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Sean Hackbarth Oil rig in the Gulf of Mexico

The Interior Department has begun work on its new five-year leasing program, and the Atlantic coast might be opened to energy development. The Hill reports that earlier this year, Interior opened the door for seismic exploration of the Atlantic coast. With 87% of the outer continental shelf off-limits right now, that would be welcome news.

Offshore development has tremendous potential. In July, Mark Green wrote that the federal Bureau of Ocean Energy Management (BOEM) released new estimates of how much oil and natural gas is off the Atlantic coast:

BOEM now believes areas within the 200 nautical mile U.S. Exclusive Economic Zone off the Atlantic Coast, from Maine to Florida, could hold 4.72 billion barrels of technically recoverable oil and 37.51 trillion cubic feet of technically recoverable natural gas. Those numbers are 43 percent and 20 percent higher, respectively, than the last government estimate of the Atlantic OCS done in 2011.

In 2013 at a House of Representatives Natural Resources subcommittee hearing, Christopher Guith, vice president of policy at the U.S. Chamber’s Institute for 21st Century Energy, explained the economic benefits from offshore development that are already occurring:

Offshore development supports over 240,000 direct and indirect jobs across the country, but nowhere is this more evident than the Gulf Coast economy.  IHS Global Insight estimated that in 2009 the offshore oil and natural gas industry represented 9.3% of total employment and 12% of the economy, and generated almost $6 billion in state and local taxes and over $13 billion in federal revenue.

Opening up the Atlantic as well as more of the Gulf of Mexico and the Arctic will mean more jobs and strengthened energy security. A 2013 study found that opening the Atlantic outer continental shelf to oil and natural gas exploration will create 280,000 jobs.

It may surprise you that in our divided country there’s bipartisan support for expanding offshore energy development. Members of Congress from both parties have sent letters urging expanded offshore energy exploration

There’s also bipartisanship among governors. In February, Virginia’s Democratic Governor Terry McAuliffe joined Republican governors in advocating for offshore energy development.

Bipartisanship also extends to the public. A recent poll found that increased offshore energy development has majority support among Democrats, Republicans, and Independents.

Members of Congress, governors, and the public are all on board. Hopefully the administration will be too.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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Sean Hackbarth  Jimmy Jeong/Bloomberg.A mining truck carries oil sands in Fort McMurray, Alberta, Canada. Photographer: Jimmy Jeong/Bloomberg.

A new study claims that the State Department underestimated the amount of greenhouse emissions from the Keystone XL pipeline. The Los Angeles Times reports:

Building the Keystone XL pipeline could lead to as much as four times more greenhouse gas emissions than the State Department has estimated for the controversial project, according to a new study published in Nature Climate Change that relies on different calculations about oil consumption.

The study’s authors based their calculation on the premise that increased supplies of petroleum through the pipeline would push down global oil prices marginally, and that would lead to an increase in consumption and thus pollution.

But wait, the State Department concluded in its final environmental impact statement that Canada’s oil sands crude will be developed and affect global consumption no matter how it’s transported:

[A]pproval or denial of any one crude oil transport project, including the proposed Project, is unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the United States.

Based upon that analysis, the State Department determined that the pipeline would have minimal impact on the environment.

The oil is already coming to market by rail, and more pipelines are either in the planning stages or are working their way through the approval process. It will get to market, one way or another.

What’s more, the AP reports that some economists are skeptical of the study’s findings:

An increase of 121 million tons of carbon dioxide is dwarfed by the 36 billion tons of carbon dioxide the world pumped into the air in 2013. That's why University of Sussex economist Richard Tol dismissed the calculated Keystone effect as merely a drop in the bucket. If somebody is concerned about climate change, he wrote in an email, the pipeline "should be the furthest from your mind."

Independent energy economist Judith Dwarkin in Calgary, Alberta, Canada, dismissed the study, faulting the idea that added oil production will lower the price and boost demand. Usually, she said, it's consumption that spurs price and then oil production.

Since we know this oil will be developed, the Keystone XL pipeline should be a part of the transport mix. It will create jobs, boost local economies, improve America’s energy security, and do it with minimal impact on the environment.

This study didn’t offer any reason to not approve it.

8 Key Facts about the Keystone Pipeline from U.S. Chamber of Commerce

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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Sean Hackbarth A natural gas rig in Wyoming.Source: Devon Energy via Bloomberg.

In 2011, polluted water was discovered in Pavillion, WY. EPA jumped to conclusions and released a non-peer reviewed report declaring that hydraulic fracturing was the cause. After issuing that report, EPA backed away from its claim. So much so that in 2013 it let Wyoming state environmental officials take over the investigation.

The first of three reports has been released and finds no evidence that natural gas wells stimulated by hydraulic fracturing caused water contamination, the AP reports:

A draft state report released Wednesday on a possible explanation why well water in a central Wyoming gas field smells foul and tastes bad points away from leaky gas wells as a source of the problem.

