Energy Works in North Dakota

For the state of North Dakota, the oil and natural gas industry currently means:

Nearly 37,000 statewide jobs provided or supported – with an average salary of $71,678 for non-gas station oil and natural gas employees.$1.8 billion contributed to state labor income.$3.8 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to North Dakota:

13,144 additional jobs created by 2015.15,840 additional jobs created by 2020.An average of $54 million of new, additional revenue generated by the industry to the state every year through 2030. That’s enough to cover more than one-third of North Dakota’s general fund contribution to the University of North Dakota budget every year, without using additional taxpayer dollars.

Energy works in North Dakota, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.

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Feb 25, wasted time

by dr,vagode
(mumbai)

when i completed my medicine back in the 90s there were a few doctors who said that offshore companies pay so much compared to what a hospital will pay.I was truly happy and got into this rig medic business and wasted so many years that today I regret and looking back feel that I should have started a clinic,done a pg in MS,MD and gone up in life.

I will like to advise doctors especially MBBS qualified this job is for people like compounders,who have fake degrees or who are qualified in HOMEOPATHIC,UNNANI OR SIDDHA medicine as they do not have any other future.

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Feb 2, ROUSTABOUT WANTED

by eric
(italy-rome)

I'm 36 years old and have being in the offshore for 4 years with some internazional experience as cementer and coiltubing helper 10years ago and now I'm automotive mechanic and would like to get back in offshore as roustabout.
I already got my opito certicate for roustabout and still loocking for the job.
can someone can direct me in some hiring drilling company in uk or in italy?

thanks

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To the President’s Ear on Energy

As the president hits the road to talk about energy, he should first listen to what the American people are saying, reflected in two new polls this week.

Start with a Harris Interactive survey that shows 76 percent of voters believe increasing taxes on oil and natural gas companies could cost them more at the fuel pump. For a president who continues to talk about hiking taxes on energy companies that should be a big red flag.

Americans who’re getting slammed by higher fuel costs appear to sense that increasing energy taxes would drive up energy producers’ costs, which – as the Congressional Research Service found last year – could decrease exploration, development and production while elevating prices.

Other details from the Harris poll of 1,009 respondents:

81 percent believe more U.S. oil and natural gas development could reduce gasoline prices.90 percent believe a pro-energy development strategy could lead to more U.S. jobs.84 percent believe increasing domestic oil and gas production could enhance our energy security.64 percent believe some in Washington are intentionally delaying domestic oil and natural gas development, potentially hurting the economy and leading to higher consumer energy costs.

Clearly, those are slam-dunk numbers on energy policies the president and his administration have been talking about a lot – while keeping 87 percent of America’s offshore areas off limits, while overseeing declines in Gulf of Mexico production and while presiding over a downward trajectory in leasing and permitting on federal lands.

Then there’s the Pew Research Center’s latest findings, that as fuel prices rise, so does Americans’ support for more oil and natural gas production:

“… support for allowing more offshore oil and gas drilling in U.S. waters, which plummeted during the 2010 Gulf of Mexico oil spill, has recovered to pre-spill levels. Nearly two-thirds (65%) favor allowing increased offshore drilling, up from 57% a year ago and 44% in June 2010, during the Gulf spill.”

That last stat is worth underscoring. While Americans’ support for a variety of energy policies – from improved fuel efficiency to more federal support for mass transit systems – is pretty much where it has been, public support for more offshore oil and natural gas drilling has increased significantly. Pew finds that twice as many Americans (65 percent) support increased offshore drilling as those who oppose more drilling (31 percent).

Again, the Pew poll suggests growing numbers of Americans believe that increasing domestic supplies of oil and natural gas can put downward pressure on the price of crude oil, which accounts for 76 percent of the cost of what they pay at the pump. So, while the president continues to talk as though little can be done about fuel prices, U.S. consumers who’re being punished at the pump aren’t buying it.

