In The Oil Patch – Episode 205: This week on “In The Oil Patch”: host Kym Bolado welcomes John Tintera, President and Director at Texas Alliance of Energy Producers!
We’re also joined by David Blackmon, Editor of SHALE Magazine!
-Originally aired on 6/8/2019
Intro:
Welcome to the In The Oil Patch presented by Shale Magazine and sponsored by a STEER. Broadcasting from the Oilfield Experts studios. Oilfield Experts where you get the right products right now. In The Oil Patch is where together we explore topics that affect us all in oil, gas, business, and in your community. Every week, your host Kym Bolado, willl visit with the movers and shakers in this fast paced industry. You’ll hear from industry experts, elected officials, and many more right here on In the Oil Patch.
Kym Bolado:
Welcome to In The Oil Patch radio show. I’m your host Kym Bolado today. We have a great show lined up for you, but first it’s time to bring on our editor of Shale Magazine, David Blackman. David, welcome to the show.
David Blackmon:
Hey, it’s another beautiful day in Texas.
Kym Bolado:
It sure is. We have a lot of very interesting things happening and some that are some troubling things happening as well. So I want to jump into some of the questions. We always have a limited time with you on each show. The annual energy outlook released this week. BP. The annual energy outlook released this week. BP noted that in 2018 the U.S oil and gas industry created the largest rise in both oil and natural gas production ever seen by any country. Let’s talk about why this is so important to America.
David Blackmon:
Yeah, it’s really kind of amazing and I think we all knew that production had gone way up in 2018. I honestly thought it was right at 2 million barrels a day. Turns out BP is calculated it have been 2.2 million barrels of oil per day increase during 2018 which to put that in perspective in 2008, we were producing in September of that year, 3. 2 million barrels per day total in the United States. Well, last year we rose, we raised production by 2.2 million barrels of oil per day and ended up over 12 million barrels of oil production. So it’s crazy what has happened with this industry and then production is continuing to rise during 2019, although at a slower pace. It’s important because it makes us less dependent on what’s going on in the Middle East. And we’ll talk about that later. We’re less dependent on foreign crude in general. We don’t have to rely on a collapsing country like Venezuela now for so much of our crude oil we don’t have to rely on other uncertain sources of crude from around the world. We are supplying such a huge portion of the market now that it is really moderated or prices globally. That means people pay less money for gasoline, which is important to everyone. And you know, it’s just that it enhances the United States’s position globally in terms of negotiating with other countries. It enhances our ability to leverage the administration’s ability to leverage that all production and then the new found energy abundance here and negotiations, trade negotiations and other negotiations with all these other countries. So it’s a really important thing for everyone.
Kym Bolado:
Well, you know, despite the fact that some people, the general population, may not quite understand how, you know, prices lowering on crude oil and our natural gas, how it really affects them. They kind of think it does and until it affects them at the pump, but it does have an impact on us. Right? So some interesting things happened. Some troubling things happen. Let’s discuss what’s going on in the oil markets, right? We had an uptick in the price on Thursday in the wake of the two major oil tankers being attacked in the Gulf of Oman. And, but in general, these prices have been trending down for the last few weeks, which is a scary thing for the industry in energy or the oil industry. I want to talk about the various factors that are influencing oil prices right now and where do you think they’re heading? Because this is some serious things occurring that can affect us here at home too.
David Blackmon:
Yeah. You know, I mean, that’s the problem. If the price goes down too far, then people start losing jobs here in Texas. And we don’t want that to happen either.
Kym Bolado:
And we started seeing signs on energy companies and services,
David Blackmon:
Thats right. And, and so, you know, it’s very important. So my whole deal with the markets right now and over the past few weeks, you’re right. I mean, there has been downward pressure on the price. And I think frankly, it’s do completely, almost completely to speculation in the markets. People are afraid that the tariff battle going on between the United States and China right now is slowing the Chinese economy down. And that means they’re gonna start losing less oil. And so speculators drive the price of crude all down on the market every day, trading on the market every day because they think the market’s going to be over supply. We don’t have any real compelling evidence at this point that that is the case, other than some increases in crude inventories over the last few weeks. But there’s all kinds of seasonal reasons for that to happen too. So it’s not like those increases in inventories are unprecedent. I mean, markets in general just don’t like uncertainty. And so yeah, that’s why we saw the, as you mentioned, the price went up Thursday when those two oil tankers were attacked. And you know, the State Department’s statement Thursday afternoon, that it was Iran that launched those attacks against those tankers and if that turns out to be correct then we could have a lot of tension over there in the Middle East. And that causes uncertainty in the market. So, you know, markets in general, the stock market doesn’t like uncertainty, the crude oil markets don’t like uncertainty, and it causes these big fluctuations in the price.
