[House Hearing, 118 Congress] [From the U.S. Government Publishing Office] HIGHLIGHTING THE ROLE OF SMALL BUSINESSES IN DOMESTIC ENERGY PRODUCTION ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON RURAL DEVELOPMENT, ENERGY, AND SUPPLY CHAINS OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTEENTH CONGRESS FIRST SESSION __________ HEARING HELD MARCH 29, 2023 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 118-007 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 51-444 WASHINGTON : 2023 HOUSE COMMITTEE ON SMALL BUSINESS ROGER WILLIAMS, Texas, Chairman BLAINE LUETKEMEYER, Missouri PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania BETH VAN DUYNE, Texas MARIA SALAZAR, Florida TRACEY MANN, Kansas JAKE ELLZEY, Texas MARC MOLINARO, New York MARK ALFORD, Missouri ELI CRANE, Arizona AARON BEAN, Florida WESLEY HUNT, Texas NICK LALOTA, New York NYDIA VELAZQUEZ, New York, Ranking Member JARED GOLDEN, Maine KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota GREG LANDSMAN, Ohio MORGAN MCGARVEY, Kentucky MARIE GLUESENKAMP PEREZ, Washington HILLARY SCHOLTEN, Michigan SHRI THANEDAR, Michigan JUDY CHU, California SHARICE DAVIDS, Kansas CHRIS PAPPAS, New Hampshire Ben Johnson, Majority Staff Director Melissa Jung, Minority Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Wesley Hunt................................................. 1 Hon. Marie Perez................................................. 3 WITNESSES Mr. Lucas Gjovig, President, GO Wireline, Williston, ND...... 7 Mr. Nick Powell, Chairman & Owner, Colt Energy, Mission, KS.. 8 Mr. Edward Cross, President, Kansas Independent Oil and Gas Association, Topeka, KS.................................... 10 Mr. Dan Conant, Founder & President, Solar Holler, Shepherdstown, WV.......................................... 11 APPENDIX Prepared Statements: Mr. Lucas Gjovig, President, GO Wireline, Williston, ND...... 25 Mr. Nick Powell, Chairman & Owner, Colt Energy, Mission, KS.. 28 Mr. Edward Cross, President, Kansas Independent Oil and Gas Association, Topeka, KS.................................... 31 Mr. Dan Conant, Founder & President, Solar Holler, Shepherdstown, WV.......................................... 53 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: Amogy Statement.............................................. 60 HIGHLIGHTING THE ROLE OF SMALL BUSINESS IN DOMESTIC ENERGY PRODUCTION ---------- WEDNESDAY, MARCH 29, 2023 House of Representatives, Committee on Small Business, Subcommittee on Rural Development, Energy, and Supply Chains, Washington, DC. The Subcommittee met, pursuant to call, at 10:01 a.m., in Room 2360, Rayburn House Office Building, Hon. Wesley Hunt [chairman of the Subcommittee] presiding. Present: Representatives Hunt, Meuser, Stauber, Mann, Perez, Schoulten, and Golden. Also Present: Representative Williams. Chairman HUNT. Welcome, everyone. Before we get started, if you do not mind, could you please stand? We will say the Pledge of Allegiance, please. Good morning. Thank you. That is so kind. Thank you all for being here. Again, I really, really, really appreciate it. Thank you to the witnesses for taking time out of your schedule to be here. I now call the Subcommittee on Rural Development, Energy, and Supply Chains to order. Without objection, the Chair is authorized to declare a recess of the Committee at any time. The Committee is here today to hear testimony about the role of small businesses in domestic energy production and the regulatory hurdles they face which threaten American energy independence. I now recognize myself for my opening statement. I have to bang the gavel first. The Committee meets today to hear testimony about the vital role small businesses play in the U.S. energy production and why now more than ever we need to empower small businesses to unleash America's energy potential. Small businesses have crucial, yet often overlooked, impacts on the health of the U.S. economy and the U.S. national security. According to the Small Business Administration, small businesses account for nearly two-thirds of all net new jobs and, in the energy sector specifically, small businesses employ approximately 800,000 workers. From oil and gas exploration to drilling, extraction, and operations, small businesses account for the majority of America's energy firms. Furthermore, small businesses are at the frontier of innovation, spurring the shale revolution, unlocking vast stores of domestic energy supply, and helping cut U.S. carbon emissions by 14 percent in just 10 years. In the oil and gas industry, small businesses are incredibly competitive and adaptable. Their adaptability enables them to innovate, focus on more marginal oil and gas reserves, and pursue revolutionary technologies that larger companies may overlook. Small businesses in our energy sector do not only drive our economy, but they also meet a critical need for American families. Hydrocarbons account for 80 percent of the world's energy supplies and oil powers 95 percent of all transportation of goods and people. Elected officials cannot legislate away for the need for oil and gas. Recent behavior by the Biden administration highlights the fact that America's need for abundant and affordable fossil fuel energy is not shrinking but growing. In the past 12 months alone, President Biden has called on oil and gas companies to ``increase production and refining''; has plundered 180 million barrels from the Strategic Petroleum Reserve; and, has begged Saudi Arabia to produce more oil. In November, the Biden Administration warned Saudi Arabia that a refusal to increase oil production would be perceived as a choice to side with Russia against American interests. When Saudi Arabia cut production, National Security Council spokesman John Kirby said the U.S. should review the relationship with Saudi Arabia in light of the OPEC decision, and to ``take a look to see what the relationship is serving our national security interests.'' This is a far cry from the president who, immediately upon taking office, cancelled the Keystone XL Pipeline, halted oil and natural gas lease sales, and raised taxes on the fossil fuel industry. The facts are clear; our dependence on oil and gas is not going anywhere. We must do more to invest in oil and gas production even if the world seems that the oil demand peak is within a decade. But, given the existing U.S. regulatory environment, it is no surprise that the oil and gas production has being outpaced by demand. The United States can make the decision to either take the lead, or let China and Russia displace us in yet another sphere of influence. The United States should be the swing producer of oil and gas in the globe, not Saudi Arabia or OPEC. If we continue to depend on countries with high geopolitical risk, we will only cede more leverage over our economic and security interests to nations who want to weaken the United States. Conflict across the globe and the battle for strategic reserves between the United States and countries like Iran, Saudi Arabia, Russia, and China makes it more critical for the United States to have control over energy production. In fact, the recent strategic partnership struck between China and Russia is a perfect example of why we must focus on policy that unleashes American energy dominance. In conclusion, producing energy within the United States is crucial for our economic stability and security, and small businesses play a critical role in this. The United States must continue to be the standard bearer in the production of abundant, ethically produced, and low- emission energy. If we empower American small businesses, we will do just that. I want to thank you all again for being here with us today and I am looking forward to today's conversation. And with that I yield to our distinguished Ranking Member from Washington, Ms. Gluesenkamp Perez. Ms. PEREZ. Thank you, Mr. Chairman, for holding this vital hearing on the role of small businesses and domestic energy production. Over the past 2 years, rising global energy prices have placed a burden on American consumers and small firms. During the peak of inflation last June, year over year prices increase in energy nearly matched the previous record set in the 1980s. this has put a serious strain on the pocketbooks of Americans and the balance sheets of our local businesses. The rising costs hurt lower income and working class people the most as we spend higher proportions of our income on gas to heat our homes and power our vehicles. To fully understand the rising costs of energy, we need to examine the broader context around energy prices here in the U.S. Energy costs have risen due to a number of factors. First, the initial shock of COVID-19 pandemic spurred many major companies to significantly cut oil and gas production as demand plummeted. But while demand rose quickly, production is just slow to catch up. Adding to this was the Russian invasion of Ukraine which put immense strain on global oil supplies resulting in higher prices worldwide. Finally, we cannot ignore corporate greed exhibited by many