A couple of other tidbits from Pew:

Of American voters who know something about hydraulic fracturing and energy from shale, 52 percent are in favor compared to 35 percent opposed. Among independents, support is actually a little stronger than the overall number, 54 percent to 35 percent.Awareness of fracking and producing natural gas from shale is mixed, but Pew found that 63 percent of those surveyed had heard something about the process.

One more note about Pew’s survey. The poll finding that Pew chose to highlight in its public announcement – Americans’ top energy priority – stems from a glaringly false choice foisted on the 1,503 sampled adults who were forced to choose one top priority between alternative sources (wind, solar, hydrogen technology) and expanded oil, natural gas and coal production. Those aren’t mutually exclusive options.

We commend the 5 percent of respondents who selected “both” even though the Pew folks didn’t offer it as a choice, as well as the 4 percent who didn’t know or refused to answer – perhaps, like us, frustrated that some continue to pit energy sources against each other when the truth is America needs all energy options to build a secure future.

View the original article here

Did Someone Mention Supply Matters?

So, a couple of weeks ago the Associated Press reported on its own special investigation into whether increased domestic oil exploration and development – supply – has any effect on gasoline prices. AP’s conclusion: There’s no correlation and so more U.S. drilling won’t help.

Since gasoline pricing is more complex than that (see our new website), the more apt question is whether supply can affect the cost of crude oil, which accounts for 76 percent of the price we pay at the pump. It’s elementary: Increase supply and you can put downward pressure on the cost of crude, which is the fundamental driver of pump prices.

That’s what we’ve emphasized in posts on AP’s study here and here. Worth repeating is the review of AP’s report by the Marshall Institute’s William O’Keefe, who noted confusion in the wire service’s own story on its own findings:

“The AP even concedes this point mid-way through the story, noting ‘if drilling activity rises around the globe for a sustained period of time, gasoline prices can fall as that new supply eventually finds its way to market.’”

Supply matters – but don’t take our word for it, AP. Look at your own recent reporting:

“Oil Falls Below $107 After US Crude Supply Jump” – March 28

And:

“Oil falls below $103 as US crude supplies jump”  – April 4

And:

“Oil drops below $102 on big U.S. supply increase” – April 4

Supply matters.

View the original article here

Environmental Experts Boost State Regulation of Fracking

The New York Times’ Joe Nocera has a column based on an interview with Fred Krupp, a key member of the Energy Department’s special subcommittee on hydraulic fracturing – key because Krupp’s also president of the Environmental Defense Fund. Nocera writes:

"Unlike others in the environmental movement, [Krupp] and his colleagues at the Environmental Defense Fund don’t want to shut down fracking; rather, their goal is to work with the states where most of the shale gas lies and help devise smart regulations that would make fracking environmentally safer."

Nocera discusses the need to improve the capture of leaked methane from fracked natural gas wells, which certainly is an industry priority. Nocera then asks Krupp whether the federal government should take the regulatory lead, presuming that would foster greater uniformity and tougher enforcement. He writes:

"Krupp frowned. “Given the dysfunction in D.C., a state-by-state approach will be more effective,” he said. “We need to focus on getting the rules right, and complied with, in the 14 states which have 85 percent of the onshore gas reserves.”

We agree. States are best situated to regulate the development of natural gas from shale because they’re closest to drilling operations and they know the geology, hydrology and other physical characteristics that vary from state to state.

In this view Krupp has important company: EPA Administrator Lisa Jackson. Earlier this month Jackson told a campus forum that fracking regulations don’t have to extend beyond the state level – following on an interview last fall in which she said the states are doing a good job regulating hydraulic fracturing and that “we have no data right now that leads us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”

We also agree on the need to get the rules right. Oil and natural gas companies have set high, constantly improving standards and are working with local communities and states to run transparent, responsible operations.

It’s in everyone’s interest to get this right, to respect the environment while tapping America’s vast shale natural gas resources, creating jobs and generating economic growth along the way. The country’s oil and natural gas companies are on it.

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Center for Offshore Safety Names Director, Former Shell Chief Scientist

The naming of Charlie Williams as the first executive director of the new Center for Offshore Safety marks an important milestone in America's efforts to safely and responsibly develop its vast offshore energy resources.

