While Oklahoma City-based Devon Energy Corp.'s future looks secure, after three major acquisitions, its chairman, chief executive officer and president, Larry Nichols, is concerned about the future of the oil and gas industry in general. "In the U.S., there are two radically different competing philosophies," he told Houston Producers Forum members recently. "One is that we can develop energy reserves in an environmentally sound way and balance our country's energy needs with its environmental concerns. The opposing philosophy is that we cannot meet our energy needs without endangering the environment, so we should intentionally restrict development and make up for the supply shortage by restricting consumption as well. "These two viewpoints have never really been debated publicly." President Bill Clinton's administration has rather effectively undermined attempts to develop natural resources. "With Clinton we were faced with the Btu tax," he said. "When that failed they switched to a subtle but effective tactic of denying access to public lands." This isn't just focused on the E&P industry. Nichols noted that hydroelectric power, which peaked in 1997, has seen a steep decline since then because dams are on eight-year license renewal cycles, and there are tremendous environmental hurdles to clear to renew. Additionally, no new nuclear plants have been built in years, and of the 103 existing plants, only 83 are expected to even try for license renewal. No new coal plants are being built, and 36 oil refineries have closed their doors during the Clinton administration. "As for natural gas, there are four major areas of prospectivity in the U.S.," Nichols said. "Three of them-offshore California, offshore the East Coast and the eastern Gulf of Mexico-are currently off-limits to drilling and development. The fourth, the Rocky Mountains, faces a long list of restrictions that get tighter and tighter." Even when oil companies do their homework, capricious rulings can thwart their efforts. Nichols cited the example of the Lewis & Clark National Forest. An environmental impact statement indicated no likely harm to the grasslands from oil and gas development. However, the director cited a "spiritual value of place," and now drilling is prohibited. "There are no criteria, no objective guidelines," Nichols said. Nichols warns that the standard fixes-donations to a political action committee, for instance-won't necessarily make a difference. During the past several years, business has spent more money on elections than labor but hasn't had as much to show for it, he said. He offers another, more grassroots, solution: inform employees as to which candidates for elected office are fair to the oil industry. A study conducted by an organization named Bipac found that employees would most like to receive information about issues surrounding an upcoming election from their employers, rather than from a labor union or political party, Nichols said. During the last presidential campaign, Exxon sent 3,370 information brochures to their retirees in Florida, stating the facts and the stands of the candidates. Halliburton and Proctor & Gamble initiated efforts, which resulted in registering 11,000 employees to vote. "It's a tidal wave just beginning," Nichols said. He added that thought he was too busy to undertake such an educational process this past election season. "But in two years there will be 200 open seats in Congress, and who wins will determine the winner of this energy debate," he said. "We'd better be there, get off our duffs and not say we're too busy, or our ability to develop oil and gas will be seriously curtailed."
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