In June, I became President of the Texas Alliance of Energy Producers (TAEP), one of the largest state oil and gas associations in the U.S. We proudly represent the industry’s upstream segment, serving our members with effective regulatory and legislative advocacy and counsel, efficient cost-saving programs, and industry-leading economic analysis.
Covid-19 effects. Taking over during this time is both challenging and rewarding. Here’s what we are focusing on, to help the industry through this period, and to prepare for the Texas legislative session starting in January.
Interacting directly with lawmakers has become increasingly challenging, due to social distancing limitations. The Texas State Capitol has been closed to the public since mid-March, as have the Austin offices for the Railroad Commission of Texas (RRC) and the Texas Commission on Environmental Quality (TCEQ). We have embraced webinars and the use of digital platforms to bring members into conversations with lawmakers and regulators that were once in-person.
Flaring issue. In April, RRC Chairman Wayne Christian assembled a Blue-Ribbon Task Force for Oil Economic Recovery, which included the Alliance, to advise the commission on regulatory steps to provide relief during this downturn. The RRC adopted several task force recommendations and then asked for further ideas to reduce Texas flaring.
Flaring has been an Alliance concern since 2019, when it joined with other state associations to form the Texas Methane and Flaring Coalition. Its mission is to develop best practices for, and offer recommendations to, the regulatory community. In June, the task force provided initial suggestions to the commission, to reduce the length of time that flaring occurs, as well as improve transparency by updating forms and moving them online.
We continue to work with the RRC to find the right regulatory balance, to provide operators clear rules on flaring without overburdening them with new regulations. Media reporting often oversimplifies the issue to just enacting stronger environmental rules, but we know that flaring is often the best way to control pollutants safely. The downturn also has created opportunities for takeaway pipeline infrastructure to catch up, as operators slow production. Unrealistic expectations, calling on the RRC to mandate zero-carbon emissions, do nothing but decimate the domestic industry, shifting jobs and production overseas. These calls have rightly been rejected, while a clear goal to reduce flaring has been set by the commissioners and supported by industry.
The 2021 legislature. The upcoming Texas legislative session will be challenging. The focus will be on budgetary limitations and decennial redistricting. A top industry priority will be to make sure the RRC and TCEQ have the resources they need. The Alliance will defend the industry, both in Austin and Washington D.C., from proposals like the Green New Deal that make Texas operators less competitive.
One tremendous Alliance resource is industry-leading economic analysis to help small independents make business decisions in the face of uncertainty. To do that, the Alliance draws on the experience and expertise of its Executive Vice President and Petroleum Economist, Karr Ingham. Since March, Ingham has been an indispensable resource for operators and the media in understanding global actions and local impacts on the industry.
The data from his monthly Texas Petro Index (TPI) show a downward trend, starting in February 2019, due to global oversupply. The TPI is down 24.1% since June 2019, precipitated by Covid-19 suppressing demand and an ill-founded attempt by Russia and Saudi Arabia to flood the market with cheap crude. There is some optimism, however, as prices have recovered since the TPI endured its largest-ever monthly drop in April 2020.
Ninety years of service. This year, the Alliance is celebrating our 90th anniversary. I am honored to lead such an historic institution. Our first incarnation was the North Texas Oil and Gas Association, founded in 1930 in Wichita Falls, Texas, to serve members’ interests in the prolific North Texas oil field. Families and companies in this region thrived through a changing Texas industry, and many still produce to this day. In 2000, we merged with Abilene-based West Central Texas Oil and Gas Association, and expanded our focus statewide by rebranding as the TAEP.
Last April, we broke new ground when Cye Wagner of Fort Worth-based Cooper Oil & Gas Inc. became chair of the TAEP’s board of directors. She is the first woman to serve as board chair in the Alliance’s 90-year history, as well as for any major Texas oil and gas association. She brings an important perspective and deep expertise as a second-generation operator and steward of a 40-year-old family business. She will support the Alliance’s mission to effectively represent the Texas industry and the interests of smaller independent companies.
Despite all the headwinds, we see tremendous opportunity to further grow our membership. As companies cut budgets, the Alliance’s programs that lower insurance or payroll costs become strong selling points for membership. And we continue to innovate with our insurance partners to bring additional helpful offerings to our member companies.
The Alliance pursues these opportunities to promote small, independent operators, because of their extraordinary value to Texas and ability to drive upstream innovation. Independent producers are the backbone of the Texas oil and gas industry, and the Alliance will be telling their story for the next 90 years.
