Energy

Shocking news! Production of fossil fuels from federal and Indian lands fell in 2013.

The U.S. Energy Information Administration (EIA) noted today in their daily “Today In Energy” that  “Sales volumes of fossil fuels from production on federal and Indian lands in fiscal year (FY) 2013 dropped 7% from FY 2012, according to EIA’s recently released annual report. Crude oil production on federal lands increased slightly in FY 2013, but that increase was more than offset by decreases in coal, natural gas, and natural gas plant liquids (NGPL) production. Sales of fossil fuels from federal and Indian lands accounted for about 26% of total fossil fuel sales volumes in the United States in 2013.”

The EIA went on to note that, “Since FY 2003, sales of fossil fuels produced on federal and Indian lands have fallen 21%, driven by declines in natural gas production and coal production. From FY 2003 to FY 2013, total U.S. fossil fuel production increased by 14%, with a 34% increase in production from nonfederal, non-Indian lands offsetting the decline from federal and Indian lands.”

“One of the main drivers in the decline in sales of fossil fuels from federal and Indian lands is the drop in offshore natural gas production, even as total U.S. natural gas production has grown rapidly because of rising production from onshore shale resources on private lands. Federal onshore natural gas sales volumes have generally increased over FY 2003-13, overtaking federal offshore production in FY 2007.”

There are a couple of things worth noting from this update. First, the percentage of our fossil fuels coming from federal lands continues to drop despite the United States’ abundance of resources. Second, the percentage of natural gas coming from federal lands offshore continues to decline despite improved extraction technology. Third, although federal onshore natural gas production has increased slightly it has been dwarfed by natural gas production from private lands.

This year the United States has become the largest producer in the world of natural gas and oil. Just last week Bank of America  announced that U.S. oil production has now exceeded both Saudi Arabia and Russia production. This is due to the fact that “Oil extraction is soaring at shale formations in Texas and North Dakota…” Most all of this is taking place on private lands using ever improving extraction methods.

If we want to continue to reduce the amount of oil we import from unfriendly parts of the world then we need to increase our energy production from federal lands and we need to finish the Keystone Pipeline so we can import oil from our friends to the north, Canada. We need federal energy policies that make sense and allow our country to increase our energy security and avoid relying on oil that comes from volatile regions of the world.

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Don’t Let the Comeback Turn Into a Fallback

Abundant domestic oil and gas resources are fueling a manufacturing comeback in the United States. A recent report by IHS Global Insight found that increased oil and gas production is supporting millions of jobs, increasing household incomes, boosting trade and contributing to a new increase in U.S. competitiveness around the world. For manufacturers and other energy consumers, the development of shale oil and natural gas in the United States in particular has been a “game-changer” in terms of reduced energy costs, increased access to secure energy supplies and availability of a low-cost raw material.

The chemistry industry alone has generated billions of dollars of new investment thanks to this innovation. Manufacturers believe continued shale oil and gas development is a critical component of a successful ‘all-of-the-above’ energy strategy. So it’s no surprise that Manufacturers, both energy producers and energy consumers, support policies that will help advance—not slow down—domestic energy production.

Unfortunately, we’re disappointed to hear reports that policy makers in Pennsylvania are considering imposing a “severance” tax on energy companies based on the value of the gas extracted from wells in the state. The impact of a severance tax is easy to calculate: new taxes translate into higher costs, less production and another hurdle for a manufacturing comeback.

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Manufacturers Remain Concerned by GHG Rules After McCabe Testimony

 

Manufacturers remain concerned that the Administration’s proposed greenhouse (GHG) rule will limit fuel options, increase energy costs and threaten the reliability of our electric grid. Today, Janet McCabe, EPA’s Assistant Administrator for the Office of Air and Radiation, testified before the Energy and Power Subcommittee that the EPA’s rule would “drive economic growth” and “provide a role for wide range of fuels”. We are not convinced. In fact, the more we dive into the 645-page proposal, the more it is apparent that limiting fuel options and increasing energy costs is the goal and inevitable outcome of this regulation. The Administration has yet to adequately assess the impact this policy will have on energy costs; the impact higher energy costs will have on manufacturers’ competitiveness; and the impact a less competitive manufacturing sector will have on jobs and the economy at large.

