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Texas Oil & Gas Battles at the Capitol with Karr Ingham | The Crude Truth Ep 141

Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Rey “RT” Treviño [00:00:00] The Texas Legislative Session is over and done with. Yes, we do have a few special sessions, but what happened in the oil and gas industry that affected us today, tomorrow, and on a national level? Karr Ingham, President of the Texas Alliance of Energy Producers, is here to break it all down on this episode of The Crude Truth.

Narrator [00:00:22] In 1901, at Spindletop Hill near Beaumont, the future of Texas changed dramatically as, like a fountain of fortune, thousands of barrels of oil burst from the earth towards the sky. Soon Detroit would be cranking out Model Ts by the millions and America was on the move thanks to the black gold being produced in Texas. Now more than a century later, the vehicles are different but nothing else has truly changed. Sure there may be many other alternative energy sources like wind and solar and electric. But let’s be honest, America depends on oil and entrepreneurs, and if the USA is truly going to be independent, it has to know the crude truth.

Narrator [00:01:05] This episode is brought to you by LFS Chemistry. We are committed to being good stewards of the environment. We are providing the tools so you can be too. Nape Expo, where deals happen. Air Compressor Solutions. When everything is on the line, Air Compressed Solutions is the dependable choice to keep commercial business powered up. Sandstone Group. Exec Crue. Elevate your network, elevate your knowledge. Texas Star Alliance, Pecos Country Operating, fueling our future.

Rey “RT” Treviño [00:01:40] Well, what a very busy and eventful Texas legislation we just got done with here about a month ago. And it’s actually taken about that month to settle, to really dive into and see what all was passed, what wasn’t passed, and what affects the oil and gas industry. And I want to just highlight to all our listeners and viewers out there that aren’t from Texas and they’re thinking, well, why is Texas legislation so important to us? Because as Texas goes and our policies in Texas goes, America’s policies follow. And not only does America’s policy follow that on a national level, but we set the global standards and what’s right and how business is done in the oil and gas industry. So that’s why this episode is so important. And to bring in today, as I mentioned in my teaser and it really wasn’t even a teaser day, I’m just excited to have the man that knows what’s going on. That during the legislative, I think he had a sleeping bag next to the state capitol and in between, it was right in between the state capital and the governor’s mansion to make sure that he didn’t miss a beat. Our man, the president of the Texas Alliance of Energy Producers, Karr Ingham. Karr, how are you, sir?

Karr Ingham [00:02:56] I’m good. You’re so kind in your introduction. Appreciate that a lot. I’m good. It’s great to be here. Good to see you. I appreciate the invitation to get to do this with you. What a privilege. And you’re not wrong. As you know, I do not live in Austin. I live in the great northern city of Amarillo, Texas. Yes. But when I took the gig… As you know, I’ve been associated with the Alliance as its economist and a few other things for a long time, 20 years plus. But I became the president of the Alliance about a year ago, July of 2024, which means that the 2025 legislative session was the first one that we had where I was actually running this outfit. So we had a deal with our members and our board. Yes, I will continue to live in Amarillo. Yes, I’ll be in Austin for the legislative session. No other place to be, have to be here. We have people here on the ground working for us, but the president of this organization needs to be there. And so there were very few exceptions about weeks of the legislative section that I was not in August for, August, Austin, for at least part of that week and often most of the week because committee hearings are happening and then, of course… These things are making their way to the floor and there’s just a lot to do. And in terms of testifying on behalf of the Alliance and our members, again, we have people, great people doing work for us in Austin, but for the most part, that needs to be me. And I just wanna make sure I was here for all of that. So it wasn’t quite as bad as a sleeping bag right over there, but kind of felt like it sometimes, but. I just want to make sure I was in town for that legislative session and available. And then that we’re staying on top of these issues. And of course you got, you got things happening in the building, but there are meetings in other places where you’re getting together with other trade groups and kind of hashing things out your members. I mean, there are things going on outside of just what happens in the buildings over there. So it’s a very busy, really intensive time. And, and there’s, there’s never going to be. A session that doesn’t have something to do with oil and gas because we’re an oil and gas state and our production has grown so dramatically over the last 15 years or so. It puts us on an even higher level in terms of impact and consequence to US production, global production. And there’s a bigger spotlight on us now than ever before from. Uh, from environmental groups, from really every perspective. And so all of this is going to find its way into the legislature somehow, or we got to be on top of this stuff.

Rey “RT” Treviño [00:05:54] Speaking of being on top of this legislative session, there were a couple of different bills pertaining to oil and gas. And I wanted to kind of just not dive into them, but talk about them and see what it is where operators got to get better or where we’ve gotten some more regulations removed to allow us to do our job more efficiently. One that comes to mind is obviously the, oh my gosh, I’m blanking on it.