Williams leads the center after 40 years with Shell, where most recently he was the company's chief scientist for well engineering and production technology. His work included developing high-pressure, high-temperature wells and specializing in drilling and completion equipment for extreme environments, such as deepwater exploration and development. Williams was introduced Wednesday:

"We have assembled the best and the brightest minds to help ensure we develop America's vast resources in the safest manner possible. Our top priority is to develop practices and programs that will help operators perform at their very best in implementing safety and environmental management systems."

The center's governing board includes operators, drilling contractors, service and supply contractors and trade association representatives. The center will help deepwater operators implement advanced safety and environmental oversight management systems, an audit checklist and third-party review systems so operators can measure the effectiveness of those systems against standards developed by API and its members. Williams:

"The role of the (center) is to provide a forum for industry to come together and focus on developing programs, sponsoring activities and sharing good practices aimed at continually learning from and improving industry's safety performance."

Williams said the center faces start-up challenges common to most new organizations, including building a staff and prioritizing its efforts:

"Another unique challenge is finalizing all the audit tools, training auditors, and verifying auditors. This is a very large new effort and one of the first things the center must address.  Although our top goal is a forum supporting continuous learning and improvement of Safety and Environmental Management Systems, auditing of SEMS is both a center and regulatory requirement."

Key to the center is connecting industry efforts to improve safe and responsible offshore operations with the American public. Williams:

"We are committed to communicating with the public and communities regarding the programs and goals of the center. The industry is fully committed to producing oil and gas safely and responsibly.  The creation of the center, the dedication of resources to it, and the broad participation of industry in the center clearly demonstrates this commitment.  The center also demonstrates an enhanced commitment by industry in creating a 100 percent safety focused forum for coming together, learning, and continuously improving safety and environmental management systems and enhancing safety culture."

API President and CEO Jack Gerard welcomed Williams' selection:

"Safe, responsible development of our offshore oil and natural gas is critical for U.S. energy security, and it provides U.S. families and businesses with affordable and reliable energy for our future."

Learn more about the Center, its governance and information on how to become a member at www.centerforoffshoresafety.org.

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Throwing Down An Energy Challenge

Let’s talk about a fundamental difference of opinion on the key energy issue of the day.

We say crude oil supply matters – in the context of global-market pricing, which affects fuel prices because the cost of crude accounts for 76 percent of what Americans are paying at the pump. More supply alters the energy equation, exerting downward pressure on crude prices. Energy Economics 101.

The president seems to disagree, saying there’s no “silver bullet,” while suggesting there’s not much that can be done to affect global markets and offer hope to beleaguered consumers. At the same time he tacitly acknowledges market forces work – but only from the side of the equation that reduces demand through efficiency and other measures.

We’re all for greater efficiency, but the president is ignoring the effect on markets of increasing demand. Or is he, because even as he scoffs at the notion of greater development of domestic oil and natural gas resources, there are conversations with the Saudis about increasing their production, talk of releasing oil from the Strategic Petroleum Reserve and pledges to Brazil that we’ll be customers for their offshore oil when it comes on line – all implying that, yes, supply matters.

Here’s one thing that’s absolutely clear. America’s oil and natural gas companies have a positive, pro-development, pro-jobs strategy to produce more energy right here at home. They believe America has energy options, not unending limitations, and they’re ready to accept the challenge of producing more oil and gas. API President and CEO Jack Gerard during a conference call with reporters this week:

“Despite what you may hear, we are an energy-rich nation, the world’s third-largest producer of oil. We have vast resources that we have not even begun to explore. And by safely developing our own resources of oil and natural gas, we can send a strong signal to the markets that America will control its energy future.”    

