March 2021 Wellhead Magazine

Alliance legislative priorities highlighted by PRSA reforms.....8

Oklahoma drilling decrease tied to GPT increase.....17

Despite historic challenges, OERB makes positive impact.....35

MARCH 2021

Following the U.S. Supreme Court’s landmark decision in McGirt V. Oklahoma, The Petroleum Alliance was able to provide its members with actionable intelligence for their legal, tax and regulatory teams thanks to the volunteer efforts of the nation’s most respected law firms specializing in Indian law and energy. Their assistance made The Alliance’s response a nationwide example and saved our members countless man-hours.

To the legal firms that assisted us following the McGirt V. Oklahoma decision, thank you for supporting The Petroleum Alliance.

David D. Le Norman Chairman

TABLE OF CONTENTS

Brook A. Simmons President

11

Adria Berry Senior V.P. - Government Affairs & Public Policy

Legislative leaders can take action to spur capital investment in Oklahoma

Natalie Kinmonth Senior V.P. - Membership & Development

13

Cody Bannister Senior V.P. Communications

Energy committee chairmen focused on industry growth

Teresa Yoder V.P. - Finance

22

Ellis Ebel Director of Operations/HR

Construction workers and families left in limbo by Keystone decision

Lauren Burnett Director of Events Bud Ground Director of Regulatory Affairs Madison Miller Committee Coordinator & Policy Analyst Annie Parks Membership & Marketing Coordinator

27 Biden administration needs an energy reality check

31 Energy Index shows industry on the verge of entering recovery

Marcy Ayers Partners Program Consultant

36

Valerie Flaherty Receptionist

OERB environmental restoration program puts farmland back to use across Oklahoma

This newsletter is produced by

39 OERB shifts education efforts online during pandemic

500 N.E. 4th St. Oklahoma City, OK 73104 405-942-2334 contact@okpetro.com www.thepetroleumalliance.com

41 SOER puts focus on marginal production, improvement March | 3

A

LETTER

FROM

THE

PRESIDENT

B ROO K A . SIMMONS As this issue of Wellhead went to press, Oklahoma’s oil and gas industry was working around the clock in sub-freezing temperatures to provide life-saving natural gas for power generation and home heating. The failure of wind and solar as providers of intermittent power presents a teachable moment as their contributions to the Southwest Power Pool plummeted. “Today, we were lucky,” said OCC Public Utility Division Director Brandy Wreath on February 16 as he petitioned for a second emergency order. “We’ve been running around 12% production by wind today, which has helped fill in that gap for other generating resources that weren’t able to come online, but the projection from SPP tomorrow is near zero on wind production… If that goes off tomorrow and we get that wet pack snow that they are talking about we could experience additional freeze offs.” This teachable moment, if we are wise enough to learn from it, is that humans need reliable, affordable baseload power provided by hydrocarbons. According to EIA, Oklahoma ranks second only to Texas in total electricity net generation from wind and is third in wind’s share of state generation after Iowa and Kansas. Wind supplied nearly 35% of Oklahoma’s net generation in 2019. But the wind doesn’t always blow and the sun doesn’t always shine. Renewables are unreliable. When they fail to deliver the necessary power to the grid, whether in California or Texas, humans most frequently burn hydrocarbon molecules to spin turbines and liberate electrons to make modern life possible. Lives have been lost in this inhospitable Arctic blast due to poor public policy decisions and the embrace of a fantastical quasi-religious quest to control the weather. Electrons are not moral or immoral regardless of how they were moved into transmission lines. However, public policy decisions can be. This issue of Wellhead is heavy on public policy. Pages 8-9 relay The Alliance’s legislative policies and bills to watch during the 2021 legislative session. Industry allies Senator Mark Allen, Senate Energy Committee chairman, and Representative Brad Boles, House Energy and Natural Resources Committee chairman, explain their priorities on pages 13 and 15. We look back to analyze the impact of 2018’s gross production tax increase on the industry and state as compared to peer competitors. Spoiler alert: Not good! City of Lindsay officials share the impact of the oil and gas downturn in their community on page 19 and we feature a family now left in limbo by President Biden’s decision to cancel Keystone XL pipeline construction on page 22. But there is good news! This issue showcases the great work of OERB in fulfilling its mission — from reclamation work in Osage and Kay counties to teacher training in the pandemic and SOER’s efforts to educate marginal well operators with virtual workshops and stay connected through a new app. Your voluntary contributions to OERB are paying dividends across the state!

Stay warm. Be well. Read on.

March | 5

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STATE ROUNDUP 1 | Texas Texas governments collect $13.9B from oil and gas industry. Texas’ oil and natural gas industry paid $13.9 billion in taxes and state royalties in Fiscal Year 2020, the Texas Oil and Gas Association (TXOGA) reported Monday. The fiscal 2020 figure represents a nearly 15-percent decrease year-on-year in industry-generated funds that support Texas schools, teachers, roads, infrastructure and various services. By comparison, TXOGA reported last January that the industry paid a record-setting $16.3 billion in taxes and royalties in 2019.

Permanent School Fund (PSF) and Permanent University Fund (PUF) – received 99 percent of Texas’ oil and gas royalties in 2020. The PSF and PUF received $942 million and $771 million, respectively, the organization added. Moreover, TXOGA stated that local school districts garnered more than $2 billion last year from property taxes from mineral properties producing oil and natural gas, pipelines and gas utilities. Additionally, TXOGA pointed out that Texas counties collected $688.4 million from oil and gas property taxes last year and the state’s Economic Stabilization Fund – also known as the “Rainy Day Fund” – received $1.657 billion from taxes on the industry.

“Even in an extremely difficult year, the Texas oil and natural gas industry continues to contribute tremendously to state and local tax coffers, while fortifying our energy security and leading the way in innovation and investment that is advancing environmental progress,” remarked TXOGA President Todd Staples in a written statement emailed to Rigzone. “The ongoing recovery of the oil and natural gas industry is essential to the state’s continuing economic improvement.”

Originally published by rigzone.com

Staples also pointed out the COVID-19 pandemic has underscored the irreplaceability of oil and gas.

Rounds heads a state association of school administrators. He knows that New Mexico - home to the country’s richest oil fields on federal lands depends heavily on drilling revenues to finance its struggling public schools. And budgets have already taken a hit from falling crude prices as the coronavirus pandemic sapped global fuel demand.

“While oil prices plummeted in the wake of the pandemic, the need for products made from oil and natural gas skyrocketed,” he continued. “Nearly every in-demand product we need to be safe, to save lives and to power our economy – from face shields and hand sanitizers to high-speed internet connections and computers – is made possible by oil and natural gas.” TXOGA noted that public education – via the state’s 6 | thepetroleumalliance.com

2 | New Mexico Biden drilling ban forces Democratic-led New Mexico to reckon with oil dependence. When Stan Rounds heard about U.S. President Joe Biden’s plans to suspend new drilling on federal lands to fight climate change, he worried about the education budget.

