October 2020 

DOMESTIC ENERGY PRODUCERS ALLIANCE October 2020 

DEPA REPORT ON INDUSTRY, LEADERSHIP, LEGISLATION AND ENERGY REGULATION

New AGS Price Marker Reflects A Maturing Coastal WTI Market Written by Jeff Kralowetz, Argus Media

he US Gulf Coast is the world’s most active and that both pipeline trades at coastal hubs and Aframax transparent physical market for crude oil. Producers waterborne trades go into setting the index. In this way, bringing crude there can sell to the 8mn b/d Gulf coast the AGS reflects the optionality that producers have to refinery network, or they can put their barrels on the sell on a pipeline basis to coastal refiners or on a water- water, where more than 1mn b/d of borne basis to the export market. US crude heads to Europe and about Pooling the pipeline and wa- 1.5mn b/d goes to Asia. terborne trades gives AGS multi- Early this year, industry leaders ple times more trades and trans- started a process to ensure that this parency than Dated Brent. In- world-class crude market has a sin- creased agreement on the quality gle published daily crude price – of WTI going into AGS makes based at the Gulf coast -- that rivals pooling possible. Midstream op- Brent as a global price marker. Ar- erators Enterprise and Magellan gus was one of the price reporting now report monthly on the aver- agencies that introduced a new age quality of WTI going through American GulfCoast Select their Houston facilities. In the (AGS) coastal crude price, repre- past six months, the quality at the senting the price for unblended two locations has been within 0.5 Midland-quality WTI sold at sev- Argus AGS is degrees API and within .05 per- eral locations at the Gulf coast. seeing growing cent sulphur of each other. Now, three months from the Argus normalizes its AGS to June 26th launch, the Argus AGS trade activity, convergence of Enterprise’s ECHO terminal at is seeing growing trade activity, Houston. So trades done at other convergence of prices at trade lo- prices at trade locations, and locations – anywhere from Cor- cations, and rising industry calls rising industry calls for a pus Christi and Ingleside to Ne- for a financial contract that will derland and Beaumont – have make AGS hedge-able by every- financial contract that will their values adjusted to reflect the one from Sugar Land to Shan- make AGS hedge-able by location spread seen in the last dong. three months of trade between ECHO and their location. Hou- Argus chose to design its AGS everyone from Sugar ston area docks have tended to as a composite index, meaning Land to Shandong. trade at a 25-cent premium to ECHO, so when Afram- cal Dated Brent grades, means there is a high degree of ax trades there are reported, the price is reduced by 25 confidence that Argus AGS price reflects broad market cents/bl before being added into the AGS volume- reality. weighted average for the day. Corpus Christi trades In spite of COVID-related market disruptions, the have a 20 cent/bl correction, and trades at MEH are US Gulf coast crude markets have continued to mature, adjusted by 7 cents/bl before being entered into AGS. making it possible for AGS to emerge. It is a robust These location spreads have been narrowing in just pricing mechanism for a US Gulf market that now in- the three months since AGS was introduced. Part of the fluences crude prices around the world. reason for the narrowing is that the new Wink to Web- Companies that would like to report their trades for inclu- ster line is able to deliver to both Magellan and Enter- sion in the Argus AGS may contact the Americas Crude Edi- prise systems, thereby helping bring them closer to par- tor, [email protected]. ity. But the Corpus Christi and Beaumont-area spreads Argus AGS and AGS Marker are published every business have also narrowed, demonstrating how the build out of day in the Argus Crude and Argus Americas Crude reports. infrastructure is making AGS one homogenous grade PA (data) codes for Argus AGS, Argus AGS Marker and for across the Gulf coast. the location price spreads are listed in the table below: Traders in Europe and Asia have noted that having one coastal price for Midland-quality WTI will simpli- Argus AGS Marker PA0030327 fy their contracting. And there is growing enthusiasm Argus AGS PA0030324 for AGS financial contracts to allow for trading spreads Location- October 2020 Location Differential PA Code between Brent futures or Dubai swaps to allow interna- ECHO 0 - tional buyers more precise hedging and decision mak- MEH + 7 cents/bl PA0030304 ing. Domestic US traders like having a price set at the Genoa Junction + 10 cents/bl PA0030305 coast, and reflective of the whole region rather than a Speed Junction + 20 cents/bl PA0030306 single location that could experience logistical bottle- FOB EHT + 25 cents/bl PA0030307 necks and erratic prices. FOB Texas City + 25 cents/bl PA0030308 Finally, the fact that Argus AGS has an average of FOB Seabrook + 25 cents/bl PA0030309 more than 30 market participants each month as com- Corpus Christi + 20 cents/bl PA0030677 pared to an average of 10 market participants in physi- Beaumont/Nederland + 20 cents/bl PA0030678

DEPA believes in seeking common ground, through common sense solutions, to the challenges facing our industry. Our bipartisan Executive Board of Directors DEPA Staff approach provides a Harold Hamm Dan Boren Peter Regan uniquely powerful voice Chairman Stephanie Canales Congressional and Alliance Liaison for our members at the Jerry Simmons Diana Chance Ed Cross David Crane state and national level. President/CEO Lobbyist Ron Ness Cynthia Simonds Don Montgomery John Schmitz Vice President Marketing and Ben Shepperd Communications Dir. Our work is critical. Berry Mullennix Brook Simmons Sarah Reece Secretary/Treasurer Administrative Services Your support is vital. Bill Stevens Manager Rock Zierman PO Box 33190  Tulsa, OK 74153  405-669-6646  [email protected]

DEPA Energy Leadership in 2021

DEPA was born out of the shale revolution and recogni- tion of the increasingly diverging priorities of the US domestic energy industry and the large international/integrated oil • American GulfCoast companies. Nowhere has this divide been more evident than within the energy lobbying establishment in Washington - Select (AGS) which is dominated by multinational, integrated companies. In the absence of an alternative voice dedicated to Ameri- • can energy priorities, the US energy renaissance would be at Stimulus Funding the mercy of radical environmentalists, large multinational companies, OPEC, even Russia. • The Preservation of In the next few issues of the DRILLER, we will have arti- cles on the DEPA Energy Leadership issues that go in-depth American Energy with what you need to know and what we are doing. • The Dangers of The DEPA strategy for success is simple. 1. Defend US production from radical environmentalists, The Green New Deal OPEC, Russia, and other threats • 2. Rewrite laws and regulations developed in an era of Refinery Capacity energy scarcity and dependence to reflect and strengthen the new reality of energy abundance and independence. • Environmental, Social 3. Open and expand competitive markets for US energy around the world and governance (ESG)

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DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 3

2020-2021 Board of Directors

Harold Hamm Chairman, Continental Resources Inc. Jerry Simmons President, DEPA Don Montgomergy VP, Montgomery Exploration Berry Mullenix Secretary/Treasurer, Panther Energy, LLC Executive Dan Boren Director, First United Bank Committee Stephanie Canales Director, Cougar Drilling Solutions Diana Chance Director, Donner Properties Ed Cross Director, KIOGA Ron Ness Director, North Dakota Petroleum Council John Schmitz Director, B29 Investments Ben Shepperd Director, Permian Basin Petroleum Association Brook Simmons Director, The Petroleum Alliance of Oklahoma Bill Stevens Director, WindRiver Associates, LLC Rock Zierman Director, CIPA

Mark Metzler, Felderhoff Exploration Bobby Baggett, Valeo Capital Advisors, LLC Jason Modglin, Texas Alliance of Energy Producers Dale Calhoun, Florida Propane Gas Association & Florida Natural Gas Association Patrick Montalban, Northern Montana Oil & Gas Assoc. Jason Geer, Michigan Oil & Gas Association Brian Moore, Superior Energy Directors Thomas Herbert, Florida Indep. Petroleum Producers Assoc. Rick Muncrief, WPX Energy Bryan T. Hood, Illinois Oil & Gas Association Greg Schnacke, Denbury Resources, Inc. Blu Hulsey, Continental Resources, Inc. Avery Smith, JP Consultants, LLC Kenny Jordan, Assoc. of Energy Service Companies Judy Stark, Panhandle Producers & Royalty Owners Assoc. Roger Kelley, Continental Resources, Inc. Jennifer Sutton, Council for a Secure America David Le Norman, Reign Capital Holdings Jim Teague, Enterprise Partners, LLC Toby Mack, Energy Equipment & Infrastructure Alliance Fred Toney, Calfrac Well Services Ltd. Mike McDonald, Triad Energy, Inc Darlene Wallace, Columbus Oil Jeff McDougall, JMA Energy Company, LLC Bob Warren, International Assoc. of Drilling Contractors Nelson Wood, Wood Energy, Inc.