Kym Bolado:
So it’s not necessarily that we’re having an abundance, which I’ve read some media information on that. That’s what the speculation is, is the reason why the prices were heading downward was there’s an abundance and people needing energy has gone down, at which I wouldn’t think that either. I thought that there would be, you know, a huge demand for it worldwide, but supposedly it’s not. Well supposedly it’s not. In some of the media reports I read, it was this is what’s causing the downward tick is an over abundance, people don’t want to use it. But then again, perception is almost everything when we look at oil and gas and what are people really believing versus fact and truth, which is why the heck we’re on the show right? To set the story straight.
David Blackmon:
Well that’s right. Yeah and the fact is that the economy here in the U.S Is just continuing to boo man. That’s our reality. And that’s the best barometer that we have is the United States economy is the largest consumer of crude oil on the face of the earth. China’s economy is also a very big consumer. So is India. India’s economy is booming. So, do we know that China is going to be using less crude? No, we don’t. We don’t have those facts in hand yet. We will be able to determine that in the coming couple of months. And then we’ll see the market adjust to that reality. But in the meantime, all we’re left with is all this speculation. And frankly I think a lot of it’s overblown.
Kym Bolado:
I was just gonna say, that’s exactly, you know, what I was also trying to make the point is last week the discussion was that in media pieces out there, we have an abundance, consumer demand is down and it’s just going to head all the way down now for the energy companies. And that’s why we’re hovering at 51. The same thing, game over, you know, it’s time to go home. Fold up your oil companies and energy companies and go home. And it’s actually not accurate at all. So I’m wondering, you know, people who read these articles like I did and just like, wow, you know, and then also, was OPEC plus, which we had this discussion on last week’s show going to keep with their cuts in line and if not OPEC stated, I mean, Saudi Arabia said they were going to make the cuts necessary to not offset the market too much. Everything is important when you look at energy and there’s just so much overblown stuff that you hear. So that’s why love to you on the show and I love for you to like give us the real truth of what’s happening out there in a lot of this just really isn’t so. So quick question on oil prices. So we really don’t know. Do you have an opinion on will they stabilize? Will they, they’re starting to work their way back up with the uptake. Are they going to stay there? Where do you see energy prices going here or crude prices in the next couple of weeks?
David Blackmon:
You know, over the next couple of weeks. I think they’ll probably remain fairly stagnant. Kind of depends on what is really happening in the Persian Gulf of course and the Gulf of Oman. But barring any major military conflict breaking out over there. I think we’re probably looking at trading in the between $50 and $55 for West Texas intermediate for the foreseeable future over the next month or two. OPEC and Russia, they’re meeting in early July to determine whether or not they’re going to extend their export limitation deal through the end of the year. I think they obviously will do that even though you see all this speculation out there in the media that maybe Russia won’t do this and maybe Iran won’t do that. I think it’s almost certain they will extend that deal and probably make further cuts to prop up the price. And so once that’s done, once we see you know drillers here in the U.S. put they’re start on their second half of the year drilling programs, which I think are going to be cut back fairly substantially, Then I think you’re probably, for the rest of the year, are going to see the crude price kind of inch backup again to the end of the $60 range. That’s what I expect to happen.
Kym Bolado:
You’re also saying if there is a situation that happens in Iran with them, you know, attacking these oil tankers, this could change the whole situation as well.
David Blackmon:
Right. I don’t think we know yet for sure what’s really happening there.
