WATCHING WASHINGTON POSITIVE NEWS FOR IPAA

With Patrick Crow Positive news reverberated through the Independent Petroleum Association of America's recent midyear meeting in Washington. The meeting coincided with the House ways and means committee's passage of a bill that moved collection points for the proposed BTU tax on oil and gas closer to the consumer, just as producers wanted. Then oil state lawmakers, mainly Sen. David Boren (D-Okla.), assured producers they will try to kill the BTU tax.

May 24, 1993

3 min read

Positive news reverberated through the Independent Petroleum Association of America's recent midyear meeting in Washington.

The meeting coincided with the House ways and means committee's passage of a bill that moved collection points for the proposed BTU tax on oil and gas closer to the consumer, just as producers wanted.

Then oil state lawmakers, mainly Sen. David Boren (D-Okla.), assured producers they will try to kill the BTU tax.

INDUSTRY'S HEALTH

Energy Sec. Hazel O'Leary and Treasury Sec. Lloyd Bentsen were present to reassure independents the Clinton team is concerned about the health of the U.S. oil industry.

O'Leary said, "Some people think this administration is a little lukewarm on oil. We're not."

She said DOE is aware that "we need to reenergize the producing industry" and as the first step within 90 days will develop a strategy to increase U.S. oil and gas production.

Although the past two administrations also developed such strategies (OGJ, May 3, p. 38), O'Leary said the Clinton administration ' needs its own short term and long term plans.

"The study will start by showing that the oil industry is important to the economy" she pledged.

O'Leary said the administration remains opposed to drilling on the Arctic National Wildlife Refuge, but she will go to Alaska to "take a hard look" at the issue anyway.

Much of the IPAA meeting focused on changes in the natural gas market. Sen. Bennett Johnston (D-La.) said the Federal Energy Regulatory Commission's pipeline rate restructuring rule, Order 636, "is going to be the best thing for natural gas we ever had."

Johnston called the four persons nominated for FERC seats as "the best accumulation of talent we've ever had."

Last week the Senate energy committee recommended that the full Senate approve the nominees: James Hoecker, William Massey, Donald Santa, and Vicky Bailey.

Elizabeth Moler, FERC chairman and the only holdover commissioner, said the four "will be a solid, sensible team. They know what they are doing."

Moler said despite the turnover at FERC, it is keeping to its timetable for the restructuring rule. Eight pipelines are in compliance with Order 636, and another 62 have filed applications. FERC plans to finish all by October.

GAS OUTLOOK

Charles Hinton Jr., chairman of W.B. Hinton Drilling Co. and of the International Association of Drilling Contractors, warned that a natural gas shortfall looms.

He said the U.S. needs about 2,000 rigs working to satisfy gas storage and consumption needs. That's more than three times the current count.

"The decade of neglect endured by the drilling industry has shriveled the U.S. drilling fleet to a level where it would be extremely difficult to place even 1,200 rigs in service," Hinton said.

He urged producers to step up their drilling schedules to avoid rig delays. "Early bird producers will be positioned to capitalize on high yearend prices while competitors are still drilling," Hinton said.

"I estimate that some 200 wells went undrilled in late 1992 because of the tight rig market, and I expect the second half of 1993 to be even busier."