4 Domestic Energy Producers Alliance

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DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 5

DOE Issues Report on the Benefits of US Oil and Natural Gas Providing Energy Security and Supporting Our Quality of Life

October 5th the U.S. Department of Energy’s While the United States was once heavily reliant on oil (DOE’s) Office of Fossil Energy (FE) announced the and natural gas imports, we are now a major supplier in release of a new report: U.S. Oil and Natural Gas: international energy markets,” said Assistant Secretary Providing Energy Security and Supporting Our Quality for Fossil Energy Steven Winberg. “We will continue of Life. This report acknowledges the critical role of to foster relationships with industry, academia, state advanced energy technology innovation in maintaining agencies, the private sector, and non-governmental or- U.S. economic success and providing a sustainable do- ganizations to drive innovation forward, to underpin mestic energy supply for the future, while recognizing U.S. economic growth and energy security.” the important benefits the oil and natural gas sector provides in our daily lives. Visit FE’s www.energy.gov to download the U.S. Oil At an energy and manufacturing roundtable in New and Natural Gas: Providing Energy Security and Mexico, Deputy Secretary of Energy Mark W. Menezes Supporting Our Quality of Life report. announced the release of the report. “Oil and natural gas provide more than two-thirds of the energy Americans consume daily. In addition to meeting our energy needs, these fossil fuel resources are integral to our standard of living,” said Deputy Secretary Menezes. “This report delves into the importance of these resources, the five key technologies that have supported the industry’s advancement, the opportunities for fu- Our robust ture domestic energy growth, and more.” Over the next two decades, oil and natural gas are projected to account for the majority of energy consumption in the United States. economy and our Not only is natural gas the largest contribu- tor to the Nation’s electric power generation, but oil and natural gas combined are energy use are revitalizing the U.S. petrochemical manufacturing industry, supplying high-tech materials, increasing commerce from exporting inextricably liquefied natural gas, supporting renewable energy, and creating well-paying jobs across the country. linked. “The Department’s efforts performing the early- stage research and working with industry to develop the technology have helped make this success possible.

The report focuses on the important benefits this increased supply of domestic energy produced, and the key advances in oil and natural gas production technology that made this growth possible.

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A Look at The Numbers Pages 7-15 are excerpts from the DOE US Oil and Natural Gas; Providing Energy Security and Supporting our Quality of Life report.

Fossil fuels provide the lion’s share of the energy we consume, with oil and natural gas comprising the majority of that contribution. Natural Gas 31% A decade ago, natural gas provided about a quarter Coal of the energy used to create electricity in the United States. Today, it provides nearly 40 percent and is ex- 13% pected to continue to claim this share for decades to come.5 While the share of power produced by renewa- Oil ble energy sources like solar and wind is expected to grow, these sources are “intermittent” – wind energy 37% fluctuates with the wind intensity and solar energy fluctuates with cloud cover and nighttime darkness – so there has to be a reliable, secure means to provide con- tinuous electricity to consumers. The larger the contri- the sun comes out.6 This role for natural gas will con- bution of renewables to the electric power grid, the tinue until low-cost, environmentally sustainable, large- bigger this challenge can be. An effective solution is scale power grid batteries capable of storing solar or installation of fast-ramp-up natural gas power plants, wind-generated energy and discharging it instantane- which can be switched into the power generation sys- ously are available. In this context, natural gas supports tem quickly whenever renewable generation slips. an integrated energy system by enabling increased de- Such plants are capable of reaching full power outputs velopment of renewable sources for power generation, of hundreds of megawatts in less than 30 minutes and while decreasing carbon emissions (relative to other can be scaled back quickly when the wind picks up or hydrocarbons) per unit of energy generated.

Energy Use Over the Four Sectors

The four major US economic sectors used energy relatively equally in 2019. Commercial 1. The transportation sector’s primary use is gasoline and diesel 18% fuel for cars and trucks. It also includes fuel for marine vessels, Industrial locomotives, and airplanes.

33% 2. Industrial sector use includes fuel or electric power for the fa- Residential cilities and equipment used for producing, processing, or assem- bling goods, including heating, air conditioning, and lighting. 21% Fossil fuels, primarily natural gas liquids, also are used as raw materials for manufactured products. Transportation 3. Commercial sector use includes fuel for service-providing businesses, governments, and organizations, including heating, 28% air conditioning, lighting, refrigeration, and cooking.

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 7

The Role of Oil and Natural Gas Beyond Energy While only about seven percent of liquid hydrocarbons are used to produce non-energy products, these products are omnipresent and essential in our daily lives in the 21st century. Home Construction Homebuilders use many natural gas-based materials to build affordable and safe homes, including plastic foam insulation and sheathing materials, vinyl siding, weath- erproof window frames, high performance caulks and paints, asphalt roofing materials, polyvinyl chloride (PVC) pipe, and chemically treated lumber. Within our homes, plastic foam insulation helps refrigerators, freezers, dishwashers, and heating and air conditioning systems operate quietly and efficiently. Fire retardant furniture and mattresses are made from synthetic fibers derived from natural gas.

Healthcare Plastics made from natural gas liquids, such as ethane, have helped revolutionize healthcare delivery. Surgical gloves, antiseptics, medications, anesthetics, and a variety of medical devices from heart valves to prosthetics to eyeglasses are just a few examples. Du- rable plastic packaging enables improved safety and more efficient delivery, from tamper-proof caps to shatter-proof bottles to protective coatings and non- permeable biohazard bags to transport medical waste. Plastic is widely used in surgical devices and proce- dures – modern pacemakers, stents, and joint replace- ment devices rely on its ability to be molded to intri- cate specifications. All of these applications are available at much lower cost and require much less mainte- nance than their metal and glass predecessors.

Consumer Products The list of products Americans use daily that are derived from oil and natural gas is almost endless. Clothing, water bottles, food packaging, sports equipment, computers, cell phones, furniture, car- pets and rugs, and other home furnishings are some examples. Natural gas and natural gas liquid derived chemicals are components of a wide variety of health, 8 Domestic Energy Producers Alliance

personal care, and beauty products that range from antiseptics to deodorants, vitamins to nail polish, and sham- poo to shaving cream. It’s difficult to imagine what life Oil and natural would be like without the hundreds of items we rely on every day for safety, durability, comfort, and conven- ience that come from oil and natural gas. gas sustain our

Automotive Industry Plastics are integral to advances in the automotive industry. Automakers have modern way of met increased fuel efficiency standards in part by re- placing heavier metal parts with lightweight plastic materials. Plastics make up 50 percent of today’s cars by life and will volume, but only 10 percent by weight9 – a shift in design that has dramatically improved gas mileage. Plas- tics also play a key role in most auto safety features, such as seat belts, air bags, interior cushioning, and continue to do crumple zones. Automakers are expected to rely even more on high strength composite materials that combine plastics with glass fibers, carbon fibers, or other materi- so for the als to create car parts that often are stronger and lighter than metals, as well as corrosion resistant. foreseeable Agriculture Natural gas and natural gas liquids serve as the source of hydrogen needed to combine with nitrogen to make future. ammonia, the foundation of chemical fertilizers that have helped increase U.S. crop production and yields, particularly for high demand crops like soybeans and corn, to record highs over the past 60 years.8 Natural gas also is used to dry these crops. Further, plastics made from hydrocarbons provide bags for hay and si- lage, greenhouse covers, bale wrapping material, mulch film to prevent weed growth, and plant nursery contain- ers. These natural gas-based products help maximize economic efficiencies in the agriculture sector.

Renewable Energy Even the renewable energy sector relies on the oil and natural gas industry. Most wind turbine manufacturers today use lightweight plastic composites derived from hydrocarbons to create strong, aerodynamic turbine blades. Some researchers suggest plastic-based solar cells may become more common in the future due to their flexibility, light weight, and ability to form ex- tremely thin components – potentially for printing and placing onto walls, windows, and a variety of other flat and curved surfaces.

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 9

Energy from oil and natural gas forms the backbone of our modern economy, powering our factories and communities, heating and cooling our homes, and transporting people and goods.

