This afternoon, in a victory for manufacturers and energy producers the U.S. Department of Interior’s Bureau of Land Management (BLM) announced it would redraft a proposed hydraulic fracturing regulation for wells operated on federal and Indian lands.  The original rule sought to make radical changes to the chemical disclosure and well construction procedures oil and gas drillers must follow before they can receive their permits to drill. 

As originally drafted, BLM’s rule duplicated existing state regulations, its costs significantly outweighed its benefits, and it would almost certainly result in delays to drilling activities. The NAM explicitly asked BLM to withdraw the proposal and better harmonize its efforts with ongoing state regulations.

Manufacturers are encouraged by this afternoon’s announcement by BLM. The NAM believes the states should be the primary regulators of hydraulic fracturing and that the federal government should not be regulating until and unless it can prove that a compelling need exists for federal intervention.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

On April 13, President Obama issued an executive order creating an interagency task force to coordinate federal oversight and regulation of shale gas development.  The executive order was made in response to complaints by  the NAM and others that a dozen federal agencies were considering oversight or regulation of shale gas and hydraulic fracturing—in addition to robust state regulation of the industry.

Fast-forward two months, and very little seems to have changed.  Since then, we’ve received a final regulation from EPA on fracking emissions and two new proposed rules from Interior and EPA that toughen the regulation of fluids used in the hydraulic fracturing process.

But even though the pace of regulation isn’t slowing down, the feds are at least coordinating, right?  Maybe not.  We’ve seen little evidence that the interagency task force is impacting these proposed regulations.  To top it all off, we’re getting mixed messages from the regulators themselves. 

On Friday, a top administration official stated that the proposed Interior regulation will be delayed because “there are some pretty significant things within that proposal that need to be fixed and addressed.”  Come Monday, a spokesperson for Interior and that same White House official both declared that the regulation is on track and will be issued by the end of the year.

When the Executive Order was issued in April, NAM CEO Jay Timmons praised the establishment of a ‘one stop shop’ for research and information to promote shale gas development, and looked forward to providing input to the working group to ensure that manufacturers and our nation’s energy needs are well represented.  Unfortunately, none of that seems to be happening—at least yet. 

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

API and ANGA released a study today calling into serious question the methane emissions data EPA has been using for unconventional gas wells.  According to the API/ANGA survey, methane emissions from hydraulic fracturing of unconventional gas wells are, in fact, 50 percent lower than EPA’s estimates.

When is EPA going to correct this flaw?  Today’s study is not even the first time EPA’s hydraulic fracturing emissions data has been contradicted by real-world evidence.  The agency has been sitting on an open Request for Correction under the Information Quality Act (IQA) since December 19, 2011. 

That request (filed by the U.S. Chamber of Commerce, available here) included a survey by URS Corp. of approximately 1200 wells, showing that actual gas emissions from the completion of unconventional shale gas wells were more than 1200% lower than EPA’s gas emission estimate.

A coalition of environmental groups filed a detailed opposition to the IQA correction request, complaining that URS had relied on too small a sample.  Well, today’s API/ANGA survey (also conducted by URS) is of 91,000 wells.  That should be more than enough.

Here’s why this matters: researchers, financial analysts and other governmental bodies are relying on EPA’s flawed estimates of natural gas emissions from unconventional shale gas well completions in a number of research reports and policy consideration. And policymakers are ultimately taking into account these potentially flawed numbers when designing regulations.

Read the API/ANGA study here.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

On Friday, EPA announced that it had finished testing the drinking water in Dimock, Pennsylvania–a town that has become the epicenter of the hydraulic fracturing debate–and found no contaminants at levels of concern.

Will this settle things once and for all?  Of course not.  But it does seem to indicate that Pennsylvania’s fracking regulations are working.  That’s important because, partly based on fears that contamination may be occurring, the federal government jumped in and started regulating hydraulic fracturing.

