INSIGHT: US energy, petchems, refiners turn up the heat on Obama

09 February 2012 14:07  [Source: ICIS news]

By Joe Kamalick

US industries turn up the heat on Obama energy policyWASHINGTON (ICIS)--US energy, petrochemical and refining industry officials are turning up the heat on what they regard as President Barack Obama and his administration's duplicitous energy policies.

As the US national election cycle begins to crank up to speed, a variety of US industries charge that the Obama administration pays lip service to increased development of conventional energy resources while actually working to retard domestic oil and natural gas production.

John Felmy, chief economist at the American Petroleum Institute (API), told a press conference this week that “there is a major contradiction in this administration’s energy policy – particularly when it comes to natural gas”.

“On the one hand we have President Obama saying he supports natural gas development,” Felmy said, but “on the other hand, we have his administration proceeding full speed ahead with investigations and regulations that could hamper that development.”

Felmy noted that in Obama’s annual state of the union address to Congress last month, the president cited US reserves of natural gas that could feed the nation’s energy needs for nearly a century and generate hundreds of thousands of jobs as well.

“He vowed that his administration would take ‘every possible action’ to safely develop this energy,” Felmy said.

“Yet within weeks of making this statement, the administration has done just the opposite, announcing several plans to further constrain development,” Felmy said.

He said that a range of regulatory initiatives and resource restrictions taken by the Obama administration are “reducing opportunities to produce our domestic supply of oil and natural gas and create and support these American jobs”.

“We have reached a point where our industry’s efforts to produce the natural gas the president says he wants are being overwhelmed by an avalanche of regulations,” he said.

Felmy in particular cited investigations or regulatory initiatives recently launched by as many as eight federal agencies focused on hydraulic fracturing (fracking), the technology that, along with horizontal drilling, is central to the recovery of vast new US shale gas resources.

He said that the investigations or regulatory plans are under way at 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).

“Some of these investigations or studies have no specific timeline, yet information continues to be shared with the press about how further studies and stricter regulation are being prepared” to deal with environmental concerns around fracking and chemicals used in that process.

He said that fracking – which involves high-pressure injection of water, sand and chemical additives into deep shale formations to free trapped natural gas – has been in wide use across the US for six decades and is already adequately regulated at state levels.

“There is absolutely no need for the federal government to add bureaucratic layers where disclosure is already occurring” at the state level, he added.

“All this adds to a state of uncertainty and generates fear for which there is no evidence,” Felmy said.

He said that the administration’s public pronouncements on domestic energy development and its regulatory practices are “polar opposites”.

“We are calling on Congress to halt the administration’s drive towards overregulation of hydraulic fracturing and commercial oil and natural gas production,” he said.

Also this week, the American Chemistry Council (ACC) launched a new advocacy campaign to build public and policymaker support for a national energy policy that the council said could drive a new renaissance in US manufacturing – if the government would just get out of the way.

ACC president Cal Dooley told a press conference: “In order for our economy to grow and for US industries to innovate and compete globally, and for businesses to create new jobs, a national energy strategy is critical”.

The council’s campaign, called “From Chemistry to Energy”, urges an “all of the above” US federal energy policy that includes development of conventional, fossil-based energy resources such as coal, oil and natural gas but renewable and alternative sources as well, such as biofuels, solar and wind power.

The campaign also advocates for improvements in commercial and residential energy efficiencies and encourages increased use of “energy recovery” practices that, for example, use recycled plastic wastes as a fuel to generate electric power.

Dooley urged US policymakers to allow industry to take full advantage of newly abundant natural gas resources in shale plays across the country, noting that the development of shale gas has reversed the fortunes of the US chemicals industry.

“Shale gas has given us the opportunity for a new golden age for the US chemicals industry,” he said, noting that US petrochemical producers collectively are planning as much as $16bn (€12bn) in new capital investments over the next three years to take advantage of the new feedstock advantage in shale gas.

He argued that with the right energy policies out of Congress and the federal government, “we can replicate the chemical industry’s experience and create a renaissance in US manufacturing as a whole”.

Dooley said that an “all of the above” energy policy could sustain US economic security going forward.

Asked if he thought the administration of President Barack Obama was hostile to fossil-based fuels and energy, Dooley said he was encouraged by Obama’s recent state of the union speech in which he voiced support for natural gas and an all-in energy future.

But Dooley said he was concerned about the administration’s recent decision to reject the long-pending Keystone XL pipeline project that would have brought more Canadian oil to US refiners, and moves by the administration to regulate hydraulic fracturing.

“We’re not hostile to the president,” Dooley said, “but we will be watching closely to see if the administration’s actions are consistent with the policy he stated in his speech.”

Over at the American Fuel & Petrochemical Manufacturers (AFPM), association president Charlie Drevna was more direct, charging that the Obama administration has “embraced an anti-fossil fuels policy”.

Drevna said that while on one hand Obama pledged to accelerate natural gas development, with the other hand he characterises the energy industry as greedy.

“We saw an example of this demonisation of fossil fuels in the state of the union address,” Drevna said.

“President Obama called for an end to what he called ‘subsidies’ to oil companies, while at the same time saying America needs to support American manufacturers,” Drevna said.

“There are no ‘oil company subsidies’, just as there is no cellulosic ethanol,” he said, charging that the Obama administration’s anti-fossil fuel policies are “against the best interests of American consumers, American workers and America’s national security”.

“President Obama is correct that creating new manufacturing jobs and producing more domestic energy is critically important,” Drevna said, “but we wish he would work with us constructively to enact regulatory and tax policies to preserve existing manufacturing jobs held by Americans today in our industries and others.”

He urged the administration to eliminate “harmful and counterproductive federal overregulation, including seemingly endless permit delays that block America’s access to domestic oil and natural gas and make it difficult for fuel and petrochemical manufacturing plants to operate”.

He said that the Obama administration’s decision to reject the multi-billion dollar Keystone XL pipeline project is only the most “recent example of the administration’s anti-fossil fuels policy”.

 ($1 = €0.76)

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

By: Joe Kamalick
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