Manufacturers appreciate the agency’s willingness to meet with stakeholders on these regulations, however until some of these fundamental concerns are addressed, we remain concerned. The NAM serves as the co-chair of the Partnership for a Better Energy Future (PBEF), which comprises more than 150 organizations representing more than 80 percent of the U.S. economy. PBEF is the leading voice in support of a unified strategy and message in response to the Obama Administration’s greenhouse gas regulatory agenda.

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FERC Approves of LNG Terminal = Jobs and Economic growth!

Earlier today the Federal Energy Regulatory Commission (FERC) authorized Sempra Energy Corp’s, Cameron LNG terminal expansion project. The authorization permits Sempra “to site, construct and operate facilities to liquefy and export domestically produced natural gas.” In addition, FERC authorized the construction and operation of a pipeline and compression facilities. This is the second terminal that FERC has authorized and the first facility since April 2012.

In reaching this decision, FERC completed a comprehensive environmental review of the project and determined that the project would not have a significant impact. As part of this review FERC required Sempra to agree to some 75 conditions to further mitigate any “potential environmental impacts.”

The only remaining regulatory piece is that the Department of Energy’s needs to provide final approval for Sempra to exports to non-Free Trade Agreement countries. The project received conditional approval to export to non-Free Trade Agreement countries in February of this year.

The Cameron LNG expansion will lead to 3,000 direct new jobs and tens of thousands of indirect new jobs. The project will invest almost $10 billion dollars which will generate hundreds of millions of additional economic development as well as millions of dollars in new tax revenues to local, county, state and federal governments.

Energy and Manufacturing continues to lead the effort to get our economy back on track. This latest approval demonstrates the ripple effect a project of this magnitude has on local and the national economy. This project will impact the manufacturing supply chain and create new opportunities for manufacturers and create thousands of new jobs. There are a number of other LNG projects still waiting FERC approval to move forward with construction and operation. These other projects also promise to create jobs and economic growth.

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Promoting New Manufacturing Act Language Passes Important Hurdle.

Yesterday the House Energy and Commerce Subcommittee on Energy and Power passed the discussion draft of the Promoting New Manufacturing Act on a bipartisan 14-8 vote. Chairman Whitfield stated:

“We need to create jobs, and one way to do this is by promoting manufacturing. I agree that we must have a ‘can do’ attitude as Obama said last week, but we must have ‘can do’ opportunities for the American people and the spirit of this country.”

The bill seeks to improve the process of preconstruction air quality permits in the U.S. by addressing the need for expediting the process and providing greater transparency of the approval timeline by the Environmental Protection Agency (EPA).

NAM vice president of energy and resources Ross Eisenberg testified before the Subcommittee during a hearing on the bill on May 21. Eisenberg shared how NAM members are frequently discouraged by the New Source Review (NSR) program in the Clean Air Act from building new or modifying existing “major sources” as the attainment of the permit alone can take several years. Each permit is issued by the state air quality control agency, which means the process varies from state to state, and the best available control technology (BACT) they must install is selected on a case-by-case basis for each facility. The discussion draft proposed by the Subcommittee would require the EPA to publish data on the number of permits issued annually, and the length of time it takes to get a permit approved, to ensure that if there is an issue Congress and the EPA will be able to asses and improve the process. And it would require that any new guidance or regulation implementing a revised NAAQS, such as the ground-level Ozone revision expected in 2015, would be published concurrently with the new standard, or would not affect preconstruction permits currently in consideration until they are published.

“As a consequence of the 2009 Endangerment Finding for Greenhouse Gases (GHGs) and the ensuing Light-Duty Vehicle GHG Rule, the EPA extended the reach of NSR to GHGs. Sensing an immediate problem—PSD for GHGs at the statutorily required levels would expose six million buildings to preconstruction permitting—the agency issued the GHG Tailoring Rule, which raised the NSR/PSD thresholds for GHGs. The agency estimated that, even at the GHG Tailoring Rule levels, it would still need to issue 900 PSD permits per year for GHGs. However, recent information from the EPA shows that in the three-plus years since NSR/PSD was extended to GHGs, only 166 permits have been issued in total. That is a stunning drop-off in PSD permits, one for which the agency does not seem to have an easy answer. Manufacturers fear that PSD for GHGs may be acting as a deterrent to new construction.”

The manufacturing comeback is reliant on an Administration that understands the need for a streamlined and transparent permitting process to allow for them to apply for permits and build new, or renovate existing facilities, without an unknown length of time passing for their approval. In the time it may take for a permit to be approved, a new EPA standard could be put in place midstream, and with the project no longer being viable, force the company to abandon the project or face higher costs and longer timelines to make the adjustments. The NAM will continue to advocate for an NSR process that encourages new investment by manufacturers, while offering them a reliable and efficient permit process.

