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DOE Study Assesses Impact of Regulatory, Environmental Constraints on Gas Supply

About 30 major regulatory and environmental impediments to natural gas production have taken substantial amounts of supply off the market at a time of rapidly increasing gas demand, according to a new report titled "Environmental Policy and Regulatory Constraints to Natural Gas Production" by the Department of Energy's (DOE) Argonne National Laboratory.

The Coastal Zone Management Act, which gives states authority over federally approved projects affecting their coastlines, "caused duplications and costly delays to federal leasing and production activities," effectively limiting access to as much as 362 Tcf of gas, the report estimated. Permitting delays at the Bureau of Land Management (BLM) have affected as much as 311 Tcf of gas resources and the National Environmental Policy Act has led to unnecessary project delays and lawsuits affecting as much as 464.5 Tcf of potential gas production, it said.

The Endangered Species Act, U.S. Forest Service restrictions, outdated BLM land use plans, BLM lease stipulations, monument designations, Outer Continental Shelf moratoria, permit restrictions, the "Roadless Rule," and many other regulatory and environmental constraints exist, each taking a chunk out of potential supply, according to the report.

Meanwhile, the Energy Information Administration estimates that domestic natural gas consumption will increase to 35 Tcf by 2025 from 23 Tcf in 2000. The factors driving this increase also continue to mount. Air pollution regulations favor clean burning natural gas over coal, for example.

The purpose of the DOE study is to provide information on existing and potential constraints to increased gas supply and development, both in the long and short terms so that the DOE can "develop, propose and support policies that eliminate or reduce negative impacts of such constraints, or issues, while continuing to support the goals of environmental protection," the agency said.

The report builds on 1999 and 2003 studies by the National Petroleum Council (NPC) and the 2003 interagency study of access restrictions to resources on federal lands mandated by the Energy Policy and Conservation Act (EPCA). The study goes further than the NPC and EPCA studies, however, by considering not only access restrictions but drilling, production, and transportation constraints as well. It also identifies constraints that apply to both federal and nonfederal lands -- onshore and offshore. Existing and possible future regulations developed and implemented by agencies such as the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers that could impede increased natural gas production are also included.

While the study does not recommend policy options, it does provide a basis for a possible follow-up study that would suggest means for mitigating the constraints.

For more information go to the Argonne National Laboratory website at http://www.ead.anl.gov/pub/index.cfm.

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