Products made from natural gas liquids are integral to nature of this relationship among energy, technology, our way of life. Over the 160-year history of the U.S. oil and human progress has not changed, despite many short and natural gas industry, but perhaps most dramatically -term ups and downs in the supply/demand balance and in the past few decades, innovative technologies have accompanying economic disruptions. Oil and natural gas helped increase the amount of economically recoverable are the two dominant energy sources in the United oil and natural gas resources available to Americans. States, accounting for two-thirds of the total energy con- These increased supplies of affordable, domestically pro- sumed in 2019. Even after accounting for the steady duced energy have supported steadily improving eco- growth of renewables, according to the EIA, oil, natural nomic conditions and living standards in the United gas, and natural gas liquids are projected to account for States as well as the rest of the world. The fundamental the majority – nearly 70 percent – of domestic energy consumption two decades from now.

10 Domestic Energy Producers Alliance

Investments made over recent decades enabled the United States to become a world leader in oil and natural gas production, which has yielded many societal benefits – related to both economics and conven- ience. Sustained investment in research and development is critical for the United States to maintain its leadership and technological competitiveness in global energy markets. Oil and natural gas will continue to play an important role in the nation’s future energy supply. As Amer- icans rise to meet new challenges, technological innovation will remain a cornerstone for our country to sustain the domestic energy supply that is so vital to providing our energy security and supporting our quality of life.

Enhanced oil recovery holds the potential to reduce the carbon intensity of the oil industry by enabling the storage of more carbon dioxide underground than is released by the combustion of the oil produced.

Advances in technology, coupled with the discovery of Americans – not just to those living in oil and natural gas- new, geologically challenging sources of oil and natural gas, producing states or working at oil and natural gas jobs. underlie the energy abundance Americans enjoy today. While the technology advances of the past two decades have Key benefits of increased production of domestic oil and spurred record-breaking offshore deep-water activity, cost natural gas include: effective production of tight gas and coal seam gas (coalbed • Significant savings to consumers. methane) from the Rocky Mountain states, and the expanded • Increased revenues for state and local governments. pursuit of CO 2-EOR in new geological settings beyond West Texas, the shale revolution has had, by far, the greatest • Increased numbers of well-paying domestic jobs. impact on domestic oil and natural gas supplies. • Revitalized U.S. chemical manufacturing. The shale revolution and other sources of increased pro- • Launching a world-class domestic LNG export industry. duction of domestic oil and natural gas have provided nu- • Reduced environmental footprint from increased pro- merous benefits to consumers, state and local governments, duction of natural gas with lower impact extraction the domestic industry, and the labor market. Because the technologies. nation’s extensive energy delivery infrastructure enables oil • Enhanced energy security. and natural gas supplies to reach nearly all corners of the country, the majority of the benefits below are relevant to all

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 11

“American energy policy is not a Republican issue or a Democrat issue. It is an American Ed Cross prosperity and a leadership issue.” KIOGA President

Significant Savings to Consumers quantify these revenue benefits. In 2019, taxes and mineral The lower oil and natural gas prices resulting from in- royalties paid by the oil and natural gas industry to the creased domestic oil and natural gas production provided state of Texas was a record $16.3 billion. During the past $203 billion annual savings to U.S. consumers – equal to ten years these revenues totaled $116 billion. As set forth $2,500 per year for a family of four. About 80 percent of the in the recent Texas Independent Producers & Royalty savings is from lower prices for natural gas (including lower Owners Association (TIPRO) “2020 State of Energy Re- electricity prices due to increased use of natural gas in the port,” these revenues “…have continued to support all as- power sector), with the remainder due to reductions in world pects of the state economy, including infrastructure invest- oil prices resulting from increased U.S. supplies. ment, water conservation programs, schools and education, To estimate the above consumer benefits, a Council of and first responders….” In addition, the Texas oil and nat- Economic Advisers Study estimated that the price of natural ural gas industry in 2019 purchased $220 billion in goods gas in 2018 without the shale revolution would be $7.79/Mcf and services, of which 80 percent came from Texas busi- and with the shale revolution would be $2.87/Mcf, a decline nesses. of 63 percent. This is roughly equivalent to the percentage In New Mexico, oil production growth on Federal land decline in the Henry Hub price of natural gas between 2007 in the Permian Basin has helped the state’s Increased Num- and 2018. bers of Well-paying Domestic Jobs The domestic oil and Increased Revenues for State and natural gas extraction industry supports 896,000 jobs (as of Local Governments the end of 2019), including both direct and indirect jobs. Oil and natural gas production provides significant reve- This consists of 158,000 direct jobs and an estimated nues to state and local governments from severance taxes, 738,000 indirect jobs, such as service and supply jobs, as added-value taxes, and other fees. These revenues provide well as induced jobs. The Economic Policy Institute re- major portions of the funding for schools and public services ports that the oil and natural gas extraction industry has in many producing states. A more detailed look at Texas, the one of the highest indirect job employment multipliers, largest oil and natural gas producing state, helps to further where one direct job leads to an additional 5.43 indirect

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12 Domestic Energy Producers Alliance Excerpts from the New DOE Report on Energy. Download, and then share the full report! www.energy.gov jobs. Last year, the average direct job in the oil and natural gas extrac- www.depausa.org/Donate tion industry had an annual average wage of $112,000, more than double the annual average wage of $51,000 for the private sector. The non-supervisory direct jobs in this industry, fi- nances and provided the means to expand funding for education and other programs. The New Mexico Oil and Gas As- sociation estimates that $1.2 billion of the state’s $6.2 billion budget came from revenue on Federal land, including royalties, bonuses, and other payments. In North Dakota, oil and natural gas taxes provided $18 billion for fiscal years 2008- 2018 for the state, accounting for more than 45 percent of total tax revenues. Crude oil and natural gas production is also a major source of revenue for Wyoming’s state and local governments. Given that Wyoming has no state income tax, local and state governments rely on tax revenues from oil, natural gas, and service companies operating in the state to fund many of its essential public services. In 2018, oil and natural gas production contributed $1.39 billion to the state of Wyo- ming from property taxes, severance taxes, state mineral royalties, and sales and use taxes. These tax revenues were used by the state to support essential public services, including providing $596 million for K-12 education, $510 million to the state’s General Fund, and $114 million for public infrastructure, among other uses.

Increased Numbers of Well-paying Domestic Jobs The domestic oil and natural gas extraction industry68 supports 896,000 jobs (as of the end of 2019), including both direct and indirect jobs.69 This consists of 158,000 direct jobs70 and an estimated 738,000 indirect jobs, such as service and supply jobs, as well as induced jobs. The Economic Policy Institute reports that the oil and natural gas extraction industry has one of the highest indirect job employment multipliers, where one direct job leads to an additional 5.43 indirect jobs.71 Last year, the average direct job in the oil and natural gas extraction industry had an annual average wage of $112,000, more than double the annual average wage of $51,000 for the private sector. The non-supervisory direct jobs in this industry which include oil engineers, well- head pumpers, roustabouts, and geoscientists, earn an average annual wage of $88,000 – about 70 percent higher than the average annual wage in the private sector. The development and application of advanced technologies discussed previously in this report and their impact on labor productivity in the oil and natural gas industry are an important foundation for these increasingly productive well-paying jobs. Labor productivity, defined as output per hour worked, has more than doubled in the last decade in the oil and natural gas industry, increasing from an index of 93 in 2008 to an index of 202 in 2018. See the chart on the next page. DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 13

