American Oil and Gas Reporter - January 2015 - 196

well-being of our nation, we will seize
this opportunity to bring about a new era
for our industry.
Better policy can help produce a better
energy future. If we, as a nation, are
serious about new jobs, if we want to

stimulate the economy, if we want to
constructively increase revenues to federal,
state, and local governments that can be
used to build roads, fund schools, support
communities, or battle deficits, we clearly
have the means to do so.

Louisiana Oil & Gas
Association
BRYAN J. HANKS
President
and Chief Executive Officer
BETA Land Services LLC
Lafayette, La.

FROM THE CHAIRMAN
Gasoline prices are falling by the day.
Because of oil prices dropping to around
$85.00 a barrel, gasoline prices in December were as low as $2.55 in some
places in the United States.
While low gasoline prices do provide
a temporary boost to local and state
economies, the boost indeed is temporary.
Late in 2014, some analysts said gasoline
prices were expected to fall another 20
cents by the end of the year, if the market
continued in this same direction. ABC
News reported that Americans would
save $420 million a week on gasoline
compared with this same time in 2013.
What is causing this significant drop
in oil prices? According to the U.S.
Energy Information Administration, the
United States is producing more oil today
than it has produced in the past 30 years.
The shale boom and advancements in
the technology surrounding hydraulic
fracturing are to thank for this rampedup activity.
The reciprocal of a vast new supply
of crude oil being produced in the United
States can be seen in the form of a sixyear low of crude oil imports. The EIA
predicts that on the current track of production, the country will be producing
9.5 million barrels of oil a day in 2015.
The analysts say this is the highest output
of domestically produced crude oil since
1970.
However, as this drilling activity has
climbed in places such as Texas and
North Dakota, if the price of oil continues
to drop, drilling activity then could decrease. While it is not time to sound the
alarm on low oil prices, if they continue
their slump below $60 a barrel, as they
were in mid-December, analysts say it
could cause trouble for the U.S. economy.

Record Lows
How does this affect the Louisiana
and national economies? Coupled with a
litigious legal climate and low oil prices,
Louisiana is experiencing a record low
for land-based and inland water rigs. As
of Oct. 14, Louisiana only had 18 landbased rigs, 13 inland water rigs and three
state offshore rigs. These numbers have
not remained this low since the 1980s.
As each rig site directly employs around
180 employees and indirectly employs
hundreds of other workers, the ripple
effect of low oil prices can be felt in our

Most Americans understand this. They
want more jobs. They want more affordable and reliable energy. It's time to move
policy in that direction.
r

own backyard. Nationally, these low oil
prices have caused energy stock prices
to fall, thus impacting our national economy.
For developing plays such as the
Tuscaloosa Marine Shale in Central and
South Louisiana, if oil prices continue
to drop, the TMS could see diminished
activity, as its wells already are very expensive to operate.
While many topics surrounding oil
and gas are important, the price of oil is
a crucial discussion at this point in the
game. Analysts and talking heads across
the country seem to each have the answer
for where oil prices will settle over the
coming months. However, so many variables make up the reasoning behind oil
prices. The international political climate,
imports and exports, the U.S. economy,
the value of the dollar, and tension in the
Middle East all comprise components
of how and why oil prices rise and fall.
So, before we buy into one specific
report, it is vital that we look at the bigger
picture so as to make an educated guess
on the future of oil and gas prices.
Ì

New Mexico Oil & Gas
Association
LELAND GOULD
Director of Governmental
Affairs
Western Refining Inc.
Albuquerque, N.M.

FROM THE CHAIRMAN
Even in an environment of low oil
prices, New Mexico is well positioned
to compete for new development. New
Mexico has two well-developed producing
basins: the Permian Basin in Southeast
New Mexico and the San Juan Basin in
the northwest part of the state.
Production in the Permian Basin has
grown very rapidly during the past few
years. Its oil production is largely responsible for New Mexico becoming the
country's fifth ranked oil producing state
as of August 2014. The Permian Basin's

196 THE AMERICAN OIL & GAS REPORTER

extensive infrastructure is growing, it has
significant acreage under lease, and numerous formations are being developed
profitably.
Meanwhile, as New Mexico's largest
source of natural gas production, the San
Juan Basin has fallen on some hard times
and natural gas drilling is very limited.
However, companies are positioning themselves to resume limited drilling programs
during the next several months. The basin
still produces more than 60 percent of
New Mexico's 1.2 trillion cubic feet of
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