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Obama's War On American Energy Production Expands

- May 12, 2016

"Yielding To Environmentalists" Obama And His EPA Are Once Again Attempting To Kill American Energy Production Through Regulation

TOP TAKEAWAYS

  • Today, Obama and the EPA caved to the demands of left-wing environmentalists, releasing a stringent methane emissions rule on American oil and gas producers.
  • The rule "doesn't make sense," since energy producers have already made progress on reducing methane emissions, and a one-size-fits-all approach from EPA "could wipe out small, independent producers."
  • The new EPA rule is just the latest in a long line of job-killing energy regulations from the Obama Administration.
  • But Obama and his left-wing allies are not done, laying the ground work for a liberal successor who they hope will go even further in passing regulations that harm American energy production.

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"Yielding To Environmentalists," Obama's EPA Has Released Severe Regulations On American Oil And Gas Drillers. "The Obama administration, yielding to environmentalists demanding action to address climate change, issued limits on methane emissions from oil and gas wells that are even tougher than those it proposed last year." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

The EPA Caved To Environmentalists, Expanding The Regulations After Green Groups Said An Original Proposal "Didn't Go Far Enough." "The EPA expanded the final regulation in response to concerns from environmentalists, who said the draft proposal didn't go far enough. For instance, the agency dropped its proposed waiver for low-producing wells that generate less than 15 barrels per day of oil or its equivalent. That could have exempted thousands of wells each year from new leak detection requirements in the rule." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

"Environmentalists Are Even Happier With The Final Rule Than They Were With The Proposed" One. "As for the rule on new sources, Environmentalists are even happier with the final rule than they were with the proposed rule, which was published in August 2015, Schneider said." (Jack Fitzpatrick, "EPA Releases Landmark Methan Regulations For New Oil And Gas Sources," Morning Consult, 5/12/16)

The Rule Gave In On Two Key Demands Of Environmentalists. "The proposed rule initially exempted low-producing well sites from the regulations, but the final rule includes all well sites. And the final rule also has more predictable inspections - quarterly for compressor stations and semi-annually for well sites." (Jack Fitzpatrick, "EPA Releases Landmark Methan Regulations For New Oil And Gas Sources," Morning Consult, 5/12/16)

  • The EPA Gave In To Demands From Environmentalists That They Double Their Inspection Schedule. "The EPA also yielded to environmentalists' pleas for more frequent inspections, by requiring companies to hunt for methane at compressor stations four times a year instead of twice, as initially proposed." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)
  • The EPA Took Out An Exemption For Low-Producing Wells, Those That Produce Less Than 15 Barrels Of Oil A Day, Opening Up "Thousands Of Wells" To The Regulations. "The EPA expanded the final regulation in response to concerns from environmentalists, who said the draft proposal didn't go far enough. For instance, the agency dropped its proposed waiver for low-producing wells that generate less than 15 barrels per day of oil or its equivalent. That could have exempted thousands of wells each year from new leak detection requirements in the rule." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

The EPA Rule Will Impose $530 Million In New Costs On The Energy Industry, A 25 Percent Increase From The First Proposal. "The final regulations unveiled Thursday will add an estimated $530 million in additional costs in 2025, according to the Environmental Protection Agency. That's at least 25 percent higher than the preliminary version released in August, and comes as low oil prices force the industry to pare spending on new exploration." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

The Biggest Loser Of Obama's Regulations? "Small, Independent" Energy Producers

Energy Producers Have Had "An Angry Response" To The Regulations, Since Energy Companies Already "Have A Financial Incentive To Keep [Methane] Bottled Up." "The changes drew an angry response from oil and gas leaders, who insisted even the softer proposal was unnecessary in light of the industry's work to pare methane emissions. Because methane is the primary ingredient in natural gas, energy companies have a financial incentive to keep it bottled up as it moves from the wellhead to compressor stations and into storage tanks." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

