A European Perspective on the U.S. Shale Energy Revolution

The intersection of a recent anti-natural gas fundraiser at the trendy Brooklyn Winery – featuring fabulous culinary delights prepared by a group of talented chefs – and the natural gas that made the evening possible was, well, simply mouth-watering.

New York Daily News columnist Bill Hammond writes that the “Taste of the Marcellus” event last week was hosted by a group called Chefs for the Marcellus, to showcase the kinds of foods they say could be jeopardized if New York Gov. Andrew Cuomo OKs hydraulic fracturing in that state’s portion of the Marcellus Shale. Hammond:

"Guests were treated to eggplant-stuffed okra, smoked lamb belly with fermented tofu and whipped ricotta jewel on toast — along with wines from the Finger Lakes and beers from Cooperstown’s Ommegang brewery. Th... more »

Jill is a district manager for Total Safety, a company that provides service solutions for various aspects of the oil and natural gas industry, as well as power-generation and industrial markets. For her, the industry is about future job security: “It’s really an industry that’s not going away.”

Her video:

Visit American Energy Works.org for more videos and information about the people who’re at work for America’s energy future.

A new USA Today/Gallup poll finds two of the top three issues that Americans care about the most in this election year are … jobs and reducing the federal budget deficit. Check and check. America’s oil and natural gas industry can help with both. Respondents were asked to weigh the importance of a number of issues (see chart), and 92 percent said creating good jobs is “extremely/very important.” On cutting the federal deficit the figure was 86 percent. Jobs and revenue to the government – we can help.

With the right policies in place – increasing access to American natural resources, the right approach to energy regulation, encouraging energy investments and more – our industry could create 1.4 million jobs by 2030. Here’s how the Wood Mackenzie energy consulting firm charts the pot... more »

Energy-driven economic growth is more than theory in places like Mount Vernon, Ohio, and Chandlersville, about 60 miles to the southeast. Shale energy is building growth in both places – in different ways.

In Mount Vernon, Ariel Corporation is experiencing demand for the reciprocating gas compressors it manufactures, which are used to extract, process, transport, store and distribute natural gas from shale. In Chandlersville, Steve Addis and his wife own and operate Annie’s Restaurant, which is seeing an influx of workers who’re drilling new shale gas wells in the area. Both show how the oil and natural gas industry supports jobs beyond direct industry jobs.

More in this video:

Visit American Energy Works.org for more videos and information about the people who’re at work for Am... more »

ConocoPhillips’ Bob Morton is chief materials scientist at the company’s technology center in Bartlesville, Okla. The chemical that allowed development of low-sulfur gasoline and diesel – without sacrificing octane and without increasing the cost of the fuel – was developed there, he says.

Coming up with environmentally friendly consumer products is Morton’s mission:

“What I really love about my job is sometimes I’m given the opportunity to see something that nobody has seen before. And when those moments happen truly, those are the things that I think are the most wonderful parts of doing the job.”

Check out Bob’s story:

Visit American Energy Works.org for more videos and information about the people who’re at work for America’s energy future.

... more »

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Make TAPS the Gift That Keeps On Giving

Worth reading is U.S. Sen. Lisa Murkowski’s op-ed piece in the Juneau Empire, marking the 35th birthday of the Trans-Alaska Oil Pipeline System, or TAPS.

The Alaska Republican knows something about oil. She represents a huge energy state and would likely head the Senate Energy and Natural Resources Committee if the GOP emerges from this fall’s elections with a majority. She depicts TAPS as more than a conduit for crude from Alaska’s North Slope. It’s an economic pipeline as well – for the state and the rest of the country. Key facts:

TAPS is 800 miles long, running from Prudhoe Bay in the north to Valdez on the Gulf of Alaska.Since oil first started flowing in 1977, the pipeline has delivered more than 16.6 billion barrels.As Murkowski notes, three out of every 10 jobs in Alaska can be traced to TAPS.The pipeline has generated more than $171 billion in revenues to the state treasury. North Slope oil production allowed the state to terminate its income tax in 1980.

