A Strong Energy Industry Offers Critical Economic and Energy Security Benefits

Continued development of our nation’s abundant natural resources offers critical economic and energy security benefits. Many states have already recognized the immense benefits of a strong energy industry, and how it can be bolstered through thoughtful cooperation and the integration of newly developed technologies to promote environmental conservation and sustainability efforts.

The Colorado Oil & Gas Conservation Commission (COGCC), which has focused on bringing about extensive rulemaking under SB-181, the law that overhauled industry regulation focused on public safety, spoke at the Colorado Oil & Gas Association’s Annual Energy Summit. The new COGCC commissioners stated that the rulemaking process would emphasize “collaboration” and “certainty” for industry, communities, local governments, and other stakeholders. The COGCC held a more than six hour public hearing where many individuals offered their support for the oil and gas industry. Many also spotlighted the significant affect the industry has on local economies and tax bases.

When Grand Junction Chamber of Commerce President and CEO Diane Schwenke spoke she reminded others that the Western Slope has historically provided the state and region with safe, reliable and affordable natural gas. She continued saying,

“Our way of life is important to each and every one of us and the oil and gas industry has contributed to that way of life with jobs and tax dollars that fund elements like our schools and first responders.”

Mesa County Commissioner Rose Pugliese emphasized that it is possible to protect communities and the environment while producing energy. She thoughtfully commented,

“We need to have a good balance between our high-paying jobs that support our community and protecting our people and the environment. I don’t think it’s an “either/or” decision. I think you can do both, you just need to bring balance to the table.”

Additionally, industry employee Sharon Zamora stated that there is potential for environmental gains in conjunction with an increase in oil and natural gas production, testifying;

“I’ve worked in the industry for over 35 years and I’m proud of what I do for a living. I’m also proud of the steps the industry has made over the past 35 years to reduce emissions and make the workplace safer. I’m proud between 2011 and 2017, per the [RACQ and CDPHE], volatile organic compounds in the Denver Metro Area/North Front Range Area were reduced by nearly 50 percent even as oil production quadrupled statewide.”

This hearing helped provide productive insight into how the natural gas and oil industry can continue to provide communities with reliable energy and economic benefits while also prioritizing environmental sustainability. It would behoove more states to call upon business and industry leaders to work together to create unique solutions as well as implement advancements in technology.

Army Corps: DAPL Court Order Creates “Impossible” Standard for Critical Infrastructure Development

In their latest brief on Wednesday to the U.S. Court of Appeals for the District of Columbia Circuit, the U.S. Army Corps of Engineers argued district court Judge James Boasberg’s order requiring the agency to perform additional environmental review on the Dakota Access Pipeline creates “a new, heightened standard of judicial review that will be impossible for agencies to meet as they consider vital infrastructure projects that excite opposition from some sector of society.”

Boasberg had also called for the 1,172 mile crude oil pipeline to be shuttered earlier this month until the Corps was able to complete the Environmental Impact Statement (EIS), which was expected to take upwards of a year. However, that order was reversed by the appeals court – allowing the pipeline to continue operations at this time.

The Corps explained the extensive permitting and review process that took place before granting DAPL the necessary approvals, highlighting the oil spill modeling to analyze how a spill could potentially impact drinking water, hunting and fishing rights, and cultural practices of the nearby Native American tribes. As a result:

The Corps found that the risk of an oil spill is low and that its effects would be limited—not only because the pipeline was built with an array of safety features, but also because it is buried deep beneath the lake bed, such that 92 feet of clay create a physical barrier between the pipeline and Lake Oahe’s waters.

The Corps also explained that it its initial review and Environmental Assessment complied with NEPA because it “closely analyzed the effects of its action and rationally concluded that they are not ‘highly controversial’ or ‘significant.’” The agency also points out that the opposition of the Tribes’ experts is not sufficient to show that the effects of the Corps’ action are in fact “highly controversial.” The Corps noted:

Perhaps most significantly, while the Tribes and the district court both focused on the potential consequences of a catastrophic oil spill, they failed to discount those consequences by the very low risk that such a spill will ever occur.

In addition to overlooking these critical factors, the Court erred on a number of other principles. The Corps argues the district court applied the wrong legal standard, ignored the low risk of an oil spill, ignored the fact that the pipeline is buried deep under Lake Oahe and the extensive safety measures that are in place if a leak were to occur, wrongly ordered the Corps to prepare an EIS, abused its discretion in vacating the pipeline easement, and erred in enjoining operation of the pipeline.