Oil and Natural Gas Extraction Subsector Launching a World-Class Productivity Improvement 2008-2018 Domestic Liquefied Natural Gas Export Industry The strong growth of natural gas Labor productivity in the oil and natural gas industry production from the shale gas revolution has led to natural gas supplies has more than doubled in the last decade. that exceed domestic demand. This provided the foundation for building a world-class domestic liquefied natural gas (LNG) export industry. Initial LNG export project efforts converted existing sites and facilities that had been originally constructed to import LNG during periods of domestic under-supply. Anticipating continued robust natural gas production, the United States is on track to become the largest global LNG exporter, increasing exports from six Bcfd at the end of 2019 to an expected 12 Bcfd by the middle of this decade, surpas- sing both Australia and Qatar. The first wave of LNG liquefaction and export facilities includes two Reduced Environmental Footprint from Increased Pro- Taking a closer look at Texas, the state boasts 361,000 duction of Natural Gas and Lower Impact Extraction Tech- of these jobs, equal to 40 percent of nationwide oil and nat- nologies The availability of abundant, affordable natural gas ural gas jobs. These jobs in Texas, including roustabouts, supplies has led to significant displacement of coal by natu- field operators, heavy truck drivers, and petroleum engi- ral gas as a fuel for electrical power plants. Increased use of neers, paid an average annual wage of $132,104 – approxi- natural gas and renewables for power generation has reduced mately 130 percent more than the average private sector job the volumes of carbon dioxide per megawatt hour (MWh) of in the state.74 These numbers do not include the significant electricity produced by over 23 percent in the past decade. additional manufacturing jobs that abundant supplies of oil Abundant supplies of natural gas have also aided the growth and natural gas have helped create. of wind and solar large LNG projects in Louisiana, two in Revitalized U.S. Chemical Manufacturing Texas, one in Maryland, and one in Georgia. During 2019, Increased supplies of affordable shale gas, containing LNG exports created $9.5 billion in revenue and helped to large volumes of ethane and other natural gas liquids, have support a positive trade balance. provided a competitive advantage for chemical manufactur- U.S. LNG export projects have expanded the global ing in the United States, which is projected to create new availability of natural gas, driving down gas prices around jobs and supports domestic economic growth. During the the world while diversifying supplies, particularly in coun- past decade, 343 projects involving $203 billion A job in tries like Poland, Lithuania, and other European countries the oil and natural gas extraction industry had an annual dependent on Russian natural gas pipeline exports (see Fig- average wage of $112,000, more than double the private ure 20). By supporting the fuel needs of new gas-fired power sector average. of investment have been completed, placed plants in other countries, U.S. LNG under construction, or entered into the corporate planning will also help bring energy to stage. These projects have created or will create: nearly some of the one billion people 757,000 permanent new jobs; an annual payroll of $57 bil- currently living without elec- lion; and an annual economic output of $289 billion by tricity, helping to lift these 2025. people out of poverty

Excerpts from the New DOE Report on Energy. Download, and then share the full report! www.energy.gov

14 Domestic Energy Producers Alliance

Reduced Environmental Footprint from In- Enhanced Energy Security creased Production of Natural Gas and Lower As domestic oil and natural gas production rates have Impact Extraction Technologies risen, U.S. imports of both commodities have fallen. The The availability of abundant, affordable natural gas sup- United States imported about 9.10 million barrels per day plies has led to significant displacement of coal by natural (MMb/d) of petroleum in 2019 from about 90 countries, gas as a fuel for electrical power plants. Increased use of nat- which included 6.8 MMb/d of crude oil and 2.3 MMb/d of ural gas and renewables for power generation has reduced the noncrude petroleum liquids and refined petroleum prod- volumes of carbon dioxide per megawatt hour (MWh) of ucts.91 This was the lowest level of total petroleum imports electricity produced by over 23 percent in the past decade. since 1996. But U.S. exports of petroleum have increased Abundant supplies of natural gas have also aided the growth significantly in recent years. In 2019, the United States ex- of wind and solar power by providing a highly responsive ported petroleum to about 190 countries. U.S. total petroleum source of backup power when wind and solar energy inputs exports averaged about 8.5 MMb/d, which included nearly 3 are interrupted. A recent study published by the National MMb/d of crude oil, equal to about 35 percent of total petro- Bureau of Economic Research concluded that renewables leum exports. U.S. petroleum net imports in 2019 were the and natural gas-powered electrical power are highly comple- lowest since 1954. Although most of the natural gas con- mentary and should be jointly installed to meet goals of cut- sumed in the United States is produced here, the United ting emissions and ensuring a stable energy supply. States also exports natural gas. Until 2000, the United States Natural gas liquids also are a significant source of the exported relatively small volumes of natural gas and mostly materials needed to construct lower weight components for by pipeline to Mexico and Canada. Total annual exports have fuel-efficient cars, wind turbine blades, solar panels, and generally increased each year from 2000 through 2019 as energy-efficient materials such as insulation. increases in U.S. natural gas production contributed to lower In addition, greater use of natural gas for electric power natural gas prices and the competitiveness of U.S. natural gas production has led to a 57 percent reduction (per dollar of in international markets. In 2019, the United States exported GDP) in domestic emissions of airborne particles such as 4.66 trillion cubic feet (Tcf) of natural gas to about 38 coun- soot, resulting in an estimated $17 billion in annual health tries – the highest volume on record, making the United benefits. States a net exporter of natural gas for the third year in a row. The combination of hydraulic stimulation and horizontal Energy self-reliance makes the United States more secure. drilling, while enabling the dramatic increase in production The capability to export energy to allies around the world of oil and natural gas from shale and other unconventional gives the United States an advantage in helping to secure formations, also has contributed to increased efficiency and global peace and security. resulted in smaller areal footprint per well drilled from drilling location development. For example, what took 64 well This report was pads with 64 vertical wells to access four square miles (40 prepared by the acres per well) in the early 2000s now can be accessed from U.S. Department of a single (slightly larger) well pad with 16 long lateral hori- Energy, Assistant zontal wells. Consolidating wells onto one drilling pad site results in as much as a 90 percent reduction in overall surface Secretary for Fossil presence per well as well as allows for a concurrent reduction Energy, Office of in the number of access roads and gathering pipelines needed Oil & Natural Gas, to service dozens of wells, further reducing the environmen- and National Energy tal footprint per unit volume of oil or gas produced. Technology Laboratory Finally, there are innovative ways that existing oil and natural gas infrastructure can be used for environmentally- (NETL), friendly applications,87 even when no longer used for oil and gas natural production. For example, a joint Federal and industry program converted 532 steel platforms in the offshore Gulf of Mexico that had reached the end of their economic life into artificial reefs. A typical eight leg platform provides a home for 12,000 to 14,000 fish and acres of habitat for hundreds of marine species.88 Researchers report fish densities as much as 30 times higher around active platforms.89 Other alternative uses of existing offshore structures in offshore waters – such as for carbon capture and storage, and solar and wind energy – also may yield economic benefits and lessen environmental impacts.

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 15

M EMBER S POTLIGHT Joe Gorder

Joe Gorder serves as Chairman of the Board and Chief Executive Officer of Valero Energy Corpora- tion. Prior to his appointment as Chairman of the Board on December 31, 2014 and Chief Executive Officer on May 1, 2014, Mr. Gorder served as Chief Operating Officer and President, responsible for re- fining operations and commercial operations in marketing, supply, logistics and transportation. He was previously Chief Commercial Officer and President of Valero Europe and served as Chairman and Chief Executive Officer of Valero Energy Partners LP. Joe also serves as Chairman of the American Fuel & Petrochemical Manufacturers (AFPM). A native of Missouri, Joe earned a bachelor’s degree from the University of Missouri-St. Louis and a master’s degree in business administration from Our Lady of the Lake University. Joe and his wife, Lacie, have two children and six grandchildren. Why Join DEPA? We are talking to leadership and pushing your issues forward.

16 Domestic Energy Producers Alliance

Changing Voter Demographics Trick or Treat? Ten percent of eligible voters this year are members of Generation Z, up from just 4% in 2016.

For the first time in a US presidential election, voters on the youngest end of the spectrum, 18-34 years old, outnumber the traditional “decision- making generation”, 56-74-year-olds, according to a January 2020 report from The Pew Research Center. The Pew Research Center, a DC nonpartisan think tank, says Millennials and Gen-Z make up 37% of the US electorate. Four million Americans will turn 18 in time for the Trump/Biden election. 2020 marks the first time many members of Gen -Z (born after 1996) will be able to participate in a presidential election. “The generational makeup of the electorate matters because generational differ- ences in political preferences are now as wide as they have been in decades. For example, 59% of Millennials affiliate with the Democratic Party or lean Democratic among registered voters. About half of Boomers (48%) and 43% of the Silent Gen- eration identify as or lean Democratic,” said a Pew Research Center article. County Clerks are reporting staggering early voting participation. "The numbers that we've seen, they've blown out our expectations," said Harris County Texas Clerk Chris Hollins. "We certainly expect that this will be the highest turnout election of all-time here." Harris County is home to Houston and 700+ surrounding communities. Clearly, the events of 2020 have made this election unique and uniquely interesting to a broader cross-section of Americans. However, we have seen a steep jump in politically vocal young people since 2014. In 1964, 50% of 18-24-year-olds voted. By 1988, less than 40% of that youngest demographic took the time to vote, according to The Pew Research Center. The American youth were generally not tapped into the serious events of the day. However, the music and entertainment industry identified this untapped market to help them advocate for them and their most significant battle of the late 1980s, censorship. Because of their growing influence, booming financial power, and political motivation, the music and entertainment industry easily mobilizing the youngest voters just before the 1990 mid-term elections with “Rock the Vote”. If you are in your mid-late 40s now, you probably remember the “Rock the Vote” campaign specifically targeted at the MTV generation. Virgin Record executives Jeff Ayreroff, Jordan Harris, and Bev- erly Lund founded “Rock the Vote” in response to what they considered censorship targeted toward their new hip-hop and rap artists. Censorship threatened artistic freedom of speech and their balance sheet. Partnered with MTV, this effort to mobilize voting teens and young adults was cringeworthy but memorable. Madonna was the first to step up as a spokesperson, Megadeth, Lenny Kravitz, Ozzy Osbourn, and Deee-Lite all offered the same pitch: Voting is self- expression for cool kids, and artistic censorship is on the line. Their efforts to activate young people across the country, to exercise their rights, and represent their interests worked. Their success is visible in upward trending young voter engagement. Rock the Vote started a momentum that has not lost its steam. Fast forward to 2020; the ‘90s youngsters are now parents to the generation that makes up a majority of the electorate (53%). Because rallying young adults was successful, there is now a “get out the vote” campaign for every passion and issue. Gen-Z has been steeped in the importance of expressing their opinions at the polls, and while not every election has them motivated, this presidential cycle sure has.

