Report on Oil and Natural Gas Industry Misses Mark

By Bob McCarty

One might think an accomplished journalist like Armen Keteyian capable of providing objective coverage of the oil and gas industry. Unfortunately, the chief investigative reporter -- and former sports reporter -- appears to have allowed personal bias and/or professional ignorance to get in the way of the facts in his report that appeared on the CBS Evening News Monday (see video here).

Not only does he criticize oil companies for drilling on only one-third of the available acreages they've leased in the United States, but he verbally scolds them for developing those leases only when it is profitable to do so.

A statement like that one convinces me Keteyian knows even less about the oil and natural gas industry -- and, perhaps, about business in general -- than I thought.

Oil and natural gas companies can no more afford to drill on every leased acre any more than major league baseball team owners can afford to pay each minor league player in his farm system a seven-figure salary. Why? Because there is no guarantee of turning a profit in either drilling wells or training ballplayers.

If success was guaranteed with every drill bit lowered into the ground, there would be no use for the term, "dry hole." If success was guaranteed at the ball park, every player would be an All-Star. There is, however, no guarantee of success in either endeavor. Not by a long shot!

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FYI: I grew up in the heart of the nation's oil and gas country as the son of a man who spent more than 30 years as an independent petroleum geologist on the plains of Oklahoma and Kansas. As I noted in a post Monday morning, I am in Western Colorado today and tomorrow as a guest of the American Petroleum Institute and The Williams Companies to gain first-hand knowledge of the latter's oil and natural gas operations in the Piceance Basin. I'll report on my visit in posts later this week.

-- Bob McCarty Writes