major companies. The domestic energy producers have reaped high profits at the expense of hardworking Americans. Instead of investing in more production to ease these prices, companies opted to enrich shareholders with hundreds of millions in dividends and stock buybacks. The issue before us today has no simple solution. There is no panacea. Fossil fuels will have an important place in our economy. You cannot match the fuel density. Working Americans cannot go out today and buy a new electric car. Buying our way out of this is not, you know, the path. But at the same time we need to contend with the long-term effects of climate change. Just last week, an IPCC report detailed the catastrophic consequences of refusing to adapt our energy grid to low emission sources. From crop failures to famine to multiplication of infectious diseases, climate change has the potential to wreak havoc on our economy and infrastructure. As an aside, I work in a garage. When it is 117 degrees outside, bringing in hot cars, we cannot work. That is the reality of working class people in climate change. And we have to acknowledge that domestic production is only part of the equation. Transmission and grid security are equally important and often ignored. As someone who lives in rural Washington, I know that rural economies cannot reach their potential when we are lacking power lines to get energy from point A to point B. I would love to work with the Chairman to hold future hearings on transmission issues facing rural America. So, this begs the question, how do we reconcile the urgent need to support working class Americans who rely on fossil fuels to get to work every day with the imperative to transition to cleaner, more sustainable energy. The answer I believe lies in the power of small businesses and entrepreneurs. These individuals are at the forefront of innovation driving progress in the field of domestic energy production. They have the vision, drive, ingenuity to create new and better solutions to the challenges we face. As we ramp up production of alternative energy sources, small, clean energy forums are creating hundreds of thousands of local, good paying jobs as these firms flourish, they drive renewal and prosperity in many rural and working-class communities across the country. That is why I am support of efforts to ensure that small firms have the resources, funding, access to capital and infrastructure necessary to succeed in this transition. For instance, the Infrastructure Investment and Jobs Act created grants that aid in research and development for clean energy. And the Inflation Reduction Act created important incentives to revitalize domestic manufacturing for clean energy and work to expedite environmental reviews for drilling permits on public lands. While I support an ``all of the above'' approach to domestic energy production, the starting place of our proposal should not be fossil fuels above all approach. We need to empower smaller firms across the board to develop solutions that bring down energy prices for working families. With that, I sincerely look forward to hearing the testimony of our witnesses here today as we examine the important role of small firms in domestic energy product. Thank you, and I yield back. Chairman HUNT. Thank you, Ranking Member Gluesenkamp Perez. I now recognize the Chairman of our Committee, Mr. Roger Williams from Texas, for his opening statement. Mr. WILLIAMS. Good morning. Thank you, Mr. Chairman. I want to thank again Chairman Hunt for holding today's Small Business Subcommittee on Rural Development and Energy and Supply Chains hearing on the Role of Small Business in Domestic Energy Production. This is an extremely important hearing so we can shine light on how the Biden administration's harsh rhetoric against the oil and gas industry is having a very real negative impact on American small businesses. In full disclosure, I am from Texas. I just want to tell you that. So, on top of dealing with out of control inflation, supply chain issues and labor shortages, this industry must also deal with discrimination from the banking sector because their work has fallen out of political favor with my colleagues on the left. And this hearing is also especially relevant because my Republican colleagues are offering a solution to help these businesses as we speak. H.R. 1, the Lower Energy Costs Act, which is being debated on the House floor, will solve many of the issues we are discussing today. And specifically, this bill would increase domestic energy production, reform the permitting process, and reverse the Biden administration's anti-energy regulations that are crushing our nation's small oil and gas producers. So I want to thank you all again for being here with us today. I am looking forward to today's hearing. And with that, Mr. Chairman, I yield back. Chairman HUNT. Thank you, Chairman Williams. We will now proceed with the witness introductions. Our first witness this morning is Mr. Lucas Gjovig. Mr. Gjovig is the president of Go Wire--excuse me, of GO Wireline , which provides wirelines and pressure pumping services to customers both large and small who drill and operate wells. A small business based in Williston, North Dakota, GO Wireline s works spans for petroleum welds, to water, helium, and carbon sequestration wells. Through his time at GO Wireline, Mr. Gjovig understands firsthand the negative impacts of uncertain regulatory environment has on the energy industry and by extension, the overall economy. His real-world experience makes him an excellent witness. We are very fortunate to have you with us today, sir. In addition to his work at GO Wireline , Mr. Gjovig serves on the Advisory Board of the Energy Workforce and Technology Counsel and volunteers on the Legislative Committee of the North Dakota Petroleum Council. He is also an active Member in the community in his hometown of Williston where he serves as Chair of the Williston Planning and Zoning Commission. I want to thank you, sir, for being here, for testifying before us on the Subcommittee, and I look forward to our discussion today. Mr. GJOVIG. Chairman Hunt, Ranking Member Gluesenkamp Perez, Chairman Williams, and other distinguished Members of the Committee, thank you for inviting me to share my perspective on this important topic. I am president of GO Wireline, a small business based on Wilston, North Dakota. The men and women working at GO Wireline---- Chairman HUNT. Mr. Gjovig, hold on. Mr. GJOVIG. Oh, I am sorry. I wasn't supposed to start. Chairman HUNT. I recognize my colleague, Mr. Mann from Kansas to briefly introduce the other two majority witnesses who are appearing before us today. So we will go through them first and then you are up. Mr. MANN. Great. Introductions and then we will wait for the witnesses. Thank you. Chairman HUNT. Thank you. Mr. MANN. Thank you, Chairman Hunt. Our next witness after that will be Nick Powell, who I am honored to introduce. He is the Chairman of Colt Energy, which is a company based in Kansas that he acquired in 1986. Colt Energy is an oil and gas exploration and production company that has operated in Eastern Kansas for over 70 years. Colt Energy offers a steady line of employment to small communities all across Kansas. Over his career, Mr. Powell has been involved with numerous other energy companies, including Overland Energy, Prairie Energy, and is the past president of Eastern Kansas Oil and Gas Association (EKOGA). Mr. Powell currently sits on the boards of both EKOGA and KIOGA, the Kansas Independent Oil and Gas Association, and he is currently the Chairman of the National Stripper Well Association. Mr. Powell's extensive career will give this Subcommittee important insight into the real world impacts this adminsitratino is having on the small business economy. Thank you, Mr. Powell, for what you do as an oil producer and for testifying before this Subcommittee. And I am looking forward to today's conversation. After that will be Ed Cross. I am honored to also introduce Ed Cross, another Kansan. Mr. Cross is the president and chief operating officer of the Kansas Independent Oil and Gas Association, a position that he has held since 2003. In that position, Mr. Cross serves and represents nearly 3,000 independent oil and gas producers, explorers, and service providers. In addition to his work with Cuyoga, Mr. Cross serves on the boards of the Domestic Energy Producers Alliance and the Council for a Secure America. He is also an active Member of the Independent Petroleum Association of America and serves as an advisory Committee Member for the U.S. Global Leadership Coalition. Thanks to his extensive experience and distinguished career, Mr. Cross can provide a wealth of knowledge about the vital role that small business play in the domestic energy production market and the current regulatory state of the industry. I want to thank you, Mr. Cross, for testifying before the Subcommittee, and I look forward to what you have to say and to the conversation. Chairman HUNT. Thank you, Mr. Mann. I now recognize the Ranking Member, Ms. Gluesenkamp