The People of America's Oil and Natural Gas Indusry

Warning Signs: Roadblocks to Progress Ahead

Mark Green

Mark Green
Posted August 11, 2014

API has put together a new infographic that captures the breadth of this administration’s policies – especially an ongoing regulatory push from EPA – that could slow progress that’s being built on America’s energy revolution. (Click on the thumbnail below to pull up a full-size PDF.)

thumbnailHere’s the thrust: The administration’s policies and regulatory efforts are hindering needed energy and economic progress. It is delaying infrastructure, such as pending liquefied natural gas export projects and the Keystone XL pipeline. It is sustaining the broken Renewable Fuel Standard and its ethanol mandates, which could negatively affect consumers and the larger economy. It’s threatening new regulation that would needlessly impact the refining sector, while advancing a stricter ozone standard that would put virtually the entire country out of compliance.

Howard Feldman, API’s director of regulatory and scientific affairs, talked about the implications of these and other initiatives with reporters recently. Feldman said EPA’s proposed new ozone standards “could be the costliest regulation ever.”

Indeed, a recent report by NERA Economic Consulting for the National Association of Manufacturers estimated a more stringent ozone standard could reduce U.S. GDP by $270 billion per year from 2017 to 2040, result in 2.9 million fewer job equivalents on average through 2040 and impose a cost to the average U.S household of $1,570 per year in the form of lost consumption. (Click here for a state-by-state look at the impacts.) All from a proposal that could put 94 percent of the country out of compliance. Feldman:

“Obviously, moving to non-attainment has significant impacts for a state and county. It inhibits expansion, it requires people to get offsets. … I have heard very clearly businesses say non-attainment means non-investment.”

Feldman discussed impacts on the oil and natural gas industry, the engine of an American energy revolution that is making the country more energy secure, creating jobs and providing wide economic stimulus:

“When you set higher standards, people will need to get offsets in those locations that don’t exist otherwise. So, in places where people are drilling out west, in Pennsylvania, in Texas, those areas are going to be maximized out for emissions and they won’t be able to grow because of the standard.”

More on the jobs impact:

“Once you start (regulating) you have to start curtailing certain things, in this case, reducing emissions and that has an impact. It could mean that businesses don’t locate to the United States. It could mean that U.S. businesses shut down. … And the other major effect is that because a business has to spend more money for emissions controls or more expensive fuels that could arise from this whole thing – that people have less money and therefore that affects the economy.”

Feldman said science doesn’t support lowering ozone standards, which haven’t yet been fully implemented, even as the country’s air gets cleaner because of wider natural gas use and new energy technologies. He said EPA should affirm the current 75 parts per billion standard:

“We believe the science does not compel EPA to lower the standard from where it is right now. We have looked at the information. The science has a lot of uncertainty in it, and it really becomes a policy judgment where to set the standard. Given the amount of uncertainty that’s in the health science … we don’t think the health information is compelling right now. … “It is a policy decision. … It’s necessary to look at the biggest picture, given all of the facts that they need to take into account. Some people say (EPA) is not allowed to consider costs. We’re aware of that but given the uncertainties that exist in the health data and given where we are in terms of attaining the previous standard … we think the best move right now is to make a policy decision to keep the (current) standard.”

Yet, it’s more than just the proposal on ozone. New control requirements are proposed for the refining sector, including new fence line monitoring, new guidance for flaring and rules for handling facility malfunctions. There might be moves to target start-up and shut-down emissions, which haven’t been isolated for regulation in the past, Feldman said.

Feldman said the five-year cycle for reviewing the National Ambient Air Quality Standards (NAAQs) might be unnecessarily too short:

“It takes more than five years to do a NAAQs review process. … We’ve made so much progress as a society. It’s not clear that we really need to be looking at the standards every five years. … Unfortunately, this EPA has not been willing to simply affirm (existing) standards.”

He said there could be a push for new regulations on industry methane emissions and cautioned against basing new initiatives on data collected five or six years ago:

“Industry is doing a very good job right now with methane emissions. EPA, I think, believes that as well. But there could be some (emissions) categories that (some believe) need to be adjusted. … (Older methane measurements) are really not relevant to what’s going on today. Industry has taken so many steps. EPA has adopted some industry measures we developed for green completions. … We’re already taking steps to reduce (methane) emissions.”

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.