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 17

US Energy and The Election An Op/Ed by Harold Hamm, Executive Chairman Continental

Beginning in 2008, American entrepreneurship and innovation changed the energy game. Call it the American Energy Renaissance. The results were extraordinary. Once again, we became the world’s largest producer of natural gas and oil. In September of 2019, we became energy independent, a net exporter of hydrocarbons. We created millions of jobs across the country and filled the coffers of states with billions in tax dollars. We also kept gas and electricity affordable for every American family. Plus, there was a trillion- dollar swing in our favor, money was kept here rather than spent over there. Not too many of us remember just how bad We achieved true energy freedom. One of the things can get when you’re not in control of your hugely important, but underappreciated results of the energy supply. American Energy Renaissance is that peace is breaking Let me take you back to the ’70s. A Republican out all over the Middle East. There’s a new order in president implemented price controls on crude oil. play. Yet we have a political party and candidate who The conventional wisdom said we were running out wants to end the miracle and replace it with the utopian of domestically produced oil and natural gas. There notion of a carbonless world. There’s no such thing. were no incentives to find more. Meanwhile, gov- Nor will there every be. ernments in the Middle East seized control of their Former Vice President Joe Biden and the Demo- oil and natural gas reserves and formed a cartel crats want to depress or even destroy one of America’s known as OPEC. most critical industries. I don’t know about you, but I In 1973 and again in 1979, they held the world hostage. It led to higher gas prices and in some cases, no gas at all. The “oil shocks” rattled the world. They knew they had us where it hurts. Perversely, we and our allies became hooked on OPEC oil for decades. The cartel dictated the supply and the price, and we shipped a good portion of our wealth to autocrats, kleptocracies and the like – not to mention the hundreds of billions in military spending to protect the energy lifelines. We don’t have to be dumb all over again. (Wind and solar will never make us energy independent.) President Trump and his administration un- derstand the huge geopolitical and economic bene- have no desire to worship at the alter of Putin or OPEC. fits of American energy independence and freedom Nor do I think it’s a good idea for American families brought about by the American Energy Renaissance. to spend 6 bucks or more for a gallon of gas or watch His opponent clearly does not. their electricity bills double.

Harold Hamm appeared on the Fox’s Mornings with Maria October 20 to discuss US energy and the election. To get video links and DEPA updates before the DRILLER launches, get on our mailing list at www.depausa.org

18 Domestic Energy Producers Alliance

Trump Administration Secures American Energy Jobs, Natural Gas Exports Issues First Extensions of Natural Gas Export Authorizations Through 2050 Department of Energy Press Release

The Trump Administration extended the terms of extending these LNG export authorizations through seven long-term liquefied natural gas (LNG) export au- 2050, DOE provides certainty to investors, industry and thorizations through 2050 in an October 22 announce- energy workers from Pennsylvania to the Permian, and ment. This action follows through on the Department of across the nation.” Energy’s July 2020 policy statement that allows for In addition to allowing existing non-FTA authoriza- long-term natural gas export authorizations to non-free tion holders to apply to extend their export terms trade agreement (non-FTA) countries to be extended through 2050, the Department of Energy’s (DOE) July through 2050. 2020 policy statement also allows current applicants to “Today’s announcement is yet another example of amend their pend- the Trump Administration’s commitment to protecting ing non-FTA American jobs at home and promoting American energy applications to exports abroad,” said U.S. Secretary of Energy Dan request an ex- Brouillette. “During this Administration, U.S. LNG export term ports have more than quadrupled, putting the United through 2050. States among the top three LNG exporters in the world. DOE also Increased LNG exports means more American energy granted the first

production, more energy security, and more American seven applications submitted under the new policy on jobs.” October 22. Through this action, long-term LNG export The United States is the top global producer of natu- authorizations are now held by companies with export ral gas and is currently in its fourth consecutive year as terminals located or proposed in Louisiana, Maryland, a net exporter of natural gas. To date, U.S. LNG exports and Texas. have reached 38 countries across five continents. The authorization holders receiving term extensions “Securing U.S. energy jobs, and creating the poten- today are: Venture Global Calcasieu Pass, LLC; Ven- tial for future growth in our energy sector is a top priori- ture Global Plaquemines LNG, LLC; Rio Grande LNG, ty for the President’s Administration,” said Deputy Sec- LLC; Dominion Energy Cove Point LNG, LP; Corpus retary Mark W. Menezes. “The development and de- Christi Liquefaction Stage III, LLC; and the Freeport ployment of innovation in hydraulic fracturing and mul- entities -- Freeport LNG Expansion, L.P., FLNG Lique- tidirectional drilling has catapulted the U.S. to the faction, LLC, FLNG Liquefaction 2, LLC, FLNG Liq- world’s number one producer of oil and natural gas. By uefaction 3, LLC, and FLNG Liquefaction 4, LLC. DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 19

POLITICAL UPDATE IT’S THE ECONOMY... Now to the election after the election 2021 and Beyond

From David Crane TGC Group/Quadripoint

• While COVID aid discussions continue it is primarily posturing by Pelosi who's trying to protect suburban members in marginally Democrat districts & President who needs suburban voters.

• Senate focused on Amy Coney Barrett confirmation process

• Current Continuing Resolution funds government through election to mid-December.

• Next COVID aid package likely to be folded into any end-of-year spending package.

• If Biden and Senate Democrats prevail in election they will have enormous leverage into that negotiation.

• If Trump wins and the GOP Senate holds the Senate they will hold the leverage

• If results are tight in key electoral college states post-election litigation will likely be on-going as congress works on FY 2021 spending deal

• Due to run-off rules in Georgia it is possible that both Senate seats could go to a run-off with the outcome

not decided until mid-January

CONGRESS

• Key argument for Trump campaign is polling undercount in 2016

• While national opinion polls in 2016 were generally accurate state-by-state polling consistently missed the mark.

• In response The American Association for Public Opinion Research (AAPOR) conducted a detailed analysis of 2016 polling to determine the breakdown between polling and voting results. The problem fell with state polls, particularly those in the industrial Midwest, which failed to properly adjust for the education level of poll respondents.

• Simply stated, those with higher education tend to respond to polls in greater numbers. According to the AAPOR post mortem on 2016 polling, state polls failed to calibrate results to account for this over-sampling

of college educated voters. 2016 V 2020 V 2016

20 Domestic Energy Producers Alliance

State 2016 Final 2020 RCP Results Average Polling AZ Trump +4 Biden +2.7 WI Clinton +2 Biden +9 MN Trump +1 Biden +6.3 MI Trump +/- Biden +7 PA Trump +/- Biden +7 NC Trump +3 Biden +2.7 GA Trump +5 Trump +4 FL Trump +2 Biden +3.7 OH Trump +1 Biden +6 Democrats As stated in a 2017 Politico article by Steve Shepard, Laying "In the 13 states decided by 5 points or fewer, the polls underestimated Trump's margin against Clin- Groundwork ton by 2.3 points. In Ohio - the perennial bell- wether Trump won easily - surveys underestimated the Republican by S.2 points ... In Wis- For Post consin -which hadn't awarded its electoral votes to a Republican since 1984 -the polls underestimated Trump by an even greater margin of 6.5 Election points ... In Pennsylvania and unexpectedly close Minnesota, the polls underestimated Trump by between 4 and 5 points, while the polls in Michigan Litigation were off in the same direction by about 3.8 points."