Perez to introduce the minority's witness for today's hearing. Ms. PEREZ. Our final witness today is Mr. Dan Conant, founder and CEO of Solar Holler. Mr. Conant started Solar Holler over 10 years ago with a vision of ensuring that West Virginia was not left behind in renewable energy generation. With some innovative practices and investments in the local workforce, he jumpstarted the industry in his home state while lowering the energy costs of local families' businesses and nonprofits. Mr. Conant has spent his entire career in the renewable energy industry. Prior to launching Solar Holler, he was the first employee at the largest solar company in Vermont and an advisor to the U.S. Department of Energy's Solar Energy Technology Office. He holds an M.S. in Energy and Climate Policy from Johns Hopkins University. Welcome, Mr. Conant. Thank you for being here today. Chairman HUNT. Thank you, Ranking Member Gluesenkamp Perez. We appreciate all of you being here today. Before recognizing witnesses, I would like to remind them that their oral testimony is restricted to 5 minutes in length. If you see the light turn red in front of you it means that your 5 minutes have concluded and you should wrap up your testimony. I now recognize Mr. Gjovig for his 5 minute opening response. Thank you, sir. STATEMENTS OF LUCAS GJOVIG, PRESIDENT, GO WIRELINE; NICK POWELL, CHAIRMAN AND OWNER, COLT ENERGY; EDWARD CROSS, PRESIDENT, KANSAS INDEPENDENT OIL & GAS ASSOCIATION; DAN CONANT, FOUNDER & PRESIDENT, SOLAR HOLLER STATEMENT OF LUCAS GJOVIG Mr. GJOVIG. Thank you, apologies, Ranking Member Gluesenkamp Perez, distinguished Members of the Committee. Thank you for inviting me. I am president of GO Wireline, a small business based in Williston, North Dakota. The men and women working at GO Wireline and I are proud to be part of the industry that provides the United States with the energy it needs to grow our economy, maintain our quality of life, and reduce our nation's emissions. My partners and I started this business in 2011, and have grown to about 200 employees working out of two locations in western North Dakota and one in northern Colorado. But we work across the region, including Montana, South Dakota, Wyoming, Utah, Nebraska, and Kansas. GO Wireline plays an important role in domestic energy production. Our company provides wireline and pressure pumping services to customers who drill and operate wells. From oil and gas all the way to carbon sequestration. We work on wells throughout their existence from when they are drilled to eventually plugged and abandoned. Our Wireline trucks have a miles-long spool of cable which we use to hoist tools into welds to accomplish a variety of tasks. This includes well integrity logging, which ensures a well's casing is not damaged and that cement outside the casing is preventing fluids from reaching water-producing zones at the surface. In a horizontal oil well, we perforate the casings so that shale formations can be hydrologically fractured and oil and gas can then flow or be pumped through those perforations to the surface. Small businesses like GO Wireline play an invaluable role in domestic oil and gas production and are vital to job creation and growing the economy. Small businesses like ours are also the heart and soul of the communities in which we work. Our customers are mostly domestic energy companies, both large and small. They have felt the impacts of the increased global demand for energy as the world has emerged from the pandemic, but energy production is not as simple as turning on the spigot. Increasing energy production requires more equipment than people, which in turn requires access to capital and financing. Over the past several years, investors have become increasingly reluctant to invest in our industry. Regulator uncertainty, along with a stream of negative rhetoric from the highest levels of government is discouraging the investment needed to keep up with demand. Greater manpower is also needed to meet increasing levels of demand. The antipathy communicated against the industry, coupled with an accurate representation of the future of our industry has made it challenging to recruit in the competitive labor market, particularly young people. In 2022, we spent more time, money, and effort recruiting new employees than we had in the last 10 years combined. Supply chain issues have created challenges as well. Long lead times, restricted supply and increased costs are all limiting factors on the capital we have available to invest in technology, equipment, and people. Importantly, an expanded fleet and workforce does not matter if our customers are unable to secure the permits to explore and drill new wells. While our customers are the ones securing permits to explore for new resources, our company is still impacted by the administration's moratorium on new leases on federal lands as future opportunities for us to work on new wells will fall as a result along with production. While the administration's rhetoric and reluctance to support new infrastructure are hindering our industry's ability to increase production, regulations such as the proposed SEC Climate Disclosure reporting requirements threaten to hurt our business directly. The proposed regulation requires disclosures from public companies on the entire value chain, including product end use impacts and supplier environmental impacts. This massive regulatory action would put enormous administrative demands to small businesses like ours, which do not have the resources or expertise to manage and to report this information to our public customers. GO Wireline, along with so many other small businesses working in this industry, stands ready to provide the services necessary to increase production to meet increases in demand. The policy decisions by the current administration, combined with the politicized hostility that has targeted the U.S. oil and natural gas industry is hindering our industry's ability to provide abundant, reliable, and clean sources of energy that both the U.S. and our allies need now to meet energy demand, improve standard of living, provide national security, and reduce global emissions. Thank you again for the opportunity, and I look forward to answering any questions. Chairman HUNT. Thank you, Mr. Gjovig. I now recognize Mr. Powell for his 5 minute opening remarks. STATEMENT OF NICK POWELL Mr. POWELL. Chairman Hunt, Ranking Member Gluesenkamp Perez, and Members of the Subcommittee, thank you for holding this important hearing and allowing me the honor of testifying before you. My name is Nick Powell, the Chairman and owner of Colt Energy. Colt Energy's main base of operations is in Iola, Kansas, which has a population of approximately 5,500, and is located in Allen County with a population of 12,500. It is engaged in oil and gas exploration, production, and development. Colt owns and operates over 150 producing oil and gas leases with approximately 400 barrels of oil and 1,800 MCF of gas per day. Our average oil well produces a little over a barrel a day, and we produce about 15 MCF per day from our average gas well. Colt currently employes 39 full-time employees. That is one employee per 10 barrels of oil and 18 MCF a day of gas. So in our industry, our marginal well industry, we hire a lot of people for the oil we produce and we are truly a small marginal producer. Our employee wages average approximately $75,000 plus profit sharing, health insurance, 401(k) retirement plan, paid vacation, and sick leave. We and other small oil and natural gas producers provide an important source of good paying jobs in small communities throughout Kansas. We also provide tax revenue to counties in which we operate and to thousands of royalty owners, many who rely on their monthly checks. So why is the current administration clearly trying to make it so hard and expensive to stay in business and produce the oil and natural gas that this country will need for decades to come? In all my years in the business, I have never seen an administration take such a callous and unrealistic approach to energy policy. From the day Biden became president, we were being told that he wants to put us out of business and is threatening costly and confusing regulations and taxes, many of which we have no idea how much it will cost to implement or how to implement them. It used to be that previous administrations and Congress have tried to protect small oil and gas operators from onerous regulations that had no real benefit for their cost. Now it seems just the opposite. Trying to eliminate percentage depletion, removing the marginal well exemption from methane leak regulations and fees to be collected on methane by the EPA to name a few. The only purpose served by shutting down small producers while oil demand is still strong will be to ship those jobs and revenue and secure energy supply to many of our adversaries that cause much more environmental harm by their producing operations than U.S. companies taking us back to dependency for our nation's energy supply. Here is a clear example