Here’s what Gerard is talking about:

Changing policies that are limiting offshore energy development to less than 15 percent of available federal areas.Returning the Gulf of Mexico to pre-2010 production levels.Reversing the downward trend of leasing and permitting on federal lands (so that public areas can match production on state and private lands in places like North Dakota and Pennsylvania).Approving the full Keystone XL pipeline, to bring upwards of 800,000 barrels per day of Canadian oil sands crude to U.S. refiners.Curb government’s enthusiasm for new regulatory layers on the development of the country’s ample shale resources.Shelving punitive proposals to raise taxes on a few oil and natural gas companies.

Each of the above would acknowledge what the government’s own data shows, that oil and natural gas are mainstays of this country’s energy present and future – rejecting an off-oil strategy that’s rooted in unreality.

Gerard:

“Sending a clear message to people who buy and sell crude oil that the United States is committed to reasserting itself as one of the world’s major oil producers would immediately put downward pressure on gasoline and other fuel prices.”

Gerard called out the administration on its energy claims:

“The administration says it’s already doing a good enough job promoting oil and natural gas development. Check the numbers, it says. We did, and they show oil and natural gas production on federal lands and waters has lagged behind development on private and state lands.”

And issued a challenge:

“Our industry would not be urging the administration to open the door to more development unless it was prepared to walk through that door, unless it envisioned investing its own capital in more projects that could produce more supply and jobs, just like the development that’s already occurring. … We once again urge the administration to act to promote more domestic resources of oil and natural gas. … If the administration will do these things, our companies will produce more American oil and gas.”

Additional resource: Talking energy with Fox News.

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Feb 25, rig welder(6G-6GR)

by fayaz
(mangalore,karnataka,india)

I have 21years exepereince in welding and fabrication i am at present working in rig. i am looking good opportunity in middleast

View the original article here

EPA Needs to Fix Air Emissions Proposal

Howard Feldman, API director of scientific and regulatory affairs, spoke with reporters today about proposed rules for oil and natural gas air emissions.  This is what he had to say.

EPA's proposed rules for the oil and natural gas sector, which address sources of air emissions including those associated with hydraulic fracturing, are due to be finalized in the first week of April. The rules are important because they would over time affect hundreds of thousands of natural gas development operations.

A new study conducted by Advanced Resources International, which we are releasing today projects the rules as proposed would significantly slowdown drilling, resulting in less oil and natural gas production, lower royalties to the federal government, and lower tax payments to state governments.

Unless EPA makes changes to the proposal, the study found that between the time these rules are implemented and 2015:

Overall drilling for natural gas using hydraulic fracturing would be reduced by up to 52%, reducing drilling by as much as 21,400 wells;Natural gas production from hydraulically fractured wells would decline by up to 11% compared to what would otherwise have been developed;Oil production from hydraulically fractured wells would decline by up to 37% compared to what would have otherwise been developed;The federal government would not collect up to 8.5 billion dollars in royalties due to reduced drilling and production;State governments would not collect up to 2.3 billion dollars in severance taxes due to reduced drilling and production.

This analysis does not even attempt to estimate the lost jobs and decline in other economic benefits that would result from reduced drilling and reduced oil and gas supply services.

As we suggested in our comments on the proposal, EPA must make changes to this rule and allow for reduced emissions while not impeding the massive job creation and economic revitalization that we’ve seen in states like North Dakota and Pennsylvania due to the shale boom.

First, reduced emission completions requirements should be less prescriptive and limited to circumstances that are cost-effective and technically feasible. A one-size-fits-all approach will not work.

EPA should also allow more time to implement the requirements once they are final. The equipment prescribed to conduct reduced emission well completions will simply not be available in time to comply with the current final rule schedule.

Manufacturers and industry need two to three years to design, manufacture and certify a sufficient number of control devices and train personnel.

We also think the system of notifications, monitoring, recordkeeping, performance testing and reporting requirements for compliance assurance must be simplified. Taken as a whole, these requirements would be overly burdensome for the small and/or temporary facilities that EPA is regulating. They would waste time and resources for the industry and EPA.

