July 2020 Wellhead

Oklahoma Energy Index 08 We Will Be Ready 12 Political Outlook: Politics in the Time of a Pandemic 44 Deal Flow & Deal Certainty 47

JULY 2020

Our state hat.

The people of Oklahoma Oil & Natural Gas are building a better Oklahoma.

We hope you will follow the OERB, @oerbok, on social media and share the news with associates, friends, and family. Because our story is an extraordinary one, and it needs to be told across our great state. Thank you for all you do.

To learn more, go to oerb.com.

David D. Le Norman Chairman

TABLE OF CONTENTS

Brook A. Simmons President

08

Natalie Kinmonth Senior V.P. - Membership & Development Jon Bargas Senior V.P. - Public & Government Affairs Teresa Yoder V.P. - Finance Ellis Ebel Director of Operations/HR

Oklahoma Energy Index Measures Decline Sponsored by INSURICA

12 We Will be Ready

Oklahoma’s Top Industry Prepares for Future

Lauren Burnett Director of Events

15

Bud Ground Director of Regulatory Affairs

Produced Water: Stakeholders Celebrate New Law on Produced Water

Madison Miller Committee Coordinator & Policy Analyst Annie Parks Membership & Marketing Coordinator Marcy Ayers Partners Program Consultant Valerie Flaherty Receptionist

This newsletter is produced by

30 With Success of Energize for Safety Coalition, Industry is Driving Safety Together

34 Financial Outlook: Oklahoma’s Energy Strengths Should Continue to Benefit State

44 Political Outlook: Politics in the Time of a Pandemic

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

47 Deal Flow & Deal Certainty Ethan House Shares What EnergyNet is Seeing

July | 3

4 | thepetroleumalliance.com

A

LETTER

FROM

THE

PRESIDENT

B ROO K A .

SIMMONS The Petroleum Alliance of Oklahoma headquarters is situated near downtown Oklahoma City’s highway interchanges. It therefore is a good location from which I can attest Oklahomans are on the move again. Post-lockdown traffic is swelling on Interstate Highways 35, 235 and 40.

Those with 8 a.m. meetings are reminded they again need to plan for delays.

We welcome the noise — semi-trucks moving consumer goods, breadwinners headed back to the office, buses moving small-town JV basketball teams to big-city clinics. The anecdotal evidence backs up hard data from Apple showing a 42% increase in Oklahoma driving activity as of June 10 from a mid-January benchmark.

Commercial air traffic has increased gradually since April but remains significantly below historical average daily departures. As a masked-up, seat-sanitizing road warrior weekend dad, I will tell you: the middle seat is being filled. The planes have never been cleaner. The passengers are handling it.

This edition of Wellhead touches on a few of the green shoots beginning to emerge. Dean Foreman, Ph.D., chief economist for the American Petroleum Institute, gives us a read on economic restart data, GDP projections and supply drawdown. EnergyNet’s Ethan House characterizes deal flow realities and expectations.

Tim Stewart of the U.S. Oil & Gas Association shares a political view from the U.S. capital. Jeff Eshelman of the Independent Petroleum Association of America highlights congressional action during the pandemic. Kathleen Sgamma of the Western Energy Alliance covers the Great American Outdoors Act and the promise of oil and gas activity on federal lands.

From here at home, we have a summary of the 2020 Oklahoma Legislature, an update on regulations impacting your business and a look at some of the Oklahoma Energy Resources Board’s outstanding work. An election season update of primary race outcomes is a teaser for runoff campaigns and the general election.

Today, our joint trade organization has the capacity to tap expertise and actionable intelligence from sources not possible before the merger.

Please pay attention to The Alliance’s updated calendar of events and information about our Partners Program — special member services to help improve your business’ bottom line as we rebuild.

What is the new normal? How many challenges will the pandemic yet reveal? What is the balance between interstate traffic and internet traffic? Microsoft Teams or Teamsters? Here at The Alliance, we remain cautiously optimistic about Oklahoma’s future, but we are not Pollyannish. Our industry is changing, just as it has been ever since Edwin Drake set up camp along Oil Creek in 1859. We will be ready!

Read on. Be well.

July | 5

2

1

3 STATE ROUNDUP

1 | TEXAS Todd Staples: Texas Oil, Gas Supplies Stable in Ongoing Viral Crisis In America, it’s comforting to know we can have energy security in the midst of financial and market insecurity.

COVID-19 has thrust our nation into uncharted territory.

As families, businesses and our leaders do their parts to help slow the spread of the virus, the oil and natural gas industry is part of the critical infrastructure that will help keep Texans safe, fueled up and stocked in the coming weeks and months.

The drop in global oil prices, coupled with the emergence of COVID-19, has created unusually difficult circumstances We are confident the underlying economic structure in America will enable our country to persevere.

The Texas oil and natural gas industry is no stranger to volatile swings, and operators have proven themselves nimble and innovative in challenging times. We are fortunate in Texas to have the energy infrastructure in place to continue to responsibly produce, transport and refine oil and natural gas into the fuels, products and power that Texans need. As the nation’s leader in oil and natural gas production, pipeline miles and refining capacity, Texas is well equipped to continue meeting our energy and everyday needs.

Oil and natural gas is vital to ensuring our country is readily able to endure this storm considering, that 96% of our daily products are made with components of oil and natural gas. Beyond the fuel in our cars, our nation’s supply chain depends heavily on our products, and we stand ready to continue supporting all industries, communities and families every day.

6 | thepetroleumalliance.com

While many of these products provide everyday comforts, a sense of security may be the most coveted feeling in times like these. As we weather this season together, Texans can rest assured — when we flip a switch, the lights will turn on. When we fire up the stove, natural gas will burn blue. When we need to make essential trips to the grocery store or pharmacy, there will be fuel at the corner station. Essential supplies will continue to make their way across our state because 18-wheelers have the diesel they need to keep rolling.

All of this is possible because Texas has the most robust energy infrastructure system in the nation to meet our needs.

Remaining calm and adhering to normal purchasing behaviors is one of the best ways we can help one another during this time. Know that the oil and natural gas industry is hard at work behind the scenes so that you have the power, products and fuels you need. While these are unprecedented and unsettling times, our nation’s energy security is intact.

Originally published by Waco Tribune-Herald

2 | WYOMING PAW Calls for Acceleration of Orphan Well Program Petroleum Association of Wyoming President Pete Obermueller called for the significant acceleration of the Wyoming Oil and Gas Conservation Commission (WOGCC) Orphan Well Program during a Joint Interim Minerals, Business and Economic Development Committee Meeting of the Wyoming Legislature.

Obermueller testified, “with so many rigs laid down…a significant acceleration of plugging and reclaiming wells would not only keep people in the industry employed

now, but would also reduce a long-term liability — paid for entirely by the oil and natural gas industry, not Wyoming taxpayers.”

The Orphan Well Program is administered by the WOGCC to plug, abandon and reclaim well sites abandoned mainly during bankruptcy. The program, paid for solely by the oil and natural gas industry, currently reclaims a few hundred wells per year with a budget of $7.5 million during the biennium. PAW is advocating to increase that amount to at least $15 million by tapping into industry funded reserves already in place at the WOGCC. According to the WOGCC, there were currently 2,793 orphan wells to be plugged in the state. Accelerating the program would retain a highly-skilled energy industry workforce otherwise sitting idle during low oil and natural gas prices. This would ensure employees in the energy service industry continue to take home a paycheck and are ready to restart drilling as demand returns, while also taking advantage of time and cost benefits of reducing the orphan well backlog — a liability the industry takes seriously.

Originally published by the Petroleum Association of Wyoming

3 | LOUISIANA Oil and Gas Industry Leads the Way in Carbon Capture Louisiana’s oil and gas industry is leading the way in reducing and managing carbon emissions as companies around the globe work to minimize their carbon footprint in a battle against climate change.

The industry’s commitment to vigorously exploring and implementing climate solutions also opens the door for Louisiana to become an economic hub for carbon capture in the U.S. Along the Mississippi River in St. Charles Parish, Louisiana, Diamond Alternative Energy, a subsidiary of Valero Energy, has partnered with Darling Ingredients to build an 18,000-bpd renewable diesel refinery near the Valero refinery in Norco, Louisiana. The joint venture, Diamond Green Diesel, will process animal fats, used cooking oil and inedible corn oil into renewable diesel fuel. Marathon Petroleum has set a goal to reduce its greenhouse gas emissions to 30% below 2014 levels by 2030, as well as expand energy efficiency, reduce methane emissions and increase use of renewable energy.

CEOs of Chevron, Shell, BP, Exxon-Mobil and Oxy are actively involved in the revolutionary Oil and Gas Climate Initiative (OGCI), a consortium of industry leaders from around the world that aims to accelerate the industry response to climate change and shape the global pathway to zero net emissions. OGCI member companies account for over 30% of the world’s oil and gas production and believe the industry can deliver the same products and services with no carbon footprint, given the right innovations. Here at home, LMOGA applauded Gov. John Bel Edwards’ recent announcement establishing a Climate Initiatives Task Force in Louisiana.

reducing emissions and to protect our coast,” said LMOGA President and General Counsel Tyler Gray.

Collaboration with the governor’s task force will be one of the priorities of LMOGA’s Carbon Committee, launched earlier this year to promote the advancement of innovative climate solutions such as carbon capture and underground storage technology in our state.

As countries and companies continue to set increasingly aggressive carbon emissions targets like net zero emissions by 2050, it has become clear that emissions reductions through improved processes and increased efficiency simply will not be enough. To stand a chance at meeting these targets, we will need to literally pull carbon out of emissions streams, or even the air itself, and store it permanently.

This is where carbon capture, use and sequestration (CCUS) can play a major role. With CCUS, carbon emissions (mostly carbon dioxide) are gathered, processed and injected into the ground for use in enhanced oil recovery options, or injected into depleted oil and gas reservoirs or deep saline aquifers for permanent storage (sequestration).

In Louisiana, we are very fortunate to have ideal geology for sequestration, existing pipeline infrastructure and a workforce well-suited for building additional pipelines.

Most importantly, we have highly concentrated industrial corridors that contain some carbon sources that are quite pure. With Louisiana laws and regulations already in place for CCUS, regulators eager to work with companies to kickstart this new industry and the governor’s inclusion of CCUS in his plan to address climate change, it’s clear Louisiana is well-positioned to be a global leader in carbon capture.

Together with the LSU Center for Energy Studies, OGCI and the Global CCS Institute, LMOGA recently hosted a CCUS workshop to facilitate an industry discussion about potential solutions and to help bring CCUS projects to Louisiana. Our industry is committed to improving air quality through the advancement of emerging technologies like CCUS, working together with industry and state agencies like the Louisiana Department of Natural Resources.

We hope our Carbon Committee can be the catalyst that brings about Louisiana’s first CCUS project and eventually makes Louisiana a major carbon capture hub, cementing our oil and gas industry as a leader in climate solutions.

Originally published by BIC Magazine

“LMOGA is looking forward to the opportunity to work collaboratively with the governor and his administration on his 2020 priorities, including efforts to continue

July | 7

OKLAHOMA ENERGY INDEX MEASURES STEEP DECLINE Economy may face a ‘slow and policy-fueled crawl back’

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OKLAHOMA ENERGY INDEX DATE

ENERGY INDEX

Base Year, 2000

100.0

Apr-19

183.4

Mar-20

120.0

Apr-20

102.8

1 Month Change

-17.2

1 Month % Change

-14.3%

1 Year Change

-80.7

1 Year % Change

-44.0%

As expected, the Oklahoma Energy Index contracted sharply in April. Oil and natural gas activity fell by 14.3% to an index reading of 102.8 — just above the baseline of 100 indexed to the base year 2000. Total energy activity in the state is now down 44% from a year ago, with the pace of decline accelerating into the deepest contraction in the last 20 years.

All index components were down again in April. Rig activity fell by 43%, with April’s weekly rig counts averaging only 25. Rig activity continued to fall into May with new drilling all but halted in the state. Oil prices fell precipitously in April before outright collapsing in May to headlines of negative prices. Many of the headlines were driven by expiring futures contracts and an unwillingness to accept physical delivery of the commodity, but the underlying weakness in energy demand is real. Most importantly, energy sector job losses mounted in April, with primary exploration and production employment down 7.6% and support employment down 6.1%. Job losses will continue in the months ahead as drilling budgets are slashed and producers shift into a production holding pattern.

“There remains a legitimate concern that markets are overplaying the economic recovery as we move into summer,” said Dr. Russell Evans, Executive Director of the

Steven C. Agee Economic Research and Policy Institute at Oklahoma City University. “A relaxing of the most severe restrictions on social gathering is certainly allowing an economic recovery to materialize, but economic activity will quickly stabilize well below 2019 levels.”

David Deardeuff, Senior Vice President at INSURICA, agreed. “2020 has been a very challenging year for companies of every size, especially service companies which have been impacted not only by the price war, but also by their challenge of connecting with customers and prospects in a COVID-19 world. We are all eager to put the past 90 days behind us as we move forward toward our new normal,” Deardeuff said.

According to Brook A. Simmons, President of The Petroleum Alliance of Oklahoma, the world economy may face a “slow and policy-fueled crawl back to full economic health.”

“We are in the midst of the storm. There are dark clouds, destruction and obstacles in our way. There is little optimism global energy demand will quickly rebound to resume the track of growth necessary to immediately return Oklahoma’s energy sector to pre-coronavirus levels of activity, but storms pass, and we will rebuild,” Simmons concluded.

OKLAHOMA ENERGY INDEX SUMMARY DATE

NATURAL GAS PRICE/MMBTU (Monthly Avg.)

BAKER-HUGHES RIG COUNT (Monthly Avg.)

ENERGY PROD. EMPLOYMENT (Thousands)

ENERGY PROD. OK WTI SUPPORT EMPLOYMENT SPOT PRICE (Thousands) (Monthly Avg.)

OK ENERGY PORTFOLIO (Monthly Avg.)

Apr-19

$2.65

104

51.2

32.3

$63.86

205.4

Mar-20

$1.79

44

42.1

24.7

$29.21

29.0

Apr-20

$1.74

25

38.9

23.2

$16.55

24.3

1 Month Change

-$0.05

-19

-3.20

-1.50

$12.66

-4.7

1 Month % Change -2.8%

-43.2%

-7.6%

-6.1%

-43.3%

-16.2%

1 Year Change

-$0.91

-79

-12.30

-9.10

-$47.31

-181.1

1 Year % Change

-34.3%

-76.0%

-24.0%

-28.2%

-74.1%

-88.2%

Source: Steven C. Agee Economic Research and Policy Institute

300 250 200 150 100

Apr 20

Apr 19

Apr 18

Apr 17

Apr 16

Apr 15

Apr 14

Apr 13

Apr 12

Apr 11

Apr 10

Apr 09

Apr 08

Apr 07

Apr 06

Apr 05

Apr 04

Apr 03

Apr 02

0

Apr 01

50 Apr 00

ENERGY INDEX, BASE = 100 IN YEAR 2000

OKLAHOMA ENERGY INDEX

The Oklahoma Energy Index is a comprehensive measure of the state’s oil and natural gas production economy established to track industry growth rates and cycles in one of the country’s most active and vibrant energy producing states. The current index is a joint project of INSURICA, The Petroleum Alliance of Oklahoma and the Steve C. Agee Economic Research and Policy Institute.

