EPA Regulation and Crucifixion

Fox News reports that EPA’s Region 6 administrator has apologized for comparing his agency’s enforcement strategy to Roman crucifixion. Of course, the 2010 remarks by EPA’s Al Armendariz, were captured on video, which you can see here.

Despite Armendariz’s apology, U.S. Sen. Jim Inhofe of Oklahoma, which is in the EPA region that Armendariz administers, is investigating. Inhofe said the crucifixion comments suggest a campaign of “threats” and “intimidation.”

Certainly, one poorly chosen analogy from a single regional administrator doesn’t indict an entire agency – though it’s concerning that this fellow, with his apparent zest for enforcement, has had oversight for the energy-rich Eagle Ford and Barnett shale areas of Texas. Talk about a chilling effect.

We hope that Armendariz’s approach to regulation is atypical. Industry prides itself on working as a partner with regulators. Perhaps EPA Administrator Lisa Jackson had some of her agency’s more enthusiastic members in mind when she acknowledged (here and here) that state regulation and state regulators should take the lead when it comes to producing energy from shale with hydraulic fracturing.

The states are best situated in terms of proximity, familiarity and perhaps temperament to regulate oil and natural gas development via fracking. They know the geology, hydrology and other local/regional conditions. With cooperation from industry and with the help of organizations like STRONGER, this is oversight best performed by the states.

Let’s not overburden them and industry – threatening the obvious benefits from shale energy production – by adding unnecessary, duplicative regulatory layers, which Wyoming Gov. Matt Mead argued in a recent letter to the Interior Department.

View the original article here

Job Creation and the Effects of Regulation

A follow-up to our follow-up on a Washington Post article that dismissed the effects of increased U.S. oil production on global crude oil markets. The story also took shots at the oil and natural gas industry’s ability to create jobs, as well as industry assertions about the potential effect of a new gasoline standard on refineries.

Let’s start with jobs. A Wood Mackenzie study released last fall said that with the right policies the oil and natural gas industry could create 1.4 million new jobs by 2030. Here’s what the job-creation growth looks like in a chart from that study:

As it has done in previous articles, the Post suggested the projection isn’t valid because it includes direct, indirect and “induced” jobs – “everything from day-care workers to valets to rocket scientists.” We discussed that here and here. Kyle Isakower, API vice president for policy analysis:

“Estimates include induced economic benefits, as do the administration and its supporters’ estimates of green jobs created by the stimulus package. Including estimates of induced employment effects is a common practice in economic modeling. Increased economic activity in one sector provides more income to the economy that will have a ripple effect in other sectors.”

Isakower continues:

“Increased oil and gas exploration requires more steel for well casings. More steel means more steel foundry workers. As the steel mill expands and hires workers, those workers’ incomes increase and they spend more on other goods and services – housing, cars, food, etc. So when a new sandwich shop opens up across the street from the steel mill, those workers hold real jobs that would not exist without the increase in oil and gas development. I doubt any policymaker wants to tell any of these people that their jobs aren’t real, or that they don’t matter.”

This isn’t theory. It’s happening in states including North Dakota, Pennsylvania, Texas and Ohio, where oil and natural gas development is creating boom conditions in state and regional economies.

Now, as for the potential connection between increased regulation and refinery closures, the Post wrote:

“API has also said new EPA standards will mean high gas costs. An API study said standards for low-sulfur gasoline would add 12 to 25 cents a gallon to the price and force the shutdown of four to seven refineries. However, a new study by API’s consultants, Baker & O’Brien, says EPA’s new standards would add six to nine cents a gallon and that no refineries would have to close. George R. Schink, managing director at Navigant Economics, testified at a congressional hearing that the standards would add 2.1 cents a gallon.”

Isakower said the Baker & O’Brien findings changed because EPA, which originally was considering lower sulfur and gasoline volatility (or RVP) requirements – leading to the 12 to 15 cents per gallon estimate of increased production costs – later decided it would not include an RVP reduction:

“We asked Baker & O’Brien to revise their study to estimate increased costs for the lower sulfur requirement alone, which resulted in the 6 to 9 cents estimate. Given EPA’s lack of transparency in the early stages of this rulemaking, and their change in regulatory plans, the differences in Baker & O’Brien’s estimates are to be expected.”