“While you appreciate the green policies for environmental issues, you can’t strangulate the revenue streams in New Mexico,” said Rounds, executive

director of the New Mexico Coalition of Educational Leaders. “So we’re very concerned.” New Mexico’s money troubles reflect the dangers facing oil-dependent economies around the globe at a time when volatile petroleum prices and rising concern about climate change pushes governments to transition to cleaner energy sources. Democratic politicians in a slew of oil-dependent states are being forced to reckon with a clash of progressive ideals: Their support for Biden’s plan to fight global warming could damage the fossil-fuel economy that has been a huge source of revenue for government programs. New Mexico, a Democratic-led state, is the biggest beneficiary of revenues from drilling on federal lands. Nearly a third of the state’s land is owned by the U.S. government and much of it overlies the Permian Basin, the world’s most productive oil field. Revenues from drilling on federal lands there soared 85% over the last decade to $707 million in 2020 - making up about a tenth of the state’s total budget. Much of that money goes to its schools. Originally published by Reuters.

3 | Ohio The Utica Shale: Ohio’s under-appreciated economic machine The Utica Shale has never really gotten the level of attention and respect it probably deserves as a major U.S. resource of natural gas and natural gas liquids. “We sometimes feel like the Utica is kind of the ‘redheaded stepchild’ of the shale industry,” said Mike Chadsey, Director of Public Relations for the Ohio Oil and Gas Association. The Utica’s proximity to and co-existence with the immense Marcellus Shale natural gas formation has a great deal to do with its not getting so much attention for being such a major resource play. But for Ohio, the Utica has been the main driver of a renaissance of an industry that started there decades before the famous Spindletop discovery kicked off the oil business in Texas in 1901. Long before then, Cleveland had become a major commerce center for the early U.S. oil industry, with the state home to one the largest refining centers on earth.

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AT THE CAPITOL

ON THE AGENDA Petroleum Alliance legislative priorities highlighted by PRSA reforms Lawmakers have returned to the state capitol, and with them comes a greater willingness to support the state’s defining industry. Oklahoma’s leading lawmakers, including the Speaker of the House, President Pro Tempore of the Senate and even the Governor, have all indicated they are ready and able to offer assistance to the oil and natural gas industry as it weathers a historic downturn. While lawmakers may be limited in what that support would include thanks to a pandemic-hampered budget, the Petroleum Alliance of Oklahoma Executive Committee and Board of Directors approved a legislative agenda in January highlighted by reforms to the Production Revenues Standard Act (PRSA). “Oklahoma’s economic cycles are highly influenced by activity in the oil and gas sector, and the industry

8 | thepetroleumalliance.com

serves as the largest source of private capital spending in the state,” Petroleum Alliance Senior Vice President of Governmental Affairs and Public Policy Adria Berry said. “Modernizing the PRSA encourages investment in the state’s historic oilfields and drives an increase in employment, capital expenditures and tax revenue.” Significant PRSA reforms will be no easy task. The issue has been broached multiple time in the past decade, most notably in 2018 when the industry was successful in modifying the interest rate for unmarketable titles from a 6% compound interest that was set in 1983 to a market-based interest rate. It was one small step to more comprehensive reforms that must be negotiated at the capitol between industry, mineral owners and legislators. “The good news is legislative leaders have indicated

LEGISLATION TO WATCH

they are willing to help our industry,” Berry said. And the willingness to assist an industry in need starts at the top. In his remarks to the Oklahoma legislature during his State of the State address, Gov. Kevin Stitt vowed to support the state’s oil and gas industry, saying the legislature must protect the state’s defining industry from “radical liberals in Washington, D.C.” One week later, the state’s top elected official issued an executive order calling President Biden’s initial actions in office an attack on American oil and natural gas producing states like Oklahoma. Stitt’s order highlights Oklahoma’s global role in energy production and American energy independence and vows to challenge any actions by the federal government that would diminish or destroy Oklahoma’s ability to responsibly develop the state’s oil and natural gas resources “Energy production is the backbone of Oklahoma’s economy,” said Gov. Stitt. “My executive order sends a clear message to the Biden Administration that threatening to destroy Oklahoma jobs and our constitutional ability to develop our oil and gas is unacceptable. We will not be passive in responding to systematic attacks on Oklahoma values.” Petroleum Alliance President Brook A. Simmons said Stitt’s actions show the necessary leadership to move Oklahoma forward with policies that boost our state’s highly-specialized economy, cut unnecessary red tape and eliminate barriers to investment “The oil and natural gas industry is the bedrock of Oklahoma’s economy. Efforts from Washington, D.C., to stymie and suppress the ability of Oklahoma companies to explore for, produce, transport and refine oil and natural gas resources here and across the nation only undermines our state’s economic recovery,” Simmons said. “The Petroleum Alliance of Oklahoma applauds the efforts of Gov. Kevin Stitt to ensure our great industry continues to produce the affordable, reliable energy our friends and neighbors need to power their lives.”

More than 3,000 bills were filed before the start of the 2021 legislative session, which promises to be a busy one after last year’s abbreviated session meant many legislative proposals weren’t fully considered. The Petroleum Alliance’s Legislative Committee and staff have reviewed every bill filed and have compiled a list of proposed legislation our organization will support and the bills we will oppose on behalf of our member companies. A sampling of the proposed legislation The Petroleum Alliance of Oklahoma supports includes: Legislation that encourages greater development of Oklahoma’s oil and natural gas resources •

HB2029 and SB1003 by Rep. O’Donnell and Sen. Taylor – Vehicles for reforms to the Production Revenue Standards Act.

Legislation that protects oil and natural gas assets •

HB2028 by Rep. O’Donnell – Pipeline Safety omnibus clean-up bill

Legislation that protects and strengthens Oklahoma’s business environment and all tax incentives, including but not limited to ad valorem, income, manufacturing, sales & use, and severance taxes for the oil & gas industry. •

HB1833 & SB467 by Rep. McBride and Sen. Daniels – Prohibits action for nuisance to be brought against any oil or gas operation which is following laws and guidelines.

•

SB939 by Sen. Taylor and Rep. Pfeiffer – Exempts critical infrastructure facilities from being considered a nuisance when certain acts are within compliance and consistent with governmental rules, guidelines or laws applicable to their sector.

•

HB1060 & SB356 by Rep. Boles and Sen. Paxton – Exempts the transfer of property between wholly-owned subsidiary companies and their parent companies from certain sales taxes.

•

SB84 by Sen. Hall – Directs the Employment Security Commission to review the unemployment compensation structure in the state, develop a method to address local economic conditions and to make recommendations on the Unemployment Insurance Trust Fund.

•

SB788 by Sen. Leewright – Defines the state average unemployment rate for the purpose of calculating the maximum number of weeks unemployment benefits may be paid.

•

SB324 by Sen. Daniels – Creates a “substantial certainty” test for workers’ compensation claims that could potentially be considered intentional torts.

•

HB2234 by Rep. Hilbert – Creates the Driving on Road Infrastructure with Vehicles of Electricity (DRIVE) Act which provides for a tax on electricity used to charge electric motor vehicles and establishes regulations for charging stations and electric vehicles.

•

HB2775 by Rep. Pfeiffer – Requires cost assessments of property for ad valorem taxes to include deterioration and depreciation and other losses of value that stem from factors external to the property.

