The energy industry is at the “dawning of the natural gas era,” but “federal regulatory overreach” threatens to crimp development of the Lone Star State’s gas and oil reserves, attendees at the Texas Conservative Coalition Research Institute’s (TCCRI) Houston Energy Summit were told Thursday.

Federal regulations, particularly those promulgated by the U.S. Environmental Protection Agency (EPA) and the Bureau of Land Management were very much on the minds of panelists who discussed issues facing the state’s oil and gas industry. First, though, keynoter and CenterPoint Energy CEO David McClanahan waived the flag for gas.

“What happens in the natural gas industry affects both sides of our business,” he said. Natural gas “is no longer thought of as a bridge fuel to the future; it is the fuel of the future, as well as the fuel of today.”

Although CenterPoint no longer owns its own power generation facilities, McClanahan said the future of power generation lies in natural gas, mainly because nuclear is too expensive and coal-fired plants are too hard to permit due to emissions regulations imposed by the federal government. The only other realistic alternative, he said, is demand-side management, which is catching on. Natural gas is “the foundation fuel around which our economy is being fundamentally restructured.”

Panelist Toby Baker, who was recently appointed a commissioner at the Texas Commission on Environmental Quality (TCEQ), lamented an “onslaught of regulations coming down from the federal government,” and said the number of federal mandates the TCEQ has seen is unprecedented.

“We end up getting saddled with enforcing whatever rule EPA promulgates,” Baker said, adding that the only way to deal with intrusive federal regulation is to push back on EPA, “getting the message out and forcing the discussion to be heard.”

EPA’s detractors enjoyed a bit of success at that with the recent resignation of EPA South Central Region chief Al Armendariz following controversy over remarks he made in 2010 (see Daily GPI, May 1).

One of the federal burrs under TCEQ’s saddle these days is EPA’s New Source Performance Standards under the Clean Air Act, which would regulate the well completion process, Baker said, even for wells in the middle of the state where air emissions are not an issue. It doesn’t make sense, he said.

Lawyer John Riley — who recently argued successfully on behalf of Range Resources Corp. in its battle against landowner and EPA accusations that two of the company’s gas wells contaminated well water in North Texas — said EPA’s rulemaking protocol is to “stake out an extreme position” and then back off a little, couching any concession made as a gift to the industry. “It’s a strategy,” Riley said.

Although Riley and Range prevailed in the well water contamination case (see Daily GPI, April 2), the lawyer said EPA has not been chastened and will continue to allege contamination where none has taken place.

Austin-based think tank TCCRI was formed in 1996 to “implement conservative public policies in state government.” The group has held energy summits in Victoria, TX, and San Antonio and is planning to hold similar events in Dallas-Fort Worth.

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