U.S. CHAMBER OF COMMERCE

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Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth An oil platform off the coast of Port Fourchon, LA.An oil platform off the coast of Port Fourchon, LA. Photo credit: Derick E. Hingle/Bloomberg.

Just before Christmas, President Barack Obama went all Grinch on American offshore energy development.

On his way out of office, he gave a hollow and solely symbolic gift to “keep it in the ground,” anti-energy zealots by blocking offshore oil and natural gas development off the Arctic and Atlantic coasts:

Obama used a little-known law called the Outer Continental Shelf Lands Act to protect large portions of the Chukchi and Beaufort seas in the Arctic and a string of canyons in the Atlantic stretching from Massachusetts to Virginia. In addition to a five-year moratorium already in place in the Atlantic, removing the canyons from drilling puts much of the eastern seaboard off limits to oil exploration even if companies develop plans to operate around them.

The president placating environmental extremists didn’t sit well with energy advocates, like Karen Harbert, president and CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy:

This administration’s seeming focus on appeasing special interests at the expense of America’s energy security at this late date is inexcusable. This 11th hour decision to attempt to permanently withdraw areas of the Arctic and Atlantic coasts from ever being considered for offshore exploration is the latest example of their anti-growth agenda that places extreme fringe interests over America’s best interest.

Congress did not intend for the president to be able to exploit a rarely used, 24-word provision to make entire seas off-limits from energy production.

But before energy opponents pop the bubbly in celebration, just as President Obama locked up these areas to development, President-elect Donald Trump could unlock them [subscription required] once he takes office [emphasis mine]:

Christopher Guith at the U.S. Chamber's Institute for 21st Century Energy argues that Trump can rescind the decree with the stroke of a pen. That would likely prompt a lawsuit from environmental groups, with the battle playing out in courts.

Guith argues that if Obama had really wanted to keep rigs out of these areas, he should have cited the Antiquities Act in his decision. His predecessor, President George W. Bush, easily reversed an earlier decision by his own father to temporarily restrict offshore oil and gas activity under the 1953 act, Guith notes.

Industry could issue a challenge against the Obama administration's move, but by the time it reached the courts, the Trump administration would be in office and in the position to defend Obama's decree, which it wouldn't. Rather than prompt that delay, industry groups appear for now to be content to wait for Trump to assume office to see if he'll repeat Bush's move and repeal Obama's declaration.

"There is the very real likelihood of a legal challenge that would ultimately fall on the Trump administration," Guith argued. "But probably the easiest part of all of this is that, in spite of all the hand-waving, all it takes is another presidential memorandum where President Trump would say, 'I am reversing the withdrawal,' and it's done."

Unfortunately, the Obama administration has given generously to “Keep it in the ground” fanatics in 2016:

In March, the Interior Department flip-flopped and scrapped plans to lease areas of the Atlantic coast to energy development. In November, it did the same in the Arctic Ocean. In July, the Interior Department unnecessarily raised the regulatory barriers to offshore energy development in the Arctic. A few weeks ago, an Obama political appointee refused to issue an Army Corps of Engineers easement to finish the Dakota Access Pipeline—even though the Corps approved the project this past summer.  

On his way out the door, President Obama, who once touted an all-of-the-above energy strategy, continues to abandon the energy abundance that powers our country.

Let's hope for better in 2017.

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Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.

 

Stephen Eule U.S. energy security

America’s energy security is at its strongest point in two decades, according to the latest edition of the Energy Institute’s Index of U.S. Energy Security Risk

This 2016 edition of the Index, the seventh in the series, provides an updated look at U.S. energy security incorporating the most recent historical data and updated forecasts. The Index employs 37 different measures of energy security risk and covers the period from 1970 to 2040. Like a golf scorecard, a low Index score is better than a high Index score.

us_energy_index_blog_grpahic_12.14.16.jpg U.S. Energy Security Risk Index, 1970-2040U.S. Energy Security Risk Index, 1970-2040Source: Institute for 21st Century Energy.


In 2015—the most recent year available-risk dropped 3 points, to 78.0, the lowest level since 1996. This is the fourth consecutive year that the overall U.S. risk score has declined. From a record high score of 101.2 points in 2011, it has fallen 23.2 points. Based on the most recent forecast from the Energy Information Administration, we also expect that future risks will be lower than thought compared to earlier forecasts. (See the chart nearby for all of the scores from 1970 to 2040.)

