Acknowledging that the boom in natural gas has led to cleaner-burning power and greater energy independence in the United States, President Obama last Tuesday in his first State of the Union Address (SOTU) of his second term vowed to cut red tape to speed up the permitting process for new oil and gas permits on public lands.
“Today no area holds more promise than our investments in American energy. After years of talking about it, we’re finally poised to control our own energy future. We produce more oil at home than we have in 15 years,” the president told the joint houses of Congress, cabinet officials, members of the Supreme Court and the nation.
“We produce more natural gas than ever before, and nearly everyone’s energy bill is lower because of it. And over the last four years, our emissions of the dangerous carbon pollution that threaten our planet have actually fallen,” Obama said.
“That’s why my administration will keep cutting red tape and speed up new oil and gas permits,” the president noted.
Rep. Doc Hastings, chairman of the House Natural Resources Committee, countered that the Obama administration is “playing fast and loose” with the facts related to drilling on public lands. “Under President Obama’s leadership, it has taken on average 30% longer, compared to the previous four years years, to approve new drilling permits…
“The Obama administration is playing fast and loose with the facts by obfuscating the difference between the length of time it takes BLM [Bureau of Land Management] to complete an APD [application for permit to drill] with the total time an APD takes to be approved.”
Hastings contends that the president has passed burdensome regulations, which have bogged down energy projects in mounds of red tape and paperwork, increasing the average processing time by 76%.
The oil and natural gas industry reaction to Obama’s speech was generally favorable, but some expressed concerns about tax proposals that could impact the industry. “We appreciate the president’s pledge to speed up permits for drilling on public land and his intention to use research and technologies to help natural gas become even more cleaner,” said Skip Horvath, CEO of the Natural Gas Supply Association.
However, “we urge caution in tax proposals that impact natural gas so that our industry can continue to stimulate job growth. Natural gas has fueled hundreds of thousands of jobs in our own industry and tens of thousands in the manufacturing sector. Conservatively there are 50 major manufacturing facilities that are projected to be constructed, expanded or re-opened by 2018 in large part because of plentiful, affordable natural gas,” he said.
Obama suggested that Congress tackle comprehensive tax reform this year, removing hundreds of billions of dollars in tax loopholes. This is a battle he has fought unsuccessfully for years.
“It is vital that U.S. policies relating to our industry all pull in a consistent and constructive direction,” said Regina Hopper, the outgoing CEO of America’s Natural Gas Alliance. “We will have to take a closer look at the president’s proposals related [to] taxes and use of revenue from natural gas production to ensure that they don’t have a negative impact on our ability to provide affordable energy and create jobs.”
On Wednesday Sen. Robert Menendez (D-NJ), who is under congressional investigation for ethics violations, introduced legislation to strip $24 billion in tax benefits during the next decade from the five largest oil and gas producers — ExxonMobil Corp., BP plc, ConocoPhillips, Chevron Corp. and Royal Dutch Shell plc. The bill, which has more than a dozen co-sponsors, died in the Democratic controlled Senate last year, and is unlikely to emerge from the GOP-controlled House of Representatives this year.
Dave McCurdy, CEO of the American Gas Association, said he welcomed the president’s focus on “cutting the red tape” in the permitting process, while Interstate Natural Gas Association of America CEO Don Santa noted that the country’s energy transportation infrastructure could also benefit from a streamlined permitting process. “The U.S. is now the world’s largest natural gas producer,” Santa said. “We must continue expanding America’s energy infrastructure to ensure that this success story continues. As part of this, we should examine ways to streamline pipeline permitting, while continuing to protect landowners and the environment.”
Obama also went to bat again in favor of combating climate change. “The fact is the 12 hottest years on record have all come in the last 15 [years]…We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have were all just a freak coincidence,” he said. “Or we can choose to believe in the overwhelming judgment of science and act before it’s too late.”
Obama urged Congress to pursue a market-based solution to tackle climate change, like the one that Sens. John McCain (R-AZ) and Joe Lieberman (I-CT) worked on four years ago. “But if Congress won’t act soon to protect future generations, I will…direct my cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy,” he said in his address.
The president further proposed that the United States use some of its oil and gas revenues to fund an “Energy Security Trust,” a new $2 billion clean-energy transportation fund to be paid for by oil and gas production on federal lands. The funds would support research in a host of technologies, such as vehicles run on electricity, homegrown biofuels and domestically produced gas.
In addition, Obama proposed a “Partnership to Rebuild America” program to attract private capital to upgrade what U.S. businesses need most: modern ports to move goods, and modern pipeline to withstand storms.
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