Eagle Ford success stories and energy policy challenges were hot topics at Hart Energy's recent DUG Eagle Ford conference in San Antonio. Bruce Vincent, wearing two hats as chairman of the Independent Petroleum Association of America and president of Swift Energy Co., addressed the dynamics of both as the opening keynote for the event.

"Some projections estimate that North America is on track to reach daily production levels of 10.7 million barrels by 2017-- more than our country has ever produced daily in its history -- and we would become the largest producer of oil in the world," Vincent said. "What's making that happen are plays like the Eagle Ford shale."

Swift Energy has been in the Eagle Ford for more than 20 years developing the Olmos end. In developing its acreage, management found that the Olmos and the Eagle Ford could be developed the same way and that the economics are very similar. Currently, Swift's position in the Eagle Ford and Olmos combined is about 144,000 acres. When the Swift team looks at the Eagle Ford and Olmos together, it sees more than 1 billion barrels of potential, or multiple trillion cubic feet of gas.

"Some people think that all areas of the shale are the same, but they're not. One of the things that Swift has done is come out publicly with more precision regarding the different models for oil, liquids and dry gas in the play."

Vincent said he likes the idea of trying to move play development into more of a "manufacturing operation," where an operator can drive costs down and efficiency and productivity up. This involves cycles. Upon entering a play the focus is on evaluating it and capturing data, then using this information to capture efficiencies. As development progresses, the next step is to optimize the commerciality and the economics of the assets. The last stage is where operators want to be, when the process has become a manufacturing operation.

While internal factors like managing operations are in the hands of management, many of the challenges inherent in energy policymaking are not.

"In terms of energy policy, people often say the more things change the more they stay the same. But there are new realities that come along…We just want to make sure that the policy issues advocate support for the domestic oil and gas industry and don’t hinder it."

One of the biggest new realities of energy policy is driven by the economy and jobs, Vincent said, adding that our economy is in the worst shape it's been in since the 1930s.

"While the economy is growing ever so slowly, we're not creating jobs. We have significant unemployment and underemployment…Our industry creates jobs and economic benefits that multiply many times over through the GDP of this country. Don't forget that."

Historically, the oil and gas business has faced taxation issues with the government before, but this is the first time the industry has had every single tax issue on the table for potential elimination. While [President Obama] might like to refer to the tax deductions as subsidies, "they aren't. They are ordinary business expenses that most other businesses get. If you take them away it will dramatically impact the cash flow of this industry, which will reduce investment, jobs, economic benefits and production.

"Don't let them win the war of vocabulary. The tax code is very complex; it was developed for a reason, and if you unwound it all there would be winners and losers. It's not simple, so don't look at it as simple."

In looking at the makeup of most legislative districts, many people in Congress are on the far left or the far right, not trying to bring common ground, Vincent said, which makes creating balanced policymaking more challenging -- and it's evidenced by the gridlock. Despite the regulatory hurdles and the blemish Macondo created, he urged companies to continue to build positive relationships with the public.

"One of the things we need to remember is that we've taken our development of oil and gas into communities throughout the country. While south Texas has enjoyed the benefits of this development for decades, many other places haven't. Because these communities are new to this we need to take an active role in building relationships. It needs to be a part of your business plan…and it will make a huge difference in our ability to develop the assets this country has."

On the hydraulic fracturing side, the latest buzz is about chemical disclosure. Vincent dismissed the idea as a solution, adding, "Many people behind that disclosure request want to shut down oil and gas development across the country, so they're asking for things that are difficult to provide. You ask Coke and Pepsi to put there formulas out there -- that's very different from asking them to put the ingredients on the bottle."

Contact the author, Bertie Taylor, at btaylor@hartenergy.com.