July | 9

BROOK SIMMONS

EX CIT ED ABOUT THE ENERGY INDUSTRY’S FUTURE

Optimism and a stoic ability to plan for the future are key attributes of oil and gas executives.

Brook A. Simmons, who became the president of the Petroleum Alliance of Oklahoma on May 1, can’t wait to see what they come up with next.

Over the years, he has watched the energy industry in Oklahoma and the nation experience several significant collapses in the 1980s, in 1997, in 2001 and 2008, only to rebound stronger than before.

He expects nothing less today.

Simmons said energy industry executives across Oklahoma and the nation have proven time and again they can adapt their businesses to address whatever challenges they have faced.

“We have seen this sort of cataclysmic drop before,” Simmons said. “But one of the untold stories, I think, is that the U.S. shale revolution really drove the nation’s economic recovery from 2008 until 2014.”

“We will recover from this again, and we have already seen what many people think was the bottom,” Simmons said, noting demand for refined products is already rebounding.

Simmons started his career three decades ago as a journalist before working for U.S. Sen. Don Nickles and a U.S. representative from Kentucky through 2004.

Simmons served as the Oklahoma Independent Petroleum Association’s federal lobbyist from 2008-2015 and worked on local, state and federal government issues for Encana (now known as Ovintiv).

Beyond that, he served on the executive committee of the Board of Directors for the Oklahoma Oil & Gas Association from 2015-2019, assisting in its merger with the Oklahoma Independent Petroleum Association to become the Petroleum Alliance of Oklahoma.

Before returning home to Oklahoma this year, Simmons briefly represented private clients on federal issues in Washington, D.C. Simmons currently serves on the Board of Directors for the Domestic Energy Producers Alliance.

Previously, he served on boards for the Western Energy Alliance, the North Dakota Petroleum Council, Royalty Owners & Producers Educational Coalition (ROPE) and the Utah Petroleum Association.

He also served on Utah Governor Gary Herbert’s Energy Advisory Council and, for a time, served as a spokesman for the American Sportfishing Association.

David D. Le Norman, the Petroleum Alliance’s chairman, noted Simmons is a perfect fit to lead the Alliance into the future.

“It is fitting that he is coming home to Oklahoma in order to oversee the organization where he has such deep roots,” Le Norman said.

Simmons grew up in Ardmore, where his father, an agronomist, worked at the Noble Foundation. An uncle, meanwhile, made his living working in the state’s energy industry.

Simmons said he learned early on that Oklahoma’s energy industry is a vital economic driver to the state and its residents, adding it remains so today, given that it generated a third of the state’s economic output in 2018.

Oklahomans earned $36.8 billion from oil and gas in 2018, with mineral owners receiving $30.4 billion in royalty payments since 2003.

“Those are the drivers in every other sector of Oklahoma’s economy,” Simmons said. “We see it on Main Street, in professional and business services, in leisure and hospitality, in construction, manufacturing, transportation and financial activities. We see it ripple across the entire realm. The oil and gas sector is Oklahoma’s life blood.”

As for the current crisis, Simmons said it, too, will pass.

“The industry will look different once we emerge from this, but I guarantee you there will be new businesses, products, services and efficiencies that will be created as a result of this crisis,” he said. “We will be preparing for the next chapter in our extraordinary story, and that’s exciting.”

Originally published by The Oklahoman

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D E V E L O P M E N T

ONLINE

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WE WILL BE READY By: Brook A. Simmons

Oklahomans know their top industry often experiences boom-and-bust cycles. This current bust, however, has been one for the record books.

U.S. drilling fell by a record 52% from between March and April, with Oklahoma production being virtually shut-in as operators responded quickly and efficiently to economic realities. On May 8, there were 12 rigs running in Oklahoma, down more than 90% from recent highs. Total U.S. liquids production dropped by 1.6 million barrels per day in March and April. U.S. petroleum demand decreased by 26.7% (5.2 million barrels per day) between March and April.

While energy rivals have floated an armada of foreign oil tankers to extend Oklahoma’s pain into 2021, there is evidence we may be seeing the beginning of the turnaround as worldwide consumers and businesses slowly emerge. U.S. Energy Information Administration and American Petroleum Institute data signal the worst of the demand destruction might have occurred by mid-April, with some strengthening as of May 1.

The men and women of Oklahoma’s oil and gas industry will emerge from this crisis smarter, more efficient and tougher than our rivals ever could imagine. That’s what we do. It’s called grit.

We persist because we know our products form the foundation of the economy. Without us, commerce simply stops.

Our highways would remain deserted, our houses, offices and hospitals would go dark. Our factories and farms would stop producing. Data centers could not connect students to teachers, rural hospitals to urban physicians, and co-workers to one another.

Despite our rivals’ attempt to crush the U.S. energy renaissance born by horizontal drilling and hydraulic fracturing, we have become the top oil and natural gas-producing nation. Ending the ban on crude oil exports gave us greater power in the global market while better protecting allies and consumers from upheaval on the other side of the planet.

Times are hard. Job losses will mount as companies right-size for the long haul. But from today’s challenges, new solutions and services will be born. Right now, there are young engineers, geologists and grizzled veterans hard at work on the next big thing to revolutionize our industry.

We can’t say exactly what the next leg of our extraordinary story will look like or when a stabilized market will help move our state upward and to the right. But we know that even before the recovery is complete, Oklahoma’s oil patch warriors will be ready.

BUT WE KNOW THAT EVEN BEFORE THE RECOVERY IS COMPLETE, OKLAHOMA’S OIL PATCH WARRIORS WILL BE READY.

12 | thepetroleumalliance.com

Helping Communities in a Time of Need By: Mindy Stitt, Executive Director, OERB While our nation and industry works to recover, the people of Oklahoma oil and natural gas will not stop helping our communities in this time of need. As we strive to push forward with a positive outlook, we remain dedicated to providing free education programs that students, parents and even those looking to build their resumes can access from home.

Through voluntary contributions from the people of Oklahoma oil and natural gas, the Oklahoma Energy Resources Board (OERB) continues its commitment to education by providing virtual classroom materials and resources so students can continue their science, technology, engineering and math (STEM) education at home. This free program provides fun, handson solutions to keep students engaged in learning.

The 10-minute video lessons are taught by certified Oklahoma teachers and cover all topics, including social

studies and language arts, but focus mostly on STEM. Each lesson can be found on OERB’s YouTube channel and through social media.

OERB is also offering free classes for oil and natural gas professionals who are out of work and looking to expand their resumes. The men and women who work in this industry are some of the brightest and hardest working people in the state. It is important to provide them with resources to help get them back to work. Through the generosity of the industry, we are able to provide four free classes through our PetroTech program at Francis Tuttle Technology Center.

The people of Oklahoma oil and natural gas are resilient and committed to this state. We will not stop supporting our neighbors and colleagues as we all work to get back to normal.

July | 13

JOIN US FOR MORNING FUEL WEBINARS During this period when we can’t gather in large groups, the Alliance is still dedicated to giving you access to leaders and experts to help you understand our complicated economic environment and manage your teams.

Join us for our regular Morning Fuel webinars in which we invite guest speakers to discuss how the COVID-19 pandemic affects our industry and state government.

The webinars are a free benefit for our members! Visit ThePetroleumAlliance.com for the latest schedule and to register.

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14 | thepetroleumalliance.com

PRODUCED WATER STAKEHOLDERS CELEBRATE NEW LAW ON PRODUCED WATER SB 1875 will encourage entrepreneurs, increase recycling The Petroleum Alliance of Oklahoma joined a broad coalition to praise Oklahoma Gov. Kevin Stitt for signing Senate Bill 1875, the Oil and Gas Produced Water and Waste Recycling and Reuse Act. The act designates who owns and is responsible for produced water and waste from oil and natural gas drilling and production operations.

“Providing clarity on this issue will help Oklahoma attract entrepreneurs who will now have a greater incentive to recycle and reuse wastewater,” said Brook A. Simmons, President of the Petroleum Alliance of Oklahoma. “We brought together a diverse group of stakeholders to craft this law, ensuring it will make our state more competitive.”

Oklahoma Secretary of Energy and Environment Kenneth Wagner said the new law will strengthen environmental stewardship.

“SB 1875 encourages innovation around recycling and reusing wastewater in the oilfield, which will reduce freshwater demand and lower saltwater injection volumes,” Wagner said. “Plus, it demonstrates how reasonable Oklahomans with diverse interests can work together to find common solutions.”

State Representative Terry O’Donnell also said the measure represents the power of collaboration.

“The issue of produced water from the drilling of oil and natural gas is critical to our state’s environment.

Interested parties from agriculture, oil and natural gas, environmental groups and surface and mineral interest owners were able to come together on an agreement that works collectively for them and for our state’s environmental policy. It is, in my view, one of the best public policy issues to come from this legislative session.”

State Senator Dave Rader championed the bill.

“I am proud to have been the author of this bill that is critical to the state’s environment,” Rader said.

Shelley Shelby, Director of Government Affairs at Continental Resources, was a key member of the Alliance’s legislative committee and helped lead efforts to broaden the bill’s appeal.

“This historic collaboration has resulted in legislation that our industry has been advocating for for years,” Shelby said. “It’s rewarding to see the effort pay off with a change that will benefit everyone in Oklahoma.”

Terry Stowers, Executive Director of the Coalition of Oklahoma Surface and Mineral Owners (COSMO), was also involved in crafting the compromise. “Solving challenges such as wastewater management requires managing a broad range of interests, including protecting the various property rights of all parties. The invaluable input and participation in the negotiations from the Oklahoma Cattlemen’s Association and the Oklahoma Farm Bureau ensured that surface owners’ water rights were protected,” Stowers said. “This process allowed various stakeholders to be involved in finding a solution which benefits the entire state, not just certain groups. We thank Sen. Rader, Rep. O’Donnell and Sec. Wagner for their leadership, and Gov. Stitt for signing the bill into law.”

THIS HISTORIC COLLABORATION HAS RESULTED IN LEGISLATION THAT OUR INDUSTRY HAS BEEN ADVOCATING FOR FOR YEARS.

July | 15

REAL ESTATE SALES • CONSTRUCTION • EXCAVATION • PASTURE MANAGEMENT • WILDLIFE MANAGEMENT

THREE RANCHES $2,172,200 Francis, Oklahoma

The Land Doctors have listed three contiguous ranches that offer a unique blend of features. These three ranches are located just north of Ada, OK, 90 miles from OKC, 120 miles from Tulsa and 180 miles from Dallas, making it an easy drive from metro areas. In total, the three ranches contain 1195 acres of land with no public roads passing through it. The ranches can be accessed by paved road frontage along the south boundary and for a very short distance on the eastern edge. There are no major transmission lines crossing the properties while a major pipeline runs along the eastern edge of the ranches. Mostly hidden from view and shielded from the world by other ranches, these properties feel much more remote than they are.

• The 28 acre Eagles Nest provides over one mile of frontage on the South Canadian River.

• The South Canadian River Ranch offers 591 acres of forest, trophy deer and 7300 feet of the crystal clear Factory Creek.

• Boulder Ranch is a very affordable 576 acre tract of timber that brings the average cost of the three ranches down to less than $1820/ac.

• Located near the prosperous Chickasaw Nation Headquarters of Ada, OK.

For more information, please call Kelly Hurt at 580-421-7512

16 | thepetroleumalliance.com

www.landdoctors.com

Kelly@LandDoctors.com

July | 17

RIG COUNT

The May index was set at 43.0, up from 34.2 in April.

Numbers below 50 indicate economic contraction is expected during the next three to six months.

OKLAHOMA TAX REVENUES May Collections DROPPED IN MAY WITH OIL May gross collections total $923.1 million, DOWN 59% FROM A YEAR AGO $150.5 million, or 14%, from May 2019.

The coronavirus pandemic continued to make its presence known in May’s Oklahoma Gross Receipts to the Treasury, State Treasurer Randy McDaniel announced as he released data showing a 14% drop in May revenue collections. Oil and gas gross production revenues plunged 59% from a year ago.

Gross receipts for May totaled $923.1 million, down by $150.5 million from May of last year.

“The Oklahoma economy, as reflected in state revenue collections, was significantly impacted by the pandemic during the last month,” Treasurer McDaniel said.

“However, the picture in May is not as conspicuous as the April report, which included the postponement until July of income tax reporting.”

McDaniel pointed to a few positive numbers in the May report. Of the six major revenue sources tracked in gross receipts, two showed positive movement. Use tax, paid on out-of-state and online purchases, and individual income tax were both slightly higher than receipts from the prior year by a combined total of $13 million.

On the other hand, sales tax and gross production receipts were substantially lower by a combined total of $106.1 million.

Sales tax receipts, including remittances on behalf of cities and counties, fell by more than 12% over the year.

Gross production collections were down by almost 60% compared to last May. May gross production tax receipts are paid on crude oil and natural gas production during March, when the price-per-barrel of West Texas Intermediate Crude Oil at Cushing averaged $29.21. One year ago, the average price was $58.15 per barrel. Meanwhile, natural gas prices fell by almost 40% over the year.

Gross production taxes on oil and natural gas totaled $38.3 million in May, a decrease of $55.6 million, or 59.2%, from last May. Compared to April 2020 reports, gross production collections are down by $22.4 million, or 36.9%.

Total gross receipts from the past 12 months are $13.07 billion, off by $477.1 million, or 3.5%, compared to the previous 12 months. Shrinking income, sales and gross production tax collections exhibited the most downward pressure during the period.

Economic Indicators The unemployment rate in Oklahoma was reported as 13.7% in April, up from 2.9% in March. The seasonally adjusted number of Oklahomans listed as jobless increased by 188,950 in one month, according to figures released by the Oklahoma Employment Security Commission. The U.S. unemployment rate was 14.7% in April.

The Oklahoma Business Conditions Index increased slightly in May, but remained in negative territory.