Murkowski writes:

“Oil wealth has paid for improving our roads, water and sewer systems, building parks, renewing our cities, and improving life in our most remote villages. The riches that Alaskans have extracted from under the North Slope have also funded our schools, and helped bring our health care system into the 21st century.”

The pipeline’s birthday is an excellent time to think about its future. Murkowski writes that at its zenith, TAPS carried 2 million barrels of oil per day. Now the daily flow is only about a quarter of that. Alaska has slipped behind North Dakota to No. 3 on the list of top oil-producing states (behind Texas). Here’s a chart from Gov. Sean Parnell’s office showing North Slope production decline, which has decreased TAPS’ flow: 

There are risks with reduced pipeline flow. According to the governor’s office, at lower flow levels it takes longer for oil to go through the pipeline, and at lower temperatures ice forms inside that can cause damage. Murkowski:

“Without new oil production, throughput in the pipeline could fall enough to threaten its future viability. Shutting down the pipeline would mean closing up shop on the North Slope. Alaska’s oil — like its massive natural gas reserves today — would be stranded with no way to market, leaving the state scrambling to replace the 85 percent of its annual revenue that today comes from oil.”

There’s a relatively simple solution: Produce more domestic crude oil to send through TAPS. The oil is there – offshore in the Beaufort Sea and the Chukchi Sea (where Shell hopes to sink exploratory wells this summer) and in the Arctic National Wildlife Refuge (ANWR), which Murkowski writes is the “largest single prospective onshore source for conventional oil in North America.” Some estimate ANWR could produce 1 million barrels of oil per day, which by itself would solve the under-capacity situation with TAPS while significantly boosting our country’s oil output. 

The problem is policy. ANWR continues to be held off limits by Washington, and development of Alaska’s offshore areas has been slow in coming – again, chiefly because the federal government has been slow granting approvals. Murkowski:

“The federally owned lands and waters to the east, west and north of Prudhoe Bay hold tremendous resources, but access has been slowed by an administration more interested in designating new wilderness than shoring up Alaska’s economy.”

We need policies that create sustained and predictable access to oil and natural gas on federal lands – in ANWR and elsewhere (see map below). Access = energy development, which will mean job creation, economic growth and a more secure energy future. And a great birthday present for TAPS.

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Lights, Cameras…Fracking!

Great time Thursday night at the grand, lovely Warner Theater in Washington, D.C., for API’s “Big Screen Energy” event, featuring film trailers from pro-energy documentaries on hydraulic fracturing including “Truthland,” “Empire State Divide” and “Frack Nation.” After the trailers, representatives of the films talked about their projects and answered questions from the audience. Some important points that emerged:

#1: Shale Energy = Economic opportunity

For lots of people in the Marcellus Shale portions of Pennsylvania, energy from fracking is helping them alter the courses of their lives. And it could help even more if New York state approves hydraulic fracturing on some scale. “Empire State Divide’s” Karen Moreau said New York agriculture needs working capital to survive. Energy development from that state’s portion of the Marcellus could supply that, keep farms operating and allow them to be handed off to the next generation, said Moreau, who since making her film was named executive director of the New York State Petroleum Council.

#2: Countering Frack Fiction

“Truthland,” featuring Pennsylvania science teacher and mom Shelly Depue, spends much of its 34 minutes dispelling misinformation about hydraulic fracturing and natural gas development. The film is a step toward centering the national fracking debate on science and fact instead of fear and misrepresentation. “Frack Nation’s” Phelim McAleer said some opponents aren’t interested in responsible development; they want to block natural gas altogether.

#3: The Right to Prosper

Moreau said the divide in New York over fracking is actually a property rights test – whether individuals may develop resources on their land. She said some opponents of natural gas development in New York’s southern tier, the counties in the Marcellus along the Pennsylvania border, aren’t residents of those areas. Still, they are trying to control or block development. The contest is still playing out, as state officials weigh how much development, if any, to allow.

Again, the evening provided an interesting perspective on an important public policy issue. At the center of it is a truth, noted by McAleer: the ability of energy to lift lives, to lift standards of living. McAleer said the lack of affordable, reliable energy usually characterizes areas that are impoverished and unhealthy – places where people have little chance to lift themselves. Energy changes that, he said.