One month ago, President Obama issued an Executive Order that not only recognized that “states are the primary regulators of onshore oil and gas activities,” but also that having ten different federal agencies all trying to regulate in addition to those states was a bad idea.

The Executive Order made sense.  What happened in the weeks afterwards didn’t.  Since the order was issued, the industry received three new federal regulations on fracking (two from EPA and one from the Department of Interior), which will undoubtedly interfere with state regulations.  The same state regulations that, according to EPA, made  61 out of 61 wells in Dimock safe.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

This week the Secretary Salazar, Department of Interior (DOI), sent proposed draft regulations to the White House on hydraulic fracturing activity on federal lands. Typically the regulation of oil and gas development has been the domain of the states. However, in this case Secretary Salazar felt compelled to provide the states with model regulations.

Deputy Interior Secretary David Hayes explained that these new regulations would be compatible with existing regulations in Texas, Wyoming and other states. This statement begs the question, if Interior’s proposed regulations are going to be compatible with current state regulations why do they feel the need to draft these regulations in the first place?

The regulations in Texas, Wyoming, Colorado and Pennsylvania are all fine blue prints that other states can follow – they don’t need the DOI to create new federal regulations! The proposed draft regulations are reported to require disclosure of the chemicals used in the fracturing process and likely do not provide companies with adequate protection of confidential business information (CBI).

President Obama said in his State of the Union Address that he wanted to pursue an “all-of-the-above” energy strategy. That strategy needs to include the development of natural gas and fracking. According to a study by PwC and the NAM shale gas development can create more than a million manufacturing jobs in the next ten years.

The shale gas revolution has already created thousands of new jobs and revitalized a number of communities across the United States. The supply of natural gas has been a boon to manufacturers that use natural gas as a feed stock and as a fuel, but this Administration appears set on slowing domestic natural gas production. Three agencies are looking for ways to regulate shale gas: EPA, DOE and DOI. If this Administration is allowed to regulate hydraulic fracturing in the manner they desire, you can be sure that our abundant domestic supply of natural gas will greatly diminish.

Chip Yost is vice president of energy and resources policy, National Association of Manufacturers.

On the energy front, one of the biggest stories of 2011 was the development of shale gas.  And, if the current trends continue, it will likely be the story of 2012 as well.

The Wall Street Journal reports,

The boom in low-cost natural gas obtained from shale is driving investment in plants that use gas for fuel or as a raw material, setting off a race by states to attract such factories and the jobs they create.

Recently, natural gas prices have plummeted.  “Because electric utilities often burn gas,” the Journal notes, “that price drop has helped bring down average electricity costs.

That’s a big deal for manufacturers, which consume one-third of the energy produced in this country. Lower energy prices make manufacturers more competitive and help offset other areas where manufacturers in the country are at a disadvantage compared to our competitors.

The shale boom’s impact on manufacturing was highlighted in a recent report completed by PricewaterhouseCoopers and released jointly with the National Association of Manufacturers.

The report shows that shale development means more investment in our economy, lower energy prices and one million more jobs by 2025.

Today the National Association of Manufacturers joined 118 other business groups in sending a letter to President Obama on the importance of shale gas and hydraulic fracturing. It’s essential that manufacturers have access to affordable energy as they use nearly one third of all the energy consumed here in the Unites States.

Excerpt from the letter:

Natural gas is an enormously versatile fuel that helps power our nation and enhances its energy security. There is huge potential to expand development, which can strengthen our nation’s economic recovery and put people back to work. Without hydraulic fracturing, that potential will not be realized, and we will not enjoy the tremendous economic and job creation benefits our nation’s abundant supplies of natural gas can provide. Government policies must encourage the continued investment in new energy development and allow it to proceed efficiently. Hydraulic fracturing is of critical importance to the success of both oil and natural gas production here at home, and the industry is committed to ensuring that it will continue to be employed in a safe and responsible manner.

