When the transcript becomes available, we will include it here. -Thank you!

David Blackmon [00:00:09] Before we go into our interview today, I wanted to let everyone know we have a new sponsor for our Energy Question podcast. The US Oil and Gas Association or Usoga for short. First established in 1970, New Soldier has been an effective and creative voice for the industry for more than a century now. You Soga is dedicated to educating the public, policymakers and legislators at the federal, state and local levels about the value of the domestic oil and natural gas industry. If you’re in the industry and not currently a USOGA member, please consider joining the association as a way of helping it tell your story to the policymakers whose actions impact everything you do each and every day. You can start that process by contacting you USOGA through its website usoga.org. Thanks so much to Usoga for sponsoring the Energy Question podcast and now on with our show.

David Blackmon [00:01:06] Hey, welcome to the energy question. David Blackmon, we’re here on the floor of Nape, a very vibrant and well-attended Nape conference. And I just feel the energy in this room is really amazing. I am here with a couple of folks from my favorite trade association in Washington that I did a lot of work with back in the day. They’re not the chief operating officer of the Independent Petroleum Association of America. And Mallori Miller, the, BP vice president, vice president of government relations. She’s she’s the person who has to go up to Congress and deal with all the politicians. What fun are y’all doing today?

Mallori Miller [00:01:45] We’re doing really well. Thanks for having us.

Dan Knotts [00:01:47]  Doin’ great. David. It’s a pleasure to be here.

David Blackmon [00:01:49] It’s, you know, I’m. Dan came in. I just talked in 2008 when I was actually active with the association and doing some work, and, so I’ve known Dan for 21 years. It’s been. It’s just phenomenal. Me, all the work, I mean, there’s all a half of its members which are usually, you know, a small mom and pops all the way up to the, the big independent producers in the United States. And it’s just a phenomenal service to the industry that you guys covered.

Dan Knotts [00:02:21] Well, David, thank you. We really appreciate it. It’s always been a pleasure, working with you. And, you know, I think it really is our our average member company is still, 20 people paying 25. You know, we have member companies in 34 states. So we really are the face of small business, and we represent larger companies, but it’s really that, what is still drives the industry is that the smaller producers group are willing to take the risks and look, and that’s our job, in Washington, on the regulatory front, on the congressional front, is to fight and be the voice for that. And it’s a pleasure every day to represent them.

David Blackmon [00:02:58] That’s going to be harder to do.

Mallori Miller [00:02:59] And yes, it definitely is. There’s there’s a number of challenges in DC right now and, and, but it’s good job security for us all.

David Blackmon [00:03:09] It is that it’s good job security for me to provide me with all kinds of material to write about every morning. That’s where we get into the issues. Let’s first talk about the fact that IPAA is in a large way, you know, very responsible for the the amazing show we’re seeing here on the floor to charge off around here in Houston. You guys have been a major part of this since the beginning, right?

Dan Knotts [00:03:37] Yeah, we were once regional partners of Nape and so on. And you know, we we have always been a big, participant in Nape. And again, we thank our leadership, the folks who saw who took the risk again. Yeah. To get out there, we were talking to Bruce mentioned, who was just, going into the Hall of Fame, you know, the gas guys. And he was saying it’s a it was a rich guy. And they met over at, at, hotel, basically a small room. And we hope that folks who come to talk about prospects, to talk to about the industry at a time, we’re also talking to one of our other member companies who said, when the industry is really going to type spot 92. And he said, he was describing that it felt good to be in a room where other you knew that there was some light at the end of the tunnel. Yeah. And Napes always provided that napes always provided the opportunity. So we’re thrilled to be here and strive to be a stellar part of it.