18 | thepetroleumalliance.com

down by

Gross income tax collections, a combination of individual and corporate income taxes, generated $289.2 million, a decrease of $15.7 million, or 5.1%, from the previous May. Individual income tax collections for the month are $279.2 million, up by $7.2 million, or 2.6%, from the prior year. Corporate collections are $10 million, a decrease of $22.9 million, or 69.5%.

Combined sales and use tax collections, including remittances on behalf of cities and counties, totaled $424.1 million in May. That is $44.7 million, or 9.5%, less than May 2019.

Sales tax collections in May totaled $362.3 million, a drop of $50.5 million, or 12.2%, from the same month of the prior year. Use tax receipts, collected on out-of-state purchases and online sales, generated $61.8 million, an increase of $5.8 million, or 10.3%, over the year.

Motor vehicle taxes produced $61.1 million, down by $2.1 million, or 3.3%, from the same month of 2019.

Other collections composed of some 60 different sources including taxes on fuel, tobacco, medical marijuana and alcoholic beverages, produced $110.4 million during the month. That is $32.4 million, or 22.7%, less than last May.

12-Month Collections Gross revenue totaled $13.07 billion from the past 12 months, June 2019 through May 2020. That is $477.1 million, or 3.5%, below collections from the previous 12mont Gross income taxes generated $4.37 billion for the 12 months, reflecting a decrease of $225.5 million, or 4.9%, from the prior 12 months.

Individual income tax collections totaled $3.86 billion, down by $202 million, or 5%, from the prior period.

Corporate collections were $501.8 million for the period, a decrease of $23.5 million, or 4.5%, over the previous 12 months.

Combined sales and use taxes for the 12 months generated $5.47 billion, a decrease of $95.4 million, or 1.7%, from the prior period.

Gross sales tax receipts totaled $4.74 billion, down by $161.6 million, or 3.3%, during the period. Use tax collections generated $735.6 million, an increase of $66.2 million, or 9.9%, over the previous 12 months.

Oil and gas gross production tax collections brought in $901.7 million during the 12 months, down by $227.4 million, or 20.1%, from the previous 12 months.

Motor vehicle collections totaled $776.1 million for the previous 12 months. This is a decrease of $8.3 million, or 1.1%, from the trailing period.

Other sources generated $1.55 billion, up by $79.5 million, or 5.4%, from the previous period.

Originally published by OK Energy Today

40%

NATURAL GAS PRICES fall over the year

$106.1 MILLION total amount decrease of SALES TAX & GROSS PRODUCTION RECEIPTS

59%

OIL & GAS gross production plunge over one year

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July | 21

MEMBERS SWING AWAY AT ALLIANCE OPEN GOLF TOURNAMENT The Alliance’s legendary events schedule resumed fullswing with the June 29 Alliance Open golf tournament at Oak Tree Country Club. Presented by BK Equipment, the Open included about 200 golfers. The event offered a rare opportunity for networking and learning more about the numerous members-only benefits the Alliance provides.

AM FLIGHT

Congratulations to our winners: AM Flight • Josh Zimmer, Zimmer Resources • Kael McFarland, MECO Land Services • TJ Woodruff, Flint Energy Partners • Justin Ezell, Franklin Mineral Holdings

PM Flight • Darrick Matthews, US Fleet Tracking • Avery Smith, JP Consultants • Kyle Dahlgren • Zac Wheat, Peregrine Oil & Gas

A huge thank you to the Alliance Open sponsors: Title Sponsor BK Equipment Exclusive Sponsors ADP BITCO Insurance Companies BK Equipment Chesapeake Energy Continental Resources Devon Energy Enable Midstream Partners EnergyNet, Inc. EOG Resources Halliburton Energy Services INSURICA Lagoon Water Midstream Marathon Oil Messer-Bowers Insurance NFP Corporate Benefits Ovintiv USA, Inc Pontotoc Sands Reign Capital Holdings LLC Spitfire Energy Group XTO Energy General Sponsors amshot Compsource Mutual Insurance Company 22 | thepetroleumalliance.com

CVR Energy Gulfport Energy Healthcare Highways Valero Breakfast Sponsor BITCO Insurance Companies On-Course Bar Sponsor BK Equipment On-Course Cookers BK Equipment M&M Supply Hydration Station Sponsor BITCO Insurance Companies Lunch Sponsor Halliburton Energy Services Lunch Bar Sponsors Enable Midstream Partners Spitfire Energy Group, LLC Awards Reception Sponsors BK Equipment Messer-Bowers Insurance Reign Capital Holdings, LLC Golf Cart Sponsor Pontotoc Sands

PM FLIGHT Beverage Cart Sponsors EnergyNet, Inc. NFP Corporate Benefits Driving Range Sponsors amshot Baseline Minerals, LLC Putting Green Sponsors INSURICA Lagoon Water Midstream Door Prize Sponsors Compsource Mutual Insurance Company Pontotoc Sands Hole Sponsors ADP amshot Baseline Minerals, LLC Blackshare Environmental Solutions BITCO Insurance Companies Compsource Mutual Insurance Company CVR Energy Enable Midstream Partners Gore Nitrogen Pumping Service, LLC

Gulfport Energy Halliburton Energy Services Healthcare Highways JP Consultants LuGreg Trucking Mammoth Energy Services McSpadden, Milner, Robinson, LLC Messer-Bowers Insurance Mustang Fuel Corporation NFP Corporate Benefits Omni Environmental Solutions Phillips 66 Pinnacle Energy Services Purple Wave Auction Valero Zimmer Resources

PARTNER HIGHLIGHTS INNOVATIVE PROGRAM CREATES OPPORTUNITY FOR OU STUDENTS WHOSE SUMMER INTERNSHIPS WERE CANCELED When the coronavirus pandemic caused businesses to shutter their offices in favor of telecommuting, many students in the University of Oklahoma Mewbourne College of Earth and Energy lost summer internships. With internships a graduation requirement for some majors, students’ graduation tracks were in jeopardy.

That’s when the college’s Ronnie K. Irani Center for Energy Solutions stepped in to help.

Housed in the Mewbourne College, the Irani Center for Energy Solutions (I-CES), founded in 2018, is a program that provides practical experiences and develops entrepreneurial mindsets for students pursuing energy- and earth-sciences-related degrees. Through externships, student teams work on industry projects provided by sponsoring companies.

Before the pandemic, I-CES student externship efforts were focused on the Mewbourne School of Petroleum and Geological Engineering’s capstone course and a couple of summer externship projects. But when students lost their summer internships, I-CES Executive Director David Ferris collaborated with energy companies to develop meaningful projects for students and companies.

“The Irani Center for Energy Solutions is committed to providing opportunities that are real-time and real-world so that both the students and the sponsoring company benefit,” said Ferris.

This meant he and his team needed to find companies that could provide current projects, not scenarios, hypotheticals or past ventures already completed. Despite logistical issues brought on by the coronavirus pandemic and a volatile energy market, six companies agreed to provide projects and valuable experience to students.

Among those companies are Oklahoma City-based Hefner Energy and Ming Energy Partners, as well as Foundation Energy Management, which is based in Dallas and Tulsa.

Nineteen petroleum engineering and two geosciences students who were without internships were placed in externships. Student teams will spend the summer working on projects ranging from valuing portfolios of royalty interests to creating field development plans in the Anadarko Basin of Oklahoma and several other major producing basins across the United States.

“This pandemic is unprecedented in our lifetimes,” said Ferris. “But despite challenges, we have seen time and again people finding opportunities to help one another. The projects provided for Irani Center for Energy Solutions externships are another example of our collective compassion for people, and in this case, our students. We are grateful to our project sponsors who provided students with hope and opportunity during a very difficult situation.”

The Irani Center for Energy Solutions is dedicated to providing energy opportunity for all. Along with experiential learning for students, I-CES enveloped the College’s professional development program, which has been offering courses for professionals in the energy and earth sciences industries at home abroad for two decades. I-CES also engages with the community about matters related to energy.

Thanks to faculty and staff efforts throughout the coronavirus pandemic, students continue to receive excellent educational experiences at the Mewbourne College of Earth and Energy.

Originally published by University of Oklahoma

July | 23

OfďŹ cial IT Provider of Best IT Outsourcing Firm (2019 Journal Record Reader Rankings)

8th Fastest-Growing Company in Metro (2019 Greater OKC Chamber Metro 50)

Your new IT provider amshot oers Alliance members a 15 percent discount on new service contracts.

amshot.com | 405.418.6282 | 428 Dean A McGee Ave., OKC, OK 73102

Culture Still Matters TECHNOLOGY PROVIDES THE WAY By: Rick Alliss, COO, amshot

It

’s a story everyone in Oklahoma City knows, one of those “where were you?” moments for our community: March 11, 2020, Thunder v. Jazz, the night the NBA was canceled.

The NBA was already speculating about having games without fans, and perhaps your employer had talked about the idea of working remotely, but the reality of it all hit fast and escalated quickly. After an NBA player for the Jazz tested positive in Oklahoma City, the NBA not only announced — just a few minutes prior to tipoff — that the evening’s game was canceled, but that the season was canceled. Things suddenly felt very real. Speculation about the coronavirus being just another virus like the flu quickly faded, and by the next week, those of us who were able to keep our jobs found ourselves indoors, working from home, for more than two months.

So now it’s the middle of summer. Communities like ours are slowly reopening and employees are slowly returning to their offices, even as cases of COVID-19 continue to rise in most parts of the country. What, if anything, have we learned about technology, infrastructure and communications through all of this?

The traditional customs of the American workplace have changed, likely for the better, likely for a generation.

Companies like Paycom and Twitter reported increases in productivity and employee utilization while employees worked from home, and many companies have considered or already approved allowing employees to permanently work from home. We’ve all stopped apologizing for having kids and pets, even when they walk into the background during our Teams and Zoom meetings.

During this period, Microsoft Teams and Zoom saw rapid expansion. Zoom — with its simplicity and free entry point — saw millions of adopters and rapidly became the go-to video conferencing solution. However, with a starting price point of $15 per month to host a meeting longer than 40 minutes, and with vulnerability issues that resulted in meetings being “Zoom-bombed,” many adopters paused to reevaluate the right solution for their businesses.

In this review, Microsoft Teams has emerged as one long-term solution that not only functions well for video conferencing and as a solution for soft phones, but also as a full collaboration software suite that allows teams to integrate many other applications inside the interface. Probably the biggest hook to Teams’ long-term success is the integration into existing organizations’ Microsoft 365 environment, which allows users to securely chat, share and collaborate on documents, schedule meetings, and log notes and reminders. Sure, some organizations had already adopted Microsoft Teams, but too many businesses were continuing to live the life of email threads and version-control stress dreams. Teams is not void of issues, of course, and if not properly configured for secure and streamlined rollout within an organization, it can quickly turn into a tangled web of unorganized communication and file misplacement.

Rick Alliss is the COO of amshot, a professional, full-service IT company whose team has over 70 years of combined experience in the energy industry. Formerly an Enterprise Architect for a large Energy Corporation, Rick has nearly two decades of experience providing technology solutions including Managed IT, Software Development, Business Intelligence and more.

July | 25

Other technology lessons of COVID-19? Home internet became about much more than streaming Netflix or video games (though it certainly came in handy for those things, too). Suddenly, parents found themselves meeting with customers and coworkers via Teams and connecting to company systems through VPN, remote desktop and the Cloud, all while their kids attended online classes using the same internet connection. Many of us are using multi-factor authentication to secure our systems and forward our work phones to our cell phones, or better yet, using soft phone technology to call and text using our work phone numbers.

As we go forward into whatever awaits, there’s one really big theme in the IT sector of our workplaces: push for

Pro

Secure collaboration /chat Secure storage Secure Integration with other applications Secure file sharing

Con

progress now, before you need it. Tag all your technology assets so you know who has what when employees take them home. Get your team on laptops. Stop worrying so much about seeing and being seen in the office every day. As leaders, plan time for virtual face time: morning cups of coffee, lunch remote conversations, happy hours for team members, prospects, and clients alike. Culture still matters. Technology provides the way. Spend the money on reliable file storage and communications tools. Make sure your office phones and systems aren’t stuck inside the walls of the brick and mortar location.

We may not see another pandemic in our lifetimes, or perhaps we’ll see this one continue through the year.

Either way, let’s make sure we’re ready.

Pro

Con

Good video conference

Great video conference

Just video conference

Needs to be configured correctly

Market awareness

Vulnerable to attack

Free (very limited version)

Weak security

$15/month minimum

Free

Another login to remember

Integrated to Microsoft 365

45-minute limit on free version

26 | thepetroleumalliance.com

Let’s make sure we’re ready

www.lagoonwater.com info@lagoonwater.com (405) 900-6900

Servant Mindset Focus on People Stewardship Safety Integrity

Serve our customers, our community, and our employees Treating others with dignity and respect Be good stewards of our environment and corporate resources Keeping safety at the forefront of everything that we do Doing the right thing, even when no one is looking and even when it’s difficult

July | 27

Dividends cannot be legally guaranteed and are subject to approval by the BITCO Board of Directors. Historically, BITCO has never failed to declare/pay a dividend in accordance with approved dividend plans. Insurance contracts are underwritten and issued by one or more of the following: BITCO General Insurance Corporation and BITCO National Insurance Company, rated A+ (Superior) by A.M. Best, A2 Stable by Moody’s, and A+ Strong by Standard and Poor’s.

Contact the Petroleum Alliance of Oklahoma office at 405-942-2334 or you can find a BITCO agent near you by visiting BITCO.com today.

A Safety Group Dividend Plan available to Members of the Petroleum Alliance of Oklahoma for over 12 years Benefit from coverages and services customized to the energy industry.

As an added benefit to your Association membership, you may be eligible to participate in the Petroleum Alliance of Oklahoma Safety Group Dividend Plan. Your participation in this plan affords you the following benefits: • BITCO’s broad coverages including property, inland marine, general, property, inland marine, general, umbrella and pollution liability, and commercial auto • Competitive rates • Local claims service • Possibility of a dividend each year BITCO offers customers programs for:

Oklahoma City Branch 1601 NW Expressway Suite 700 Oklahoma City, OK 73118 405-847-6000

• Oil or gas lease operators • Oil lease contractors • Well servicing contractors • Drillers • Miscellaneous oilfield service companies Providing specialized coverage and risk control services for members of the energy industry for over 70 years, BITCO has a long-term commitment to the oil and gas industry. As a member of the Old Republic General Insurance Group, the largest segment of Old Republic International, BITCO provides our insureds with the financial strength and stability of one of America’s 50 largest shareholder owned insurance organizations, that also ranks among the Fortune 500 list of the nation’s biggest companies.

www.BITCO.com

STANDING THE TEST OF TIME BITCO AND THE PETROLEUM ALLIANCE OF OKLAHOMA’S PARTNERSHIP 2020 has seen a multitude of social and economic events that have challenged and made “change” a constant for all of us in some form or fashion. So much so that it has given many of us a greater appreciation for those things that remain constant in our lives and our industry.