And Schink? Isakower:

“(His) testimony that the costs for gasoline production would only increase 2.1 cents per gallon simply  averaged Baker & O’Brien’s cost estimate across all refineries. However, the Baker & O’Brien study estimates the marginal cost for those refineries that must upgrade to meet the new requirements, so his analysis is not directly comparable to the Baker & O’Brien marginal cost estimate. Refiners compete with one another – those that do not have to upgrade will not share in the cost of the upgrades for the facilities that do, as Schink’s testimony suggests.”

View the original article here

Environmental Experts Boost State Regulation of Fracking

The New York Times’ Joe Nocera has a column based on an interview with Fred Krupp, a key member of the Energy Department’s special subcommittee on hydraulic fracturing – key because Krupp’s also president of the Environmental Defense Fund. Nocera writes:

"Unlike others in the environmental movement, [Krupp] and his colleagues at the Environmental Defense Fund don’t want to shut down fracking; rather, their goal is to work with the states where most of the shale gas lies and help devise smart regulations that would make fracking environmentally safer."

Nocera discusses the need to improve the capture of leaked methane from fracked natural gas wells, which certainly is an industry priority. Nocera then asks Krupp whether the federal government should take the regulatory lead, presuming that would foster greater uniformity and tougher enforcement. He writes:

"Krupp frowned. “Given the dysfunction in D.C., a state-by-state approach will be more effective,” he said. “We need to focus on getting the rules right, and complied with, in the 14 states which have 85 percent of the onshore gas reserves.”

We agree. States are best situated to regulate the development of natural gas from shale because they’re closest to drilling operations and they know the geology, hydrology and other physical characteristics that vary from state to state.

In this view Krupp has important company: EPA Administrator Lisa Jackson. Earlier this month Jackson told a campus forum that fracking regulations don’t have to extend beyond the state level – following on an interview last fall in which she said the states are doing a good job regulating hydraulic fracturing and that “we have no data right now that leads us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”

We also agree on the need to get the rules right. Oil and natural gas companies have set high, constantly improving standards and are working with local communities and states to run transparent, responsible operations.

It’s in everyone’s interest to get this right, to respect the environment while tapping America’s vast shale natural gas resources, creating jobs and generating economic growth along the way. The country’s oil and natural gas companies are on it.

View the original article here

Environmental Experts Boost State Regulation of Fracking

The New York Times’ Joe Nocera has a column based on an interview with Fred Krupp, a key member of the Energy Department’s special subcommittee on hydraulic fracturing – key because Krupp’s also president of the Environmental Defense Fund. Nocera writes:

"Unlike others in the environmental movement, [Krupp] and his colleagues at the Environmental Defense Fund don’t want to shut down fracking; rather, their goal is to work with the states where most of the shale gas lies and help devise smart regulations that would make fracking environmentally safer."

Nocera discusses the need to improve the capture of leaked methane from fracked natural gas wells, which certainly is an industry priority. Nocera then asks Krupp whether the federal government should take the regulatory lead, presuming that would foster greater uniformity and tougher enforcement. He writes:

"Krupp frowned. “Given the dysfunction in D.C., a state-by-state approach will be more effective,” he said. “We need to focus on getting the rules right, and complied with, in the 14 states which have 85 percent of the onshore gas reserves.”

We agree. States are best situated to regulate the development of natural gas from shale because they’re closest to drilling operations and they know the geology, hydrology and other physical characteristics that vary from state to state.

In this view Krupp has important company: EPA Administrator Lisa Jackson. Earlier this month Jackson told a campus forum that fracking regulations don’t have to extend beyond the state level – following on an interview last fall in which she said the states are doing a good job regulating hydraulic fracturing and that “we have no data right now that leads us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”

We also agree on the need to get the rules right. Oil and natural gas companies have set high, constantly improving standards and are working with local communities and states to run transparent, responsible operations.

It’s in everyone’s interest to get this right, to respect the environment while tapping America’s vast shale natural gas resources, creating jobs and generating economic growth along the way. The country’s oil and natural gas companies are on it.

View the original article here

Hydraulic Fracturing and Regulation

Shale oil and natural gas development in the United States has been a clear economic success story during a time when successes have been few.  Our industry has been producing energy, jobs and revenue at a strong clip.  And yet we’ve only begun to realize the benefits of energy from shale.  

The industry is committed to producing this energy safely and responsibly, and in addition to strong industry standards, there are appropriate federal and state regulations in place for oil and natural gas operations, including those that employ hydraulic fracturing.  And many state rules have recently been strengthened. 

