Obama forms unconventional gas interagency working group

US President Barack Obama issued an executive order establishing an interagency working group to coordinate federal policies to support safe and responsible US unconventional natural gas resource development. Oil and gas trade associations and other business groups immediately applauded the action.

“We’re pleased that the White House recognizes the need to coordinate the efforts of the 10 federal agencies that are reviewing, studying, or proposing new regulations on natural gas development and hydraulic fracturing,” American Petroleum Institute Pres. Jack N. Gerard said on Apr. 13 after attending a White House meeting on the executive order.

“We have called on the White House to rein in these uncoordinated activities to avoid unnecessary and overlapping federal regulatory efforts, and are pleased to see forward progress,” he noted.

Obama’s order established the working group and named his domestic policy advisor, Cecilia Munoz, or a designated representative as its chair. Its members will include deputy-level representatives or the equivalent from the US Departments of the Interior, Energy, Defense, Agriculture, Commerce, Health and Human Services, Transportation, and Homeland Security; the US Environmental Protection Agency; and the White House Council on Environmental Quality, Office of Management and Budget, National Economic Council, and Office of Science and Technology Policy.

The order said the working group will coordinate agency activities to ensure they are efficient and effective, and share scientific, environmental, and related information among the agencies where appropriate. It will make long-term plans and ensure coordination among federal entities on research, natural resource assessment, and infrastructure development; promote interagency communication with stakeholders; and consult with other agencies and offices where appropriate.

‘An important role’

“While gas production is carried out by private firms, and states are the primary regulators of onshore oil and gas activities, the federal government has an important role to play by regulating oil and gas activities on public and Indian trust lands, encouraging greater use of gas in transportation, supporting research and development aimed at improving the safety of gas development and transportation activities, and setting sensible, cost-effective public health and environmental standards to implement federal law and augment state safeguards,” Obama said.

Hours after he issued the executive order, DOI, DOE, and EPA announced a memorandum of agreement to coordinate their present and future scientific research and scientific studies on unconventional oil and gas resource development. They said a primary goal of this effort will be to identify research topics where collaboration among the three agencies can be most effectively and efficiently conducted to provide results and technologies that support sound policy decisions by the agencies responsible for ensuring the prudent development of energy sources while promoting safe practices and human health.

“Improvements in technologies like hydraulic fracturing are responsible for greatly increasing our capacity to develop America’s abundant unconventional resources in recent years,” Deputy US Interior Sec. David J. Hayes said.

“Through a close collaboration across the government that reduces redundancy and streamlines our research, we are positioning the Obama administration to best meet the critical need of increasing public understanding and public confidence of these critical technologies so that we can continue safe and responsible exploration and production for many decades to come,” Hayes continued.

Trade associations representing producers and other gas industry segments quickly responded to Obama’s action. Independent Petroleum Association of America Pres. Barry Russell said the executive order has a very good intent. “We hope [it] provides the administration with a more comprehensive understanding of the federal government’s increasing regulatory grasp on the industry,” he said. “A key mission of this new coordination effort should be to reach out to the state agencies that already regulate hydraulic fracturing and the industry’s other practices.”

On-the-ground expertise

America’s Natural Gas Alliance Pres. Regina Hopper and Natural Gas Supply Association Pres. R. Skip Horvath separately noted that the order, as it laid out a blueprint for coordinating federal agencies’ efforts to oversee growing US unconventional gas production on federal lands, also recognized the states’ primary overall role. “Each state has different geological conditions and state regulators have the on-the-ground presence and expertise to promulgate and oversee unique operating requirements,” Hopper said. “We look forward to continuing to work with both the administration and the states.”

Kathryn Klaber, president and executive director of the Marcellus Shale Coalition in Canonsburg, Pa., said fracing is essential to produce US unconventional gas resources. “To even further improve environmental performance, states like Pennsylvania continue to raise the bar on regulatory requirements,” she indicated. “As the interagency’s panel begins its work, we remain eager to provide real-time, on-the-ground insight in an effort to ensure that common sense regulations are in place.”

Other business and trade associations also commented. “With shale gas poised to play an important and growing role in the nation’s energy strategy, appropriate regulations and policies will be critical,” the American Chemistry Council said in a statement. “[Its] full potential…will only be realized with sound state regulatory policies that allow for aggressive production in an environmentally responsible way. A coordinated approach to regulation can certainly help. We will be watching closely as the president’s initiative develops.”

Business Roundtable Pres. John Engler called Obama’s executive order “a solid first step toward coordinating and, we hope, improving federal oversight of hydraulic fracturing.” Chief executives from businesses in the organization recently discussed with the president how overlapping rules and duplicative and unnecessary rules could make federal regulation of this technology burdensome, he said. “We hope this working group can cut through these complications and encourage further investment in the energy sector,” Engler said.

API’s Gerard emphasized that growing US gas resource development, as well as increasing US production of crude oil from tight shale formations, would not be possible without fracing. “The president’s support of natural gas reminds us that we are reliant on technologies developed by the industry that make it possible to develop this energy resource,” he said. “We have one of the world’s largest known gas reserves, and we need public policies based on sound science in order to develop this affordable source of energy.”

Contact Nick Snow at nicks@pennwell.com.

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