In energy from shale, the United States has an historic opportunity to be more prosperous – with abundant fuel for the lifestyles of its citizens and the power to revitalize critical industries like manufacturing and chemicals. The U.S. also can make its future more secure, less dependent on imports. Industry’s role is to develop these resources safely and responsibly. It is doing this while striving to continually improve technologies and performance.

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The Administration’s Flawed Five-Year Offshore Plan

Words matter. But actions matter more, and the Interior Department’s final five-year offshore oil and natural gas leasing plan shows that while the administration trumpets an all-of-the-above energy approach, it falls short of providing the bold leadership needed to fully deploy our country’s ample resources.

You can read Interior’s statement on the plan here. Basically, Secretary Ken Salazar says the strategy includes areas with the “highest-known resource potential.” Sounds good, but it took industry exploration for those areas to gain that designation. Only through exploration can we learn the resource potential of other areas. Loudly, misguidedly, the administration is saying “no” to that.

Its plan omits areas off both coasts and in the Eastern Gulf of Mexico that are believed to be rich in energy – but which will remain unexplored. There’s little incentive to spend millions of dollars to research and gather data in these areas because they are off-limits to exploratory drilling. API’s Erik Milito, director of upstream and industry operations:

“We must move past policies that undermine the mission of supplying Americans with the energy they need. While vitally important, the Western and Central Gulf of Mexico areas included in this proposed offshore program are not ‘new’ areas. … Today’s proposal will not allow us to realize the full benefits from safe and responsible development of America’s oil and natural gas resources, continuing a pattern of delay and unnecessary restraint.”

Milito said Interior’s plan, announced with the Bureau of Ocean Energy Management, actually pushes back a scheduled 2015 lease sale for the Beaufort Sea off Alaska – where leasing already has occurred. It makes more areas off limits than it makes available. Milito:

“A sensible long-term strategy would embrace and promote expanded oil and natural gas exploration and development to create new jobs and secure critical energy supplies for future generations. … Exploring and developing new areas that offer oil and natural gas gives the United States the golden opportunity to create an additional one million new jobs and billions in new revenue to our government in just seven years. We cannot reach these goals by constricting exploration and obstructing the safe and responsible development of American energy resources.”

While oil production has increased in private and state lands, this administration has consistently deterred activity on federal lands, where oil production has actually decreased. Instead of forward-looking energy leadership that would create jobs, generate tax revenue for governments and make America’s future more secure, the administration offers posturing and talk. Instead of acting to promote greater domestic oil and natural gas production it is restricting opportunity and building in delay – neither of which will prepare the United States for its energy future.

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Another Study ‘Showing’ No Contamination from Fracking

Where to begin in a review of Pro Publica’s article on new research into the migration of subterranean brine to shallow water above? The inflammatory, overreaching headline? The leap from Duke University’s study to conclusions suggesting to the public that hydraulic fracturing is polluting drinking water?

Let’s start there. On that point the article is self-rebutting. See the fourth paragraph:

"No drilling chemicals were detected in the (shallow) water, and there was no correlation between where the natural brine was detected and where drilling takes place."

Then, near the end of the article:

"Nevertheless, (Robert) Jackson, one of the study's authors, said he still considers it unlikely that frack fluids and injected man-made waste are migrating into drinking water supplies. If that were happening, those contaminants would be more likely to appear in his groundwater samples, he said. His group is continuing its research into how the natural brine might have travelled, and how long it took to rise to the surface. 'There is a real time uncertainty,' he said. 'We don't know if this happens over a couple of years, or over millennia.'"

As for the study itself, Jackson and his team say they found that naturally occurring brine migrates upward to shallower depths. They say the risk of the migration could be greater in areas that have undergone hydraulic fracturing. Yet, there’s this from the study’s introductory summary:

“The occurrences of saline water do not correlate with the location of shale-gas wells and are consistent with reported data before rapid shale-gas development in the region …”

Energy In Depth has solid analysis on the study, here. Highlights:

The study fails (as Jackson notes above) to establish whether the migration occurs over 10 years or 10 million years. Without that, it’s impossible to determine whether the phenomenon is cause for concern.If brine is traveling up from thousands of feet below the surface, why haven’t the pathways Duke’s researchers identify allowed natural gas in the Marcellus region to leak out and disappear over time?There’s no discussion of whether the Marcellus Shale – which is largely a dry region with “virtually no free water,” according to Penn State’s Terry Engelder – even contains enough brinewater to leak.