Kym Bolado:
Yes. Makes sense. Well David, thank you so very much for being on this week’s show. We look forward to having you on next week when I’m sure there will be of course a lot more oil and gas changes till next week. We’ll talk to you then.
David Blackmon:
Okay. I’ll look forward to it.
Kym Bolado:
We are going to take a quick break. You are listening to In The Oil Patch radio show. We’ll be right back.
Commercial:
In The Oil Patch radio show is proud to bring you this week’s energy minute produced by Shalemag.com.
Commercial:
Oil prices were relatively stable on Tuesday as news that Russia remains uncommitted to extending the OPEC plus agreement. When the group of exporting countries meets later this month was offset by a promise by Saudi Arabia to take action designed to ensure markets stability. Public Railroad Commissioner Ryan Sitton announced that he would seek reelection to a second term at the state’s oil and gas regulatory agency next year. Sitton was elected to his first six year term in 2014. During his time on the commission, Texas has grown to become the fifth largest producer of oil in the world as well as the nation’s largest exporter of crude. I’m Kim Bolado, host of In The Oil Patch radio show and that’s your energy minute.
Intro:
Listen to In The Oil Patch radio and keep up with the oil and gas industry online at Shalemag.com.
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Kym Bolado:
I’m your host Kym Bolado, and today we have a great show lined up for you. Our guest today is John Tintera, one of the smartest guys that I know when it comes to oil and gas. He is the president currently of Texas Alliance of Energy Producers, but John just comes with the vast amount of information when it comes down to oil and gas. He’s also a licensed geologist as well. Well John, welcome back to the studio. It’s been a little bit of time since we’ve seen you last. We’ve had a couple of folks from the Texas Alliance join us in your place, so I’m glad to see you are back. I know that you had been in Washington DC and I hope to get into that a little bit further on in the show. But I’m excited because we just ended the 86 legislative session and you’re an expert in this area. We had Bill Stevens on last month talking to us about what he thought we might get away with an oil and gas and what we might actually close with. And so I’m glad you’re here to talk to us about how it actually ended for oil and gas. But before I turn over the mic to you, just wanted to remind our listeners if you have a question for John, I’d love to talk to you as well. Please be sure to call in to (210) 526-3656. So John, let’s get started. Tell me a little bit about session. What were, let’s take one at a time. Let’s talk about the biggest topic that we had out there. Intimate domain.
John Tintera:
Well, the legislative session was an exciting session and it always is for the oil and gas industry and the Texas oil patch because what the legislature does really affects your oil and gas industries and independent oil and gas producers ability to take the God given resources that are underground, extract them and bring to the surface and really help shape American energy independence. And I can’t emphasize that enough. So we very carefully watch and monitor happens during the session. We provide our insight. I must testify during the legislative session a dozen times under oath making sure that the science and the facts encountered the due process that’s necessary so that we can craft the right laws. And I would like to report to your listeners that the legislative section from the view of the oil patch was a success. The first things that we always look for is we never want to see an increase in our tax burdens if we can possibly avoid it. And I’d like to say that we did not see an increase in our tax burdens. Rather, the legislature wisely decided to take the money that we currently contribute to the welfare of the state and use it. And once we pay our taxes, it’s really up to the wisdom of the legislature to decide how to use it. But they have used a wisely, we have a budget. That budget has embraced some big issues. We’ve had some real successes with that. There’s going to be a reduction in some property taxes. The $251 billion bi-annual budget is something that takes a lot of negotiations. We have a well funded regulator in the railroad commission, which is critical to make sure that federal overreach does not intrude into our Texas borders. A strong state regulator is the best defense against that. But we also had some, no goats. We had some things that just didn’t happen in eminent domain is one of those things. There was a lot of negotiations. There was a lot of discussions. Frankly, they were 10 different legislative bills that were proposed to address it. None of them got across the goal line.
Kym Bolado:
And this isn’t the first time. The session before that, the 85th and emminent domain was on there as well. So this is a very important topic. Can we, can you break it down for us? What is at stake with emminant domain? Why does it keep coming up every session and I want to add in right now we have David Blackman on the line. Our Editor of SHALE Magazine. Can we bring him on too, cause I know he always has a lot of discussion with you. But what is the, David, are you with us on the line? Can we bring on line 4 David Blackman.