David Blackmon [00:04:27] So you mentioned Bruce, Bruce Vincent, who was, the president with energy for a long time, a really great guy, one of the great, oil and gas guys here in Houston. I was are you familiar with Doomberg  the cartoon character? He’s, he’s he’s a fantastic economist. He writes, he’s actually the most popular Substack account related to energy. I interviewed him this morning. He was talking about guys like Bruce. Guys like we were talking about earlier. And he was he was just going on and on about. Those are the folks that are heroes. He, you know, you know, I, I completely agree with that. The people that take the risk. You know, and invest all this money in their. Their personal fortunes into providing the energy that we all need are really American heroes. And it’s kind of a shame more people in the public don’t really understand that.

Mallori Miller [00:05:21] Well, I think one of our challenges is that we’re not very good at tooting our own horn.

David Blackmon [00:05:26] Well, it’s always been.

Mallori Miller [00:05:27] And I think that that also plays into part of our challenge in Washington is, you know, we we are an, industry that likes to just get things done. And we don’t do as good of a job about talking about, you know, some of the societal benefits that we bring. So I think

David Blackmon [00:05:45] Yeah. And you know why, right, is because the people who run these companies really are the people who understand the business. They’re they’re engineers. They’re they’re geoscientists. They’re businesspeople. And and they come to the office every day, want to go out and drill wells and produce oil and gas. And and I was in the position kind of like you guys are inside the companies having to go in and talk to these, these CEOs and say, well, you know, we need to spend a couple hundred thousand dollars talking about this and talk about that. And you just can’t believe the blank stares I would get from some of the great people. Love them all. But man, it’s a tough job to convince and you really have to do a better job.

Dan Knotts [00:06:27] You know, David, the only other thing I would add is, so often then the thought is, that the, the technology always blows me away because these are smaller companies, but they’re engineers. They care about protect the environment. They obviously care about being in compliance of all the regulations, and they are often the ones that are taking the risk. And so one of the things where I was right, marriage. Exactly right. Our guys don’t shoot the horn enough sometimes, even though I still tell them to say, you can do that. And I’ll say, we’ve been doing it for five years. I think that would be helpful to know when we’re talking about the industry in Washington, because too often it’s I think the thought is it’s, you know, just this kind of willy nilly. These guys are unbelievably professional. And, it’s really important for the nation and the economy.

David Blackmon [00:07:14] It really is. I wish we could convince more people in Congress that you you represent small producers. And EPA has just finalized this new product, regulation automation. Talk about the impact that’s going to have on some of your smaller producers, especially the ones that are producing marginal. Well.

Dan Knotts [00:07:37] Yeah. You want, I’ll be happy. So, you know, it’s an enormous issue. And management of methane is really important. We understand our members. And so I know this company from Washington. The thought is it has to be Washington, that the states have a robust regulatory system in place. So one of the things we’re saying is let that play out. Know what the administration is doing with the quad zero is going to have a huge impact on our members. And at some point, the challenge is to make it so that they can still produce because of the the government regulations get so onerous, so complicated. So did that at some point you can’t do it anymore. And especially in marginal wells which are really important. So we we we’re going to continue to have a discussion. But at some point you say let’s the administration really trying to do here and we know.

Mallori Miller [00:08:27] So and I think one of the big challenges too is the cumulative impact of all of these regulations that we’ll have. Obviously we talk about the way but also, you know, the methane tax that was passed and the Inflation Reduction Act a few years ago.

David Blackmon [00:08:42] And thank you, Senator, Manchin West.

Mallori Miller [00:08:46] And, you know, if you if you talk to him today, if he regrets that and and he’s not running again, he’s not running again. So, it’s the cumulative effects, and the SEC trying to regulate methane, you know, that’s what’s really going to, to impact especially our members this the smaller company. And so that’s, the layer in effect of all of those together, and especially when a lot of them, there’s different regulations in each one, they don’t always necessarily jive together either.

Dan Knotts [00:09:18] So and the only other thing I would say is so prescriptive, I mean, one of the other things that’s amazing about the industry is there’s a number of ways you can get at it. We want to stress, again, we understand nothing is important, though. You’ve got to get it. But the industry can do it so many different ways. But when you’re anytime you write regulations, then you’re you’re handcuffing these guys who are the innovators. So let’s get at it. And that’s why so often the states are not softer regulations, but they understand their basins. They understand what has to be done. And that shouldn’t be the way it is instead of a top down approach from Washington.

