Current regulatory uncertainty and permitting delays are two of the biggest factors negatively impacting Permian Basin oil and gas production, an industry leader has told a U.S. House committee.
Steven Pruett, chairman of the Independent Petroleum Association of America, noted that exploration activity in the Permian Basin, stretching for 250 miles from western Texas to southeast New Mexico, is presently down due to a decline in investment.
“The number of banks loaning money to oil and gas companies is half what it was 5 years ago,” Pruett told members of the Energy and Commerce Committee’s Subcommittee on Energy, Climate, and Grid Security.
Pruett said the decline was attributable to environmental, social, and governance investing mandates, as well as loan losses. He additionally asserted that “permitting delays for infrastructure development” has negatively impacted projects.
Continued Pruett: “Without new pipelines, processing plants, and export terminals, oil and gas production in the U.S. will not grow.”
Pruett called for greater Congressional oversight of the Environmental Protection Agency and Department of Interior, among other federal agencies, “as it relates to regulations affecting the oil and natural gas industry broadly defined from the wellhead to the consumer.”
The founder and chief executive officer of Elevation Resources, which is based in Midland, Texas, Pruett also addressed the ongoing lack of labor confronting the oil and gas industry.
“Negative messaging by the Biden Administration discourages people from joining our industry,” Pruett asserted.
“My generation is approaching retirement, setting the oil and gas industry up for the ‘great crew change,’” said Pruett. But even though wages have generally increased by some 15% in the last two years, “there are not enough young people to replace my generation in the oil industry.”
Add in one further challenge to the industry: “Months-long delays in completing or repairing wells and facilities due to manpower and equipment shortages.”
Altogether, said Pruett, drilling and completion costs just for his company alone have risen from $8 million in 2021 to $11 million per well in 2022 “due to escalating input costs, including steel and labor, while liquid prices have reduced our returns, thus limiting drilling activity.”
Other industry leaders providing testimony to the subcommittee contended that the Biden Administration through its regulatory policies is intent on reducing oil and gas production in the coming years.
In taking testimony from industry leaders, House Energy and Commerce Committee Chair Cathy Rodgers said a decline in Permian Basin oil and gas production would mean three things: “Lost jobs. Lost revenues. And lost livelihoods.”
By Garry Boulard
