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Key Issues

In many ways, the petroleum industry is large and complex with issues that span the globe and are of world wide import. Other issues affecting or resulting from oil and gas development are more local in nature and mainly concern local communities right here at home. UPA works to be an advocate for the oil and gas industry in Utah and represent member companies in the numerous issues of import that impact both industry and Utah communities.

Some key issues include air quality, gas prices, tier 3 fuels, industry economic impacts, hydraulic fracturing, refinery safety, public lands, landowner issues, and transportation.

After the safety of our employees and communities where we operate, environmental stewardship is a top priority for UPA Members and Utah's oil and gas industry. Preserving and enhancing Utah's air quality is important to us. While there is no doubt our industry produces significant emissions in the development and manufacture of critical energy resources on which we all depend, we also dedicate tremendous resources, investment, time, technology and manpower into minimizing and controlling those emissions the the greatest extent possible. We work closely with local, state and federal air quality regulators and meet or exceed all air quality related laws. We work closely with communities to help educate and answer questions regarding our emissions and their impacts. We, along with our families, live and work in Utah and want to keep it a great place for this generation and those to come.

Fuel prices affect us all. Whether you drive for a living or hardly at all, the price of gasoline can significantly affect our family budget, vacation plans or corporate fleet costs . Gasoline is a commodity like any other and is subject to the same basic economic principles - supply and demand. Utah, unlike many states, has both oil production as well as refining capacity within the State. Utah’s five petroleum refineries depend on crude oil supplies from Utah as well as surrounding intermountain states. Our local refineries manufacture roughly the equivalent of Utah’s overall gasoline needs, but the market for gasoline is more complex than that. We both import and export a significant amount of fuel through the State. Fuel is imported from refineries in Wyoming and Montana and also exported to Idaho, Washington, Nevada and other surrounding states.

Several factors play into the retail price of gasoline, but the single largest factor is the price of crude oil. Transportation costs, refining costs, marketing costs, profits and taxes are also key cost components.

EPA’s Tier 3 Motor Vehicle Emission and Fuel Standard rule is designed to reduce air pollution from passenger cars and trucks. When fully implemented with new fuel technology and more advanced, cleaner automobiles, the program will be an important piece of the puzzle and step forward in Utah’s efforts to clean and maintain our air quality.

The new rule targets both new automobile technologies and fuel sulfur levels. Tier 2 standards, implemented over the past several years, significantly reduced fuel sulfur levels from 300 ppm to 30 ppm. The Tier 3 rule will further reduce sulfur on average from 30 ppm to 10 ppm. The Tier 3 rule will be phased in over several years, and Utah's small refineries are required to implement changes by 2020.

Utah's oil and gas industry has a tremendous economic impact on the State. The activities and investments surrounding finding, producing, moving and manufacturing these products create tremendous economic benefits to our national and local economies. Jobs in these fields provide good-paying, family-sustaining lifestyles. Tax revenues and royalties from the oil and gas industry fund local services and provide income to schools and students.

Over the past decade, the United States has seen a renaissance in energy development. New and improved technologies have unlocked oil and gas resources that previously we're inaccessible. The result has been a tremendous upswing in domestic energy production that has turned the tide away from a dangerous dependence on foreign energy sources. Hydraulic Fracturing has played a key role in this process. The hydraulic fracturing practice, commonly referred to as “fracking”, is a safe, well-proven technique that has been successfully used over a million times for over 60 years. In recent years, it’s use has been expanded and perfected and is now unlocking oil and gas resources that give the United States tremendous leverage and flexibility in the worldwide energy marketplace.

Operating our facilities in a safe fashion is our top priority as an industry. Our employees are our most important asset and sending them home safely each day is the most important thing we do. Our goal is to have zero safety related incidents. UPA Member Companies invest heavily in safety equipment and training to facilitate a safe working environment. We also recognize our responsibility to our neighbors and community partners. We work closely with local fire and emergency response agencies as well as state and federal safety regulatory agencies. UPA Members have coalesced to form safety committees to learn from and teach each other best practices, both within the State and taking the best information available from refineries across the country, to make sure we operate as safely as possible.

Utah is blessed with some of the most beautiful and scenic landscapes in all the world. Many of these lands deserve special protection for our enjoyment and that of generations to come, but for many lands, the highest and best use is resource development. We are a public lands state with over 70% of our lands owned or operated by the State, federal government or indian tribes. Many of Utah's vast natural resources lie beneath these public lands. For that reason, it’s critical that access be reasonably allowed for the wise and prudent development of those natural resources. A great deal of Utah’s wealth is tied up in our public lands. That is wealth that can be used to fund schools, provide jobs and sustain communities. A State and federal policy that promotes multiple use of these lands is critical to the future of this great State. Multiple use includes preservation and recreation, but it also includes the wise economic use of the lands including grazing, timber harvesting, mining and oil and gas development.