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Manufacturers Continue Fight Against Public Nuisance Suits

The Supreme Court meets today in closed conference to decide whether to hear a case that could set the stage for thousands of environmental suits against manufacturers who are in full compliance with their permits from the Environmental Protection Agency (EPA) and its state counterparts. Unless reversed, the appeals court decision in GenOn Power Midwest, L.P. v. Bell will open the courts for property owners and residents near manufacturing plants around the country to sue those companies for emitting anything from their plants.

An editorial in yesterday’s Wall Street Journal highlights the problem: “Failing to reverse the decision could expose U.S. industry to billion [sic] of dollars of liability and lead to a state-by-state chopped salad of pollution controls as judges make what are quintessentially political decisions.”

The Manufacturers’ Center for Legal Action is seeing this latest attempt to subject companies to so-called “public nuisance” litigation for activities already subject to permitting, equipment improvement requirements, monitoring, and public and private enforcement liability under the Clean Air Act. That law was supposed to provide a uniform system for environmental compliance and enforcement, but this lawsuit and others like it threaten to turn trial judges into EPA regulators, setting standards, monitoring compliance, and issuing penalties.  A similar case in Iowa is now awaiting a decision from that state’s Supreme Court.

We are harnessing the power of a broad range of manufacturing associations to help us tell our story in the courts.  Many groups, including the American Chemistry Council, the American Iron and Steel Institute, the Corn Refiners Association, and the Treated Wood Council, have joined in our effort to shine a light on this litigation problem.

In March, we asked the U.S. Supreme Court to review the GenOn Power case. We should find out on Monday whether the Court will hear the issue, and after full review, whether to end this nonsense once and for all.

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‘Waters of the U.S.’ Analysis Flawed, According to New Report

According to a new report released today, the EPA has significantly underestimated the economic impacts the proposed “Waters of the United States” rule will have on local communities and businesses. The analysis, authored by University of California-Berkeley faculty member and Brattle Group principal Dr. David Sunding, examines the U.S. Environmental Protection Agency’s (EPA) estimates of probable costs and benefits associated with the proposed rule, which includes a significant expansion of the term “Waters of the United States” to include previously unregulated waters such as fire and drainage ponds, certain streams and tributaries, storm water, roadside and other ditches.

Manufacturers continue to face an onslaught of overly burdensome rules, regulations, and guidance from the EPA. While appropriate regulations have clear benefits, Washington has developed a regulatory instinct that is holding back growth and harming our competitiveness. The rule will dramatically expand EPA’s regulatory reach and encourage the EPA to go back to the drawing board on this rule.

In the analysis, Dr. Sunding chronicles how EPA systematically excluded costs, underrepresented the acreage that will now become jurisdictional areas and used flawed methodologies to arrive at much lower economic impacts. Dr. Sunding concluded that the errors in the study are so extensive as to render it unusable for determining the true cost of the proposed rule. His report underscores the need for EPA to withdraw the rule and complete a comprehensive and transparent economic review.

The report was commissioned by the Waters Advocacy Coalition (WAC), which represents the nation’s manufacturing, construction, real estate, mining, agriculture, wildlife conservation, forestry and energy sectors. To learn more about the rule and its impact on manufacturers, click here.

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Study Shows Unilateral Carbon Regulations Drive Costs Not Global Emissions Reductions

A report released today by the U.S. Chamber of Commerce and economic firm IHS confirms what the NAM has been saying since the President issued his Climate Action Plan in June 2013: overly aggressive, unilateral U.S. carbon regulations will increase the cost of energy, slow economic growth and cost jobs, while doing little to stem global emissions. Carbon and other GHGs collect in the atmosphere indiscriminate of the location of the emission source. Thus, a ton of carbon emitted in the U.S. has the same impact as a ton emitted in China or India. To have a meaningful impact on the collection of GHGs in the atmosphere, carbon policies must be implemented in coordination with other major industrial economies.

If the U.S. acts alone with regulations designed to rapidly lower U.S. emissions and increase energy costs, manufacturers will become less competitive ceding production and jobs to other countries – increasing emissions in those often less energy- and carbon-efficient countries in the process. Manufacturers have demonstrated a commitment to reducing their GHG emissions. Manufacturing and other industrial carbon emissions are down 13% since 2005, while manufacturers’ value added to the economy grew by 19% over the same time period.  A better strategy for lowering global emissions would be to promote policies that support U.S. manufacturers who continue to operate more efficiently, emit less and develop technologies that will support a sustainable future.

