DEBATE: Are Restrictions on Fracking and Oil Exports Stifling American Prosperity?

Lifting Bans on Fracking, Exports Will Add Many Jobs, Save Consumers Billions

By Kyle Isakower

(Tribune News Service/TNS) – If Texas were a nation, it would be the No. 3 dry natural gas producer in the world — ahead of Iran, China and Saudi Arabia.

Eight individual states now each produce over 3 billion cubic feet of natural gas per day, which would rank them among the world’s top 30 producing countries.

In oil production, two U.S. states — Texas and North Dakota — would rank among the top 20 nations in the world. Four additional states — Alaska, California, New Mexico and Oklahoma — make the top 35.

In other words, the United States is now a global energy superpower, and even individual states are now global leaders in their own right.

This growth is paying off for American families and businesses. The abundance of affordable energy has lowered costs for many businesses, sparking a manufacturing renaissance and attracting companies back to our shores. Shale energy will support nearly 400,000 manufacturing jobs this year.

Memorial Day gasoline prices were at their lowest levels in five years, spurring the highest holiday weekend road travel volumes in 10 years.

Last year, U.S. Energy Information chief Adam Sieminski estimated that global supply outages could push prices to about $150 per barrel. But stable and growing U.S. production acted as a buffer against turmoil in the Middle East and elsewhere, and now Americans are saving an average of $108 per month at the pump.

That’s pretty much the definition of energy security, and it’s almost entirely due to hydraulic fracturing and horizontal drilling.

If production levels on federally controlled land matched those on state and private lands, the United States could reap even greater economic rewards.

But that’s not what’s happening. While production on non-government land jumped 89 percent for oil and 43 percent for natural gas between 2009 and 2014, gas production on public lands slumped 34 percent and remained flat for oil.

The culprit is all too predictable: bureaucratic red tape. New hydraulic-fracturing regulations announced by the Obama Administration would make the disparity even worse by delaying operations and driving up costs.

Hydraulic-fracturing operations are already subject to a wide range of federal regulations under the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act and other laws — in addition to strong state rules tailored to each area’s unique geology, hydrology and other physical characteristics.

According to the Ground Water Protection Council, “state agencies are on the forefront of oil and gas regulation” and continually update regulations to “address the safety and environmental issues surrounding modern energy development.”

As President Obama’s former Secretary of the Interior Ken Salazar put it, “We know that, from everything we’ve seen, there’s not a single case where hydraulic fracking has created an environmental problem for anyone.”

Meanwhile, regulatory delays for key infrastructure and federal restrictions on crude-oil exports continue to hold back production, preventing U.S. consumers and workers from realizing the full economic benefits of America’s energy revolution.

Lifting the obsolete, ’70s-era ban on crude exports could generate up to 300,000 additional U.S. jobs, cut our trade deficit by $22 billion, and save American consumers billions per year on gasoline, heating oil and diesel fuel.

Free trade for crude oil also makes geopolitical sense.

Sen. Lisa Murkowski, R-Alaska, the chairwoman of the Senate Committee on Energy and Natural Resources and sponsor of legislation to end the export ban, notes:

“If we lift the current sanctions on Iran while keeping in place our own domestic sanctions on crude-oil exports, America’s ability to increase its domestic energy security and that of our allies will suffer.”

America’s production resurgence has been a game-changer geopolitically, economically and from a national-security perspective.

Forward-thinking policies that encourage, not undermine, responsible energy production can cement our position as a global energy leader.

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Kyle Isakower is vice president for regulatory and economic policy at the American Petroleum Institute.

 

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New Federal Rules Are Low-Cost and Promising, But May Not Be Tough Enough

 By Michael E. Kraft

(Tribune News Service/TNS) – The Obama administration recently announced the first major federal regulation of hydraulic fracturing, better known as fracking, to take effect in June.

Fracking has been praised for contributing to a massive increase in production of oil and natural gas, reducing the nation’s reliance on imported oil and fostering increased use of cleaner natural gas over other fossil fuels, particularly coal.

Critics, however, have long faulted fracking’s impact on the environment and public health from contaminated wastewater and release of toxic chemicals. In some states, the injection of wastewater in deep underground wells also has led to an increase in earthquakes.

The new rules proposed by the Interior Department’s Bureau of Land Management apply only to oil and gas leases on 750 million acres of public and Indian lands. They leave untouched the vast majority of fracking operations that take place on private and state lands.

These other drilling activities will continue to be governed only by state regulation, which has been supportive of the industry. However, many states have yet to develop regulations for fracking, and the new federal plan could push them to adopt tough rules. That’s one of the industry’s fears.

The Interior rules target three concerns about fracking. One is the way that recovered wastewater is handled. Instead of being stored in open pits, which is now common, covered tanks are to be used to minimize groundwater pollution.

A second element addresses construction and testing of well casements, which could help to control leakage of drilling fluids as well as accidental release of methane, a powerful greenhouse gas.

This summer, the administration will be proposing separate rules to reduce methane emissions from new and modified oil and gas production and transmission facilities, with voluntary guidelines for existing installations.

A third component mandates disclosure of information about chemicals used within 30 days of fracking operations. The information is to be placed in an online database at the industry-backed FracFocus website. However, companies will be allowed to keep certain proprietary chemicals secret.

Interior estimates that the cost of compliance with the new rules will be less than one-quarter of 1 percent of the cost for drilling a well, seemingly a small amount. Yet the industry argues that this cost and the associated red tape of regulation could seriously disrupt oil and gas drilling. It is more likely that declining oil prices would do that, as they have already.

Drilling companies also object to full and timely disclosure of the chemicals used in fracking. They cite the burdens of reporting such chemical use, even though tens of thousands of companies routinely and efficiently disclose chemical releases through the federal Toxics Release Inventory program.

Interior made many concessions to industry before issuing the proposed rules, yet oil and gas companies filed lawsuits to block their implementation. In addition, Republican leaders in Congress promise legislation to keep control of fracking completely under state authority, a move that is almost certain to weaken regulation of the industry.

On the other side of the dispute, environmental groups generally have praised the new rules, although many say they are insufficient to protect public health.

For example, the rules do nothing about toxic air emissions at fracking sites, and the limited disclosure of fracking chemicals comes only after drilling begins.

President Obama is said to view his last two years in office as an opportunity to leave an historic environmental legacy, with actions on climate change topping that list.

The new fracking rules will help to reduce greenhouse-gas emissions. Yet they may do less in that regard than many other administration efforts, such as setting higher vehicle fuel-efficiency standards, promoting renewable-energy technologies, and finalizing EPA’s Clean Power Plan that will sharply limit carbon emissions from power plants.

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Michael Kraft is professor emeritus of political science and public and environmental affairs at the University of Wisconsin-Green Bay.