AAPG's message that the domestic petroleum industry needs action from the government was carried to the Halls of Congress in testimony before the U.S. House Committee on Resources in mid-April.
AAPG President M. Ray Thomasson delivered an 11-page statement, including graphs and charts, that called for access to public lands for exploration and changes to the U.S. tax code to assist the upstream industry in providing a sound resources base for the U.S. economic and security interest.
The testimony by Thomasson was invited by Resources Committee Chairman Rep. Don Young (R-Alaska).
The hearing was titled "Compromising Our National Security by Restricting Domestic Exploration and Development of Our Oil and Gas Resources."
Young said that he would use the hearing to "focus on the alarming fact that while our nation is one of the largest consumers of fossil fuels, it lacks a coherent energy policy."
Testifying were members of Congress -- notably House Majority Whip Tom Delay (R-Texas), administration officials and a number of non-governmental witnesses, including Thomasson.
The groundwork for the invitation was laid just a week before the session, when an AAPG delegation from the Division of Professional Affairs made visits in Washington, D.C., carrying AAPG Position Papers to nine offices on Capitol Hill and visiting with key staffers and legislators in both the House and Senate.
The DPA delegation included DPA president-elect G. Warfield "Skip" Hobbs, and DPA Government Affairs Committee members Charles Mankin, director of the Oklahoma Geological Survey; Terry Hollrah, who is also AAPG treasurer; and Tom Moore, chairman of the SEPM Government Affairs Committee. GAC Committee chairman Dwight "Clint" Moore and AAPG vice president Carl Smith were scheduled to participate but were unable to do so due to personal commitments.
The DPA delegation's visit was arranged and facilitated by the American Geological Institute's David Applegate, whose activities are financially supported in part by AAPG.
The core of the message was AAPG's 10 energy issue Position Papers (December 1999 EXPLORER).
"We emphasized that the U.S. has significant remaining oil and natural gas potential, but that Congress has done its best to deny access to these resources, and has created tax and regulatory policies that have increased our dependence on uncertain non-U.S. supply," Hobbs said. "We said that we hoped that the Position Papers would be incorporated into a yet-to-be-formulated national energy policy."
Visits were made to a number of top staff members representing a range of committees and subcommittees that deal with energy, lands and the environment.
The key meeting was with Congressman Young, along with his chief of staff and other leaders of his staff. Young told the DPA group that the Committee on Resources, which he chairs, was scheduled the following week to hear testimony on opening more public lands, such as ANWR and the OCS to petroleum exploration.
On Friday April 7, two days following the visit with Young, an invitation was received to testify the following Wednesday, April 12, before the House Resources Committee. AAPG President Thomasson was tapped as the presenter for the AAPG positions.
Mankin was designated as the chief architect for the testimony. Mankin, director of the Oklahoma Geological Survey for 36 years, is the dean of U.S. state geologists and received AAPG honorary membership at the New Orleans annual meeting just days after the testimony he was instrumental in crafting was read.
"Not enough can be said of Charlie's role in this endeavor," Thomasson said. "His experience in dealing with these issues before Congress and on the state level was invaluable."
Over the weekend, the AAPG statement was readied and delivered to AGI, which handled the production and delivery of the items, including charts and graphs, to the committee's distribution apparatus.
On Wednesday, April 12, four panels appeared before the Resources Committee. Thomasson testified first in the third panel of the morning. Other panel members were Robert Ebel, director of the Energy Program of the Center for Strategic and International Studies; Jerry Jordan, president of the Independent Petroleum Association of America; Howard Geller, executive director of the American Council for an Energy-Efficient Economy; and Gerald L. Hood, secretary/treasurer of the General Teamsters Local 959, Anchorage, Alaska.
Points in the statement to the committee included:
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Consumption continues to rise, while U.S. production continues to decline.
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"Because of changes in the tax code and increasing restrictions in access to public lands the U.S. petroleum industry is facing declining opportunities to develop those commodities that are present.
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"Some will argue that the resources are not there to be found. That is simply not true."
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Citing the National Petroleum Council's comprehensive assessment of the natural gas supply and demand situation in the United States, "the resource base is sufficient to support the expected growth in demand." However, they note that a substantial portion of that resource base is, at present, either not accessible due to federal moratoria or accessible with onerous restrictions that destroy the economic viability of development.
Thomasson went on to say how important unconventional resources are, and that "with increasing technological capability, the industry can economically recover an increasing volume of resources."
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"The NPC study also notes that a significant increase in capital expenditures will be required to achieve (meet) the projected in natural gas demand."
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"The Congress must address two issues. These are improved access to public lands and appropriate incentives to provide for capital generation."
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The Arctic National Wildlife Refuge (ANWR) 1002-A area and the Outer Continental Shelf was cited as examples of "off-limits" areas to exploration, and the Rocky Mountains area was named as an example where obstructive regulations hinder the development of the U.S. energy supplies.
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"We believe that no additional areas of public lands should be removed from access, and especially by the sole action of the president of the United States, until a proper assessment of their resource potential is conducted."
The statement read:
"In addition to those mentioned previously, we believe the following issues need to be addressed by the Congress:
- Examine the existing permitting process to make sure that permits are executed in a timely and reasonable manner.
- Establish certainty with respect to timing and area of offshore lease sales.
- Restoration of the write-off of Intangible Drilling Costs for the passive investor (doctors, lawyers and other non-industry people).
- Eliminate the onerous Alternative Minimum Tax, which cripples investment.
- Expensing of delay rentals in the year incurred, not capitalizing them as currently required.
- Expensing of geological and geophysical costs.
- Make permanent the suspension of the net income limit for percentage depletion on marginal properties.
- Raise the depletion allowance provision to previous levels."