US energy sector leader hopes Obama will boost domestic exploration

24 January 2012 18:07  [Source: ICIS news]

WASHINGTON (ICIS)--A top energy industry leader said on Tuesday that he hopes President Barack Obama will make a course correction in his administration’s energy policies when he delivers his annual state of the union speech before Congress today.

The White House has indicated that energy issues will play an important part in Obama’s message to Congress later on Tuesday.

Jack Gerard, president of the American Petroleum Institute (API), said his industry would welcome greater emphasis from the president on domestic energy development, but he was critical of the Obama administration’s energy policies of the last three years.

“We hope the president tonight will announce changes in policy to support growth in our domestic energy development by opening more offshore and onshore federal lands to production and by putting some restraints on duplicative and unnecessary regulations,” Gerard said.

He said the Obama administration cites increased US oil and natural gas production as evidence of positive energy policies.  But Gerard charged that recent domestic energy output gains are due to increased production on private and state-controlled territories while development on federal onshore and offshore lands has declined.

“The administration’s current polices have reduced offshore energy development and are slowing development on federal lands in the west,” he said.

“Under current policy, we will see a 35% drop in Gulf of Mexico offshore development by 2013, according to Energy Department statistics, and there has been a 44% decline in energy permitting on federal lands in the west,” he said, citing production and permitting in 2009-2010 compared with 2007-2008.

Gerard also noted that 85% of US offshore areas remain closed to energy development and that the White House recently denied a permit for construction of the Keystone XL pipeline project that would bring Canadian crude oil to US refineries.

“We are going in the wrong direction,” he said.

“If the administration is serious about embracing domestic energy development, one thing the administration could do is to stop trying to inhibit fracking in natural gas development,” Gerard said.

Hydraulic fracturing, known as “fracking”, involves injecting large volumes of water under high pressure into shale rock formations to free-up otherwise unrecoverable natural gas resources.  Environmentalists and others charge that chemical additives used in fracking contaminate drinking water supplies.

“Today there are eight federal departments or agencies in this administration that are reviewing fracking with the intent to regulate it,” he said. 

An API spokesman said the eight entities are the Environmental Protection Agency (EPA), Department of Energy (DOE), Department of the Interior (DOI), the Agriculture Department (USDA), Department of Defense (DOD), Department of Transportation (DOT), the Department of Health and Human Services (HHS) and the Securities and Exchange Commission (SEC).

“I don’t know how you can talk about improving production of domestic energy when you have eight agencies looking to restrict development,” Gerard said.

“But I think it is a positive indication that the president feels the need to address energy in his speech tonight,” Gerard said.  “We hope the tone will be positive and cooperative and that the president will make a course correction in his energy policy.”

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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