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By DEBORAH SOLOMON And TENNILLE TRACY

Wall Street Journal

The Obama administration on Thursday proposed the first national air standards for gas wells that are drilled using a controversial practice known as hydraulic fracturing or “fracking.”

The move comes as companies seek to tap into newfound natural-gas reserves lodged in shale rock, triggering concern about the impact of the drilling process on air and water quality. The government is taking a broader look at hydraulic fracturing, including studies on whether harmful substances leach into drinking water.

The Environmental Protection Agency’s proposed rules are aimed at reducing the amount of pollutants released in the air when oil and natural gas is produced. The restrictions would require energy producers to capture emissions that escape into the air when natural-gas wells are drilled.

The rules are part of a broader EPA effort to improve air quality by combating smog-forming ozone. Earlier this week, the EPA postponed for a fourth time the release of new smog standards, saying they are still being reviewed by the White House. Business groups have challenged the new rules, saying they will kill jobs and hurt the fledgling economic recovery.

Thursday’s proposals stem from a lawsuit filed by a pair of environmental groups who successfully sued the agency to update clean-air standards for the oil and natural-gas industry. The agency is under a court-ordered deadline to finalize the rule by February.

Jeremy Nichols, director of the Climate and Energy Program at WildEarth Guardians, one of the groups that sued the EPA, said the proposals show the agency recognizes hydraulic fracturing poses some environmental risks.

“EPA’s proposal recognizes natural gas fracking is not going to go away tomorrow and says let’s at least make sure we have…safeguards in place,” he said.

Ramon Alvarez, senior scientist with the Environmental Defense Fund, said the rules are “a vital step toward reducing air pollution from the oil and natural-gas industry.”

The American Petroleum Institute, a group representing the oil and gas industry, said it would review the rules and ask the EPA to postpone finalization by six months.

“EPA has already imposed stringent emissions limitations on engines used in oil and gas operations,” said Howard Feldman, API’s director of scientific and regulatory policy. “API will review these proposed rules to ensure that they don’t inadvertently create unsafe operating conditions, are cost effective and truly provide additional public health benefits, and don’t stifle the development of our abundant natural resources.”

Many of the emissions the EPA has targeted escape into the air when natural-gas wells, drilled using hydraulic fracturing, are being prepared for production.

The EPA is proposing to reduce the emissions by requiring the use of special equipment to separate oil and gas from a mix of fracking fluids and water that flows to the surface during one stage of well completion. The proposed rules would apply to more than 25,000 wells a year, as well as to storage tanks and other pieces of equipment used by the oil and gas industry.

The EPA estimates the proposed rules will reduce smog-forming volatile organic compounds emitted by the oil and gas industry by 25%. They also should reduce methane emissions by 26% and air toxics such as benzene by nearly 30%.

Certain states, such as Wyoming and Colorado, already require the use of this equipment, and EPA officials said 3,700 wells already have the technology in place.

The EPA says these proposed standards will eventually save the oil and gas industry about $30 million a year because drilling companies will be able to sell the fossil fuels they will be required to capture during the fracturing process.

Original Article

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by Maddie Garrett

KATC

With Tropical Storm Don approaching, Shell said it’s evacuating about 70 non-essential personnel from rigs in the southwest Gulf of Mexico. And that means helicopter companies in Lafayette are firing up their engines for the first round evacuations.

“These are very costly decisions that are being made, but over the years the oil companies have come to realize they need to make these decisions pretty early on,” said Greg Roberts, Lafayette Regional Airport Director.

Roberts said they’ve weathered many storms over the years, as helicopters bring in offshore workers. He said the communications network in the Gulf of Mexico and in Southern Louisiana is well equipped to know where every aircraft is at all times.

“There’s a lot of traffic, you’ve got some real professionals doing what they do best, which is fly these helicopters out to the rigs and to land based operations,” said Roberts.

Air traffic controllers at Lafayette Regional Airport said even just hours after Tropical Storm Don was announced they already had several helicopters come in.

“We’ve seen quite a bit of activity here with PHI and others… It could be preliminary removal of some personnel and equipment off of some of these rigs,” said Roberts.

While non-essential workers are brought back to land, production in the Gulf hasn’t slowed.

“The decision to cutting production back right now has not been made to do that, and I think what we’ll see is companies will monitor tomorrow and then make some decisions after that if it looks like they made need to do that,” explained Don Briggs, President of the Louisiana Oil and Gas Association.

And with any weather event, the storm could change and that could mean more evacuations or production halts.

Original Article

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Wall Street Journal

Politicians wringing their hands over how to create more jobs might study the shale boom along the New York and Pennsylvania border. It’s a case study in one state embracing economic opportunity, while the other has let environmental politics trump development.