One of those things that have been a constant over the past 15-plus years is the Alliance’s partnership with BITCO Insurance Companies. Since working together to form the OIPA Safety Group Dividend Program in 2003, BITCO has distributed dividends totaling in excess of $10 million to the membership. In addition to a potential dividend; the combined efforts of the Alliance and BITCO continue to provide valuable benefits by ensuring that members of the oil and gas industry have consistent access to a financially stable insurance carrier (A+ XV rating per A.M. Best) who provides insurance protection, risk control services and claims related services that are tailored to meet the unique needs of those of us working in the oil patch.

BITCO has been meeting the needs of industries at the core of our economy for over 100 years. Their long-term commitment to industries such as ours has been invaluable as we have worked together to weather the inevitable ups and downs of our business. There are countless stories of how both BITCO and the Alliance have worked together to address solutions to challenges while creating opportunities, including the recent merger of the OIPA and OKOGA to form the Petroleum Alliance of Oklahoma.

As a long-term player in the markets it serves, BITCO has been there for its customers offering solutions that help policyholders proactively address issues which have the potential to impact the costs of their insurance programs. BITCO offers flexible coverage and premium payment options that help its customers deal with the ever evolving legal requirements and economic cycles common to the oil and gas industry. Examples include BITCO’s recent expansion of its pollution liability coverage options, as well as continuing to offer monthly reporting options to help address the fluctuations in employers’ payrolls, a key variable in your monthly cost of insurance.

BITCO’s experienced underwriting, claims, and risk control professionals understand the oil and gas business and the unique challenges it presents. As BITCO Risk Control Consultant, Alan Anderson says, “A common theme that has really made a positive impact from a safety/ loss perspective is our desire to form strong relationships with our customers, including their desire to share their job experiences, allowing others to benefit from their successes.”

As BITCO’s President and CEO, Vince Lamb, expresses often, “We are here for you.” This philosophy has been especially evident during the recent COVID-19 pandemic outbreak during which BITCO has been able to maintain excellent levels of service despite having most employees in BITCO’s Home Office and their 15 branches working remotely.

The Petroleum Alliance of Oklahoma and BITCO — a great partnership that has stood the test of time and looks forward to serving the membership of the Alliance for years to come.

We are here for you!

A special “Thanks” to friends and customers that have made our success possible over the last 40+ years.

You know who you are... again “Thank You”

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“Kickin up Dust since ‘77”

WITH SUCCESS OF ENERGIZE FOR SAFETY COALITION, INDUSTRY IS DRIVING SAFETY TOGETHER By: Tom Robins, Founder and President, Energize for Safety Coalition In 2018, communities across Oklahoma were reaping the benefits associated with a booming oil and natural gas industry — plenty of high-paying jobs, tax revenue for schools and public safety and restaurants and hotels filled with customers. Along with these benefits, however, came increased traffic on local roads and real concerns about driver safety.

Parents were particularly focused on new teen drivers in these often-rural communities who lacked the preparation and training to share the road with oilfield equipment and trucks.

State agencies such as the Oklahoma Highway Safety Office and Oklahoma Department of Public Safety were also looking for leadership from our industry for education, engagement and enforcement solutions to address driver safety concerns and an increased number of crashes. The Oklahoma Department of Transportation (ODOT) needed a way to connect and communicate priorities and discuss engineering solutions and projects with the industry and local stakeholders.

Recognizing the need to bring everyone together, the oil and gas industry voluntarily stepped up to support a new model to engage all concerned stakeholders in identifying and deploying solutions with through the formation of the Energize for Safety Coalition.

Building a Successful Coalition Made up of industry professionals, nonprofits, state agencies and community leaders, the Coalition was formed as a nonprofit organization in 2018 with the support of then Oklahoma Oil & Gas Association Chairman and OERB Board Member Wade Hutchings and founding board funder Devon Energy, Marathon Oil and Ovintiv.

Coalition safety efforts are organized around the principles of engagement, education, engineering and enforcement.

Coalition stakeholders believe everyone plays a role in promoting safety in Oklahoma communities where energy is produced and transported. The Coalition now has a funding grant from the Oklahoma Energy Resources Board and the engagement of many Petroleum Alliance of Oklahoma members who all place safety as their number one priority.

“The Energize for Safety Coalition brings everybody under one roof to look at issues of safety, public awareness and educating our community. It’s made a huge impact for us here,” said Dennis Baker, Kingfisher chief of police.

Taking Care of Students The first meeting of the Coalition was hosted at the Chisholm Trail Technology Center (CTTC) on Highway 33 west of Kingfisher.

“The most important thing for me is the lives of my 30 | thepetroleumalliance.com

students as they drive to and from our campus,” said Max Thomas, superintendent of Chisholm Trail Technology Center. “The Energize for Safety Coalition has provided my students and staff with training, resources and tools that help us positively impact driver safety. I’m grateful for their efforts and support.”

The Coalition worked with the Oklahoma Highway Safety Office to have the Oklahoma Safety Council provide all CTTC students and faculty with additional driver safety training. The Coalition created and hosted a hands-on energy traffic and safety day at CTTC with the safe driving nonprofit Oklahoma Challenge, a first for the industry.

“The Energize for Safety Coalition makes it possible for us to teach thousands of western Oklahoma high school students how to share the road with energy traffic in their community,” said Linda Terrell, Oklahoma Challenge director.

ODOT engineering improvements near CTTC included a new turn lane to eliminate blind spots, lane striping, flashing lights and a dedicated exit and entrance. ODOT is also working to install center lane rumble strips and shoulders within the highway corridor.

Highway Safety Corridor The facility’s concern for students put an industry spotlight on Highway 33 between Kingfisher and Watonga. The Coalition was asked by the Oklahoma Secretary of Transportation and the Oklahoma Commissioner of Public Safety to lead an effort with industry professionals, ODOT and the Oklahoma Highway Patrol (OHP) to implement a 25-mile Highway Safety Corridor on Highway 33.

The Highway Safety Corridor on Highway 33 is a unique team approach. The focus is not just on increased OHP enforcement, but on community engagement, education and ODOT engineering to support driver safety outcomes.

Over 300 coalition members came together with community stakeholders to highlight the collective commitment to road safety and announce the safety corridor. This corridor included additional signs, increased law enforcement, student driver training and reprioritizing ODOT projects in the area for striping, rumble strips and designated turn lanes.

The Results The results of the Energize for Safety Coalition over the past two years have far exceeded stakeholder expectations.

Within the first year of operation, the Highway 33 Safety Corridor experienced a 46% reduction in crashes. This fall, over 1,800 students will participate in an Energy Traffic and Safety Day. The Coalition is also exporting best practices learned in Oklahoma to the Permian Road Safety Coalition.

“Our goal is to see a year-over-year reduction in the number of crashes, number of fatalities, serious injuries and non-serious injuries throughout the area,” said Paul Harris, Oklahoma Highway Saftey Office director. “The Energize for Safety Coalition is critical to helping us achieve this goal.”

With a mutual commitment to promoting safe driving, support from the Petroleum Alliance of Oklahoma and OERB for the Energize for Safety Coalition has created a new model for community and industry success.

ODOT Oklahoma Highway 33 Safety Corridor Feb. 25 through Feb. 24 | 2018-2019 and 2019-2020 Year in Review

2018-2019

Per Day

2019-2020

Per Day

Trend

OHP Citations

420

1.15

711

1.95

69% increase over 1st year

OHP Warnings

1126

3.08

1270

3.48

12% increase over 1st year

OHP Total Contacts

1546

4.23

2020

5.53

30% increase over 1st year

Collisions

47

0.12

25

0.07

46% reduction from 1st year

“This effort is saving lives and improving our industry’s relationships with the communities in which we work,” said Brook Simmons, Alliance president. “It is a win-win for all involved.”

<< Oklahoma Transportation Secretary Tim Gatz, staff and ODOT Commissioners receive the Energize for Safety Coalition’s “Driving Safety Together Award

Over 1,500 high school students from Oklahoma communities where energy is produced and transported participated in a Coalition Energy Traffic and Safety Days

vv

<<

Energize for Safety Coalition facilitated briefings with industry, Oklahoma Highway Patrol and Oklahoma Department of Transportation >>

July | 31

OKLAHOMA ENERGY RESOURCES BOARD INNOVATES TO CONTINUE CORE MISSION The people of Oklahoma oil and natural gas are innovative, resilient people. Just like our industry, the Oklahoma Energy Resources Board (OERB) is tightening its belt, looking for new ways to efficiently support education and clean up historic well sites.

Despite low oil prices and a massive decline in production, Oklahoma oil and natural gas producers and royalty owners are still providing voluntary funding which allows OERB to continue its industry-leading programs. By placing a priority on completing smaller well site cleanup projects first, their goal is to reach the same number of landowners from previous years.

Similarly, by offering new online resources like their 17 virtual classroom lessons, they are finding ways to continue to reach teachers and students in this new educational landscape. They are also developing a digital Ambassador Program to empower the men and women of our industry to educate their friends and neighbors about the importance of oil and natural gas to our state and nation.

After releasing original, interactive lessons, OERB wrapped up the virtual classroom program last month.

These lessons, which covered topics from trigonometry to Oklahoma History, provided supplemental learning opportunities for students during distance learning. All were taught by certified Oklahoma teachers and involved hands-on activities to do at home.

With an assignment to be completed after each lesson, parents shared their kids’ work on OERB’s social media channels. If you missed it during the school year, the lessons will remain on OERB’s YouTube channel. This can be a great way to keep students engaged throughout the summer!

Through OERB, the people of Oklahoma oil and natural gas are offering free online classes for idled industry professionals in an effort to help them add skills to their resumes.

Four classes are being offered virtually through OERB’s PetroTech program in conjunction with Francis Tuttle Technology Center: Excel Levels 1-3, SQL, Python and Resume & Writing. These classes are available for free to anyone who lives in Oklahoma and has worked in oil and natural gas. You can take advantage of this opportunity from anywhere in the state. The topics were selected based on feedback from industry professionals.

“The men and women who work in this industry are some of the brightest and hardest-working people in the state.

That is why the people of Oklahoma oil and natural gas are dedicated to providing them with resources to help get them back to work,” said OERB Executive Director Mindy Stitt. “Through their voluntary funding, we are able to offer scholarships and free classes because they value our workforce.”

THE MEN AND WOMEN WHO WORK IN THIS INDUSTRY ARE SOME OF THE BRIGHTEST AND HARDESTWORKING PEOPLE IN THE STATE.

32 | thepetroleumalliance.com

While the online classes are being offered for free, space is limited. They will be filled on a first come, first served basis. For more information about how to enroll, visit OERB.com/careers/petrotech.

As always, OERB will continue to work alongside industry partners to carry out its mission of educating Oklahomans and remediating abandoned well sites across the state.

Member Spotlight

BK EQUIPMENT

This month, we’re spotlighting Alliance member BK Equipment. A trusted leader in oil field service work, BK Equipment specializes in equipment rentals, oil field product manufacturing and quality fabrication.

With the recent high demand for hand sanitizer and subsequent supply shortages, BK Equipment team members saw an opportunity to help their community. A group of BK Equipment employees formed Blackfoot Services, which supplies all-purpose cleaner/disinfectant and moisturizing hand sanitizer lasting up to eight hours.

Blackfoot Services produces microSURE, an EPA-certified disinfecting surface protectant and FDA-registered eight-hour hand sanitizer. The anti-microbial formula for this product was created over 15 years ago by boardcertified neurosurgeon Dr. Erwin Lo, who initially developed it to treat infectious diseases in the most extreme environments.

The long-lasting sanitizer leaves a breathable barrier which stays working and locked in place for up to eight hours, eliminating the need for continuous sanitizing. The formula protects against most common germs and bacteria on skin, wounds, fabrics and both porous and non-porous surfaces.

Here’s how it works: • When applied properly, the micro-crystalline structure is formed over the surface as it dries.

• The billions of spikes form a covalent bond, essentially creating a new surface which is deadly to microorganisms but unnoticeable to humans and completely safe to touch.

• As unwanted cells attempt to attach to the surface, its membrane is punctured and destroyed via a “mechanical kill.”

Blackfoot Services sees the formula as a global solution across all industries, from hospitals and clinics to schools and restaurants.

“Blackfoot Services is one of the few disinfecting product lines currently being tested specifically to combat COVID-19,” said J.P. Peacock of BK Equipment. “I’m extremely proud of our employees who saw a need in the community and quickly came up with a solution to help both businesses and consumers. We need more creative thinking like this to drive recovery.”

The Petroleum Alliance applauds BK Equipment and Blackfoot Services for their ingenuity and creativity! This kind of innovative thinking will help revolutionize our industry and position us as thought leaders and problem solvers. One thing is certain — more solutions and services will be born from today’s challenges.

8HD, the eight-hour defense hand sanitizer, does not wash off with soap and water. The sanitizer is physician tested and approved and is available in a variety of sizes: 2 oz bottles (48 per case), 1-gallon jugs (4 per case), 5-gallon buckets, 55-gallon drums and 275-gallon totes. The product is fragrance-free and features a soothing formula which will not dry out hands.

The all-purpose disinfecting surface protectant can be wiped, sprayed or misted onto surfaces. It is bleach-free, alcohol-free, ammonium-free and contains no added dyes or fragrances. One gallon usually covers 4,0005,000 square feet.

“In the near future, we also expect to roll out a laundry product for consumers, as well as corrosion and agricultural products,” said Peacock.

“These products will further help mitigate the spread of COVID-19 and keep the general public, as well as large-scale industries, safe.”

To request a product quote, please visit www.b-kequipment.com/handsanitizer.

July | 33

FINANCIAL OUTLOOK OKLAHOMA’S ENERGY STRENGTHS SHOULD CONTINUE TO BENEFIT STATE By: Dr. Dean Foreman, Chief Economist, American Petroleum Institute (API) As our country and the world confronts the unprecedented combination of a public health crisis, significant economic downturn and tumultuous domestic and global oil markets, we have seen oil demand, prices and consequently drilling and production fall by historic amounts.

These events have adversely affected Oklahoma, its state budget and the potential prospects for investment in the state’s energy industry.

Yet, while we cannot understate the severity of the potential impact from this unprecedented combination, Oklahoma’s strengths are undeniable and should be a source of its resilience.