Kym Bolado:
Hi there you are. Welcome. I’m glad you decided to join us on the show today. So I was talking to John and I wanted him to talk a little bit about, what is the real situation with eminent domain. I know we talk a lot. We write, you write a lot about it in SHALE Magazine and Forbes. So I wanted to have your take on this too. So John, just what is, what keeps, why is it on the 85th? Why has it been on the 86 legislative session? What is the importance to oil and gas? Why does this keep coming up?
John Tintera:
Well, the simple definition of eminent domain is best to model would be highways. No one wants a highway built in their backyard. You know everybody’s going to use the highway eventually. And so I eminent domain is the ability for government and for certain private entities that qualify in order to acquire that land, pay a fair market value for that land, but then build that highway, and that in some people’s minds, is a potential intrusion on private property rights. And let’s say right off the bat, in Texas, private property rights is a very sacred thing and we have a tremendous respect for it. In the oil and gas industry. Most of our drilling is done on private property. Most of our mineral leases are from private leases because minerals are privately owned in the state of Texas. So the oil and gas industry has tremendous respect for it. However, if the oil and gas industry connect, get the oil and gas out of the ground, get it into a pipeline and get it to market safely and efficiently and quickly so that we can sell our product. It does no good. It does no good for the state of Texas. It does no good for American. It certainly does no good for all the workers who salaries are dependent on that. So eminent domain is primarily an issue regarding pipeline right of ways and the ability of pipelines to acquire land fairly and at a fair economic price so he can build their pipelines for the greater good of Texas and the Texas economy. The issue is that as you negotiate with individual landowners, every single person who’s pipeline is going to have to cross their property, has a story to tell. They have a personal attachment to the land and dealing with that personal attachment and being fair and being transparent is what the eminent domain legislation attempted to address and was unable to get across the goal line. There were competing bills. None of them were able to come to a consensus. And I will say that one of the things that’ll happen in the interim over the next 18 months is I expect a lot of discussion, a lot of meetings and further negotiations between the private property owners, the oil and gas community as well as all the other entities that are involved in eminent domain.
Kym Bolado:
Interesting. Well, you know, one thing that I know is if we do not get these pipeline and infrastructure done, it has an impact across the state of Texas. And of course, you know, we’re talking about all over the United States. We’re talking about higher prices at the pump. I mean, we really do feel it as the consumer too. So this is a pretty important topic that we kind of grapple with here in Texas and try to find what is the balance necessary to make everyone happy and of course achieve the goal as well. David, welcome back on the line and tell us, I know you joined in here. Do you have a question for John Tintera today? David? We keep having technical difficulties today. A problem.
New Speaker:
Here I am.
New Speaker:
Here you are. Welcome. I know we kind of dropped you off here for a second, but welcome to the show. And I wanted to see if you had a question for John today.
David Blackmon:
Well, of course I missed the last five minutes or so of the discussion. But John I wanted to, I know you talked about eminent domain, but in the legislature we also had a series of water bills considered and a couple of good ones passed. I’m wondering if you’d like to talk about those as well.
John Tintera:
Well, thank you. And that brings up a really a key topic. Water, water use, recycling of produced water, and the ability to dispose of water in Texas is critical to the oil and gas industries. A lot of people know we have 185,000 oil wells in Texas. They 5 billion barrels of oil every year. What they don’t know is that along with that oil comes a lot of water. And this is very old water. I call it dinosaur water. Hundreds of millions of years old and that water needs to be treated and disposed of. And we have had a series of regulations and legislation that has addressed that. And I think when we come back from the break we’ll be able to talk in detail about that.
Kym Bolado:
Very good. So David, stay tuned, stay on the line. When we get back, we’ll get back on the topic of water. You are listening to In The Oil Patch radio show and we’ll be right back.
Commercial:
And we’re back. You’re listening to In The Oil Patch radio show. We are live in studio today being joined by the President of the Texas Alliance of Energy Producers, John Tintera and Editor of Shale Magazine, David Blackman. And I’m welcoming you to call into the show and ask your questions now of John. The phone number to call in is (210) 526-3656. Now John, before the break, David Blackman asked you a wonderful question about the produced water. It’s such a hot topic pertaining to how the Texas legislators managed this session. So let’s get back on that topic.
