As market uncertainty continues, how are independent producers adjusting to new financial and regulatory dynamics? During today's OnPoint, Dan Naatz, senior vice president of government relations and political affairs at the Independent Petroleum Association of America, explains why he believes more oversight is needed from Congress of the Obama administration's oil and gas regulations, many of which, he says, overlap with state policies.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Dan Naatz, senior vice president of government relations and political affairs at the Independent Petroleum Association of America. Dan, thank you so much for coming on the show.
Dan Naatz: Such a pleasure being here, Monica. Thank you for having us.
Monica Trauzzi: So, Dan, nearly 70 members and representatives of IPAA were in meetings on Capitol Hill last week discussing the specific concerns that independent producers have with the current state of play on regulation. What is the key message that was delivered to members of Congress?
Dan Naatz: It was an important message, that we really do represent the independent portion of the upstream sector of the oil and natural gas industry. And so we went to Congress to have a discussion of the regulations that are coming from the administration, the impact that it has on our members, the impact it has on natural gas and oil production on federal lands, on private lands, and everywhere, and really concern about the number of kind of regulations that are pancaking on top of each other. So that was the message we brought to Congress this week.
Monica Trauzzi: Some of your members met with House and Senate leadership. What is the policy landscape that they laid out for you, and what is it that Congress can do when it comes to these regulations?
Dan Naatz: Yeah, it's a great question, and it was something that our members struggled with, to say, you know, it's not necessarily passing a specific bill or doing anything. So one of our real focuses was oversight, both in the House in the Senate, to have the committees, both Republican and Democrat, on a bipartisan, ask the administration questions about this. What is their purpose? Because many times we've found that regulations overlap, they overlap with state regulations, other federal regulations, and so as you're moving forward -- certainly for our members -- looking at this complicated regulatory scheme, we need the Congress to get some of those answers from the administration.
Monica Trauzzi: Is your sense that there is a clear understanding from members of Congress about why things are different for your producers versus the bigger guys?
Dan Naatz: Yeah, there is. I think again -- and we represent a wide swath of members, but I do think a lot of these members understand that the independent producers, our average size is still a 20-person company. When you're talking about having to navigate this complicated regulatory scheme, it is different for those companies. And again I also want to stress -- and we always lead with that -- we're very proud of our environmental record. We're very proud of our safety record. But when you're looking at it, it is a challenge for smaller companies to address those concerns.
Monica Trauzzi: This is a particularly volatile and uncertain time for the oil industry. How are your producers affected by market dynamics?
Dan Naatz: Market dynamics are -- you know, no doubt it's a tough time in the industry. You've seen this -- in one way the renaissance that's happened with American oil and natural gas production has really led to lower prices and this price environment. But those are challenges a couple of our members that I was with on my team said, "Look, we understand that. We've faced that over the years -- a boom and bust cycle. We can plan for that. As a good businessman you should plan for that." The challenge we have is that currently the regulatory scheme, the legal system that's happening is really forcing them to have to make decisions outside of the business cycle that they face with prices and commodity prices.
Monica Trauzzi: And IPAA's CEO Barry Russell recently wrote in the Washington Times that the Obama administration's oil and gas policies are sapping the strength of energy producers. There's data showing production is back to pre-Deepwater Horizon levels, so what specific changes then would your industry like to see on the regulatory front? You talked about this pancaking. What would you like to see?
Dan Naatz: I think one of the issues is clarity, in addition uniformity, so that you know the scheme you're facing before you go forward. Second of all, in Barry's article I think the discussion is certainly on state and private lands you've seen this uptick in oil production, natural gas production, but on federal lands where the federal government has an integral role, that has all dropped. And we view it as an opportunity for the federal government to step forward and have a wide array of options moving forward, and one of those options we're concerned about is to continue to push for keeping it in the ground on federal lands. And that's a challenge for a lot of our members who operate both onshore and offshore, quite honestly.
Monica Trauzzi: The Obama administration recently proposed directing oil and gas revenues from offshore production towards climate resilience. Do you believe that more funds should be going to climate resilience?
Dan Naatz: You know, one of the issues is there's going to need to be additional research and review of all these issues. And we are -- as producers we often talk about the royalties that go to the federal government. I won't get into too many details on where that goes -- there's issues of land and water conservation funds, should the monies go elsewhere -- but it does get to the point that these are federal revenues. It's an important revenue stream for the federal government and something that we have always been very proud of what we've done and think we can contribute more if we have the opportunity, rather than go the opposite direction.
Monica Trauzzi: So when you look at the current field of potential nominees to become the next president, is there one candidate in particular that you think would serve the interests of your industry best?
Dan Naatz: We have not taken -- on the presidential level we have not taken any position on that, and we won't do that. But we certainly review all the candidates, and over the years -- I've been now at IPAA for 13 years -- every presidential election we'll meet with both the candidates and their teams, talk about what we have done, again both on a bipartisan fashion. We met with the Obama administration; we met with the Romney folks last time. We'll continue to do that, because one of the things I think that is important for the country to have is a discussion on energy where we go -- this renaissance, not only in oil and natural gas, but the unbelievable opportunity that's been created as we're talking about oil imports going down to the lowest level in decades. Again, not only that, but wind, solar -- how this all works is going to be key to having a vibrant economy, to increasing job growth, and certainly for the next 10, 15, 20 years where the nation's going.
Monica Trauzzi: All right, we'll end it right there. Dan, thanks for coming on the show.
Dan Naatz: Monica, thank you very much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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