Specifically, Oklahoma’s $206 billion annual economy achieved an enviable position over the past decade largely due to its growth, quality and diversity of energy resources, supportive energy policies, central geographic location, strong pipeline infrastructure and inherent advantages supplying natural gas, oil and electricity nationwide.

These Oklahoma strengths remain. Let’s discuss what we’re watching now at API. When we monitor energy markets, the first and most fundamental driver is the connectivity between local and global markets — and their inextricable linkage to economic activity. Historically, global economic growth has been volatile and cyclical, averaging 3.0% per year from 1970 to 2019. As of June 2020, the third-party consensus based on Bloomberg and the International Monetary Fund is that global GDP will contract by 4.0% this year on a market exchange rate basis but rebound by 4.4% in 2021. While these estimates remain uncertain, $9 trillion of global stimulus efforts have so far been infused to counter current economic conditions. It’s reasonable to believe that $9 trillion of stimulus will have a positive impact sooner rather than later.

G loba l G DP grow th c ould re bound s trongly to 4 .4 % in 2 0 2 1 , a c c ording to third-pa r ty c ons e ns us e s tim a te s Historical global real GDP growth averaged 3.0% per year (1970-2019) but can be volatile and cyclical The third-party consensus expects growth of 4.4% in 2021, a rebound following a contraction of 4.0% in 2020

Global GDP growth, 1970-2019*

Global GDP outlook*

y/y%

y/y%

6

6

Average 1970-2019

Average 1970-2019

4

4 2 0

2

-2

0 -4

-2

-6

1970 www.api.org

1980

sources: IMF, Bloomberg

1990

2000

* Market exchange rate basis

2010

2019

sources: IMF, Bloomberg

2020

Third-party consensus range June 2020 2021

2022-2040

* Market exchange rate basis

Historically, energy demand has increased along with economic growth. Every 1% rise in global GDP required 0.6% more energy on average between 2010 and 2019, but also consistently between 2015 and 2019. By API estimates, this relationship ran slightly weaker for oil (0.5%) but stronger for natural gas (0.9%) in recent years, which is fundamentally why we remain optimistic that energy demand will rebound along with the economy.

34 | thepetroleumalliance.com

A fte r the im m e dia te de m a nd s hoc k , E I A ex pe c ts the globa l oil m a rk e t to re ba la nc e by Q3 2 0 2 0 EIA global supply/demand and Brent price estimates as of June 2020 Million barrels per day 10 Supply less demand

8

Brent crude oil prices

EIA estimates

Column1

6

2020$/Bbl 125

100

4 2

75

0 -2

50

-4 -6

25

-8 -10

2015

www.api.org

2016

2017

sources: EIA STEO (June 2020), Bloomberg

2018

2019

2020

2021

0

In fact, recent weekly total U.S. oil demand, measured by petroleum deliveries, has evidenced the nascent recovery by rising to 17.6 million barrels per day (mb/d) for the week ending June 5 from a low point of 13.8 mb/d for the week ending April 10. To be clear, U.S. oil demand was still about 15% below the level of June 2019, but an improvement of 28% over the past eight weeks is remarkable.

Consequently, West Texas Intermediate (WTI) crude oil prices rose by $12.01 per barrel to $28.56 per barrel between April and May — a record 72.6% monthly crude price increase.

The U.S. Energy Information Administration (EIA) currently projects the global oil supply/demand balance will rebalance beginning in the third quarter of this year and supports oil prices slowly climbing towards $50 per barrel over the next year.

Ok la hom a ’s na tura l ga s a nd oil produc tion ha ve drive n e c onom ic grow th dire c tly a nd he lpe d e na ble othe r s e c tors As Oklahoma’s natural gas and oil production nearly doubled between 2010 and 2019, the state’s real GDP growth increased by 26.4% Oklahoma’s economy requires energy for trade, transportation, construction and manufacturing, which rose by 6.9% between 2010 and 2018 at the same time as energy-related CO2 emissions trended downwards

2019 Oklahoma GDP - $206 billion

Real GDP, energy demand, and CO2 emissions Index (2010=100)

250 All other

200 150

Trade & Transportation

Utilities Natural Resources

Professional Services

Construction

Manufacturing

100 50 0

2010

2012

GDP Energy demand

sources: BEA, EIA

2014

2016

2018

Natural gas and oil production CO2 emissions

www.api.org

N a tura l ga s a nd oil ha ve s tood out for the ir im por ta nc e in Ok la hom a ’s e c onom y a nd e ne rgy c ons um ption

By comparison, U.S. natural gas demand has fared similarly (down 19.2% between March and June per EIA’s Short-term Energy Outlook), but diminished by only 5.2% in production and maintained working gas inventories that have remained within the five-year historical range.

In other words, U.S. natural gas markets were relatively better balanced than oil markets, and benchmark prices at Henry Hub of about $1.70 per million British thermal unit (Btu) over for the first half of June have been low, but were expected by futures markets to approach $3 per million Btu before the end of the year.

For Oklahoma, this means energy could be back in business, and when we analyze the state’s economic performance over the past decade, it’s clear natural gas and oil production have been key drivers of growth.

The diverse energy at play in Oklahoma reveals a well-positioned, competitive mix due to the state’s competitive resources, consistent energy policies and strong pipeline infrastructure.

Although the precise path forward remains uncertain, Oklahoma’s competitive advantages should endure as our nation turns the corner in coming months and quarters.

www.api.org

sources: EIA (2019) and API Team graphics

July | 35

FORECAST HIGHLIGHTS SHORT-TERM ENERGY OUTLOOK Global Liquid Fuels Although revisions to EIA’s forecasts in the June Short-Term Energy Outlook (STEO) are generally smaller than they have been in recent months, this forecast remains subject to heightened levels of uncertainty because mitigation and reopening efforts related to the 2019 novel coronavirus disease (COVID-19) continue to evolve. Reduced economic activity related to the COVID-19 pandemic has caused changes in energy supply and demand patterns in 2020, particularly for petroleum and other liquid fuels. Uncertainties persist across EIA’s outlook for other energy sources, including natural gas, electricity, coal and renewables.

Daily Brent crude oil spot prices averaged $29 per barrel (b) in May, up $11/b from the average in April. Oil prices rose in May as initial data showed global oil demand was higher than EIA had forecast and adherence to announced production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) was high. EIA expects monthly Brent prices will average $37/b during the second half of 2020 and rise to an average of $48/b in 2021. The forecast of rising crude oil prices reflects expected declines in global oil inventories during the second half of 2020 and through 2021. EIA expects high inventory levels, and spare crude oil production capacity will limit upward price pressures in the coming months, but as inventories decline into 2021, those upward price pressures will increase.

EIA forecasts that demand for global petroleum and liquid fuels will average 83.8 million barrels per day (b/d) in the second quarter of 2020, 16.6 million b/d lower than at the same time last year. Lower demand is the result of COVID-19-related shutdowns throughout much of the world. As stay-athome orders are eased, EIA expects liquid fuels consumption will rise to an average of 94.9 million b/d in the third quarter (down 6.7 million b/d year over year). EIA forecasts that consumption of petroleum and liquid fuels globally will average 92.5 million b/d for all of 2020, down 8.3 million b/d from 2019, before increasing by 7.2 million b/d in 2021.

EIA expects the supply of liquid fuels globally will average 92.6 million b/d in the second quarter of 2020, down 7.9 million b/d year over year. The declines reflect voluntary supply cuts by OPEC+ and reductions in drilling activity in the United States because of low oil prices. Oil supply fell by less than demand in the second quarter, and EIA expects supply to be slower to increase. In the forecast, the global supply of oil declines

to 92.0 million b/d in the third quarter before rising to an annual average of 97.4 million b/d in 2021. EIA expects OPEC to drive supply growth in 2021.

EIA expects that global liquid fuel inventories will grow by an average of 2.2 million b/d in 2020. EIA estimates inventories rose from January through May at an average rate of 9.4 million b/d. The builds, which peaked during April, were the result of a sharp decline in global oil demand because of widespread travel limitations and reduced economic activity. EIA estimates that global oil inventories at the end of May stood 1.4 billion barrels higher than they were at the end of 2019. However, EIA now expects global oil inventories will begin declining in June, a month earlier than previously forecast, with draws continuing through the end of 2021. The soonerthan-expected draws are the result of sharper declines in global oil production during June and higher global oil demand than previously expected. EIA expects global liquid fuels inventories will fall at an average rate of 2.5 million b/d from June 2020 through the end of 2021.

EIA forecasts U.S. liquid fuels consumption will average 15.7 million b/d in the second quarter of 2020, down 4.6 million b/d (23%) from the same period in 2019.

The decline reflects travel restrictions and reduced economic activity related to COVID-19 mitigation efforts.

EIA expects the largest declines in U.S. oil consumption have already occurred and demand will generally rise during the next 18 months. EIA forecasts U.S. liquid fuels consumption will average 18.4 million b/d in the third quarter of 2020 (down 2.3 million b/d year-over-year) before rising to an average of 19.5 million b/d in 2021.

Although that level would be 1.4 million b/d more than EIA’s forecast 2020 consumption, it would be 1.0 million b/d less than the 2019 average.

Declines in U.S. liquid fuels consumption vary across products. EIA expects jet fuel consumption to fall by 64% year-over-year in the second quarter of 2020, gasoline consumption to fall by 26% and distillate consumption to fall by 17%. EIA forecasts the consumption of all three fuels to rise in the third quarter and into 2021 but to remain lower than 2019 levels.

EIA estimates U.S. crude oil production fell from a record 12.9 million b/d in November 2019 to 11.4 million b/d in May 2020 as Baker Hughes reported the fewest active drilling wells in the United States in their records, which go back to 1987. EIA expects U.S. crude oil production will continue to decline to 10.6 million b/d in March 2021, then increase slightly through the end of 2021. EIA forecasts that U.S. crude oil production will average 11.6 million b/d in 2020, down 0.7 million b/d from 2019. In 2021, EIA expects U.S. crude oil production will average 10.8 million b/d. This 2020 production decline would mark the first annual decline since 2016. Typically, price changes affect production after about a six-month lag. However, current market conditions have shortened this lag, as many producers have already curtailed production and reduced capital spending and drilling in response to lower prices.

Natural Gas In May, the Henry Hub natural gas spot price averaged $1.75 per million British thermal units (MMBtu). EIA forecasts that relatively low natural gas demand will keep spot prices lower than $2/ MMBtu through August. However, EIA expects prices will generally rise through the end of 2021.

EIA expects that natural gas price increases will be sharpest this fall and winter when they rise from an average of $2.06/MMBtu in September to $3.08/MMBtu in January. Despite EIA’s forecast of record end-of-October storage levels, EIA expects that rising demand heading into winter, combined with reduced production, will cause upward price pressures. EIA forecasts that Henry Hub natural gas spot prices will average $2.04/MMBtu in 2020 and $3.08/MMBtu in 2021.

EIA expects that total U.S. consumption of natural gas will average 81.9 billion cubic feet per day (Bcf/d) in 2020, down 3.6% from 2019. The decline primarily reflects less consumption in the industrial-sector, which EIA forecasts will average 21.0 Bcf/d in 2020, down 8.7% from 2019 as a result of reduced manufacturing activity.

U.S. dry natural gas production set a record in 2019, averaging 92.2 Bcf/d. EIA forecasts dry natural gas production will average 89.7 Bcf/d in 2020, with monthly production falling from 96.2 Bcf/d in November 2019 to 83.6 Bcf/d in March 2021, before increasing slightly. Natural gas production declines the most in the Appalachian and Permian regions. In the Appalachian region, low natural gas prices are discouraging producers from engaging in natural gas-directed drilling, and in the Permian region, low crude oil prices reduce associated natural gas output from oil-directed wells. In 2021, EIA’s forecast production of dry natural gas in the United States averages 85.4 Bcf/d. EIA expects production to begin rising in the second quarter of 2021 in response to higher prices.

EIA estimates that total U.S. working natural gas in storage ended May at almost 2.8 trillion cubic feet (Tcf), 18% more than the five-year (2015–19) average. In the forecast, inventories rise by 2.1 Tcf during the Aprilthrough-October injection season to reach more than 4.1 Tcf on October 31, which would be a record.

EIA forecasts that U.S. liquefied natural gas exports will average 5.6 Bcf/d in the second quarter of 2020 and 3.7 Bcf/d in the third quarter of 2020. EIA expects that U.S. liquefied natural gas exports will decline through the end of the summer as a result of reduced global demand for natural gas.

Electricity, Coal, Renewables and Emissions EIA forecasts 5.7% less electricity consumption in the United States in 2020 compared with 2019. The largest decline by consumption sector on a percentage basis occurs in the commercial sector, where EIA expects retail sales of electricity to fall by 9.1% this year. Industrial retail

electricity sales is forecasted to fall by 6.7%. EIA forecasts residential sector retail sales will decrease by 1.5% in 2020. Milder expected temperatures compared with 2019 reduce EIA’s forecast of electricity consumption for space heating and cooling, but that effect is partly offset by an assumed increase in electricity use by more people who are working from home. In 2021, EIA forecasts total U.S. electricity consumption will rise by 1.0%.

EIA expects the share of U.S. utility-scale electricity generation from natural gas-fired power plants will increase from 37% in 2019 to 41% this year. In 2021, the natural gas share is forecasted to decline to 36% in response to higher natural gas prices. Coal’s share of electricity generation is forecasted to fall from 24% in 2019 to 17% in 2020 and then increase to 20% in 2021. Electricity generation from renewable energy sources is forecasted to rise from 17% in 2019 to 21% in 2020 and to 23% in 2021. The increase in the share from renewables is the result of expected additions to wind and solar generating capacity. Nuclear generation is expected to decline slightly in both 2020 and 2021, but its generation share rises from 20% in 2019 to an average of 22% in 2020 and 21% in 2021 because total U.S. generation falls by more than nuclear generation.

EIA forecasts that renewable energy will be the fastestgrowing source of electricity generation in 2020. EIA expects the electric power sector will add 23.2 gigawatts of new wind capacity and 12.6 gigawatts of utility-scale solar capacity in 2020. However, these future capacity additions are subject to a high degree of uncertainty, and EIA continues to monitor reported planned capacity builds.

EIA expects coal production will decrease by 25% to 530 million short tons (MMst) in 2020. Metallurgical coal mines in Appalachia have slowed production based on reduced demand from global steel production and coking coal, and EIA forecasts production in that region will decline by 35% this year. EIA forecasts Western region production to decline by 25%, partly because of slowing demand for steam coal from key importers such as India and a decline in U.S. coal-fired generation in 2020. In 2021, EIA forecasts coal production will rise to 549 MMst because of rising natural gas prices and rising demand for U.S. exports.