The benefits of shale energy development are indisputable. Nationwide, shale gas development was supporting 600,000 jobs in 2010, according to a December IHS-Global Insight report. Natural gas prices have fallen by half from their level three years ago. That is benefiting families that heat their homes with natural gas, as well as businesses and consumers that buy their electricity from utilities that generate it with natural gas.

Low natural gas prices are also benefiting chemical manufacturers and other businesses that use natural gas as a raw material, and that is encouraging businesses to locate new facilities in America rather than overseas.

The president has called for his administration to reign in burdensome regulations. At a time when the government is desperate for revenue, and America’s gasoline prices are high, applying overly burdensome regulations would be bad public policy and could place an even bigger burden on Americans in the form of higher energy costs.

EPA can fix these rules so they reduce emissions yet are still compatible with oil and natural gas development that creates jobs, government revenue and improves our energy security. We ask them to keep these recommendations in mind as they finalize the rule.

View the original article here

Fact Checking the Administration’s Fact Checker

White House Communications Director Dan Pfeiffer put up a blog post last week, fact-checking his boss’ all-of-the-above energy strategy – perhaps because others have found the president’s energy assertions are more myth than fact, that he’s really offering an almost-none-of-the-above approach. Let’s review the White House’s defense.

Pfeiffer:

“The fact is, oil is bought and sold in a world market. And just like last year, the biggest thing that’s causing the price of oil to rise right now is instability in the Middle East.”

This important acknowledgement – echoed by Federal Reserve Chairman Ben Bernanke – accurately depicts the reality that crude oil is a global commodity whose pricing is affected by global events. Keep that in mind as we continue.

Pfeiffer:

“The truth is that there is no silver bullet to address rising gas prices in the short term, but there are steps we can take to ensure the American people don’t fall victim to skyrocketing gas prices over the long term.”

History suggests that just as global crude markets are affected by unrest and uncertainty that could restrict supply, they also can be affected by developments that expand supply. That’s what happened in the summer of 2008:

So, yes, supply matters – even the prospect of increased supply can have impact. So then the question is: What can the United States do to have more effect over crude oil supply, which, as nearly everyone agrees, is key to what happens at the pump?

We could approve the Keystone XL pipeline, which would bring upwards of 800,000 barrels of oil per day from Canada. We could endorse a federal offshore drilling plan that actually includes new areas for development, to increase domestic supply. We could open access on federal lands that currently are off limits. Studies indicate a tiny piece of the vast Arctic National Wildlife Refuge (ANWR), for example, could deliver 1 million barrels or more per day.

Unfortunately, the administration has said no the Keystone XL, no to a more robust offshore drilling plan and no to fully developing our onshore resources in ANWR, the Rockies and other areas. While the administration says it’s for greater domestic oil and natural gas production, it’s actually doing little to foster that and in a number of cases is blocking it.

Pfeiffer:

“Since 2008, U.S. oil and natural gas production has increased each year, while imports of foreign oil have decreased. In 2011, U.S. crude oil production reached its highest level in 8 years, increasing by an estimated 110,000 barrels per day over 2010 levels to 5.59 million barrels per day. U.S. natural gas production grew in 2011 – the largest year-over-year volumetric increase in history – and easily eclipsed the previous all-time production record set in 1973. Even if you fail to give the Obama Administration the credit it deserves in helping to expand this production, any notion that production has been blocked or slowed, doesn’t square with the facts.”

Actually, the notion that the administration has blocked or slowed oil and natural gas domestic production is well-supported by fact:

There has been a “systematic decline” of energy production on federal lands in the West in the past two years, according to a study by EIS Solutions released in January. According to Bureau of Land Management data, the number of new federal oil and gas leases is down 44 percent, while the number of new drilling permits and the number of new wells drilled both are down 39 percent.According to the Energy Information Administration, federal production in the Gulf of Mexico is estimated to be down 21 percent from 2010 – falling from 1.55 million barrels per day to 1.32 mb/d last year to an estimated 1.23 mb/d this year.Ten federal agencies currently are looking at more regulation of hydraulic fracturing, threatening the catalyst to the current natural gas revolution.