Karr Ingham [00:06:22] Oh, the inactive well bill. Yes, the Inactive Well Bill. Yes, right.

Rey “RT” Treviño [00:06:26] And that one kind of goes along with the plugging and the orphan wells in some form or fashion.

Karr Ingham [00:06:31] In some form or fashion, but to be clear, and this was part of the problem when we were having this discussion, I think there’s a clear distinction between an inactive well and an orphan and abandoned well. Yes. And yet I don’t think this distinction was clear to everybody because there was I think some conflation of these two notions, an inacted well. You’re an operator, so you know this stuff, and I don’t know an operator that doesn’t have some number of inactive wells as a part of their well inventory. And so an inactive well is one that is owned and controlled by a good operator. Pecos. That can, and they’re, they’re they’re owned and controlled and managed by licensed operators and good standing with the state because you’ve got to have an active P five to do all of this stuff that you have to do with inactive wells. And so these inactive well inventories, there’s always stuff that you have do along the way anyway, on certain timeframes, if it’s inactive for long enough, and this was law before any of this came up, you after. Ultimately disconnect the electric power to it. You’ve got to at another stage down the road remove the surface equipment, et cetera, et cetera. So we already had these things in place. The point being that inactive wells are not wells that are out there that are big problem wells that are leaking nasty stuff all over the place. We know where they all are. The state keeps track of these things. Operators have to file reports about this. And that’s completely separate and apart from an orphan and abandoned well. And the terminology is pretty self-explanatory. It’s orphaned, which means nobody owns and controls it now. And it’s abandoned, which means nobody’s really doing anything with it. Well, is the orphan and abandon well inventory in Texas potentially problematic? Yes, because you don’t have operators that are taking care of them and doing. A mechanical integrity test and testing for leaks and so on and so forth. And sometimes these do kind of break through and pop to the surface. And on the rare occasion when that actually happens, it’s a big story. And I get it. You know, nobody wants to see anything bubbling up out of the ground and spreading around. Nobody wants to say this, but this is not happening with inactive wells now. The origin of the legislation, the philosophy behind it is that a rising, and we do have a rising number of inactive wells in Texas, is that that rising number of active wells may ultimately lead to a rising number or orphan and abandoned wells. I’m not convinced at the case because the data doesn’t bear that out historically, but that’s the assumption. And so the idea was on the part of the legislature a desire to. Arrest the growth, upward growth in the number of inactive wells and began to stabilize that and then start to bring it down over time. And the way they elected to do this was by kind of attacking operators inactive well inventories and requiring them to do more than they had been doing and either plug or return them to service over basically a, you know, a 15 year compliance. Time frame and this sounds like a lot I think this sounds like a long time.

Rey “RT” Treviño [00:10:26] Right, right.

Karr Ingham [00:10:26] To people and they may say, well, yeah, 15 years again. But the fact of the matter is that’s some tough math for a lot of our operators because it costs money to plug wells. And when you mandate that you’re gonna start plugging a lot wells in a constricted timeframe going forward, there’s no way the cost of plugging wells is not gonna go, it already has gone up. Yes, it has. Extraordinarily. Yes. Um, and there’s no way that this is not going to push the price of that activity up in the future as well. So this is the bill. This is the thing that took up most of our time and energy and work during this legislative session to try to keep that where it’s manageable and workable for operators and smaller independent oil and gas operators in particular.

Rey “RT” Treviño [00:11:14] So with the 15 years, so for an example, I know for us, when we go look at new art, at leases that other people have, and it’s like, hey, we think we wanna pick it up. We look at all the inactive wells, and it like, okay, when you look at it, we kind of do the math that, okay these are all potential plug or put back online wells. Right, it’s one or the other. We’re either gonna put the well back online to be a producer. Or it’s like at some point we’re going to plug it. So we do look at them as plugging liability when you pick up a lease. However, sometimes there might be a hundred wells that are maybe inactive. And so with this 15 years, are you saying that you got to do something within that 15 years with all 100 inactive wells?

Karr Ingham [00:12:04] That’s exactly right. The idea is that all of those over a 15 year period of time have to be either plugged or returned to service now. And we had a lot to do with this. Yes. If you get to the end or you’re approaching the end of that 15 year timeframe, there are some exceptions built in that will allow you to petition the commission to extend that 15-year timeframe, but it, you know, you’ll have to prove an operator or have to proof some things up to the commission. And so we, again, we were very instrumental in getting this exception process beefed up a little bit to give operators a potential out when it’s getting to the end of that 15-year period of time. But absent that exception process, yes. The idea is now there’s, it’s not every single inactive well that you have. This applies to wells that are uh, 25 years old or more. In other words, they were completed 25 years or more in the past and have been inactive for 15 years or. And again, you think that’s going to whittle. There’s a lot of wells in Texas that meet that test fall into that category. Absolutely. Of course.