Engelder, a Marcellus expert who was asked by the researchers to review their work, notes a number of questions the study leaves unanswered, reducing its usefulness. He writes:

"My review is predicated on the objective of your paper which is stated as a search for '...specific areas of shale-gas development in northeastern Pennsylvania that are at increased risk for contamination of shallow drinking water resources with deeper formation brines...' (the last sentence of your abstract). The term, risk, suggests that your paper veers from a conventional geology paper and enters into the realm of science-based advocacy or if you like, science policy."

Engelder is on target there. Unfortunately, the academics, wittingly or unwittingly, produced a study that is easily morphed into a siren call by opponents of natural gas production. Pro Publica’s article is Exhibit A. Exhibit B is a Bloomberg News story under this headline: “Pennsylvania Fracking Can Put Water at Risk, Study Finds” – despite the fact the study found no evidence of such a risk.

Words like “can,” “may” and “might” camouflage the point that the study didn’t find a correlation between the location of shale-gas wells and occurrences of saline water. To suggest otherwise in a news article is disingenuous and counterproductive in the national discussion of energy from shale.

As Engelder notes, the study is a platform from which advocates can mislead. On this story, The Associated Press got it right, focusing its report on what the study showed: “Gas drilling in northeastern Pennsylvania did not contaminate nearby drinking water wells with salty water, which is a byproduct of the drilling.”

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Welcome to Williston, Welcome to Prosperity

Perhaps only The New York Times could reduce the energy/economic miracle of North Dakota’s oil and natural gas bonanza to something akin to a toothache. Columnist Gail Collins ventures forth from the concrete canyons of Manhattan to discover the hubbub on the high plains and doesn’t avoid raising a skeptical eyebrow.

To her credit, Collins was able to confirm what lots of people already know: Oil and natural gas extracted from the Bakken Shale formation through hydraulic fracturing is practically evaporating unemployment in North Dakota , which has a jobless rate considerably lower than New York:

Collins writes:

"If you did come, however, you would feel really, really wanted. Radio ads urged me to embark on a new career as a bank teller, laborer, railroad conductor or cake decorator. The local Walmart has a big sign up, begging passers-by to consider starting their lives anew in retail sales. The Bakken Region Recruiter lists openings in truck driving, winch operating and canal maintenance work, along with ads for a floral designer, bartender, public defender, loan officer, addiction counselor and sports reporter. All in an area where the big city has a population of around 16,000."

In other words, if you want to work it’s almost guaranteed you can land a job. But there’s a “but.” Collins describes the Bakken boom as filled with traffic, dust, man camps, bursting schools, long lines (as though waiting 30 minutes for a Big Mac is too much to pay for May’s 2.7 percent state unemployment rate) – while suggesting the most ambitious eatery in town probably wouldn’t impress many folks on the Upper West Side.

It’s true that strong economic growth creates many demands, and, as North Dakotan Rob Port regularly notes on his Say Anything Blog, state and local officials and support businesses need to do a better job seizing the opportunities. But Collins loses us – and perhaps credibility – describing the fracking used to extract oil and natural gas as “environmentally suspect.”

Suspect? Not to EPA Administrator Lisa Jackson, talking April 27 to Fox News:

“In no case have we made a definitive determination that the fracking process has caused chemical contamination of groundwater.”

…basically repeating what she told Congress in May 2011:

“I’m not aware of any proven case where the fracking process itself has affected water.”

Collins may have turned in her piece before this came in, but on Wednesday the EPA removed suspicions surrounding hydraulic fracturing and well water in Dimock, Pa. – ground zero for those who claim fracking fouls drinking water. Regional Administrator Shawn M. Garvin:

“The sampling and an evaluation of the particular circumstances at each home did not indicate levels of contaminants that would give EPA reason to take further action. Throughout EPA's work in Dimock, the Agency has used the best available scientific data to provide clarity to Dimock residents and address their concerns about the safety of their drinking water.”

