question on whether the state
can prosecute them," she said. "There is
a far bigger implication on the civil side.
There is a question over who has jurisdiction; for example, if you are drilling
in Hughes County, are you subject to the
rules of the Oklahoma Department of
Environmental Quality, or to federal rules,
because it is reservation property?"
Shelby said the Creek Nation had been
adamant in its desire to maintain the status
quo and wanted to minimize any impacts
on agriculture or oil and gas operations.
Marathon Oil's Houser noted the real
problem for the oil and gas industry with
resolving the Murphy murder case with
the result being a change to how traditional
tribal sovereignty has been viewed is that
more than 40% of the surface of Oklahoma
could become BLM's responsibility, while
other federal statues, including the Indian
Leasing Act, the Stigler Act and the Mineral Development Act also could become
a larger part of the regulatory environment
across the state.
"For those operators already dealing
with the BLM regulatory process, this

Zach Lee (left) moderates a panel discussion on Oklahoma's legal affairs with Will Houser
(center), land and agency adviser at Marathon Oil, and Shelley Shelby, director of
government affairs at Continental Resources. The event was part of the Petroleum Alliance
of Oklahoma's fall conference, held Oct. 21-24.

DECEMBER 2019 97
American Oil and Gas Reporter - December 2019

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