To explain this good news, one need look no further than the application of hydraulic fracturing, horizontal drilling, and advanced seismic imaging throughout the country’s vast shale formations. The rapid increase in domestic oil and natural gas production has lowered energy imports and expenditures for those imports and put downward pressure on prices. Despite slumping prices, domestic crude oil output still increased by more than seven percent in 2015, off the pace of previous years but still quite good. Natural gas production achieved a record high, with a five percent increase in 2015. Continued improvements in energy efficiency also have contributed to the lowering of energy security risks that we’ve seen over the past few years.

It’s not all good news, though. Crude oil price volatility rose significantly, driven by the desire of Saudi Arabia to capture greater market share by driving down sharply the price of crude oil.  Rapid shifts in prices in either direction—volatility—can create unstable market conditions that increase energy security risks. One thing we’ve learned recently, however, is that America’s energy entrepreneurs are up to the challenge and will maintain high levels of output that should help keep prices from rising too much. As prices firm up, we can expect that U.S. producers will continue to do what they do best—innovate.

A special feature in this year’s Index of U.S. Energy Security Risk is a look at trends in security of world oil production that take into account the reliability and diversity of crude oil supplies over time.  It notes, for example, that about 55% of the world’s current oil output comes from countries Freedom House categorizes as “not free”—in other words, countries more likely to see political turmoil, join cartels, or use energy for geopolitical ends. This is a substantial risk that makes America’s resurgence in oil production all the more important, because it reduces our, and the world’s, exposure to unreliable sources of oil. (Refer to the report for more details.) The U.S. Index and its companion, the International Energy Security Risk Index, are available here.

This originally appeared on the Institute for 21st Century Energy's blog.

Sean Hackbarth An oil jack near Corpus Christi, Texas.Photo credit: Eddie Seal/Bloomberg.

You may see “Keep it in the ground” folks and other anti-energy activists pounce on a new EPA report in an attempt to stop fracking.

But the truth is fracking--using water, sand, and a small amount of chemicals to break up shale rock thousands of feet below the surface to free oil and natural gas—isn’t a threat to drinking water.

From Energy In Depth:

Today, the Environmental Protection Agency (EPA) released the final results of its long awaited groundwater study. While the agency made some wording changes to its previous topline finding, the data have not changed. This study took five years to complete, and in that time EPA found nothing to suggest that fracking is a serious risk to groundwater. Because of this, the report only reinforces what EPA found previously – that “hydraulic fracturing activities have not led to widespread, systemic impacts to drinking water resources.”

If fracking were a major threat to drinking water supplies, the data gathered by EPA would show it – but they don’t. If fracking were contaminating water on a widespread level, the evidence would also have been found in the dozens and dozens of peer-reviewed studies that have been conducted over the past decade. So perhaps contrary to its intention, EPA’s study officially closes the book on the environmental activists’ deliberate misinformation campaign.

On a press call,  EPA official acknowledged that “number of identified cases of drinking water contamination is small.” Compare that to the two million wells that have been fracked over decades.

Think of it like airplanes. Thousands of times a day, they take off and land with rarely any mishaps. Based on that, we call flying, “safe.” The same logic applies to fracking.

Hydraulic fracturing: How it works


Like any industrial process, fracking has to be done properly to be safe. But by following industry best practices and upholding the multitude of regulations state agencies place on it, fracking is done safely.

This has been show in many instances where researchers closely studied the practice:

Earlier this year, University of Cincinnati researchers—partly funded by fracking opponents—found “no evidence” that the practice harmed groundwater in the Utica shale in Ohio. A 2015 Yale University study didn’t find evidence of groundwater contamination in Pennsylvania natural gas wells. Energy Department scientists determined in 2014 that fracking fluid didn’t seep up thousands of feet to drinking water in natural gas wells in the Marcellus Shale. In Pavilion, Wyoming, state environmental investigators found in 2015 there was “little evidence” that fracking caused ground water contamination.

The idea that fracking can cause someone’s water to become flammable is a fraud.

Here’s some more truth: Fracking has transformed the geopolitical energy landscape. The shale boom launched an American energy renaissance, has saved families money, and transformed the U.S. into an important exporter in world energy markets.

And as science shows, it’s being done safely.