Utah Oil and Gas Development

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• Utah Oil and Gas Development
• October 21, 2009
• Lowell Braxton
• IPAMS Utah Representative
• Independent Petroleum Association of Mountain
  States

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Independent Petroleum Association of Mountain
States (IPAMS)

• Working to make the Intermountain West a
  business-friendly environment for independent
  natural gas and oil producers
• Promoting environmentally responsible development
• Over 400 members exploration and production,
  service and supply, legal, financial,
  environmental, regulatory and general consulting
  companies

www.ipams.org
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The Role of Independents

• Independents are generally smaller companies that
  dont have refining and retail operations, and
  direct most of their efforts toward finding and
  producing natural gas and oil in America.
• Independents
• Drill 90 of the wells
• Produce 82 of US natural gas
• Produce 68 of US oil
• Have an average of 12 employees

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Issues

• Utahs Natural Gas and our Clean Energy Future
• Resource Management Plans (RMPs)
• Federal Leasing
• Air Quality
• Congressional Proposals

www.ipams.org
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Natural Gas Its a natural fit for our nations
most pressing challenges

• Affordable, clean, domestic and over 100 years of
  supply
• The expanded use of natural gas is the most
  obvious and cost-effective way to reduce
  greenhouse gas emissions
• Exploration and development creates important
  jobs, revenue and energy security benefits

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Renewable Energy Needs a Back-upBecause the wind
doesnt always blow, and the sun doesnt always
shine

• Electricity cannot be stored
• Renewable generation without backup is unreliable
• Natural gas generation is the only viable
  instant-on/ instant-off backup power source
• Studies show that cap-and-trade will increase
  demand for natural gas by over 20

www.ipams.org
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Resource Management Plans
Billions of Cubic Feet

• The Dept of the Interior (DOI) is refusing to use
  the six Utah RMPs
• Seven year open public process where all voices
  were heard
• 35 million to produce
• Over 100 federal, state and local interagency
  meetings
• 185,000 public comments
• Represent a balance of multiple-uses
• Utahs voice and interests are being circumvented
  by Washington
• DOI needs to feel pressure from Utah officials so
  that they stop listening exclusively to outside
  conservation interests.

www.ipams.org
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Resource Management Plans
Billions of Cubic Feet

• Put off-limits to oil and gas or severely
  restricts over 3 million acres in Utah
• Despite those additional restrictions, DOI
  refuses to act according to the RMPs

www.ipams.org
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Access to Public Lands in Utah for Oil Gas
Development

• BLM manages 22.9 million surface acres.
• Oil and gas activity occupies just 58,365 acres
  -just 0.2 of BLM lands
• Energy development on public lands is extremely
  important in Utah, where 58 of natural gas and
  42 of oil production is federal.
• Contrast the 4.5 million acres under lease today
  with the 20 million acres under lease in 1984.

www.ipams.org
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HR 1925 Red Rocks Wilderness Act
Billions of Cubic Feet

• The Red Rocks Wilderness Act would take 9.4
  million acres from energy development (17 of
  Utahs land)
• 12 million acres (22) are already off limits to
  energy development through designation as
  wilderness, national parks monuments, roadless,
  etc.
• 39 of public lands closed to development hurts
  rural economies and jobs
• Despite its failure to pass for two decades, DOI
  is restricting access to Red Rocks Wilderness Act
  land.

www.ipams.org
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Federal Leasing
Billions of Cubic Feet

• The Department of the Interior (DOI) is currently
  withholding 40.7 million worth of leases in Utah
• 600,000 acres from 563 leases, dating back to
  November 2001.
• The state is entitled to almost 50 of the money
  for the leases, yet DOI is holding this large
  amount of capital in an unproductive capacity.

www.ipams.org
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DOI Chooses Redundant Analysis over Domestic
Energy Development
Billions of Cubic Feet

• Report on the 77 withdrawn leases from December
  2008
• Not a single parcel reinstated
• 8 parcels withdrawn completely
• 52 parcels deferred indefinitely
• Only 17 parcels to be leased
• While I respect the authors of this report,
  their findings are insulting. I fail to see how
  a nine-day on-the-ground review by a team of
  outsiders is better than the seven-year process
  of public hearings and real input that produced
  the comprehensive plan by professional BLM and
  state employees in Utah.  Congressman Rob Bishop

www.ipams.org
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Oil and gas activity is fueling Utahs economy

• Utah ranks
• 8th in U.S. natural gas production at 431 Bcf
• 13th in U.S. crude oil production at 21.9 million
  barrels
• Jobs
• 11,000 direct and indirect jobs
• More than 50 of employment in the Uinta Basin
  and 60 of total wages
• Average annual salary of EP jobs is 84,795
  (32,000 state average)
• 2008 Government Revenue
• 42.9 million in Utah property taxes
• 103.6 million in Utah severance taxes
• 76.6 million in Utah state royalties
• 172.6 million in Utah share of federal royalties
• 50 of total revenue to Utahs permanent school
  fund.

www.ipams.org
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Industry Working to Protect Air Quality

• IPAMS recently released the Uinta Basin Air
  Quality Study (UBAQS) to help regulators, public
  land managers, and industry reduce impacts to air
  quality

• UBAQS results Average ambient concentrations
  of ozone and criteria pollutants will remain
  below the national air quality standards in the
  Uinta Basin through 2012
• UBAQS shows that we can develop natural gas and
  oil in Utah while still protecting the
  environment.

www.ipams.org
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Congressional Proposals
How do these legislative and administrative
proposals align with national policy
objectives? -Strengthening the
Economy? -Creating Jobs? -Reducing GHG
Emissions? -Reliance on Foreign Energy? All
would be counterproductive harming consumers,
business, the economy and energy security!
Raising Taxes 80 Billion Tax Increase on
Industry Over 10 Yrs Climate Legislation Will
cost American Households 1,761 yr. - Sends
natural production/refining overseas New
Regulation Hydraulic fracturing regulations
could kill 2,869,000 jobs New Bureaucracies Offi
ce of Federal Energy and Minerals Leasing
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Additional Regulation of Hydraulic Fracturing

• Federal legislation proposed to take regulation
  away from the states
• Almost all Utah wells are fracture stimulated
• No cases of groundwater contamination in over 60
  years of state regulation

• IOGCC survey of state regulators
• 2004 EPA study
• Groundwater Protection Council Study
• Frac fluid is 99.5 water and sand

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Protecting Groundwater
Shallow fresh-water aquifers are protected with
steel casing and cement.
Natural gas is produced from deeper geologic
horizons not suitable for drinking water supplies.
Source Energy-in-Depth http//www.energyindepth.
org/
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Summary

• Continued access to Utahs public lands is vital
  to Utahs economy and the nations energy
  security
• Natural gas is abundant and affordable, with over
  100 years of supply
• RMPs represent a balance of multiple-uses of
  Utahs public lands
• Uncertainty in the federal leasing process is
  diverting investment away from Utah.

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Weve Reached a Fork in the Road
The voice of Utah must be heard on these
issues! Please write to and meet with Interior
Secretary Salazar and other DOI officials.
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Lowell Braxton IPAMS lbraxton_at_ipams.org