• Democrats have already begun laying groundwork to invalidate a potential Trump win.

• Intense focus on mail-in voting. State laws require all mail-in ballots be received by election day. Democrat focus on USPS delays sets predicate to argue late ballots should be counted.

• Hillary Clinton publicly stated that Biden should not concede the election if he loses.

• The total number of voters who voted early, absentee or by mail in 2016was 67.2 million.

• The USPS on average handles 471.1 million pieces of mail every single day.

• Even if the number of absentee and mail-in ballots doubled from 2016 the total would still represent less than a quarter the amount of mail the USPS handles daily.

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 21

GOP defending 23 seats to RACE FOR Democrats 12

Depending on THE SENATE Presidential Tidbits About the Candidates, States & Races election outcome Arizona Race: Republican incumbent Martha McSally is running against Democrat chal- Democrats lenger and Mark Kelly. Kelly is a former astronaut and husband of former Representative need 3-4 seats Gabby Gifford. Gifford was a rising star in the Democrat party when she seriously injured in a shooting attack that left 19 injured and 6 dead. McSally had previously lost a race for the US senate in Arizona before being appointed to complete the term of John McCain upon his death. Since becoming a senator for Arizona, an independent organization ranked McSally the sixth most bipartisan State Oct. Polls senator and she tied for #1 of ALL 100 senators for the most bills signed (Chronological beginning with most recent) into law. Over the summer McSally consistently trailed Kelly however AZ Kelly +2, +10, +8, +11 polls have shown the race tightening, with McSally leading by 3 points in MT TIE Dains +9, +1 the most recent survey of likely voters. The most recent Presidential CO Hikenlooper +9 polls have also tightened significantly with Trump taking a lead. In general Greenfield +4, +5 Arizona voters have an independence IA streak and changing demographics are Peters +1, +3, +10, +8 reshaping the state. While it seemed MI Arizona was trending toward the Cunningham +5, +10, +6, Tillis +1, Cunningham +4 Democrats the state is now very much NC in play going into the final days of the campaign. McSally has been strong Ossof +1, Perdue +1, +8 supporter of the US domestic energy GA1 industry. Mark Kelly is on record as Loeffler R, Warnock D, Collins R opposing expanded drilling in the US, GA2 opposing hydraulic fracturing and Simple majority to win or heads to runoff - strongly supporting subsidies for re- As of now Loeffler/Collins vote combines for newable energy. a majority if neither poll 50% on November 3rd Montana Race: Incumbent GOP Senator Steve Daines is facing off Tuberville +12 against popular former State Attorney AL General and Governor Steve Bullock. Gideon +1 Montana has been reliably Republican ME at the presidential level, but has elected several Democrats statewide, in- SC TIE cluding Bullock, in recent years. While this race is considered a toss-up Daines continues to hold a slight lead and President Trump is expected to carry the state. In the Senate Daines has been at the forefront in advocating for US energy independence and domestic energy producers. Colorado Race: Republican Senator Cory Gardner is running against former Colorado governor John Hickenlooper. Shifting demographics mean Colorado has trended sharply to the left since the 2016 presidential election. Gardner has taken a bipartisan approach on energy to reduce emissions, combat climate change, and grow the Colorado economy. Gardner is widely considered to be the most vulnerable of GOP incumbents and faces an uphill battle for reelection. He has consistently trailed by an 8-9 point margin which 22 Domestic Energy Producers Alliance Tidbits About the Senate Candidates, States & Races Cont’d tracks very closely with President Trump’s numbers ate races are headed to a run-off which could leave in Colorado. Few members fo the Senate have been open the question of control of the Senate until mid stronger supporters of the US domestic energy in- -January. dustry. Georgia District 2: Senator Kelly Loeffler is Iowa Race: Iowa is one of the most competitive running against Democratic Senate candidate Raph- states in both the presidential race and the battle for ael Warnock. Loeffler was appointed to her senate the Senate. Republican Senator Joni Ernst is facing seat in December 2019 by Governor Brian Kemp Democrat challenger Theresa Greenfield. Ernst is after Johnny Isakson announced his resignation due running for a second term in office after first being to health reasons. Warnock was a Senior Pastor at elected in 2014. That year, she defeated Bruce Bra- Ebenezer Baptist Church in Atlanta, the former ley (D) by a margin of 8.3% flipping Iowa's Class pulpit of Reverend Dr. Martin Luther King, II Senate seat, which had been held by Tom Jr. Loeffler is competing against GOP Congress- Harkin (D) since 1984. While polls have shown man Doug Collins who the defense for President Ernst trailing Greenfield recent surveys have shown Trump in House impeachment proceedings. This the race tied or Ernst with a slight lead (within the race is undoubtedly heading for a run-off. Both margin of error). Similarly, the Presidential race is Perdue and Loeffler are strong and outspoken advo- a toss-up in Iowa. This is one state where the fate cates for US energy independence. of the Senate and presidential candidates are tied together. Alabama: Democrat incumbent Doug Jones and Republican Tommy Tuberville are running for Ala- Michigan Race: Incumbent Senator Gary Peters bama’s senate seat. Jones was the first Democrat to is running against Republican challenger John win a Senate seat in Alabama since 1992 when he James. James served in Operation Iraqi Freedom as ran against scandal ridden Roy Moore.. Tuberville a Ranger-qualified aviation officer logging 753 was head coach for several college football teams – flight hours leading Apache attack helicop- including Auburn – from 1995-2016. He retired in ters. While James continues to make the list of 2016, from the University of Cincinnati as one of GOP challengers with a chance to pick up a Demo- the top 50 most winning football coaches of all crat seat Peters continues to lead in the polls in time and became a member of ESPN's broadcast Michigan, as does Biden. It is worth noting that staff. while President Trump trails Biden in Michigan he is polling ahead of where he did 4 years ago. As Maine: Democrat challenger Sara Gideon broke a with most states Michigan will come down to voter fundraising record in her race with Senator Susan turnout. Collins. In Q3 2020, Gideon brought in $39.4 million. Similar to Cory Gardner Collins is considered North Carolina Race: Senator Thom Tillis is to be among the most vulnerable GOP incumbents. facing off against Democrat challenger Cal Cun- She has been the top target for Democrats due to ningham. As of August 31, Cunningham was the her support for Brett Kavanaugh’s nomination to highest independent expenditure target of the NRSC the Supreme and now faces backlash from the with $9.6 million spent to oppose, and Tillis was state’s GOP voters for opposing the nomination the fourth-highest independent expenditure target of and confirmation of Amy Coney Barrett to the high the SMP with $5.1 million spent to oppose. Tillis court. Collins has never led in the polls. Collins struggled with the GOP base early resulting from supported lifting the export ban and US energy critical comments about Trump. At the same time independence. shifting demographics have put a once safe GOP state in play. Both Trump and Tillis have closed South Carolina: Democrat challenger Jaime the gap in North Carolina which is considered a Harrison is running for Senator Lindsey Graham’s must-win for President Trump and key to the GOP seat. Harrison broke Beto O’Rourke’s fundraising holding the Senate Majority. Watch North Carolina record bringing in $57 million in Q3. Much like as an early indicator for control of the Senate and Tillis in North Carolina Graham has come under White House. Tillis is a staunch supporter of US fire from his base for his close relationship with energy independence and US oil and gas produc- now-deceased GOP moderate John McCain and for tion. inconsistent support for President Trump. Howev- er, as Chairman of the Senate Judiciary Committee Georgia District 1: Senator David Perdue faces Graham has earned praise from the President and Democrat challenger Jon Ossoff in the Peach State. conservative for shepherding the Coney Barrett Under Georgia election law the winner must secure nomination through the Senate. While this has 50 percent of votes cast. While Perdue currently drawn the fire and the money of left-leaning activ- leads the race he has not gone above 50% in the ist groups who are pouring tens-of-millions into polls raising the possibility that both Georgia Sen- defeating him it appears Graham has stabilized his race and is leading in most recent polls. DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 23

Races Slowly Tightening

• While GOP incumbents are trailing in virtually every race in most cases recent polling indicates the races are tightening.

• Near certainty the GOP will pick up Alabama.

