Colorado Petroleum Council (CPC) Executive Director Tracee Bentley did not consider it an oil and gas industry victory on Nov. 6, 2018, when voters across the state resoundingly rejected Proposition 112. The initiative would have established production setback requirements so stringent that new exploration and production in the state effectively would have been stifled.
Credit should go to Protect Colorado, an umbrella organization of other businesses and local officials to which CPC, an American Petroleum Institute affiliate, and the Colorado Oil & Gas Association supplied information, Bentley told OGJ just weeks after the election.
“Almost every single Chamber of Commerce in the state opposed it. Many agricultural groups did too,” Bentley recalled in a phone interview from CPC’s Denver office. “It was pretty much every business organization in Colorado. A coalition of more than 50 mayors also organized against it.
“When it came to Proposition 112, 70% of the job losses if it had passed would not have been from the oil and gas industry. It would have hit education, health care, real estate, construction, retailing, local governments, and other sectors,” Bentley said.
Bentley lives in Weld County, which she said is doing well economically because of the oil and gas production there. “When we got results on Prop 112, it was clear that counties with production in or close to them voted against it. Boulder, Denver, and a couple of counties with ski communities were for it. The rest of the state thought it was a bad idea,” she said.
Looking forward to 2019
With the elections now over, Bentley began to turn her attention to working with the winners. Many of these—from the incoming governor and attorney general to members of the legislature and several on Colorado’s congressional delegation—are Democrats.
“I’m excited to work with the new legislature,” Bentley said. “I feel comfortable working with all of them. They all seem willing to sit down and talk. I don’t think any of the members want to shut down the oil and gas industry here. They seem smarter than that.”
Bentley also keeps in touch with staffs from the US Environmental Protection Agency, who work in its Region 8 office in Denver, and the Bureau of Land Management, which has its western US headquarters in nearby Lakewood.
“There are instances when putting the pieces together can be challenging, but Colorado has been at the forefront of states regulating oil and gas,” Bentley told OGJ. “In some cases, the federal government has looked at what we’re doing it and adopted it as a federal regulation. We’ve had some good conversations.”
API established the CPC in March 2014 because Colorado is a bellwether as the fifth-largest producing state with some of the nation’s strictest regulations, Bentley said. “As a result, we have some outside special interest groups which like to experiment politically here,” she said.
“When it comes to antioil and gas initiatives, we’ve seen the same folks behind them several times,” Bentley said. “On election night, when Prop 112 was defeated, the people behind it said they would be back in 2020. This conversation is far from over.”
Field offices are extensions
Colorado’s is only one of 34 petroleum councils that are an API affiliate in a US state. “Our field offices are extensions of API in Washington. They have access to all of our political, technical, policy, legal, and communications expertise,” said Rolf Hanson, who became the trade association’s vice-president of state government relations in October after 3 years as a senior director in that capacity.
“At the state level, our directors are viewed as the industry’s representatives from exploration and production to marketing and retailing,” Hanson said at API’s Washington headquarters. “They have access to our expertise here to respond to technical issues where they work and live. This also lets API be consistent in its policy messages, whether in Maine or in California.”
Hanson dealt with below-cost sales and other petroleum marketing issues when he joined API as a lobbyist in Minnesota in 1999. Information gets out more quickly now, and the industry needs government relations experts in more state capitals, he said.
“There aren’t many state legislators who have been around that long. Term limits cause legislatures to change. In a lot of states, we’re the only national oil and gas association, aside from [the Petroleum Marketers Association of America], with representatives there,” Hanson told OGJ. Coalitions with business and other groups outside the oil and gas industry have grown significantly in the last 5 years, one of which made a major difference in Colorado in defeating Proposition 112, he added.
One stop for information
Many state regulators consider the local petroleum council a one-stop shop for reliable information about the industry, Hanson said. “Many of them have the best intentions, but aren’t aware of a proposal’s unintended consequences,” he said. “Politics are polarized more on social issues now than on politics. There’s a lot of education that needs to take place.”
Hanson considers it essential for the people working in the states to understand the political landscape and dynamics there. “The quality of the individual matters. That’s what makes all this a success. They interact with different people every day. They have to learn how to deliver information in the best ways possible. They often have to overcome people’s preconceived notions,” he said.
That’s particularly true in New York, which still has a vibrant industry with at least 13,000 active natural gas wells while being the nation’s fourth-largest oil and gas consuming state, according to API New York Executive Director Karen Moreau. New York City is dominant in the second regard and basically overrides more rural groups upstate, she said in a phone interview from her Albany office.