(Also see Kenneth P. Green’s blog post on the Dimock announcement over at AEI, here.)

Earthquakes and fracking? David J. Hayes, Interior Department deputy secretary, in April:

“We also find that there is no evidence to suggest that hydraulic fracturing itself is the cause of the increased rate of earthquakes.”

Bottom line: Collins may have environmental suspicions about shale energy and fracking, but a number of people paid to pay attention to such things don’t share them.

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Innovation: Making Energy Production Cleaner, More Efficient

When we wrote last week about technologies to mitigate water demands during hydraulic fracturing, we knew we’d find more examples of energy innovation for the simple fact that there’s a lot of innovating going on. Here’s a little bit about two other advances in the area of fracking waste water, as well as another company’s initiative to make the development of Canada’s oil sands cleaner and greener.

Halliburton says it has a suite of solutions to reduce the demand for fresh water in hydraulic fracturing operations, called H2-Forward. You can read more about it, here. Basically, it’s a process that allows drillers to reuse fracturing fluid. Halliburton:

"The service includes new technologies such as CleanWave service that is used to process fracturing flowback and produced water, resulting in a clean brine fully suitable for well site operations including drilling, fracturing and completion fluids. … The system, which can treat 20 bbl/minute, uses an electrical process that destabilizes and coagulates suspended colloidal matter in water. Easy scalability enables quickly treating large volumes of water in reserve and flowback pits and, depending on the operation, treating flowback and produced water in real-time during a fracturing operation. The CleanWave system removes up to 99% of total suspended solids, heavy metals, hydrocarbon and bacteria."

Meanwhile, Pennsylvania-based Epiphany Solar Water Systems’ main product is a system that uses solar power to clean fracking waste water. Consol Energy, which is active in the Marcellus Shale area, recently announced it is investing $500,000 in Epiphany and will run a test site for the purification system beginning next month.

Here’s Ephiphany’s description of its technology:

"Dirty water passes into the distillation unit and instantly vaporizes due to the intense heat focused on the distillation unit. During the vaporization process, any dissolved solids … separate, and living organisms (bacteria) are killed due the intense heat. The water vapor (now void or any impurities) continues to pass through the distillation unit. As the steam reaches colder stages it begins to condense back down into distilled water. From the output of the distillation unit then comes freshly distillated water, safe for consumption."

Calgary-based N-Solv Corporation is promoting a technology it says will reduce the amount of energy needed to produce bitumen from oil sands, while reducing greenhouse gas emissions 85 percent without using any water. A $60 million field test in Alberta is scheduled for next April. It uses warm solvents such as propane or butane to melt the bitumen deposits, which the company says is more efficient than using in-situ steam technology. You can read more about it on the company’s website, here.

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Caution Warranted as E15 Launches in Kansas

From Kansas we hear that a gas station owner in Lawrence has become the first in the country to offer E15 fuel – gasoline with 15 percent ethanol instead of the 10 percent blend that’s standard around the U.S. According to the New York Times, Scott Zaremba may expand E15 to more of his eight stations.

Before motorists in the Lawrence area rush down to fill up, they might take the time to check their vehicle warranties. Even though the EPA has approved E15 for cars and light trucks from model year 2001 forward, a Coordinating Research Council study showed that the fuel can cause engine damage. Automobile manufacturers have said vehicle warranties will not cover damage from E15. Bob Greco, API downstream group director:

“We need to press the pause button on EPA’s rush to allow higher amounts of ethanol in our gasoline. The new fuel could lead to engine damage in more than 5 million vehicles on the road today and could void the manufacturer’s warranty.”

Greco said E15 also could damage engines in boats, recreational vehicles and lawn equipment. Consumers should follow the fueling recommendations in their owner’s manuals and carefully read all gasoline pump labels before refueling, he said.

Potential problems with E15 – which is being advanced as a way to help meet volume requirements set out by the Renewable Fuels Standard – were discussed at a hearing on Capitol Hill this week. API President and CEO Jack Gerard criticized EPA’s rush to push E15 into the marketplace:

“EPA should not have proceeded with E15, especially before a thorough evaluation was conducted to assess the full range of short- and long-term impacts of increasing the amount of ethanol in gasoline on the environment, on engine and vehicle performance, and on consumer safety.”

