Obstacles In Store for Oil Industry
By: Mycah Glover
Updated: November 29, 2012
Permian Basin -- The Permian Basin has certainly enjoyed the benefits that come along with a booming oil economy this year. But we still faced some obstacles like the potential listing of the sand dune lizard. So what's in store for the near future?
"The oil and gas industry has got to be on our toes like never before," said Ben Sheppard, president of the Permian Basin Petroleum Association.
Sheppard says on the federal level, he feels at least ten agencies are looking at hydraulic fracturing regulations.
And then, there's the budget crisis.
"We believe there will be another attempt to get rid of the intangible drilling costs and percentage depletion allowances that operators have enjoyed for 70 to 80 years in an attempt to try and balance the budget," said Sheppard.
On the federal level, he's also concerned that new air quality guidelines could add costs to basic operations.
But there are also concerns on the state level.
"PBPA just submitted comments on November 20 to the Texas Railroad Commission on Rule 13," said Sheppard.
He says proposed changes to Rule 13 are an effort to update casing, cementing, drilling, and completion requirements for all wells in Texas. They are standards that have been in place for roughly 25 years.
While PBPA supports having current and updated rules that reflect new technology being utilized in the field today, Sheppard says, "We made some comments because the original draft had some major problems in it...some unworkable scenarios and requirements that were impossible for operators to meet."
For example, it could have added $250,000 to the cost of each well which would have a devastating impact on operators. But Sheppard remains optimistic.
"We anticipate that the Railroad Commission will take these comments into account before they issue their final comments sometime after the first of the year," said Sheppard.
Experts say the oil industry should also keep a close eye on oil prices. Some predict we could see prices tumble next year.
Although there are clearly some obstacles, Sheppard remains optimistic that 2013 will be another good year for the oil industry. In fact, he says production has been predicted to grow dramatically over the next several years.
For more energy news, follow Mycah Glover on Facebook and Twitter.
"The oil and gas industry has got to be on our toes like never before," said Ben Sheppard, president of the Permian Basin Petroleum Association.
Sheppard says on the federal level, he feels at least ten agencies are looking at hydraulic fracturing regulations.
And then, there's the budget crisis.
"We believe there will be another attempt to get rid of the intangible drilling costs and percentage depletion allowances that operators have enjoyed for 70 to 80 years in an attempt to try and balance the budget," said Sheppard.
On the federal level, he's also concerned that new air quality guidelines could add costs to basic operations.
But there are also concerns on the state level.
"PBPA just submitted comments on November 20 to the Texas Railroad Commission on Rule 13," said Sheppard.
He says proposed changes to Rule 13 are an effort to update casing, cementing, drilling, and completion requirements for all wells in Texas. They are standards that have been in place for roughly 25 years.
While PBPA supports having current and updated rules that reflect new technology being utilized in the field today, Sheppard says, "We made some comments because the original draft had some major problems in it...some unworkable scenarios and requirements that were impossible for operators to meet."
For example, it could have added $250,000 to the cost of each well which would have a devastating impact on operators. But Sheppard remains optimistic.
"We anticipate that the Railroad Commission will take these comments into account before they issue their final comments sometime after the first of the year," said Sheppard.
Experts say the oil industry should also keep a close eye on oil prices. Some predict we could see prices tumble next year.
Although there are clearly some obstacles, Sheppard remains optimistic that 2013 will be another good year for the oil industry. In fact, he says production has been predicted to grow dramatically over the next several years.
For more energy news, follow Mycah Glover on Facebook and Twitter.
