Natural gas groups Wednesday said they were hopeful the Obama administration will provide a more cohesive energy policy during the president’s second term, at the same time urging various industry segments to speak to lawmakers and the public with one voice on hydraulic fracturing (fracking).
“What we [gas groups] have to do…is collectively [band] together” and tell leaders and the public “the real story” to dispel the “unsubstantiated fear” associated with fracking, said Regina Hopper, president of America’s Natural Gas Alliance (ANGA), during the State of the Energy Industry Forum sponsored by the United States Energy Association in Washington, DC.
“It is really important that we speak collectively. When a mother calls me in New York and says, ‘I’m worried that this will affect my [family],’…It’s important that we have conversations with these people and not allow ourselves to be caught up” in disputes with activists. If “you can figure out a way to collectively talk with them, it makes our job more beneficial.”
This strategy would counteract the “activists [who are] out there deliberately spewing false facts, false information” about fracking, said Skip Horvath, president of the Natural Gas Supply Association, which represents gas producers.
Hopper said her group is continuing to push for fracking in New York (see Shale Daily, Dec, 5, 2012). “It’s a very difficult political situation for the governor in New York.”
Both Hopper and Horvath expressed concerns about the Environmental Protection Agency’s (EPA) multi-year review of the potential risks of fracking on drinking water (see Shale Daily, Dec. 24, 2012). The agency study is due in 2014.
“We want that study to be successful,” she said, adding that the companies that ANGA represents “take their responsibilities seriously.” However, “what we have seen [is] that there are significant questions around the study protocols.”
Added Horvath, “If the EPA study were to be science-based, we wouldn’t have to worry about it. But we have seen the EPA put out things…[where] the science was not good science. So that gives us pause. We’re worried about that.”
He doesn’t foresee Congress addressing this year the issue of whether the federal government or the states should regulate fracking. “The states are doing such a good job of regulating fracking” of shale.
“What I do hear on [Capital] Hill is about LNG [liquefied natural gas] exports. Now that is a hot issue,” Horvath said. A recent Department of Energy report found that LNG exports would be a “net benefit” to the U.S. economy (see Shale Daily, Dec. 10, 2012), but several prominent congressional lawmakers are cautious about LNG exports or oppose them outright because they contend that they would increase domestic gas prices.
American Gas Association (AGA) President Dave McCurdy denied that LNG exports would impact domestic gas prices. “We don’t see the potential for instability or dramatic increase in prices…We see prices in the range of $4-6 throughout the decade.”
Price-wise, “the one commodity that remains below the other commodities [metals, silver, gold, corn et al.] is natural gas and, of course, that’s due to shale,” Horvath said. “That’s not changing. It’s been going on for almost four years.”
About 50 major petrochemical and fertilizer plants are slated to be constructed or expanded in the next few years, all of which would use natural gas as a feedstock, Horvath noted. And by 2020, gas usage by power generators is expected to rise by 0.5 Tcf, while in the manufacturing sector gas use is expected to increase by 0.5 Tcf. An additional 0.1 Tcf would supply natural gas vehicle fleets and trucks. In all, the gas use would help the balance of trade with 0.51 Tcf.
Horvath is more hopeful than in the past that the President Obama will issue a cohesive energy policy in his second term. Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America, echoed that sentiment. “I do think there will be a little more unity” on energy from the Obama administration in the second term.
There may be room for some policy changes since EPA Administrator Lisa Jackson and Interior Department Secretary Ken Salazar, both aggressive on the environmental front, are leaving the administration. Reports are that Energy Secretary Steven Chu also may step down, which would allow the administration to create a new energy triumvirate.
Producers are particularly concerned over the Interior Department’s land policies going forward. “The United States is at the center of the shale revolution because of our system of private mineral rights,” said American Petroleum Institute President Jack Gerard. “We need to ensure [a] vision of shale energy for our future and make sure that it expands to leveraging the promise and the potential of our public lands, and doing what we can to protect and preserve their multi-use status, or we run the risk of this becoming a foreign concept to us as well.”
A key issue for producers is increased access to federal lands for leasing. “When it comes to federal regulation, we must all consider what we now call the elimination factor, specifically the realization that the president or his agencies can literally cancel a lease that’s already been offered or withdraw huge tracts of land from…consideration,” Gerard said.
“Sadly, over the past few years, we’ve seen the administration wield its elimination factor in a manner that has resulted in lost jobs” and the loss of revenue for the federal government. According to the Interior Department, from 2008 to 2011, the number of drilling permits issued as well as the number of wells drilled on federally controlled onshore lands dropped by more than 35%. Estimates for 2012 are not available.
More than 80% of the Outer Continental Shelf (OCS) remains off-limits, Gerard said. The administration has canceled lease sales in the Western Gulf of Mexico (GOM), and has taken the East and Pacific coasts, the Alaska OCS and the eastern GOM “off the table.”
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