STEER: A Business Model That Works

It was great to be able to write this issue’s cover feature on the South Texas Energy & Economic Roundtable (STEER) and its outstanding staff, including President and CEO Omar Garcia. Watching the organization have so much success has been very rewarding, since I played a minor role in its creation back in 2012; and writing the piece provided a chance to reflect on the STEER business model and why the oil and gas industry should try to replicate it in other parts of the country.

By late 2011, it had become obvious to everyone that the Eagle Ford Shale was a world-class resource that represented an unprecedented opportunity for economic development in South Texas. Shortly after a lunch during which I and a group of colleagues talked about how best to go about protecting this opportunity, I got on a conference call with the Haynesville Shale Operators’ Committee (HSOC). This coincidence of timing was what spurred my involvement in the germination of STEER.

HSOC was the brainchild of the Louisiana Oil & Gas Association (LOGA) and its President, Don Briggs. Created during the height of the development of the Haynesville Shale natural gas development, the organization served as an extremely effective voice for the industry in what was at the time the busiest shale development region of the country. The challenge the Haynesville Shale presented to LOGA was its concentration in the northwest corner of the state, hundreds of miles from the state capital of Baton Rouge, where LOGA’s offices were located.

Rather than have its staff constantly travel back and forth between Baton Rouge and Shreveport to help its members address community and regulatory issues, LOGA came up with the model of establishing a committee within its organizational structure that essentially functioned as a separate trade association. To become members of HSOC, companies paid separate dues, and the committee itself had its own separate staff.

To further distinguish HSOC as a separate entity, the HSOC staff seldom became engaged in the single most crucial role of any state trade association — lobbying the state’s legislature. Instead, HSOC focused on helping members with community and media relations, functions that have not traditionally been strong points for the industry’s legacy associations.

The model worked. HSOC was a tremendous asset for producers, the media and communities in the region, all of whom needed an honest-broker intermediary to help understand and communicate with one another.

Seeing no reason why this model wouldn’t work just as well in South Texas — where the sudden, massive growth in oil and gas activity was very predictably creating lots of friction and challenges in the local communities — I took the idea to Rob Looney, then-President of the Texas Oil & Gas Association (TXOGA), one of the industry’s largest trade associations, headquartered in Austin. My involvement ended there, since I had a conflicting role with one of the industry’s national trade associations at that time.

Looney very quickly created a study committee within TXOGA to develop a proposed model. It was that study committee that ultimately developed the STEER model, which differs from HSOC in that STEER was to become a completely new and separate trade association with completely separate membership. Progress was fast: Less than eight months after I had first raised the idea with Looney, STEER was up and running; and it has been a great benefit to the industry and the people of South Texas ever since.

The great thing about the STEER model is its applicability to any region of the country. While it can create concern among the pre-existing conventional industry associations that it will be a competitor, the reality is that STEER serves a complementary role, performing functions that the traditional industry associations have not been staffed or funded to perform. And STEER, like HSOC, stays away from lobbying, focusing instead on community relations and communications.

Prior to the last decade or so, the oil and gas industry by and large treated the functions of community engagement and media relations as little more than nuisances. For many decades, oil and gas exploration was almost always conducted in rural areas, far away from subdivisions, schools or downtown areas where people used to gather. The industry’s big concern was not conflict with local communities or even interaction with the news media; instead, legal, legislative and regulatory matters were far more pressing. Naturally, the industry’s trade associations tended to be located either in Washington, D.C., or in the various state capitals, and those associations were staffed to deal with those pressing issues.

But the combination of rapid population growth in some of the big shale plays and increased public awareness of oil and gas operations in general has changed all of that. It’s key to remember that the means of extracting petroleum products from shale rock — the wedding of hydraulic fracturing and horizontal drilling — was developed in the Barnett Shale, which sits smack in the middle of the Dallas-Fort Worth Metroplex.

Drilling in the Barnett began to really ramp up during the 1999–2001 time frame, at the same time the region was experiencing a huge population boom. Operators there soon discovered that leases that had been taken out in the mid-1990s on what had been ranch- or farmland had since become home to new housing subdivisions by the time companies were ready to move a drilling rig onto the location.

Never in its history had the U.S. oil and gas industry been forced to deal with such a high degree of local community issues and media attention simultaneously. The state’s then-existing trade associations were caught off guard equally as much as their member companies were.

They were all staffed by great people — I knew and worked with them all — but they were simply not staffed or funded to be able to effectively address the volume and variety of issues that were coming at them rapid-fire out of North Central Texas. Worse, their member companies were very slow to help them adjust to this rapidly changing landscape. Thus, the early years of the 21st century were disastrous for the industry from a reputational standpoint, not just in Texas, but nationally.

Eventually, the industry did devise several innovative and effective approaches to help with these issues, like the Barnett Shale Energy Education Council and the Joint Association Task Force.

These efforts have gone a long way in repairing the reputational damage done in those early years.
The creation of STEER and the hiring of the right person, Omar Garcia, and his great staff to lead the association early in the development of the Eagle Ford Shale played a big role in making sure the industry did not suffer similar reputational damage in South Texas. It’s a real success story, and one that can be repeated anywhere in the country.

 

About the author: David Blackmon is Associate Editor for Oil and Gas for SHALE Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles, the last 22 years engaged in public policy issues at the state and national levels. Contact David Blackmon at david@shalemag.com.

 

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