Foutch warns of federal fallout

OIPA Wellhead, April 2009 issue

Randy Foutch is no stranger to uncertain futures.  After all, the longtime OIPA member has started four companies in the past two decades, founding them with money from his own pocket with the support from a private equity firm.

His first venture in company creation came with Colt Resources in 1994, when depressed oil and natural gas prices put the future of Oklahoma's energy industry in doubt.

"The industry was in question," said Foutch, the featured speaker at the April Wildcatter Wednesday luncheon.  "It was not far off from where it is today."
While those uncertain times of the 1990s were weathered, the same may not be said of the near future, Foutch warned.

Efforts by the newly-empowered Obama administration could put a heavy burden on oil and natural gas producers, forcing many out of business and leaving the rest with increased costs and less reward for their high-risk drilling ventures.
"I spend a lot of time in Washington," Foutch said.  "And I try to spend that time with people who do not like the industry.  That's not a difficult thing to find."

Foutch said there is a growing belief that a hydrocarbon-based power grid will go the way of wood power and steam power.

"They're ready for that to happen," Foutch said.  " ... They want to make us go away."

Foutch said many in the Obama administration and Democratic congressional majority say they are opposed to growth in hydrocarbon use because of its impact on climate change.

Increased taxes on the oil and natural gas industry will slow production, Foutch said, and carbon cap-and-trade expenses aimed at the producer instead of the end user will push oil and natural gas producers into extinction.  Cap-and-trade costs alone could start at $50 per ton of carbon emitted and go to as much as $500 eventually, he added.

Also to be feared, Foutch said, is subjecting hydraulic fracturing to Underground Injection Control standards.  The compliance costs, according to a department of energy report, could reach $10 billion in the first year.

"This scares me," Foutch said. "This can put us out of business."