John Tintera:
In Texas and in Texas oil fields, water is a big deal. It takes water to drill a well. It’s not inaccurate to describe water as the lifeblood of oil and gas. If you don’t have water and access to water, you’re not going to be able to drill a well. Your rig count is not going to be able to continue to increase. You’re not going to be able to increase production. At the same time, after you drill the well after it’s completed and after it’s producing oil, water is going to be coming up out of the ground. Very ancient water, dinosaur water, water that is hundreds of millions of years old and that water is going to be salty and it’s going to need to be handled in some way. Typically the water goes to disposal and those deep injection wells, which are specially regulated have been carefully monitored over the years. And there are some public concerns about that. One of the public concerns is the potential that some of these wells might be causing some induced seismicity or some earthquakes. And so the less water that you have to dispose of, the better off you are. What we saw the legislature do is to encourage recycling of produced water in Texas. The water that comes out of the wellbore. They have passed several bills that truly encouraged the recycling and reuse of this produced water. So it comes out of the ground, it goes to a treatment facility, that contaminants are removed and it goes back into the oil patch and is reused to drill the next well. So you don’t have to use freshwater, you don’t have to use newly acquired water, you can use the water that’s already come out of the ground. What you saw was in House Bill 3246 by Drew Darby, the ownership of this water was clarified and it said that, “For the purposes of recycling, as the water is transferred from entity to entity, as it goes from the producer to the recycler, the ownership of that water passes with it.” That allows companies to develop a business plan that will encourage investment. And when we say investment, I’m talking hundreds of millions of dollars of investment. A multibillion dollar industry is growing in the Permian basin with midstream water management. I mentioned this because I’m currently authoring a white paper that’s going to be released at the end of the summer and it’s going to be on the regulatory and policy framework overseeing produced water in the state of Texas. It builds on the white paper I did in 2014. I encourage all your listeners to see that. But this bill is going to be a critical part of that because it’s going to encourage investment to recycle produced water, reuse it in the oil field and provide opportunities for technical innovations that we have seen happen over and over again in the oil and gas industry in order to build on the technology base that allows us to reuse water. At the same time, some of this water comes out of the oil field, it’s pretty darn clean. And with a fair amount of treatment it might be able to be reused in other ways, even outside of the oil field possibly. For example, there’s been pilot projects where some of the oil field wastewater has been treated and then used in irrigation controlled applications for nonedible plants. And it’s been very successful with that. Well, a special bill was passed by Representative Lozano House Bill 2771 that encourages the state of Texas to seek federal delegation of the national pollution discharge elimination system permits that would allow the state of Texas to be one stop shopping for the discharge of this produced water. So you would not have to get two permits, one from the state of Texas and one from the environmental protection agency. You could just get one. Streamlined tremendously and encourages the state of Texas to seek this. We have been focused on this for quite awhile at the Texas Alliance of Energy Producers. Last session in the 85th session our Governor Abbott signed Senate concurrent resolution 26 which called on the state of Texas and all state agencies and entities to seek federal delegations. At the same time, Railroad Commissioner Wayne Christian also went to the Interstate Oil and Gas Compact Commission and they passed a resolution calling for federal delegation to come to the state. And what the premise of this is, is we’d like to see Texas regulated by Texans. And that’s very important.
Kym Bolado: It’s important because I think that Texans know how to regulate it the right way since oil and gas has primarily been what Texas has done for over a hundred years. A long, long time.
John Tintera:
Yeah. And one of the examples of that is they recently reached out to Texas, our congressional delegation, the House Energy Committee in Congress in Washington DC on Congressional Hill and asked me to come to Washington DC and to testify. And what the testimony was on was a concern by the more liberal parts of the Congress in order to put more federal regulations, essentially hamstring the oil and gas industry in Texas with federal regulations and the need for federal permits for hydraulic fracturing. And my testimony was there to refute it. And they had three anti oil experts and myself on the panel. And it was an exciting opportunity to be able to put the great story of Texas out there. And I will say that partisan politics is alive and well in Washington DC.