  • Oil And Gas Producers Have "Been Making Great Strides To Voluntarily Reduce" Methane Emissions "Because Doing So Makes Economic Sense." 'Industry has been making great strides to voluntarily reduce its methane emissions because doing so makes economic sense,' Snyder said. 'Imposing additional reporting and regulatory paperwork obligations is even more burdensome at this time.'" (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)
  • Oil And Gas Producers Have Worked To Cut Down On Methane Emissions Because They "Literally Allow The Industry's Product To Float Away." "Oil and gas industry representatives are unhappy with the rule. Industry members had argued after the proposed rule that the regulation was excessive on two fronts. First, natural gas consists primarily of methane, so it's in the industry's interest not to let it leak. Unlike carbon dioxide emissions, methane emissions literally allow the industry's product to float away. Second, natural gas emits far less carbon dioxide than coal and has helped the U.S. cut carbon emissions by acting as a "bridge fuel" that's cleaner than coal and cheaper than renewables." (Jack Fitzpatrick, "EPA Releases Landmark Methan Regulations For New Oil And Gas Sources," Morning Consult, 5/12/16)
  • The Rules Don't "Make Sense," Since "The Industry Is Already Leading The Way In Reducing Emissions." "'It doesn't make sense that the administration would add unreasonable and overly burdensome regulations when the industry is already leading the way in reducing emissions,' said Kyle Isakower, vice president of regulatory and economic policy for the American Petroleum Institute." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

The Oil And Gas Drillers Who Will Be Hit Hardest By Obama's Regulations: "Small, Independent Producers." "Industry officials also warn that aggressive new mandates -- on top of other, still-proposed regulations clamping down on gas that is vented or burned on federal land -- could wipe out small, independent producers. Companies could spend more paring incremental methane emissions than they will recover by selling the natural gas they keep from leaking, industry groups said." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

"The Rule Effectively Asks An Already Battered Industry To Do More With Less, Amid Low Oil And Gas Prices, Dwindling Rig Counts And Thousands Of Lost Jobs." "The rule effectively asks an already battered industry to do more with less, amid low oil and gas prices, dwindling rig counts and thousands of lost jobs, said Sandra Snyder, a lawyer specializing in environmental regulation at Bracewell LLP." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

Left Wing Environmentalists Love The Rule

Earthjustice President Trip Van Noppen Said The Group Would Fight To Defend The Regulations In Court. "'Earthjustice will defend this rule in court when the oil and gas industry tries to weaken it.'" ("Obama Administration Finalizes Safeguards Against Oil & Gas Industry Climate Pollution," Earthjustice, 5/12/16)

Mark Brownstein, A Vice President At The Environmental Defense Fund, Called The New Regulations "A Significant Step." "'It's a significant step, and makes a significant contribution to addressing this important short term climate forcer,' added Mark Brownstein, a vice president at the Environmental Defense Fund." (Chris Mooney and Brady Dennis, "Obama Administration Announces Historic New Regulations For Methane Emissions From Oil And Gas," The Washington Post , 5/12/16)

The President Of The Clean Air Task Force Called The Regulations "A Really Important Step Forward." "This is the first time that EPA has ever regulated methane from any industry. And how appropriate, because this [industry] is the largest emitter of methane," said Conrad Schneider, advocacy director for Clean Air Task Force, an environmental group. "That's a really important step forward with respect to controlling greenhouse gases, and toward meeting our international commitments." (Chris Mooney and Brady Dennis, "Obama Administration Announces Historic New Regulations For Methane Emissions From Oil And Gas," The Washington Post , 5/12/16)

But Obama And His Left-Wing Environmental Allies Want To Go Even Further

The Methane Rule Is Just The Latest In A Long Line Of Obama EPA Regulations. "The methane rule follows a landmark regulation Obama finalized last year to cut carbon dioxide emissions from coal-fired power plants by 32 percent. The plan, the centerpiece of Obama's climate change strategy, has drawn legal challenges from power companies and dozens of Republican-led states. Obama also has proposed regulations targeting carbon pollution from airplanes and set new standards to improve fuel efficiency and reduce carbon dioxide pollution from trucks and vans." (Matthew Daly, "US Proposes To Cut Methane From Oil, Gas By Nearly Half," The Associated Press , 5/12/16)

The Rule Is Designed To Help Obama Meet His "Promise To Slash Oil And Gas Sector Methane Emissions." "The EPA rule will help the U.S. move closer to fulfilling President Barack Obama's promise to slash oil and gas sector methane emissions by 40 percent to 45 percent from 2012 levels by 2025. The new methane rule alone won't be enough to meet the goal, but it provides a stepping stone to requirements for 1 million existing wells too." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