The discovery of shale gas has been creating jobs and boosting our economic growth while also contributing to our energy security. Any additional regulations on the industry will hurt job growth in this important industry. Manufacturers hope that Congress and the Obama Administration will continue to support the development of shale and hydraulic fracturing technology.

Late last week the U.S. Energy Information Administration published their “Today in Energy” and featured coal reserves. According to the report, “The United States leads the world with over 260 billion short tons of proven recoverable coal reserves—28% of global reserves. Recoverable domestic coal reserves, at current mining levels, would last 222 years.”

I find it ironic that we have one government agency touting our coal reserves while another agency does everything it can to limit the use of coal. Affordable energy is key to manufacturers’ ability to compete. We can ill afford to lock away any sources of energy that can help manufacturers better compete. We have an energy policy in this country being set by the Environmental Protection Agency (EPA) instead of Congress.

President Obama’s decision to shelve the unachievable and unaffordable ozone standards proposed by the EPA was appropriate but long overdue. There are a whole slew of other EPA regulations that we need to deal with from Boiler MACT, to Utility MACT to coal ash as well as permitting delays for OCS drilling and threats of regulation on shale exploration and fracking. We need the White House to lead and make decisions that provide an environment where job creation is possible and not stifled by poorly thought out regulations. 

Chip Yost is vice president for energy and resources policy, National Association of Manufacturers.

On Tuesday the U.S. Geological Survey released updated data on how much natural gas is contained in the Marcellus Shale. The new estimate finds that the Marcellus Shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids. 

From the USGS release:

The Marcellus Shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids according to a new assessment by the U. S. Geological Survey (USGS).

These gas estimates are significantly more than the last USGS assessment of the Marcellus Shale in the Appalachian Basin in 2002, which estimated a mean of about 2 trillion cubic feet of gas (TCF) and 0.01 billion barrels of natural gas liquids.

The increase in undiscovered, technically recoverable resource is due to new geologic information and engineering data, as technological developments in producing unconventional resources have been significant in the last decade.  This Marcellus Shale estimate is of unconventional (or continuous-type) gas resources.

This news provides additional evidence of how promising of a source the Marcellus Shale is for our nation’s energy supply. It is absolutely critical to the competitiveness of manufacturers that they have access to affordable sources of energy. Adding burdensome and unnecessary regulations to the shale industry will only drive up the costs and add bureaucratic red tape with little benefit. 

You can find out more about this new estimate from the USGS here.

Yesterday the Department of Energy’s (DOE) Natural Gas Subcommittee released its interim report which makes recommendations to the Secretary regarding the safety and environmental performance of hydraulic fracturing from shale formations. The final report is expected in November of this year and the public will be given a chance to comment.

The preliminary report recognizes that “natural gas is a cornerstone of the U.S. economy, providing a quarter of the country’s total energy.”  It also acknowledges that technologies used in extracting natural gas from shale formations have increased production by 30 percent. What does all this mean? It’s very simple; it means more domestic jobs, stronger economy, lower natural gas prices and greater energy security.

In a Bloomberg story that ran today on new possible regulations for the shale industry, it would seem that the Director of the Bureau of Land Management may seem eager to issue potentially burdensome regulations on the industry.  

Do we need to make sure we extract shale gas responsibly and safely, yes! Can the states do a good job of regulating shale gas production? Yes they can.  States have been doing it for 150 years, 4.3 million wells, and by the way, most of the natural gas wells involve some form of hydraulic fracturing. Companies are continuing to work to improve the process, technology and implement the best practices possible.

It is critical to the global competitiveness of manufacturers and job creation in our country that we are able to utilize all the sources of energy available. We can’t afford to lock any of it away. Shale gas can provide much of our country’s natural gas needs. If the federal government is put in charge of regulating shale gas production then I have already seen this movie and it doesn’t end well. Let’s not go down the path of limiting what energy sources we will use, but let’s pursue a course of utilizing all of our sources which will help lead to lower energy costs and economic growth. 

Chip Yost is vice president for energy and resources policy, National Association of Manufacturers.