New Study Shows Proposed Regulations Could Slow Oil, Natural Gas Production

By March 16, 2012Energy, Regulations

Environmental Protection Agency (EPA) regulations could sharply reduce drilling for natural gas and oil production, according to a new study from the American Petroleum Institute (API). The proposed New Source Performance Standards (NSPS) for oil and natural gas production will impact new hydraulically fractured gas wells and existing gas wells that are “re-fractured.”

According to the API press release, the study found that the proposed regulations would:

  • Reduce drilling for natural gas using hydraulic fracturing by up to 52 percent;
  • Reduce natural gas production by up to 11 percent; and,
  • Reduce oil production by up to 37 percent.

These dramatic reductions in domestic production would result in the federal government losing up to $8.5 billion in royalties and state governments losing up to $2.3 billion in severance taxes.

There is no doubt that the shale gas boom has provided manufacturing operations with a reliable and affordable supply of energy. These proposed EPA regulations, however, threaten to slow fossil fuel production and potentially increase prices as manufacturers are trying to create jobs and boost the nation’s economy. The NAM urges the EPA to ensure these rules allow oil and natural gas producers the appropriate flexibility they need to comply with the regulations in a cost-effective manner.

Alicia Meads is director of energy and resources policy, National Association of Manufacturers.

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