Election year energy politics clashed with economic distress at Rocky Mountain Oil & Gas Association's annual meeting in Denver early this month.
Energy Sec. James D. Watkins used the occasion to hail omnibus energy legislation passed by a House-Senate conference committee just hours before he spoke.
But not all producers and refiners in the audience shared his enthusiasm for the energy bill, a hard-won Bush administration goal that many Rmoga members doubt will help their industry much.
Several of them privately expressed dismay over Watkins' praise, delivered to a beleaguered oil and gas group, of Department of Energy research programs boosting clean coal technology and battery powered vehicles.
Watkins' exuberance contrasted with the generally somber tone of the rest of the meeting, which focused on critical industry problems having to do with government: federal onshore leasing logjams, changing Clean Air Act amendment fuel mandates, and burgeoning environmental regulation of drilling and production operations.
Rmoga Pres. Ken D. Luff, a Denver independent, cited an industry "depression" during his report of deep staff and budget cuts for the association. The cuts are part of a functional review that's still in progress.
In meetings last April, Luff said, major financial contributors to Rmoga, citing changing operating and financial emphases, proposed "considerable" budget cuts.
"They were saying the industry has changed, and so must Rmoga."
THE DRILLING NEED
Speaking little more than a month before U.S. presidential elections, Watkins turned his energy bill triumph into a bludgeon against proposals of the Democratic challenger, Arkansas Gov. Bill Clinton.
Clinton and his running mate, Sen. Albert Gore of Tennessee, claim to love natural gas as a fuel, Watkins said.
"But they haven't got to the chapter on drilling yet. They don't know it comes from there."
Watkins took special aim at Gore's environmentalism, outlined in the vice-presidential candidate's book Earth in the Balance. Watkins called it "woo-woo foolishness that comes out of some religious belief."
The Bush administration, too, likes gas. "Gas demand has got to go up. Deliverability has got to go up, which means drilling has got to come back. Capital has got to start flowing again."
Watkins welcomed provisions in the omnibus energy bill extending relief from the alternative minimum tax (AMT) to independent oil and gas producers. In a press conference, he cited "a great industry wrecked" by AMT. He said relief should apply to major companies as well as independents.
He also called for leasing of the Arctic National Wildlife Refuge Coastal Plain, once a centerpiece of the administration's energy strategy. ANWR leasing fell out of the legislation when the Senate declined to shut off a filibuster against it and auto fuel economy standards late last year.
Opposition to ANWR leasing, Watkins said, has little to do with the environment.
"It is an antidrilling position that is taken up by those who think anything we do in that area is unnatural."
REGULATORY WOES
Rocky Mountain operators have leasing and drilling difficulties of their own.
The Forest Service still is not issuing leases on most of its vast inventory of land, mainly in the U.S. West. It quit leasing in the mid-1980s when a court rejected environmental analyses in its planning documents.
Rmoga's lands committee has worked with Forest Service officials to try to speed the analyses, secure increased funding for the agency's efforts, and set priorities for forest planning according to degree of industry interest. The committee won an extension of existing leases, on many of which activity has ceased pending further leasing.
"Some forests are leasing," said committee chairman David Brown of Amoco Production Co. in Denver. "But they're few and far between."
Rmoga's legal committee warned of continued federal efforts to increase regulation of production and drilling wastes under laws governing hazardous substances.
Members cited rulings by the Environmental Protection Agency this year that weaken exemptions for petroleum and exploration and production wastes from regulation under the Comprehensive Environmental Response, Liability, and Cleanup Act.
Committee Chairman J.P. Connor, Marathon Oil Co., said Congress probably will mount another attack on the production exclusion to the Resource Conservation and Recovery Act (RCRA) during reauthorization proceedings next year. He warned of a possible linking of RCRA, which mandates "cradle to grave" hazardous waste management, and Cercla, the Superfund hazardous waste cleanup law, regarding petroleum and E&P waste.
During efforts like these to tighten hazardous waste control, Connor said, "they are not at all concerned about anybody's pocketbook."
While Rmoga's refining committee met with regional EPA administrators over implementation of Clean Air Act fuel mandates, President Bush complicated reformulated gasoline planning by extending volatility waivers for ethanol (see story, p. 36).
RMOGA'S CUTS
Two of the 10 persons affected by a 30% Rmoga staff cut worked on lands issues in the association's Denver headquarters. Rmoga traditionally has played an industry-leading role in those issues.
The cuts leave one person on the lands staff in Denver, and she is adding staff duties in other areas.
Rmoga also closed an office in Billings, Mont., and a division office in Idaho. It eliminated other positions in the central office in Denver and in several state division offices.
The group cut teacher education programs in North Dakota, Montana, and Colorado and advertising programs in North Dakota and Wyoming.
The moves result from a fiscal 1993 budget cut to $1.7 million from $2.3 million in 1992. A committee that began work in August is studying the "long term mission and focus" for Rmoga. It is to complete work by April.
Luff said the committee's recommendations will determine the association's future direction.
Meanwhile, he said, the group will try to increase membership and dues revenues. He estimated Rmoga saved the industry $200 million during 1991 in its six state region just through its state legislative and regulatory activities.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
