Rapid growth of US oil production is “remarkable” in the current political climate, says the immediate past chairman of the Independent Petroleum Association of America.
Bruce H. Vincent, president of Swift Energy Co., told the Decision Strategies Oilfield Breakfast Forum that recent production gains from unconventional resources have come “in the face of an administration that has threatened you at every turn.”
In remarks sharply critical of the administration of President Barack Obama, Vincent highlighted repeated proposals to trim or eliminate oil and gas industry tax deductions. If enacted, he said, the proposals would cut industry cash flow by 25-35%.
Vincent offered this list of “new realities” in energy policy, evolving from a “very uncertain” political climate and the boom in unconventional oil and gas development:
• Jobs and the economy form the primary political focus.
• Everything is in play on taxes.
• Extreme political polarization continues.
• Slow federal permitting for drilling has become “de facto policy.”
• Regulatory challenges persist.
• Unconventional resource work gives the industry the chance to strengthen its political support in “new communities.”
Vincent disputed Obama’s recent claim of responsibility for rising oil production, saying the administration has done “everything they could to limit oil and gas production in this country.”
The main problem, he said, is “regulatory overreach,” an example of which is the push by federal agencies to regulate hydraulic fracturing, the well-completion technology crucial to development of low-permeability reservoirs.
Vincent accused federal agencies of wanting to find problems with the method “so badly they’re making stuff up.”
Another speaker, Douglas L. Becker of Bank of America Merrill Lynch, predicted oil prices will cycle between $80/bbl and $200/bbl for Brent crude during the next 5 years, limited at the top by demand destruction and at the bottom by revenue needs of key members of the Organization of Petroleum Exporting Countries.
He also predicted US prices for natural gas might fall to as low as $1/Mcf at times before starting to recover in 2014-15 as demand grows under a “manufacturing renaissance” fueled by cheap energy.
Becker said he expects the Baker Hughes US rig count, which has drifted below 2,000 as gains in oil drilling fail to offset drops in gas, to begin climbing again in the third quarter.
Contact Bob Tippee at email@example.com.