American Oil and Gas Reporter - December 2015 - 96

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ConventionCoverage: Independent Oil & Gas Association of New York

Shale Revolution Rewriting
Global Energy Equation
By Dan Holder

AMHERST, N.Y.-Despite the domestic oil and gas industry's slump, a condition
all the worse in New York, the Independent Oil & Gas Association of New
York offered some small doses of optimism at its 35th annual convention.
Bernard Weinstein, associate director
of the Maguire Energy Institute in the
Cox School of Business at Southern
Methodist University, noted how shales
had rewritten the global energy equation
in his keynote address at the event, held
Oct. 21-22 at the Buffalo Marriott Niagara
in Amherst.
"Because of the shale revolution, the
United States is the number one oil and
gas producing country in the world. We
also are number one in nuclear and renewables, and number two in coal," Weinstein said. "This has provided de facto
energy independence. We no longer are
being held hostage by anybody. OPEC
still matters, but in a different way. OPEC
cannot impose another embargo because
it would not mean anything."
Thanks to the shale revolution, the
United States now produces 10 percent
of the world's oil, he said, adding domestic
operators would be producing much more,
if not for White House policies.
"It is almost miraculous that we have
had the shale revolution, which started
when Barack Obama first took office,

because this administration does not like
fossil fuels," Weinstein assessed. "And
yet, the industry has succeeded, despite
a lot of opposition and pushback."
Weinstein suggested an appropriate
presidential perspective would recognize
the United States status as an energy superpower, which would prompt the administration to lift the ban on U.S. oil
exports and encourage exports of liquefied
natural gas. A sensible domestic energy
policy also includes reasonable regulation,
he held, saying while wind, solar and
other renewables will be part of the portfolio, the government must accept the
country's long-term need for fossil fuels.

Glut
The world's oil market is oversupplied
by at least 2 million barrels a day, a glut
that Weinstein attributed mostly to U.S.
operators. "Go back to 2010, and look at
OPEC production. At least until the
middle of this year, it stayed pretty flat,"
he said. "OPEC is not accounting for the
increased supply; it is not other nonOPEC countries. The United States and
Canada are responsible."
Sluggish demand growth compounds
the situation, Weinstein reported, pointing
out that while the U.S. economy is in relatively good shape, most other nations
are seeing little, if any, growth.
The Marcellus Shale, which includes
the Southern Tier of New York, offers a

Roger Willis (left), moderator
for the Independent Oil & Gas
Association of New York's annual convention, pauses with
keynote speaker Bernard Weinstein, associate director of
the Maguire Energy Institute
in the Cox School of Business
at Southern Methodist University. Weinstein closed IOGA
NY's meeting, held Oct. 21-22
in Amherst, N.Y.

96 THE AMERICAN OIL & GAS REPORTER

unique opportunity, he assessed. Principally a natural gas and natural gas liquids
play, Weinstein indicated its potential to
supply Northeast markets remained strong
and would prove profitable once the U.S.
economy recovered. However, low energy
prices will postpone any recovery, he
predicted. Capital spending will fall 40
percent in shale plays this year, and
another 25 percent in 2016, he said,
adding international analysts project $200
billion in deferred exploration and production projects during the next 12 months.
Weinstein said New York Governor
Andrew Cuomo's prohibition on highvolume hydraulic fracturing continued
to block the state's western counties from
adding a new dimension to their
economies. "The Southern Tier of New
York has been losing people and jobs for
decades," he said. "Hydrocarbon production still is a real opportunity to grow
and diversify the economy. A geologist
has told me that this is one of the sweet
spots of the Marcellus, along with permeability and porosity, the formation is
fairly close to the surface. What is more,
you have the Millennium Pipeline."
Several studies have documented the
benefits of reviving New York's oil and
gas industry, he stated. A Manhattan Institute report projected shale development
could add 225,000 energy jobs in the
Southern Tier over 10 years, as well as
thousands of related employment opportunities. Other researchers examined four
years of Pennsylvania's Marcellus history
and saw a 75 percent jump in oil and gas
employment.
Weinstein reported Broome County,
N.Y., funded a study by SMU's Maguire
Energy Institute five years ago. "The county
reached out to us because it was very interested in developing shale resources,"
he recalled. "The institute did a what-if
study on the economic and fiscal impacts
on Broome County if 2,000 wells were
drilled over 10 years. It projected $7 billion
in new spending, which would translate
into $400 million worth of income over
10 years, 8,000 person-years of employment, and significant increases in royalty
income, and state and local taxes."

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