•

SB498 by Sen. Thompson – Waives certain payroll requirements for tax year 2021 for manufacturing facilities currently receiving related ad valorem exemptions as long as other statutory requirements are met. March | 9

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AT THE CAPITOL

ENCOURAGING INVESTMENT Legislative leaders can take action to spur capital investment in Oklahoma oil and gas industry By Adria G. Berry Now is the time for action. Our state lost its competitive advantage in attracting investment capital to our historic oilfields when the oil and natural gas industry bore the brunt of a budget-stabilizing tax increase in 2018. When the gross production tax on new wells increased from 2% to 5%, the number of drilling rigs fell almost immediately. In 2019, Oklahoma saw a precipitous decline in drilling activity, dropping from 132 to 52 active drilling rigs in the state. Other similar energy-producing states did not see such a decline, with our energy peers New Mexico and North Dakota losing just five drilling rigs combined in the same time frame. When the COVID-19 pandemic limited the movement of Americans and drove down demand for petroleum products, it was a double whammy for Oklahoma’s bedrock industry. Drilling activity fell to record lows, and the number of active drilling rigs could be counted on two hands. Today, the oil and natural gas industry is poised to launch a slow, steady march back to where it once was, but it will require assistance from state policy makers to do so. The Biden administration’s attack on the petroleum industry has paved a new path forward for Oklahoma’s economy. While the actions of the new president have intent to harm the nation’s oil and natural gas industry as a whole, Oklahoma has the potential to serve as an oil and gas haven. Because the president’s actions will largely be relegated to limiting oil and gas activity on public lands, states like Oklahoma with negligible amounts of federal lands could be on the receiving end of uprooted investment capital from oil and natural gas companies across the nation. Lawmakers have an opportunity to let companies know that Oklahoma is a safe and stable place to invest capital. By creating good, sound policy that aids companies in their decision to do business in Oklahoma, elected officials will help drive an increase in employment, capital investment and tax revenue for the state.

“

By creating good, sound policy that aids companies in their decision to do business in Oklahoma, elected officials will help drive an increase in employment, capital investment and tax revenue for the state.

The message is clear: It’s time to encourage capital investment in Oklahoma oil and natural gas again. — Adria G. Berry is senior vice president of governmental affairs and public policy for The Petroleum Alliance of Oklahoma.

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AT THE CAPITOL

Gov. Kevin Stitt signs an executive order to protect Oklahoma’s oil and gas industry from federal overreach. Joining Stitt at the signing were, from left: Sen. Zack Taylor, R-Seminole, Senate Energy Committee Vice Chair; Secretary of Energy and Environment Ken Wagner; Sen. Mark Allen, R- Spiro, Senate Energy Committee Chair; Rep. Brad Boles, R-Marlow, House Energy & Natural Resources Committee Chair; Rep. Anthony Moore, R-Clinton, House Energy & Natural Resources Committee Vice Chair.

‘A FRIEND IN THE LEGISLATURE’ Energy committee chairmen focused on industry growth Rep. Brad Boles, R-Marlow, began his tenure as chairman of the House Energy and Natural Resources Committee in February, leading the committee that will advance or deflect the majority of proposed legislation that impacts Oklahoma’s oil and natural gas industry. Across the hall, Sen. Mark Allen returns to his seat as chairman of the Senate Energy Committee, where he will spearhead the upper chamber’s energy-related efforts. This month, the two energy committee leaders answer three questions from The Petroleum Alliance of Oklahoma. What are your predictions for this legislative session, especially in regards to legislation that would impact the oil and natural gas industry. Boles: “First of all, we want to make sure the Oklahoma oil and natural gas industry knows that they have a friend in the legislature. I know there’s a lot of attention on the federal side, so we want our oil and gas companies and employees in the industry here in

Oklahoma to know we’re going to do everything we can to combat the federal regulations. “Number two, Oklahoma is already a pro-energy state, but what can we do to continue that momentum and what can we do to help the current companies grow and also bring in investment from outside? “Lastly, the bill I’m running gives cities some of the gross production tax. Counties are getting it. Schools are getting it. The state gets a lot of it. We’d like to reapportion some of it to go to local municipalities. With a lot of activity, there’s road issues that happen, and I think it’s only fair to help those cities recoup their costs in repairing roads due to extra oilfield traffic. It helps the industry, because in a lot of communities oil and gas may not have the best reputation because of road issues. It’s not due to lack of taxes they’re paying, it’s due to a lack of how those taxes are being applied.” Allen: “I’m hoping we can lower the GPT to entice companies to produce Oklahoma oil before they Continued on page 15

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AT THE CAPITOL

Continued from page 13 produce somebody else’s. I’ve got a bill to lower it 1%. I don’t know if it will get heard, but I’ve got a bill to do it. “Zach Taylor and I have talked about tying the GPT to sales tax. If the sales tax is 5%, GPT should be 5%. “If there are other states with a lower GPT than ours, they’re going to turn their valves on before they turn ours on.” You have a working history in the oil and gas industry. How does your professional experience help you in crafting and advancing legislation for the energy industry? Allen: “It has a huge effect. We’ve been in business for 56 years in the service industry. We know what makes Oklahoma go, and that’s drilling rigs. It’s a job creator. It’s not just the oil industry that flourishes. It’s restaurants, hotels and motels, grocery stores, car dealers, tire dealers. It’s everybody. Everybody prospers from a positive oil market.” Boles: “I’ve got a 14-year history in the oil and gas industry through manufacturing. Our company manufactures equipment for the service sector cementing equipment, pumping equipment, acid equipment. I know how volatile the industry can be based on commodity prices that are controlled by external forces outside of Oklahoma. The people that say “we have oil and gas in Oklahoma and as long as we have it, they’re going to drill it,” that’s not always the case. We have to be careful in our policies and the ramifications they could have. Oil and gas is the biggest contributor to our budget. It doesn’t just affect industry, it affects our schools our cities and definitely our state.”

“

It’s not just the oil industry that flourishes. It’s restaurants, hotels and motels, grocery stores, car dealers, tire dealers. It’s everybody. Everybody prospers from a positive oil market. — Sen. Mark Allen

As chair of the your committee, how do you choose which bills are heard in committee and which ones aren’t? Boles: “I review each bill myself, meet with my vice chairman to go over the policies and then I meet with stakeholders within the industry to get their feedback on how it would affect them. I try to get as many perspectives as possible so we don’t have any unintended consequences. There’s wisdom in counsel.” Allen: “If it’s going to put more regulations on business, it’s not going to get a hearing. There were probably 28 bills filed, and we’ll probably hear maybe 14. I worked with my vice chair. We went through them all and picked the bills that we would hear.”

“

We want to make sure the Oklahoma oil and natural gas industry knows that they have a friend in the legislature. — Rep. Brad Boles

March | 15

AT THE CAPITOL

OKLAHOMA DRILLING DECREASE TIED TO INDUSTRY TAX INCREASE The barometer of Oklahoma’s oil and natural gas industry is the drilling rig. The more rigs dotting the Oklahoma landscape, the more vibrant the state’s defining industry and overall economy.

GPT on new wells increased from 2 to 5 %

Oklahoma, however, has seen a precipitous decline in drilling activity, and the decreased exploration activity the state has seen began at the end of 2018, when the state’s 2% gross production tax rate for new wells was increased to 5%. In 2018, Oklahoma lawmakers increased the tax as part of a broader tax-increase package to stabilize the state budget and fund a pay raise for the state’s public school teachers. But no other industry bore as large a tax burden increase as the oil and gas industry, and the GPT increase marked the largest single tax increase on the industry in the history of the state.

stymied energy markets and sent oil prices to historic lows, demand for drilling activity fell as well, and Oklahoma rig activity fell another 75% from 52 to 13 rigs.

