Jason Modglin, president, Texas Alliance of Energy Producers, talked about their recent survey of more than 160 oil and gas professionals.
The interview also discusses industry’s disconnect with government leaders, business executives and regulators, with publicly-traded company The North Face’s recent action of rejecting business due to the buyer’s professional lifestyle.
The survey, representing a broad cross-section of the industry, the respondents weighed in on their concerns, challenges, priorities, and outlook. They also provided pointed suggestions for federal and state officials heading into 2021.
For the top concerns, challenges, and priorities, respondents chose up to three:
Biggest Macro-level Concerns:
- The price of oil (59%)
- Demand for oil and gas (47%)
- Federal overregulation (43%)
Among the executives surveyed (37% of survey takers), “environmental activism/overreach” is a top three concern (37%) while more than one-third are worried about federal overregulation. For all other respondents, federal overregulation is the second biggest concern (47%).
Business Challenges: With those concerns in context, the top three challenges are:
- Maintaining the business (46% – 56% for executives) – Also the top 2021 priority. Executives see
- Growing the business (34%)
- Lack of budget (29% – 25% for executives)
Top 2021 Priorities: In addition to maintaining and growing the business, “increase production” is a top priority for 2021 (33%):
- Independent producers chose increase production as number one (62%).
- Executives chose “improve project margins” as their third biggest priority (30%).
2021 Outlook
Despite the issues confronting the industry, 75 percent of respondents believe the industry will be better (44%) or about the same (31%) one year from now. Regarding their own business outlook for 2021, about 70% are neutral (38%) or positive (33%), while nearly one-third are negative.
“Our industry is resilient, and the optimism reflected here shows that,” said Jason Modglin, President of the Texas Alliance of Energy Producers. “Concerns about economic conditions and burdensome federal overreach are very real, but these results and comments demonstrate a determination to fight and persevere.”
Respondent Recommendations
How to tackle all these challenges, concerns, and priorities in 2021 are the looming questions. The respondents had plenty to say via three open-ended questions asking what one thing the State of Texas and the Federal Government can do to improve the industry, and the best way to defend the industry against activities/detractors.
A variety of suggestions emerged from these queries:
More Education, PR and Marketing: Citing a lack of understanding about the industry’s positive impacts, the respondents highlighted the need for increased public education, public relations, and marketing across all three questions.
Sample comments:
- “Tell the story of why this is an industry that benefits local communities, the state of Texas, the USA, and the development of the entire world.”
- “The industry doesn’t do a good job explaining why we are needed.”
- “Less regulation, more education to the masses, more promotion for its benefits. Actually show how most operators and businesses in this industry care for the environmental effects and do everything we can to keep it from being harmed.”
State of Texas: Provide More Support & Fight the Feds: The respondents gave specific recommendations to the State of Texas regarding regulation, flaring, taxes, and opposing federal overreach. For example, requests to the Texas Railroad Commission include develop more streamlined permitting, reduce taxes and fees, and delay plugging enforcement.
Sample comments:
- “Combat local municipalities from overreach to preventing the exploration or use of fossil fuels.”
- “Continue to maintain a predictable and reasonable regulatory scenario that encourages extraction and full utilization of the state’s natural resources for the benefit of mankind.”
- “Get geared back up to fight federal government on oil and gas regulation.”
- “Stop natural gas flaring and come up with a system to utilize the wasted fuel.”
Federal Overreach: Some variation of “stay out of our way” was the most common response, emphasizing the concerns about overregulation. Others suggested more oil and gas exports, reducing or eliminating foreign imports, no ban on fracking, and increased support for natural gas.
Sample comments:
- “Don’t get in our way. Allow pipelines and refineries to be built. Not only protect the environment, but don’t ban the most important technological innovation since the computer chip (frac) for human life.”
- “Quit villainizing the use of fossil fuels.”
- “Fight against an economic shut down.”
- “Stop politicizing the industry and include it as a practical part of our future energy mix.”
About the Survey
More than 160 oil and gas professionals responded to a web-based survey between Nov. 9 and Nov. 25, 2020. Responses were gathered via social media and direct e-mails from the Alliance as well as third-party databases. The respondents represent a broad spectrum of the Texas oil and gas industry, from independent producers (44%) to energy service companies (13%) to professional services firms (16%), and more.
The typical respondent was an executive of an independent producer with between one and 25 employees. About 20 percent of all respondents work in companies with up to 250 employees, with the rest in organizations of up to 1,000, 5,000, and 10,000+. Other respondents identified their roles as engineers (10%), operations (9%), sales, government, geologists, finance, procurement, royalty owners, consultants, and more.
About Texas Alliance of Energy Producers
The Texas Alliance of Energy Producers is the most knowledgeable and effective statewide oil and gas association in the nation. Serving more than 3,000 members, the Alliance provides a voice for sound U.S. energy policy. These individuals and organizations – from small independents to publicly traded companies – are the driving force behind the U.S. energy renaissance. Founded in 1930, the Alliance celebrates its 90th anniversary this year. For more information, visit https://www.texasalliance.org/ and @TexasAllianceEP.
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