After decreasing by 2.8% in 2019, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decrease by 14% (714 million metric tons) in 2020. This record decline is the result of less energy consumption related to restrictions on business and travel activity and slowing economic growth related to COVID-19 mitigation efforts. CO2 emissions decline with reduced consumption of all fossil fuels, particularly coal (33%) and petroleum (13%).

In 2021, EIA forecasts that energy-related CO2 emissions will increase by 5% as the economy recovers and stay-athome orders are lifted, for a net decrease in energy-related CO2 emissions of 9% for 2020 and 2021 combined. Energyrelated CO2 emissions are sensitive to changes in weather, economic growth, energy prices and fuel mix.

Originally published by U.S. Energy Information Administration (EIA) July | 37

REGULATORY AFFAIRS REGULATORY RELIEF IN OKLAHOMA FOR OIL & GAS COMPANIES With Oklahoma’s oil and natural gas industry suffering historic economic hardships, the Petroleum Alliance of Oklahoma is working closely with our state and federal officials to provide all possible support for our industry.

Our regulatory committee and staff members will continue to address this ongoing effort as our members seek recovery.

The following government entities have offered some form of relief for the oil and natural gas industry during the COVID-19 pandemic: The State of Oklahoma — Alliance staff worked with the Governor’s staff to adopt presidential guidance on essential critical infrastructure and workforce, and temporarily suspend public safety licensing and testing requirements. These actions allowed workers in critical infrastructure jobs to continue without disruptions. The Governor then issued Oklahoma Executive Order 202007, requiring all nonessential businesses in the state of Oklahoma to close while exempting oil and natural gas companies and workers.

The passage of Senate Bill 661 in 2019 was serendipitous, as it changed the Administrative Procedures Act, allowing agencies to meet by teleconference or videoconference.

This allows the agencies to be more flexible while still protecting the health and safety of its employees and the public.

Oklahoma Corporation Commission (OCC) — The OCC closed its offices to the public and implemented remote work for most employees, which required new processes to be established very quickly for remote work. All OCC services can now be conducted online, via telephone, email and regular mail and will continue until further notice.

The Commission meetings have continued to occur as scheduled, and the public is able to watch the live stream or listen and participate via conference call.

Administrative courts are being conducted via teleconference and videoconference. Contested cases are allowed to be conducted or can be delayed until inperson meetings resume. Companies and attorneys that conduct business in the courts have received updated instructions on remote participation and remote filing instructions. Pleading submissions, as well as all other filings in established OCC causes, can be submitted via email and can be emailed to division-specific OCC attorneys. The cause number and venue-specific file stamp will be electronically affixed to the application and returned to the filer via email. The Commission has suspended all fines and all court clerk filing fees for emergency order applications filed during this time.

38 | thepetroleumalliance.com

In addition to the efforts outlined above, the Alliance staff has been working diligently on relief for our members by: • Identifying and correcting issues related to the OCC’s Oil & Gas Division staff working remotely.

There are weekly calls to identify problems and work on solutions, such as establishing procedures for registering new operators.

• Raising the issue of excess electricity demand charges with the Public Utility Division, which has led to further discussions between the oil and natural gas companies and electric providers.

• Requesting Secretary of Energy & Environment Kenneth Wagner to submit a RVP waiver for Oklahoma Refineries to the EPA, which he submitted on March 26, 2020.

• Encouraging the OCC to submit a request into the Governor’s Coronavirus Aid, Relief and Economic Security (CARES) Team for funds to plug orphaned wells abandoned by companies financially disrupted due to COVID-19.

Oklahoma Department of Environmental Quality (ODEQ) — The ODEQ has closed all offices to the public, and agency business continues through email and virtual meetings. The Alliance staff worked with the ODEQ on implementing concerns of the oil and natural gas industry on facility inspections, enforcement discretion, stack testing and identifying critical industries. The ODEQ implemented an Enforcement Discretion policy related to compliance with some environmental requirements.

The ODEQ still encourages self-disclosure when a noncompliant issue is identified. The ODEQ State Laboratory has remained open with limited services.

The Environmental Protection Agency (EPA) — The EPA has published a policy concerning enforcement and compliance during the COVID-19 pandemic.

The EPA will exercise enforcement discretion specified below for noncompliance covered by this temporary policy and resulting from the COVID-19 pandemic. The policy will apply retroactively beginning March 13, 2020. The enforcement discretion described in this temporary policy does not apply to any criminal violations or conditions of probation in criminal sentences. The policy expires Aug. 31, 2020.

Federal Energy Regulatory Commission (FERC) — FERC issued a policy statement providing guidance regarding the commission’s response to the effects of the national emergency caused by COVID-19 on oil pipelines. The guidance addresses the impacts of COVID-19, particularly where such pipelines are encountering regulatory hurdles that may impede or delay attempts to respond to changing market dynamics. FERC has stated that oil pipelines may request temporary waivers or extensions of time to comply with the following regulations where necessary and appropriate to address the unforeseen circumstances resulting from COVID-19.

U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) — OSHA issued an interim enforcement response plan for the coronavirus pandemic. The response plan provides instructions and guidance to OSHA Area Offices and compliance safety and health officers for handling coronavirus-related

complaints, referrals and severe illness reports. The response plan contains interim procedures that allow flexibility and discretion for field offices to maximize OSHA’s impact in securing safe workplaces in this evolving environment.

Bureau of Land Management (BLM) — Due to the COVID-19 national emergency and the sharp decline in domestic oil prices, federal oil and gas leases may qualify for a royalty rate reduction. BLM recognizes many operators are not able to operate wells economically or as a practical matter and may find it necessary to simply plug and abandon a significant number of producing wells unless they receive financial relief. BLM is concerned that premature abandonment of a substantial number of these wells on federal leases will mean the immediate loss of the oil, which these wells now produce, and the potential loss of their remaining recoverable reserves.

The bureau issued Interim guidance for Royalty Rate Reduction requests for Oil and Gas Leases during the COVID-19 national emergency.

The national emergency is also affecting many oil and gas companies’ field operations by causing a significant reduction of necessary contractor and employee services.

Many operators cannot safely operate or produce from oil and gas wells on federal leases. If operators shut-in wells on a massive scale, then there is a high likelihood that many leases will terminate due to lack of production.

BLM issued guidance on application for Suspension of Operations and Suspension of Production. Suspension of Operations can be approved when a company has an approved APD but due to COVID-19 doesn’t have the personnel needed to complete that well. Suspension of Production allows for shut-in of the lease due to COVID-19. Typically, suspension of a federal lease would require many regulatory steps, this guidance streamlines that process so producers have more latitude.

For more information on any of the programs and initiatives listed above, please contact Alliance Director of Regulatory Affairs Bud Ground at bud@okpetrocom.

OIL AND NATURAL GAS: A SOLUTION FOR OUR NATIONAL PARKS By: Kathleen Sgamma, President, Western Energy Alliance

Recently, the Senate passed the Great American Outdoors Act. Western Energy Alliance has been actively supporting the provisions of the bill that would take revenue from oil and natural gas production on public lands and direct it into national parks.

We conducted a #ParksinWreck campaign to highlight the $12 billion funding shortfall in our beloved national parks and how the parks suffer from crumbling roads, dilapidated visitors’ centers and eroding trails. We raised money for Friends of Canyonlands Park as a way to promote the need to reduce the maintenance backlog in the parks.

Why is the Western Energy Alliance doing this? After all, companies having been producing on public lands in the west for decades. Why do we care what the government does with its 12.5% take of the revenue?

Well, we live, work and play in the west, in which over 50% of the land is federally owned and where the majority of parks are located. We love national parks just as much as other Americans. They’re right in our backyard, and we visit them regularly.

The second answer is that we and our members are civic-minded. We do indeed care how the government uses the billions of dollars of federal revenue we generate annually. We want to see it used for the betterment of society. By making a direct link from oil and gas development on non-park, nonwilderness public lands to national parks, we raise awareness of how our industry provides more money for conservation than anyone else.

The bill is a great way to highlight that offshore production already generates 100% of the Land and Water Conservation Fund, which has funded nearly $4 billion in conservation projects over many years. The new bill would likewise dedicate revenues from onshore federal production into repairing our national parks. It’s a great opportunity to highlight all our industry does for conservation.

Finally, Western Energy Alliance is constantly fighting keep-it-in-the-ground groups who want absolutely no development on public lands. Development only occurs in a small portion of the vast federal land holdings and not on areas set aside for conservation, like national parks and wilderness areas. Of the 700 million acres of federal lands and minerals, only 25.5 million acres are under lease, and only 0.07% of the land experiences any oil and gas surface disturbance.

It’s a reasonable balance that returns money to the American taxpayer while protecting the land.

Yet our opponents constantly throw up development roadblocks that the Alliance must battle. We are the lead trade association advocating for reasonable access to and balanced regulations of federal lands.

President Trump has already said he’d sign the bill if the House passes it. After that, when obstructionist groups once again sue to stop leasing or permits, we’ll have a potent new tool. We’ll be able to point out how their efforts take vital funding away from national parks. Conservation simply doesn’t happen without someone generating the revenue, and that “someone” is oil and natural gas.

July | 39

YOUR OUTSOURCING

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OIL AND GAS ACCOUNTING, DIVISION ORDERS, LEASE RECORDS AND DUE DILIGENCE.

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TULSA, OK OFFICE: 40 | thepetroleumalliance.com 918.584.2111

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Michael Gibson | mgibson@associated-resources.com

LEGISLATIVE SUMMARY ABBREVIATED, CONTENTIOUS LEGISLATIVE SESSION SAW SUCCESS ON KEY INDUSTRY ISSUE Numbers matter in our industry — and looking at the stats for the 2020 legislative session, some might find this year’s results disappointing.

The Oklahoma 2020 legislative session began like any other session, convening on the first Monday of February. Legislative committees met, floor sessions were held and legislative business was conducted. The Petroleum Alliance’s legislative team did a remarkable job moving our issues forward while also keeping legislation which would negatively impact the industry at bay.

176 BILLS SENT TO GOVERNOR 2020 Session

But then, on March 17, a Senate staffer tested positive for COVID-19, the Oklahoma Legislature adjourned subject to the call of the chair and the Capitol was closed to the public The legislature later convened briefly to approve a series of bills preventing across-the-board budget cuts resulting from an anticipated revenue failure. It was estimated the FY 2020 budget would be $400 million short. The legislature also met in a special session called by Gov. Kevin Stitt to affirm his declaration of a health emergency, a statutory requirement.

The legislature convened once again on May 4 and sent approximately 150 bills to Gov. Stitt, bringing the total to 176 bills for the 2020 session. The governor vetoed 19 of those measures, an unprecedented six of which were overridden by the legislature.

For comparison, last year, 535 bills were sent to the governor; 12 were vetoed, and none were overridden.

For fiscal year 2020, the legislature appropriated approximately $8.6 billion; keep in mind they provided an additional $435 million to ensure a revenue failure was not declared for FY 2020. For FY 2021, the legislature appropriated $7.8 billion. This amount is approximately $885 million (9.8%) below the total authorized amount.

In the midst of this turmoil, there was a bright spot for our industry. The Alliance’s main priority this session was Senate Bill 1875, the Oil and Gas Produced Water and Waste Recycling and Reuse Act. The act designates who owns and is responsible for produced water and waste from oil and natural gas drilling and production operations. In spite of the tumultuous session, we are proud that our staff was able to usher through this important piece of legislation.

It passed both houses of the legislature with minimal opposition and was promptly signed into law by Gov. Stitt.

The Speaker of the House recently described the 2020 session by stating “this session was so unique.” We could not agree more.

19 VETOED BILLS

$7.8 BIL APPROPRIATED 9.8% below total authorized amount FY 2021

PRIMARY ELECTION 2020

The June 30 primary election was expected to have some surprises, and it certainly did not disappoint.

The surprises, however, were not the ones highly anticipated by political prognosticators.

Oklahoma Corporation Commissioner Todd Hiett amassed 75% of the vote, when some predicted a much narrower victory. Medicaid expansion, which was supposed to have finished with 65% of the statewide vote, passed narrowly by 50.4%.

Although there were some upsets in the Legislature, the Petroleum Alliance of Oklahomaâ&#x20AC;&#x2122;s PAC saw tremendous success. The PAC backed the election of Rick West in House District 3 over incumbent Lundy Kiger. Candidates receiving contributions and winning in their primary were Rep. Kevin McDugle (HD 12), Rep. Jim Grego (HD 17) , Rep. Gary Mize (H-31), Rep. Cynthia Roe (HD-42), Rep. Kenton Patzkowsky (HD-61), Rep. Sheila Dills (HD-69), Rep. Monroe Nichols (HD -72) and Rep. Marilyn Stark (HD-100).

In the Senate, we supported Sen. Wayne Shaw (SD-3), who was defeated in his primary. Sen. Larry Boggs (SD-7), who the PAC supports, faces a runoff election in August. Additionally, PAC-supported candidate Jessica Garvin will challenge Sen. Paul Scott (SD-43) for the Republican nomination.

July | 43

POLITICS IN THE TIME OF A PANDEMIC By: Jeff Eshelman, IPAA Senior Vice President of Operations and Public Affairs / Energy in Depth

These past few months have been remarkable for our industry and nation. Not only did we face a major commodity price crash due to the supply-demand imbalance, but we also faced a global pandemic that has shut down economies worldwide.

The federal government has acted swiftly to provide economic support to American workers and businesses impacted by COVID-19. While the U.S. natural gas and oil industry is critical to the national and global economies, it is important to note we have not asked for any special “bailouts” for American producers. Any assistance provided to our industry should be the same for all industries nationwide, whether that is through the Payroll Protection Act or the Main Street Lending Program.

However, a fringe group of congressional Democrats and activist groups are arguing against bipartisan support of the energy industry and its employees. In a recent letter written by Sen. Ed Markey (D-Mass.), these lawmakers are clearly putting the demands of keep-it-in-the-ground activists above the needs of blue collar workers.

States across the country, led by both Democrats and Republicans, have declared oil and natural gas operations are “essential” or “critical” business activities — a sharp contrast to the view expressed in Sen. Markey’s letter, showing just how out of touch these politicians really are. As The Hill reports: “More than 40 Democratic lawmakers are arguing that fossil fuel companies should not be able to receive any assistance under the coronavirus relief package passed by Congress last month. In a letter to Treasury Secretary Steven Mnuchin and Federal Reserve Board Chairman Jerome Powell, lawmakers say the $2 trillion deal was ‘intended to support struggling families, workers, businesses, states and municipalities. … giving that money to the fossil fuel industry will do nothing to stop the spread of the deadly virus or provide relief to those in need.’”

It seems these Democrats don’t believe “struggling families, workers and businesses” include oil and natural gas workers and operators, but we know that’s certainly the case.