So it is a concern that there are now 10 separate federal government agencies looking to study and potentially add new and unnecessary layers of regulations on hydraulic fracturing, the technology on which 70 percent of future gas wells depend. 

Unnecessary layers of federal regulation could increase costs and delays for operators, which could harm new projects, sacrificing thousands of new jobs and depriving government of billions in revenue.

We are strongly encouraging policymakers and elected officials to keep shale energy development moving forward.  So during this election year, we will encourage voters to learn more about energy and about the candidates’ positions on energy policies, and to make energy a ballot box decision in 2012.

The benefits of shale energy development are indisputable.

Just yesterday, a new study in Ohio said development of the Utica Shale could mean 65,000 new jobs in the next two years.In Pennsylvania, development of the Marcellus Shale created 72,000 new jobs from late 2009 to early 2011.   In North Dakota, shale development helped drive down unemployment in the state to the lowest level in the nation, helped produce a state budget surplus of $1 billion, and elevated North Dakota to the nation’s fourth largest oil producer.  In Arkansas, shale development has boosted state revenue by more than $1.5 billion over the last few years. Houston is the first metropolitan area in the United States to regain all of the jobs lost during the recession, an analysis by the Texas Workforce Commission has concluded.  Many of the new jobs likely relate to the oil and natural gas industry and to shale development.A study by former Census officials of U.S. household income in nine geographic regions between 2007 and 2010 found it increasing only in the four-state oil patch region: Louisiana, Texas, Oklahoma and Arkansas – all centers of shale energy development.Nationwide, shale gas development was supporting 600,000 jobs in 2010, according to a December IHS-Global Insight report.Also, natural gas prices have fallen by half from their level three years ago.  That is benefiting families that heat their homes with natural gas, as well as businesses and consumers that buy their electricity from utilities that generate it with natural gas.  Low natural gas prices are also benefiting chemical manufacturers and other businesses that use natural gas a raw material, and they are encouraging businesses to locate new facilities in America rather than overseas.  Dow Chemical, for example, plans to reopen an ethylene production plant near Hahnville, Louisiana, this year and build another one on the Gulf coast by 2017.  It also plans to build a new propylene plant in Texas by 2015.

And there is every reason to believe we could see more of all of these benefits in the future.  The IHS-Global Insight study estimates that the shale gas industry alone could support 1.6 million jobs by 2035, driven by capital investment approaching $2 trillion.

Finally, an analysis from PricewaterhouseCoopers concludes that shale gas development – and more affordable natural gas supplies – could support about one million U.S. manufacturing jobs in 2025.

To realize the full extent of this promise, therefore, we must be thoughtful about any changes to an already robust regulatory structure for hydraulic fracturing.  We don’t need unnecessary or duplicative rules from multiple federal agencies. 

The administration has been advocating more oil and natural gas development.  It has also called for streamlining regulations.  We believe they could do much to achieve both objectives by taking a critical look at what its various agencies are proposing to do on hydraulic fracturing and shale energy development. 

The direction they’re headed in won’t be conducive to the development of energy we know our nation will need and the production of which could provide tremendous additional benefits to our economy. The administration needs to reconsider the wisdom of adding unnecessary layers of federal regulation on this truly game-changing opportunity.  A significant change of course is needed.

View the original article here

Hydraulic Fracturing and Regulation

 

Shale oil and natural gas development in the United States has been a clear economic success story during a time when successes have been few.  Our industry has been producing energy, jobs and revenue at a strong clip.  And yet we’ve only begun to realize the benefits of energy from shale.  

The industry is committed to producing this energy safely and responsibly, and in addition to strong industry standards, there are appropriate federal and state regulations in place for oil and natural gas operations, including those that employ hydraulic fracturing.  And many state rules have recently been strengthened. 

So it is a concern that there are now 10 separate federal government agencies looking to study and potentially add new and unnecessary layers of regulations on hydraulic fracturing, the technology on which 70 percent of future gas wells depend. 

Unnecessary layers of federal regulation could increase costs and delays for operators, which could harm new projects, sacrificing thousands of new jobs and depriving government of billions in revenue.

We are strongly encouraging policymakers and elected officials to keep shale energy development moving forward.  So during this election year, we will encourage voters to learn more about energy and about the candidates’ positions on energy policies, and to make energy a ballot box decision in 2012.

The benefits of shale energy development are indisputable.