Rey “RT” Treviño [00:13:26] That are over 25 years old.

Karr Ingham [00:13:27] Oh, absolutely. Of course. I mean, man, the wells that we got operating in Texas and even the inactives, we’ve got a lot of wells that have been around for a long time, both producing and currently inactive. So it’s that group of wells this applies to. But of course what happens with every passing year is that wells fall into that category because if they’re age 23 now in a couple of years are going to be age 25 and if they’re 12 years inactive now, you know, three years, they’ll be 15 years in active. So you’re going to be adding wells to that group on a rolling annual basis. And so this is kind of what you have to keep, what you have to, keep, have to keep track of.

Rey “RT” Treviño [00:14:11] Okay. So with wells that are producing that are 25 years or older, what do we, like, we just got to monitor.

Karr Ingham [00:14:19] If it’s just a producing well, I mean, if it’s a producing well, then this doesn’t affect that, just the inactive wells. Inactive wells? You know, we’ve got a lot of operators and we spent a lot of time connecting with our operators on these issues and learning things about the nature of their operation, getting feedback and counsel from them on how we need to proceed here. And um… I’d say on average, and this is just a rough guess, but it’s probably not far off. On average, it’s very common for an operator to have of their total well inventory that they have 20% anyway that are inactive. And in some cases, 25, 30, third of their wells in some case are in active. And again, it not like they’re sitting out there not being taken care of because the state has requirements. Even before this law was passed on those inactive wells. But this requires that to happen now. We’ll say, and this was virtually all of us, that bill was, when it was originally drawn, was supposed to go into effect on September 1 of 2025. And we pushed that back or got pushed back. And let’s, our members we were working with on Senate side in particular, House as well, Um, we, we essentially got that start date moved back two years. So the start date of that 15 year period is September 1, 2027, not 2025. So that gives us a little bit of a longer runway to, for these guys to start figuring out how they’re going to manage this, but if you just do the math on your current inactive well inventory and what you have, that’s going to age into that group. In the next 17-year period of time and what you have to do in terms of plugging them to totally eliminate. It’s some ugly math in many cases. It’s very ugly. Very costly to operators. There’s a chance this will put some guys under. There’s the chance that companies may spend, I mean, the more money you’re spending on that sort of thing is the less money you are spending on new development. And bringing new production online and drilling wells and, and, um, uh, secondary recovery efforts, whatever the case may be. Um, because, you know, you’ve only got so much cashflow to work with and, uh. And you know that’s production multiplied by price, essentially pretty easy stuff. Oh, you are an economist and I am an economist. So I got that one down. So… You know, so here’s the pie of revenue and the bigger share of that pie that’s taken up by things like this and it’s going to do it means less money goes to other beneficial things.

Rey “RT” Treviño [00:17:25] Right now, we’ve always followed a 10%. It’s like whatever you have inactive, you gotta do 10% of your scope. I don’t, I like that a lot better than, hey, you got 15 years to do something.

Karr Ingham [00:17:40] This is true. And so again, it’s not like operators were not already plugging right on a regular and ongoing basis. 10% 10% of their inactive. Well,

Rey “RT” Treviño [00:17:51] Yeah, put it online or plug it, 10%. So that means, you know, again, with that 100 for easy math, I mean, you know 10 wells a year that are on my operator license have to be plugged, and it’s not just one lease, it’s within my entire deal. That’s interesting, and that doesn’t start until September of 2027.

Karr Ingham [00:18:15] That’s correct. Okay. All right. Yeah. But you know, I mean, obviously everybody’s going to have to start planning for this now and looking ahead. And when this legislation was first drafted it was much worse.

Rey “RT” Treviño [00:18:29] Okay.

Karr Ingham [00:18:30] Than it was compared to the version that passed. It was 10 years inactive, and a 10-year compliance timeframe was no exception. That would have been unworkable unmanageable so costly so we we set about to kind of change those numbers and You know, frankly, it could be worse. I mean, we were talking to some of our guys also do work in Oklahoma. Uh-huh. They’re an active well-built. I don’t know the status of it now, but it’s extraordinarily worse than Texas. Oh, wow. Shorter timeframes, very little in the way of exceptions. And so there are other states that are struggling through this as well. And what you said in your introduction is quite correct. People look at what Texas does and how they handle these sorts of things from a legislative and regulatory perspective. So we end up being a model for things that happen in other states and around the country and in some cases, even the feds. And what we do here is so consequential. Not just in terms of our contribution to the marketplace, which is 43% of the nation’s oil. 30% of the nation’s natural gas.

Rey “RT” Treviño [00:20:00] Go Texas. Go Texas, yeah.

Karr Ingham [00:20:01] Uh how this is regulated and how we do this in Texas, everybody’s watching and so it’s important to get these things as close to right as possible.