Greco said consumer protection is paramount:

“Our first priority should be protecting consumers and the investments they’ve made in their automobiles. EPA has an obligation to base this decision on science and not on a political agenda.”

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Energy’s Game-Changing Face

A Wall Street Journal report [subscription required] quotes energy analysts who say America will cut its Middle East oil imports in half by the end of the decade and could become oil-independent by 2035, thanks to North American production. 

To those who see the unique chance for the United States to increase domestic oil and natural gas production and fundamentally change this country’s energy equation, we say welcome to the fold. The Journal’s sources are saying things similar to what others have said, including Wood Mackenzie’s analysis last fall, Citi’s 2020 Energy Outlook released this spring and this week’s study by Harvard’s Kennedy School. Of course, along with the energy, there’s job creation and tax revenue generated for government treasuries. All good.

Look at the analyses and there’s a common thread: hydraulic fracturing. It’s the game-changer for the United States, unlocking oil and natural gas resources from shale and other tight rock formations. It is responsible for the rewriting of U.S. natural gas reserve estimates, and its use in oil development is expanding in North Dakota, Texas and other states.

USA Today highlights the fracking boom in a big article, here.  There’s a neat infographic with the story, detailing some hydraulic fracturing basics. The piece’s main thrust is the fantastic economic and energy opportunities afforded by fracking, as well as some of the challenges:

“Even as the price of natural gas dropped to around $2 for a thousand cubic feet this warm winter — half last year's price — states caught up in the boom have enjoyed an employment windfall when jobs nationally have been hard to come by. Since 2009, Pennsylvania has 38,900 natural resources jobs, up 72%; North Dakota has 21,900 jobs, a 172% surge, according to Federal Reserve data. These numbers don't include jobs added to service the fracking industry — everything from selling workers donuts to making steel pipes used in the process.”

That’s what dynamic growth, driven by energy derived from hydraulic fracturing, looks like. The article goes on:

“For many others, the good times are rolling. Welders employed in the natural gas industry average $28.48 an hour, 6 bucks more an hour than other industries pay, according to the Bureau of Labor Statistics. ‘We're still hiring,’ says David Schultz, a plant manager for Forum Energy Technologies' metal fabrication plant in Clearfield, Pa. … About half the fracking well tanks that are manufactured or fixed at the plant are bound for Ohio and the Utica shale, Schultz says.”

No question, there are challenges, as the article notes. Traffic, noise, stretched public services, scarce hotel space, long lines at restaurants. People are concerned the boom will go bust, although industry leaders repeatedly stress the long-term nature of their shale investment. Ohio State University agricultural extension agent Mike Hogan:

“The number of trucks on the roads is incredible. But the money is more than welcome here.”

That seems to be the dominant attitude in other shale states. Energy development is bringing dramatic growth that occasionally tests local infrastructures. But it’s also lifting local, regional and state economies – taking up what Citi’s Daniel Ahn, one of the authors of its energy outlook, describes as slack in our economy. “This couldn’t happen at a better time,” Ahn says.

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Gulf Lease Sale Emphasizes Need for Expanded Opportunities

Some details from Wednesday’s federal lease sale in the central Gulf of Mexico (news coverage here and here):

Size – The Bureau of Ocean Energy Management (BOEM) sale attracted high bonus bids of $1.7 billion for the area off the coasts of Louisiana, Mississippi and Alabama – ranging as far as 230 miles into the Gulf. Bids – Fifty-six companies submitted 593 bids on 454 tracts, with the sum of all bids totaling more than $2.6 billion. That’s a big sale, though not the biggest ever. According to BOEM the biggest value lease sale was $3.68 billion in the central Gulf in March 2008. The last sale in the central Gulf in March 2010 totaled $949 million. Record – The highest bid on a single tract was $157.1 million, submitted by Statoil in the Mississippi Canyon, Block 718 – about three times higher than the previous top bid of $52.5 million submitted in 2010.

