I want to welcome our witnesses, and I am pleased that Governor Carcieri of Rhode Island is here to share his views on the environmental impacts of U.S. natural gas supply.
Although the U.S. is a world leader in natural gas supply, we pay more for it than anywhere on the globe. For the last several years, natural gas prices have been volatile - they have caused manufacturing production costs to increase dramatically; factories are closing, high paying and irreplaceable manufacturing jobs are leaving the country, and consumers are hurting the most. The tragedy of course is that it is completely unnecessary. Tactics employed to stop exploration and production of new natural gas sources under the pretense of “environmental protection” are costing this country dearly and will only get worse if we don’t act. There are those who are simply opposed to drilling anywhere, anytime and will go to all lengths to prevent it from occurring. But we can explore and produce while protecting the environment.
I would like read a quote: “The U.S. oil and gas industry has integrated an environmental ethic into its business culture and operations. The industry has come to recognize that high environmental standards and responsible development are good business.” It may surprise some of my friends that the quote is from a Clinton Administration DOE report titled “Environmental Benefits of Advanced Oil & Gas Exploration & Production Technology.” While the former President’s policies did not encourage oil and gas exploration, at least someone in his Administration understood that it didn’t harm the environment.
Natural gas makes up 24% of our energy supply – it is used to provide 19% of the nation’s electric power generation (used in over 60 million households), and 40% of U.S. industries rely on natural gas for energy or use it as a necessary feedstock to produce a variety of products from chemicals and fertilizer to glass.
Environmental policies, particularly the Clean Air Act Amendments of 1990 and the regulatory uncertainty of New Source Review have contributed to significantly increased demand for natural gas-based electricity generation. The increased demand for natural gas, without any increase in supply, has translated to high and volatile prices. Because we have vast natural gas resources, our supply problem is one of our own making.
[insert NPC chart showing restrictions ] The National Petroleum Council’s most recent report stated that our policies promoting the use of natural gas as an environmentally attractive fuel are in conflict with laws and regulations that “limit access to gas-prone areas where gas can be explored for and produced in an efficient and environmentally friendly manner.” The shaded areas represent the amount of gas that is “effectively” off limits from exploration and development. Under these policies, it’s as if we have turned our proud, strong nation into a man starving to death, complaining about it, and then simply refusing to eat.
What is astounding is that those who are promoting these policies that limit our access to natural gas are also pushing for changes in the Clean Air Act that would dramatically INCREASE our demand for natural gas, further increasing pricing and volatility, and I am speaking specifically to people who are trying to regulate carbon dioxide.
Experts agree that traditional domestic gas sources are being depleted and insufficient to meet future demand. They point to the Rocky Mountain area as the premier future gas supply in the lower 48 states.
Unfortunately, according to the NPC, much of the mountain areas are “effectively” off-limits to production because of regulatory uncertainty. Producers, like any business, require certainty to operate successfully. They must be able to plan their investments, and have a reasonable certainty of a return. The uncertainty is a result of an obstructionist pattern played out by radical environmental groups who rely on regulatory and legal challenges to constantly impede and delay until the point where exploration dies. They work hard to put more laws on the books with which producers must comply, in order to stop production or delay it definitely. Their obstructionist agenda has been working and the resulting increase and volatility of natural gas pricing has cost this country jobs - and its only going to get worse if it continues.
[NPC chart] The NPC report concluded that 69 trillion cubic feet or 29% of the area’s technical base is “effectively” off-limits to exploration and development. Further, an additional 56 TCF of potential gas faced significant costs and delays to development.
[BLM/USFS leasing chart] This chart shows what a producer must go through in order to obtain a federal lease and permit on BLM or Forest Service land. Again, it depicts the process before any actual disturbance of land occurs. By the way, the nine red stop signs are opportunities for legal challenges.
Again, this chart just shows the leasing and permitting process, BEFORE any exploration or production. We probably couldn’t make a big enough chart that would capture the delays in building new pipelines to get the supply into areas which need it the most, such as the Northeast.
Having a clean and safe environment is critical, but contrary to the opinion of the radical environmentalists and their supporters, we can have a clean environment without sacrificing U.S. competitiveness and U.S. jobs. Pursuing environmental policies that force natural gas, while preventing increased supply through obstructionist tactics is irresponsible and hurts our workers, our consumers, and our nation.