Rey “RT” Treviño [00:20:13] I want to break away real quick to talk about the Alliance and how important the Texas Alliance of Industry Producers was in that moment getting this bill done right over here to make it where it is that you guys are fighting for the operators. So I just want to kind of almost do a quick break away here to talk about the alliance real quick and how people and how other operators can join. Just kind of, almost like a quick infomercial here in the middle.

Karr Ingham [00:20:41] As you know, there are, because we’re Texas and because we are as big as we are and because we have regions of the state that are incredibly important, there’s more than one oil and gas trade association in Texas, in fact, doing upstream work alone, exploration production work. There are actually five of us, three are statewide, the Alliance, Texas Oil and Texas Independent Producer and Royalty Owners Association. Then you got two regional groups, Permian Basin Petroleum Association. And then in Amarillo, in that part of the world where I live, Panhandle Producer and Royality Owners’ Association. All good groups with good people doing good work. We’ve got a lot of cross membership across these organizations too. So their members may be ours and vice versa. This was a collaborative effort. There’s no doubt about that, but we all have a bit of a different focus at times on certain things. And the Alliance historically has been known and has been very effective at making sure we are fiercely advocating for smaller. Private independent oil and gas operators, as I like to say, and I’m sure you’ve heard me say, and I’ve sure I’ve said it a time or two here on this. We all know oil and guys companies whose names everybody knows, great big outfits. ExxonMobil, Chevron, these are all members of ours, by the way, and love them. I don’t mind big oil, it’s a big world. And it takes a lot of product to supply it. So I’m. I’m not a big oil hater by any stretch of the imagination, but in Texas, we have a lovely, interesting ecosystem and landscape of oil and gas production. So you’ve got great big companies drilling great big wells and producing a lot of stuff. As production falls off on those wells, it’s often the case that they get to a certain production level and they’ll hand those off to kind of a next tier operator. And then they’ll do the same and then they all do the same. Then you end up with a lot of great companies in Texas operating of, you know, anywhere from a few to a big number of small marginal wells. And these are 80 to 90% of the wells in Texas, by the way, would fall into that marginal category. So this is most of the wells in taxes. And we’ve got a lot members that operate those wells. So again, got great big companies whose names everybody knows. You’ve got smaller private independent, and then you’ve kind of a group of private, pardon me, public independents.

Karr Ingham [00:23:34] Who are big players. Pioneer was one of those, Diamondback, Matador, all great members of ours and others. Publicly traded, but independents, all they do is produce oil and gas. And then you’ve got private independents from very small to pretty good size. And as I like to say, this group of smaller private independants is a great group of great operators. Put you guys in this category. They’re sophisticated, they’ve been around a while, they know what they’re doing and they’re great at what they do and nobody knows who they are. Nobody’s, nobody outside the business and many inside the business have never heard their names before. They’re important, they’re important to us. They operate wells in every corner of the state to beneficial economic activity and they do throw in, you know, in Texas, somewhere around 10% of their production, which is not inconsequential. We don’t need to see it go away. We don’t even see these operators go away, so we spend our time, we work with the larger companies on issues that we can be helpful with and we align with them. And again, I love our larger member companies, I just do. Great people and their government relations. People in Texas are fantastic to work with, love them all. Uh, but when it comes to issues like this, and we want to know what they think, and we wanna know if, you know, how consequential this is to the larger companies, because this, well, they’re all members of the Alliance as matters to us, but it’s these smaller guys that we just want to make sure don’t get hammered by a new piece of state legislation and, or regulation. And certainly this applies at the federal level as well. The Alliance and I don’t mind. Toot and I are horn. I’ve been doing it for a long time and I’ve been associated with the Alliance for 21 years now. I know what we do, how we’ve done it, how well we’ve done it. We look out for the industry from one end to the other. And again, we fiercely advocate for smaller private independent oil and gas producers. And if you’re not a member of the Texas Alliance of Energy Producers, you need to be. Why? Because It takes resources to do this work. We, again, we have people in Austin that we hire to represent us at the Capitol. I defend this team to the, this is the best team of oil and gas lobbyists. There is in Texas. Um, there’s, I don’t, I, that’s, that subjectively true. I think certainly is true to me. Um, they don’t do it for nothing. So we pay them and, uh, honestly, I’m not sure we pay them what they’re worth, but, um, so it takes resources to do this. And we are, by the way, the only. As far as I know, we’re the only group in Texas, and we may be the only state trade of all the producing states in the country to have our own DC lobbyists. We’ve got our own representation up there because what happens in DC, I mean, you can kill these smaller guys out of DC just like that. Biden administration did everything they could to get that done. And so that’s not a place that we think we can ignore, you know, show up up there once a year and go have a meeting or two. We got to be on top of what’s happening there and be working on it. I was in DC just last week compared to when we’re recording. I’ve been there several times.

