PERMIAN BASIN
PETROLEUM ASSOCIATIONMidland, Texas
May 8, 2001
Barry RussellPresident
Independent Petroleum Association of America
Overview
• The Nature Of The Energy Problem
• The Issues
• Changes In Washington
• IPAA’s Role
Major Focus: Energy Policy
• Domestic Production Of Oil And
Natural Gas
• Meeting Growing Future Demand For Energy
U.S.Natural Gas DemandComparison of 1992 and 1999 NPC Study Results
1990 1995 2000 2005 2010 2015
YEAR
1999 NPC Reference Case 1992 NPC High Case 1992 NPC Low Case Actual
A C T U A L F O C U S P E R I O D E X T E N D E D V I E W
1999 NPC Range of Outcomes
TRIL
LIO
N C
UB
IC F
EET
15
20
25
30
35 ACTUAL FOCUS PERIODFOCUS PERIOD EXTENDED VIEWEXTENDED VIEW
U.S. Natural Gas Demand by Sector
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
TR
ILLIO
N C
UB
IC F
EET
1990 1995 2000 2005 2010 2015
YEAR
Other
Commercial
Residential
Industrial
ElectricityGeneration
F O C U S P E R I O D E X T E N D E D V I E WA C T U A L
0
10
20
30
40
50
60
BC
FD
* Representing 91% of US Production
Drilling Year:1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Pre-1990
Production Decline Rate of Base:
16% 17% 15% 17% 18% 21% 23% 23%18% 19%
U.S. Production History*
1990 1991 19991998199719961995199419931992
Natural Gas Prices(NYMEX)
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
6.00
6.50
7.00
7.50
8.00
8.50
9.00
9.50
10.00Ja
n-90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Trade Date
Pric
e ($
/mm
btu)
Fwd Curve Apr01 Fwd
(3/9/01)
Forward Pricing: 1 year $5.23 3 year $4.76 5 year $4.6810 year $4.75
898
362
0
200
400
600
800
1000
1200
Oil Rigs
Natural GasRigs
Rigs Drilling for Natural Gas Have Doubled
Natural Gas Producers are Responding
488
1,125
April, 1999 February, 2001
Issue: Building a Sound Energy Policy
• Recognize Importance Of Energy
• Establish Energy Advocacy– Require Consideration Of “Energy Impact”
In Regulatory Decision Making
Critical Factors
• Access
• Technology
• Financial Requirements
• Skilled Workers
• Rigs
• Lead Times
• Requirements Of New Customers
Issue: Resource Base• Knowing How Many Laws, Regulations And
Conflicting Management Plans Are In Play
Issues: Access to Capital
• Increase Spending By $10 Billion A Year Through 2015
• Double Wells Just To Deal With Natural Gas Demand
• Retain As Much Revenue As Possible
• Old And New Tax Reforms
What’s Going On In Washington
• Bush-Cheney National Energy Policy Task Force
• Transition Advisory Teams
• The Administration And The Agencies
• The Congress
Our Role In The Process
• Wildcatters’ PAC
• The Transition
• Congressional Hearings
• Congressional Oil & Gas Forum
Political Effectiveness
• Record-Breaking Fundraising
• Increased IPAA Member Involvement
• The Wildcatters Fund Contributed To 71 Open Congressional Seats And Competitive Races To Ensure A Pro-Business/ Pro-Oil & Gas Congress
Grassroots Activism
• Voter Education Guide
• “Get Out The Vote” Campaign
Hearings & TestimonyThe 107th Congress
• House Energy and Air Quality Subcommittee
• House Resources Committee
• House Energy and Mineral Resources Subcommittee
• Senate Energy and Natural Resources Committee
• Federal Energy Regulatory Commission
Rep. Barbara Cubin (R-Wyoming)Rep. Joe Barton (R-Texas)
Sen. Frank Murkowski (R-Alaska)
Rep. James Hansen (R-Utah)
Congressional Oil & Gas Forum Advocacy
The Oil and Gas Forum Hosted by
IPAA on March 15, 2001
Drew 90 Participants and
7 Members of Congress