American Oil and Gas Reporter - September 2022 - 51

as possible, but the equation is different
in the summer months.
" It is not only about production volumes,
but also about treating the entire
year as one-size-fits-all instead of considering
it seasonally, " he adds. " There
are a lot of nuances to account for. "
" We are focusing on working with
the RRC on meaningful changes to help
stabilize the grid without unduly classifying
every well in Texas as critical, "
Shepperd says. " We think the RRC has
cast too wide a net by capturing marginal
production as critical, when none of the
production from those wells ever reach
electric generating facilities. "
Although PBPA hopes to help regulators
arrive at workable regulations, Shepperd
cautions that some flaws may manifest
only over time. " Trying to strike the
right balance is a real challenge, " he acknowledges.
" There is no question that
when the legislature meets in January it
will need to address and fine-tune SB 3
and other related legislation in order to
keep working toward the common goal
of grid stability and resiliency. "
Looking Ahead
Robertson notes that PBPA also is
turning its sights to January 2023, when
both the Texas and New Mexico legislatures
will kick off. With Uri issues unexpectedly
forcing their way into the forefront of the
2021 Texas Legislature, he recounts, top
priorities for the oil and gas industry-and
its opponents-were pushed to the back
burner. " It will be very interesting to see
what comes back up and gets legs in
2023, " he considers. " During the next
few months, that will become clearer, especially
as the state continues to hold interim
committee meetings. "
" In Texas, we expect more detailed
conversations about weatherization and
the balance between energy production
and environmental concerns, " Shepperd
predicts. " In New Mexico, some political
forces flat-out want to halt oil and gas
activity, so there will be plenty of robust
discussions-as we have seen in the past-
about the future of oil and gas in the
state. Of course, oil and gas provides
about 70% of the state's budget, not to
mention impacts to local economies. "
While some of that discussion happens
across party lines, he observes, Democrats
also are wrestling over the matter within
their own caucus. " There is a healthy debate
about oil and gas between the progressives
and the more moderate wing, "
Shepperd characterizes. " Although many
of us are willing to move forward on
questions about an energy transition and
the changes before us, there is no future
without oil and gas. Suggesting we can
transition away entirely from oil and gas
is simply not realistic. "
The state's Oil Conservation Division
and Environment Department have implemented
methane requirements on operations
that oil and gas companies gradually
are adjusting to, Shepperd notes.
He says it will be revealing if key state
leaders immediately seek to pile further
requirements atop the new ones.
" Regulatory bodies have established
rules to help accomplish state leaders'
methane reduction and carbon capture
goals, " he notes. " Will those leaders still
insist too little is being done and call for
even more legislative action? "
Annual Convention
As he evaluates the state of the Permian
Basin oil and gas industry, Shepperd acknowledges
stronger commodity prices
have encouraged investment, but adds
that challenges with personnel, supply
chains and public policy have dampened
some of that enthusiasm. " People are
happy to get back to work, and there is a
lot of activity, " he reports. " Folks are cautiously
optimistic. Long-term demand
fundamentals are favorable for the industry.
However, we have a healthy concern about
the regulatory environment and anti-industry
rhetoric, so it is a mixed bag. "
Robertson says many privately-held,
large independents have kept their own
counsel about drilling plans, and generally
have kept to their development schedules
rather than adjusting them in response to
oil and gas price fluctuations. Although
such a long-term mindset may be refreshing,
he notes, it clashes with many
policymakers' rhetoric.
" Many in the federal government say
they want to encourage operations here,
but only for the short term. Some voices
in Washington have been very clear about
that, " he says. " Unfortunately, short-term
investment does not bear much fruit in
our industry. Anyone interested only in
short-term investments is not really interested
in our industry. "
The political climate is one of many
topics likely to arise at PBPA's 2022 convention,
scheduled for Sept. 28-29 at the
Permian Basin Petroleum Museum and
the Petroleum Club of Midland. The association
says presenters include Speaker
of the Texas House of Representatives
Dade Phelan, R-Orange, as well as the
longest-serving member of the New Mexico
Legislature, Senator Stewart Ingle, RPortales,
Texas Railroad Commissioner
Jim Wright and analyst Colin Fenton.
The schedule also includes the conference's
annual legislative panel discussion.
" There is a lot of positivity about what
the Permian Basin is and can be, " Robertson
describes. " We are excited to bring all
those speakers to the membership to discuss
many of the issues we are facing. "
" PBPA is tackling dozens of issues, "
Shepperd notes. " Our annual meeting
should be interesting and informative for
people to learn more about what the association
is working on.
" The meeting always has been a good
networking opportunity, " he adds. " We
are happy to be holding an in-person
meeting. We did that last year, but this
time it should feel like we are 100%
back to normal. "
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