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Obama's State of the Union Supports Shale Gas Development

President Obama, in his annual State of the Union speech Tuesday night, for the first time issued a strong call for development of domestic natural gas and oil as part of "an all-out, all-of-the-above strategy that develops every available source of American energy."

Devoting more time to favorable mention of fossil fuels than he ever has before, Obama proclaimed that "we have a supply of natural gas that can last America nearly 100 years. My administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. America will develop this resource without putting the health and safety of our citizens at risk.

"Nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we've opened millions of new acres for oil and gas exploration...Right now, American oil production is the highest that it's been in eight years. That's right -- eight years. Not only that -- last year, we relied less on foreign oil than in any of the past sixteen years.

"But with only 2% of the world's oil reserves, oil isn't enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy -- a strategy that's cleaner, cheaper and full of new jobs."

To develop that American energy the president said he was "directing my administration to open more than 75% of our potential offshore oil and gas resources." Some industry watchers noted that the pledge was the same as the long-term leasing program already announced by the Interior Department, but that didn't dim natural gas industry elation at the unprecedented praise.

Some who were attempting to discern the muscle behind the message saw it as an indication the administration would not come down too hard on hydraulic fracturing (fracking) rules. Tudor, Pickering, Holt and Co. analysts said the president's plug for developing domestic natural gas and oil "takes some of the target off the back of hydraulic fracturing...domestic production growth from either commodity isn't happening without fracturing."

While promoting natural gas Obama reiterated the administration's position for requiring disclosure of chemicals used in fracking, saying "the development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don't have to choose between our environment and our economy."

But, there was no mention of any additional restrictions on drilling. Chemicals disclosure already is advancing with individual state rules and a website supported by the industry, fracfocus.org, where companies voluntarily disclose their chemical use.

The president's new recognition of natural gas was part of his strategy to support all forms of domestic energy. He gave the federal government some credit for shale gas development and used it as a lead-in to a reiteration of his support for renewable energy incentives.

"It was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock -- reminding us that government support is critical in helping businesses get new energy ideas off the ground."

Even the repeat of his usual refrain calling for an end to oil and gas subsidies, thrown in toward the end of the speech almost as an after-thought, didn't dim the industry's (irrational?) exuberance.

Natural Gas Supply Association President Skip Horvath said the industry "stands ready to meet the challenge laid down by the president to help natural gas realize its potential as a key part of U.S. energy policy." And, America's Natural Gas Alliance pointed out "the president said -- our nation does not have to choose between economic growth and environmental stewardship. That indeed is the promise of abundant, American natural gas."

Among others, the American Gas Association (AGA), Interstate Natural Gas Association of America (INGAA), National Association of Manufacturers (NAM), American Chemistry Council (ACC), Alliance to Save Energy and Consumer Energy Alliance (CEA) all gave a thumb's up to portions of the speech, but some praise carried the caveat that there needs to be more action behind the President's words.

Calling natural gas "a fuel in the right place, at the right time," AGA CEO Dave McCurdy praised Obama's push for gas's role in the nation's energy future -- both in the address to a joint session of Congress and in his recent jobs report. INGAA also commended the recognition for gas and the role it can play.

"We appreciate President Obama for recognizing the role of domestic natural gas as a pillar of U.S. energy policy, and we urge him to remember the critical role pipelines play in bringing this vital energy supply to market," said INGAA CEO Don Santa.

While giving Obama kudos for focusing on jobs and energy security by boosting domestic energy production NAM CEO Jay Timmons said the administration's decision earlier this month to deny a permit to the proposed Keystone XL oil pipeline from Canada to the Gulf of Mexico "killed the promise of nearly 20,000 manufacturing and construction jobs" (see Shale Daily, Jan. 19). Timmons said the President has the opportunity to create jobs by eventually approving the controversial project.

"The Obama administration must take action to put an end to the rampant overregulation and overreach by the National Labor Relations Board and the Environmental Protection Agency," Timmons said.

ACC CEO Cal Dooley said both energy and manufacturing are keys to "any blueprint for a stronger economy." Dooley said NAM and the 780,000 manufacturing employees it represents are "part of the answer" for meeting the energy challenges the president referred to in his more than one-hour speech.

Officials with the coal industry said they felt ignored. Steve Miller, CEO of the American Coalition for Clean Coal Electricity, characterized Obama's speech as being most notable for what it left out -- "any mention of coal, America's dominant source of electricity." Miller said it seemed "inconceivable that any national goals of creating jobs, rebuilding U.S. manufacturing and keeping energy affordable for our families and businesses can be achieved without domestically produced coal playing a central role."

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