GOP Task Force Says Environmental Rules Stifle Natural Gas Supply

WASHINGTON, DC, October 1, 2003 (ENS) - Environmental review and bureaucratic red tape have caused a natural gas crisis that is having devastating impacts on the U.S. economy, according to a report issued Tuesday by House Republicans. The report says the solution lies with policies to expedite natural gas drilling on federal lands, but critics contend that these measures will not provide consumers or industry with any relief from high natural gas prices.

The report from the House Task Force for Affordable Natural Gas details that although America has abundant domestic natural gas resources, the natural gas supply chain is near "its breaking point."

Last winter's cold weather drew down reserves of natural gas and caused prices to spike - this has combined with increasing demand and led to the doubling of natural gas prices.

"People are losing jobs, industries dependent on natural gas are suffering and home heating prices continue to skyrocket," said Representative Billy Tauzin, a Louisiana Republican chairman of the House Energy and Commerce Committee. "Without increased exploration and development of our nation's abundant natural gas reserves, our economy and the livelihoods of all Americans are at risk."

House Republicans say new technologies limit the environmental impacts of natural gas drilling operations. (Photo courtesy Energy Department)

About 15 percent is imported from Canada and one percent is obtained via imports of liquefied natural gas (LNG).

The interest in getting natural gas from federal lands is understandable - more than 60 percent of the nation's future natural gas reserves lie beneath public lands in the Rocky Mountains and Alaska and in offshore waters managed by the federal government.

These resources offer "years of supply for American consumers and the economy," according to the task force. "But government policies are making it increasingly difficult, if not impossible, to access these promising reserves."

It says the permitting process is plagued by numerous overlapping environmental regulations and in order for a company to drill on federal lands "several mind numbing procedures must be successfully completed."

The task force, which was formed in June by House Speaker Dennis Hastert, calls for a new single federal agency to process permits for natural gas drilling on federal lands and for that process to be standardized and expedited.

It recommends incentives for industry to drill on federal lands and to develop of natural gas pipelines and LNG storage facilities.

Many of the recommendations issued by the House task force will be considered by the joint conference committee that is currently compiling a massive energy bill, said Tauzin, who is cochair of the committee.

That is a concern for environmentalists, who believe the energy bill further tilts the scales in favor of fossil fuels and rolls back environmental oversight of energy development on public lands.

It provides some $500 million in loans to subsidize oil and gas development, according to the U.S. Public Interest Research Group, on top of the existing $10 billion these industries will receive over the next five years in existing tax breaks.

The draft of the bill is a "buffet of special interest provisions," said David Alberswerth, public lands policy expert for The Wilderness Society.

Republicans contend that the nation faces a severe energy crisis - in particular when it comes to natural gas.

Many are pushing for increased domestic production of natural gas, but conservationists and some energy experts believe short term price relief can be achieved by increased efficiency and renewable energy development. (Photo courtesy U.S. Minerals Management Service)

For many years the resource was discarded as worthless, but today natural gas provides one fifth of all the energy used in the United States and demand is outpacing supply. Government policies have encouraged the use of natural gas - a clean burning fuel - and the Energy Information Administration estimates natural gas consumption will increase 60 percent by 2020.

Many are worried about the impact on the electricity generating sector, which has increasingly embraced natural gas, and on consumers - 55 percent of all U.S. households use natural gas.

The task force also noted the impact of higher prices on industrial users, such as manufacturers of fertilizer, plastics, chemicals, and steel. These industries use natural gas as a fuel and raw material, and the price spikes over the past year have been costly. The task force detailed that natural gas price pressures have forced the closure of 11 ammonia plants.

"The federal government has pushed and pulled our energy sector into a corner, and now we are witnessing higher prices and lower inventories which punish American consumers, workers and our nation's economy," said Hastert, an Illinois Republican.

The task force says tax incentives should be granted for natural gas from marginal wells and royalty incentives for existing wells on federal lands.

The nation needs to reconsider "federal land grabs" that bar natural gas production on million of acres of public lands, according to the task force, as well as within 85 percent of the Outer Continental Shelf (OCS).

"Radical environmentalists continue to bang the same old drum that we can not produce energy and still protect our environment," the task force said.

But critics say the natural gas crunch the nation faces is the result of inadequate storage and transportation, not supply.

"The lack of access to Western public lands did not cause recent natural gas price spikes," says Peter Morton, an economist with The Wilderness Society.

Morton points to report released in January 2003 by the Interior Department that found 88 percent of the "technically recoverable" natural gas resources and 85 percent of the "technically recoverable" oil on federal lands in the Rocky Mountain region are currently available for leasing and development.

And a survey in 2000 by the Interior Department's Mineral Management Service found that 80 percent of the nation's undiscovered, economically recoverable OCS gas is located in the Central and Western part of the Gulf of Mexico, which is currently not subject to the moratorium.

Importing liquefied natural gas is seen as a good longterm solution by some to the natural gas price crunch, but it is an expensive proposition that will take years to develop. (Photo courtesy Energy Department)

A study released last month by the American Council for an Energy Efficient Economy found nationwide efforts to increase energy efficiency and renewable energy could reduce wholesale natural gas prices by 10 to 20 percent within a year and save consumers some $15 billion annually in retail gas and electric power costs.

The task force acknowledged that other energy sources could help ease the price hikes from natural gas, but cautioned that renewables are a very small part of this equation.

Many of these resources are "not economically viable in today's energy markets," said the task force, which called for efforts to encourage more nuclear power and clean coal technology.