Environmentalists Oppose Pipeline Development but Offer No Viable ‘Plan B’

Texas Scorecard recently published an opinion column from GAIN strategic advisor and retired Army Corps Col. Tom Magness regarding the bureaucratic and legal challenges facing critical energy infrastructure projects.

Col. Magness explains that recent setbacks for the Atlantic Coast, Keystone XL, and Dakota Access pipelines set a dangerous precedent for the future of infrastructure development and have “spotlighted the need for regulatory consistency and clear regulations.” Further, Magness suggests that policymakers and regulators have a responsibility to improve this process:

Policymakers and regulators must work to streamline the permitting and approval process for critical infrastructure, especially given the need for investment and job creation following the COVID-19 pandemic, and see the big picture with regard to the multitude of benefits of investment in our energy systems. Regulatory reform is needed so future projects can avoid falling prey to needless reviews and lawsuits, and the overreach of activist judiciaries spurred on by those without a Plan B.

Col. Magness explains that investment in our energy infrastructure network is the most environmentally sustainable approach to transporting the natural gas and oil that millions of Americans rely on each day:

Not only does safe transit through pipelines produce minimal emissions, but it also removes scores of trucks and train cars from our highways and railways. And, with regard to natural gas, pipelines can connect to consumers and reduce or minimize the need for flaring, the practice of burning off excess gas produced during oil drilling. In other words, it is not just the consumer and the industry who reap the benefits of Plan A. With no other practicable alternative, this is the best approach for our environment.

But despite this, environmental activists continue to oppose the construction of much-needed infrastructure – like the Permian Highway Pipeline in Texas:

Nonetheless, consider the Permian Highway Pipeline (PHP), which was designed to carry natural gas across Texas to help relieve transportation bottlenecks out of the Permian Basin—and reduce flaring, in the process. The project provides timely economic contributions amidst the current economic downturn, is expected to generate millions of dollars in tax revenues to support community services in Texas, and has already supported thousands of jobs for Texans with its construction. It is estimated that state and local jurisdictions will benefit from $42 million in annual tax revenues generated by the pipeline. Seemingly a win for all. Yet, pushback from environmental groups (with no reasonable Plan B) and regulatory barriers could impede the success this project would yield.

Rather than trusting these committed professionals, opponents have launched several extraneous lawsuits and filed regulatory complaints seeking to block the project. In fact, one group of activists spent nine months developing a complaint with the Texas Railroad Commission, alleging pipe segments were damaged—only to find no damage after a thorough review by the commission. And earlier this summer, the Sierra Club—a national environmental group well known for opposing energy infrastructure development—argued in federal court that the Army Corps wrongly issued permits for the natural gas pipeline and called for an injunction to halt construction.

Now is not the time to second guess the regulatory processes that have guided responsible infrastructure development for decades. As Col. Magness explains, regulators and policymakers must look to facts and science and “promote an atmosphere that invites investment in infrastructure that is safe, efficient, and affordable for years to come…”

Audio News Release: GAIN applauds Kinder Morgan for Rerouting Permian Highway Pipeline around Blanco River

This week, an audio news release is circulating radio in the state of Texas applauding Kinder Morgan for rerouting the Permian Highway Pipeline around the Blanco River. See below for the full Audio News Release:

Introduction: Earlier this month, pipeline builder Kinder Morgan announced a minor reroute of its Permian Highway Project around the Blanco River in Central Texas. The company announced the new route after consulting with the U.S. Army Corps of Engineers, the Texas Railroad Commission, and local landowners. 

Craig Stevens, spokesman of “Grow America’s Infrastructure Now” said:

“We applaud Kinder Morgan and the Permian Highway Pipeline engineers who worked with regulators, local leaders, and landowners to develop this route adjustment around the Blanco River. The natural gas and oil industry is leading in the development of energy resources in the Permian region, bringing jobs, economic prosperity, and tax revenues to the Lone Star State.

Once operational, the $2 billion dollar Permian Highway Pipeline will safely and reliably transport Permian natural gas to the Gulf Coast for use across the United States and around the world.”

Outro: For more information, visit gainnow.org.

COVID-Induced Drop in Oil Demand Continues to Take its Toll

The COVID-induced drop in oil demand has created significant challenges for the skilled workers, the industry, and the states that heavily rely on oil tax revenues. More than 100,000 jobs have been lost this year in the oil and gas sectors.