Just yesterday, a new study in Ohio said development of the Utica Shale could mean 65,000 new jobs in the next two years.In Pennsylvania, development of the Marcellus Shale created 72,000 new jobs from late 2009 to early 2011.   In North Dakota, shale development helped drive down unemployment in the state to the lowest level in the nation, helped produce a state budget surplus of $1 billion, and elevated North Dakota to the nation’s fourth largest oil producer.  In Arkansas, shale development has boosted state revenue by more than $1.5 billion over the last few years. Houston is the first metropolitan area in the United States to regain all of the jobs lost during the recession, an analysis by the Texas Workforce Commission has concluded.  Many of the new jobs likely relate to the oil and natural gas industry and to shale development.A study by former Census officials of U.S. household income in nine geographic regions between 2007 and 2010 found it increasing only in the four-state oil patch region: Louisiana, Texas, Oklahoma and Arkansas – all centers of shale energy development.Nationwide, shale gas development was supporting 600,000 jobs in 2010, according to a December IHS-Global Insight report.Also, natural gas prices have fallen by half from their level three years ago.  That is benefiting families that heat their homes with natural gas, as well as businesses and consumers that buy their electricity from utilities that generate it with natural gas.  Low natural gas prices are also benefiting chemical manufacturers and other businesses that use natural gas a raw material, and they are encouraging businesses to locate new facilities in America rather than overseas.  Dow Chemical, for example, plans to reopen an ethylene production plant near Hahnville, Louisiana, this year and build another one on the Gulf coast by 2017.  It also plans to build a new propylene plant in Texas by 2015.

And there is every reason to believe we could see more of all of these benefits in the future.  The IHS-Global Insight study estimates that the shale gas industry alone could support 1.6 million jobs by 2035, driven by capital investment approaching $2 trillion.

Finally, an analysis from PricewaterhouseCoopers concludes that shale gas development – and more affordable natural gas supplies – could support about one million U.S. manufacturing jobs in 2025.

To realize the full extent of this promise, therefore, we must be thoughtful about any changes to an already robust regulatory structure for hydraulic fracturing.  We don’t need unnecessary or duplicative rules from multiple federal agencies. 

The administration has been advocating more oil and natural gas development.  It has also called for streamlining regulations.  We believe they could do much to achieve both objectives by taking a critical look at what its various agencies are proposing to do on hydraulic fracturing and shale energy development. 

The direction they’re headed in won’t be conducive to the development of energy we know our nation will need and the production of which could provide tremendous additional benefits to our economy. The administration needs to reconsider the wisdom of adding unnecessary layers of federal regulation on this truly game-changing opportunity.  A significant change of course is needed.

View the original article here

Environmental Experts Boost State Regulation of Fracking

 

The New York Times’ Joe Nocera has a column based on an interview with Fred Krupp, a key member of the Energy Department’s special subcommittee on hydraulic fracturing – key because Krupp’s also president of the Environmental Defense Fund. Nocera writes:

"Unlike others in the environmental movement, [Krupp] and his colleagues at the Environmental Defense Fund don’t want to shut down fracking; rather, their goal is to work with the states where most of the shale gas lies and help devise smart regulations that would make fracking environmentally safer."

Nocera discusses the need to improve the capture of leaked methane from fracked natural gas wells, which certainly is an industry priority. Nocera then asks Krupp whether the federal government should take the regulatory lead, presuming that would foster greater uniformity and tougher enforcement. He writes:

"Krupp frowned. “Given the dysfunction in D.C., a state-by-state approach will be more effective,” he said. “We need to focus on getting the rules right, and complied with, in the 14 states which have 85 percent of the onshore gas reserves.”

We agree. States are best situated to regulate the development of natural gas from shale because they’re closest to drilling operations and they know the geology, hydrology and other physical characteristics that vary from state to state.

In this view Krupp has important company: EPA Administrator Lisa Jackson. Earlier this month Jackson told a campus forum that fracking regulations don’t have to extend beyond the state level – following on an interview last fall in which she said the states are doing a good job regulating hydraulic fracturing and that “we have no data right now that leads us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”

We also agree on the need to get the rules right. Oil and natural gas companies have set high, constantly improving standards and are working with local communities and states to run transparent, responsible operations.

It’s in everyone’s interest to get this right, to respect the environment while tapping America’s vast shale natural gas resources, creating jobs and generating economic growth along the way. The country’s oil and natural gas companies are on it.

View the original article here