The Marcellus shale formation—65 million acres running through Ohio, West Virginia, western Pennsylvania and southern New York—offers one of the biggest natural gas opportunities. Former Pennsylvania Governor Ed Rendell, a Democrat, recognized that potential and set up a regulatory framework to encourage and monitor natural gas drilling, a strategy continued by Republican Tom Corbett.

More than 2,000 wells have been drilled in the Keystone State since 2008, and gas production surged to 81 billion cubic feet in 2009 from five billion in 2007. A new Manhattan Institute report by University of Wyoming professor Timothy Considine estimates that a typical Marcellus well generates some $2.8 million in direct economic benefits from natural gas company purchases; $1.2 million in indirect benefits from companies engaged along the supply chain; another $1.5 million from workers spending their wages, or landowners spending their royalty payments; plus $2 million in federal, state and local taxes. Oh, and 62 jobs.

Statistics from Pennsylvania bear this out. The state Department of Labor and Industry reports that Marcellus drilling has created 72,000 jobs between the fourth quarter of 2009 and the first quarter of 2011. The average wage for jobs in core Marcellus shale industries is about $73,000, or some $27,000 more than the average for all industries.

The Pennsylvania Department of Revenue says drillers have paid more than $1 billion in state taxes since 2006—and the numbers are swelling. In 2011’s first quarter, 857 oil and gas companies and affiliates paid $238 million in capital stock and foreign franchise taxes, corporate income taxes, sales taxes and employer withholding. This exceeds by some $20 million the total payments in 2010.

The revenue department also identified some $214 million in personal income taxes paid since 2006 that can be attributed to Marcellus shale lease payments to individuals, royalty income and asset sales. And all of this with no evidence of significant environmental harm.

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Then there’s New York. The state holds as much as 20% of the estimated Marcellus shale reserves, but green activists have raised fears about the drilling technique known as hydraulic fracturing and convinced politicians to enact what is effectively a moratorium.

The Manhattan Institute study shows that a quick end to the moratorium would generate more than $11.4 billion in economic output from 2011 to 2020, 15,000 to 18,000 new jobs, and $1.4 billion in new state and local tax revenue. These are conservative estimates based on a limited area of drilling. If drilling were allowed in the New York City watershed—which Governor Andrew Cuomo is so far rejecting—as well as in the state’s Utica shale formation, the economic gains would be five times larger.

Consider New York’s Broome County, which borders Pennsylvania and from which you can spot nearby rigs. The county seat of Binghamton ought to be a hub for shale commerce, but instead its population is falling as its young people leave for jobs elsewhere.

A study commissioned by the county in 2009 found that Broome could support up to 4,000 wells, but drilling even half that number would create some $400 million in wages, salaries and benefits; $605 million in property income from rents, royalties and dividends, and some $43 million in state and local tax revenue.

The Broome analysis pointed to Texas, where Chesapeake Energy paid Dallas Fort Worth International Airport $180 million for drilling rights on 18,000 acres of airport property—$10,000 per acre. The airport receives a 25% royalty on the natural gas produced by airport wells—more than $28 million in fiscal 2008. The study also noted the boon that rising oil and gas property values have been to Texas landowners, tax authorities and school districts.

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Governor Cuomo has said he wants to lift New York’s moratorium, and the state’s recently released draft rules are a step forward. But they must still undergo legal review and a public comment period that could bar New York drilling for the rest of this year, if not longer. New York will also still ban drilling in about 15% of the state’s portion of the Marcellus and impose more onerous rules than other states on private property drilling. Such bows toward the obsessions of rich, big-city greens explain why parts of upstate New York are the new Appalachia.

As they look across their northern border, Pennsylvanians can be forgiven for thinking of New Yorkers the way Abba Eban once described the Palestinians: They never miss an opportunity to miss an opportunity.

Original Article

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By Nicolas Loris

Heritage.org

July 25, 2011 at 5:00 pm

Natural gas prices in the United States have been low in the past few years, and increased estimates in natural gas reserves from shale formations in Pennsylvania, New York, Texas, Oklahoma, Arkansas, and Louisiana are opening opportunities to increase exports to other nations. In some countries, natural gas prices are three times as high as they are in the United States.

Exporting natural gas would provide a huge boon for our economy, as it would expand market opportunities for American companies and incentivize more production. In 2010, President Obama said that he wants to double exports in five years. There are productive ways to meet this goal, and exporting natural gas could play a critical role in meeting that target.

But that concept has its critics.

In a Senate Energy and Natural Resources Committee Hearing earlier this week, Senator Jeff Bingaman (D–NM) expressed concern that opening up the natural gas market to increase exports would drive up prices in the United States. Bingaman said, “In oil, regardless of the fact it costs not one penny more to produce, the price of the gas goes up dramatically because of what’s happening in Libya or Egypt. It would concern me if we would see the same kind of global market for natural gas.”

