Independents, Pickens Reveal State of Energy Industry

Article excerpt

A pitch is being made today to the national press in Washington, D.C., by independent oil and gas leaders about the dire state of affairs within the domestic energy industry.

Independent Petroleum Association of America Chairman Eugene Ames Jr.

and President Denise Bode, who is an Oklahoma native, are speaking before the National Press Club on "The State of the Domestic Industry: U.S. Oil and Gas Policy at a Crossroads." It is not a pretty picture, as has been reported lately, and the reaction of Capitol Hill press is anyone's guess. These days, lawmakers certainly don't seem to want to talk about energy. They tend to harp more on issues like health care as election day nears.

Nearly every indicator of the strength of the domestic oil and gas industry are now at historic lows _ the rig count, seismic crew count, supplies inventories, well servicing activity, available equipment, etc.

The experts who compile those statistics are predicting further slumps for 1992 _ unless there are some dramatic changes in U.S. energy policy, that is.

Last September, though, the U.S. Senate didn't blink, and indeed seemed to welcome, the chance to put off a debate on the omnibus energy bill that was borne out of President Bush's National Energy Strategy. Not surprisingly, it will be an issue that pits energy interests against the extremist environmental ones. The attitude of lawmakers is not surprising either. For at least two years prior, two Oklahoma lawmakers, Sens. David Boren, a Democrat, and Don Nickles, a Republican, have had energy bills aimed at sustaining the domestic industry lay dormant for lack of interest.

A month after the Senate scrapped the mega energy bill, though, Congress' Office of Technology Assessment issued its update on the nation's oil import vulnerability. It had been nearly 10 years since the 1984 report was reviewed.

Well, the picture is clear. There is no way to cloud the facts.

"The OTA's October 1991 report," Ames said in a letter to Sen. J. Bennett Johnston, D-La., who is chairman of the Energy & Natural Resources Committee, "raised concerns about the United States' growing oil import dependence and eroding oil replacement capability.

"One of the OTA's principal conclusions _ `Declining domestic crude oil production threatens to exacerbate any oil import shortfall' _ deserves further examination and prompt action by the Congress." In fact, Ames added that government assessment of the demise facing the domestic oil and gas industry is probably understated. It has been noted by the leadership of Oklahoma independents that the scenario facing the U.S. and its domestic oil and gas industry is eerily similar to that of the early to mid-1970s just prior to the first Arab Oil Embargo.

"While the OTA observed in general terms the decline in U.S. oil production, it did not provide detailed insight into the state of the U.S.

industry. The situation is probably worse than OTA found," Ames informed Bennett.

"Almost all of the statistical indicators of activity in the domestic exploration and production industry are at modern-time lows." The rig count in 1991 was the lowest since 1942 as World War II raged and steel was diverted from the oilpatch for the war effort.

Monthly seismic crews have fallen to the lowest since that gauge of activity has been tracked, 1974.

Well servicing is down 20 percent from the most recent peak in December 1990 and continues to fall.

Drilling and production equipment has been sold to overseas operators or has rusted out.

"Even if the domestic industry had enough equipment, it still would be limited by the shortage of qualified personnel," Ames noted.

Oil and gas employment, in extraction only, has plummeted a "shocking" 50 percent, with more than 300,000 jobs gone, since the peak year of 1983, he said. The trend is growing in magnitude, too. …