Kym Bolado:
I think that’s pretty obvious when you look and see how much is not getting done unfortunately, you know, quickly we’re getting ready to go to a break. President Trump announced yesterday, he’s been tweeting all day to day about, of course them coming up with an agreement with Mexico, which is great. How much of an impact do you think this is going to have now in oil and gas? I know that there was a lot of discussion with China and now Mexico just made it worse. Quickly, how good is this going to be for the industry?
John Tintera:
This is a tremendous positive impact for the oil and gas industry. Everybody recognizes that trade is a critical issue. You have to rely on your leadership in Washington DC to do the right thing. And I think the right thing is done.
Kym Bolado:
I think he got it done. I couldn’t agree with you more. Stay tuned. We’ll be right back. We’ve got more callers on the line and we’ll be joined by David Blackman. You’re listening to In The Oil Patch radio show and we’ll be right back.
Kym Bolado:
And we’re back. You’re listening to In The Oil Patch radio show. Our guest today is John Tintera, the President of the Texas Alliance of Energy Producers and I encourage you if you’re listening to call in on 210-526-3656 Our phone lines are full right now, but I encourage you to keep trying. John, before the break we had David Blackman joining us. Editor of Shale Magazine. David, are you with us? And what’s your question for John? I know you still want to talk on water.
Clint:
Yeah. One last thing to build on what John was saying about water and talking about a fact about in Texas that folks are not generally aware of the Permian basin. One of the surprising things you learned about the Permian Basin when you really study the water situation out there as well. Fresh water is fairly, it’s limited brackish water, brackish underground water is amazingly abundant. And one of the big innovations that we’ve seen in the industry in hydraulic fracturing over the past five to six years is the ability by these these companies like Halliburton, Schlumberger, and the big oil field service companies to incorporate brackish water into the hydraulic fracturing process. Prior to that that you really had to have fresh water to do it. Well, by enabling these companies to use brackish water, it means that water resources are simply very abundant out there. There’s no shortage of water. The recycling and reuse of that water is still very important and it’s really positive that we’re having done incentivize now in the state of Texas. But people should understand that hese companies by and large are not really even using fresh water in their operations, which is a very positive thing for the state of Texas.
John Tintera:
You know, David Blackman is a very astute observer and there is much less competition for the limited freshwater resources in west Texas because of the technology to David just described. And we have seen some legislation that came in from the session, mostly promoted by Larson regarding the development of Brackish Water in House bill 722 as well as the appropriation of water for the recharge of aquifers in House Bill B20 on both of these are going to build on that technology and give an opportunity for reuse replenishment and to continue to protect the fresh water resources and to avoid competing with other industries and domestic needs for that f resh water.
Kym Bolado:
Very, very exciting because you know, when Eagle Ford first kicked off, there was a lot of fresh water being used. It was a very, there was a lot of negative media around that and it’s good to see that the industry really saw. You’re right, it’s a natural resource, it’s so valuable. And with their technology and with time they were able to develop the recycling part of it. So it’s good to hear. Let’s move on. Let’s bring Joe on line 2. Joe welcome to In The Oil Patch radio show. And do you have a question for John Tintera?
Joe :
Yes. Happy to be here. My question was about that offshore Port in Corpus Christi and I’m aware of if there are several ports like this of this design around the world. None of which are in category five hurricane waters as in the Corpus Christi design. And I think a hurricane could up end the structures and hurl it I guess all obn the land or to other ships or what have you. And this might sound a bit far fetched, but this is exactly what happened in the 1900 hurricane of Galveston. Has this sort of threat been studied? Any? That’s the question.
