Jordan Blum, editorial director, Hart Energy: We're here at the Executive Oil Conference by Hart Energy here in Midland, Texas in the heart of the Permian Basin. I'm joined by Steve Pruett, the CEO of Elevation Resources and also chairman of IPAA. So we have record oil and gas production right now. We're led by the Permian Basin. It's happening under President Joe Biden, but at the same time, it's not happening because of the White House. We have what appears to be a good bit of new rules and regulations on the horizon, so can I get you to elaborate on that dichotomy at play?
Steve Pruett, president and CEO, Elevation Resources | chairman, IPAA: So today, the headwinds are really perspective in the future and our industry, and through IPAA, we're trying to educate our members and our industry on what's coming so that we can get in compliance on those regulations ahead of the implementation, which we'll start with the methane tax in 2025, and then by 2028, the Quad Ob and c methane emissions reduction program will also hit the industry.
JB: So obviously no one argues that methane emissions have been a big problem in the Permian, but especially on the intensity front, a lot of improvements have been made. Those gains are continuing. So what's really the right middle ground that can be found? Where can there be compromise, if any?
SP: Well, our license to operate Jordan is at stake here. I live in Midland, we breathe the air, we drink the water from the subsurface, so we need to be responsible because we live in this place. So getting ahead of the regulations is part of it, but environmental stewardship is the larger element to maintain our license to operate and to take care of this environment that we live in. So being proactive around keeping a closed system further, we have economic incentives because we sell gas and the NGLs that are part of it, and we obtain revenue. So the more we capture, the more we sell. So we are motivated not to put it into the atmosphere, and there are technologies that are emerging that are very affordable that we can implement along with monitoring techniques that can prove that we are selling the natural gas and not venting it or flaring it.
JB: Very good. So very simply put from your perspective, what's next?
SP: What's next is really rolling it out to the small independent, because frankly, the Exxons and Chevrons and Diamondbacks and Pioneers of the world, along with Elevation, because we have modern production, we're on it, but we've got tens of thousands of small operators operating over 700,000 marginal wells. That in of itself, a given well is not a big emitter, but when you aggregate it, it's significant. So it's education and then it's potentially tapping federal money. $1.5 billion is assigned from the Inflation Reduction Act for the smaller operators, but there's no mechanism to disperse that money. So we're hopeful through IPAA and various other organizations, including the UT Energy Institute, to find a way to get the money dispersed to where it's needed to replace tanks and to implement monitoring technologies and LDAR so the smaller operator can continue to produce.
JB: Thank you so much for joining us here at the Executive Oil Conference. To read and watch more, please visit us online hartenergy.com.
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