Environmentalist groups are pressuring banks and insurance companies not to finance or insure oil and natural gas company projects and they have done some damage.
The Permian Basin Petroleum, Texas Independent Producers & Royalty Owners and Texas Oil & Gas associations say the battle has been joined and the outcome is uncertain.
“Those opposed to the oil and gas industry have utilized a number of different weapons to try and harm the industry,” PBPA President Ben Shepherd said. “Included in this arsenal have been a variety of attempts to increase the costs of oil and gas operations.
“The end game here appears to be to make other energy sources economically competitive, not by decreasing the real world costs of those energy sources, which to be fair has also been attempted through government subsidies, but by increasing the cost of oil and gas energy development.”
Shepherd said regulatory burdens have traditionally been the preferred tool to manipulate the free market and increase the costs on energy operations, but there have also been attempts to increase costs by limiting access to capital or insurance.
In 2021, he said, the Texas Senate’s Bill 13 from Austin prohibited the state from investing in entities that boycott energy companies.
“The Texas Comptroller was required to conduct a study of environmental, social and governance policies and compile a list of those prohibited entities,” he said. “This law has begun to have an effect on financial institutions that have previously placed investment barriers on energy companies, causing some institutions to reject their previous positions and begin lending again.”
TIPRO President Ed Longanecker said pressuring financial institutions to reject oil and gas projects “is yet another tactic used by activist organizations that has no true basis in reality.
“Many of these organizations exist solely to protest fossil fuels, offer no realistic solutions to replace this critical energy source and ignore the immense damage these directives would cause including shifting market share to countries that lack the same environmental standards as the U.S.,” Longanecker said from Austin.
“The pendulum is shifting as economics, energy security, policy and common sense are starting to prevail over these biased initiatives, but those efforts will undoubtedly persist in one way or another.”
He said state legislators “are having a direct impact” with their legislation directing the state to divest from entities that boycott fossil fuels and following through with strict implementation and monitoring by Comptroller Glenn Hegar.
“Last year we saw the power sector increase its use of natural gas for power generation from 38 percent in 2022 to 42 percent with levels expected to remain the same through 2024,” Longanecker said. “Growth in 2023 and ’24 is linked to the use of natural gas over more carbon intensive fuels, making it a significant source of power for the industrial, residential and commercial sectors.
“The U.S. Energy Information Administration estimates that the consumption of natural gas in the commercial and residential sectors will increase to an average of 22 billion cubic feet per day in 2024.”
Considering American power’s sustained reliance on natural gas for electricity generation, the increased occurrence of severe weather events that require dispatchable generation and the electrification of the economy, “Natural gas is set to remain a critical energy resource for the power sector in the coming years,” Longanecker said.
TXOGA President Todd Staples said from Austin that a reliable energy supply is crucial.
“However, adverse policies are emerging which restrict or discourage investment in oil and natural gas,” Staples said, crediting Sen. Brian Birdwell, R-Granbury, and Rep. Phil King, R-Weatherford, for passing SB 13.
“Oil and natural gas are irreplaceable commodities and the industry is working to reduce emissions and address concerns through innovative solutions,” he said. “Promoting policies that encourage fair treatment regarding the necessary investment for all energy sources as we work towards a cleaner energy future is a goal that should be shared by everyone who understands the need for both reliability and affordability.
“Both can be achieved while making environmental progress.”