The oil and natural gas industry warned then that the tax increase would erode the economic advantages to drill new wells that had helped fuel the state’s new millennium oil boom. Those warnings fell on deaf ears, and the impact was immediate.

The 2020 decrease in drilling activity is on par with other energy producing states, but the double whammy decrease seen in 2019 and 2020 in Oklahoma has stalled the state’s economy, reduced job gains and limited state tax receipts.

For 2019 Oklahoma stood alone in the decline in drilling activity when compared to other similar energy producing states. Throughout that year, Oklahoma’s peer states saw minimal declines in state rig counts, with New Mexico and North Dakota losing just five drilling rigs combined. In Oklahoma, however, during that same time frame, rig activity fell 61%, dropping from 132 to 52 rigs.

“It’s clear the increase in the state’s gross production tax had a chilling effect on our state’s defining industry,” Petroleum Alliance President Brook A. Simmons said. “Oklahoma led losses among peer oil and natural gas states in 2019 and 2020. We fell farther and faster. The state’s economy and the state’s oil and natural gas industry are intertwined. Several factors — among them public policy — will play into the pace of the industry’s recovery.”

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March | 17

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ECONOMY

Downtown Lindsay, in the heart of the SCOOP, is dependent on a vibrant oil and gas industry. With Oklahoma’s rig count still in the teens, the influx of oilfield workers that benefited the community in years past has dwindled significantly.

FEELING THE PAIN In rural Oklahoma, oilfield communities see the ups and downs of oil and gas industry first-hand by Heidi Brandes

oilfield workers, which also leads to additional hires.

When times are good, they are really good. When times are bad, everyone feels the pain.

But when the downtimes hit, cities like Lindsay feel the cut more than larger metropolitan areas in the state.

For smaller Oklahoma communities like Lindsay in Garvin County, the ebbs and flows of the oil and gas industry in Oklahoma directly affects how successful the town is. When oil and gas production is up, Lindsay’s 2,500 population can swell to up to 10,000 with an influx of field workers and oil and gas production employment.

“The oil and natural gas industry is very impactful because of our sales tax. Because oil is down right now, we have had to cut our city budget big time,” said Kathy Hammans, Lindsay city clerk.

The economic impact of Oklahoma’s oil and natural gas industry doesn’t just affect the sales tax and water sales the town generates from drilling; it affects almost every aspect of the economy from mom-and-pop cafes to big box retailers like Walmart. In the boom times, that flurry of oil and natural gas activity equals a financial boom to the City of Lindsay, which lies in the heart of the SCOOP. Thanks to the influx of tax collections, the city replaced an aging water treatment plant with a reverse-osmosis treatment facility and used the former plant as a holding tank for water from the city’s wells earmarked for industrial use. The sale of that water, primarily for use in the oilfield, generated an extra $4 million for the city in addition to a monthly sales and use tax increase of $100,000 per month, a direct result of the increased number of people working in and around the city. Rental property throughout the city also sees a boost, as demand for housing increases, and those momand-pop restaurants and stores rely on the hunger of

“We had to cut all capital outlay from last year’s budget because we were down so much, so there were no new vehicles and we had to limit doing any roads. We are in need of a new electric plant and substation, and that has been put off for a year.” Hammans said that the OPEC price war of 2020 and the COVID-19 pandemic led to even more insecurity in the oil and gas industry in Lindsay. “The oil and gas industry impacts everything we do here because the businesses in town are not seeing the clientele or the customers that come in from the oil industry,” she said. “When oil went down with COVID and everything else last year, everything went down. We are hearing that things are starting to come back up and that we will see an increase in our sales tax again. We really hope that happens.” While the biggest employers are the City of Lindsay and Lindsay Public Schools, many of the residents of Lindsay also work in or in association with the oil and gas industry. On average, roughly 200 oil and natural gas related businesses operate in and around Lindsay. Continued on page 21 March | 19

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Continued from page 19 “Many people are not working because of the oil industry drop, and we’ve had a hard time collecting utility bills because of it. We had some people who were several thousands of dollars in arrears for several months,” said Hammans. “Basically we’ve become a collection agency. It’s very tough because we all know it’s hard right now. So it’s affecting everything.” THE ECONOMIC IMPACTS The Oklahoma Energy Resources Board, in conjunction with Steven C. Agee Economic Research and Policy Institute at Oklahoma City University, released an economic impact study for Oklahoma’s oil and natural gas industry that shows the industry in 2014. The study evaluated the size, composition and economic impact of the oil and natural gas industry on the state. That 2014 report showed that the industry directly employed 110,861 workers and accounts for $27.1 billion in gross state product. It supported $15.5 billion in employee and self-employed earnings. The indirect impacts were even more impressive. Those indirect impacts equaled employment equivalent to 465,616 full and part-time jobs, $65 billion in gross state product, and $48.1 billion in employee/selfemployed earnings. In addition, the state added just over 60,000 private sector jobs between 2010 and 2012, and nearly 25 percent of those came directly from exploration and production operations. The State Chamber of Oklahoma released another Economic Impact Of the Oil and Gas Industry report in 2016. That report showed that in 2015, the oil and gas industry employed 53,500 Oklahomans who earned $5.6 billion, and 95,000 Oklahomans earned $10 billion in self-employment income from oil and gas activity In total, nearly 150,000 Oklahomans were either wage and salary workers or self-employed in the oil and gas sector, and household earnings ($15.6 billion) from the oil and gas sector totaled 13.2% of total state earnings. Average wages in the oil and gas sector ($104,000) were more than double the state average ($44,178). The spillover benefits to cities like Lindsay were just as impressive. Activity in the industry supports an estimated $28.6 billion in additional spillover output of goods and services in other industry sectors statewide. In total, the oil and gas industry supported an estimated $65.7 billion in total state output, and direct earnings in the industry supported an additional $17.2 billion in estimated spillover earnings statewide. The situation looks different in FY 2020/2021. In Fiscal Year 2015-2016, Lindsay’s sales tax collections equaled $2,698,498.40. In 2019-2020, the sales tax collections equaled $2,987,939.22. However, so far in FY 2020-2021, those collections dropped to $1,317,956.79. The city’s use tax collections also dropped from the FY 2019-20’s $334,854.25 to this year’s $181,353. “The oil and gas industry is sometimes our bread and butter, but we’re looking at ways to be more sustainable without the oil industry,” Hammans said.

“

The housing and hotel market, the restaurant market and other businesses like gas stations are all affected when we have a downturn like this in the economy in oil and gas. They all feel the hit.

