Do not rush to regulate, API officials urge Obama administration

Nov. 14, 2016
Federal agencies that regulate oil and gas activity should not rush to impose new requirements before the Obama administration leaves office, two American Petroleum Institute officials said one week before the Nov. 8 elections.

Federal agencies that regulate oil and gas activity should not rush to impose new requirements before the Obama administration leaves office, two American Petroleum Institute officials said one week before the Nov. 8 elections.

"While the nation focuses on the elections, it's important to also keep the continued efforts and success of the industry in innovating and advancing the technologies to ensure that energy resources are developed safely and with protections-and benefits-for health and the environment," API Upstream Operations Director Erik Milito said.

"There are more than 100 rules and regulations recently proposed or pending covering oil and natural gas," he told reporters during a Nov. 1 teleconference. "I'm not going to address all of them-but some of the most significant would [affect] hydraulic fracturing, ozone standards, methane controls, and the next 5-year plan covering access to offshore areas."

Kyle Isakower, API vice-president for regulatory and economic policy, also participated, adding, "The stakes are high, especially because America's status as a world energy superpower can either grow or wither based on specific policy decisions that will be made by this next administration, the new Congress, and by state legislatures."

Noting that the US has become the world's leading oil and gas producer in a few short years, he suggested that the dramatic reversal was the product not of government regulation, but of industry innovation.

"Costs aren't just lower, but by continuing to pursue our energy renaissance we can further boost our economy and create more good paying jobs," Isakower said. "With the right energy policies, America's oil and gas industry could support as many as an additional 1 million American jobs in 2025 and as many as 2.3 million by 2035. This makes clear that markets, not government mandates, should guide our nation's energy policy."

EPA's fracing study

Milito said that the US Environmental Protection Agency's impending finalization of its 5-year, multi-million-dollar hydraulic fracturing report is a key calendar item.

Its draft contains quantitative scientific data-including more than 950 sources of information, published papers, numerous technical reports, information from stakeholders, and peer-reviewed EPA scientific reports-that support existing language saying there is no widespread, systemic impact on the quality of drinking water, he indicated.

"Overall, the report demonstrates that industry practices, industry trends, and regulatory programs protect water resources at every step of the hydraulic fracturing process," Milito said. "The prevalence of industry best practices nationwide, combined with strong state regulatory frameworks is the likely reason why the EPA draft assessment found no widespread, systemic impacts on drinking water resources from hydraulic fracturing."

US air is becoming cleaner because of private sector collaboration with federal, state, and local authorities to substantially reduce ground-level ozone levels, he maintained. Fracing has been a key factor in cutting domestic emissions of traditional pollutants and greenhouse gases by shifting more power generation to natural gas, which emits fewer nitrogen oxides, sulfur dioxide, mercury, and 50% less carbon dioxide than coal, Milito said.

"At the same time, EPA has been implementing various programs under its Clean Air Act authority," he continued. "Air quality improvements will continue as states add even more emission control technologies to achieve ozone standards set in 2008 under the National Ambient Air Quality Standards (NAAQS). Unfortunately, EPA then issued new, more stringent 2015 ozone standards before fully implementing the 2008 standards."

Any unnecessary rush to implement the new requirements could risk the gains made over the past several years and impose needless economic burdens on states and industry, he warned. The implementation schedule for the 2015 standards should be extended, not overlapped with standards that are being fulfilled, Milito recommended.

Other potential pile-ons

Other federal regulators could pile on new requirements, he said. The US Bureau of Land Management's venting and flaring rules could require costly methane controls for some of same emissions sources EPA already regulates, or is considering regulating, Milito noted. All of this would come on top of existing state venting and flaring regulations, he said.

His observation came a day before two federal officials called for continued industry cooperation in improving methane emissions measurements and technology at a Gas Technology Institute conference in nearby Alexandria, Va. (OGJ Online, Nov. 3, 2016).

Milito said that the Obama administration could make another significant oil and gas decision before the end of the year regarding the 2017-22 US Outer Continental Shelf management program that it is preparing. "Seventy-seven percent of voters support producing more oil and gas offshore, yet the government keeps 87% of federally controlled acreage off-limits," he said. "That's despite studies suggesting that opening areas in the Atlantic, Pacific, and eastern Gulf of Mexico could lead to production of more than 3.5 million b/d of oil equivalent and generate 840,000 jobs.

The administration took a step in the right direction initially proposing to lift exploration restrictions for the Atlantic, only to backtrack months later, despite strong voter support," Milito added. "Making the same mistake now by removing the Arctic from the final plan would be short-sighted."

The Consumer Energy Alliance, National Association of Manufacturers, and US Chamber of Commerce made a similar point in a letter with 108 signatories that they sent to US President Barack Obama and Interior Sec. Sally Jewell 2 days later (OGJ Online, Nov. 3, 2016).

"US energy policy that supports oil and gas can help the nation meet national energy, economic, and climate goals," Isakower said during the Nov. 1 teleconference. "We encourage all officials to be aware of and reexamine the avalanche of new regulations now under consideration."

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.