that the EPA is more interested in adding to our costs than lowering measurable methane leaks. The first EPA rule proposal released in November 2021 did not require ongoing emissions, monitoring of low producing well sites that emit less than three times per year. Then, in 2022, the DOE completed a report on the emissions profile of low production wells. In fact, one of our leases was used in that test. They came out and ran a test on our lease and that was in my written report, the outcome of that. The report shows that well sites producing less than six barrels a day fall below the thresholds that EPA has considered as low emitting sites. On November 11, 2022, the EPA advanced their supplemental proposed rule to regulate oil and gas methane emissions. The EPA ignored the third party DOE study and strengthened the leak detection repair requirements for small oil and gas wells. Another potential hit to our operating costs is a proposed methane fee of $900 per ton on operations generating in excess of 25,000 tons of CO2 equivalent. What does equivalent mean in terms of methane and how do we prove we are exempt? The devil is always in the detail which we don't have. Depending on unknown cost increases we are facing from regulations and fees does not take into consideration other costs of doing business that increased as we deal with inflation and labor shortages, just like everyone else. So when we are continuing to face some of the highest inflation rates we have seen in 40 years, small operators can ill afford any additional unnecessary costs or regulatory burdens. Thank you, Mr. Chairman, once again for holding this hearing on the serious issues facing small energy companies. I look forward to answering your questions. Chairman HUNT. Thank you, sir. I now recognize Mr. Cross for his 5 minute opening remarks. STATEMENT OF EDWARD CROSS Mr. CROSS. Thank you. Good morning, Mr. Chairman, Ranking Member Perez, and Members of the Committee. I am Edward Cross and I am the president of the Kansas Independent Oil and Gas Association. I have worked in the oil and gas industry for over 38 years as a geologist and now as an advocate for the industry, and it is my honor and privilege to serve this great industry that enhances life experiences and improves the quality of life of people around the world. And with over 3,000 Members, the KIOGA as we call it, the Kansas Independent Oil and Gas Industry is a lead state and national advocate for the oil and gas industry in Kansas. We talk about small independents. Those are the folks that drill and produce oil and gas. We do not generate or market the end products. We raise our capital through the well head. We do not tap equity markets to get that cashflow or any of the cashflow that comes from the wells, what we use to drill and produce the wells that we have here. And many operators spend over 100 percent of their cashflow on drilling and developing those new wells. In Kansas, oil and gas is producing in 89 of the 105 counties. Our average well makes two barrels of oil per day and 23,000 cubic feet of natural gas, yet we are a 3.6 billion industry in a state that supports over 100,000 jobs and $3 billion in family income and are consistently one of the top three industries in the state in terms of gross state product. Over the last 2 years, in the name of climate change, the federal government has done much to impeded American oil and gas production and these actions not only affect producers but they are more often more harmful to the small businesses that are in the oil and gas industry. President Biden and his supporters continue to look for every opportunity to weaken, attack, and destroy domestic oil and gas production, including carbon and methane tax proposals, unilaterally increasing the regulation of oil and gas production, and proposing to eliminate critical oil and gas cost recovery tax provisions. Biden's actions are making it harder for our economy to recover and damaging our nation's energy security. Because industry and infrastructure require development, Biden's anti-development and environmental policies are a major obstacle to responsible development. In his State of the Union speech in February, President Biden portrayed the global energy crisis as a problem that he is solving, but in fact, it is a problem he has helped cause and is making worse with his anti- fossil fuel policies. Energy information administration says global oil and gas demand will increase over the next 30 years and nearly half of that world's energy is expected to come from oil and natural gas in 2045. That demand will be met one way or another, and if America does not meet that it will be met by other countries who do not share our security interests, environmental, or human rights values. The solutions are right here in America and we just need to seize upon those. It does not make sense to place unnecessary political and legal obstacles in the way of responsible American oil and gas production, cancel pipelines to discourage investment in fossil fuels, and then beg OPEC and others for more oil to contain inflation. The oil and gas industry can be part of the solution to our nation's energy solutions or energy challenges. Entrepreneurs in the private sector and smart state led policies can drive American energy leadership. Tax policy proposals from the Biden administration seem designed to punish the energy sector. It is key for the small independent oil producers that Congress retain cost recovery measures like the percentage depletion deduction and intangible drilling cost deduction. These measures are neither subsidies nor loopholes but tax provisions critical for American oil and gas producers to sustain capital availability and formation. The EPA flipflopped on their proposed methane rule. You know, first exempting marginal wells and then caving to pressure from environmental activists and ignoring a Department of Energy third-party study to make the regulations more harmful to small producers. The EPA proposed oil and gas methane rule is contrary to the congressional intent as the Inflation Reduction Act exempted smaller wells from regulation. Congress should engage EPA to ensure that the agency develops cost effective oil and gas methane regulations that reflect congressional intent and provide flexibility. We also have concerns about a number of issues that are in my written testimony, whether it be the strategic petroleum reserve or Endangered Species Act or environmental social and governance standards and more of those. So in closing, you know, the most pressing issues facing the U.S. economy in the foreseeable future are not those arising from climate change or an energy transition; rather, the factors to watch are inflation, rising energy costs, and security threats. America's independent oil and gas producers look forward to working with you and your colleagues to develop innovative solution to address our energy challenges in the coming years. Our mission is to empower people, improve lives, and inspire success. I thank you. Chairman HUNT. Thank you very much, sir. I now recognize Mr. Conant for his 5 minute opening remarks. STATEMENT OF DAN CONANT Mr. CONANT. Good morning, Chairman Hunt, Ranking Member Gluesenkamp Perez, and all the Members of this Committee. I am honored and humbled to have the opportunity to speak with you today as a representative of the vanguard of a new industry in Appalachia. And I want to share with you three stories. The story of how we reimagined who solar is for. The story of how we started training the first generation of solar installers in coal country, and the story of what Congress can do to help further emission in bringing clean, renewable energy and jobs within reach of all of our neighbors across Appalachia. My name is Dan Conant. I am the founder and president of Solar Holler. We are based in Shepherdstown and Huntington, West Virginia, and I also come to you as a former advisor to the U.S. Department of Energy Sun Shot Initiative, as well as a veteran of multiple solar startups. For generations, Appalachia has powered American prosperity with our coal, and Solar Holler is ensuring that we will continue to power America in the 21st century with renewable energy. From the moment I moved back to my hometown to start up our company 10 years ago, we have relentlessly pursued innovative approaches that make solar the most affordable source of energy for all of our neighbors across Appalachia. Due to this dedication and approach, we are a rapidly growing team of incredibly dedicated, talented, and passionate professionals. Over the past decade, we have started the industry from scratch in our region and grown to a staff of 105 people. Our team models, designs, finances, and builds beautiful solar projects that will last for the next two generations, all the while producing free, clean energy. Every project our team designs and builds helps families, nonprofits, and businesses across our region cut their power bills while revitalizing the economy of West Virginia. Our dedication to making solar the most