Industry: Obama sending mixed messages on natural gas

The natural gas industry has a question for President Obama: Are you for us or against us?

On one hand, Obama and his staff love to extol the environmental, economic and security benefits of the domestic gas production boom of recent years.

During last year’s State of the Union address, Obama touted his “all-of-the-above energy strategy” as bringing the United States closer to energy independence.

“One of the reasons why is natural gas,” he said. “If extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change.” 

At the same time, the Environmental Protection Agency (EPA) is leaning heavily on natural gas to take market share from coal in order to meet the carbon-reduction goals outlined in last summer’s landmark climate rule for power plants, and many agencies are working to make gas a more viable fuel for vehicles.

The industry felt that Obama had its back.

But that same EPA this week said it would seek to slash leaks of methane, the main component of natural gas, from the oil and gas drilling sector with new regulations that the industry says would threaten the very benefits that it has brought in recent years.

Taken together with planned actions from the Interior Department, the administration wants to cut methane emissions from oil and gas by 40 to 45 percent.

Drillers see inconsistencies in an administration that wants to boast about an industry’s accomplishments while writing aggressive new rules for it.

“The administration has talked very favorably about the impact natural gas production has had on their ability to achieve a good portion of the president’s climate change goals,” said Frank Macchiarola, the top lobbyist for America’s Natural Gas Alliance.

“With this particular rule, we’re disappointed that the administration has chosen the path of mandatory regulation on new and modified sources of methane emissions.”

Jack Gerard, president of the American Petroleum Institute, said the administration’s logic doesn’t hold up.

“The very natural gas that has brought carbon emissions down in this country to 20-year lows, leading the world on reducing or changing the upward trajectory on carbon emissions, now we’re going to single them out for further regulation, which further discourages the industry and adds unnecessary costs for what it is we’re trying to do,” Gerard told reporters.

He said the regulations, which are due to come out in the summer, “will only undermine dramatic reductions in CO2 emissions made possible by an abundant and affordable domestic supply of clean-burning natural gas, while discouraging energy development that is the foundation of the American energy revolution.”

Burning natural gas emits about 40 percent of the carbon dioxide as coal, along with greatly reduced emissions of pollutants like mercury, nitrogen oxides and sulfur dioxide, making it a much more environmentally friendly fuel.

But gas is about 95 percent methane, which has 20 to 25 times the global warming potential as carbon dioxide.

That, and the threat of the regulation, have spurred the industry in recent months to point more and more toward what they’ve already done to cut methane emissions. They cite recent data from the EPA finding that methane from hydraulically fractured gas wells dropped 73 percent between 2011 and 2013, while production skyrocketed.

That means further regulation is unnecessary, drillers say.

“Industry has been taking a lot of steps on its own, voluntarily, to reduce its emissions over the years,” said Sandra Snyder, an attorney with Bracewell & Giuliani who represents gas drillers.

“To come forward and put some really aggressive goals out there is just making it more difficult for industry to operate and continue to provide that natural gas that’s going to be so important to meeting our future power needs and manufacturing needs throughout this country,” she said.

The EPA says it’s listening, and that it also wants to preserve the benefits of gas.

EPA head Gina McCarthyRegina (Gina) McCarthyPruitt granted extension to file financial disclosure form Pruitt's 24/7 security requested over fears of Trump policy backlash EPA documents detail threats against Pruitt MORE told reporters that her agency wants to make sure the industry “continues to be viable and grow economically and continue to provide us with the natural gas that we’ve enjoyed and that we’re continuing to rely on, and do it in a way that keeps them economically viable.”

The benefits of increased natural gas use don’t have to be mutually exclusive with cutting methane emissions, said Ken Medlock, director of Rice University’s Center for Energy Studies.

“There’s nothing wrong with seeking policy that supports the development of cleaner fuels, but at the same time, wants to mitigate any negative environmental externality associated with that development,” Medlock said. “There’s really nothing inconsistent about that.”

Medlock said the Obama administration may not be going about methane reductions in the best way, since there is research still under way about where in the gas production and distribution cycle sees the most leaks and which place would be best for targeting rules.

But while new rules are likely to add costs to the natural gas industry, Medlock takes issue with the idea that they would squander the benefits of increased gas production and use.

“If I say I want to use natural gas because it’s cleaner, but I want to reduce methane leaks, those are both consistent statements in terms of trying to achieve environmental benefit,” he said.