Rey “RT” Treviño [00:27:26] I was about to say, you’ve been there, I mean, even during…

Karr Ingham [00:27:31] Yeah, the weeks I wasn’t here, there were a couple of them I was out there.

Rey “RT” Treviño [00:27:36] I want to ask you about the Railroad Commission and what’s going on over there. We have a lot of great regulations that really help the environment out. I mean, I always tell people that, when you’re drilling oil and gas in America, it’s the cleanest place that we actually drill oil. Without a doubt. Without a Doubt. There is a new law or a new rule that the Rail Road Commission came up with for pit liners, is that correct?

Karr Ingham [00:28:03] Yeah. It’s a, it’s a broad waste of management rule, but, but it’s that.

Rey “RT” Treviño [00:28:09] What is this broad waste management rule?

Karr Ingham [00:28:11] Well, it’s oil and gas waste, which is produced water, which is other things. And so this has been in the works for a couple of years now at this point. And the commission rolled out a draft proposed rule in late 2023. We had some problems with that draft and our members did as well. And we spent a lot of time in meetings with the railroad commission. Both in terms of their senior executive staff at the commission, from executive director to oil and gas division director, to that kind of top tier of people that work at the Commission, then the three commissioners themselves. We had meetings with each of them separately to just talk about this proposed rule. And again, it was a thing that started out considerably worse for the oil and glass industry and for private independence in particular. That we did a lot of work on to get to a level where we thought it could be workable. Now this, just on the pit side of things, think of pits in two categories. Schedule A, which are smaller pits that our smaller guys are drilling. So drilling, reserve, work over, et cetera, et cetera. And then schedule B, which is a great big commercial, you know, produced water Recycling the fact and the party

Rey “RT” Treviño [00:29:37] Yeah, yeah, million barrel tank.

Karr Ingham [00:29:38] So it’s, uh, it’s principally the schedule, a, the, the smaller pits where our guys, again, our smaller guys are just, I mean, you have to do it all the time. You got to go dig a pit for one reason or another. Yes. And so the question is, what is the commission after with regard to these schedule, eight pits, these smaller pits, it the private smaller guys, our, our. Our digging constructing. First and foremost, the commission’s not, we’re still having some conversations with them about this because it only went into effect on July 1, but it is in effect now. So if you’ve not been paying attention to this, first of all, if you’re a member of ours, you’d be reading our stuff and you’d know what there is to know about this. But the commission has a spot on its website dedicated to this with all kinds of information on there. So if. If this is a thing as an operator you don’t know about right now, you need to go find out about it because this is already in effect. What the commission seems to be after first and foremost is simply the registration of these pits. They just want to know where they are and they want to be able to sometime in the future go back and find a pit that was dug for one reason or another and just preserve the location. And purpose of that pit.

Rey “RT” Treviño [00:31:04] Okay.

Karr Ingham [00:31:04] So that’s, I think, purpose number one. The overarching purpose of the rural rewrite, which is a chapter four, rule eight rewrite, is groundwater protection. And again, I don’t think there are many of us that would disagree with that as a, you know, as an operator or as an industry. But we’ve been doing that for a long time anyway. And so one other provision of the rule said, if the bottom of that pit is within 50 feet of groundwater, then yes, it will have to be lined. But that can be a synthetic line or it can be a clay line, depends on your, you know, the nature of your surface, maybe. And that at the, between the agreement we had on this and their release of that rule. There were a couple other elements added to this that have been a little bit problematic, which is to say there are some other provisions that would require a liner to that pit where even if you’re 200 feet to groundwater and it is the makeup of the water that’s in it, total dissolved solids. So you need to go look at these things and And this kind of threw us for a little bit of a loop. This is the thing we’ve been working on is just try to clarify with the commission when a liner is gonna be required and when it’s not gonna be a required. And one of the hangups on synthetically lining most of these pits, which is kind of where we’ve gotten if you just read the language of the regulation is that not only is it costly for the operator, the landowners don’t want it in many respects. They don’t want anything to do with that. And so we’ve already had, obviously, and you have to do it all the time, work with your surface owners and, you know, make sure what is happening on the lease out there kind of works for everybody. And so this is the thing that we’ve been spending time, even up to right now, we’re working on it as we speak, just trying to clarify what the commission is gonna require in these cases. And if you’ve got a situation where a clay liner will work, or if you got a a situation where it’s a ways down to the groundwater, and especially if you have a situation where the landowner simply does not want a synthetic liner out there. Is there flexibility within this rule to do this? And can the commission, and more specifically, can the Commission District Offices provide that exception? And is this being uniformly communicated from Austin Railroad Commission Senior Staff to those district offices? And so these are the things that we’ve continue to work on and had calls on. This was a big deal. I mean, this was a two-year rewrite of that section of the rule. And we spent a lot of time on it. And again, spent a lotta time consulting with our operators and meeting with commission staff. And I think, again, making some real headway on the part of smaller private independence. And that’s what we’re trying to do now is just kinda see this thing through to its end to make sure we’ve got a durable process in place. Where there’s opportunity to do what needs to be done and protect groundwater, but without having to engage in costly things that cost operators, money, and landowners don’t want.