• Depending on the Presidential race Democrats need to pick up 3-4 seats to take control of the Senate as VP casts the deciding vote where Senate is tied.

• Look for GOP Senate candidates to sim- ultaneously "localize" the election while also raising the specter of a Biden, Schumer, Pelosi, AOC Washington.

• Amy Coney Barrett nomination process will motivate both party's bases going into election day.

The Red State/Blue State Covid-19 Divide The Politics of Recovery Dictating Experience

State Unemployment Rank State Unemployment Rank Rate Rate NE 4.0 1 PA 10.3 42 UT 4.1 2 NJ 10.9 43 ID 4.2 3 IL 11.0 44 SD 4.8 4 MA 11.3 45 VT 4.8 4 NM 11.3 45 ND 5.0 6 CA 11.4 47 AL 5.6 7 HI 12.5 48 GA 5.6 7 NY 12.5 48 MT 5.6 7 RL 12.8 50 OK 5.7 10 NV 13.2 51

24 Domestic Energy Producers Alliance

The Filibuster

Why It Matters Your Input Presidents deserves a Cabinet and agency leaders of their own party thus a 50-vote threshold for such Is Needed! nominations simply rounds out the result of the general election. While a simple majority requirement for judicial We are looking for companies nominations, particularly the SCOTUS, and while court decisions can have broad and lasting effect, the in Chapter 11 bankruptcy as a courts and court decisions rarely impact the everyday result of being rejected for a life of the average American. bank loan. Elimination of the filibuster on ordinary legislation would allow a simple majority in the Senate the power to influence and control virtually every aspect of Help us with a study American life. on lender biased! Given the increasing and evermore radical divide between Red and Blue states, between urban, suburban Please contact our office and rural voters elimination of the filibuster will ac- 405-669-6646 or celerate and exacerbate the current political divide. [email protected]

Current State of the Filibuster

• Historically under Senate rules, 60 votes are required to invoke cloture (end debate) on legislation and nominations.

• 2013 Democrats changed Senate rules to require a simple majority to invoke cloture on Executive Branch nominees and all non-Supreme Court judicial nominations.

• 2017 Republicans change Senate rules to require a simple majority to invoke cloture on Supreme Court nominees. • 60 vote threshold to invoke cloture remains for Energy authorizing and appropriations legislation. • Should Democrats sweep the fall elections there Votes will be enormous pressure on S-enate Democrats to eliminate the filibuster entirely in order to move the progressive agenda.

• Schumer has signaled a willingness to eliminate the rule. Coons, previous opponent has signaled an openness to a rule change as have most Democrat Senate challengers.

• The end of filibuster likely means adding DC and Puerto Rico as Democrat insurance against future Republican Senate majorities DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 25

COVID Healthcare and Economic Response Will Dominate 2021 Regardless of Election Outcome

• The Trump realignment was driven by working class white voters in the industrial Midwest responding to Trump's commitment to reshoring and restoring the US manufacturing base.

• Whether this realignment holds for a Trump victory or these voters shift to Bi den the demand for economic opportunity among these voters will only Proud to affiliate with IPAA and DEPA grow. • The COVlD economic crisis continues to weigh heaviest on hourly earners and service workers who were the most vulnerable going into the crisis.

• Black and Latin Americans have been disproportionately impacted both by the COVID healthcare and economic crisis.

• Both the Trump Administration and Congressional Democrats were already focused on economic opportunity and upward mobility among Black and Lat- in Americans.

• As the economy recovers there will be intense focus on economic and social policies aimed at maximizing access and participation in the recovery by working and mid- dleclass Americans families.

26 Domestic Energy Producers Alliance

Democrats Must Answer For Biden’s Promise to End the Oil Industry

House Energy Action Team co-chairs Rep. Jeff Dun- (64%), corn (54%), and soybeans (48%). can (R-S.C.) and Rep. Markwayne Mullin (R-Okla.) • Other estimates show that a 100% renewable energy joined House Republican Whip Steve Scalise (R-La.) in a joint statement blasting Joe Biden’s unrealistic and dan- grid would cost Americans anywhere from 43 to gerous promises to outlaw fossil fuels and destroy the 286% more on their electricity bills. livelihoods of millions of Americans employed in energy- • America’s poorest families spend 22% of their house- producing jobs. hold budgets on utilities and gas. By comparison, fam- “By radically suggesting that we should get rid of oil, ilies in the top income quintile only spend 5% of their the Democrat Party’s leader would destroy American household budgets on these same expenses. Rising jobs, increase energy costs on hard-working families, and energy prices hit low-income families harder. make our country less secure by increasing our dependence on oil from Russia and Middle-Eastern countries. • In New England, moratoriums on natural gas extrac- America’s abundance of oil, coal, and natural gas drives tion, and pipeline transport from Pennsylvania and our economy, lowers household electricity costs for fami- Ohio caused electricity price increases that lies, and secures our energy independence. The Democrat were double that of similar regions across the coun- Party’s leader’s explicit vows to destroy the millions of try. jobs that rely upon these natural resources is an affront to • In 2019, as a result of fracking and increased natural American workers, our friends and allies overseas, and gas production, the U.S. reduced CO2 emissions by the all-of-the-above energy strategy that led to a cleaner 140 million tonnes, the largest reduction of any coun- environment along with the strongest economy our nation try according to the International Energy Agency. has ever seen. Threatening to take away the livelihood of millions of hard-working families and increase household • Because of fracking U.S. emissions have outpaced the energy costs in the middle of a global pandemic is beyond rest of the world. According to the EPA, from 2005 to irresponsible, and every Democrat in Congress ought to 2018, total U.S. energy-related CO2 emissions fell by denounce these absurd and dangerous proclamations.” 12 percent, while global energy-related emissions increased nearly 24 percent during this period. BACKGROUND: • Abroad, the Green New Deal and similar plans would • The traditional energy sector employs roughly 6.8 make our allies more dependent on bad actors and million Americans and added over 120,000 new rogue states like Russia, Iran, and Venezuela for their jobs in 2019 alone. energy needs. Domestically, outlawing fossil fuels • The U.S. Chamber of Commerce found that a frack- would degrade our ability to rely upon our own natu- ing ban imposed in 2021 would eliminate 19 million ral resources as we make the switch from reliable en- jobs and reduce U.S. GDP by $7 trillion in just four ergy to unreliable or unproven “green” techs. years.

• The same study found that household energy bills would more than quadruple and that drivers would pay twice as much for a gallon of gasoline. • According to a report by the Global Energy Institute, The House Energy Action Team was "keep it in the ground" activism, including New York revived March 2019 by House Minority State's ban on fracking, has prevented over $91 bil- Whip Steve Scalise (R-La) to counter lion in economic activity and ruined 700,000 job op- the Green New deal by promoting an portunities. “all of the above” energy agenda. • The American Petroleum Institute (API) estimates a fracking ban would raise the cost of farming wheat

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 27

DEPA Comments Regarding Proposed changes to The Endangered Species Act Submitted October 8 to Ms. Aurelia Skipwith

Dear Ms. Skipwith, pendent oil and gas associations representing the small The Domestic Energy Producers Alliance (DEPA) business men and women of the energy industry, de- welcomes this opportunity to provide comments on the voted to the survival of U.S. domestic crude oil and U.S. Fish and Wildlife Service’s (“FWS’s”) proposed natural gas exploration and production. Our member- Regulations for Designating Critical Habitat (Rule). ship promotes common sense efforts to ensure environ- DEPA remains interested in clarifying and improving mentally responsible exploration and production of oil regulations promulgated pursuant to the Endangered and natural gas throughout the nation; however, we Species Act (“ESA” or “the Act”). The Act has histori- oppose overly broad or unduly burdensome regulations cally been used as a tool of obstruction to the develop- that suppress the economic engine of domestic energy ment of energy and commerce in general, with dimin- production with no apparent benefit to health, the hu- ished attention devoted to the preservation of the spe- man environment or the economic welfare of the cies. We support the changes that have been made American people. henceforth in these regulations and likewise support the The Endangered Species Act is a very critical envi- clarifications proposed in this regulation regarding the ronmental tool that can be very beneficial in helping to criteria and guidelines for the designation of critical preserve the various species. But in order to effectively habitat. DEPA has also collaborated with and supports perform its intended function, the Act must be adminis- the comments of the North Dakota Petroleum Council tered using credible science and common sense. Unfor- as well. tunately, it has been used most recently rather as a tool The Domestic Energy Producers Alliance (DEPA) is of obstruction with little or no actual consideration to an alliance of producers, royalty owners, and oilfield the species. In fact, in many cases, and in their pre- service companies as well as state and national inde- sumed attempt to benefit a particular species, environ-

