TRRC Commissioner Ryan Sitton | Russell T. Rudy Energy LLC
Last week Texas Railroad Commissioner Ryan Sitton addressed the March meeting of the Houston Association of Professional Landmen. His presentation, and answers to subsequent questions, proved quite interesting.
Sitton observed that the vast majority of those of us working in the energy industry are relatively uninvolved politically. While most of us vote, even in primaries, and some donate to candidates, relatively few ever get directly involved in a campaign. He feels that this works to the detriment of our industry.
The biggest regulatory hurdle facing oil and gas, in Sitton’s opinion, is whether the federal, state or local governments should regulate the industry. Not surprisingly, he feels that the states are best qualified to do so. He reasons that the states have the staff and expertise to effectively regulate energy in the best interest of all concerned. He feels the federal government is too far removed from oil and gas operations and tends to adopt a position of “one size fits all”. Conversely, local governments do not have the perspective and expertise to do an effective job.
While conservatives tend to oppose a larger role for the federal government and liberals endorse it, the state vs. local issue cuts across ideological and party lines. He cited the recent fracking referendum in Denton, Texas. Greg Abbot and Ryan Sitton won their races for governor and Railroad Commissioner respectively with 60% of the vote in Denton. Both are Republicans and very pro-energy. However, the fracking ban won by the same margin. This led to Sitton’s next point; education of and communication with the public is critical.
Sitton feels that if the electorate is aware of all the pros and cons of energy issues that we will win at the polls. However, he thinks the industry has done a poor job in this area. Intermittent efforts by individual companies will not get the job done. Sustained, industry wide, coordinated efforts would, however, be successful. He cited public outreach efforts in Colorado as an example.
Lifting the crude export ban would significantly benefit domestic oil and gas producers according to Sitton. U. S. refiners are geared for running heavy, sour crudes, much of which comes from overseas. However, the shale revolution has produced a glut of sweet, light crude which is ill suited for our domestic refineries. By lifting the crude export ban we could ship our sweet, light crude to other countries which would pay a premium for it, and everyone would benefit.
Finally, Sitton feels bullish about the long term prospects for domestic oil and gas producers. He reasons that Saudi Arabia currently benefits from production that was brought online when drilling and completion costs were much lower than those incurred by domestic shale operators. Consequently, the Saudis are exploiting this cost advantage to our detriment. However, Saudi Arabia’s fields are depleting and they now have to drill new wells and upgrade facilities at current, and higher, prices. Consequently, Sitton sees their cost advantage diminishing, and eventually disappearing.
