VOLUME 16, NO. 4 THE TIPRO TAARGETRGET February 14, 2013 RESIDENT BAMA NOMINATES ALLY EWELL AS NEXT Texas P O S J Independent SECRETARY OF THE DEPARTMENT OF INTERIOR Producers and On Wednesday, February 6, 2013, President Obama announced his nomination for the next leader of Royalty Owners the U.S. Department of Interior - Mrs. Sally Jewell from Washington. Should her nomination be Association confirmed by the U.S. Senate, Jewell would replace Ken Salazar, who resigned from the position last month. In the role, Jewell will be responsible for directing all staff operations at the Interior Department, the federal agency that manages the nation's public lands, water, wildlife and energy resources. “I am extraordinarily proud to nominate another strong and capable leader to take the reins at Interior, and that is Mrs. Sally Jewell,” said President Obama. “Even though she has spent the majority of her career outside of Washington - where, I might add, the majority of our interior is located - she is an expert on the energy and climate issues that are going to shape our future. She is committed to building our nation-to-nation relationship with Indian Country. She knows the link between conservation and good jobs. She knows that there’s no contradiction between being good stewards of the land and our economic progress; that in fact, those two things need to go hand in hand. She has shown that a company with more than $1 billion in sales can do the right thing for our planet.” For the past eight years, Jewell has served as the CEO of Recreational Equipment Inc. (REI), a popular retailer of outdoor gear. Previously, she spent three years working for Mobil Oil Corp. in Oklahoma and Colorado, and worked in the commercial banking industry for more than 19 years. Jewell holds a bachelor's degree in mechanical engineering degree from the University of Washington. “I’m humbled and I’m energized by this opportunity,” said Jewell. “I look forward to working with the dedicated employees at Interior who work so hard Photo credit: The White House to care for our land and our resources every day.” In recent years, the Interior Department has moved forward with plans to impose new regulations on hydraulic fracturing operations. The federal agency recently delayed its publication of the rules, announcing it will rewrite its proposal and release a revised version for public comment in March. CALL FOR NOMINATIONS FOR 2013 TEXAS TOP PRODUCERS AWARDS The Texas Independent Producers & Royalty Owners Association (TIPRO) is now accepting nominations for consideration of the 2013 Texas Top Producers award. In partnership with the publishers of Texas Monthly and the Best Companies Group, TIPRO is proud to honor the best in the Texas oil and gas industry through its Texas Top Producers awards program. These professionals have helped revolutionize the business, and deserve to be recognized. Award categories are divided into four professions, including Best CEOs, Best Engineers, Best Geoscientists and Best Landmen. Professionals working in the Texas oil and gas industry, including all members of TIPRO, are asked to submit their nominations for the 2013 awards by emailing [email protected]. Please include the name, company and job position of the proposed candidate, as well as a short description of why this individual is worthy of the award. All nominations will be reviewed by the TIPRO-Texas Top Producers awards committee. The top 15 finalists for each category will be included in the official Texas Top Producers survey, which will be distributed on May 1, 2013. Voting for the survey will close on May 31, 2013. Survey results announcing the winners of the Texas Top Producers program will then be published in the November 2013 edition of Texas Monthly magazine. For more information or to register to receive an electronic ballot to vote in the Texas Top Producers survey, visit www.tipro.org/index.php/about-us/ttp. Page 2 February 14, 2013 THE TIPRO TARGET CHAIRMAN’S MESSAGE TIPRO Members - In his fifth State of the Union address, delivered Tuesday, February 12, President Barack Obama outlined his initiatives and priorities for the year to come. While the President used the opportunity to talk about Medicare, immigration, guns, education and the potential looming sequestration, perhaps most significant to the E & P sector were his remarks regarding natural gas development, climate change and changes to the tax structure. Once again, with the call for comprehensive tax reform by the President, we’ll see tax provisions like Intangible Drilling Costs (IDCs) and percentage depletions continue to be attacked. However, what the President and so many elected officials in Washington all-too-often fail to realize is that these tax