NGI The Weekly Gas Market Report / NGI All News Access

Message to New Congress, Administration: 'Do No Harm'

The oil and natural gas industry's wish list for the new Congress, Obama administration and the New Year is very short -- "do no harm," say industry representatives in Washington, DC. They indicated that their "wants and expectations" will be more moderate due the changing of the guard at both ends of Pennsylvania Avenue.

"Do no harm. That would be at the top of our list," said Rayola Dougher, senior economic adviser for the American Petroleum Institute (API), which represents major producers. "Industry is not saying 'give us something, give us something.'"

Producers already got something of an early Christmas gift as the president-elect took a windfall profits tax off the table last week, possibly because it's hard to see any windfalls on the horizon (see separate story).

Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America (INGAA), echoed the "do no harm" sentiment. "We're afraid of any statutory changes that would be harmful" to interstate gas pipelines.

INGAA is urging policymakers not to take a "step backwards" with respect to the siting and approval process for natural gas pipeline facilities. Edwards noted that Rep. Timothy Bishop (D-NY) introduced a bill (HR 6720) earlier this year to establish a commission to consider changing the approval and siting process for gas pipelines, potentially taking the authority away from the Federal Energy Regulatory Commission (FERC) and putting it in state and regional hands, as is currently done with electric transmission lines.

"That's why we're building almost no electric transmission [facilities] in this country," he said, adding that altering the existing process for gas pipelines -- when it's not broken -- would be disastrous for gas infrastructure.

The original target of the House bill was liquefied natural gas (LNG) facilities, but in their "zeal" to block LNG, Bishop and the bill's cosponsors are attempting to alter the siting and approval process for gas pipelines and storage, according to Edwards.

In a related item on his wish list, he believes improvements are needed in the siting process for gas facilities "so you don't have a single state able to veto a multi-state project that has been approved by FERC."

This is a "short but very concentrated list that will require a lot of effort," Edwards said. "We're tempering our wants and expectations because it's a new Congress and administration."

INGAA's wish list for the Obama administration "is just getting them to understand the importance of natural gas in energy and environmental policies that they want to implement." He believes the incoming administration will be open to input from the gas industry. Dougher said the API is "looking forward to working with the new administration...We can see a lot of common area to proceed."

By "do no harm," Dougher said the API means "do not impose new taxes [on producers]...allow us to make new investments" to find and drill for oil and natural gas, she said.

Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA), said his group's chief objective is to prevent any harm to tax policy for producers, including the enactment of new taxes or the elimination of existing tax benefits in the form of intangible drilling and development costs. While prospects of a windfall profits tax seems to have disappeared, producers are afraid Congress may still seek to gain additional revenues from the industry.

The "do no harm" also extends to reinstating the moratorium or imposing restrictions on development in the Outer Continental Shelf (OCS), Dougher said (see NGI, Nov. 10). She said some in Congress are proposing to restrict drilling to 50 miles and beyond from shorelines. That would take off the table 90% of the available resources off the West Coast, as well as one-third of the available resources off the East Coast.

Congress is in "somewhat of a quandary" on the offshore issue, said the IPAA's Fuller. "I don't think they know quite where they want to go" with respect to the OCS. He doesn't expect lawmakers to "rush in" to reimpose the moratorium, but he anticipates there will be a "lively debate" early on in the new Congress on the issue.

Fuller also expects that Democrats will revisit the "use-it-or-lose-it" strategy for leases. In effect, this would force producers to return oil and gas leases that aren't being pursued in a due diligent fashion. He is concerned that Congress may try to define due diligence, which he said could turn out to be "reasonable or unworkable."

He also noted that development opponents are seeking to either "pare back or modify or eliminate" the categorical exclusions for onshore oil and gas producers, which would slow drilling activity. Under categorical exclusions, certain activities by onshore producers, such as maintenance and drilling at pre-existing sites, are exempt from the lengthy National Environmental Policy Act review process.

Fuller further expects the new Congress to raise issues associated with hydraulic fracturing, a technique used to stimulate production of oil and gas.

INGAA's Edwards believes Congress will act on major energy legislation in 2009 that will "involve a lot of input from the new administration." He expects the energy measure or measures to focus on energy efficiency, aggressive development of alternative energy and transmission of electricity produced from renewable sources, among other issues.

But Dougher doesn't see Congress immediately turning to energy when it returns in January. "I think the new Congress will be tied up with the economy."

Will there be a repeat of the partisan bickering between Democrats and Republicans in 2009? "To me it's all a question of the extent to which Democrats in both chambers are willing to reach across the aisle to Republicans," Edwards said.

With the runoff win of Sen. Saxby Chambliss (R-GA) last Tuesday, the Democrats' hopes of obtaining a filibuster-proof majority of 60 members in the Senate died. But they remained undeterred, saying they have the support to fend off GOP efforts to derail major legislation.

"The Democratic margins in the Senate are much, much better so the likelihood of filibusters [by Republicans] being successful will be diminished," said Bill Wicker, a spokesman for Sen. Jeff Bingaman (D-NM), chairman of the Senate Energy and Natural Resources Committee.

Senate Democrats currently hold 58 seats, including two by independents who routinely caucus with the Democrats. They could gain another seat in Minnesota, where Sen. Norm Coleman and Democrat Al Franken are sweating out a recount. All told, Democrats gained seven new seats in the Senate in the most recent elections.

The Democrats' failure to gain a filibuster-proof majority "will assure that any kind of major legislation that's passed in the Senate has a modicum of bipartisan support," Edwards said. "Even if they had gained 60 votes, it would have been difficult to pass a Democrats-only bill," especially one dealing with energy and environmental issues, which usually break down along regional rather than party lines, he said.

The Senate Democratic caucus "is not a monolith" voting one way on all issues, but rather "it is 58 different senators with different opinions."

The reason that Senate Democrats and Republicans were deadlocked on so many issues this past year, including energy, was that the chamber was "so evenly divided" between the two parties, Wicker said. Democrats had 51 seats, with Republicans holding 49. But the margin between the two parties going into the next Congress is much larger -- 17 seats.

In addition to the independents, Wicker believes there are a number of "fairly progressive, open-minded Republicans" who are up for reelection in two years and don't want to obstruct the Obama administration that will side with Democrats.

Republicans currently have 41 seats in the Senate, with the hope of gaining one more in Minnesota. Senate Minority Leader Mitch McConnell (R-KY), who faced a tough election himself in November, has said holding 41 seats is critical to forcing Democrats to reach compromises, not to block legislation, the Washington Post reported.

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus