American Oil and Gas Reporter - January 2012 - 222

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The Presidential Papers
to rely so heavily on energy from unstable
parts of the world. This goal is attainable;
however, government first must encourage
energy development with a common sense
energy policy that acknowledges and appreciates the tangible benefits that enhanced
oil and gas development can bring to
America's economy and standard of living.
It defies logic to proclaim the goal of
reducing dependence on foreign oil while
simultaneously opposing the expansion of
domestic oil and gas production; however, this is exactly the approach Washington is taking. As an industry, we must continue to work together to ensure that our
nation's energy interests are protected
and that oil and natural gas are recognized
as significant contributors to the American
economy, national security and our way of
life. KIOGA is working with our industry
allies to advance those priorities.

for our nation in the years ahead, an informed public never has been more essential. KIOGA's communication priorities focus on:
* Educating policymakers and the
public on critical energy tax and regulatory
issues;
* Developing good media relations to
help inform the public about the benefits
the industry provides, the commodities it
produces, and the products made from them
that enhance our standard of living; and
* Keeping KIOGA members informed.
KIOGA believes ongoing communication with key policymakers is critical to
protecting our industry from the serious
risks of overtaxation and over-regulation.

Louisiana Oil & Gas
Association

Outreach Efforts
As the oil and gas industry confronts the
enormous challenge of providing affordable, adequate and reliable energy supplies

STEVE JORDAN
President and
Chief Executive Officer
Central Crude Inc.
Lake Charles, La.

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We believe it is important for policymakers to honestly confront the consequences
of oil and gas tax and regulatory proposals, and to address the need for a genuine
domestic energy policy. Our strategy for
2012 is focused on implementing these
core policy priorities.
The oil and gas industry is eager to have
an open, honest and transparent dialogue
about our industry and how it operates. As
independent producers, we recognize the
significant contributions our industry
makes to our nation's energy security
and way of life. KIOGA is working hard
to ensure that policymakers in Washington and Topeka understand our capabilities and our commitment to advancing the
well-being of our state and our nation. ❒

In 2012, oil and gas businesses across
the United States potentially could see significant growth in several industry sectors.
In Louisiana, the slow return of activity in
the Gulf of Mexico and the continued discovery and development of shale resources remain the most talked about issues within industry circles.
Throughout the United States, market
trends overwhelmingly have driven exploratory and production investments toward oil. In recent years, the North American natural gas market has experienced an
unprecedented disconnect from its usual
relationship with oil. The historical ratio
between the price of natural gas and oil has
averaged 10-to-1. However, developments
in the last 10 years have moved that ratio
to closer to 20-to-1.
On Nov. 8, 2011, the U.S. Energy Information Administration announced it ex-

222 THE AMERICAN OIL & GAS REPORTER

pected domestic natural gas production to
reach new highs in 2012. EIA estimates
2012 production will rise 1.3 billion cubic
feet a day to a record 66.9 Bcf/d. There is
no question that the rise of shale gas production has played a primary role in driving these unprecedented numbers. Record
production, however, has led to record
supplies that have
slowed a once
booming sector.
Haynesville Shale
The shale resource boom sweeping the
nation has made a profound impact on
Louisiana. The Haynesville Shale has
proven itself a prolific resource for dry gas
production and, in October, surpassed
the Barnett Shale as the top producing natural gas field in the continental United
States. By producing 5.5 Bcf/d, the Haynesville has provided a desperately needed jolt to our state's economy and certainly
has exceeded early expectations.
However, the subsequent natural gas
supply glut generated from the surge of nationwide shale gas production and resulting sluggish natural gas prices have raised
questions about the economics of Haynesville drilling. Many companies have
found it difficult to justify $10 million-$12
million in drilling costs in a $3.50-$4.00 an

American Oil and Gas Reporter - January 2012

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