“The oil industry is a big part of Lindsay. I’ve been here for 33 years now, and I’ve seen it go up and down about every five years, and it doesn’t go completely bust. There are good companies that are still stable.” Dr. Russell Evans, professor of economics at Oklahoma City University in the Meinders School of Business, said Oklahoma’s oil and gas industry was already headed into a mild recession before the price war and pandemic of 2020 hit. “In late 2018, as we moved through 2019, we were really moving into pretty subdued oil and gas activity, and the oil and gas contraction was leading Oklahoma into a very mild recession in 2020 when the coronavirus hit,” he said. That recession affects employment, but Evans said the continued advancement in technology also means less jobs. “The industry continues to get more and more efficient and capital intensive. In other words, as we go through time, the industry is able to produce more and more barrels of oil using fewer workers,” he said. “What that means is that every time we go through one of these contractionary cycles, we don’t ever really get back to our previous employment peak. Even with a recovery, we don’t ever have back all of the jobs that we lost. It seems like we’re down about 20,000 or 25,000 jobs in just payroll jobs and exploration and production.” For cities like Lindsay, which relies heavily on workers and companies spending money in the area, that job loss means even more bad news. “There are so many other kinds of auxiliary sectors that benefit from oil and gas,” Evans said. “Say there’s a big play going. The housing and hotel market, the restaurant market and other businesses like gas stations are all affected when we have a downturn like this in the economy in oil and gas. They all feel the hit.” Not all little towns can survive if oil and gas goes away. For the communities that rely on the employment and money from the industry, oil and gas is a lifeline to continued prosperity. “I think that as we go through the next generation of Oklahomans, we’ll see some rural areas that find a path forward and some where the struggle gets harder and harder every passing generation,” Evans said. “I think our small communities really need to think about how to leverage our oil and gas good times towards a sustainable economic future.” March | 21

IN WASHINGTON

The Zwall family: Richard, Paige, sons Ethan and Gabriel. The Zwalls travel across the country together from one pipeline job to the next.

‘IT’S DEVASTATING’ Construction workers and their families left in limbo by Biden’s Keystone XL decision SIOUX CITY, South Dakota — The Zwall family goes where the job takes them. Richard, his wife Paige, and their two sons Ethan and Gabriel, have spent the better part of a decade crisscrossing the country in their camper to work on America’s pipelines. It’s an unconventional lifestyle but one that works for them. They get to give their children a “hands-on history lesson” of the United States and show them that grit and hard work pay off. The 37-year-old patriarch got started in the pipeline business after Paige’s grandfather helped him land his first job. He’s been hooked ever since. In 2009, Richard Zwall worked on the first Keystone Pipeline project. He started off in South Dakota, made his way to Oklahoma, and finished the gig in Texas.

22 | thepetroleumalliance.com

Eleven years later, he was back and among thousands of skilled workers ready to help build the Keystone XL pipeline. Like so many others, he was drawn in by a steady paycheck, good benefits, and a pension. But all of that came crashing down on Jan. 20 when President Biden signed an executive order that revoked federal permits for the $8 billion cross-border venture. Richard Zwall told the Washington Examiner there had been rumors the new president would shut down the project but that some had held out hope because Biden campaigned on creating jobs. “Democrats are supposed to support the union,” he said. “One minute he would tell us, ‘I’m not going to [cancel the pipeline], and then he did.” If plans had stayed in place, the Keystone XL pipeline would have carried Canadian crude oil from Alberta to

Steele City, Nebraska. The pipeline would connect two points of an existing pipeline, also called Keystone, which carries oil from Canada to Gulf Coast oil refineries. Construction of the Keystone XL pipeline began in 2020 after a decade of protests from environmental activists, Native Americans, and ranchers along its proposed route. They’ve raised concerns about climate change and said oil spills could contaminate the land and pollute drinking water. Most recently, opponents said that pipeline workers living in close quarters could contract COVID-19 and spread it to nearby communities and reservations. Proponents of the pipeline have touted the number of jobs it would create and claim the pipeline would help the U.S. become less dependent on overseas oil. In 2015, President Barack Obama rejected the project on environmental grounds. President Donald Trump revived it as one of his first actions in office, only to have Biden reverse it on his first day in the White House. “Once Joe sat down with his stack of executive orders, and he got to the KXL pipeline, that was it,” Peter Bardeson, business manager for the Laborers, Local 620 union in Sioux Falls, told the Washington Examiner. “Our guys were told by the contractors on site that Joe killed the job.” Bardeson, who has been involved with three crosscountry pipelines, had about 60 laborers working at three of the six pump sites in South Dakota when the news of the cancellation hit. Local 620 members began working on location in June and were expected to

stay on the job until March. Bardeson estimates that the cancellation of the pipeline cost the union 60,000 hours and $1.6 million in lost wages. “We fought tooth and nail with Barack Obama to build this pipeline,” Bardeson said. “We went to all kinds of town meetings, hearings, and spoke on behalf of the pipeline, what was at stake, which means getting off foreign oil from countries that are anti-American, countries we have been fighting with for years. We were working toward being more self-sufficient.” He said things looked up with Trump in office but acknowledged that the former president was a lightning rod for controversy and feared that opposition to Trump would translate to disaster for the pipeline. “They hate Donald Trump. People hate Donald Trump. Democrats hate Donald Trump. But Donald Trump did a Continued on page 25

“

Once Joe sat down with his stack of executive orders, and he got to the KXL pipeline, that was it. Our guys were told by the contractors on site that Joe killed the job.

March | 23

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IN WASHINGTON

Continued from page 23 lot for America and for us,” Bardeson said. “He’s a guy who wasn’t a politician, and they hated him for it.” Bardeson believes scrapping the pipeline might have been part of a political vendetta but says Washington needs to wake up and take a hard look at the real-life consequences of the decision. He’s also tired of the condescending talk coming out of Washington about laid-off pipeline workers switching to solar jobs. Not only is it a different skill set, but carpenters, for example, spend a lot of their own money purchasing specialized hand tools and other items they need for the job. “A good pair of boots Keystone XL pipeline workers work to complete a pump station in South Dakota. will set you back $200,” Bardeson said. “You can’t spend $50 for a pair of cleared out, and Cox admits that if she didn’t have a boots to stand in all day, two-income household, things would be pretty dire. 10 to 12 hours a day, six to seven days a week, and be comfortable. Those are the tools of our trade, so we Richard Zwall said his decade on the road has taught have to buy quality, and that costs money.” him how to budget for the lean times but also said he still has payments to make on his truck. And money, for a lot of ex-pipeline folks, is much tighter these days. When the Washington Examiner asked people who worked on the pipeline, or in a job that supported Bardeson recalled one union member recently pipeline workers, if they thought the Keystone XL was purchasing his first home, only to find out a few days done for good, the majority said no. later that he was out of a job. Another worker put down a chunk of change on a new car, thinking he “I’m quite certain this project is on pause, not stop,” would be financially solvent. Philip Mayor Michael Vetter told the Washington Examiner. “It has dragged out for several years, “It was the greatest thing watching people get the each time, beginning and stopping on the whims American dream, but now, it’s devastating,” he said. of individual presidents or judges. And each time, The pain isn’t limited to the men and women working thousands of American jobs hanging in the balance. A on the pipeline. It is spread out to the communities decision of finality is needed, one way or the other.” and small business owners who took out loans and Bardeson said the president of his union would be invested based on the promise that the pipeline would meeting with members of the Biden administration bring in revenue. soon. “My husband and I are in debt more than I’d like,” “We can’t just let the president sign something and kill Laurie Cox told the Washington Examiner. Cox it,” he said. “We can’t roll over and play dead. We need purchased a two-story hotel in Midland, South Dakota, to at least let him see that he’s killing.” six months ago that, up until recently, housed welders, carpenters, and union laborers. The majority have