John Tintera:
Joe that is a very good question and it shows that you’re also an acute observer of history. So, so well done. I’ve had a lot of experience in emergency response. I was a disaster preparedness officer for the Railroad Commission, I have done more oil spills and I can count, both in the field and as far as planning and response activities and preparation it really comes down to two things. First is prevention of any sort of catastrophic action. And then there’s the response for that. The facilities both in federal and state regulations and the state waters expand two to three league limit or about 10 miles from the state of Texas shoreline. I’ll just state jurisdiction and then it becomes federal jurisdiction after that. But both state and federal requires special construction, special well designs, special cutoff valves to close it off. And of course, one of the blessings that we have in this modern age that the poor victims of the Galveston disaster did not have is we have satellites and we have the weather forecast, and the ability to evacuate and prepare and to empty out your storage facilities. Just like ships take to see during hurricanes, how facility battens down it’s hatches, illuminates all of the potential for any sort of catastrophic destruction. And as a result of that, I feel that combined with the outstanding response capabilities of the State of Texas, that these facilities will not only just survive, but will recover quickly from any sort of catastrophic hurricane.
Kym Bolado:
Well, John, we are almost through the show. You’ve had a lot of call ins and questions pertaining to you know, the 86 legislature and how it closed. I’d like to bring on Clint, line 1, and see what his question is. Clint, are you there? Welcome to In The Oil Patch radio show.
Clint:
Yes. Thank you.
Kym Bolado:
What’s your question for John?
Clint:
Yes. My question is, can you tell me why gulf coast oil imports have fallen to the lowest level since 1986?
John Tintera:
Clint, excuse me, Clint. Very good question. Yes. And thank you for calling in and asking that. I would say it’s a for the same reason why Gulf coast exports have grown to record levels that we’ve ever seen. And the federal government has now approved the export of both natural gas and crude oil and we are literally, Texas is fueling the world. And as Texas fuels the world. We simply have our refineries working at capacity and there’s just less need to import the crude oil. Instead, what you’re seeing is dramatic exports. And while this will make some challenges for a port like Corpus Christi because they are going to have to find a way to turn around the shipping, bring in ships and bring in the tankers and fill them up with the Texas crude and send them out again. As we see this trade balance dramatically change and the United States become the number one oil and gas producer worldwide, which is where it’s trending, you are going to see less imports, you’re going to see more exports. And really the imports that you do see are going to be targeted imports that are going to be coming in for a special need, a special type of crude that might be needed for blending at a particular refinery. Instead of the massive influx of oil that we saw way back in the 1970s that literally held this nation hostage during the Arab oil embargo of the late 1970s. The ability for any foreign power to do that today is now for virtually impossible.
Kym Bolado:
Well we are getting ready for a break. When we return from break, I’d like to get on the infrastructure funding. I’d like to talk a little bit about the Texas board of Professional Geoscientists as well. You are listening to In The Oil Patch radio show. We’ll be right back. The call in number to call and speak to John is (210) 526-3656. I’m giving you my number (210) 526-3656. You’re listening to In Oil Patch radio show and we’ll be right back.
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Kym Bolado:
And we’re back. You’re listening to In The Oil Patch radio show. Our guest today is John Tintera, President of the Texas Alliance of Energy Producers. And we also have on the line David Blackman, the Editor of Shale Magazine. I’m just thrilled to have you both on the line. Part of my job is interview but I’m certainly not an expert, so to have two such prestigious gentleman on the line in studio with me talking everything oil and gas is a real honor. Before the break, you know, we’ve had a couple of questions. We’ve been covering session, the 86 session and what happened pertainong to oil and gas. There are two specific areas of interest that I think we should try to cover on our last segment. So John, David, let’s talk a little bit about the infrastructure fund. What happened on 86th with this fund?
John Tintera:
Well, there was a lot of discussion and frankly quite a bit of action regarding infrastructure. There is a recognition throughout the oil patch and certainly throughout the state also that as our ability to extract oil and gas expands, so does the need for having a strong infrastructure, an updated infrastructure, and a safe infrastructure. And if you start looking at some of the road conditions, there is no doubt as you put more traffic on roads, you need to improve the roads and the oil and gas industry strongly supports this. The Texas Alliance of Energy Producers would like to see investment from the state of Texas into our oil field areas. And we saw that this year. The legislature has given a quarter of a billion dollars to the Texas Department of Transportation in order to try to build up where ever oil field activities involving the increasing number of wells, the volume of oil and gas, waste that’s involved with it. qAny of the activities that include oil and gas production for those areas in those counties have, they’re going to have access to this fund so that they can improve their roads. At the same time, we saw some really innovative ideas. They didn’t cross the goal line, but there were special funds that were proposed and special expenditures that were began to be developed. And I believe we’re going to see a lot of discussion during the interim on that. Your listeners should pay attention to that. You should feel free to contact your local representatives with any of your concerns and as always, the Texas Alliance of Energy Producers stands ready, reach out to us, call us. We’re happy to explain the situation to you and we’re happy to advocate on behalf of the oil and gas industry.