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Manufacturers Push for Growth-Producing Outcomes in T-TIP Agreement

This week U.S. and EU negotiators return to the negotiating table in the fifth round of Transatlantic Trade and Investment Partnership (T-TIP) talks. The negotiations are being held in Arlington, VA this round, and I made a presentation to negotiators and stakeholders on manufacturers’ priorities in the T-TIP agreement.

A quick glance at the numbers might lead some to question the importance of negotiating a strong trade and investment agreement between two of the world’s economic leaders, the United States and European Union.  After all, the two economies enjoy the world’s largest commercial relationship – comprising one third of total goods and services trade and nearly half of global GDP.  In 2013, the United States exported close to $232 billion of manufactured goods to the EU, or roughly 17 percent of all U.S. goods exported to the world.

So, why do we need to strengthen this economic alliance further? The answer is simple and critical: there are barriers to trade and investment across the Atlantic that, if removed, would yield substantial economic growth for both the United States and the EU – growth that both economies desperately need to maintain, sustain, and grow jobs in a changing global market. For example, according to a Johns Hopkins study of the transatlantic economy, even a modest alignment of U.S. and EU regulatory standards and non-tariff barriers could increase GDP by an estimated $106 billion.  That’s real money linked to real jobs.  Another study by Bloomberg’s Ken Monahan estimates that tariff elimination across the Atlantic would result in more than $10.5 billion in total duty savings and would boost U.S. and EU exports each by 17 percent!

In order to ensure that the final T-TIP agreement lives up to these expectations, it is essential that the T-TIP is a comprehensive, high-standard agreement aimed at further opening the transatlantic market to increased trade in goods and services, promotes greater transparency in rulemaking, and removes unnecessary regulatory obstacles to trade. Ultimately, a T-TIP agreement should eliminate all tariffs upon implementation, address regulatory barriers, strengthen investment ties, and provide strong protection and enforcement of intellectual property rights and set a new standard for the global economy.  A successful, growth-producing T-TIP will be one that reduces the cost of doing business across the Atlantic by eliminating both tariff and non-tariff barriers to trade and investment.  Such an agreement will put manufacturers in the United States in a stronger competitive position not just in terms of trade with the EU but in the global economy as a whole.

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Timmons Talks Energy at Kentucky Conference; Visits GE and Big Ass Solutions Shop Floors

Timmons discusses energy policy.

Timmons discusses energy policy.

This week, NAM President and CEO Jay Timmons delivered remarks at the Kentucky Association of Manufacturers’ (KAM) 2014 Energy Conference. Timmons was joined at the conference by leaders from across the state, including Kentucky Association of Manufacturers President Greg Higdon and Kentucky Secretary of Energy and Environment Len Peters.

He discussed the unique energy opportunities and challenges facing the manufacturing economy and the solutions that will bolster the industry’s economic strength in Kentucky and throughout the world, as well as how policies in Washington could endanger the critical all-of-the-above energy mix that manufacturers need to remain competitive.

Timmons also stressed that Manufacturers must use the political process to push back against harmful policies.

Timmons visit's GE's Louisville facility.

Timmons visits GE’s Louisville facility.

During his visit to Kentucky, an NAM team was on the ground in the state speaking with manufacturers about how to build a Get Out the Vote campaign using the tools and resources on the NAM’s Election Center to ensure that every eligible manufacturing voter goes to the polls this election year. To read a copy of his remarks, click here.

Jay Timmons and Carey Smith.

Timmons and Carey Smith.

While in Kentucky, Timmons also paid a visit to the Louisville and Lexington shop floors of General Electric (GE) and Big Ass Solutions.  At GE, Timmons was joined by President and Chief Executive Officer of GE Home & Business Solutions Chip Blankenship. Blankenship currently serves as the head of the NAM’s Workforce Task Force, a team of manufacturing leaders that are tackling the workforce challenges hampering the continued growth of American manufacturing competitiveness. While touring through Kentucky-based Big Ass Solutions, Timmons was joined by CEO Carey Smith, a manufacturing leader in Kentucky. Carey showed Timmons his state of the art manufacturing process for Big Ass Solution’s low-speed fans that are used for industrial, agricultural, commercial and residential use.

 

 

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