Rey “RT” Treviño [00:35:00] So the 50 feet so if it’s so if the water table is below like 50 feet or more away you don’t got to put a ladder in is that our

Karr Ingham [00:35:10] Well, this is kind of where we got to. This was more or less our understanding. Okay. But the rule got, there were a couple of additions made to this that have less to do with the distance to groundwater and more to do with the makeup of the water in that pit. So if it’s above a certain TDS. Oh my gosh. Then exactly. So this, again, threw us all for a little bit of a loop and we didn’t really see it coming. So this is why we’re having to spend some time just clarifying this and working on it through the commission. I’ll say this much, the commission and its senior staff from executive director Wei Wang on down, they are extraordinarily uncommonly responsive to us. I put in a call to Wei and I think the next day, I had a meeting scheduled with the senior staff to talk through this with some of our members. So I’m not calling them out on this. That’s just a situation between the regulator and the regulated that we need to make sure is workable for the operators. And that’s what this process looks like.

Rey “RT” Treviño [00:36:24] Man there are so many things that are going on here in Texas and again we set the standards and as Texas goes, America follows. Methane is still a big thing and so is carbon and CO2 especially at a national level. I know just the other day Lee Zeldin was on the news talking about rolling back some of these Biden, no not Biden, Obama error regulations. Can you discuss those a little bit.

Karr Ingham [00:36:51] I sure can. I’m pretty excited to get to discuss them because they’re happening and the Trump administration with Zeldin at the helm at EPA is really driving these things forward. You’re not wrong. I mean CO2 has been an issue in the oil and gas world and frankly in just the energy consuming world, as CO2 has become. The devil itself in terms of an atmospheric gas. And there are a lot of differing opinions about this. And I’m not a physicist and I’m an atmospheric physicist, but there’s enough disagreement about the nature of CO2 concentration in the atmosphere. To at least question whether it’s a good idea to upend our entire energy system to the detriment of the country, to the detrimental consumers, frankly to the detriment of the oil and gas industry, but to re-engineer or try to through the hammer of government policy to try to CO2 emissions out of existence. That’s kind of where we’ve been headed with this. And then if you don’t know it, and I don’t that most people do, CO2 emissions in the United States, you know what they’ve been doing for 25 years now? Going down. This is what they’d been doing. As we’ve grown production, as we’ve grow consumption, CO2 emission in the U.S., going down, both in terms of just actual number, as well as our global share of CO2 emissions and our per capita share of co2 emissions, all down, not up. So I wonder if the Biden administration was thinking, well, that declining CO2 number is a problem. We have to come up with another atmospheric Satan and that atmospheric Satan is methane. Obama started this with a methane rule. Trump rolled back part of that rule in his first administration, but the Biden Administration, Boy, they came running at us. Steam rolling at us. It was all methane all the time. So we ended up with new methane rules that we’re trying to unwind now and the EPA is trying to underline what you’re talking about. There’s this interesting thing called the endangerment finding. And what EPA should do and is required to do is to say, okay, if we’re gonna heavily regulate CO2, for example, we have to go through a process of determining whether or not CO2 and rising atmospheric concentrations of CO2 are a danger. Well, they’re not a danger to you and me. We’re breathing it in and breathing it out. And we could do so at much higher levels of CO two in the atmosphere than we are right now, without a doubt. So not a pollutant in that sense, what we’ve always thought pollutants were, you know, in an air sense. Particulate matter, nasty stuff being released into the atmosphere. It’s not that CO2 is, you know, it’s not harmful to us as we sit here. The only way in which it’s potentially harmful according to them is as a greenhouse gas. Yeah. And so under the notion that CO 2 is a dangerous planet warming greenhouse gas, the Obama EPA in 2009 determined and its EPA went through the process and came up with this thing that an endangerment finding. Yes. See, we find that CO2 is a danger to the citizenry of the United States and we’re going to regulate it as such. This has been in place. We’ve, we’ve had issues with this finding ever since then, but the Zeld and EPA, just the. Just this week as we’re talking, Zeldin and Energy Secretary Chris Wright were at a meeting in Indianapolis, I think. Yes. And he announced at this thing that they were going to begin the process of unwinding the endangerment finding for CO2. Well, guess what? The endangerment finding also includes methane. We’re talking about greenhouse gasses. Good. And so these things, the endangerment finding has been the. The linchpin of greenhouse gas regulation at the federal level and out of EPA in particular. If that finding were to go away, at least in theory, and I doubt it will be as simple as all this in practice, but at least, in theory this removes the federal government’s authority to regulate CO2 and methane as greenhouse gasses, which in theory gets the EPA and the federal government out of your life and mine, gets them out of off the backs of oil and gas companies and producers and consumers for that matter. I mean, one of the things they tried to do was this ridiculous tailpipe emissions rule. And I hated it, but it was a genius move. I mean our argument has always been, listen, if you think CO2 is a bad thing, Your argument is not with people that are producing oil and gas, it’s with people that are using it. Well, I guess they wised up to this and started trying to regulate the CO2 emissions out the tailpipe of your vehicle and mine. And so that went away, thank goodness. But again, this in theory removes the justification for the federal government and the EPA to regulate greenhouse gas. Again, will it be that simple? I wish, probably not. You know, they’re gonna get sued for doing this. That happens all day, every day. We sued when they did stuff. They’re gonna sue when this administration does to. The difference is they would put a rule into place. It would start being bad. It would started having negative consequences and those would all be in place. While we’re searching for a judicial solution. In this case, that thing goes away and then it’s gone while they’re trying to litigate this. So over all that period of time, we’re not having to deal with it. And the other thing is that’s a huge thing. This endangerment finding is a massive, massive event in oil and gas regulation. And energy regulation as concerns petroleum energy for sure, and maybe coal as well, regulation of that form of energy, which is most of what our energy is. And then the other thing, so that was an Obama thing. And the Biden administration put new methane rules into place called, these are just terms that roll off my tongue now. Most people don’t know what this is, But we would call them quad OB and C. So we had Quado A and it’s just, you know, where do you find this stuff in government docs?

