House Natural Resources Hearing On America’s Onshore Resources

MEMORANDUM

FROM: Michael Zehr, HBW Resources

DATE: ​March 14, 2013

RE:​House Natural Resources Committee Hearing on Onshore Energy Development
_____________________________________________________________________________________

Background:

On Thursday, March 14th, 2013, the House Natural Resources Committee Subcommittee on Energy and Mineral Resources held an oversight hearing entitled: “America’s Onshore Energy Resources: Creating Jobs, Securing America, and Lowering Prices.” The hearing focused on the economic benefits onshore oil and gas development has brought to communities and how it can contribute to energy security. It highlighted individual stories of business owners who have benefitted from energy development by increasing profits, creating new jobs, and expanding their businesses in areas previously seeing little economic growth prior to energy development in the area. Additionally, this hearing considered some of the challenges both regulatory and environmental facing communities with expanded energy activities occurring in them.

Chairman Statement:
The Honorable Doug Lamborn
Witnesses and Testimony:
The Honorable Michael McKee
County Commissioner
Uintah County, Utah

Whit Perryman
Vermeer Equipment of Texas-Louisiana
Vice President of Associated Equipment Distributors

Frank M. Puskarich
Founder and Owner
Hog father’s Old Fashioned BBQ

Paul Battista
Co-Founder and VP of Business Development
SunnySide Supply Inc.

Don Shilling
President, General Equipment & Supplies, Inc.
Member, Energy Equipment Infrastructure Alliance

Paul Cicio
President
Industrial Energy Consumers of America

Daniel Weiss
Senior Fellow and Director of Climate Strategy
Center for American Progress Action Fund

Highlights:

Ranking Member Rep.Rush Holt (D-NJ) warned that the sequester cuts being imposed would have major impacts on the pace of approvals for leases and permits for all forms of energy activity. He made the point that he believes the industry is doing well right now and production is up so additional access to more land is not necessary at this time and that the US should not export natural gas to other nations. He believes the resources should stay in the country to benefit US manufacturers.

Rep. Rob Bishop (R-UT) spoke about the tremendous opportunity that energy development can have for communities, but claimed the key to long term economic success in these areas is a diversified set of industries and employers. There is a danger in relying on just one resource extraction activity.

Commissioner McKee of UT repeatedly expressed his communities frustration with the US Government for approving areas for energy development and doing all the necessary studies and then simply changing their minds after a new President was elected. The change chilled investment, led some workers to leave for other states, and has denied needed local job opportunities.

Whit Perryman, the owner of Vermeer Equipment of Texas-Louisiana and Vice President of Associated Equipment Distributors highlighted how energy production activities were benefiting landowners and creating jobs all over the country with equipment and service companies experiencing record years. In Texas, they have seen sales of equipment triple with 50 percent of that increase directly related to shale activities. Many of the other sales of equipment were made possible by land leases used by farmers to purchase new equipment. The Associated Equipment Distributors estimate that the total impact of shale development on their businesses at over $2.4 billion.

Mr. Puskarich a BBQ restaurant owner from the Marcellus region has seen his small town grow and thrive since energy production started with more job opportunities and better wages. He has seen his business grow as more workers come through, and as a result of more economic opportunities, wages in the service industry have gone up 65%.

Paul Battista, the Co-Founder SunnySide Supply Inc. , talked about the many benefits that energy development has had for his community, the main one being that his kids and those of families in their towns and communities do not have to leave to find work. They can stay or come back to highpaying rewarding careers either in the energy industry or the multiple service industries springing up around these activities.

Don Shilling, President of General Equipment & Supplies, Inc. said that they have seen similar improvements in their areas of operation where they have seen wages increase from $27 to $38/hr since 2009, and they have increased the size of their workforce from 125 to 220 during the same period. ND is growing rapidly and he urged support for Rep. Kevin Cramer’s bill H.R. 767.

Daniel Weiss, the Director of Climate Strategy at CAP said the Clean Economy sector created 13% more jobs than oil and gas production. The US needs more renewable power as a way of addressing the threat of climate change. He said that increased production on federal lands has already occurred compared to the Bush years and the fact we are producing more now while also experiencing historically high prices is continued proof that there is no statistical correlation between production and price.

Rep. Doug Lamborn (R-CO) expressed concerns about activities and policies coming out of Washington affecting, slowing, or even halting the economic development discussed by the panelists. Since much of the production has been on private lands, Members and citizens from Western states will be disproportionately impacted by policies determining access and development on federal land since the government owns such vast portions of land in many of those states.

Mr. Batista of Sunnyside Supplies agreed that he is concerned about potential slowing or halting of development. He said that when production begins there are a lot of growing pains with increased traffic and road use, but ultimately these can be resolved and the real benefits to the communities come a few years later through improved infrastructure. In his township, impact fees totaling $511,000 this year represented more than half of township’s budget. They will be using these funds for both short-term needs and long-term infrastructure. He mentioned how Range paved many of the township’s gravel roads which saves on costs over the long run for both the companies and the township

Rep. Holt made the point that the majority had stacked the panel as usual, but had inadvertently harmed their cause since production on federal lands and private lands is up and going in the right direction and things are good in the energy sector. If everything is going so well, why should we open up more land waive regulations or lower taxes—seems things are going pretty well.

Rep. John Fleming (R-LA) wanted to clarify the record about production levels from federal lands highlighting a CRS study showing that actual levels of production on federal lands is down. He said that new rules being considered for both public and private lands could harm the economic growth now going on. He also focused on permitting times getting worse not better even while new taxes on production are being sought. He took the position that this is something the government should be supporting, not standing in the way of.

Rep. Adam Lowenthal (D-CA) said that more needs to be done to address climate change and expressed support for taking tax breaks away from oil and gas companies and using it support additional R&D and deficit reduction.

Rep. Matt Cartwright (D-PA) asked about regulations for drilling and if this one industry should be exempted or treated differently than other businesses and industries. He said that federal regulations and state regulations must evolve to meet the challenges of increased production in different areas. He said that oil and gas producers should have to comply with the same storm water runoff rules other businesses have to, and he said he would be introducing legislation today calling for just such action—the FRESHER Act.

Rep. Steve Daines (R-MT) returned to concerns about production on public vs. private land since so much of the land up there is owned by the government. He said permits and investments tend to follow path of least resistance and expressed some concern that federal lands were less attractive investment opportunities as a result of policies and permitting delays. Commissioner McKee told the congressmen about how workers, investments and the associated economic activities left for ND when the federal government cancelled millions of acres of federal leases in UT.

Rep. Jared Huffman (D-CA) expressed interested in the water resources required for fracking operations and how these are regulated and addressing particularly in arid regions like his district. He asked about fracking fluid recycling, storage, and disposal. With the contests over water all over CA, there is a real need for planning to protect all users.

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