Now, some perspective.  As API’s Erik Milito said Tuesday, the simple fact that the federal government held a lease sale in the central Gulf is important. It had been more than two years since drilling blocks had been put up for bid. That BOEM opened more than 38 million acres after a two-years-plus hiatus was a positive step.

Interior Secretary Ken Salazar heralded the sale as evidence of the administration’s “all-of-the-above” energy strategy:

“When it comes to domestic production, the president has made clear he is committed to expanding oil and natural gas production safely and responsibly, and today's sale is just the latest example of his administration delivering on that commitment. … The Gulf is back. There is great robustness in oil and gas activity currently under way in the Gulf, as well as interest in additional exploration.”

Well, it’s probably more accurate to say the Gulf is getting back. Unfortunately, just returning to 2010 levels of activity (rig counts, etc.) concedes that two years of production were negatively affected by the administration’s policies – the 2010 deepwater drilling moratorium and the slow pace of permitting when the ban was lifted. Given that context, sure, industry was enthusiastic about Wednesday’s sale. National Ocean Industries Association President Randall Luthi:

“A sale of this size signals a strong industry commitment to the Gulf of Mexico and to our nation’s energy future and to more domestic jobs.”

More context: The areas opened for bidding this week have been considered before, which is what Milito emphasized on Tuesday. The central Gulf was not a new area for development. So, instead of restricting opportunity to these areas, the government should be expanding it to new ones. As Luthi suggests, industry is willing and able to do more. Just imagine the robustness of the bidding if the lease areas were in the Eastern Gulf or off the Pacific and Atlantic coasts – areas with undiscovered, technically recoverable reserves estimated at 1.40 billion, 10.37 billion and 3.82 billion barrels, respectively (see map).

Milito from Tuesday:

“Exploration is what leads to production. And it is important to understand that it is critical to maintain a robust leasing program to allow companies to explore new prospects and replace the production that is coming from existing wells. Maintaining the status quo won’t work.”

Opening up more U.S. resources for development (onshore as well) is the real path to expanding domestic oil and natural gas production – which is fundamental to a true, all-of-the-above energy approach. It’s critical to an American-made energy strategy that will create jobs, expand the economy and help us be more energy secure in the future.

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EPA’s Costly, Unnecessary Soot Proposal

EPA continues to act tone deaf to the real-world needs of U.S. businesses and regular Americans. Its particle standards proposal issued this week is a good example of the kind of investment-squelching overregulation that ultimately could hurt the country’s energy future.

With the country’s air continuing to improve under the existing fine-particle soot standard, EPA proposed tightening it. The rule is scheduled to be finalized in December. Howard Feldman, API’s directory of regulatory and scientific affairs, says the rule’s benefits aren’t worth its costs:

“Air quality will continue to improve dramatically under the current government standards, but EPA’s proposal could substantially increase costs to states, municipalities, businesses and ultimately consumers without justified benefits. We are concerned that it could come at a significant economic cost and lost investments and limit our ability to produce the energy our nation needs.”

Between 2000 and 2010 concentrations of fine-particle soot fell by 27 percent, according to EPA. Feldman says three-fourths of Americans today live in areas where air quality meets today’s standards, and that the trend will continue – which suggests the new standard is unnecessary.

Feldman also says EPA based its proposal on “faulty scientific analysis,” that important data have been ignored and some of its purported findings are actually misinterpretations. How tightly the standards are set is a policy judgment. Because there is no bright line to guide the standard setting, the impacts of the standards matter. Feldman:

“A more stringent rule will discourage economic investment in counties that fail to meet new federal standards.  It’s in our interest to have both clean air and a vibrant domestic economy. However, the new standards would put many regions out of attainment, and companies considering a place to build a plant or refinery could perceive non-attainment as non-investment.”

Again, in the context of an economy trying to regain its footing, EPA is tossing out banana peels – with potential costs on a number of fronts that ultimately will hit real people. This economic anti-stimulus also is an unnecessary energy impediment.

It illustrates why, if we’re serious about a secure energy future, a common-sense regulatory structure is needed. By that we mean a regulatory process that’s open to all and based on sound science and legitimate cost-benefit analysis. By that standard EPA’s proposal falls well short.

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