affordable source of energy was shown in our very first project. A groundbreaking community effort with my congregation, Shepherdstown Presbyterian Church. That project won national accolades, including the interfaith Power and Light National Renewable Role Model Award for a first of its kind crowdfunding approach. Rather than passing a plate or doing a traditional capital campaign, we crowdsourced water heaters. Members of the congregation and half the businesses in town agreed to let me connect an internet-connected remote control to their water heater. And we actually connected 100 water heaters across town as a network, registered them as a power plant on the PGM regional grid, and started day trading second by second in tune with the fluctuations of the power grid. Using these water heaters, we were able to create a new source of funds to support solar projects at churches, affordable housing groups, and libraries across the state while stabilizing the power grid, preventing blackouts and power surges and ultimately incorporating more renewable energy into the grid. That first project with my church would have cost the congregation more than $50,000 at the time. Instead, it cost them one, one dollar. And over the next 25 years, the project will save the church more than $100,000 to put back towards their mission. We had to get creative with that because of the way the solar incentives are built that specifically discriminate against nonprofits. Those incentives have typically left out tax-exempt entities. Thanks to the Inflation Reduction Act that passed last year, however, all of the federal investment tax credits are going to be opened up to churches and schools and municipalities just the same as they always have been for businesses. In 2015, we relaunched Rewire Appalachia, a workforce development and training program in partnership with our friends at Coalfield Development. Through that collaboration, Solar Holler gave more than 40 young folks who were kids of coal miners the chance and hand-up into the solar industry. We paid for their college, for their electrical apprenticeships, for their solar certifications, and gave them close supervision under the tutelage of our master electricians, and we kept going from there. In 2020, we willingly unionized, joined up with the International Brotherhood of Electrical Workers and have been very proud to be leading the union movement in West Virginia. Our latest efforts are focused on high schools and vocational programs. This January, we launched internship programs with Wayne County West Virginia schools, as well as Boyd County, Kentucky. And through this program, high school seniors spend four days a week in their vocational classes learning electrical theory, learning drafting, and then one day a week they are paid interns on the job, learning how to safely and beautifully install solar systems. Once they graduate in June, they will be able to slide right into a career with Solar Holler and stay at home, which is one of our biggest challenges in West Virginia with the brain drain we have seen over the last 50 years. I am running out of time but I have got to say, things are going very, very well for us, especially with the investments, the Inflation Reduction Act is making in our states. We have seen a boom in manufacturing just in the past year, particularly around electric school buses, grid scale batteries. We have had five major industrial announcements in the past year that will employ more than 2,900 people in the clean energy industry in West Virignia. We are really excited to be able to keep pushing the envelope here and see where this all takes us over the next 10 years. Thanks so much, and I look forward to answering any questions. Chairman HUNT. Thank you very much. We now move to the Member question under 5 minute rule. I recognize myself for 5 minutes. My first question is for you, Mr. Gjovig. Your company's name alludes to the portion for the energy process you are involved in. In horizontal wells you perforate the casing so that shale formations can be hydrologically fractured, a process that is credited with ushering in today's era of energy, abundance, and independence in North America. What would a ban on fracks do to your business, your employees, and the overall U.S. oil and gas industry? Mr. GJOVIG. That is an excellent question, Chairman. It would obviously devastate our business as we are an integral part of that function of completing a well. But in turn, it would devastate the community in which we work, and I think even more importantly it would devastate lower income and working-class communities across the country as the cost of energy would rise as production would fall. Chairman HUNT. Excellent. Thank you. Mr. Powell, next one for you, sir. Turning our attention to ESG, regulatory burdens and overreach, would you say tha the regulatory environment during the current administration has increased or decreased your ability to access capital? Mr. POWELL. Well, it would certainly seem to have decreased capital. We have not had to go out and look for capital but I have people I know that it make sit harder for them. And certainly it does for the industry as a whole. You know, so to answer your question, it increases it. Now, for me specifically, because we do not go out and look to raise money, but I know other people that I talk to and it is a problem. And there is a concern on where this is going to come because you have to raise money to be able to continue to drill, particularly when the price of oil goes down and you don't have your revenues to do drilling. Chairman HUNT. Also, sir, you referenced the pending DOE methane inspection rule in your testimony and that your wells were part of the DOE study. To me, especially in the scope of small producers such as yourself, the DEO inspection and testing sounds like a solution searching for your problem but not finding one. In your opinion, does the proposed methane tax make sense for small producers? Will it hurt your business more than it will help your business reduce methane emissions? Mr. POWELL. Thank you for the question. We had one of our properties, producing properties were used in this DOE study that was done with a third party to see whether or not these small producing wells really produce much methane before you impose a lot of expensive regulations on them. They tend to be widespread and one size fits all we have seen in the past. And so the crew came out and set up their equipment on our lease. And they started the test, and in fact, our executive vice president just happened to go out there and be on site. He was curious to see the testing. And they stopped the test because they thought their equipment wasn't working because they weren't picking up any methane, any at all. So they checked all their equipment, looked around, and said, no, the equipment is working. There just isn't that much methane. And we knew that. You know, these wells when they get old and producing marginal wells like that all the gas is gone. That is why we do a barrel a day because there isn't much pressure moving that oil. And I was very surprised because I knew that about 60 percent of the wells they tested were very low. So I thought, okay, they have paid for the money. They have run the tests. We are going to get this exemption. Well, they switched. And now some are being put into that. And I do not understand, so. Chairman HUNT. Yes, sir. Thank you very much. The last one is for you, Mr. Cross. We have got about one minute left, so if you can wrap it up as soon as possible. According to the U.S. Energy Information Administration, oil and gas supply 68 percent of the United State's energy in 2022. How long would it take in terms of years for solar and wind to meet that level of energy share? And what would be the cost for the U.S. taxpayer to reach that mark? Mr. CROSS. Well, it is hard for me to answer how long it would take, the wind and solar to get there. But you know, 68 percent, you know, I think on the world level that project that wind and solar by the year 2045 will make up 10 percent, 10.9 percent or something of globally. And that is globally, not the United States. So it would take, you know, they would take billions of dollars to get to where they are today, wind and solar, where they are at today, I don't know, 7, 8 percent of energy today. So it would take quite some time. I don't really have an answer to exactly when. Chairman HUNT. Thank you very much, sir. I really appreciate it. And I now recognize the Ranking Member, Ms. Gluesenkamp Perez for 5 minutes of questions. Ms. PEREZ. Thank you, Mr. Chairman. Mr. Conant, your company has made amazing investments in workforce development at the local level. As somebody from a rural community, I really appreciate that. As somebody who works in the trades, I know it is critical for getting early training, you know, junior high, hi school. Can you speak about some of the benefits it provides to communities, particularly in some of the more rural areas to educate young people about the opportunities and