American Oil and Gas Reporter - April 2015 - 169

ConventionCoverage: Illinois Oil & Gas Association

N.Y. Fracturing Ban A Cautionary Tale

EVANSVILLE, IN.-Sometimes it is
better to learn from a story than to compare
situations, Independent Oil & Gas Association of New York Executive Director
Brad Gill advised his Illinois counterparts.
Gill was a featured speaker at the general interest session during the Illinois
Oil & Gas Association's annual meeting,
March 5-6 at Evansville's The Centre. In
his presentation on how IOGANY lost
its fight against a statewide hydraulic
fracturing ban, Gill clarified that he
wanted to explain what happened in New
York. "This is not a comparison between
states," he stated. "This is simply the
New York story."
Gill recapped his association's multiyear process, which involved multiple
environmental group protests, and various
political failings and misunderstandings.
"When unconventional plays became
a big thing in the Northeast, as oil and
gas production increased, the more public
concern and outcry increased," he detailed.
New York's supplemental generic environmental impact statement (SGEIS)
assessing the community impacts of highvolume hydraulic fracturing received
260,000 comments from industry and the
public, Gill recalled. Governor Andrew
Cuomo initially seemed to support the
industry, and floated a five-county plan
that would have applied only to areas
that supported drilling.
Four years into the process, the state
also mandated a health study, but gave
no timeline for its completion, he continued. "Also, we realized that Governor
Cuomo was very close with former U.S.
Senator Robert F. Kennedy Jr., who is
notably anti-industry," Gill said. "And,
Cuomo definitely was thinking of his reelection campaign and a possible presidential bid. That is when we noticed he
was beginning to change his tune about
the industry."
After several missed deadlines, delays,
and changes in regulatory staff members,
Cuomo "was waiting on the science, but
wanted to decide by the end of 2014,"
Gill said. The governor banned high-volume hydraulic fracturing in mid-December, but anti-industry organizations have
continued to attack oil and gas on other
issues, he elaborated.
"If I had to give any advice on this to
fellow oil and gas associations, it would

be: define the battle and the desired outcome, and determine first whether others
will be influenced by politics and personal
alliances," he said. "And, decide early
on if it's even a winnable battle against
your particular political backdrop."
Gill cautioned against arguing from a
merely logical perspective, which he said
many industry members tended to do as
very logic-driven people. "When it comes
to emotion versus logic, reason, facts
and science, emotion will win every
time," he warned. "People will listen to
misinformation as long as there is an
emotional component to it because they
want to protect themselves, their loved
ones, and the environment. It's hard to
persuade them with science when they
are clutching this misinformation so emotionally."
The IOGANY executive recommended
that IOGA staff and members "never underestimate (their) opponents." Before
beginning a campaign similar to IOGANY's, an association should have
funding, manpower, and clout, which he
defined as "influence or alliances."
"We were not big enough or strong
enough to fight our battle," Gill acknowledged. "We lost too 'pretty.' I would
have rather won, even if it meant winning
it less gracefully."
Oil Prices
Michael Loftus, Metolius Capital
LLC's business development-distribution
representative, spoke to IOGA members
on the declining oil market and speculated
about when operators might expect to
see some price recovery and positive momentum.
The United States' deflationary price

environment has led to very low interest
rates, which Loftus said was caused at
least partially by too much government
spending. "We are not spurring growth
in the industries needed," he commented.
At the time of IOGA's meeting, he
noted short-term interest rates were 0
percent, and long-term rates were 2 percent. By contrast, the average long-term
rate was 5 percent.
"Stocks plummeted in 2008, and even
though they are recovering now, the
growth isn't enough to support current
commodity prices," Loftus suggested.
"Oil prices have had a fundamental move
because the market started trading oil
sideways. Because of all those factors,
we see a stronger dollar, sideways to
lower trade in commodities overall, and
deflation continuing."
Loftus said that 50 months might be
an accurate timeline for sideways trading,
but "oil is going to go up, eventually."
"Interest rates will have to go up relatively sooner than the government wants
them to," he added. "I estimate that by
June, government officials will have to
talk about increasing interest rates, or
maybe in 2016-17.
"But, if you want to know when the
market is going to recover from sideways
trading, I would suggest looking at the
relationship between oil prices and interest
rates," Loftus offered. "That would be a
good indicator of recovery. At this point,
though, $74 a barrel is probably an optimistic average for sideways trading."
Awards Program
During IOGA's Wildcatter Luncheon
on March 6, the association awarded Jim
Cantrell, Royal Drilling & Producing

IOGA of New York Executive Director Brad Gill (left)
chats with IOGA President
Todd Shulman after
IOGA's general membership meeting. Gill spoke
to his Illinois counterparts
on the story of New York's
hydraulic fracturing ban.

APRIL 2015 169



American Oil and Gas Reporter - April 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2015

Contents
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