Now, E&E News reports oil-producing states are bracing for spending cuts as the coronavirus pandemic continues to put a damper on the industry. Less oil production as a result of the lessened demand means a significant decline in tax revenues – which impacts public services from education to roadways to hospitals:

North Dakota’s oil production stayed near a seven-year low in June at 890,000 barrels a month, for instance. That’s a slight increase from May but still about 40% below the state’s output in December.

Oil production tax revenues are 15% lower than forecast for the two-year budget cycle and a whopping 83% lower in July, according to North Dakota budget figures.

The state tucks away most of its oil money in dedicated funds that are reserved for one-time expenditures, Lynn Helms, the state’s top oil regulator, said on a conference call Friday.

But those fiscal buckets “aren’t going to get filled,” he said. “There are water resources projects that won’t get funded, infrastructure that’s not going to get funded.”

North Dakota isn’t the only state facing these problems, however:

In Oklahoma, the Legislature was faced with a gap of $1.3 billion when it met to write its spending plans for the 2020-21 fiscal year, which started in July. Lawmakers were able to avoid cuts to education, but they largely depleted the state’s $1 billion reserve fund, said Paul Shinn, a budget analyst at the Oklahoma Policy Institute, a progressive-leaning think tank.

In Texas, Comptroller Glenn Hegar (R) told state legislators in July the state will have $110.2 billion to spend in the 2020-21 biennium, down from an estimate of $121.8 billion in October.

In New Mexico, Gov. Michelle Lujan Grisham (D) called a special legislative session in June to trim the state’s budget. Lawmakers cut about $415 million in general fund spending, leaving $7.2 billion to spend in the fiscal year that started in July.

While the coronavirus pandemic has introduced unprecedented uncertainty and new challenges, it is critical the oil and gas industry is positioned to bounce back after the pandemic subsides, ready to provide affordable and reliable access to the energy that fuels the American economy.

Pandemic Lockdowns Show Concerning Glimpse of What a Carbon-Free Economy Would Look Like

Dead cities and town centers, empty highways and shopping malls, and abandoned airports and stadiums – the coronavirus pandemic has provided a glimpse into what a carbon-free America would look like, and it’s not good.

The Wall Street Journal recently published an opinion column from Paul Tice, who works in investment management and is an adjunct professor of finance at New York University, regarding the environmental movement seizing the coronavirus pandemic as an opportunity to further the green agenda as the Democratic Party now champions “decarbonization” as the best way to “build back better” from the coronavirus.

But looking past the partisan rhetoric and ideological opposition to the use of traditional energy sources like oil and natural gas, a world without fossil fuels would look similar to a never-ending COVID-like lockdown. As Tice writes:

“Without fossil fuels, Americans would face limited mobility and economic activity would be diminished, with higher unemployment and perennial supply chain disruptions since hydrocarbons are used to make and transport most goods. This economic reality is probably not lost on the cooped-up general public.”

As Tice points out, there is no money left to subsidize green energy. He writes:

“The pandemic has exposed the precarious financial position of almost every part of the U.S. economy. Before the crisis, most American households lived from paycheck to paycheck, with little savings for an emergency. We now know that the same is true of most U.S. businesses and almost every level of government.”

The author also explains that extending low-cost loans and investment and production tax credits to solar and wind projects does little to stimulate the economy, and instead “distorts investment flows and erodes already weak public finances.”

Tice concludes by emphasizing that the coronavirus crisis has exposed the “frivolous nature of climate alarmism.”

“Government-backed global-warming alarmists have spent three decades warning everyone about impending planetary doom over the next century. While they have been obsessing about 100 years in the future, a human scourge from 100 years ago sneaked up on the world in less than three months.”

“As the country starts to dig out from the worst recession since the 1930s, now would be a good time to rethink our priorities.”

Regulatory Hurdles Will Impede Future Energy Growth

A recent op-ed in the Des Moines Register by Paul Griffin highlights how legal setbacks for fossil fuel projects today can halt clean energy projects in the future. Recent setbacks for pipelines projects from Dakota Access to Keystone XL can set a precedent for the way U.S. energy projects are managed as environmental groups continue standing in the way of allowing affordable, safe, and reliable energy to serve Americans.

Griffin highlights how the cancellation of the Atlantic Coast Pipeline can have disparaging consequences for energy growth:

The recent cancellation of the much-need Atlantic Coast Pipeline only deepens this troubling trend for U.S. energy. In the case of that pipeline, activists were able to manipulate the convoluted permitting process and the court system at the local, state, and federal levels to effectively force Dominion Energy and Duke Energy to cancel the project. 