the trades and jobs that exist in local areas? Mr. CONANT. We have made really conservative efforts over the past 10 times. We actually built our company around training up the first generation of solar installers in the state. Across Southern West we have just seen, like I said in my testimony, a brain drain over the last 7 years as the coal industry has declined. And if you go into McDonald County, West Virginia for instance, back in the 50s there were over 100,000 folks in McDowell County. Now we are down to about 15,000. Four out of five buildings are empty and it is because there are no jobs left. People have to leave the state. So, that is why we have focused so critically on folks coming out of high school, folks early, early adult hood so that we can train them up in the trades, get them into the electrical field. We are actually 3,000 electricians short across West Virginia right now for just the work we need to do as a state. And with the benefits of the IRA coming to fruition, we are going to need another 4,000 electricians in state. So we have a 7,000 electrician gap in a state of 1.8 million people. This is huge. And, you know, the time to do that is when you are in high school or when you are coming straight out of school. So through this partnership with Wayne County Schools, we are really excited to be working specifically with high school seniors, promoting vocational education at the school level and making sure that folks have a career path that allows them to stay at home versus filtering off into the rest of the country. Ms. PEREZ. Thank you. You know, later today I am going to have a 9-foot chainsaw delivered to my office that my grandpa used in the woods and, you know, like West Virginia, Washington State has been centered around a particular industry for a long time. You know, how has increased investment in renewables in the state helped bring wealth back to the communities and diversity the local economy? Mr. CONANT. I would say it is still early days. So, the industrial announcements that I was mentioning, those have all just been made in the past year, and really over the last several months with the new battery factories coming in and I think the first electric school buses are just now running off the line. But for instance, Form Energy makes grid scale batteries. They are locating in Weirton, West Virginia, which is an old steel town on the Ohio River. It has got I think 5,000 to 7,000 folks, somewhere in that area, and this is going to be 700 jobs in a town of 5,000 to 7,000 people. It is absolutely enormous for giving folks a reason to stay, for supporting the school system, for really supporting the infrastructure of this town with a really rich history. So I am excited to see where all that goes. In our case, we have got over 100 families supported directly by the wages that we are producing. We are scattered all over the state. In the age of COVID, we went virtual across the teams so that everyone could live in their home holler and not have to come into the office every day. And so that is really spreading out the benefits across a really rural state. Ms. PEREZ. Yeah. Thank you so much. Mr. Gjovig, outside of H.R. 1 there are some bipartisan efforts to reform the permitting process. Could you give us some details as to which aspects of these bills are most important to lowering the cost for Americans? Mr. GJOVIG. Permitting reform and access to federal lands I think is an important part of making sure that we have a steady supply of American production going forward in the future. Today, we have work that is going on, but 5 years from now if permitting is not done now and access to federal lands is not granted now, we will see an impact on production. Ms. PEREZ. Mr. Powell, you mentioned in your testimony--I do not have quite enough time to ask this question. I will catch you in another round. But thank you. Chairman HUNT. Thank you very much. I now recognize Mr. Mann from Kansas for 5 minutes. Mr. MANN. Thank you, Mr. Chairman. And thank you to the witnesses and everyone for being here today. I represent the big 1st District of Kansas, which is roughly two-thirds of our state. I can assure you there is no tree in my district and in our state that needs a 9-foot chainsaw to cut down. Incredible. But we do have a lot of oil and natural gas. And hundreds and thousands of oil and natural gas wells have been drilled in our state since the late 19th century. And they produce 6.7 billion barrels of oil and 41.2 trillion cubic feet of natural gas. In Kansas, small independent businesses account for 92 percent of the oil production and over 63 percent of the natural gas production. These independent producers who own and run these small businesses employ thousands of people across the state and they are critical to the American economy. I am glad that we are having this hearing to shed positive light on this tremendous industry, these fantastic people that too often get told that what they are doing does not matter and the government instead of thanking them, which we should be doing, throws up more taxes, more burdensome regulations, and makes their life more difficult. So I appreciate you all being here today. A few questions. First for you, Mr. Cross. Can you explain how producers have been affected by regulatory overreach and the impact it has had on the oil and gas industry? And then specifically, what particular regulations are the most onerous or are you most concerned about right now. Mr. CROSS. Yeah. Thank you for the question. You know, our biggest priority in the oil and gas industry are federal regulations. We do have state regulations, too, that we comply with, but the federal regulation seems to be the most onerous. And so when we looked at, you know, like the endangered species Act where they are trying to list--well, they did list just this week, the lesser prairie chicken in Kansas is a threatened species, which we feel they have not met all of the criteria for listing that particular species. Those are very costly. Or the methane regulations that are supposedly coming down. Like I said, the Department of Energy third-party study which was done not only in Kansas but across the nation found no viable or significant quantities of methane or volatile organic compounds from marginal wells, yet the EPA decided to ignore that study so that they could put these, and these are very costly, for the producers in Kansas. Mr. MANN. And expand upon the methane fee. What impact would that have on our producers? I mean, what would that mean to our small businesses that are trying to produce oil to feed and fuel all of this? Mr. CROSS. Well, they have not come out with the regulations yet but the proposals that they have right now could cost as much as 30 to 40 percent of the cap X it would take to drill and produce a well in Eastern Kansas where they make less. Like Nick said, one barrel, it may be as much as 50 or 60 percent of their Cap X on a well to comply with just a methane regulation itself. Mr. MANN. Yeah. Incredible. Thank you. A question for you, Mr. Powell. Can you explain the importance of percentage depletion and how the elimination of this would affect your small business and many others like it throughout Kansas and throughout the country? Mr. POWELL. Yes. Well, small producers depend greatly on percentage depletion. Once we drill a well and it starts producing, it goes into decline. And the only way to maintain our revenues is by continuing to drill more wells. So we have to use a lot of the revenue we get to put back in the ground to continue drilling to maintain our revenue so we can maintain our employees and our fixed costs. And percentage depletion allows that and only for small producers. It is only allowed up to 1,000 barrels per day. It is only on the first 65 percent of your income. And it also, besides allowing you to continue to drill wells to maintain your production and stay in business, it also allows the wells to economically around longer as these wells decline, and if costs go up--keeps more of the money so we can keep these wells economically alive. They produce longer and they produce money for the state, for the royalty owners. People keep forgetting about these royalty owners. There are probably millions of royalty owners across the country, 100,000 in Kansas, and they rely on that monthly check. And once that well is plugged, it is not going to provide any money to the county, to the state, nor to the royalty owners. So it helps all those people besides us. Mr. MANN. The royalty owners are American, different than the royalty owners in Saudi Arabia or other parts of the world. So these dollars stay in our economy. Last question. I have about 30 seconds left for you, Mr. Powell. What decisions out of Washington do you feel like have harmed your business, your small business the most? Mr. POWELL. Oh, I cannot do that in 20 seconds. Mr. MANN. That is fair. That is fair. Mr. POWELL. But, I mean, it is a long list. You know? And it is not only the ones that we have to deal with, the cost, because we cannot hire