API’s new president cites progress, outlines challenges for 2019

Responsible operations and steadily improving technology have combined to make the US the world’s leading oil and gas producer, said American Petroleum Institute Pres. Mike Sommers in his first major public address on Jan. 8. But carefully conceived policies and improved permitting processes will be necessary to keep the progress going, he told more than 400 attendees at API’s 2019 State of American Energy event.

Responsible operations and steadily improving technology have combined to make the US the world’s leading oil and gas producer, said American Petroleum Institute Pres. Mike Sommers in his first major public address on Jan. 8. But carefully conceived policies and improved permitting processes will be necessary to keep the progress going, he told more than 400 attendees at API’s 2019 State of American Energy event.

API and its members generally are encouraged by the Trump administration’s efforts to reduce excessive regulations, Sommers said, but tariffs that have been imposed on imported steel are a matter of concern, he told reporters following his address. “I know of a company in Texas that can’t complete a pipeline it began to build because the steel pipe it needs is too expensive,” he said.

Sommers said he was encouraged when US Trade Rep. Robert E. Lightizer said earlier that day that progress is being made in US trade relations with China. “But we’re still concerned about possible retaliatory tariffs on LNG that could hurt US exports,” Sommers said. “China’s retaliatory tariffs carry the risk of losing a vital energy market, which can mean losing American influence where we need it. It’s a void that other countries are happy to fill.”

Canada and Mexico are the nation’s best energy customers, “so we like the US-Mexico-Canada free-trade agreement and will work to see it approved in this congress,” he said. “API’s position is pretty straightforward: Fight back against anti-American trade practices but do it in ways that don’t undermine America’s economic leadership driven in large part by energy.”

Sommers said it’s also important for members of the new Congress and other federal policymakers to remember that natural gas is becoming the main source of generated electricity in the US, making the country the world leader in reducing carbon emissions.

Key to sensible regulations

“That happened because our industry was free to innovate, and the market was free to work,” Sommers said. “The key to energy regulations is to keep them grounded in common sense and hard science, while letting this industry deliver on the next wave of innovation. Do that, and there will be no end to the energy opportunities for this country.”

Finally, US energy transportation systems need to be expanded across the country, Sommers said. “Even if we get everything else right—technology, regulations, and all the rest—infrastructure still has to keep pace with production. Building the systems we need to deliver affordable energy to families and businesses can support up to 1 million-plus jobs/year, a real opportunity for bipartisan accomplishments in the new Congress.”

API also would like to see the new Congress reform the federal Renewable Fuel Standard (RFS), Sommers said. “I think it’s clear that the RFS is a failed policy. It was enacted to favor a specific fuel 12 years ago and none of its goals have been met.”

API’s 2019 State of American Energyreport highlighted what the trade association’s president called “Generation Energy”—innovators and problem-solvers that are changing the nation’s energy narrative every bit as dramatically as Col. Edwin Drake did in 1859 when he drilled the nation’s first successful oil well in Titusville, Pa.

‘Trained and ready’

The report presented 13 US oil and gas industry executives who described ways they and their companies are working to continue the country’s energy progress. Four others—BP America Chairman Susan Dio, Shell Oil Co. Pres. Gretchen Watkins, Devon Energy Chief Executive Dave Hager, and Ariel Corp. Chief Executive Karen Wright—joined Sommers on stage to discuss what they are doing.

Mount Vernon, Ohio-based Ariel is the nation’s largest gas compressor manufacturer, Wright noted. “The shale revolution, by opening up additional supplies, has put pressure on manufacturers. Every one of them in the Ohio River Valley, where we’re based, is maxed out,” she said.

The company, which is trying to find people to help it build infrastructure, “decided to build programs and not wait for things to happen,” Wright said. “In our vocational programs, we recruit for attitude and aptitude. At the end of our 3-month program, they’re trained and ready to go to work for us.”

Hager said, “People want to work in an industry where the jobs have meaning, and they can use their skills. We try to use an all-inclusive approach. Some people want to be involved in more than fixing cell phones. We try to provide that opportunity.”

Dio noted, “We want lifelong learners with the right sill sets. We’re getting involved with universities to discuss the kinds of skills we need and discussing how to develop them.” More women and minorities also are needed, the panelists generally agreed.

All four also mentioned that more oil and gas transportation systems are needed in the US. Permian basin supplies are substantial, but need to be moved to markets, Hager said. “To the degree we can have support to streamline the permitting and regulatory processes, the more oil and gas we can produce. The supplies are there,” he said.

Watkins pointed out, however, that some parts of the federal government have been surprisingly flexible. The Federal Aviation Administration gave Shell permission to use drones in the Permian basin, which took vehicles off roads, improving safety and reducing carbon emissions, she said.

Technology also keeps moving ahead, the panelists agreed. “The crawlers and drones we have now are amazing,” said Watkins, while Hager reported, “We’re turning some our equipment into joint source sensors.”

Contact Nick Snow at nicks@pennwell.com.

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