David Blackmon [00:09:52] And that’s such an important thing. And of course, it’s always been, you know, a big piece of the advocacy in IPAA to to push the enforcement down as close to the people as you can push it. Right. Because there. Folks who really understand the business. They know the people of their state. Right? And instead, they want to do everything from this, you know, the Central Office Building in Washington, D.C., and it’s all these these people who have never been to County, Texas and never met anyone from Texas, probably most of who have no understanding of what’s really happening out there. Whereas someone from the TCU in Austin and jump in a car being petite in two hours and really gang up the people and really understand the impacts of what they’re doing.

Mallori Miller [00:10:45] Yeah, it’s interesting. There was a congressional hearing and the Energy and Commerce Committee just a few weeks ago talking about talking about, you know, how how some of these regulations are going to impact small producers. And one thing that I thought was really interesting, helped to get a witness from Michigan to testify. And he said, I have a wonderful relationship with my state regulator. I can call him up on the phone any, any day. We have excellent communication. And they understand what’s going on in the state of Michigan. So it’s a lot easier for me to work with them in that framework than it is from a federal approach.

David Blackmon [00:11:25] And yeah, really is to.

Dan Knotts [00:11:27] Achieve those results, right? I mean, that’s the goal to achieve those results. You mentioned the mature in Wyoming. And I’ve had one of our other Wyoming producers say, look, Dan, I was born and raised here. Wyoming is in my blood. I’m going to do it. I would never do anything that’s going to harm the state. Right. So it’s that when Washington speaks, they don’t understand that. Just what you’re saying. It’s that local flavor. So we feel very strong about it. But it’s going to be a huge issue. We’re going to have to continue to battle with.

David Blackmon [00:11:57] So what else are the federal regulators working on? You know, I know they’re trying to get everything done as soon as they can before the election. Just in case their man doesn’t get reelected. What else is coming down that you don’t?

Mallori Miller [00:12:14] Well, I primarily my jurisdiction. I’ve handled a lot of, federal land issues. And also offshore, we have a pretty robust offshore contingency within IPAA. So there’s just an on site onslaught of regulatory issues coming down the pipeline. BLM is also trying to regulate methane venting. And through their venting and flaring. Waste minimization will not should be finalized. It was supposed to be finalized in January. So it’ll be finalized hopefully or. Well, not hopefully, but it will be at some point. Sam. And, you know, there’s just a number of different regulatory issues. USA has been a big thing that, the Fish and Wildlife Service has.

Dan Knotts [00:12:59] Endangered species to that.

Mallori Miller [00:13:00] Endangered Species Act. This is the Canadian.

David Blackmon [00:13:02] Center for Biological Diversity.

Mallori Miller [00:13:04] This year. Actually, it’s the 50th anniversary of the passage of the ESA. So, the Biden administration has put a big push on trying to to make that a hallmark of their administration as well. And I think one other thing that, you know, you mentioned the speed, that they’re trying to get these regulations out. You know, we’re getting dangerously close to the lookback period for the Congressional Review Act. So any regulation that is published within 60 legislative days of the end of an administration can then be looked back at by Congress and in the next Congress, and they could potentially undo those rules. So I know that the administration has their eye on the clock, and they’re they’re watching what’s coming out.

David Blackmon [00:13:55] And speaking of that. Explain to folks how few legislative days there are left. We’re sitting here February 8th reporting this ten months, nine months before the elections in March for the end of the year. How many legislative days are actually left on the congressional calendar as it its today?

Mallori Miller [00:14:13] Well, it it’s one project they can always change. But my goodness, you know, August, they’re going to be. Oh, I would say fewer than or fewer than that. Yeah. I mean, and in a typical week there’s only 3 to 4 legislative days because.