Kym Bolado:
Interesting.
David Blackmon:
Yeah, John and you know, in the 2013 session they had a similar thing happened when the Eagle Ford Shale was in full boom down there. The legislature tap the rainy day fund for, I think it was a quarter of $1 billion in to help improve roads down there. And people, you know, it’s a point always try to make and emphasize with folks is that our rainy day fund is, frankly a model for the rest of the country. It’s the most well funded rainy day fund of its kind in the country and it’s funded entirely from the oil and gas severance tax. And it just enables the addition to having such a positive budget picture in general in this day. Having a $12 billion rainy day fund sitting there gives the legislature so much added flexibility that you just don’t see in other states with how to address major infrastructure type issues like this. And it all goes back to having a healthy oil and gas industry here in Texas.
John Tintera:
David, you’re absolutely right. The oil and gas industry is a rising tide that lifts all boats in the state of Texas. A lot of people don’t know that for every foot of, cubic feet of natural gas that’s produced 7.5% of the fees go to severance tax for the state right off the top. For Oil, for every barrel of oil, 4.6% of the fees go immediately to the state of Texas right off the top. And so the oil and gas industry makes a tremendous contribution to the economy of Texas. And that does not include all of the jobs, all of the local taxes, county taxes, et Cetera, Ad Valorem taxes that get paid. So it really is an economic engine that drives the state economy.
Kym Bolado:
You know, I think that we should quickly move to the Texas board of professional geoscientists. What happened there, John?
John Tintera:
The Texas Alliance of Energy Producers recognize that the sunset commission, which we’ve used state agencies every few years to decide whether they should continue or not, had recommended to abolish the Texas Board of Professional Geoscientists, which requires that a practicing geologist be certified.
Kym Bolado: That doesn’t sound good.
John Tintera:
Well, you know, if you believe in board certification, if you like a board certified divorce attorney or a board certified plastic surgeon, well having a board certified geologist is very important. Because the decisions that geologists making, the recommendations I may they make, particularly in the environmental realm, dramatically affect public health and safety. Well, we were able to argue against that, receive the support of the legislature and the Texas Board of Professional Geoscientists for all the geologists that are listening out there, the Board of Professional Geoscientists will continue for the next six years and the board certifications will stay in place and the public will be safer and better protected as a result.
Kym Bolado:
Good. You know, there was also, plumbers are not going to be licensed in the city of San Antonio. Now is going to have to take that task up. And I wonder, there are specialists for a reason. It’s important to keep them in place and some of them are for just consumer safety. Some are for, you know so people don’t get worked off. But these, these specialties are so important and like you said, you would never think about going to a doctor that specializes in cancer for lung treatments or brain treatments if they’re not specialized in that. So that being said, I want to thank you for coming into studio today. John and joining us and answer some of the questions that our callers had as well as David. Thanks for calling in and helping me run the show today. I greatly appreciate it. That is all the time we have for our live show today. We’ll be back in a month here in studio again as we do every month live with the Texas Alliance of Energy Producers and John Tintera. But for now we do have to say, Adios. Please be sure to like us on Facebook. That is a Shale Magazine or you can go and like us on In The Oil Patch radio show on Facebook. And if you have any questions for John, email us at shalemag.com and we’ll be sure to have them for the next show ready. Thank you for listening to In the Oil Patch radio show.
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In the Oil Patch is where together we explore topics that affect us all in oil, gas, business, and in your community. Every week, your host Kym Bolado willl visit with the movers and shakers in this fast paced industry. You’ll hear from industry experts, elected officials, and many more right here on In the Oil Patch.
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