provisions, which have been in place for more than 100 years, are critical for domestic oil and gas development. They are not “big oil subsidies,” as they tend to be labeled. Instead, they are essential for small operators and business owners, who would likely be forced to reduce their business without these tax provisions in place. Large integrated companies cannot fully utilize these kinds of deductions; consequently, the elimination of such provisions would have a much more substantial impact on our nation’s smallest companies that help produce the majority of America's domestic energy. In January of 2013, a major news magazine, Forbes, explained in David F. Martineau detail, that “oil and gas tax provisions are not subsidies for ‘big oil.’” One of the jobs of TIPRO is to work to determine how to better inform the rest of the news media and general public of the facts there were so ably described by the article in Forbes magazine. Furthermore, in his speech, President Obama did acknowledge the significant advancements that have been made in energy development in recent years, praising the industry for helping the country take control of its own energy future. As he put it, “Today, no area holds more promise than our investments in American energy.” I sincerely agree with the President on this point, and hope he will take action to support additional research and development in the months to come. With the creation of new drilling techniques, we can further improve methods of oil and natural gas extraction, and enhance our ability to recover natural resources. In doing so, we will help support the economy and create even more American jobs, at a time when it is needed most. Currently, our industry is able to provide more economic contributions than any other. In Fiscal Year 2011, the oil and natural gas industry paid over $9.3 billion in state and local taxes and royalties in the state of Texas alone. These payments are in turn used by lawmakers to fund programs related to: education, Medicaid, children's health insurance programs, child protective services, roads, emergency services, and much more. Additionally, oil and gas development puts Americans to work and pays them exceptionally well. Here in Texas, more than 353, 000 jobs are supported by the oil and gas industry -- a number which is expected to continue to rise sharply in the years ahead, thanks to the ongoing development of shale formations. However, despite all of the promise that oil and gas development can provide, the President did warn of the impact of climate change and the need to transition to clean and renewable energy resources in the future. During his State of the Union address, President Obama proclaimed, “If Congress won’t act soon to protect future generations, I will. I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change and speed the transition to more sustainable sources of energy.” Inevitably, this command will likely result in the creation of additional regulations and restrictions on exploration and production in America. Already, federal agencies like the U.S. Environmental Protection Agency (EPA), the U.S. Fish & Wildlife Service (USFWS) and the U.S. Department of Interior, among others, have needlessly tried to impose rules that would slow oil and gas activity and limit hydraulic fracturing operations. With this new mandate by the President, we can expect to see more to come in the months ahead. The President says he wants to make our economy stronger and prevent another financial crisis - however, imposing unnecessary, overly burdensome restrictions on oil and gas development is not the right way to accomplish this goal. Instead, we need a regulatory system in place that protects the environment while at the same time encourages oil and gas exploration and production. I look forward to seeing many of you in Austin at the end of this month for TIPRO’s 67th Annual Convention, as we gather to learn more about state and federal issues that could impact our industry. Sincerely, Calendar of Events FEBRUARY 26-27, 2013 MARCH 20, 2013 APRIL 10, 2013 MAY 8, 2013 AUSTIN TIPROS HOUSTON IPAA/TIPRO HOUSTON IPAA/TIPRO HOUSTON IPAA/TIPRO 67 TH Annual Leaders in Industry Leaders in Industry Leaders in Industry Convention, Luncheon, 11:30 a.m. Luncheon, 11:30 a.m. Luncheon, 11:30 a.m. Sheraton Hotel Downtown. Houston Petroleum Club. Houston Petroleum Club. Houston Petroleum Club. For info, call: (512) 477-4452. For info, call: (832) 233-5502. For info, call: (832) 233-5502. For info, call: (832) 233-5502. Page 3 February 14, 2013 THE TIPRO TAGET RRC TO HOLD PUBLIC HEARING ON SWR 13 The Texas Railroad Commission (RRC) will hold a public hearing on Thursday, February 21, to discuss proposed modifications for Statewide Rule 13.