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mental zealots have caused adopted during this administration, the property, lives more harm than good. Their and the very valuable renewable resource –forests - solution to preserving a spe- might not have been lost. And had these same entities cies has often been to exter- recognized the threat of the barred owl to the northern minate the predator species, spotted owl, the threatened listing might not have been an action which flies in the implemented. But there was extreme pressure from the face of natural law. We urge environmental groups that had as their mission to stop the Service further to dedi- the lumbering of these western forests and the ESA cate the resources necessary and the spotted owl provided a quick and sure path for to give more heed to the their goal. dual purpose of the Act of recovering species. The northern spotted owl is just one of many exam- Forest fires are raging in California as a result of the ples of listings that have been used to “weaponize” the proliferation of underbrush and the tree disease that has ESA for purposes other than the preservation of the been an effect of this growth. Up until 1990, the timber species. DEPA feels that the ESA rules need to be re- industry managed most of these forests removing un- vised to make them better and even stronger as they derbrush (fuel) and thinning out dead and dying trees. apply to the prevention of species extinction. The two With the listing of the spotted owl in 1990, it was mission of the ESA are first, to protect species from thought that cutting down trees in old-growth forests extinction through listing as either threatened or endan- could threaten local wildlife like the northern spotted gered and second, to recover these species from threat- owl. But such activities were also critical to reducing ened or endangered status with the intent to ensure the combustible fuel and lowering the risk of wildfires survival and proliferation of the species. Approximately growing and spreading quickly, according to forest- 2,240 species3have been listed as threatened or endan- management experts. gered under the ESA, but only 39 species have been However, the U.S. Fish and Wildlife Service has recovered thus far. 4 identified competition from the barred owls as one of the main threats to the northern spotted owl’s continued Subpart I survival. The barred owl is a raptor that is not native to Considerations of Impacts and Exclusions from this area but that has moved in over the past 100+ Critical Habitat years. In an attempt to eradicate this threat and as part of an experiment approved by the U.S. Fish and Wild- § 17.90 Impact analysis and exclusions from critical life Service (FWS), owl hunting has been the pilot pro- habitat. ject for a larger effort that the FWS, a four-year experiment to kill up to 3,600 barred owls in about 2 percent Subpart I §17.9(a) of spotted owl habitat in Washington, Oregon, and Under the current rules, an area may be designated northern California.1 as critical habitat only if the species of concern is actu- The listing of the northern spotted owl as threat- ally found to exist in that area. In this section the pro- ened under the ESA, and the subsequent very wide posed Rule speaks to the factors that should be consid- designation of critical habitat brought the timber in- ered in the designation of critical habitat. When consid- dustry in California and Oregon to a halt, allowing the ering the designation of critical habitat, economic and proliferation of the “fuel” in the forests and the ensu- other non-biological factors should be carefully evalu- ing fires. In 2020 alone, 8,320 forest fires broke out in ated in the process. This paragraph specifies that im- California burning over four(4) million acres of for- pacts may be both qualitatively and quantitatively de- ests and resulting in the deaths of30 people, the evacu- scribed. ation of 96,000 residents and the destruction of over 8,000 homes and businesses. The estimated cost re- Subpart I §17.9(b) sulting from these fires has been $1.62 billion during 2020 thus far.2If the USFW and their partners had tak- This paragraph states that “Prior to finalizing the en the time to consider the economic and other non- designation of critical habitat, the Secretary will con- biological impacts of the northern spotted owl, as pro- sider the probable economic, national security, and vided in this and previous revisions of the ESA Rules other relevant impacts of the designation upon pro-

DEPA Report on Industry, Leadership, Legislation, and Energy Regulation October 2020 29

posed or ongoing activities.” Habitat. The decision to exclude critical habitat (4(b)(2) DEPA feels that in addition analysis) is a critical aspect of the listing process as it has to the benefits to the species, the potential to impact not only federal but also state and the Secretary should consider private stakeholders and their land and resources. This all impacts that might result Rule serves to clarify the process for the affected parties as from the designation of criti- well as for the general public. We appreciate the efforts of cal habitat and supports the the Service and the Department of the Interior in perform- measures proposed in Sub- ing the research and dedicating the resources necessary to part I §17.9(a) and (b). As in prepare these proposed rules. Likewise, we appreciate the the example of the northern opportunity to comment on these rules would offer to pro- spotted owl, the cessation of timbering the forests actu- vide any further information that you might require on ally resulted in the ultimate destruction of more habitat these topics. Please feel free to contact me at (405) 664- than it was intended to save. National security should 0926. also be a major consideration, especially in the develop- Sincerely, ment and production of critical natural resources. THE DOMESTIC ENERGY PRODUCERS ALLIANCE Subpart I §17.9(c) J Roger Kelley, Chairman - Regulatory Paragraph (c) gives the Secretary the discretion of whether to conduct an exclusion analysis when: (i) The cc: Jerry Simmons – President & CEO proponent of excluding a particular area (including but Pete Regan – Congressional & Alliance Liaison not limited to permittees, lessees or others with a per- mit, lease or contract on federally managed lands) has Rusty Shaw – Co-Chairman – Regulatory presented credible information regarding the existence of a meaningful economic or other relevant impact supporting a benefit of exclusion for that particular area; or (ii) The Secretary otherwise decides to exercise discre- WWW. tion to evaluate any particular area for possible exclusion. DEPA recognizes that this discretion is critical to DEPA the ability of the Secretary to give credence to all information available in making his decisions. USA. Subpart I §17.9(d) Paragraph (d) further delineates the factors and im- ORG pacts that should be considered when conducting a hab-  itat exclusion analysis. Of particular interest, this paragraph speaks to the consideration of existing conserva- Upcoming Regulatory tion plans or agreements. DEPA is familiar with CA’s and CCA’s in which our industry has committed to con- Committee Meetings servation measures which have been accepted by the USFW and /or state agencies and which are actively being implemented on a specific area DEPA would pre- December 17, 2020 fer that the Secretary have the authority and be directed Regulatory Committee Co-Chairman, to give due regard to these conservation measures. Roger Kelley, Continental Resources and Rusty Shaw, Denbury Resources. Subpart I §17.9(e) Meetings are held by teleconference and are open Paragraph (e) grants the Secretary the authority to to anyone who would like to attend. Please email [email protected] to be included in call in exclude areas from critical habitat, granted that he ful- information. Dates are subject to change. fills all other of the provisions and considerations of this rule. DEPA supports. Our Work Is Critical. DEPA therefore recommends the Service adopt this Rule regarding the Regulations Designating Critical Your Support is Vital.

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Brouillette Cautions about Taking Anti Fossil Fuel Policy Makers Seriously

President Trump announced at the end of October that he tiromo during the interview. was considering a study to analyze the impact of hydraulic During his Pod Save America chat with former presidential fracturing technology on the economy; specifically the con- speechwriter Jon Lovett and former Senior Advisor to Presi- sequences of a fracking ban in the US. dent Obama Dan Pfeiffer Joe Biden made it clear his admin- Energy Secretary Dan Brouillette made an appearance on istration would make climate change related legislation a top Fox to discuss the study and the 19 million US jobs that priority. “It’s the number one issue facing humanity. And it’s depend on oil and gas production. “There are policy makers in DC who want to eliminate not only this technology, but the entire fossil fuel industry and word to the wise, when they say things like that, when they say they want to eliminate oil, when they say they want to eliminate gas, a word to the wise believe them. Believe them. They almost did it with coal during the last three to four years. The industry is on its heels, if you will. We are bringing it back very strongly, but there are very real policies they are considering. It’s important the number one issue for me,” Biden said “Unchecked, it is for people to consider that,” Brouillette told Maria Bar- going to actually break this planet,” Biden added. “No one is going to build another oil or gas-fired electric plant. They’re going to build one that is fired by renewable energy. We have to invest billions of dollars in making sure that we’re able to transmit over our lines,” Biden said. Brouillette didn’t comment on any specifics of study that would be overseen by the Department of Energy, saying that it was still in the process of being developed. The Secretary closed the interview by reminding viewers of the importance of American energy independence and the Proud supporter of DEPA. contribution that the oil and gas industry makes to modern life beyond fuels. “80% of the world’s electricity comes Thank you for what you do for our country. from oil and gas,” he said.

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