American Oil and Gas Reporter - July 2016 - 89

ConventionCoverage: California Independent Petroleum Association

CIPA Sees Good Prospects
Amid Fiscal Challenges
By Dan Holder
NAPA, CA.-The collapse of commodity prices has significantly impacted
the oil and gas industry, Steve Layton,
chairman of the Californian Independent
Petroleum Association, assessed in his
remarks opening CIPA's annual convention. However, he noted, fiscal challenges
often generate optimism.
"When we make it through to the
other side-and we will, because our industry is filled with wonderfully resilient,
resourceful and remarkable people-we
will be stronger, but we will be changed,"
said Layton, president of E&B Natural
Resources, in Bakersfield, Ca. "That is
the opportunity this crisis brings. It is the
opportunity to open doors that were not
open to us, to think in ways that we have
not thought before, to take action that we
would not have taken before. But we
must seize those opportunities, and we
must be willing to sail uncharted waters.
If we do, we just might discover something
valuable."
In previous industry downturns, oil
and gas typically followed separate paths-
in which one retained market value while
prices for the other dropped-but this time
both commodities dovetailed lower, Layton
said. Prices have recovered since January,
but the increase is not enough to provide
more than a brief respite, he assessed.
"Together, we feel the sadness when
we have to make tough decisions that
impact the lives of our employees, associates and their families," Layton said.
"Together, we also feel the frustration
that the small $50-a-barrel glimmer of
hope is all but dashed by the dramatic increase in legislation and regulation that
targets the oil and gas industry. That is
why we need CIPA."
Layton pointed to the association's
legislative oil symposium as merely one
example of CIPA's value to its members.
Created six years ago, the annual event
brings more than 30 state legislators together with operators.
"It is a relationship that absolutely
transcends party lines, and places the
focus on the value our industry brings to

the state, its communities and the citizens
of the districts belonging to those legislators," he said. "This coalition of legislators has taken a stand against popular
opinion and against the leadership in
their parties, because it is the right thing
to do."
Rock Zierman, CIPA's chief executive
officer, observed forging alliances was
hard when those outside the industry typically viewed operators as "Stetson-wearing Texans with cowboy boots. But, when
we are shown to be California-based royalty owners, employees, and service and
supply companies, we are a lot more effective," he said.
While CIPA continues to be involved
in regulatory and public education issues,
Zierman assured that it would never forget
its core mission: representing the oil and
gas industry in the California Statehouse,
"making sure that things do not get worse-
made worse by bad legislation being enacted or bad legislators getting elected."
Working In The Statehouse
In the midst of the negative issues
confronting the industry, Zierman noted

Steve Layton, chairman of the California
Independent Petroleum Association,
opens the association's annual convention by predicting the oil and gas industry
will emerge from this market downturn
stronger and changed. He said operators
must seize opportunities as they became
available and be willing to sail uncharted
waters.

there were signs of hope in California,
including a growing number of legislators
willing to work with producers. Three
state legislators participated in a panel to
kick off the meeting's general session,
and discussed how they went against
their party's traditional stance.
Zierman opened with a question on
how legislators considered the potential
impacts of California's climate bill, SB
350. The 2015 legislation requires the
state by 2030 to get half its electricity
from renewable sources and to double
building energy efficiency. Legislators
removed a provision mandating a 50 percent cut in petroleum use (AOGR, October
2015, pg. 45).
Assemblyman Mike Gipson, D-Carson,
cited his district's economic ranking-
sixth-poorest in the state. He said that
and its high unemployment counts were
his primary reasons for opposing SB 350.
"I walked into a district that was
labeled poor," Gipson said. "That vote
could mean doing away with those jobs
and further disenfranchising the people I
swore to protect and represent. And so, I
said no to SB 350 in its original form."
Assemblyman Jim Cooper, D-Elk
Grove, said his opposition to SB 350
arose over its unfairness, and noted that
few in his Central Valley district could
afford pricier electric vehicles. He noted
537 of his constituents received rebates
for purchasing an EV, compared with the
more than 5,000 rebates issued in Marin
County, Ca. His constituents also continue
to pay gasoline taxes, which EV owners
avoid, he pointed out.
"Especially down in the south (of the
Central Valley), a lot of folks cannot
afford to live in cities. They have to commute," Cooper said. "They have to put
gasoline in their cars. We use petroleum,
and will continue to use petroleum."
Assessing California's political future,
Cooper predicted the state would see
more races between Democrats, with liberal or moderate leanings distinguishing
candidates.
The miseducation of some legislators
is another cause for concern, said Assemblyman Rudy Salas, D-Bakersfield.
JULY 2016 89

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