As mentioned, the oil and natural gas industry has not asked for a corporate bailout, as Sen. Markey and the other letter signers call it. The reality is that if operators, especially smaller independents, can’t access the loans that every other company can, they may be forced into layoffs, reduced operations or possible bankruptcy. This scenario would be devastating to the millions of people who work hard every day to produce the energy we all use.

OIL & NATURAL GAS INDUSTRY SUPPORTS THE ECONOMY While the fringe lawmakers work to block financial assistance to essential workers and businesses, and environmental activist groups continue to take advantage of COVID-19 to push their agenda forward, the oil and natural gas industry is stepping up to help communities affected by the pandemic.

Across the country, companies and trade associations have donated personal protective equipment that health care workers rely on, given millions of dollars to charities and nonprofits and supported students with educational resources while classes are cancelled.

When it comes to supporting workers and their communities, it’s clear where the oil and natural gas industry stands. The question is, given their letter seeking to single out some they see as less worthy, where do these elected officials stand?

44 | thepetroleumalliance.com

A Washington Perspective By: Tim Stewart, President US Oil and Gas Association

L

ike everything else, COVID-19 has altered Washington, D.C., freezing Congress in its tracks and putting presidential campaigns on hold. The crisis hypercycle, both real and manufactured, makes any November predictions a fool’s errand.

Washington deserves credit for quick action on COVID response and economic stabilization packages, but with just 40 days left on the legislative calendar, it is clear Congress has lost nearly an entire year to impeachment and the COVID-related shutdown. Even must-pass items such as the annual defense authorization and appropriations bills remain in question given the toxic election year climate.

With all that has already happened in 2020 — from impeachment to protests, and with five months until the election — one can only guess what else will reshape the political and regulatory world.

The pace of recovery is the determining factor in everything going forward. If additional stimulus spending is needed, or even possible, we might expect an infrastructure-related bill, top-heavy with transportation and water infrastructure spending to be deliberated — though the clock is against it. Meanwhile, the administration races to finalize rulemaking on everything from National Environmental Policy Act (NEPA) reform to executive orders on China decoupling to supply chain resiliency.

Social distancing has at least temporarily altered every functional aspect of Washington, from the way congressional hearings are held to how campaign money is being raised. Agency decisions are made via conference calls. Freedom of Information Act (FOIA) requests from environmental groups no longer request the names of who entered the U.S. Department of Interior, but instead seek to determine who was included on a Zoom call invite.

As one congressional staffer told me, “The day-to-day work continues, but it’s nearly impossible to cut a deal across the aisle over email and Zoom calls.” A federal employee said, “People you need to collaborate with are just not around, and you have to be doggedly persistent to get even the simplest decisions made.” Congressional inaction and agency paralysis were already underway — now, it’s just happening remotely.

Set aside the April price shocks, demand collapse and the subsequent reordering of the capital markets. We work through challenges like that — it’s what we do.

Our biggest work ahead is the emerging class of would-be decision-makers who see neither a role, nor place, for our industry. Our innovation and our wealth creation stand in the way of their plans for social and economic reordering. The left-wing political opportunists who see the weakness now are writing the industry postmortem. In their minds, November will bring about the final chapter for oil and gas.

In 30 years, I have learned one thing: never bet against the oil and gas industry.

To bet against so many smart people, who play the long game so well, is folly. I will stack up our smart people against the left’s congressional committee chairman or the anti-oil and gas activists any day of the week.

Oil and gas has been around for more than 150 years because we provide what people need. The smart money follows, and no election, pandemic or protest will change that fact.

July | 45

46 | thepetroleumalliance.com

DEAL FLOW & DEAL CERTAINTY By: Ethan D. House, VP Business Development, EnergyNet, Inc.

The slowdown of the upstream oil and gas acquisitions and divestiture market began well before this springâ&#x20AC;&#x2122;s commodity price collapse, market shutdown and the news of a new virus sweeping the nation. As public market investors shut down capital and demanded free cash flow, we saw companies begin to pull back A&D activity to pause and better navigate the changing landscape. This coupled with everything else previously mentioned brings us quickly to today.

Many publicly-traded E&P companies, as well as some which are privately held, have begun restructuring conversations or were well within the bankruptcy process by early April 2020. More will follow, and this space will take some time to flush out. For an outright sale of the company or the assets individually, we see movement on the asset divestment side 3-12 months down the road.

Some energy investment banks have noted how slow, or in fact dead, the marketplace is currently. We agree it has slowed, though we are starting to see deals shake loose. There will be a lack of deals greater than $1 billion offered or closed in the foreseeable future; however, transactions in the sub-$200 million space are continuing.

Through June 2020, EnergyNet has closed more than 700 individual property packages ranging in value from $100,000 to $40 million. Of all interest types offered, royalties and minerals make up the largest percentage of total sales though there were a few larger operated packages sprinkled throughout. We see an increase in the number of packages coming to the market in the next few months, though we maintain the value range will typically be $10-$200 million. Additionally, we see gas-heavy Proved Developed Producing assets transacting more frequently than oil assets, mainly because buyers and sellers can agree on the underlying commodity price.

Deal close certainty and making sure buyers are financially capable and properly vetted remain important factors for sellers in the current market. We boast a large universe of buyers with dry powder, but the system falls apart without EnergyNet verifying that the bidders have the funds ready and liquid so they can close in a timely manner. EnergyNet promotes competition amongst financially qualified buyers who have proven they can close the deal.

If you are a buyer, donâ&#x20AC;&#x2122;t worry â&#x20AC;&#x201D; we see a large number of deals and quality assets coming to market soon.

Sellers, on the other hand, have been positively surprised by the number of bidders participating and the valuations they are putting on the table. Buyers are going out of their way to demonstrate to sellers how they are structuring their offers to provide maximum value for production and a potential upside in these current market conditions. Many buyers are getting creative with their structures to ensure a deal gets to the finish line. The professionals at EnergyNet have a 20-year history of solid experience, A&D market insight and consistent deal execution.

July | 47

Downstream Update

BIOFUEL GROUPS FILE PETITION CHALLENGING TRUMP ADMINISTRATION’S SMALL-REFINERY WAIVERS Biofuels groups have filed a petition in the U.S. Court of Appeals in Washington against the Environmental Protection Agency (EPA), challenging the agency’s process for granting refineries exemptions to the nation’s biofuel blending mandates, the groups said Wednesday.

The petition, filed by groups such as the Renewable Fuels Association, the American Coalition for Ethanol and Growth Energy, challenges the EPA’s process for granting waivers to 31 oil refineries for 2018. The biofuels industry has criticized the Trump administration for expanding the

48 | thepetroleumalliance.com

number of waivers granted in recent years, claiming the exemptions undercut demand for fuels such as corn-based ethanol.

“We are going to hold the EPA accountable under the law for the damage it has done to rural communities, biofuel producers and farm families,” said Growth Energy Chief Executive Emily Skor.

Since August, when the EPA announced waivers for 2018, the Trump administration has tried to mend fences with the biofuels industry and corn lobby. Last week the EPA proposed a plan to boost biofuels demand that would base

biofuel volumes required for blending on exemptions recommended by the U.S. Energy Department. The plan was met by further consternation from industry leaders.

“EPA continues to implement the Renewable Fuel Standard program in accordance with the Clean Air Act, taking into consideration additional direction from Congress, recommendations from the Department of Energy and relevant court decisions,” EPA spokesman Michael Abboud said.

Originally published by Reuters

Midstream Update

EPA PUSHES BACK AGAINST STATE MOVES TO STYMIE PIPELINE PROJECTS The oil and gas industry in the United States scored a big win this week after the Environmental Protection Agency (EPA) narrowed the focus of a rule that, up until now, allowed states to refuse to grant pipeline permits or stall them indefinitely. But under the Trump administration’s guidance, the EPA is saying “no more shenanigans.”

The EPA has issued a final rule narrowing the scope of review for proposed oil and gas pipelines that states should consider under a section of the Clean Water Act for energy infrastructure.

Up until now, states have been using Section 401 of the Clean Water Act to deny permits to oil and gas pipeline projects.

But this final rule makes it clear: under the Clean Water Act Section 401, states can look at the water issues only — not larger issues such as climate change — when asked to review an energy infrastructure project.

States will also be required to complete the review within one year of receiving a certification request, a rule that will surely cramp the styles of the anti-fossil fuel states.

The process for pipeline approvals involves the Federal Energy Regulatory Commission (FERC), which is tasked with interstate pipelines and regulating pipeline market entry. The agency awards a certificate of public convenience and necessity authorizing the construction or extension of natural gas facilities, according to an official permitting website for the U.S. government. FERC requires environmental reviews for projects like interstate natural gas pipelines.

But the states get a say too in the form of the Clean Water Act (CWA).

Under the powers granted to states by the CWA, states can deny any pipeline project a permit — even one that FERC has approved — if either the construction or operation of the pipeline violates the state’s water quality standards.

In this way, states are able to override federal pipeline approvals and potentially derail a multi-state pipeline project.

This isn’t inherently a bad idea, but the scope of the state’s power is supposed to be limited to the effects on water, with “supposed to be” being the operative phrase.

Some would argue that New York did so beyond their power by analyzing the cumulative impact upon all environmental resources, instead of just water.

The EPA’s actions this week aren’t so much a change in policy or intent of policy, but a clarification of the spirit of the existing Clean Water Act, which the EPA contends was never designed to blanketly oppose oil pipelines on broad climate change grounds after the FERC had given a project a green light. This keeps the assessment of the broader environmental impact in the hands of the FERC, not each state.

But the EPA would no longer stand idly by.

“When states look at issues other than the impact on water quality, they go beyond the scope of the Clean Water Act,” the EPA said in a statement.

“The EPA is returning the Clean Water Act certification process under Section 401 to its original purpose, which is to review potential impacts that discharges from federally permitted projects may have on water resources, not to indefinitely delay or block critically important infrastructure,” EPA Administrator Andrew Wheeler said. “Today, we are following through on President Trump’s Executive Order to curb abuses of the Clean Water Act that have held our nation’s energy infrastructure projects hostage, and to put in place clear guidelines that finally give these projects a path forward.”

While the Trump administration and the oil and gas industry have been pushing for and proposing new energy infrastructure as the nation moves closer to energy independence, some states such as New York have denied permits for such projects.

Last month, the New York State Department of Environmental Conservation (NYSDEC) denied a water permit for the required Clean Water Act Section 401 Water Quality Certification of Williams’s Northeast Supply Enhancement gas pipeline from Pennsylvania to New York City.

Before that, the FERC approved certificates for three different interstate projects back in 2018, and New York nixed all three.

Oil industry associations supported EPA’s proposed final rule in comments late last year.

“For those opposed to any oil or natural gas development, America’s energy infrastructure needs are viewed as little more than convenient opportunities to deploy regulatory strategies designed to delay needed projects and sever resources from markets.

And increasingly, those regulatory tactics include use of the Section 401 certification process to attempt to delay, constrain or altogether veto nationally important energy projects,” the American Fuel & Petrochemical Manufacturers and the American Petroleum Institute said.

Where the industry sees the states’ actions as a power grab, others see the EPA’s ruling as the power grab.

Commenting on the EPA’s final rule to limit the scope of Section 401 review of the Clean Water Act, NYSDEC Commissioner Basil Seggos said in a statement: “This action is nothing short of a federal power grab that would strip New York and all states of our authority to protect clean water and public health. New York won’t stand for it. We will continue to fight to protect our communities and defend our authority under the law.”

The fight over the CWA scope, or more specifically the fight over how much power the states have to derail pipeline projects, is far from over. Just over a month ago, the EPA and the Department of the Army issued another final rule on a separate aspect of the clean water act that redefined the waters of the United States. The EPA’s move drew criticism from democratic states and resulted in lawsuit filings.

Originally published by OilPrice.com

July | 49

LEGAL UPDATE SUPREME COURT JUSTICES WRESTLE WITH CREEK RESERVATION CASE U.S. Supreme Court justices on May 11 looked for clear answers — and maybe even a compromise — on whether Congress officially terminated the Muscogee (Creek) Nation’s reservation at Oklahoma statehood.

During oral arguments conducted by telephone, justices also sought to understand the extent of disruption that might result from a ruling that Oklahoma has been improperly trying criminal defendants within historical Creek boundaries for more than a century.

Justice Neil Gorsuch, whose vote may be critical to the outcome of the case, seemed to align himself with the viewpoint that Congress never disestablished the Creek reservation.

Gorsuch said there was “an awful lot of debate” before Oklahoma statehood in 1907 about the possible means of terminating the Creek reservation, but that the commission tasked in the 1890s with stripping the Five Tribes of their land “couldn’t quite get there.”

The arguments on May 11 came in a criminal appeal from child rapist Jimcy McGirt, who claims he should have been tried in federal court, rather than state court, because he is an enrolled tribal member and his crime was committed on the Creek reservation.

The issue raised by the case is whether the Creek reservation, which includes eight counties and most of Tulsa, was ever officially terminated or whether the tribe and the federal government still exercise authority over some matters.

considered it; his participation in the McGirt case gives the court nine justices to make a decision, and his views may decide the matter.

As when they heard the previous case, justices asked about the implications of remaking the legal jurisdictions in eastern Oklahoma.

Justice Ruth Bader Ginsburg said, “What makes this case hard is that there have been hundreds, hundreds of prosecutions of some very heinous offenses of state law.”

Those cases, she said, would all have to be retried “years later when the witnesses may not be there anymore.”

Ian Heath Gershengorn, representing McGirt and arguing that the reservation was never terminated, responded that “there may be hundreds of cases” but that the state of Oklahoma had not documented that high a number of potential retrials.

And, he argued, the actual number doesn’t mean the Supreme Court should allow people to be tried in the wrong courts.

“I think that harm flows anytime a criminal defendant is tried by a sovereign that lacks jurisdiction,” he told Ginsburg.

Oklahoma Solicitor General Mithun Mansinghani, arguing for the state attorney general’s office on May 11, told Justice Samuel Alito that a ruling that the Creek reservation still exists would mean thousands of previous cases that were resolved in state courts may have to be retried in federal courts.

A decision in the case is expected this summer.

“We have currently over 1,700 inmates whose crimes were committed in the former Indian Territory who identify as Native American,’’ Mansinghani said. “So, the state presumptively would not have jurisdiction over those people and would have to release them.

Though the case concerns the Muscogee (Creek) Nation, the decision is expected to apply to the other members of the Five Tribes — the Cherokee, Chickasaw, Choctaw and Seminole Nations.

