Even as federal regulations become stricter and more onerous, momentum continues to grow for America’s oil and natural gas renaissance. In October 2011, the Domestic Energy Producers Alliance (DEPA) — an alliance of mostly small oil and natural gas producers, royalty owners and oilfield service companies, along with state and national oil and gas associations — predicted U.S. energy independence by 2020.
With a unique grassroots approach to domestic onshore energy advocacy and education, DEPA is devoted to the survival of U.S. oil and natural gas E&P. By taking an early lead on the issue of energy independence, DEPA successfully launched an effective campaign that has educated policymakers, regulators and the public about the role U.S. independent producers have played in making energy independence a reality.
“DEPA and our coalition partners are the clearest, most effective voice for America’s independent oil and natural gas industry,” said DEPA President Mike McDonald of Triad Energy. “DEPA represents independent, nonintegrated oil and natural gas production companies that operate almost exclusively in the domestic E&P segment of the industry. Independents are not ‘big oil,’ and we must speak for the interests of our allies and coalition partners, which sometimes are directly opposite of the interests of the major integrated energy companies.”
DEPA and its 13 collaborating trade association partners — from California to West Virginia and Texas to Montana — represent roughly 10,000 individuals and companies engaged in domestic onshore oil and natural gas E&P. Investing in DEPA means having the interests of the independent energy producer represented before the U.S. federal government.
“More than 18,000 independent producers drill about 95 percent of U.S. oil and natural gas wells and account for 67 percent of U.S. oil and gas production,” McDonald said. “While there are some large, publicly traded companies among the nation’s independent producers, the average company size is 11 employees. Independent producers typically invest more than 100 percent of their revenue in drilling new wells.”
In order for the U.S. to achieve energy independence, certain steps need to be taken.
“No. 1 is the maintenance of tax provisions critical to the livelihood of independent producers — namely, the percentage depletion allowance and the expensing of intangible drilling costs,” McDonald said. “These tax provisions have allowed us to keep and reinvest our own capital to try and fail and try again, and in the process drill more wells and produce more oil and natural gas — moving the U.S. to a point where energy self-sufficiency for our nation is not only realistic but increasingly probable.
“Secondly, breakthrough technologies, primarily in horizontal drilling, allow us to drill down 2 miles, turn to the right and drill another 2 or more miles. America’s oil and gas industry has developed this technology over two decades of expensive experimentation when failure was far more prevalent than success. These wells are several times more expensive than conventional wells. This new technology requires massive amounts of capital. The tax code has contributed significantly to this game-changing technological revolution.”
To get the U.S. where it needs to be, DEPA will continue to support tax certainty, development and utilization of oil and gas technologies, and a balanced, common sense approach to federal regulations.
“We have a clear vision that achieving energy independence is a game changer for all Americans and a true paradigm shift for our nation’s stature in the world,” McDonald said.
For more information, visit www.depausa.org or call (405) 424-1699.
