Watching Government: No time for complacency

Feb. 8, 2016
The public may have grown complacent about oil and gas issues after 2015's crude and product price plunge. Trade associations in Washington plan to be anything but in 2016.

The public may have grown complacent about oil and gas issues after 2015's crude and product price plunge. Trade associations in Washington plan to be anything but in 2016.

"If we were a company looking at goals and accomplishments, last year was pretty incredible," Independent Petroleum Association of America Pres. Barry Russell said on Jan. 8. Major victories included the repeal in late December of a 40-year-old ban on exports of US-produced crude and the block of federally listing the greater sage grouse as an endangered or threatened species, he told OGJ.

But independent producers still will face federal issues in 2016 that are more regulatory than legislative, Russell said. "There's a pattern to federalize regulations which are being handled better at the state level," he said.

Heavier federal regulation has had an impact already, observed American Exploration & Production Council Pres. Bruce Thompson on Jan. 7. In 2008, there were more than 5,000 federally permitted onshore oil and gas leases, he said. By 2014, the total was down to 500-"before low prices had become a factor."

He expected the US Bureau of Land Management to propose onshore venting and flaring rules to limit methane emissions on public lands-which it did on Jan. 22-and the US Environmental Protection Agency to propose its own methane requirements.

"Courts are becoming the only recourse on many of these issues," Thompson said. "These and other rules go to the heart of our members' operations on federal lands. But the government is driving producers out."

Associations representing industry segments further downstream also see encroaching federal regulations. Amending or repealing ethanol quotas that were inserted into the Renewable Fuel Standard in 2007 is a major priority for both the American Fuel & Petrochemical Manufacturers and American Petroleum Institute.

Preparing groundwork

Neither organization expects Congress to act on the quotas this year because of upcoming national elections, but both will be laying a foundation for 2017. "Once we see a new Congress assembled and a new president, we'll be better able to judge the prospects for change," API Pres. Jack N. Gerard told reporters on Jan. 5.

Policymakers will need to recognize that the provisions' goals in the name of improved energy security already have been met by domestic production growth from more unconventional production, he told OGJ on Jan. 13. EPA still seems intent on raising ethanol quotas "even though motorists have roundly rejected high amounts of it in their vehicles," Gerard said.

"When EPA came out with its latest quotas in November, standards were for 2014 and 2015," AFPM Pres. Chet Thompson said on Jan. 14. "That shows how dysfunctional the RFS has become."