406 Dirksen EPW Hearing Room

Harold G. Hamm

Chairman and CEO, Continental Resources, Inc.

Good morning Madam Chairman and Senate Committee Members. My name is Harold Hamm. I am the Chairman of the Board and Chief Executive Officer of Continental Resources, Inc. I am also the Chairman of the Board of the Oklahoma Independent Petroleum Association (1,700 members) and immediate past-President of the National Stripper Well Association, which represents operators of oil wells only capable of producing 10 barrels per day or less.
Continental Resources is a mid-size independent oil and gas exploration and production company headquartered in Enid, Oklahoma. Last year my Company invested over $300 million drilling 180 oil and gas wells in the United States. My professional training is in geology and my job is to find and develop oil and gas; which I have done successfully for the past 35 years.
I want to first state that I am concerned about the impact our human activities have, not only on our planet, but on future generations. As the parent of five children, grandfather of 10 grandchildren, and the CEO responsible for over 350 employees and their families, clearly, we should make reasonable efforts to keep our air and water free from pollution. While I do not believe the science of global warming is proven or settled, energy efficiency and cost-effective deployment of technologies that emit little or no greenhouse gases, such as wind, solar and other renewable energy sources are “no brainers.”
Let’s first talk about The Kyoto Protocol….Only two of the original 15 EU countries will meet their Kyoto Protocol targets. One year after the Protocol was signed, Britain and China’s emissions have steadily been climbing. China’s emissions will eclipse America’s carbon emissions in 2009. Any policy that ignores the fact that developing countries are accelerating their CO2 emissions will doom our children to a lower quality of life as a result.
The Climate Change Stewardship Act would cost the American economy 1.3 million jobs according to Wharton Econometric Forecasting Associates. Through many boom-and-bust periods in the oil patch, I have witnessed the devastating, far-reaching impact of job losses on a family and it is not something that I, nor should you contemplate lightly.
One recommendation with which I strongly disagree is the requirement for fossil fuel producers to purchase allowances equal to the emissions estimated to be released when the fuel is combusted. While characterized as the purchase of an allowance, the economic substance is similar to President Bill Clinton’s BTU Tax proposed in 1993. At that time, Senators from both parties quickly realized the high cost the BTU Tax would have on the US economy and on average American families and that proposal was withdrawn.
The report noted that care should be taken so that policies do not merely push emissions from U.S. facilities to overseas operations. The imposition of this BTU Tax would have that effect because domestic oil and gas production activities would be subject to more costly greenhouse gas emission regulations than other producing countries.
The domestic oil and gas industry already has higher finding and producing costs than other countries from which we import oil and gas. The proposed BTU tax would further disadvantage the industry and lead to a reduction in domestic oil and gas production.
Our domestic stripper wells (those producing 10 barrels of oil per day) would be particularly impacted. These wells have the highest production cost and lowest profit margins. This production is the most stable category of production in the U.S. and has a very, very shallow decline and is, in fact, practically in a stable state. Stripper wells contribute 20% of our domestic production (approximately 1 million barrels per day).
The “upstream” program recommended by the USCAP which requires fossil fuel producers to be covered by allowances that equal the emissions released when the fuel is combusted is exactly the type of costly regulation that will devastate the domestic oil and gas industry without having a direct effect on global greenhouse gas emissions.
The Kyoto Protocol will cost the average family of four $2,700 per year. Our GDP will flatten and jobs will move overseas, yet CO2 emissions will continue to rise, then what will our children’s sacrifices have been for?
Furthermore, the cap-and-trade approach to reduce greenhouse gas emissions has never been implemented on the scale being discussed and could have significant, adverse, and unanticipated effects on the U.S. economy.
Though experts debate whether global climate change is affected by greenhouse gas emissions, we can be certain that allowance systems recommended by USCAP will reduce domestic oil and gas production, increase our dependence on foreign sources of energy and have high costs to the US economy and average American families.
Our priority should be consideration of the direct causes of global warming and action to correct those conditions which can be affected by mankind. Some of those conditions include pollution of the world’s streams, rivers, and oceans, clear-cutting of the vast Equatorial rain forests, denuding of the vegetation across Africa, encroachment of deserts in China, Africa, and the Middle East, and general over-population conditions of the world. The United States continues to be a leader in cutting pollution across the board. In the last three decades we have significantly cleaned up our waterways and cut air pollution by more than half. We have accomplished this while simultaneously growing our economy and increasing energy use.
Climate legislation that costs the American family, the American businessman, and America’s future generations the loss of jobs, a lower quality of life and CO2 emissions that continue to climb is not good policy.