A US House of Representatives committee chairman asked the Securities and Exchange Commission for information regarding the financial regulatory agency's recently reported investigation of ExxonMobil Corp. The committee is troubled by reports that the inquiry's investigative actions "are couched in concerns related to climate change," Chairman LaMar Smith (R-Tex) said in a Sept. 29 letter to SEC Chair Mary Jo White.
"More disturbingly, media coverage has directly linked the commission's 'far-reaching' inquiry to New York Atty. Gen. Eric Schneiderman's (D) ongoing investigation into Exxon under state securities fraud law," Smith said. "The committee is currently investigating the New York AG's Exxon probe in order to assess the adverse effects his investigation might pose to the scientific research and development enterprise."
The SEC would neither confirm nor deny that such an investigation is taking place. ExxonMobil has issued a statement saying it would cooperate in such an inquiry.
Committee Republicans have been saying for months that Schneiderman and Massachusetts Atty. Gen. Maura T. Healy, who are both Democrats, have launched separate investigations of whether the multinational oil company allegedly suppressed climate change information to protect its financial position in violation of the respective states' securities laws.
Staffs from the committee's majority and the two AGs' offices have exchanged several letters the past few months over whether the states have responded adequately to the committee's subpoenas.
"The committee is concerned that the SEC, by wielding its enforcement authority against companies like Exxon for its collection of and reliance on what is perhaps in the SEC's view inadequate climate data used to value its assets, advances a prescriptive climate change orthodoxy that may chill further climate change research throughout the public and private scientific [research and development] sector," Smith said in his Sept. 29 letter.
Smith asked White and the SEC to provide information about the matter by Oct. 13.
At a Sept. 14 hearing, committee Democrats said Smith is misusing the committee's oversight authority to interfere on ExxonMobil's behalf with state law enforcement investigations.
"This hearing appears to be the culmination of a politically motivated 'oversight' agenda that has been applauded by oil, gas, and mining interests and broadly condemned by the public, the media, and the independent scientific community across the country and around the world," Ranking Minority Member Eddie Bernice Johnson (D-Tex.) said.
TAEP: Texas upstream economy contracted for 21st straight month
The upstream oil and gas economy in Texas contracted in August for the 21st consecutive month, according to the Texas Alliance of Energy Producers' Texas Petro Index (TPI).
A composite index based upon a comprehensive group of upstream economic indicators, the TPI during the month was 150.5, down 52% since peaking in November 2014 at 313.5, which marked the zenith of an economic expansion that began in December 2009 when the TPI stood at 187.4.
Karr Ingham, economist and creator of TPI, sees the steep decline of upstream activity as an orderly and logical process that has surpassed some important milestones.
Crude oil prices have stabilized at $40-50/bbl since posting a low of $27.08/bbl in February. In August for the first time since the contraction commenced, the average monthly crude price in Texas of $41.49/bbl exceeded the average price of $39.67/bbl in the same month a year earlier.
Drilling rig activity has been increasing since May in response to higher oil prices, although Ingham expects rig-count growth to stall in the near future absent another oil-price increase.
Estimated statewide total upstream employment in Texas increased by 800 jobs in August compared with the updated July employment estimate, marking the first addition to upstream employment in Texas since December 2014.
Ingham said the changes "suggest the industry is no longer hemorrhaging in terms of price, the rig count, and jobs." However, he cautioned that "as long as the TPI continues to decline, the upstream oil and gas industry in Texas will not begin to transition to an expansionary mode."
August industry stats
Crude production in Texas totaled 96.3 million bbl, down 9% from the August 2015 total. With oil prices in August averaging $41.49/bbl, the value of Texas-produced crude totaled nearly $4 billion, 4.9% less than in August 2015.
Estimated Texas natural gas output surpassed 700.1 bcf, a year-over-year decline of 6%. With natural gas prices in August averaging $2.69/Mcf, the value of Texas-produced gas declined 7.7% to $1.88 billion.
The Baker Hughes Inc. count of active drilling rigs in Texas averaged 231, down 40% from that of August 2015. Drilling activity in Texas peaked in September 2008 at a monthly average of 946 rigs before falling to a trough of 329 in June 2009. In the most recent economic expansion, which began in December 2009, the statewide average monthly rig count peaked at 932 in May and June 2012.
The number of original drilling permits issued was 660, down 23.6% from the August 2015 total. The number of permits issued this year through August, 4,830, is down 34.8% compared with the first 8 months of 2015.
An estimated 204,125 Texans remained on upstream industry payrolls, down 19.3% from August 2015 and 33.3% fewer than the estimated high in December 2014. According to TPI estimates, the trough of upstream employment in Texas before the expansion ending December 2014 was 184,640 in October 2009. During the previous growth cycle, industry employment peaked at 225,965 in October 2008.