people to come in here and take care of these things. It is what we look coming down the pike, you know, the road. It is a change. It is a change. And it is threatening, so we worry about what is coming down. And the people we want to hire, they worry about, well, are you going to be around as a business? Mr. MANN. That is the important thing. If you look forward, it is not just the regulations you have but all the talk of the regulations that are coming, how expensive that is, how bad that is for business on every front. So thank you all for being here. And with that, I am past my time so I will yield back the time that I do not have. So thank you. Chairman HUNT. Thank you, Mr. Mann. I now recognize Ms. Schoulten from Michigan for 5 minutes. Ms. SCHOULTEN. Thank you so much. Thank you to the witnesses today for coming and testifying on such a critical issue. The testimony that has been shared today has touched on different aspects of workforce and retention issues, a vital part of ensuring we have a strong domestic energy industry is cultivating a strong workforce. I rarely have a meeting or a conversation these days where when I ask what is the most critical issue facing your industry or your sector and the first response is not worker shortages or workforce development and retention. So, Mr. Conant, the Rewire Appalachia and high school vocational programs you mentioned in your testimony are great examples of how to cultivate a strong local workforce. What further measures in the clean energy space should Congress be paying attention to when it comes to some of those workforce development issues? Mr. CONANT. One of the biggest challenges we see is at the community college level, just having teachers. It is a whole lot more lucrative for teachers to work in the field as an actual electrician than it is to teach other electricians. And that has been seriously holding us back. Not just West Virginia but nationwide. So, I would say increasing teacher pay and making that a more competitive career so that you can enable all the thousands of others. Ms. SCHOULTEN. Thank you. And I have one more question for Mr. Cross. You mentioned in your testimony that there are ways for Democrats and Republicans to work together on effective energy policy priorities. Bipartisanship is a guiding principle of my leadership here. What are some of the proposals in this space that you can support that not only strengthen American production but also ensure a green future for our kids? Mr. CROSS. You know, we believe that we need energy from all forms to meet our energy needs. But that also includes oil and gas in that sector. So, you know, policies that do not penalize the oil and gas industry but support oil and gas in addition to supporting green are ways I think we can work together to get an energy policy going forward. Ms. SCHOULTEN. Thank you. I yield back. Chairman HUNT. Thank you, ma'am. I now recognize Mr. Stauber from Minnesota for 5 minutes. Mr. STAUBER. Thank you very much, Mr. Chair. Mr. Conant, you are involved in the solar business and the solar panels and what have you; right? Are there any critical minerals used in the production of solar panels. Mr. CONANT. Yes. Mr. STAUBER. Which ones are they? Mr. CONANT. I am not a chemist, so I am---- Mr. STAUBER. But you know there are critical minerals? Mr. CONANT. Yes, there are. Mr. STAUBER. If you want to sole source critical minerals in the United States or foreign countries? Mr. CONANT. I really want to source them in the United States. Mr. STAUBER. Great. You are going to support H.R. 1 then. That is my bill. Thank you. Did you know that this administration pulled the lease in their banned mining in the biggest copper/nickel find in the world? Did you know that? The minerals for your solar panels, did you know that, yes or no? Mr. CONANT. My business is---- Mr. STAUBER. Mr. Conant, I am trying to help you here because I support all of the best energy. All of the best. And your solar panels are going to be a part of that. What I am telling you, or asking you is, do you support minerals sourced to the United States rather than foreign companies who use child slave labor, yes or no? Mr. CONANT. Absolutely. Mr. STAUBER. Okay. In Minnesota, we have the biggest copper-nickel find in the world and this administration just pulled the leases and banned mining in northeastern Minnesota. Do you support that? Mr. CONANT. I think you should talk to the administration about that. Mr. STAUBER. No, I am asking you. Because it removed the sourcing in our country. And you said you talked about union labor. These were project labor agreements, thousands of union workers gone because of political reasons. And it matters to you where we source the minerals; correct? Mr. CONANT. Yes. Mr. STAUBER. thank you. Does your company get any subsidies from the federal government indirectly or directly? Mr. CONANT. Be inflation reduction Act created a number of tax credits for solar projects. They extended that to the tax- exempt entities, including churches and municipalities and hospitals. There is also a number of incentives to target that development directly into historical coal. Mr. STAUBER. And I think one of the things that we have to know as we get into the solar universe and you are in the inception of it, we have to understand that we will never meet the Inflation Reduction Act Standards for Critically minerals mined domestically if we do not allow mining. Just yesterday, the Secretary of Interior asked, and she signed the ban. When asked if there was critical minerals in that mine she had no idea. Zero idea to help you manufacture in this country. So I am asking you to support H.R. 1, Lower Energy Costs, put union workers in northeastern Minnesota back to work using the best environmental standards, the best labor standards in the world. So thank you for supporting H.R. 1. I appreciate that. Mr. Gjovig, Mr. Powell, and Mr. Cross, yes or no, do you consider yourself big oil? Mr. GJOVIG. No. Mr. POWELL. No. Mr. CROSS. No. Mr. STAUBER. That is what I thought. And I am willing to bet you would take offense at such a claim. This gets at a larger point that we at the Small Business Committee, we must always keep in mind when more regulations are imposed or taxes are raised they have the greatest effect on you, the small business owners. Through it's worn American energy production, the Biden administration is doing just that, harming small businesses and threatening to put those in the coal, oil, and natural gas industries out of business. Mr. Gjovig, can you expand on the cost and time that goes into complying with the increased regulations you mentioned in your testimony? Mr. GJOVIG. It would require me to track our own emissions which is something that I do not have the staff or the expertise to do, but also the environmental impacts of my suppliers, which would require the legwork to track that down from my suppliers, which include small and large business. And then disclose that to our publicly traded customers. It would be a big administrative burden for us. Mr. STAUBER. And my time is up. And I want to thank all four of you for your testimony. Mr. Chair, I thank you and the Ranking Member for holding this. It is extremely important and that is why H.R. 1 is so important to get across the finish line. And I yield back. Chairman HUNT. Thank you, sir. And I recognize Mr. Golden from Maine for 5 minutes. Mr. GOLDEN. Thank you very much. Mr. Cross, just another opportunity to talk a little bit about ways that we could do some bipartisan work together to have an effective energy policy here in the United States. You mentioned supporting all types of energy but we didn't really get into any specifics. I just want to give you another opportunity. What types of investments or things could we do on a bipartisan basis that would help out your industry? Mr. CROSS. Okay. I think you saw in my written testimony, I have things, you know, where most Republicans look at energy policy as an economic issue, whereas Democrats seem to think of it as an environmental issue. Mr. GOLDEN. Well, I would not agree with that. Mr. CROSS. Okay. Well, those are just polling numbers that came out. But you know, looking at ways, and we talked about several of those, like the tax policy, looking at the oil and gas. We do not feel like any of our cost recovery mechanisms like percentage depletion and tangible drilling cost deductions are subsidies by any means because they have to spend the money. That is the way they raise their capital. We are not big oil. We do not tap equity markets. The cashflows coming from the well is how we do that. So those are critical for the smallest producers. As I said, the percentage depletion, the majors have not had that since 1975 or something so they do not really care about that. But that is imperative for that small producer that makes two barrels of oil per day. You know, I might add in Kansas, many of those wells out there in Western Kansas, they are providing 25 percent of the employment in accounting, 75 percent of the property tax. And it is critical