Testing showed no evidence gas wells in the Pavillion area are leaking produced gas into the ground or providing a route for deep gas to seep into aquifers tapped for household water, according to the draft report by the agency that regulates oil and gas development in Wyoming.

The release of the Wyoming Oil and Gas Conservation Commission report, which examined 50 gas wells within a quarter-mile of 15 water wells, opens a 30-day period for the public and others to weigh in on the draft findings.

Encana, the petroleum company that owns the Pavillion gas field, pointed to the latest findings as evidence their gas wells aren’t to blame.

“The report confirms that the natural gas wells in the Pavillion Field were soundly constructed and provide no migration pathway into domestic water wells,” Encana spokesman Doug Hock said in an emailed statement.

I hope in the future EPA doesn't carelessly make accusations against hydraulic fracturing, a decades-old technology.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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Sean Hackbarth Oil tanker, Kyeema Spirit.Photographer: Eddie Seal/Bloomberg.

Because of America’s domestic oil boom, oil imports fell to their lowest level in 3 ½ years in June, improving the trade deficit.

As you can see from this chart by Mark Perry at the American Enterprise Institute, oil imports as a share of total petroleum products supplied have fallen dramatically since 2005, about the time when the shale boom began.

Net petroleum importsNet United States petroleum importsSource: Mark Perry.

It seems counterintuitive to argue for exporting American oil, right? The Washington Post editorial board understands energy markets and explains why allowing U.S. oil exports is sound energy policy [emphasis mine]:

New technology is tapping oil-bearing shale formations in states such as North Dakota and Texas. Most of this product is light oil, which does not require heavy refining. Some of the most advanced refineries in the world are along the Gulf Coast, but that’s actually a problem: Their owners invested in expensive facilities suited to refining heavier crude, so there is a mismatch between the refining infrastructure and the type of crude flowing from U.S. wells. In the deeply interconnected global oil market, in which borders matter less than many people think, the obvious solution is to allow oil companies to ship the light crude to refineries suited for processing it, supporting U.S. profits and U.S. jobs in the process, and to tolerate imports of crude oil that U.S. refineries can handle.

Energy Secretary Ernest Moniz made this point in May.

The Post editorial goes on to note that exporting oil will improve American energy security: “[E]xpanded exports would encourage the development of oil fields and transport infrastructure, which would help the country weather some disruption in the global oil trade.”

The job gains will be substantial. An IHS study found that exporting U.S. oil will mean an additional $746 billion would be invested in domestic oil production resulting in an additional 1.2 million barrels per day of oil produced per year and 394,000 jobs created annually.

We’re long past fearing that an oil embargo will bring our economy to its knees. Instead, we live in a time of American energy abundance. When circumstances change, policies should too.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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Sean Hackbarth  2007-2014.Source: Energy Information Administration.

“Nothing has come close to the positive impact Marcellus Shale has had on our local economy.” That’s what Vince Matteo, President & CEO of the Williamsport/Lycoming Chamber of Commerce and Dennis Martire, Vice President and Mid-Atlantic Regional Manager of the Laborers’ International Union of North America, wrote in May.

The economic benefits should continue unabated since, according to the Energy Information Administration, natural gas production hit a new milestone in July:

Natural gas production in the Marcellus Region exceeded 15 billion cubic feet per day (Bcf/d) through July, the first time ever recorded, according to EIA's latest Drilling Productivity Report. The Marcellus Region, mostly located in West Virginia and Pennsylvania, is the largest producing shale gas basin in the United States, accounting for almost 40% of U.S. shale gas production. Marcellus Region production has increased dramatically over the past four years, increasing from 2 Bcf/d in 2010 to its current level.

Bloomberg reports, “Marcellus gas accounts for about 16 percent of gross U.S. production, up from 2 percent in 2008.”

Companies working the Marcellus Shale plan to hire 2,000 more people this year. Matteo and Martire write, this has brought hope to their area:

Our neighbors’ entrepreneurial spirit has seen a resurgence. For the first time in recent memory, young people have a real opportunity to stay here and many who left the region -- or the country -- to find work have returned home because good-paying, family-sustaining jobs are now available again.

Jobs ranging from all educational levels are being created across a growing and robust supply chain, with many paying salaries twice that of the statewide average.

The economic benefits from natural gas development have spread across Pennsylvania, as the Manhattan Institute’s Mark Mills writes:

The Marcellus shale fields in Pennsylvania were responsible for enabling statewide double-digit job growth in 2010 and 2011 and now account for more than one-fifth of that state’s manufacturing jobs. For every $1 that the Marcellus industry spends in the state, $1.90 of total economic output is generated.

At the same time, Duke University researchers concluded that natural gas development via hydraulic fracturing has been a plus for local Pennsylvania governments.

Responsible development of Marcellus Shale natural gas is creating jobs and improving peoples' lives. If federal regulators refrain from slapping duplicative regulations on hydraulic fracturing, these communities will continue reaping the benefits. 

[H/t Mark Perry]

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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