David Blackmon [00:14:30] You know.

Dan Knotts [00:14:31] Right now is recess is and no, I it’s a great question, David, because Mallory said to me not long ago, she knows she positive, far more positive than me, 60 legislative days. And I was like, okay, what’s at April? And she’s like, no, wake up. It’s, legislative days. And so it’s it goes and it’s pretty far back.

Mallori Miller [00:14:50] And we’re in an election year. So August, October, you know, those those months are pretty much. Yeah.

David Blackmon [00:14:57] Yeah. I mean, it’s we’re getting probably by April or May you’re probably going to be at it. Right David. Yeah. So it’s yeah. So there’s going to be this frenzy of new regulation, I think. What? This means coming out of all of these agencies and these companies, you know, the big companies, the Exxon Mobil, the Devon Energy have a big number of staff, people who can deal with all of that. But a company with 20 employees might have one right now.

Dan Knotts [00:15:25] It’s it’s really, key. And it’s what we always talk about, and it’s why we’re there and it’s why we were founded to represent those small producers. But, you can see the push to make it very difficult for, smaller producers to get out and operate. And, you know, we’ve talked about that so many times, but it’s such a dynamic industry. You have very small producers that move where you talk in the offshore, there’s small producers push the other, it makes it competitive, it gets the other, it makes everybody better. Number one, it helps the economy. It helps jobs. And so the frustration is, is that the government, through through government regulation tries to push those, those industries down. And it makes no sense. It really doesn’t when you’re talking about the industry independent producers who really launched the shale revolution, which is change the world, right? I mean, it really has it, you know, better than I do, but it really changed the world. And that’s not being dramatic when you’re talking about what’s happened in the Ukraine and Russia, in Europe. It’s unbelievable. So really frustrating. But that’s our job and that’s why we’ve got to get down and get after it.

David Blackmon [00:16:30] So what do you think? I mean, if you have folks, who are big natural gas producers to want access to the international markets, particularly when Henry I’m sitting at $2 entertainment. BTU this pause on LNG, export facility permitting. How big an impact is that going to have the effect, assuming it gets lifted in ten months, as the administration claims it will be? Yeah. I mean, is it going to be a big major impact on, on our industry here in the United States, or is it going to be something to kind, it’s temporary and will recover. Right now, I won’t.

Mallori Miller [00:17:09] Well I wouldn’t. First of all, I would not believe that it’s going to be lifted in ten months. I think.

David Blackmon [00:17:15] I always have the caveat that.

Mallori Miller [00:17:17] You know, I think it’s it’s definitely going to have an impact for sure. I think our companies need access to those international markets. And, it’s sad because this policy is just completely politically driven at this point. And Biden seems to think that in order to do that, to shore up his environmental base. But there’s no real reason for it, in my opinion.

David Blackmon [00:17:43] No. No real business reason.

Dan Knotts [00:17:45] No. And you know, David, I think the other thing is the message it sends to the world, is is devastating. I mean, again, it the unreliability of American Natural and not from our side, but from the government side and the federal side. So if you look at what’s happened, in the world, again, even post invasion of Ukraine, it was U.S LNG that kept this going. And now the message is, that we’re going to look at this, we’re going to look to stop exports. And it’s so politically driven. Again, I was I was talking to somebody earlier, the Washington Post editorial board, not an opinion piece that Washington Post editorial board said. It’s an awful idea. When the Washington Post editorial board sends a bad idea, it’s a bad idea. So we’re really we’re looking for allies. We’re talking to folks in Congress, both Republican and Democrat, to do something about it because it’s it really has implications far beyond the short sighted knocking about.

David Blackmon [00:18:42] When you talk about that Washington Post editorial. I read that with fascination because, honest to God, it read like something I would have read.

Dan Knotts [00:18:50] Correct.