March | 25

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IN WASHINGTON

BIDEN ADMINISTRATION NEEDS AN ENERGY REALITY CHECK BY BERNARD L. WEINSTEIN During the first week of his presidency, Joe Biden signed two significant executive orders to help burnish his environment bona fides. On day one, he revoked the permit for the Keystone XL pipeline and, a week later, he declared a one-year moratorium on new leases for oil and gas drilling and fracking on federal lands and waters. Building the Keystone pipeline would have supported more than 1,000 high-wage American jobs and generated about $8 billion of much-needed economic activity during this pandemic-induced recession. Instead, the canceled pipeline will generate 48,000 tons of scrap metal that may fetch $51 million. Ironically, the demise of Keystone XL, after a 12-year battle, will do little or nothing to reduce fossil fuel consumption or greenhouse gas emissions. It doesn’t take gasoline vehicles off the road or add renewable energy sources to the power grid. And because Canada is the world’s fourth-largest oil exporter and petroleum is its No. 1 export, our northern neighbor will simply seek new outlets and markets for its Alberta oil through existing and planned pipelines to its West and East coasts while shipping more crude to the U.S. via rail tanker car. Similarly, it’s not evident the lease moratorium on federal lands and waters will have any measurable environmental benefits. Last year, despite the pandemic, the U.S. remained the world’s largest oilproducing nation while, for the first time in 71 years, exporting more crude oil and petroleum products than we imported. If domestic production is constrained because of the drilling ban, we will simply revert to being a net importer, consuming more oil from OPEC and other less-reliable suppliers with all the attendant energy security and balance-of-trade issues that entails. Indeed, a recent study commissioned by the American Petroleum Institute estimates that a leasing and development ban on public lands and waters will increase imports by 2 million barrels per day.

Federal lands account for about 22 percent of U.S. oil production and 12 percent of natural gas production. But in some states, the percentage is much higher. For example, 52 percent of New Mexico’s oil production and 67 percent of its natural gas occurs on federal lands. Most oil and gas production in Colorado, Utah and Wyoming also takes place on federal government property. According to the Bureau of Land Management, in 2019 oil and gas operations in western states generated $76 billion in economic output and supported 300,000 jobs. A study by the University of Wyoming estimates potential tax losses of more than $110 billion in eight western states from a leasing moratorium. New Mexico, the fourth-poorest state in the nation as measured by median household income, could suffer the most in terms of employment and revenues losses. Though domestic oil consumption may have peaked, that is not the case for natural gas, which is being substituted for coal in power generation and is largely responsible for the huge drop in greenhouse gas emissions in recent years. Over the past decade, U.S. energy companies have invested heavily in the infrastructure to produce, process and transport oil, natural gas and petroleum products. We have become a major exporter of oil and have the potential to become the world’s top supplier of clean liquefied natural gas. The Biden administration needs an energy reality check. Though renewables such as wind and solar are making inroads, oil and gas will remain America’s — and the world’s — primary energy sources for at least the next 30 years. What’s more, the global economy will recover from the pandemic, as will the demand for oil and natural gas. Canceling pipelines and banning oil and gas production on federal lands simply cedes market share to other countries while doing nothing to combat climate change. Bernard L. Weinstein recently retired as associate director of the Maguire Energy Institute at Southern Methodist University. He is also an emeritus professor of applied economics at the University of North Texas.

It’s even possible that putting restrictions on domestic oil and gas production will lead to greater use of coal for power generation, thereby increasing carbon emissions. (Perhaps not surprisingly, the moratorium does not apply to coal resources on federal lands.) March | 27

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LEGAL

LITTLE WORDS, BIG MEANINGS Seminole Nation offers little to eliminate fears in clarifying severance tax letter intent By Brook A. Simmons Little words can carry big meanings. Love. Hate. Hot. Cold. Fear. None no more than four letters, but each quickly conveys a physical or emotional feeling. For oil and natural gas producers in eastern Oklahoma, it is the combination of three little words that continue to blanket the industry in uncertainty. The U.S. Supreme Court ruling in McGirt v. Oklahoma that the Muscogee (Creek) reservation was never disestablished paved the way for potential affirmation of four other reservations — the Cherokee Nation, Chickasaw Nation, Choctaw Nation and Seminole Nation — that cover almost the entirety of the eastern and south-central part of the state. While the court’s decision centered around a criminal case, its designation that the Creek Nation was still a reservation thrust civil law in Indian country, including environmental regulation and taxation, into a complicated and often confusing legal arena. In December, the Seminole Nation sent letters to all oil and natural gas producers with wells in Seminole County informing those operators of the tribe’s 8% severance fee. Attorney General Mike Hunter intervened, asking the tribe to cease, retract, clarify and legally justify its request of producers. In January, the Seminole Nation clarified its position, saying the tribe has not “at this time” sought severance tax payment from oil and natural gas producers operating outside of tribal trust or restricted lands.

“

Simply because the tribe is not exerting taxation authority “at this time” does not mean the tribe will forego taxation authority in the future. Fear leads to capital flight.

“At this time.” Three little words with potentially huge meaning. The tribe’s statement does little to eliminate long-term fears for Oklahoma oil and natural gas producers working in Seminole County, the majority of which was part of the tribe’s original reservation lands. Simply because the tribe is not exerting taxation authority “at this time” does not mean the tribe will forego taxation authority in the future. Fear leads to capital flight. The McGirt v. Oklahoma decision has created significant uncertainty for those who live or work in eastern Oklahoma. Without further clarification on civil matters, this landmark ruling will be a drag on investment that will undermine the prosperity of tribal members and non-Indians alike. — Brook A. Simmons is president of The Petroleum Alliance of Oklahoma.

March | 29

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ENERGY INDEX

ENERGY INDEX SHOWS INDUSTRY ON THE VERGE OF ENTERING RECOVERY Oklahoma’s oil and natural gas industry is nearing a point of recovery. The most Recent Oklahoma Energy Index (OEI) shows oilfield activity in the state has reached its low point, said economist Russell Evans. With all five indicators used to calculate the Energy Index — rig count, energy production employment, energy support employment, crude oil prices and natural gas prices — showing only minor upward or downward movement over the past six months, current conditions are a signal the industry is moving out of its current economic cycle and into economic recovery. The Energy Index now stands at 105.2, an increase of 0.6% from the previous month but 33% less than one year ago. The OEI is a comprehensive measure of the state’s oil and natural gas economy established to track industry growth rates and cycles in one of the country’s most active energy-producing states. The OEI is a joint project of The Petroleum Alliance of Oklahoma and the Steven C. Agee Economic Research and Policy Institute. Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said crude oil and natural gas prices have been buoyed by an output cut by Saudi Arabia and drawdown in U.S. inventories, but the biggest driver of how quickly the oil and natural gas industry sees recovery will be based on increased energy demand driven by a nation moving out of pandemic-driven confinement. “Most importantly, there is a path to more robust economic activity, and therefore more robust energy demand, developing,” Evans said. “But the path is hardly unobstructed. A successful transition to a post-pandemic economic recovery will require the

administration and success of a vaccination program, effective federal and monetary policy, slower rates of transmission, a less stressed health care system, and the confidence to engage again in collective social consumption.” Petroleum Alliance President Brook A. Simmons said that increased demand for crude oil and natural gas in a post-pandemic world, while welcome for Oklahoma energy producers, will not necessarily equate to an increase in drilling activity the state has seen in previous years. Drilling in Oklahoma was already waning pre-pandemic with the economic advantage of oil and gas exploration eroded following a 2018 increase in the state’s gross production tax. “Commodity prices are moving closer to a range that will support a very modest increase in drilling activity and new production,” Simmons said. “The biggest question is how attractive will Oklahoma be to the limited allocation of drilling capital to be deployed in 2021?”