Utah is a checkerboard of different types of land and mineral ownership. One glance at a map showing who actually owns the surface of Utah’s lands will show the complexity this issue provides. The surface and mineral "estates" are sometimes owned by the same person, but sometimes they’re owned by different parties. A "split-estate" occurs when the surface and minerals are owned separately. These circumstances require special attention to protect the valid property rights of both parties. There has always been oil and gas produced on federal, state and “fee” (privately owned) lands ever since production started in Utah. Over the past decade, however, there has been a consistent move towards private lands as the challenges of leasing and permitting on federal lands has grown more complex, expensive and time consuming. This move towards fee lands is exciting news if the surface owner also owns the minerals rights. Rents and royalties from oil and gas production for a private landowner can be substantial. But what about if that surface owner doesn’t own the mineral rights? What are their rights and responsibilities? And what about the rights of the mineral owner? These are important, and sometimes challenging issues that need to be addressed and understood as the State’s oil and gas development continues.

Oil, natural gas and refined petroleum products are transported across our State via truck, rail and most notably, pipelines. Pipelines are the safest and most efficient means of petroleum-related transportation. Pipes bring natural gas from the producing areas of Utah to your home or business to keep you warm, generate electricity, and keep our manufacturing and other industries moving. They also deliver crude oil, from within Utah and other surrounding states for refining. Pipelines also carry refined products for consumption in Utah, including Salt Lake International Airport and Hill Air Force Base, as well as for export both North, throughout Idaho and Eastern Washington, and South to Nevada.

Trucks carry crude oil from the producing areas, primarily in the Uinta Basin, to Salt Lake area refineries. They also carry gasoline and diesel fuel to wholesale and retail locations throughout the State. A growing area of petroleum related transportation throughout the country, including Utah, is the use of rail. Rail lines carry crude oil to be refined in Utah and outside the State. Rail also transports needed inputs for use in the refining process as well as crude related by-products that are sold and transported to other markets to be manufactured into thousands of useful, everyday petrochemical products.

  • As of 2015, Utah ranks 11th nationally in oil production and 12th among states in natural gas production.
  • There are currently 141 operating refineries in the United States with 5 located in Utah. Utah refineries produced over 36 million barrels (1.5 billion gallons) of motor gasoline in 2015 and over 19 million barrels (798 million gallons) of distillate fuel (diesel).
  • Well completions in Utah (both oil and gas) have declined dramatically over recent years as commodity prices plummeted and have stayed low. There were 1243 completions in 2008, 925 in 2014 and only 305 in 2015.
  • Duchesne (46%), Uintah (34%) and San Juan (12%) Counties accounted for 92% of oil production in Utah in 2015. The balance was produced collectively from Sevier, Grand, Summit, Carbon and Emery Counties.
  • The ratio of oil wells drilled in Utah versus natural gas wells has shifted significantly over recent years as commodity prices have affected company's drilling programs. In 2008, only 28% of wells drilled were for oil while in 2014, 76% of all wells drilled were primarily seeking oil.
  • Wages for energy-related jobs are nearly double the average annual wage for all employment in Utah.
  • In 2015 petroleum products and natural gas accounted for 59% of total energy consumed in Utah. Coal was responsible for 38% while all renewables combined made up 3% of energy use.
  • Utah refineries received record amounts of crude oil in 2014 and only slightly less in 2015, with 43% coming from in-state and 8% coming from Canada.
  • Fossil fuels made up 98% of Utah’s total energy production in 2015, while renewable sources accounted for only 2% of Utah’s production portfolio.
  • Property taxes charged against Utah oil and gas activities have increased more than six times since 1996, totaling nearly $64 million in 2015.
  • The value of crude oil produced in Utah reached an all-time inflation-adjusted high of $3.2 billion in 2014, but then dropped to only $1.5 billion in 2015 as commodity prices sank.
  • Natural gas production in Utah reached a record high in 2012 of 491 billion cubic feet, but has since dropped to 423 billion cubic feet in 2015.
  • Oil and gas operations in Utah account for about 1.3% of the State's gross state product. Utilities (including some non-energy sectors), refineries, and pipeline transportation and maintenance account for an additional 1.9%.
  • The last major refinery built in the United States was put into operation in 1977.
  • Utah’s average price of residential natural gas in 2015 was $9.72 per thousand cubic feet, the 17th lowest in the nation. As recently as 2011, Utah’s price was the third lowest in the nation, but new natural gas pipelines have better connected our once captive market with the rest of the United States.
  • Natural gas is the largest source of annual energy production in Utah, surpassing coal for the first time in 2010.
  • In 2015, 76% of the electricity generated in Utah was from coal-burning power plants. Electricity generation from natural-gas power plants more than doubled since 2007, increasing its total share in 2015 to 19%.
  • Utah produced 18% more energy than it consumed in 2015, continuing its status as a net-energy exporter. This percentage is usually closer to 30%, but production of fossil fuels was significantly down in 2015.
  • Energy-related employment in Utah declined to 15,367 in September of 2015 (down 16% from the 18,236 recorded in October 2014 prior to the oil price crash), of which the majority (30%) came from the oil and gas sector.
  • Average yearly wages in the energy sector ($83,400, first three quarters of 2015) are more than double the statewide average annual wage ($41,500, first three quarters of 2015).

UPA's voice is strengthened by companies like yours joining forces with us to work towards maintaining and improving Utah's favorable business climate.

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