  • Obama Is Also Trying To Meet The Goals He Set As Part Of The Paris Climate Agreement. "Cutting methane will also help the United States achieve the goal it pledged in the Paris climate change agreement to cut its greenhouse gas emissions up to 28 percent below 2005 levels by 2030." (Valerie Volcovici, "EPA To Set First Rule To Cut Methane From Oil, Gas Sector," Reuters, 5/11/16)

Obama Is "In A Rush To Propose And Finalize Sweeping Regulations Targeting Greenhouse Gases" As The End Of His Presidency Looms. "With his presidency drawing to a close, Obama has been in a rush to propose and finalize sweeping regulations targeting greenhouse gases blamed for global warming." (Matthew Daly, "US Proposes To Cut Methane From Oil, Gas By Nearly Half," The Associated Press , 5/12/16)

Now That Obama And His EPA Have Targeted New Oil And Gas Wells, His Next Target Is Existing Ones. "Under a legal process established through the Clean Air Act, after acting on new and modified wells, the EPA can move to tackle existing infrastructure. Obama promised the U.S. would go after those existing oil and gas sources during a March summit with Canadian Prime Minister Justin Trudeau. The agency formally kicked off that process Thursday by releasing a draft information collection request that asks oil and gas companies to turn over two waves of data about emissions, pollution-reducing equipment and associated costs." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)

  • The Regulations Are A "Stepping Stone" To Eventual Regulations On Existing Oil And Gas Wells. "The regulations target methane emissions from new oil and gas facilities, and they serve as a stepping stone to an eventual rule regulating facilities that are already running." (Jack Fitzpatrick, "EPA Releases Landmark Methane Regulations For New Oil And Gas Sources," Morning Consult, 5/12/16)
  • The EPA "Signaled Its Plans To Regulate" Existing Wells. "And while this would not apply to the vast numbers of existing rigs, well pads and auxiliary equipment that have driven a historic boom in domestic oil and gas production, the agency also signaled that it plans to regulate these as well." (Chris Mooney and Brady Dennis, "Obama Administration Announces Historic New Regulations For Methane Emissions From Oil And Gas," The Washington Post , 5/12/16)

But The Rules On Existing Wells Will Be Written By Obama's Successor. "The rules have prompted a backlash from the oil and gas industry, which contends the federal rules would undercut companies' progress on capturing methane. But what they are really worried about is what EPA says is coming next: a look at whether the agency should require the industry to address leaks in the vast existing network. But that's a task that's set to fall to President Barack Obama's successor." (Eric Wolff, "Methane Rule Day!," Politico's Morning Energy, 5/12/16)

The New EPA Rules Are Unprecedented

The EPA's Rules Are "The First Regulations" To Go After Greenhouse Gas Emissions From The Oil And Gas Industry. "The Environmental Protection Agency will unveil on Thursday a rule to target methane emissions from new or modified oil and gas facilities, the first regulations to tackle the greenhouse gas from the sector, two sources briefed on the matter said." (Valerie Volcovici, "EPA To Set First Rule To Cut Methane From Oil, Gas Sector," Reuters, 5/11/16)

  • The Proposal Will Go After Methane Emissions At "New And Modified" Oil And Gas Drilling Facilities. "The proposal is expected to require new and modified oil and gas processing and transmission facilities to find and repair methane leaks, capture natural gas from hydraulically fractured oil wells and limit emissions from pumps and other types of equipment." (Valerie Volcovici, "EPA To Set First Rule To Cut Methane From Oil, Gas Sector," Reuters, 5/11/16)
  • " The EPA First Proposed The Regulation Last August And Finalized The Measure After A Public Comment Period." (Valerie Volcovici, "EPA To Set First Rule To Cut Methane From Oil, Gas Sector," Reuters, 5/11/16)

The Rule Broadens Existing Regulations On Drilling Equipment. "Under the rule, companies will have to upgrade pumps and compressors, while expanding the use of so-called 'green completion' technology meant to capture the surge of gas that can spring out of newly fracked wells. Such green completion techniques have been required at new and modified natural gas wells since 2015, but Thursday's rule would broaden the requirement to oil wells too." (Jennifer Dlouhy, "For Drillers, Obama Methane Rule Is Worse Than Proposed," Bloomberg, 5/12/16)


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