March | 31

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OERB

DESPITE HISTORIC CHALLENGES, OERB MAKES POSITIVE IMPACT By Mindy Stitt 2020 was a year full of challenges for all of us, but thanks to the support of the people of Oklahoma Oil & Natural Gas, the OERB was able to continue to make an impact across our state. From virtual learning resources to cleaning up abandoned well sites, we sought out innovative solutions to a difficult year. Tasked with staying relevant and valuable during this uncertain school year, the OERB found new ways to help educators and students through virtual resources. We created a series of 17 online classroom lessons taught by certified Oklahoma teachers. They provide supplemental learning opportunities across a variety of subjects. We also created two new virtual workshops to give teachers the tools they need to keep students engaged both virtually and in-person. Nearly 500 teachers were able to attend these professional development opportunities. As we go into 2021, we will strive to keep the educators’ needs as our top priority. We also went virtual with our industry education workshops through Sustaining Oklahoma’s Energy Resources. Nearly 700 attendees, a record for the program, were given more convenient ways to learn about the latest oil-field technology and regulations – for free. We are also offering other new digital learning opportunities for oil and natural gas operators. As with our other programs, we were also able to find new ways to increase efficiencies in our well site cleanup program. In 2020, we cleaned nearly 500 historic well sites in Oklahoma. These sites were abandoned 50 to 100 years ago, well before today’s producers were in operation. However, through their voluntary funding the OERB can clean land across the state, restoring natural beauty and providing a huge benefit to landowners. Thank you to the people of Oklahoma Oil & Natural Gas for continuing to make our mission possible and building a better Oklahoma. With the support of our great industry, we will continue to provide these valuable resources in 2021 and years to come.

“

Thank you to the people of Oklahoma Oil & Natural Gas for continuing to make our mission possible and building a better Oklahoma.

— Mindy Stitt is executive director of the Oklahoma Energy Resources Board.

December | 35

OERB

Arlo DeKraai, third from left, saw the benefits of the OERB environmental restoration program after his ranchland in Osage and Kay Counties was brought back to life through the program.

RESTORING PRODUCTION OERB well site clean up program puts farmland back to use across Oklahoma Arlo DeKraai is no stranger to the oil and natural gas industry. DeKraai spent his career in the petroleum industry. The former president and CEO of refinery and midstream service provider InServ, he became executive vice president and board member of Willbros Downstream when the businesses merged. He retired in 2010. Now, he spends his time on his family-owned ranch that spans the boundary between western Osage County and eastern Kay County in the heart of the Burbank Field. Drilled in 1920 by Marland Oil Co., the Bertha Hickman #1 well was the first to produce oil from the Burbank field. The initial discovery produced 150 barrels per day from the Burbank sand. Later that year Roxana Petroleum Co. brought in another well at 3,450 barrels per day in the same general area. The field had its highest production from 1920 through 1924 with 20 million to 31 million barrels of oil annually, according to the Oklahoma Historical Society’s website. The town of Burbank where the oilfield draws its name had about 200 residents and an economy based on

36 | thepetroleumalliance.com

farming and ranching until E.W. Marland discovered petroleum northeast of the town. Burbank became a boom town, and other towns in the area such as Whizbang sprang up overnight to exploit the rich petroleum resources. DeKraai’s land holding includes what was once part of the oil boom ghost town of Apperson in Osage County. The now defunct community was home to a crude oil storage facility with 26 separate storage tanks. The storage tanks have long been gone, but remnants of the boom times remain. Foundations of the tanks and containment berms around them remained. The berms, constructed to ensure any crude oil leaks were contained, created a boggy quagmire after any rain making the ranchland where the tanks were once located inhospitable to livestock and impassable other than on horseback. DeKraai himself took on the effort to eliminate the 26 separate berms and foundations, hiring a local bulldozer operator to help make his land more usable. “After he got through with the fourth one, he came back and said it was more than he could do,” DeKraai

said. “It was more work than either of us expected.” Enter the OERB and the industryfunded organization’s three decades of restoration work at historic oilfield sites across the state. Through the OERB, the people of Oklahoma oil and natural gas have voluntarily invested more than $132 million to clean up orphaned and abandoned well sites left by companies that no longer exist – over 18,000 sites in all – at absolutely no cost to landowners. Working with local contractors, most of the historic sites the OERB cleans consist of concrete and metal debris. With an average cost of about $6,000 per site, cleanup can be cost-prohibitive for landowners, including farmers and ranchers. Consequently, many of these sites would have remained as eyesores or barren pieces of land across the state. Thanks to today’s oil and natural gas industry, who were not responsible for any of the sites we have cleaned, the OERB is able to restore productivity to the land at no cost to landowners. In 2020 alone, the work of the OERB environmental restoration program cleaned up 496 historic well sites at a cost of $5.8 million. DeKraai’s land is among the 496 sites, but the work on his property didn’t stop at former oil storage tanks. The OERB and contractor Beacon Environmental conducted a complete survey of DeKraai’s land, finding old well sites and salt scarring from oilfield activity long ago. “I don’t know if I’ve ever dealt with a more professional group,” DeKraai said. “I’m an absolute fan.”

Remnants from the oilfield past, including concrete footings, above, and salt scarring, below, were all removed from the land of Arlo DeKraai in Osage and Kay Counties.

DeKraai applauded the OERB’s restoration efforts that transformed portions of the ranch, built two ponds and made more acres functionally beneficial to the ranch’s cattle operation. “Our land is more productive because of the OERB,” DeKraai said. “It took away the barriers that made portions of our land unusable. They didn’t just restore it, they made our land more productive and more usable.”

March | 37

OERB

MEETING NEEDS OERB shifts education efforts online during pandemic Education is of utmost importance to Oklahoma oil and natural gas producers. That’s why they make it one of the Oklahoma Energy Resources Board’s core missions. Through leadership and voluntary funding, the OERB has continued to invest in quality educational resources to help teachers and students. Despite tough market conditions, low oil prices and a global pandemic, that commitment is stronger than ever. As teachers, students and parents face continued uncertainty, the OERB is standing ready to help fill any gaps that may arise and have already taken significant steps to ensure Oklahoma’s teachers and students have access to the tools they need to thrive in the classroom. VIRTUAL WORKSHOPS In 2020, the OERB was able to stay relevant and valuable during a challenging school year by offering virtual resources. From YouTube classroom lessons taught by certified Oklahoma teachers to an online workshop that gives teachers the tools they need to keep students engaged both virtually and in person, the OERB strives to keep the needs of our educators as our top priority. The organization also went virtual with energy education workshops by offering “mini” versions of OERB’s normal training. During these two-hour webinars, OERB master teachers show fellow educators how to teach pre-selected activities from the OERB’s full curricula both virtually and in person. Teachers who attend receive a guide, a kit of materials to do the activities with their students and two professional development hours. These are a great way to provide hands-on STEM activities that are based on oil and natural gas concepts and aligned to state academic standards. TOOLS FOR TEACHERS After surveying hundreds of teachers across the state, the need for training related to virtual learning was evident. The OERB partnered with Operation Engagement, which was founded by Oklahoma teachers to provide highquality, relevant training for teachers struggling to manage this difficult school year. These two-hour webinars provide teachers with new tech skills and ideas to keep students engaged virtually or in person. The webinars cover topics like how to integrate existing lessons into the digital space, how to create easy online quizzes, how to keep students organized and provide lists of resources to support distance learning across all age levels. VIRTUAL CLASSROOM To engage students at home with STEM education, the people of Oklahoma Oil & Natural Gas have created virtual classroom lessons that are taught by certified Oklahoma teachers and aim to provide students with supplemental lessons during distance learning. The innovative, fun, and free programs cover social studies and history, but focus on science, technology, engineering and math (STEM). Parents and teachers can browse the OERB’s library of free hands-on STEM education lessons through our Virtual Classroom program, where kids grade K-12 can learn about oil and natural gas through fun STEM activities, all at home. We will continue to work with educators across the state to provide the tools and resources we all need to help keep young minds learning. March | 39

POWE R ON , OKL AHOMA THANK YOU TO THE OIL & NATURAL GAS INDUSTRY FOR KEEPING OUR STATE RUNNING

Without the oil & natural gas industry, Oklahoma would be lost in the dark. Merit Auto Group stands proud with our neighbors who put so much at stake each day to keep the community’s lights on.

