Dear Senator Warren,
I write on behalf of Range Resources Corporation and our approximately 530 employees in response to the letter you sent to our CEO dated November 23, 2021. As I discussed with Mr. Cohen of your office, he confirmed that your November 23 letter is not part of or based on a formal congressional inquiry or investigation, and we are responding to your letter in reliance on that confirmation.
Before turning to the questions posed in your letter, we are compelled to address the fundamental misunderstandings set out in your letter regarding our Company and its role in providing clean and reliable energy to many Americans. First, Range is proud to be one of the successful independent producers who have delivered vast economic and environmental benefits from the responsible development of domestic natural gas resources, and we invite you and your staff to understand more of our commitment to the United States and our environment by reviewing our most recent Corporate Sustainability Report at www.csr.rangeresources.com.
Second, as you correctly identify in your letter, Range is a natural gas producer, but that is, unfortunately, where the facts end, and the inaccuracies begin. To that end, we wanted to provide you some additional facts which are critically important to understanding the role of natural gas as an essential energy resource for Americans and the entire world.
Fact: Range is engaged in the production of natural gas from the Marcellus Shale in Pennsylvania. https://www.rangeresources.com/operations/
Fact: Range, and other companies that similarly produce natural gas, do not control the price of natural gas. As you know, that would be unlawful. We are a “price taker”. Range sells its product into a domestic market in which we accept the price that is available for our product. We secure sales under short-term and long-term agreements; however, in virtually all such agreements the amount we receive for the sale of natural gas is based on publicly available indices. See Range Resources Corporation 10K.
Fact: The market price for natural gas is set by a myriad of variables, the most fundamental of which is supply and demand. Today, Americans benefit from the use of our own resources in the form of natural gas supplies from areas like the Permian Basin in West Texas, the Haynesville Shale in Louisiana as well as the Marcellus Shale in Pennsylvania. The demand comes from a wide range of uses for natural gas of which exports is just one of many markets.
Fact: U.S. natural gas prices have generally decreased since 2005 as the supply of natural gas produced in the U.S. has been increased by companies like Range. For example, U.S. Natural Gas prices averaged $8.69/MMBtu in 2005, while they averaged $2.03/MMBtu in 2020.
Fact: Natural gas production has increased over 50% in the last ten years, due to innovation and technology through horizontal drilling and hydraulic fracturing, which is a 60+ year old proven technology. American consumers have benefitted greatly from this increased supply as natural gas prices have decreased significantly. To provide additional context, the recent “high” prices of which you write are lower than even the lowest price for natural gas in 2008.
Fact: While natural gas supply has significantly increased as a whole, delays and cancellations of pipeline infrastructure projects have directly impacted supply to many Americans, including your constituents, and the long-term effects could be significant. Areas of New England, including Massachusetts, have been forced to rely on natural gas imports rather than domestic, regional resources of natural gas due to lack of infrastructure,.
Fact: Over the past decade, Americans have benefitted from the abundant supply of natural gas brought to market by Range and other independent producers. U.S. consumers are saving $203 billion annually, or an average of $2,500 for a family of four, thanks to the increased production from shales. However, this same period has been a tremendous challenge for natural gas producers like Range as natural gas and crude oil prices declined to the point of being at or below breakeven levels for many companies, driving hundreds of producers into bankruptcy. At Range, our employees and shareholders saw a dramatic impact to our stock price, which fell from $93 per share in May 2014 to under $2 per share in early 2020 as natural gas prices reached the lowest seasonal prices in over two decades.
To read your November 23 letter is to ignore the facts noted above and the very recent, significantly depressed pricing of natural gas. Your suggestion that we are at a historic “high” is not accurate. Furthermore, past, current and future policies aimed at increasing the cost of producing and transporting natural gas (or stopping it altogether) will only lead to additional costs for consumers, like your constituents. We welcome the opportunity to discuss how thoughtful policies can further America’s energy security, while at the same time providing the world, particularly developing countries, access to clean-burning natural gas that is free of political strain and that will allow them to survive harsh winters and improve their standard of living, while displacing other forms of energy that lead to increased environmental degradation.
Turning to the questions posed in your letter, and in reliance on your representation that your November 23 letter lacks any congressional investigatory authority, we provide the following information:
1. For each of the last ten years, including 2021 to date, please provide the following information:
a. The total amount of natural gas that your company has exported.
b. The percentage of your company’s total natural gas production that was exported.
As described above, Range sells gas into the domestic market to a wide variety of buyers, many of which resell gas to other markets. Range has no way of knowing how much of the natural gas it produces ultimately is exported and sold internationally. As a result, Range cannot respond to this question.
2. For each of the last ten years, including 2021 to date, please provide the following information:
a. Your company’s average profit margin for exported natural gas.
b. Your company’s average profit margin for domestic sales of natural gas.
c. The amount your company has invested in clean, renewable energy.
Range’s profit margins (which are a matter of public record as Range is a public company which files quarterly 10-Qs and annual a 10-K) are not separated by exported natural gas (the amount of which we have no information about as set forth in response to question no. 1) and domestic sales of natural gas. Range is proud to be a producer of clean, reliable fuel for heating and electricity generation and, as a small independent producer, has consistently focused its capital budget on the production of natural gas in an environmentally responsible way.
3. Has your company considered cutting, suspending, or ending exports of natural gas to help ease spiking domestic prices?
As described above, Range doesn’t accept the premise that natural gas prices have been “spiking” and, since Range does not directly determine the amount of natural gas sold to international buyers and transported internationally, the question has no applicability to Range.
4. Have any of your top company executives, in the last decade, been awarded bonuses or other compensation based on increasing exports of natural gas? If so, please provide a list of all such executives and the bonuses or other compensation awarded.
Range’s executive compensation program is annually described in detail in the company’s proxy filings which are readily available at sec.gov. As set forth in such filings, no executive compensation metrics have been established based on the export of natural gas.
5. What other actions has your company taken to help ease spiking domestic natural gas prices?
As described above, it is simply inaccurate to state that natural gas prices have been “spiking” as a review of data available from the EIA demonstrates. Specifically for your constituents, Range encourages you to support development of the necessary pipeline infrastructure to allow supply of domestically produced natural gas to be available to consumers and power generators in your home state11.
The U.S. benefits from abundant natural gas resources. Currently, natural gas prices in Europe and Asia are approximately 6x higher than natural gas prices in the U.S.
Thank you for the opportunity to respond to your letter. If you have any further questions, please let me know.
David P. Poole