Interior Secretary Ryan Zinke on Tuesday said it was “wasteful” for natural gas to be flared from oil wells, but he wants to find a way to incentivize rather than penalize operators.
Speaking in Houston on the second day of CERAWeek by IHS Markit, Zinke told a friendly crowd it would be better to encourage operators to not flare than to penalize them.
Interior’s Bureau of Land Management was charged under the Obama administration with implementing an associated gas venting and flaring rule. However, the Trump administration has sought to block implementation, a proposal that recently was rejected by federal courts.
"I don't know what the future is, but...that flaring is a waste," Zinke told the audience. “We want to make sure we incentivize capture, and to do that we need pipelines. The permitting process has to be supportive of infrastructure."
One example would be to reduce the government royalty to encourage the gas to be produced, he said.
The Trump administration considers itself a partner to the industry, which is “making American energy great again,” Zinke said.
And the administration wants to ensure it is even greater. Zinke touted Gulf of Mexico Lease Sale 250, scheduled to be livestreamed on March 21 from New Orleans, which would be the largest in history. The second scheduled auction under the Outer Continental Shelf leasing program for 2017-2022 is to include all available unleased areas in federal waters, an estimated 77.3 million acres.
The Lower 48 offers a plethora of oil and gas resources that can be developed faster and for less investment than multi-year offshore drilling prospects, which Zinke acknowledged.
“This sale is going to be a bellwether in many ways,” he said. “We’ll see what the future of the offshore is in comparison to the Permian,” the most active onshore basin in North America.
He poo pooed criticism that the Trump administration is “pro oil and gas” versus protecting the environment. Although the administration is focused on an “all of the above” energy strategy, no form of energy is without “consequence.”
More “environmentally friendly” energy alternatives also have their downside. Solar farms require lots of land, while wind turbines kill 750,000 birds a year, he claimed. And “certainly oil and gas and coal have a consequence on carbon.”
Zinke also attempted to interpret what the president means by "American energy dominance." To the Interior secretary, the term means producing energy in an environmentally responsible way while increasing economic growth for the United States. There also is a “moral component” to ensuring U.S. energy security.
"I don't want to see your children to have to deploy overseas to have to fight for energy...Affordable, readily available energy promotes peace,” he said.
The Interior chief also defended Trump’s tentative decision to impose tariffs on steel and aluminum imports, a proposal that has drawn withering criticism from the oil and gas industry and its allies.
Asked whether he is concerned about the impact on companies, Zinke said he agreed with the president.
“National security-wise, you have to have produced steel and aluminum in this country, and that industry has atrophied so far.”
Longer term, “tariffs generally disrupt free markets and raise costs, but it is also incumbent on the American steel companies themselves. They have to re-fit and rebuild,” in the same way the oil and gas industry did when oil prices plummeted in late 2014.