CHICKASHA | DUNCAN | FAIRVIEW MERITAUTO.COM 40 | thepetroleumalliance.com

SOER

SOER PUTS FOCUS ON MARGINAL PRODUCTION, IMPROVEMENT Marginal wells play an important role in Oklahoma’s oil and natural gas industry. With 28,050 oil wells and another 45,083 natural gas wells, production from marginal wells accounts for approximately 10 percent of Oklahoma’s total oil and natural gas output. For marginal well operators in the state, the No. 1 source for information on new processes and technological advancement to sustain and improve production from those wells is Sustaining Oklahoma’s Energy Resources (SOER), a committee under the authority of the Oklahoma Energy Resources Board (OERB). SOER was created in 2013 when the state merged the Oklahoma Marginal Well Commission into the OERB. The commission had been cited for failing to correct internal control deficiencies in 2012 by state auditors, and the merger was part of Gov. Mary Fallin’s broader efforts to consolidate state agencies to gain efficiencies for the state. Although the name has changed, the important programs of the former Marginal Well Commission have remained the same. Workshops, roundtables, the Oklahoma Oil & Gas Technology Forum and the successful Oklahoma Oil & Gas Expo all remain core programs that serve the state’s oil and gas industry. “Oklahoma’s marginal wells continue to support the state’s ranking as No. 4 in natural gas marketed production and No. 5 in crude oil production, contributing an important 10% to total output,” Petroleum Alliance President Brook A. Simmons said. “Moreover, the family-owned businesses that operate these wells represent Oklahoma’s foundational history. Our challenge is to honor that legacy while encouraging new processes and technological advancements to help the next generation of stripper well operators thrive in a rapidly changing world.” Oklahoma Oil & Gas Expo The Oklahoma Oil & Gas Expo is the largest event of its kind in Oklahoma. This one-day event is held in Oklahoma City and is attended by more than 3,800 participants, exhibitors and sponsors from the oil and natural gas industry. The Expo brings together companies, ideas, innovations and people who will shape the future of the industry. It is the only event of its kind in the state that is organized and hosted by local Oklahomans.

Exhibitor Marvin Preston, right, speaks with attendees at the 2020 Oklahoma Oil & Gas Expo. Attendees can network, learn, make connections and enjoy a complimentary Head Country BBQ lunch. Exhibitor registration for the 2021 Expo will open to the general public on March 1. Workshops In 2020, SOER went virtual with its industry education workshops. The challenge quickly turned into an opportunity as SOER constituents were given more convenient ways to attend workshops for free. In 2020, SOER hosted 17 online workshops with more than 700 participants. SOERCONNECT A new resource developed in 2020, the SOERCONNECT App is an easy way to connect with the local oil and natural community and gain access to industry resources. Through the app users can access free industry materials like industry workbooks, webinar recordings from the latest workshops and other educational videos. Users can also submit a question to get advice from other industry professionals when faced with difficulties in the field. The app also has quick and easy access to SOER’s Lease Pumper’s Handbook with searchable filters and links. SOERCONNECT is a native app, so it can be easily accessed in a remote location without Wi-Fi or internet. It is now available for free download in the App Store. March | 41

TY PECK

C R U D E S U P P LY M A N AG E R AT C V R R E F I N I N G A N D N E W LY A P P O I N T E D O E R B B OA R D MEMBER

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Who’s your favorite Oklahoman? Recent Oklahoma Hall of Fame inductee, Olympic gold medalist, world champion and wrestling coach John Smith.

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If you could eat one food the rest of your life, what would it be? A hamburger. Either a mushroom swiss burger from The Garage or a double cheeseburger from Braums.

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Mountains or beach? Definitely the mountains, but the altitude adjustment does get a little bit tougher each trip as I get older.

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Have you met anyone famous? While it is certainly not unusual for Oklahomans in the wrestling community to have met him, John Smith was the first person that I met as a child who I considered to be famous.

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Favorite college team? Oklahoma State Cowboys. In one sentence, what do you actually do all day in your job? While I have the opportunity to work on a variety of projects, my primary focus is to provide supply to our two refineries by working with my customers and internal stakeholders to offer high-quality, fieldlevel service and the full suite of back office support.

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Favorite band in junior high? Really taking me back here, but probably Foo Fighters.

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Name of your pet? Stella, our 10-year old rescue dog. What was your first job? My very first job was field work for a local oil producer during my summer and Christmas breaks in high school. My first job out of college was as a Commercial Credit Analyst for an Oklahoma owned bank.

What was your first car? 1993 F-150. A good chunk of my paychecks from my summer job in the oilfield went towards dressing it up. Rumor is that pickup can still be seen from time 42 | thepetroleumalliance.com to time in Kingfisher County.

If you could have dinner with one person, alive or dead, who would it be? My maternal grandfather, who passed away young and I was never able to meet. What was your favorite TV show as a child? The Wonder Years. Winnie will always have a piece of my heart. What’s the number one item you would save from your burning house? The artwork that my little girls make for me. It used to be a box full, but they are creative machines. Now there is more than I could carry in a single trip.

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What is your favorite thing about working in the oil and gas industry? I’m guessing this is going to be a common answer, but it’s the people. I have made a lot of lifelong friends in this industry, across a large span of geography and age ranges. I’m thankful every day that I am in a role that allows me to interact with so many of the people in our great industry..

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What is your favorite holiday? Before having kids it was 4th of July, but seeing them experience the joy of Christmas is the best.

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What is the best gift you have ever received? I’m a sentimental person, so my answer is a little bit surprising to me. I actually think it is the Apple watch that my wife and daughters got for me for my birthday. It helps me keep a focus on movement and activity. I have always been an active person, but it is easy to let that slip when you work in an office. I like for the watch to remind me of my activity, or rather inactivity, before my belt does.

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What is the first thing you would do if you won the lottery? I’m very frugal (my wife might argue irrationally so). I’m guessing the answer involves hiring an attorney, burying it in a hole in the backyard, or both..

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Last movie you saw at the theater? Frozen II, right before the pandemic. I’m not a huge fan of movie theaters, but I certainly would have appreciated it more had we known what was coming!

What’s your favorite drink? Grapefruit Topo Chico is my go-to.

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What’s your favorite app? Amazon Music. The Yacht Rock station can turn any situation into a party.

March | 43

THE PETROLEUM ALLIANCE OF OKLAHOMA 500 N.E. FOURTH ST. OKLAHOMA CITY, OK 73104

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