William G. Barr III
Message from the President
August 31, 2009
Dear Membership:
After months of a recession and crashes in the real estate, equities and banking markets, it seems that natural gas producers will be the latest causalities. Just as the economy seems to be starting to recover, natural gas prices have fallen to a seven year low and into the dreaded $2 range.
Fueled (no pun intended) by technology driven increases in production from the shales across the country, and coupled with significant decreases in demand from the commercial and industrial sectors, deliverability of natural gas has simply outpaced demand and prices have responded accordingly.
Predictably, rig activity has dropped significantly. We are currently running less than 45% of the number of rigs that were drilling for natural gas a year ago (699 versus 1606). As the decline curves of the recently drilled natural gas wells continue to decrease in deliverability and an increasingly smaller number of new wells are brought on line, the glut will vanish, especially as the economy recovers. The questions remains; “How long will it take for balance to be restored and prices to move back up?” Everyone has an opinion, but certainly most believe that this is a short-term problem. Given the Obama administration’s stance on carbon reduction and climate change initiatives, most commentators believe that natural gas will play an active and expanded role in meeting the country’s future energy demands. There is a lot of talk of natural gas being the fuel that builds the bridge to the future. A carbon constrained future where governmental incentives are aimed at the renewables.
The KOGA Board of Directors has taken some proactive steps to be part of the solution. At our 73rd Annual Meeting, we created a new ad hoc committee to research and report on what was being done in other states and to promote the use of natural gas as a transportation fuel. Natural gas is a domestic, clean burning, readily available “alternative” transportation fuel: an alternative to imported crude oil.
The committee is called the Natural Gas Vehicle (“NGV”) Committee. Its membership consists of Nan Hamilton (Stand Energy), Kevin West (EQT Production), Marybeth Anderson (Chesapeake Energy), Tal Jones (Merit Gas and Oil), Denny Rohr (Interstate), Bob Laughner (Daugherty Petroleum), and me. Tara Taylor, KOGA Associate Director was assigned to support the NGV Committee. After numerous meetings and significant research, the Committee submitted a report to the Board at our August meeting and with Board approval has developed two “white papers” for use in educating governmental officials and the public at large. The white papers are included in this issue of “Bits” and are also available on the KOGA website.
I encourage you to read the papers, learn the facts and spread the news. Personally, deliver copies to your local legislators, to your city and county officials, to your school board members, to your local civic organizations, to your newspaper editors and publishers and to anyone else that you think appropriate.
The work of the NGV Committee isn’t complete. The Board’s next mandated task is to research the legislative initiatives in other natural gas producing states and develop a proposal for submittal to Governor Beshear’s Administration requesting Kentucky legislative action. While it is too early to report on what will be contained in the proposal, tax incentives for construction of infrastructure (fill stations, pipelines, etc.), and mandated state use of natural gas fueled vehicles are certain to be hot topics.
While the focus of this letter is specific to the natural gas side of our collective industry, our crude oil producing members should understand that this will always be the Kentucky OIL and GAS Association and that this endeavor is one in which the Board is trying to capture the magic of the moment for both the Commonwealth and our members. There is a perfect storm brewing: a secure and abundant domestic supply of natural gas, an increasingly disconnected pricing scheme between crude oil and natural gas, a decreasing worldwide supply of crude oil, and the Obama Administration pushing carbon reduction legislation. Combined, it creates a great environment to promote natural gas as the clean burning, readily available alternative transportation fuel that it is.
We will keep you posted as we get closer to the development of our legislative proposal and the Kentucky 2010 Legislative session. If you have any questions for Bill you can reach him by
email.
Sincerely,
William G. Barr III
Kentucky Oil & Gas Association
Past Presidents
1929-1930 C.E. Curry
1930-1932 R.C. Snyder
1932-1933 D.S. Keenan
1933-1940 Earl Wallace
1940-1943 N.W. Shiarella
1943-1949 M.A. Arvin
1949-1952 John T. Diedrich
1952-1956 George Ellison
1956-1958 O.H. Horne
1958-1960 Fred E. Moran
1960-1962 E.E. Clark
1962-1964 George A. Hoffman
1964-1966 Robert W. Moore
1966-1968 H. Warren Hartsough
1968-1970 Phillip Jenkins
1970-1972 Milton S. Yunker
1972-1974 Don C. Weller
1974-1976 George H. Warren Jr.
1976-1978 Robert N. Tullis
1978-1980 C. G. Collins
1980-1982 John Avila
1982-1984 Robert C. Soaper
1984-1986 W.A. Watson Jr.
1986-1988 Curtis E. Davis
1988-1990 Greg Hartsough
1990-1992 Michael P. Sanders
1992-1994 John P. Gabbard
1994-1995 George H. Warren, III
1995-1997 William S. Daugherty
1997-1999 Bill Cubbedge
1999-2001 David Walker
2001-2003 D. Michael Wallen
2003-2005 Bob Alley
2005-2007 Bernie Miller
2007-2010 William Barr III
President-Elect:
2010-2012 Jed Weinberg
