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By Don Briggs

President, Louisiana Oil & Gas Association

In the coming weeks, Americans will go to the polls to elect a new President of the United States. While the past few months have produced much mud slinging and partisan politics, the end result of these campaigns will be a new president. Potentially, Barack Obama will be re-elected, but if the right has their way, Governor Mitt Romney from Massachusetts will take over the reigns. Romney recently released his new energy policy outlining his hopes for achieving energy independence by 2020. While this 2020 projection might be a touch zealous, the Romney group does have several positive ideas for energy development.
According to MittRomney.com, his energy policy has six main objectives: 1. Empower the states to control onshore energy development 2. Open offshore areas for energy development 3. Pursue a North American energy partnership with Canada and Mexico 4. Ensure accurate assessments of energy resources 5. Restore transparency to permitting and regulation 6. Facilitate private-sector-led development of new energy technologies.

To expand on a few of their goals, first, the Romney camp desires to give more power to the states to control onshore energy development. Through this empowerment, they feel that by establishing this process the states can then oversee all development and production on federal lands within the borders, not including lands designated as off-limits. Within the states power, regulatory processes and permitting programs for all types of energy expansion will be considered to fulfill all requirements of the federal government. Criteria will be established by the appropriate Federal-overseeing agency to certify the state processes.

Second, the Romney/Ryan ticket is proposing the opening of offshore areas for energy development that are currently closed by the Obama Administration. These areas range from the Gulf of Mexico, to the Atlantic coast, to portions of the Alaskan coast. They will assure that “state-of-the-art processes and safeguards for offshore drilling are implemented in a manner designed to support rather than block exploration and production”. This potential offshore opening will not only create thousands of jobs in the oil and gas industry, but create additional economic development right here in Louisiana for sectors such as the restaurant, hotel and auto industry to name but a few.

Lastly, the Romney team’s objective of restoring transparency to the permitting and regulation process is a key to Louisiana’s economic growth. Louisiana suffered greatly during the Gulf of Mexico drilling moratorium of 2010. This moratorium directly affected the state of Louisiana killing thousands of jobs with the ripple effect felt across multiple industries within the state.

According to Romney, “If we develop our American resources to the fullest, we will guarantee ourselves an affordable and reliable supply of energy, and also enjoy benefits throughout the entire U.S. economy.”  Not only can their plan create over three million jobs and sustain more than one trillion dollars in revenue for federal, state and local governments, but it will help push our country towards a goal that we can hope will one day be reality – using home grown oil and gas rather than having a significant dependence on foreign resources.

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By Don Briggs
President, Louisiana Oil and Gas Association

President Obama released his budget this week for 2013. With high hopes that the energy sector might receive support, reality says different. The President has clearly stated that he would like to “eliminate unwarranted tax breaks for oil companies, while extending key tax incentives to spur investment in clean energy manufacturing and renewable energy production”. Therefore, he is making good on his plan to “double down” and kill the incentives of the oil and gas industry, while continually promoting green energy and tax cuts for wind and solar power. We are seeing natural gas prices at an all-time low in the United States, while wind and solar power continue to be exponentially more costly per unit to produce. Not only is the production of natural gas more cost efficient than wind and solar, but the oil and gas industry has also created thousands of jobs for a hurting U.S. economy. American Petroleum Institute President Jack Gerard stated, “Frankly, the administration should be trying to replicate the success America’s oil and natural gas industry has had in creating jobs and growing the economy primarily through development on private and state lands. The evidence clearly shows that what we’re doing is working.”

With the vast amount of shale oil and gas available, America has the potential to become less dependent on foreign resources in the coming years. But, we have an administration that is trying to slash investment incentives and in turn, give government dollars to the clean energy sector – wind and solar. The oil and gas industry currently invests its dollars, and then receives credit; The Obama plan would give out hundreds of millions of dollars before the wind and solar companies have invested their first dollar. Again, the Federal Government is cutting investment incentives to the very industry that has created thousands of jobs for the United States.

President Obama also included in his budget $45 million in funding to the U.S. Department of Energy, the Environment Protection Agency (EPA), and the U.S. Geological Survey to further research “reducing the potential health, safety and environmental risks of hydraulic fracturing”. While no government or private organization has any concrete evidence that hydraulic fracturing causes environmental or health-related problems, this $45 million funding is yet another avenue for the Federal Government to take oil and gas regulations from the states’ jurisdiction. Deputy Interior Secretary David Hayes stated, “We have no interest in creating conflict with state regulation.” In direct contradiction to Deputy Secretary Hayes, Interior Secretary Ken Salazar says that due to companies not liking patchwork regulations from state to state, Interior will be creating a template to be used across the country. This countrywide template idea rings of federal regulation and is not acceptable to the oil and gas industry.

The President has attempted to persuade the general public that his intent is to develop and assist America’s energy industry. However, it is clear that his plan diminishes a thriving oil and gas industry and he clearly does not desire to see America become truly energy independent.

By Don Briggs
President
Louisiana Oil & Gas Association

In the past, we have discussed the importance of the hydraulic fracturing process and the essential role it plays in the recovery of unconventional oil and natural gas resources.  We have also noted that this process has an impeccably safe track record of more than sixty years of application and it will be applied to the majority of America’s oil and natural gas wells far into the foreseeable future.  What has not been discussed in detail is the myriad of federal threats that stand to over-regulate and hamper the use of this technology.

When we talk about a potential federal takeover of the hydraulic fracturing process the first thought that comes to mind is the Environmental Protection Agency (EPA).  For the past several years, the EPA has sought authority over the process and has made it clear that the safety of hydraulic fracturing must be extensively studied.  It continues this pursuit even with the agency’s release of a 2004 study that found the process posed no discernable risk to fresh water aquifers.

The EPA, however, is not the only federal agency or body eyeing oversight of the hydraulic fracturing process. The White House interjected itself into the discussion when the Administration commissioned a special advisory panel to the Department of Energy to analyze the process and make recommendations for any additional regulations.  As well, a few members of Congress have pushed for legislation that would place hydraulic fracturing under federal oversight within the Clean Water Act.

Recently this week, an official within the Bureau of Land Management (BLM) noted that the agency is looking at regulating hydraulic fracturing on federal lands.  BLM’s deputy director in Wyoming, Larry Claypool, claimed at a recent hydraulic fracturing forum that the agency is “seriously considering” the regulation of the process.

There is no question that the hydraulic fracturing process is effectively and highly regulated within each state.  The fact that one million wells have been fracked throughout the entire continental United Sates without negatively impacting the water table is a testament to the states’ ability to effectively regulate the process.

So what if the federal government usurped jurisdiction over the states?  Let’s look at the government’s track record of oversight on federal lands and in the Gulf coast region.

According to the Western Energy Alliance, applications for permit-to-drill approvals on federal onshore lands decreased 43% in the Rockies and 37% nationwide since 2006.  The federal government has also proven itself incapable of bringing permitting, drilling and production in the Gulf of Mexico back to pre-Macando levels.  Currently, new deepwater permit issuance is 39% below normal levels and shallow-water permit issuance is 80% lower than historical averages.

Hydraulic fracturing is now responsible for 30% of our nation’s domestic resources, and has aided in the extraction of more than 600 trillion cubic feet of natural gas and 7 billion barrels of oil.  According to the National Petroleum Council, 60% to 80% of all wells drilled in the United States in the next decade will require fracturing to remain viable.

The government’s track record and performance would lead many to believe that it is incapable of efficiently and timely permitting the millions of new wells that will be drilled and hydraulically fractured in the coming decades.