5 Questions With John Pilkington

By Jason Womack, Tulsa World, Okla.

Oct. 19–John Pilkington is the chairman of the Oklahoma Independent Petroleum Association and serves as president of Tulsa-based Muirfield Resources, an independent oil and gas exploration company. Pilkington was born and raised in Tulsa and spent more than 20 years as a banker before entering the energy industry in the late 1970s.

1. What is the Oklahoma Independent Petroleum Association and what does it do?

Founded in 1955, the OIPA is the state’s largest oil and natural gas advocacy group and one of the largest statewide oil and gas associations in the nation. We represent more than 1,700 member companies and provide a voice for Oklahoma’s independent crude oil and natural gas producers in Washington, D.C., at the state legislature and in regulatory matters.

Our members include the largest independents in the nation, like Devon and Chesapeake, as well as medium-size and small producers in the state.

In recent years, the OIPA has reached out to oilfield service companies, which have become more prominent among the association’s membership.

2. How are the interests of independent oil and natural gas producers different from non-independent producers?

Independent

producers are the driving force of Oklahoma’s petroleum industry, drilling more than 90 percent of the wells while producing 96 percent of the crude oil and 88 percent of the state’s natural gas.

Unlike integrated energy companies, the wellhead price of crude oil and natural gas is the only source of revenue for independent producers. Much like Oklahoma’s farmers and ranchers who sell their cattle and wheat at market prices, independent producers have no say in what price their product brings. They simply take the price the market gives them.

Also, independent producers do not refine gasoline, and they see no benefit from higher prices at the pump.

3. What key issue will the OIPA face in the coming state legislative session?

Term limits continue to change the face of our state Legislature, and because of that, one of our primary goals each legislative session is to educate new legislators about the benefits of increased drilling and production in Oklahoma and the economic impact the oil and natural gas industry has on the state.

This state was built on the fortunes of the oil and natural gas industry, and the industry is still Oklahoma’s economic backbone as we celebrate our centennial. Last year, more than 4,500 jobs were added to the state’s work force thanks to the oil and natural gas industry, and close to 20,000 jobs have been created over the past five years. In 2006, more than $1 billion was paid in gross production taxes, a 7 percent tax paid by producers of crude oil and natural gas.

We will continue to defend our industry against tax, transportation and water issues that will hamper the industry’s ability to produce the oil and natural gas our state and country so desperately need.

4. OIPA has embarked on a capital campaign to raise money for a permanent headquarters. How much money has the campaign generated and when will OIPA break ground on the new building?

Through the generosity of our members and the leadership of former Chairman Harold Hamm and Building Committee Chairman Ronnie Irani, a substantial amount of money has been pledged to build a permanent headquarters for the association, with construction scheduled to begin in early 2008.

5. What challenges do independent producers and the association face in this current period of strong energy prices?

The greatest obstacles and challenges our association and members face lie in Washington, D.C. Higher energy prices have triggered legislation designed to punish “big oil” for its “record profits.”

Unfortunately, there is little distinction between independent and non-independent producers in our nation’s capital, and small producers in Oklahoma are lumped in the same category as large, integrated companies that refi ne and sell gasoline and are now labeled as villains. Additional taxes and restricting access to federal lands to punish a few endangers us all, producers and consumers alike.

By creating an unfriendly business environment through higher taxes and limiting access to energy rich areas of the United States, we are hampering our ability to lessen our dependence on foreign energy sources. By allowing and encouraging producers to explore for oil and natural gas in our own country, we will be able to increase our available supply and decrease prices.

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