Rey “RT” Treviño [00:44:31] Documents, yeah.

Karr Ingham [00:44:32] So you had Quato A under Obama. Yeah. And then Quado B and C. Well, Quado C is the, B’s bad enough. C’s the worst one. So for the first time that pulls the existing sources, which means. Gas production and other facilities that have already been in place for a long time, they get pulled into these methane regulations. Again, horrifically costly, very burdensome from a time standpoint and from a reporting standpoint. I mean, you name it. And the Biden administration got this rule in place and finalized. And so it’s in the process of being put into place. The states. Get to administer part of this. And so all of this has been going on. But in our meeting with the EPA, again, as we’re talking right now, this was just last week. I was in DC talking to the newly confirmed head of the Office of Air and Radiation in the EPA. What that means is this is the office that regulates emissions. And so, they are in the process of unwinding and standing down the Biden administration methane rules, quadro B and C. B is new stuff, C is existing stuff. And what they just did. And by the way, he got confirmed on a Wednesday and we met with him on a Thursday. Wow. So if we weren’t his first official meeting after he got it confirmed, and I just choose to believe that we were, and I think that we are, but I can’t confirm that. We were way up there on the list. And very shortly after that, and this was just this week, they announced a thing. This is all just DC terminology. Called an interim final rule. And what that means is they can release an interim, final rule that says, okay, those Biden methane rules, they are stood down for now.

Rey “RT” Treviño [00:46:46] Okay.

Karr Ingham [00:46:47] And we’re going to take 18 months to take a more considered look at this. The value of this is that if you’re going undo a rule that is in place and published, that amounts to another rulemaking process. And rulemakings at the federal government agency level are hard and time consuming and tedious and all kind of process hoops to jump through. And so what they’re doing is buying the time to do that with the release of this interim final rule which becomes effective immediately. Now what we’re trying to figure out is exactly the extent to which this lets oil and gas off the operators off the hook currently for complying with these methane rules and QUAD OC which is the existing facilities in particular. And again we’re spending time on this even as we speak right now because these things have only just happened. Yeah. And so… So, we’re in the process of seeing what this looks like. The overarching point is that Trump, his EPA, and Mr. Zeldin, and now Mr. Zeldon’s team are actively involved in trying to unwind a lot of the, frankly, silly, problematic industry attacking, consumer attacking regulations and policies that went into place in the previous administration. And they are to be commended for this. We might all wish that this could be done faster, that it could be more comprehensively all at one time. The DC doesn’t lend itself well to that kind of really quick change. And you may not want it to, because you don’t want the next group to come in and just do the same thing. And put all that back in place at the drop of a hat. So we’re looking for durable things, but. This endangerment finding is again a huge event and worth following.

Rey “RT” Treviño [00:48:50] You know, you guys are knocking out of the park and you talk about worth following. I’d like for you here as we wrap up in about 30 seconds or less, tell us about the conference that you guys got coming up because at events like the Texas Alliance Conference, you’re gonna have people there that’ll be able to even dive into more. So can you just talk about that event real quick and when it is?