Congressman Tim Murphy (R–PA) shared similar thoughts after the Department of Energy approved a plan for Louisiana-based Cheniere Energy to export 2.2 billion cubic feet of natural gas overseas—the first approval of its kind. Murphy said, “Sending natural gas overseas is the medical equivalent of bleeding a patient in order to cure him. I fear what this would do to prices.”

No one knows how dramatically prices would rise, if at all, with increased exports. With the amount of natural gas the United States holds, an increase in supply to offset some of the natural gas going overseas could make the price increase marginal. If coupled with the freedom to ensure access to new fields, creating a market abroad would incentivize additional exploration.

Even so, if the price of natural gas in the United States rises as a result of exportation, the markets will adjust accordingly. Prices rising at home should not be a reason to put in place protectionist policies or restrict free trade. Not only would American gas producers benefit from increased exports, but citizens in other countries would benefit from cheaper imports—just as Americans benefit when we import cheaper products.

Providing other countries with cheaper energy would not only lower the product prices that we import that use energy to make, but it would also promote economic development in those countries so they import more American goods. Simply put, the gains to free trade far outweigh any losses that would be incurred.

The energy economy, like the broader economy, is incredibly complex. It relies on dispersed, tacit knowledge from millions of actors that coordinate their actions through the pricing system. Since no one man is capable of acquiring all the information to allocate resources efficiently, as F. A. Hayek argued in “The Use of Knowledge in Society,” price signals provide the information necessary to effectively motivate and harmonize economic actors in ways a central planner could not do.

So if natural gas prices rise, it creates opportunities for other energy producers to expand their production, providing opportunities for other electricity producers (whether it be coal, nuclear, wind, or solar) to provide electricity at a lower cost. Distorting the market and restricting free trade reduces prosperity, stifles innovation, and stunts economic growth.

Original Article

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Approximately 11,000 people gathered at the Cajundome for last year’s “Rally for Economic Survival,” an event meant to shed light on the hardships felt by employees and companies in the oil and gas industry during the drilling moratorium. There are now 51 rigs operating in south Louisiana.

Written by Amanda McElfresh
The Advertiser

A year ago this week, Lafayette put itself in the national spotlight with the Rally for Economic Survival, an event designed to showcase the importance of the oil and gas industries and the hardships that were felt by employees and companies during the post-oil spill drilling moratorium.

An estimated crowd of 11,000 people gathered inside the Cajundome last July 21, with another 11,000 watching the rally live online. Dozens of media outlets from across the country gathered to cover the event, which even drew international news attention.

“We used the Rally for Economic Survival as a vehicle to allow the people to vent their frustrations and we gave them a way for their voice to be heard, and it was heard by media from across the country,” said Rob Guidry, president of the Greater Lafayette Chamber of Commerce, the event’s main organizer. “The attention was a pleasant surprise and we were happy that so many outlets from the national media decided it was worthy to cover.”

The attention eventually subsided, but those involved in the rally say the impact was long-reaching.

“We were told the moratorium would go through Nov. 30, but I think that thanks to our collective efforts and continuing to point out how poor the policy was, the moratorium was lifted six weeks early,” said Scott Angelle, secretary of the Louisiana Department of Natural Resources. “That was lifted early in part because of that rally and the attention it drew. But what I believe the rally also did was, it gave people hope. In spite of the BP oil spill, we knew at the highest levels of state government that we could still drill safely, and I think we gave people hope that it would happen again.”

According to data provided by the DNR, there are now 51 active rigs operating in South Louisiana. That marks an increase from mid-July 2010, when 30 active rigs were located in the southern part of the state, and is also higher than in July 2009, when 19 such rigs were operating in the region.

“What Louisiana needed was for business owners who had a lot of capital at risk and employees who were on the payroll to have hope that a better day was going to come,” Angelle said. “I think we pulled that off in a miraculous way, thanks to our collective efforts.”

The rally also marked a shining moment for Angelle, whose fiery and passionate speech on behalf of safe drilling, balancing the energy industry with environmental safety and fighting for business owners was easily the highlight of the day.

Angelle said he fed off the crowd’s energy, his own frustrations with the federal government’s moratorium and his lifelong passion for Louisiana and turned that into something his friends now call “The Speech.”

“For me, it was a moment,” Angelle recalled. “It was my chance to play starting quarterback in the playoffs. For me, personally and professionally, it was definitely a highlight. I think I delivered the message that needed to be delivered and I hope people saw me as a serious person who cares passionately about policy that matters to this nation.”

Guidry said the rally also helped draw attention to the Greater Lafayette Chamber of Commerce and its role in the energy industry.

“The industry has so many professional organizations representing various sectors, that it’s sometimes easy to overlook the value of the chamber of commerce,” Guidry said. “When we stepped up with the rally, we were seen as being relevant and representing a broader economy. The chamber spoke from a much broader perspective, and a lot of people saw that.”

Original Article