So, another question: If overall domestic production has increased while production on western federal lands and in the Gulf has decreased, what does that mean? It means the increases are coming from areas not under federal control – that domestic output is increasing despite the administration’s policies, not because of them.

Pfeiffer:

“We believe an all-of-the-above approach doesn’t need to come at-any-cost. That is why just as we make available more than 75 percent of our potential offshore oil and gas resources, the Obama Administration continues to study the feasibility of exploration, development, and production in other areas.”

Here we have some statistical flim-flammery. While the administration has made available for development 75 percent of federal offshore resources that meet the government’s definition of undiscovered but technically recoverable resources, these areas only account for 13 percent of the United States’ total offshore acreage. That’s how a 75 turns into an “F” on development.

Pfeiffer:

“As you can see, the claims and the facts just don’t add up.”

The White House’s problem is the facts do add up. We’re looking at a 21 percent decline in Gulf production and a trajectory on federal lands that’s heading down. It’s an administration that says one thing on energy and does something else – sending mixed messages to Americans and global energy markets.

View the original article here

More on Moving Global Markets

The Marshall Institute’s William O’Keefe has a must-read on Fuel Fix for folks puzzled by the recent AP analysis that discounted the effect of domestic drilling on global crude pricing, which is the key component (76 percent) in fuel costs.

Remember, the AP said its statistical analysis of 36 years of monthly, inflation-adjusted, gasoline prices found no correlation between the level of production from U.S. wells and prices at the pump.

O’Keefe:

“The AP attempts to use a disconnected statistic, domestic production, to make an erroneous correlation to counter arguments in favor of more U.S. exploration and development. In doing so, the wire service offers the public a political statement in place of objective analysis.”

O’Keefe continues:

“To begin with, domestic oil production has been steadily declining since its peak in 1970 when it averaged 9.64 million barrels per day (MMbbl/d). From 1978 to 2010, domestic production reduced 37 percent. In that same period, the price of gasoline increased by nearly 60 percent—climbing from a national average of $1.61 to 2.56 per gallon. This data seems to suggest what many of us already learned in ‘Economics 101’; there’s an inverse relationship between supply and demand. That means that as the availability of a product/service (ie. oil, wheat, gold, etc.) declines, prices will rise.”

And:

“The AP even concedes this point mid-way through the story, noting ‘if drilling activity rises around the globe for a sustained period of time, gasoline prices can fall as that new supply eventually finds its way to market.’ Yet, it then implies that crude oil prices are insensitive to changes in supply as if it is a unique commodity. The story ignores what has happened to prices when for example a hurricane disrupted production and refining in the Gulf coast region, or when Nigerian or Libyan oil production has been disrupted. The price of crude goes up and then down when supplies come back on line. So when other factors are relatively stable, an increase in supply relative to demand will lower price. How much depends on the increase in supply.”

O’Keefe then moves to the lost energy opportunities resulting from current policies:

“… a policy of NO and a self imposed moratorium on increased exploration has probably resulted in hundreds of thousands of barrels or more not being produced. Adding those unproduced barrels to the current global supply would put downward pressure on crude oil prices which translate into to lower gasoline prices. Instead, there has been a policy of NO to the eastern Gulf of Mexico, NO to offshore drilling, NO to Alaska’s coastal plain, and NO to Keystone XL. With a more enlightened energy policy our oil production over the course of this decade could increase by a million barrels a day or more. That is not trivial.”

O’Keefe is certainly right on that, because, as noted here and by energy analyst Geoff Styles in a recent blog post, the key to the situation is the United States’ actual ability to impact global crude markets by affecting daily spare capacity – the amount of available crude above current demand. Styles writes:

“Traders have to think about how prices are really set, and they understand that it's the interaction of the last few million barrels per day of supply, demand and spare capacity that really count, along with inventories. An extra million or two barrels per day – a quantity of which North America is certainly capable – can make a huge difference in oil prices.”

Supply matters. Although the administration implies agreement by talking about releasing oil from the strategic reserve, the president seems only to believe that markets can be affected by lowering demand while saying, in effect, that current domestic oil production is good enough.