for those. So those are the type of policies. Mr. GOLDEN. Thinking about tax credits and tax policies, are there things out there that are going to be helpful do you think to energy producers for making smart investments like more energy efficient manufacturing or emissions technologies, carbon capture, et cetera? I mean, are there things out there that you would look to take advantage of? Mr. CROSS. Yes. You know, we do not receive tax credits but like you say, cost recovery mechanisms are there. Whenever you talked about you said carbon capture. What was the other one? I am sorry. You said---- Mr. GOLDEN. Any kinds of tax policies that would help manufacturers to make investments to increase their energy efficiency. Mr. CROSS. Yeah, you know, so we talked a little bit about ESG, for example. That does not affect directly a lot of the small producers because they are not tapping equity markets and things like that. But it does affect a lot of the suppliers. Some of them use suppliers and service companies that may get capital from companies that are trying to get capital and they have to comply with the ESG standard. So that greatly impacts, you know, in our state, labor supply is a big issue. I mean, we have, it was a very active year in Kansas in drilling but it could have been a lot more if they could have had more people out there drilling. So those are the kinds of things. Mr. GOLDEN. Yes. Mr. Powell, I saw in your testimony you expressed concern about the president tapping into the Strategic Petroleum Reserve. You did note that it helped drive down prices which obviously my constituents and probably most people out there appreciated. But you know, you noted some long-term concerns about how that is going to impact you and your business. What types of moves could the government make that would alleviate your concerns about that? Mr. POWELL. Well, I think that strategic petroleum reserve is not to be used for what they use it for. I mean, you artificially---- Mr. GOLDEN. To drive down high prices? Mr. POWELL. Yeah, but it is artificial. It is short term. You all are looking at long term, I assume. Mr. GOLDEN. Short term relief---- Mr. POWELL. You want to make sure that we have the energy we need---- Mr. GOLDEN. I understand that. Mr. POWELL.--to keep this country. And if by artificially pumping that oil out, well, if you could keep pumping it another six months it will be empty. Then what do you do? And what do you do if you need it? So by bringing the price down you send a message, do not make investments. You have less revenue coming to drill more wells, produce more oil. And if you do not have that as we have seen in Europe, your price will go right back up and even higher than it was when you started to empty the petroleum reserve. So ask me this question in another year or two when we see where the price of oil is. Mr. GOLDEN. Right. You would like them to restock the reserve? Mr. POWELL. I would. In fact, President Biden said when he did this he said, I will pump this oil out and bring the price down. But do not worry. When it gets below $72 I will fill it back up. That is what he said. It is kind of a bait and switch because he did not do that. The price went to 67. Have we seen any oil pump back into that? He could have gone out on the futures market for 6 months and priced it below 72 and bought it and pumped it back in there. And he did not. Mr. GOLDEN. I have called on him to do that. So I agree with you about that. I disagree, obviously, when gas is $5 bringing prices down is pretty critically important to the American people. Mr. POWELL. Like I said, 2 years from now when the effects of artificially bringing down the price of a product has on its supply in the future. Mr. GOLDEN. Thank you. Chairman HUNT. Thank you, sir. I now recognize Mr. Meuser from Pennsylvania for 5 minutes. Mr. MEUSER. Well, I thank you, Chairman, very, very much. And my apologies for just dropping in. It is just one of those busy days. I am on the Financial Services Committee as many of my colleagues have many other Committee hearings. So this is really important. That is my whole point, just to stress that I am sorry I missed it because it is a very important hearing and we really appreciate you all making the trip here. My district now includes much of the Marcellus shale area. We call it the Northern Tier of Pennsylvania. I have been very acquainted with that area for quite a number of years, even when I was not representing it only because it just has been so important since 2011-2012. Previously, I was revenue secretary in Pennsylvania so we set up oil and gas workgroups very early just to help the industry understand compliance and grow in a responsible manner. And it has made an enormous difference in Pennsylvania. I think we have the second or third largest reserve of natural gas in the world. And it is developing, things are going well, but it could be doing a lot better. Not so much because of necessarily costs and excessive taxes but entirely because of regulations, permitting, as well as pipelines very much, too. And investing as you, Mr. Cross, have brought up, meaning access to capital from banks, large and small, community, regional, and even the larger banks where some of this ESG mandates are coming into play. I mean, it is not uncommon for me to get a call from a community bank. You would not believe the call I just got he would say, or she, from the SEC warning me to watch out for my carbon footprint in my investment portfolio. You know, I might have to hire somebody to look after this. I thought I already had somebody good. So tell me, you know, there is rhetoric about it. There is commentary. There is real life. Today we have these requirements but just wait until next year. They are going to be even harsher so you had better maintain them even more stringently than you already do. Maybe you can just comment on that for me, Mr. Cross. Mr. CROSS. Yes. That is a big issue for small companies, as well as the big companies. And I know in Kansas, we look at our small banks. Many of them are small banks in Kansas. And we are concerned about whether they are going to use an ESG standard on that. The other thing we are worried about is insurance companies that have started to say that they are not wanting to insure companies that produce fossil fuel. So that makes a big, you know, I think Chubb came out just this last week or so talking about how they would look at maybe not wanting to insure fossil fuel imprints on your portfolio. And what we do in the small independent oil and gas industry is, you know, we just want them to be fair in their assessments. We are not asking for anything special. We just want them to look at the financial performance. Mr. MEUSER. And how the upstream and downstream, right, from water suppliers, to farmers, to grocery stores who buy the food from the farmers who use natural gas for their fertilizer. I mean, it seems as if an overreach is an understatement. Mr. CROSS. There is no doubt. In Kansas, like we say, the people that we have here, and this is true for small producers across the nation, not only Kansas but Pennsylvania as well and others. We are friends and neighbors. We life and work right where we have our product. So we care about our environment as much as anybody. They are wanting to protect that. They have for many years. So ESG standards is really nothing new. The industry has been doing those things for many years. Mr. MEUSER. I would love to hear from you afterwards. We always have limited time for this. What your suggestions would be, I can do, we can do, this Committee can do to educate the banks and more so the regulators in the banking community on what you see is best, responsible, and yet maintaining a level of responsibility as well as gaining that access to capital. Lastly, I would just like to ask our thoughts on H.R. 1 that are coming across. This bill, H.R. 1, particularly even maybe comment or afterwards on how we will have the justification right to build pipelines across certain states that have kept us from doing so. In Pennsylvania, for instance, natural gas is about one-fifth the cost that it very often is in the winter anyway in Boston. And if we could pipeline across New York State, America energy wins, consumers' costs go way down, and everybody is a lot happier. Mr. Chairman, my apology. I am out of time. If I can get that at some other point I would appreciate it, your thoughts on H.R. 1. Thanks very much. I yield back. Chairman HUNT. Thank you very much, sir. I want to thank all the witnesses for being here. I really appreciate it. I really appreciate your testimony today. Without objections, Members have 5 legislative days to submit additional materials and written questions for the witnesses to the Chair which will be forwarded to the witnesses. I ask the witnesses to please respond promptly. If there is no further business, without objection, the Committee is adjourned. And thank you very much. [Whereupon, at 11:12 a.m., the subcommittee was adjourned.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]