A vast majority of the production in the United States comes from small independent oil and gas companies.
During an April 27, 2011, interview with Stuart Varney of Fox News, Rep. Dan Boren, D-Okla., argued against eliminating certain tax breaks for oil companies -- an idea that had gained support in recent weeks as gasoline prices soared nationwide. Boren argued that the biggest financial pain from ending such tax breaks would be felt by smaller companies like those based in his oil-rich state. The tax breaks, he said, "go to small independent companies like we have in Oklahoma. Did you know a vast majority of the production in the United States comes from small independent oil and gas companies? And the new rigs that are … drilling right now in the United States, they are not the ExxonMobils of the world. They are the Devons, the Chesapeakes, and even smaller companies that are based in Oklahoma that are employing a lot of … Democrats (in) blue-collar jobs. And the president needs to understand that." We wondered whether "small independent oil and gas companies" actually account for "a vast majority of the production in the United States." We turned to the Independent Petroleum Association of America, the trade group that represents independent oil and gas companies. They pointed us to a study the group commissioned from the consulting firm IHS Global Insight and released earlier this month. The study compared the reach of the "independent" sector to the bigger firms in the industry. It defined independents as "all North American operators in the lower 48 states and Alaska, excluding BG, BP, Chevron, ConocoPhillips, ENI, ExxonMobil, Hess, Marathon, Murphy, Occidental, Petrobras, Repsol, Shell, Statoil, and Total." Using the statistical tables provided, we calculated a few relevant percentages. We’ll summarize them here: U.S. oil and gas production for 2010 (amount produced) Onshore: Independents accounted for 72 percent of production Offshore: Independents accounted for 42 percent of production Total: Independents accounted for 67 percent of production U.S. oil and gas production for 2010 (dollar value) Onshore: Independents accounted for 70 percent of value Offshore: Independents accounted for 37 percent of value Total: Independents accounted for 62 percent of value So independents accounted for between 62 percent and 67 percent of domestic oil and gas production in 2010. That’s a healthy majority, but we think Boren’s description of it as "a vast majority" is exaggerated. There’s another factor to consider. Boren said he was referring to "small independent oil and gas companies." The statistics above certainly include some of those smaller companies, but it also includes some that aren’t so small. These include the two that Boren specifically mentioned. Devon Energy Corp. reported $9.9 billion in total revenue and $4.6 billion in net income in 2010, while Chesapeake Energy Corp reported $9.4 billion total revenue in 2010 and $1.8 billion in net income. Both companies are small compared to, say, ExxonMobil Corp ($105 billion in revenues, $9.3 billion in net income for 2010), but they’re hardly run out of someone’s basement. So we think the suggestion that those companies qualify as "small independent oil and gas companies" is misleading. Ultimately, Boren makes a valid point that a majority of U.S. oil production comes not from the biggest multinational oil companies but from independent firms. Still, it’s not a "vast majority," as he said, and some of the firms in the "independent" category -- including the two he cited by name -- are hardly what most people would consider "small." On balance, we rate Boren’s statement Half True.
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