Most Americans disagree. Recent polling shows strong support for the Keystone XL pipeline and for greater oil and natural gas production here at home. They believe more of our own supply would make a difference with markets that are moved by expectations and strong leadership.

View the original article here

Recalculating the White House

Monday the White House had a blog post up saying:

“While profits soar, oil companies are receiving about $7,610 a minute in tax breaks.  That’s $4 billion a year of your money.”

During the latest economic downturn, when industries were shedding jobs and limiting spending, the U.S. oil and gas industry was doing the exact opposite.  Over the past few years we supported around 9.2 million U.S. jobs and, when given the opportunity, invested hundreds of billions of dollars into the United States to find new resources and generate the energy that American’s need.  So despite doing everything the Administration looks for in an industry – create jobs, invest in the United States, innovate – it does not appear to be enough.  The false argument now being made is that the industry is somehow not paying its fair share.

First, let’s put profit in perspective.  The oil and gas business generates revenue from its worldwide activities – however, it costs a huge amount of money to be successful.  That is why the real analysis for profits should be profit margin – how much profit does the industry earn on its sales.  In that light, during the most recent quarter the profit margin for “Major Integrated Oil and Gas” was 6.2%, which ranked 114th out of 215 industries.  So, I guess if profitability targets an industry, look out “Publishing – Periodicals” at 51.7%!

Second, let’s look at the claim that the industry is getting “tax breaks”.  These “breaks” are essentially deductions that the industry, along with many other industries, are eligible to claim.  They are not tax credits (which reduce taxes dollar for dollar) or grants from the government.  They are tax deductions for business investments that will generate tax revenues in the future.  Unlike the case of credits or grants, the government will still be paid the full amount of tax owed on our operations.

To illustrate let’s take a look at one of the deductions the president proposes to change, that for Intangible Drilling Costs (IDC). Currently large integrated oil companies can currently deduct 70% of their IDC costs over the first year and the rest over the next four years, under the president’s plan companies would have to spread the deduction over time – let’s say seven years. So for a well costing $5,000,000 the deduction schedules look like this:

Under both plans the amount being deducted will be the same, which means the taxes ultimately being generated would be the same.  The industry however uses the cash flow from the deduction to invest in equipment and jobs as they continue to drill and develop energy here in the United States.

Finally, let’s put the $7,610/minute point into perspective.  The oil and gas industry pays substantial amounts to the federal government in rents, royalties, bonus payments and, oh yes, taxes.  In total, these payments have been around $86M/day or $59,000 a minute!  An over 700% return on their “investment”.  So, at the end of the day, it is not the government supporting the industry, but the industry supporting the government.

Additional taxes or royalties may raise this amount in the short term, but it will eventually drive away investment.  This shouldn’t be surprising, by being able to reasonably recover costs, companies are able to drill more, and drilling more produces more American energy and more revenue for the government, not to mention more jobs.  The president’s plan will actually produce less, less, and fewer.

So while the White House tries to shape the numbers on the industry, the real numbers are as follows:

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Mar 17, Offshore platform cook

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Life in the Barnett Shale: Energy, Jobs, Growth

Local businessman Tim Osborn says that when he was a schoolboy growing up in North Texas, his hometown probably didn’t have more than 250 people. Today the area is vibrant, with 10 times that number living there. Work is plentiful, housing is booming and there’s room to grow – thanks to the oil and natural gas industry and the energy-rich Barnett Shale.

The area about 30 miles north of Dallas is thriving with oil and natural gas development in the Barnett Shale providing the magnet for other kinds businesses and industries. “The reason it has grown is the oil and gas business,” says Osborn, president of CBA Automation, an electrical and instrumentation contractor. “We have other industries moving here because this is a prospering area.”

Others are doing well, too. Check out this video detailing the oil and natural gas industry’s positive impacts on life in North Texas:

Here’s a slideshow that also helps capture the way of life in the Barnett Shale:

View the original article here