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.

You can’t stop the entrepreneurial spirit of America’s job creators, their persistence or appetite for success. Despite the administration’s roadblocks to domestic oil production, manufacturers remain resilient and innovative, achieving new breakthroughs and continuing to find and develop new domestic energy resources.

An editorial in today’s Wall Street Journal details the success of energy producers continued commitment to exploration, despite the challenges they have faced over recent years, such as the recent moratorium in the Gulf of Mexico.

The Journal notes:

The Interior Department is still issuing very few permits, only 15 for new wells since it lifted its moratorium in October, but Exxon received one of them and struck black gold at 7,000 feet below sea level and some 230 miles at sea… Exxon estimates the field contains some 700 million barrels of oil equivalent, one of the largest finds of the last decade.

The great energy irony of recent years is that governments have thrown hundreds of billions of dollars at wind, solar, ethanol and other alternative fuels, yet the major breakthroughs have taken place in the traditional oil and natural gas business. Hydraulic fracturing in shale, horizontal drilling and new seismic techniques are only the best known examples.

Oil and natural gas companies have stepped up their efforts, incorporating additional safety and environmental protections as part of their commitment to the sound, reliable production of domestic energy to lower costs and reduce our dependence on foreign oil.

The Journal’s editorial concludes, “The Exxon discovery is a display of the animal spirits that still live in the U.S. energy industry, notwithstanding the political efforts to stifle them. As much as Washington tries, the U.S. economy is hard to keep down.”

The House of Representatives this afternoon voted 266-149 to pass H.R. 1230, the Restarting American Offshore Leasing Now Act. That’s a huge bipartisan level of support for the bill, which directs the Secretary of Interior to move ahead with previously scheduled offshore oil and gas leases.

The overwhelming support came despite the White House issuing a formal Statement of Administration policy opposing H.R. 1230 and H.R. 1229, the Putting the Gulf of Mexico Back to Work Act.

• Washington Post (blog), “US House votes to open Va. coast to offshore drilling“
• The Hill (blog), “House passes offshore drilling bill“
• Reuters, “White House slams Republican offshore drilling bill“
• Dow Jones, “US House Votes To Compel Offshore Drilling Lease Sales Within Months“

One argument Americans do NOT need to hear in today’s House debate on H.R. 1230, the Restarting American Offshore Leasing Now Act, is encouraging domestic energy production will do nothing to lower high gas prices today because, after all, it will take years for any new drilling to produce oil and gas. That old argument is just an excuse for inaction.

And it is an old argument. As Rep. Doc Hastings (R-WA) observed on a conference call with bloggers Wednesday, opponents are always saying it will take 10 years or seven years to have impact, but they were saying 10 or seven years ago. With action then, we might not have this problem.

Hastings, chairman of the House Natural Resources Committee, then dared to cite market forces in his further rebuttal:

But to me, there’s a bigger portion to this, and that is, crude oil is a global commodity and that we know. Yet we are sitting on potential reserves here that are absolutely huge, and the world knows that. And if we send a signal to the markets that we’re going to go after the resources that we have in this country … — and keep in mind, OPEC controls about 45 percent of the market — I think that will send a signal to the market that we are very, very serious about utilizing our resources, and I think that will have a positive impact on driving the price of gasoline down.

As a matter of fact, that happened in 2008, if you recall. Because there was a congressional and a presidential moratoria [on outer continental shelf drilling] in 2008 going into the gas crisis, $4 a gallon in August of that year. Both of those moratoria went away, and you know, the gas prices dropped, and I think there’s no question about that, it was because there was a signal to the market….

A lot of people say there are other factors controlling prices, and my short answer to that is, sure there are other factors. It’s called OPEC. They’re a cartel….In any sort of cartel, if you want to beat a cartel, you increase the supply of whatever that cartel is controlling. So if we send a signal that we’re going to increase the potential supply of crude oil in the world, I think the market will respond accordingly.

The National Association of Manufacturers sent the House a “Key Vote” letter Wednesday endorsing H.R. 1230, as well as H.R. 1229, the Putting the Gulf of Mexico Back to Work Act.

News coverage …

• Richmond Times-Dispatch, “Offshore-drilling bill up for vote in House“
• The Hill (blog), “OVERNIGHT ENERGY: The House offshore drilling battle begins “
• Washington Examiner, “Dems, GOP duel over energy legislation“
• Reuters, “Republicans to push US offshore drilling expansion“

The House of Representatives today debates H.R. 1230, Restarting American Offshore Leasing Now Act, one of three bills House Republicans have proposed in their American Energy Initiative to increase the reliable production of domestic oil and natural gas. (House floor schedule)

The National Association of Manufacturers on Wednesday sent the House a “Key Vote” letter urging support for the bill, as well as H.R. 1229, the Putting the Gulf of Mexico Back to Work Act. Excerpt:

Manufacturers support energy policies that: 1) expand domestic supplies in an environmentally safe manner; and 2) lower costs for manufacturers, which use nearly one-third of our nation’s energy. Access to competitively priced energy helps manufacturers compete in the global economy and preserves high-paying jobs here at home.

Every day of unnecessary delay in permitting costs jobs and hurts America’s manufacturers and their employees. Thousands of jobs were lost during the 2010 offshore moratorium. Companies that make and supply equipment, services, engines, boats and materials such as steel and concrete suffered under the moratorium and continue to suffer.
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