“Had the infrastructure project been completed, it would have created more than 17,000 high-paying union jobs and generated up to $30 million in additional property tax revenue. Just as important, Virginia and North Carolina residents could have saved $377 million with cheaper energy from natural gas. With Americans reeling from COVID-19, shouldn’t we be doing everything possible to reduce financial burdens and open access to affordable, reliable, and clean energy?”

Millions of Americans have filed for unemployment in recent months and continue to struggle to make ends meet. While the Atlantic Coast Pipeline never got to see the light of day, legal challenges to the Dakota Access Pipeline, which has operated safely and efficiently for years, continue on:

U.S. District Judge James Boasberg’s July 6 decision to vacate the project’s permits and empty the pipeline within 30 days is a crucial blow to a project that is already delivering massive benefits. Already in operation for three years, this $3.78 billion pipeline has increased North Dakota oil production by 50%, resulting in the safe delivery of 500,000 barrels per day of Bakken crude and generating more than $1.9 billion in labor income through the creation of 10,000 jobs.”

Additionally, the op-ed also notes that activists are challenging the Nationwide Permitting 12 program, a straightforward process allowing the U.S. Army Corps of Engineers to efficiently grant permits for pipelines and other key infrastructure projects. Removal of this process could not only strip 80 different oil and gas pipeline projects of their permits, but also threaten the authority of America’s top engineers and trained scientists who specialize in this work. Since when do we question a surgeon performing an operation or a teacher in a classroom?

The fact of the matter is that American consumers directly benefit from many of these crucial infrastructure projects that environmental activists continue to challenge. Impeding upon economic growth and reliable energy sets a poor precedent for the future of our nation’s energy industry. 

When Anti-Energy Activism Becomes Economically and Environmentally Disastrous

America’s energy industry is in many ways the lifeblood of the country. Its expansion over the past decade has created millions of jobs, reduced our dependence on cartelized foreign suppliers, and contributed to local, state, and national prosperity. Now, anti-energy activists, having adopted a myopic vision of environmentalism which incorrectly conflates new infrastructure construction with environmental degradation, are doing all that they can to sabotage the industry.

In an op-ed recently published in the National Review, economist and industry expert Benjamin Zycher explains why discouraging investments in energy infrastructure reduces environmental security at great cost to the economy.

No amount of activism will end America’s need for affordable and accessible energy. Knowing this, radical environmentalists have targeted the infrastructure that keeps the country powered, using baseless litigation to stall or prevent new construction in hopes of reducing the economic viability of the energy industry as a whole. Recent examples of resistance include litigation targeted at halting the operation of Dakota Access as well as the construction of Keystone XL and Permian Highway. Besides jeopardizing the livelihoods of the tens of millions of Americans who are employed in the energy sector or rely on their products, these lawsuits ultimately threaten environmental sanctity across the country. As Zycher writes:

“New energy-infrastructure investment by definition replaces older facilities and provides alternatives that are cleaner, environmentally safer, and less dangerous for workers and communities. The shutdown of older infrastructure without replacement incontrovertibly leads to a reduction in the stock of productive capital, a reduction in the supply of energy and the economic value of the natural-resource base, and less aggregate wealth.”

Anti-energy activists frequently argue that all infrastructure connected to energy production or transportation is inherently bad for the environment, but they willfully ignore the stringency of modern permitting processes. Regulatory agencies at both the state and federal level conduct hundreds of inspections before projects are approved, and stakeholders have every reason to encourage a comprehensive review process. The desire to prevent accidents is precisely why pipelines, which are measurably safer than rail and truck transport, are being constructed in the first place.

Instead of attempting to disrupt the energy industry through self-defeating litigation, environmental activists should encourage the well-regulated modernization of infrastructure for its economic and environmental benefits. Zycher concludes:

“A sharp reduction in investment in energy infrastructure would make the economy poorer, and in the long run poorer is dirtier…A rigorous and continuing inspection regime is vastly more consistent with environmental protection than opposition through litigation. And both regulators and private-sector operators have powerful incentives to pursue safety and benign environmental outcomes.”