Karr Ingham [00:49:18] Like most groups, Texas Alliance of Energy producers holds meetings here and there throughout the year. Our annual conference has been in Fort Worth for the last three or four years, certainly post-COVID. And we’ve been at a great facility for the past last year and now this year again, called the Crescent Hotel and west of downtown in Fort worth in the arts district out there. It’s fantastic, brand new facility, fresh. Modern, great setup for us and great group to work with. So we had our first meeting there last fall. And so our annual conference is coming up November 10th and 11th in Fort Worth, Texas at the Crescent Hotel. So this will be an opening reception on the evening of the 10th. And then the program starting with breakfast and speakers and then we’ll close with a keynote. Last year, that keynote was Karl Rove. And of course, this was just in advance of. Of the presidential election and a lot of house and Senate races. So it was fascinating to have him there. We’re working on a couple of potential keynotes. The other thing about November 11th is that it’s Veterans Day. And we’re going to lean into that, I think, pretty hard. And so we’re working on a couple of potential speakers, but this will be, we’ll start with breakfast and. Content there that we’ll have a morning of speakers. And some of those are lined up and then trying to get this keynote locked down. We’ll be rolling out registration for that in a couple of weeks. So it’s, and at that time, that’ll be updated on our website. We’ll send it out to members and all of this. It’s a great opportunity to just come connect, come talk to us, come talk your fellow oil and gas operators. There’s not room there for a massive number of exhibitors and, but there is a trade show there that has, you know, good 10 to 15, just great, great vendors to the industry. And this is a very popular thing that we have there and it’s set up just outside the meeting room and adjacent to everything else. Again, it’s a great facility and. Uh, I’d love to have, I love to have every oil and gas operator in Texas at this thing. And as you know, I want you at this thing, let’s hope to have you there to set up and doing this and talking to our members, talking to speakers that we have at the meeting. So I hope that works out.

Rey “RT” Treviño [00:51:59] No, no, no. I’m excited. I think we’re going to do our best to get a fellow podcaster, a good friend, Stu Turley there.

Karr Ingham [00:52:07] Oh boy. Well, that’s a, that a game changer right there. I’m going to have to think about that for a little bit before I let that happen.

Rey “RT” Treviño [00:52:16] For those out there, again, and I know you’ve been on the show, but how can people get a hold of Texas Alliance of Energy producers?

Karr Ingham [00:52:23] Just our website first and foremost, texasalliance.org. Membership information is there. Getting in touch with me is there and my email address is just Kay Ingham. So first initial, I-N-G-H-A-M Kay Ingam. My lovely and talented, smart, I like wife, uh, for those who are looking for a way to remember that says that it reads like King Ham. It does. I’ve never put, I’m not, I I’m not that, but anyway, that’s what she says. So King Ham at, at uh, Texas lines.org. Anyway, so that’s how you get in touch with me, but just go to our website. We’ll have the annual meeting information out there. It’s got membership. Information on it now. And again, we’ve got various membership levels. And so find one that works for you, but come be a part of this organization. And if you’re in or connected to the oil and gas industry in Texas, again, a lot of great groups, all friends and colleagues and people we work with in terms of oil and guess associations in Texas. But our team is fantastic. Our mission and history is fantastic And hopefully we’re doing a quality job on behalf of the industry writ large in Texas, all segments of it, and smaller private independent oil and gas operators in particular. I don’t know anybody who’s working harder for that bunch than us, both in Texas and in D.C. And we’d love to have more team members, more resources to deploy to get the work done. So I’m, as you know, I’m I’ll go anywhere and I’ll talk to anybody about membership in the Alliance. If it’s off in the middle of nowhere and there are three guys there, if I can get there, I’m gonna go and I will talk to them.

Rey “RT” Treviño [00:54:25] Well, Karr, I can’t thank you enough. I know that the Texas Alliance of Energy Producers is really, is here for all oil and gas companies in Texas and y’all truly fight for us. And there’s no doubt about it. Y’all have the best team here behind us that’s fighting for us and at the national level. So thank you as always. And thank you so much for coming on again today. And thank, thank you for working with my schedule and being here.

Karr Ingham [00:54:51] This is actually you working with my schedule and I’m glad we could get it done. I’m happy we’re sitting in the same room at the same table doing this. I’m honored to be invited and I appreciate it.

Rey “RT” Treviño [00:55:04] Well, thank you. And to all our listeners out there, if you got any questions, don’t hesitate to reach out to me or reach out the car. He’s the guy that knows what’s going on. And thank you as always. And we’ll see you again on another episode of The Crude Truth.

Narrator [00:55:18] Again, The Crude Truth would like to thank today’s sponsors, LFS Chemistry, NAPE Expo, Air Compressor Solutions, Sandstone Group, Exec Crue, Texas Star Alliance, Pecos Country Operating, and Real News Communication Network.

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