Sequestration will affect federal energy activities, Zichal warns

The automatic budget cuts under the impending federal budget sequestration will adversely affect federal energy activities, warned Heather Zichal, US President Barack Obama’s chief energy and environmental policy advisor.

Oil and gas producers should expect additional delays in permit application processing and regulatory decisions, she said during a Feb. 27 seminar at the Center for Strategic and International Studies.

“Activity will slow down in every state, and the economy will suffer,” Zichal said. “It’s senseless because it can be so easily avoided. The president has prepared a balanced and sensible [federal deficit reduction] proposal that Congress should take up and approve immediately.”

She said energy and climate policies will remain a priority “as long as the president remains in office.”

Asked to elaborate on Obama’s remark in his Feb. 12 State of the Union address that he is prepared to take administrative actions if Congress does not develop meaningful climate-change legislation, Zichal said, “This administration has demonstrated its capacity to think creatively and use its authority to move aggressively on automotive fuel efficiency following decades of neglect and propose the most ambitious coal-fired power plant emissions controls in history.”

‘All of the above’

She also emphasized that the White House remains firmly committed to pursuing all forms of energy resource development. “The president recognizes we can’t put all of our eggs in one basket,” Zichal said. “As great as the natural gas revolution is, we can’t do it while neglecting research and development for renewable and alternative energy sources.”

While US energy export discussions mainly center on LNG, she said coal and oil exports also need to be addressed. “We’re looking at this as an opportunity to create jobs, but we also want to make sure they don’t compromise our energy security,” she said. “As a general rule, we’re not opposed to exports. But we don’t want them to hurt US consumers.”

Zichal said the administration is “incredibly excited that advanced biofuels are finally providing real barrels.” She acknowledged members of Congress have expressed concern about the federal Renewable Fuel Standard established under the 2007 Energy Independence and Security Act, and conceded that some of its aspects need to be examined. “But the notion that the [US Department of Defense] shouldn’t be allowed to invest in biofuels when it considers this an important part of its future isn’t fair,” she said.

“We recognize that we will need oil and gas in the near term, which is why we continue to emphasize safe and responsible development and production,” Zichal said. “At the same time, we need to reduce emissions further. We will continue to look at all available tools.”

The federal energy policy landscape keeps changing, she added. “I’m having to deal more with the rail industry as it considers ways to transport all the oil that’s being produced in the Midcontinent to refineries in a safe and environmentally responsible manner,” Zichal said.

Contact Nick Snow at nicks@pennwell.com.

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