Activists’ Legal Gamesmanship Threatens American Energy Security

In recent months, environmental activists have led a number of high profile legal campaigns against American energy infrastructure projects. Emboldened by successes, including the cancellation of a New Hampshire pipeline, they have expanded efforts to block new projects by manipulating permitting and legal processes to attain their desired political outcome. In an op-ed published in The Hill, former Pentagon official Steven Bucci describes the danger that their bad-faith litigation poses to the country.

Environmental activist groups like the Sierra Club and the National Resource Defense Council frequently support anti-infrastructure lawsuits under the pretense of redressing regulatory shortcomings. In reality, their cases have little to do with ensuring accountability and oversight, and everything to do with crippling a crucial sector of the national economy in the name of environmentalism. With regards to the Keystone XL Pipeline, Bucci writes that:

“Litigation by environmental groups seemingly had little to do with a better process and everything to do with legal jujitsu. They no doubt saw the interagency tensions as an opportunity in their longstanding strategy to stop fossil fuels from being extracted, transported and even used at all.”

Besides undermining the intended purpose of the courts by using litigation as a vehicle to inflict costs and delays on energy companies, these organizations are actively eroding America’s energy independence and national security, while actually contributing to an increase in global carbon emissions.

The existence of pipelines has no bearing on the nation’s need for reliable and affordable energy. Rather than reducing that need, preventing infrastructure projects only forces the country to import its energy. Bucci explains that:

“With demand for oil and natural gas not weakening any time soon, efforts to thwart domestic production and block key transportation infrastructure will not diminish our use of these fuels but, instead, will simply increase dependence on foreign sources like oil from the Middle East and gas from Russia.”

Besides empowering countries that have historically manipulated energy prices to the detriment of our national security, these lawsuits inadvertently increase global carbon emissions by giving other energy producing countries with far less regulations a competitive advantage – as well as forcing American energy producers to transport natural gas and oil via truck and train in the absence of pipelines, both of which are less safe and less environmentally-conscious. In this way, organizations like the Sierra Club are undermining their own purported objectives.

All of this is made worse by the fact that activists have taken advantage of a moment of national economic vulnerability to force energy infrastructure companies to capitulate when they are at their weakest, without regard for their importance to economic recovery and contribution to past and future prosperity. At a time when the country is still reeling from a global pandemic, misguided and manipulative efforts to shut down infrastructure projects are a danger that our companies, their employees, and our country can’t afford.

Joe Biden Should Maintain Pragmatic Approach to American Energy, Despite His VP’s Opposing View

This week, presumptive Democratic presidential nominee Joe Biden announced his highly anticipated vice presidential candidate, Sen. Kamala Harris. The choice sent ripples throughout the energy industry, given Harris’ staunch opposition to fossil fuels, having stated at a CNN townhall last September: “There’s no question I’m in favor of banning fracking.” Further, Harris was one of the first senators to back the ambitious Green New Deal. Former Vice President Joe Biden has stated that he does not support a fracking ban, but has said that he would prevent new permits for fossil fuel extraction on federal lands. Biden would be prudent stand firm on his level-headed approach to energy policy, especially if he wants to be successful in key swing states like Pennsylvania and Ohio that are at the heart of the U.S. shale boom.

Her comment on fracking aside, Harris is a concerning VP choice when it comes to our nation’s energy future. At the aforementioned CNN town hall on climate change, she also promised to take on Big Oil when it profits “off of harmful behaviors.” This is a vastly different approach than Biden, who has attempted to maintain a much more moderate position, aware that many states, including key swing states like Pennsylvania, heavily depend on these industries.

The Western Energy Alliance President Kathleen Sgamma said;

“He’s already had to dial back some of his anti-fracking rhetoric to try to win over blue-collar workers in a state revitalized with natural gas manufacturing jobs, and a VP pick who’s called for a ban on fracking isn’t going to be any more convincing,” she added, “He remains vulnerable with blue-collar workers in general and in energy states in particular.”

Election concerns aside, should Biden and Harris’ ticket win in November 2020 they must accept the reality that natural gas will continue to be a primary energy source for our nation for the foreseeable future. For example, fossil fuels provided the majority of the U.S. electricity generation in 2019, with natural gas being the largest source at roughly 38%. Petroleum products account for more than 90% of the total U.S. transportation sector energy use – with electricity providing less than 1% of total sector energy usage, with nearly all of that in mass transit systems. Biden will need to maintain a commonsense approach to our nation’s energy policy, which includes the use of natural gas and oil and welcoming investment in new, safe energy infrastructure in order to prioritize the energy needs of Americans for decades to come.