Not more than three years ago, Wichita-based Val Energy Inc. had 130 employees. The company annually drilled about 40 oil wells around Kansas for itself and 150 more for other businesses.
Today, the workforce is down to 15. With fuel prices also down, Val Energy — a business you may have never heard of, but one of thousands tied to the state’s oil and gas industry — dug just five holes last year.
“And two of them were dry,” said owner Todd Allam.
For drillers who hadn’t already gone out of business across Kansas and in parts of western Missouri, 2016 was horrible. But in the wake of Americans making Donald Trump president, energy companies speckled through the region see a more promising horizon of pay dirt.
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Consider three of Trump’s appointees:
▪ Oklahoma Attorney General Scott Pruitt, the president-elect’s pick to run the Environmental Protection Agency, is a close ally of the fossil fuel industry and outspoken critic of the EPA.
▪ Former Texas Gov. Rick Perry, tapped to be energy secretary, vowed as a presidential candidate to dismantle the regulatory agency he’s been picked to head. (In a famous “oops” moment from a 2011 campaign debate, he couldn’t recall the Department of Energy among three on his list to eliminate.)
▪ Nominated to be U.S. secretary of state, Rex Tillerson just recently retired as chief executive of ExxonMobil.
Tillerson’s former company is a Big Oil behemoth — hardly reflective of the many family-run outfits that tap this region. Sometimes called “small oil,” producers in the Sunflower State draw fewer than five or six barrels a day out of the average farm well.
Still, they’re in a fossil fuel business that can threaten wildlife and waterways. Concerns have mounted near the Kansas-Oklahoma border that deep underground injections of wastewater from the drilling process have contributed to house-harming earthquakes.
Activists on the ecological front anticipate at least four years of intensified legal fights as the Trump administration tries to deliver on full-throated promises to roll back regulations.
“We can see those three (Trump appointees) together turning the apple cart upside down,” said Craig Wolfe, who edits the Sierra Club’s Kanza Group newsletter.
Oil workers in the region hear a different message: Maybe the Trump team will help save our livelihoods.
“You’d be hard-pressed to find anyone in the oil business who didn’t vote for Trump,” said Tanner Butler, 26, who manages an oil field southeast of Loch Lloyd Country Club on the north rim of Cass County.
‘Trying to keep a job’
With 200 wells maintained by the private Kansas Resource Exploration and Development LLC, the field where Butler works has been quietly spitting up crude south of Kansas City since 1912. And who around here knows of it?
In the heady days of oil selling for $100 a barrel, dozens of trucks daily would line East Oil Well Road, a gravel lane running through the field. Outside contractors had all the business they could stand laying new pipe and hauling in the latest pumps and excavators.
With today’s prices just above $50 a barrel, those contractors are now idle or making do in other kinds of jobs, said Butler of Ottawa, Kan. Truck fleets vanished from the site, and the working wells here are kept functioning by just Butler and three other laborers accompanied by a miniature Australian shepherd dog named Michael.
To invest in new equipment and exploration is out of the question for most companies. Keeping the present leases going, if they’re worth it, is how oil and gas operators have been surviving.
The four men still working the Kansas Resource wells in Missouri consider themselves lucky to be maintaining one of the largest active fields for more than 100 miles around.
“We have kids, and we’re just trying to keep a job,” said employee Josh Heuser, 25.
In some ways, the small crew — blue jeans caked with grime, work boots blackened with crude, the tire treads of their pickups packed with mud — represents the millions of white, working-class voters who analysts say pushed Trump over the top in the Electoral College delegate count.
“We’re hopeful,” Butler said, that 2017 will mark a turnaround from recent years of hardship for small oil. But they’ll acknowledge that presidential administrations have less effect on industry fortunes than do production decisions by OPEC, half a world away and oblivious to U.S. voters pining for change.
Last year ended on a promising note for U.S. producers, as OPEC and Russia agreed to cut oil production to boost prices after two years of helping flood the market. The global production glut resulted in domestic crude prices falling 60 percent since 2014, according to the Kansas Independent Oil and Gas Association.
In Kansas — the nation’s ninth-largest oil-producing state and 12th-largest natural gas producer — the number of intent-to-drill permits issued by the state Corporation Commission dwindled to 1,166 last year, down from 7,104 in 2014, when drilling hit a decade-long high.
Gov. Sam Brownback has often cited the industry’s struggles along with low crop prices as major reasons for the state’s nonstop revenue crises, which skeptics blame on his too-deep cuts in income taxes.
Environmental groups are fine with the slowdown in drilling permits, and U.S. motorists will gladly accept cheap gasoline prices. But Nick Powell, chairman of the oil and gas association and owner of Mission-based Colt Energy Inc., said “mom-and-pop” businesses that help fuel vehicles and heat homes need a break from Obama administration regulations.
“Our oil-producing companies don’t have stables of lawyers to fill out all these forms,” he said. “It’s very burdensome.
“Those guys in D.C. have no idea what goes on out here.”
Trump’s influence limited
Though regulatory proposals of a new White House can affect the costs of oil and gas exploration and production, Kansas Corporation Commission spokesman Samir Arif said the American president’s influence can be overestimated.
“At least as far as oil and gas, the regulations we see tend to come from the state level,” he said.
The EPA in the Obama years stepped up efforts to curb U.S. methane emissions, a potent greenhouse gas tied to oil and natural gas production. Kansas and 12 other states have sued over the new rules, saying they’re unnecessary and too costly.
And suits will keep flying no matter who oversees the regulators, said Amanda Goodin, staff attorney for the legal advocacy group Earthjustice, representing environment interests nationwide.
A Trump administration “can’t just say there’s a green light for polluters,” Goodin said. “They have to provide a rational and factual basis” for changing present rules.
“If they don’t, they’re going to get sued.”
Litigation presently involving Kansas energy interests include long-stalled plans for expanding the coal-fired Sunflower Electric Power Corp. plant in Holcomb, Kan.
The Kansas Supreme Court, which in 2013 reversed the state’s decision to issue a permit for the plant’s extension, could permanently derail the proposal in “a decision that could come any day,” said Goodin. “And obviously the Trump administration can’t overturn a state Supreme Court ruling.”
But Allam of Val Energy said he hoped Team Trump could “step on the neck” of groups pressing for drillers to pay fees or set up protective zones to honor the habitat of the lesser prairie chicken. The federal government in 2014 listed that species as endangered.
“When you put Rick Perry and Rex Tillerson on the Cabinet,” Allam predicted, “some of this will stop.”
Well activity drying up
Intent-to-drill permits issued by Kansas regulators have plunged with oil and natural gas prices the past five years.
2012: 6,861 permits
Source: Kansas Commerce Commission