“Even though Gov. Andrew Cuomo’s (D) executive order in late 2014 placed the state on the production sidelines, it’s still an important oil and gas consumer,” said Moreau, who grew up upstate and built her career there as an attorney working on local zoning issues and ordinances.
“New York is a challenging state for the industry at a time when it could grow, but the emphasis on renewable fuels across the Northeast will require more gas as a standby fuel,” she said. “It’s important to be able to explain to local councils and commissioners how much the industry does for their constituents.”
Putting resources to work
API New York tries to connect the dots between state and federal policies in its contacts with voters and policymakers to help preserve a high-quality way of life across the state, Moreau said. API in Washington has formidable resources that she uses to relay to millennials what the industry contributes to their lives, she said.
“Our industry is something people take for granted until they have trouble getting their heating oil delivered. But utilities are discussing moratoriums on hookups because they can’t get gas supplies,” Moreau said.
In 2019, Moreau expects the keep-it-in-the-ground movement to push for the New York State Senate and Assembly to adopt legislation that would make energy that is consumed there 100% renewable. “More policymakers need to understand what this means, particularly when it comes to antipipeline bills,” she said. “We expect a full plate as we enter the new session since the Blue Wave hit hard here. We also have a number of new members in our congressional delegation who will be focusing on these policies.”
Downstate politicians have embraced antidevelopment rhetoric to win votes from oil and gas opponents without realizing that wind power, transmission lines, and other projects are being stopped as well, Moreau said.
“Rhetoric does not ensure affordable and reliable energy. That’s why it’s important to have local people working as issues arise in states. We build coalitions with nontraditional allies because several have seen projects go to places with more favorable policies,” she said.
Southern Region challenges
North Carolina Petroleum Council Executive Director David McGowen, who is based in Raleigh, also works as API’s Southern Region director with contractors in councils in South Carolina, Georgia, Florida, Alabama, Arkansas, Tennessee, Kentucky, and West Virginia. Consumption issues are dominant in most of the nine states, although Alabama has activity off its coast in the Gulf of Mexico and Kentucky and West Virginia have onshore exploration and production, he told OGJ in a phone interview.
It was a big step when the National Marine Fisheries Association decided on Nov. 30 to issue incidental harassment authorizations to five offshore geophysical contractors wanting to survey the US Mid-Atlantic Outer Continental Shelf for oil and gas for the first time in decades, McGowen said. The contractors still need to get permits from the US Bureau of Ocean Energy Management before they can move ahead, he noted.
“It’s essential for state and local governments to understand how extensive resources are out there so informed choices can be made,” McGowen said. “The last oil and gas data are more than 30 years old. Several of these communities and counties haven’t taken a position because they want to let the surveys proceed. But we’ve worked hard with everyone to discuss what the benefits would be. We won’t know for certain until we have fresh information.
“One point that’s often lost is that these resources are in national waters,” McGowen said. “While state and local views are important, most groups we talk with understand it’s very early in the process and are interested in learning more.”
McGowen said he and officials in other states approach issues by representing the industry with the utmost integrity. “We try not be confrontational. Most of the states in the Southern Region rely on pipelines to get gas for winter heating needs, although Florida gets most of what it consumes by water routes,” he said.
Working in weather emergencies
API’s representatives in the Southern Region also work with states during weather emergencies to make certain there are sufficient fuel supplies, McGowen said. Hurricane Florence was particularly challenging because it affected him and other state directors personally, he told OGJ.
The industry was very well prepared, partly because API held an action briefing early in 2018 to discuss lessons learned during 2017 events, he said. “That, in large part, assured we had a more efficient and effective response in situations we dealt with this year,” McGowen said.
The agency in charge can vary from state to state, he pointed out. “We work closely with state regulators on issues ranging from fuel quality to air quality. Basically, we try to help them understand how their decisions may affect the industry and consumers positively or negatively,” he said.
“We have good relationships with North Carolina’s Department of Environmental Quality and similar agencies in other states. Most of their officials are career employees who work cooperatively with us. Their professionalism has helped immensely to maintain positive relationships and an atmosphere of trust,” McGowen said.
API’s local advocacy network continues to grow. It announced on Dec. 12 that it has hired Kevin Servick as its Central Region campaign manager to enhance its network of industry advocates. He most recently was manager and senior advisor on Ohio Auditor of State Dave Yost’s (R) successful campaign to become the state’s attorney general.
“It’s about making the message local so officials and voters understand the impacts,” Hanson told OGJ. “It also helps them understand the impact of oil and gas on their daily lives. Once this foundation is laid, it’s easier to discuss specific issues.”