“And that is probably half the actual number because it doesn’t include crimes committed against Native Americans, which the state would not have jurisdiction over. We’re talking here about potentially over 3,000 inmates we may have to turn over.”

The court is taking its second crack at the topic after apparently deadlocking last year in a case involving an Oklahoma death row inmate whose crime was committed within the historical Creek boundaries and argued that he shouldn’t have been tried in state court.

Alito asked whether the case could be decided narrowly on the basis of what court should have had jurisdiction over McGirt’s case, averting a ruling on the reservation question.

Gorsuch recused himself from that inmate’s case because he sat on the lower appeals court that

Deputy Solicitor General Edwin Needler, arguing for the Trump administration, said that narrowing the case that way would be relevant because Congress had intended

for Native Americans and non-Native Americans to be subject to the same laws after statehood.

But Gershengorn, representing McGirt, said, “There was a lot of discussion about whether there’s a compromise available on criminal jurisdiction. There is not.” He said Congress’s intent was clear that jurisdiction over crimes on Native American land was in federal courts.

Some justices inquired about Mansinghani’s assertion that the Creeks never had a reservation before statehood. That argument was a new one forwarded by the Oklahoma attorney general’s office this year that wasn’t made in the previous case.

Questioning Gershengorn, Chief Justice John Roberts noted that, according to the state of Oklahoma’s arguments, the Creeks themselves “had been adamant about the fact that they are not ‘reservation Indians.’”

Gershengorn responded, “The best evidence of what Congress thought about whether Creek lands were a reservation under the statute is that Congress referred to those lands as a reservation under the statute.”

Congress never terminated the Creek reservation, Gershengorn said, and never transferred criminal jurisdiction to Oklahoma.

“Indeed, Congress considered hallmark language of disestablishment and rejected it,” he said.

Needler told justices that the U.S. government didn’t agree with Oklahoma that the Creeks never had a reservation.

But he said that in preparing Oklahoma for statehood, “Congress eliminated all hallmarks of a reservation.” Congress broke up the tribe’s domain and eliminated its courts, along with the distinct treatment of Native Americans under federal law in the territory, he said.

Congress “directed that Oklahoma law would apply throughout the former Indian Territory and provided for the transfer of criminal and civil cases involving Native Americans and non-Native Americans alike to state court,” Needler said.

Originally published by the Oklahoman

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WILDCATTERS

WILDCATTERS WEDNESDAY RECEPTION WEDNESDAY, AUGUST 19 | 5:30 The Mayo Hotel | 115 W 5th St | Tulsa, OK 74103

PETROLEUM ALLIANCE PAC

Alliance PAC contributions support candidates who support Oklahoma’s oil and natural gas industry.

For information about donating, contact Jon Bargas at 405.601.2244 or jon@okpetro.com.

REGISTRATION* $50 | In advance, members $65 | In advance, non-members $65 | Day of the event

HOW TO REGISTER Online: www.ThePetroleumAlliance.com Phone: Contact Ellis Ebel at 405.601.2272 *Please note there is no reserved seating for this event.

STEVE ANTRY

“Pamela Anderson, Cow Patties, and Resource Plays” Antry founded the Eagle Energy series of companies, whose focus

Antry has over 40 years of industry experience and is from a third-

has always been in the Mid-Continent region of the United States.

generation Oklahoma oil family. He holds a bachelor’s of business

Eagle sold substantially all of its assets in late 2012 in a transaction

administration and an MBA from Texas Christian University.

valued at $650 million. This was the fifth largest transaction of any

Additionally, he was a nominee for Entrepreneur of the Year for

kind in Oklahoma that year. More recently, Eagle sold its remaining

2011 by the accounting firm of Ernst and Young and was one of

STACK and SCOOP assets in central Oklahoma in 2019. Eagle

three Oklahoma finalists for that honor for 2012. Additionally, he

was named in the top five of the Journal Record’s “Fast 40” list of

is a Lifetime VIP of the International Blues Foundation. In 2017

Tulsa’s fastest growing companies in 2011 and earned the top spot

he produced and performed vocals, harmonica and guitar for his

in 2012. Prior to founding Eagle in 2009, Antry founded Beta Oil &

debut album, which earned critical acclaim and reached the No. 5

Gas. He led Beta through its initial public offering and onto growth,

Blues/Rock worldwide ranking in the roots music charts.

eventually ranking as No. 125 in the Oil and Gas Journal’s list of the top 200 oil and gas producers in the U.S. before merging with PetroHawk Energy.

54 | thepetroleumalliance.com

WEDNESDAY RECEPTIONS

WILDCATTERS WEDNESDAY RECEPTION T U E S DAY, S E P T E M B E R 1 5 | 5 : 3 0 P. M .

S k i r v i n H i l t o n | 1 P a r k A v e | O k l a h o m a C i t y, O K 7 3 1 0 2 PETROLEUM ALLIANCE PAC

Alliance PAC contributions support candidates who support Oklahoma’s oil and natural gas industry.

For information about donating, contact Jon Bargas at 405.601.2244 or jon@okpetro.com.

REGISTRATION* $50 | In advance, members $65 | In advance, non-members $65 | Day of the event

HOW TO REGISTER Online: www.ThePetroleumAlliance.com** Phone: Contact Ellis Ebel at 405.601.2272

DAVID M. WOOD

*Please note there is no reserved seating for this event. **Online registration closes at noon on September 14.

President, CEO and Director of Gulfport Energy David Wood joined Gulfport in December 2018 from Arsenal

David holds a bachelor’s degree in geology from the University

Resources LLC, a West Virginia-focused natural gas producer,

of Nottingham in England and completed Harvard University’s

and First Reserve Corporation portfolio company, where he

Advanced Management Program. He previously served on the

most recently served as Chairman of its Board of Directors and

Board of Directors and as an Executive Committee Member of

previously held the role of CEO. From 2013 to 2016, he served as a

the American Petroleum Institute. He was also a member of the

Senior Advisor to First Reserve, a premier energy-focused private

National Petroleum Council and is a member of the Society of

equity firm, serving on several portfolio company boards. Prior

Exploration Geophysicists. His past board affiliations include

to that, he spent more than 17 years at Murphy Oil Corporation,

Crestwood Midstream GP LLC, Crestwood Equity GP LLC, Deep

including as CEO, President and Director from 2009 until his

Gulf Energy LP and Berkana Energy, when it was majority owned

retirement in 2012. From 1980 to 1994, David held various senior

by Murphy Oil.

positions with Ashland Exploration and Production. He began his career as a well-site geologist in Saudi Arabia. He currently serves on the board of Lilis Energy Inc., an exploration and development company operating in the Delaware Basin.

July | 55

56 | thepetroleumalliance.com

July | 57

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The Petroleum Alliance of OKlahoma

l a i c o s Get WITH THE

ALLIANCE

The Petroleum Alliance of Oklahoma is your go-to source for industry news and reports. From live webinars to real-time updates, we are working hard to keep our members informed.

FOLLOW US ON SOCIAL MEDIA FOR MORE EXCITING INITIATIVES!

THE QUOTING PERIOD FOR THE NEW PETROLEUM ALLIANCE OF OKLAHOMA ASSOCIATION HEALTH & BENEFITS PLAN IS NOW OPEN! As a reminder, the Alliance has partnered with Blue Cross and Blue Shield of Oklahoma to help our members provide affordable benefit plans for their employees.

The new Petroleum Alliance of Oklahoma Association Health & Benefits Plan offers: • Access to the state’s largest preferred provider organization (PPO) • Providers you can trust • No medical underwriting • Multiple plan options with nationwide access • Dental, vision and prescription drug coverage • Seamless and intuitive benefits management Alliance member companies are eligible for these plans if they: • Have between 2 and 50 employees and are headquartered in Oklahoma • Elect medical, dental, vision and basic life coverage For more information, please contact benefits@okpetro.com.

July | 59

2020 NEW CALENDAR OF EVENTS JUNE: 6/29: The Alliance Open Golf Tournament - Oak Tree Country Club, OKC

JULY: 7/17-7/18 STACK Summer Classic Livestock Show – Kingfisher County Fairgrounds

AUGUST: 8/19: Wildcatters Wednesday Reception – The Mayo Hotel, Tulsa Featured Speaker: Steve Antry, CEO, Eagle Exploration

SEPTEMBER: 9/TBD: Oilfield Appreciation Charity Concert - The Jones Assembly, OKC 9/15: Wildcatters Wednesday Reception – Skirvin Hilton Hotel, OKC Featured Speaker: David Wood, CEO, Gulfport Energy

OCTOBER: 10/7: Wildcatters Wednesday Luncheon – Tulsa Country Club, Tulsa 10/22: Wildcatters Invitational Golf Tournament – Gaillardia Country Club

NOVEMBER: 11/5 - 11/8: Annual Meeting - Four Seasons, Las Colinas, TX 11/12: Wildcatters Wednesday Luncheon – Skirvin Hilton Hotel, OKC

DECEMBER: 12/3: Wildcatters Wednesday Luncheon (TBD) – Skirvin Hilton Hotel, OKC 12/19: SCOOP Winter Classic Livestock Show - Grady County Fairgrounds 60 | thepetroleumalliance.com

ANNUAL MEETING NOVEMBER 5-8

As our industry navigates these unprecedented times, rest assured that the Alliance is continuing to work on your behalf. While circumstances beyond our control have forced us to reschedule our Annual Meeting, we hope to see you all in Las Colinas in November! Now more than ever, we are grateful for your support.

Please see below for important information regarding the date change for our Annual Meeting: Existing Reservations: • If you have an existing reservation, no action is necessary. The Four Seasons will automatically shift your reservation to the new dates.

• If you need to modify your existing reservation, you may do so through the Petroleum Alliance Group Reservation Website. For any questions, please contact Lauren Burnett at lauren@okpetro.com.

New Reservations: • If you wish to make a new reservation at the hotel, please contact Lauren Burnett at lauren@okpetro.com.

Registration: • If you made a reservation previously, your registration has been moved to the new dates, and no other action is required.

• If you are a sponsor and have not yet received your comp codes from Ellis Ebel, you will soon.

Sponsorships are still available, so please contact Natalie Kinmonth at natalie@okpetro.com if you are interested.

July | 61

KEVIN LASSAHN VICE PRESIDENT & G E N E R A L M A N AG E R VA L E R O A R D M O R E R E F I N E R Y

1 2 3 4 5

Who’s your favorite Oklahoman?

T. Boone Pickens. I was fortunate enough to hear him speak at an event in Oklahoma City in 2016. I believe his philanthropy was one of his most amazing accomplishments, and at that time, he had given away more than his current net worth. When asked why, he said that he wanted to see his money put to good use while he was still alive. He then punctuated the comment with, “But don’t worry. I still have enough to get across the finish line!”

If you could eat one food the rest of your life, what would it be?

If the associated health concerns magically went away, I have to admit I would digress to eating pizza, burgers, French fries and an assortment of fried food every day.

Mountains or beach?

I would go to the beach. Growing up on the east coast, trips to the beach are my favorite summer memories with my family and friends. Building those memories with my kids is something I look forward to every summer.

Have you met anyone famous?

I have been able to play in the Valero Texas Open Pro-Am several times and have golfed with some great golfers. The most notable was Phil Mickleson, who proved to not only be a great golfer, but a great person to spend the afternoon with.

What’s your favorite drink?

O’Brien Estates Cabernet Sauvignon, our favorite winery in Napa that we used to frequent when we lived in northern California.

62 | thepetroleumalliance.com

6 7 8 9 10

Favorite college team?

I graduated from Drexel University, which is not a big sports college. So on game day, my favorite team is whichever team the person I’m at the game with is cheering for. This is even truer now with my daughter at OU and my son heading to OSU in the fall!

In one sentence, what do you actually do all day in your job?

Hopefully be a leader; my job is to set the strategic vision and ensure the organization is aligned with and executing that vision every day.

Favorite band in junior high?

R.E.M. was the first concert I ever attended.

A friend’s mom who drove us there and waited in the parking lot. Imagine dropping off half a dozen middle schoolers to a concert with 20,000 people in attendance and expecting them to find you afterwards without a cell phone!

Name of your pet?

We have a full house: four kids and four pets.

Our pets are Dillon (14-year-old Lab), Daisy (2-year-old Lab), Beau (three-month-old yappy little dog) and Zebra (guinea pig).

What was your first job?

I fulfilled my childhood dream of becoming a lifeguard at my neighborhood pool. I didn’t think I would ever want to do anything else until I started to drive and realized I barely made enough money to pay for gas.

11 12 13 14 15

What was your first car?

A brown 1979 Toyota Corolla. The car was handed down from my brother, who inherited it from our mother. My younger brother was the proud recipient of the car when I was done with it. It served our family well.

If you could have dinner with one person, alive or dead, who would it be?

Bill Gates. His part in the digital transformation of our generation is fascinating, including his unprecedented shift from leading the world’s most successful business to creating the world’s largest philanthropic organization. I would love to hear his story, his technological and philanthropic vision for the future and maybe spark a friendship with the second richest man in the world.

What was your favorite TV show as a child?

I was a child in one of the greatest eras of TV, so it is hard to choose just one. I remember looking forward to prime-time television greats like “The Dukes of Hazzard,” “The A-Team,” “Magnum, P.I.” and “Knight Rider.”

What’s the number one item you would save from your burning house?

My cell phone. If my family is out safely and I have my cell phone, I can live without all the other stuff.

What is your favorite thing about working in the oil and gas industry?

The people. At all levels of the oil and gas industry we have hardworking, intelligent and dedicated people who advance our industry to ensure we can provide safe, clean and affordable energy which makes people’s lives better.

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What is your favorite holiday?

Labor Day weekend is my favorite holiday because it’s the last big weekend of summer.

My birthday always falls on Labor Day weekend, and it usually means I get to enjoy it with a lot family and friends. We always plan fun outings and gatherings to enjoy the weekend and celebrate my birthday.

What is the best gift you have ever received?

My four amazing kids are the best gifts that I have ever received. Of course, my wife agreeing to marry me so that we could have those amazing kids together is a very close second!

What is the first thing you would do if you won the lottery?

I hope that I would take the time to reflect on what is most important to my family and community and prioritize how I could use my newfound wealth to improve them. A noexpense-spared trip to a tropical paradise would be the perfect way to accomplish such reflections.

Last movie you saw at the theater?

I don’t remember the exact movie, but I do know it was with my two youngest children. Going to the movies is something we enjoy doing together, but COVID-19 has interrupted our movie outings.

What’s your favorite app?

I enjoy traveling, and I do a lot of both business and personal travel. Travel apps are great, and I love the ability to book a hotel, plane ticket or rental car within minutes and from any location with Wi-Fi or cell service.

The flexibility travel apps provide is amazing.

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