David Blackmon [00:18:50] I made every argument I used against that at the Forbes and at the Telegraph. The Washington Post used exactly the same argument. So this is a very clear cut issue and a very clear cut, a bad idea. And also from a financial standpoint, right, because it can take years to, to raise the capital. And when these are ten, $12 billion project, it doesn’t take a few weeks to raise that capital. It takes years. And so, you know, I’m sorry.

Dan Knotts [00:19:20] Go ahead.

Mallori Miller [00:19:20] And I was just going to say having the certainty to to get contracts is really a key part.

David Blackmon [00:19:26] Yeah. Yeah.

Dan Knotts [00:19:27] That’s the other issue that so often with the administration that’s a frustration for us is Secretary Granholm, you know, the issue when when there’s pressure to say we’ll just go out and drill, these are long term multimillion dollar projects. I mean, LNG train it’s it’s $1 billion much. You can’t just do it that way. And you need certainty. You need regulatory certainty. You need to know what’s going on. And when you throw that into, confusion, it makes the ability of any company, United States, to want to invest and harder. You know, one of the I know, you know, well, in the offshore we talked about it was to the the stability of the U.S system for so long has been one of the bedrocks. You know, it’s a lot. These are it’s not going to change government, the government, the regulations are going to be fairly solid throughout and in the confusion and chaos and it makes trouble for everybody.

David Blackmon [00:20:23] Yeah. And then, you know, that regulatory certainty and the, the, the ability of investors to predict what the U.S legal system is going to look like, how it’s going to be enforced five years into the future has been such a key element of attracting trillions of dollars of investment into the United States that might have gone elsewhere otherwise. And I just feel very, very concerned that we’re losing a lot of that now. Right? I mean, you combine this decision with, for example, the Keystone XL cancellation and and TC energy wasn’t in violation of any large statute or permit one of the United States at that. And the president just cancels a $12 billion investment with the stroke. Yeah. Well, what does that do to other investors? Confidence. Right. It’s just insane.

Dan Knotts [00:21:15] Yeah, absolutely. And Mallory is from the West. I’m from Colorado. You know, the other issue that you find is on these western lands, the impact on local economies. Yeah. Wyoming and, Colorado, you know, that that that interplay, production on federal lands with everything else is going on. It’s devastating for communities, when the administration and they don’t seem to care at all. Yeah. You know, it’s really a challenge that I don’t believe the federal government should be doing that, that you obviously you always have. It’s a dynamic relationship. We understand that. But when you’re looking at the impact on jobs in the communities, what’s happening to these small towns? They just don’t seem to care. And the answer is you’ll find something else to do or leave. And, we don’t that that just doesn’t make any sense to us. It’s a much better way to get there. That would help everybody.

David Blackmon [00:22:08] Right? Right. Exactly. Well, we’re we’re running against time. I want to, though, before we put this down, let everyone know where they can find. I don’t like following what you’re doing. Get involved if they want to get involved. Letter writing campaign, that kind of advocacy stuff. If you’re.

Mallori Miller [00:22:27] Yeah. So if that IPAA dot org is our website, we also have energy index.org. There are rapid response media arm that kind of pushes back against some of the misinformation out there. Yeah. And we’d be happy to talk to anyone about membership. We’ve got a number of different committees. It’s really easy to get involved in. And truly, we need everyone. We need your expertise and, to help us advocate better for you on to to members of Congress and the administration.

David Blackmon [00:23:05] Any closing words?

Dan Knotts [00:23:05]  I think the only other thing I would say is energy voters. Even if you’re not a member of I, I understand as Americans how important this is. This is that we’re at an inflection point with this election. Be informed, understand what’s going on, and be an energy voter. Across the country.

David Blackmon [00:23:22] Yeah. Thank you.

Mallori Miller [00:23:25] Thank you so much. I appreciate.

David Blackmon [00:23:26] Thank you sir.

Dan Knotts [00:23:27] Thanks a lot.

David Blackmon [00:23:28] Be great folks. Hey everybody. Thank you so much for watching. We’ll talk to you again soon.