Week Ending January 15, 2021

API Highlights Effort on Methane, Priorities for Biden Administration

This Article Appears as Published in Foster Report No 3332
API Highlights Effort on Methane, Priorities for Biden Administration

The American Petroleum Institute (API) is going to work with the incoming administration of President-elect Joe Biden where it can and oppose rules if needed, such as a planned halt to hydraulic fracturing on federal land. But in a shift for API, acknowledging a priority for lowering methane emissions, the group will support federal regulation on methane that is consistent with API principles, said Mike Sommers, president and CEO of API.

Officials from API have meet with the Biden transition team and know that the administration will want to put forward effective methane regulations that survive judicial scrutiny. While the Trump administration reduced federal regulations on methane from the Environmental Protection Agency (EPA), API is open to further regulations on the topic that are consistent with the Clean Air Act, Sommers said January 13. “We want to work with them on what the right regulatory regime should look like,” since there is state regulation on methane and it’s in the best interest of producers to capture methane to sell, he said.

Sommers referred to an expansion of The Environmental Partnership to address flaring at oil and natural gas production sites and the reduction in methane emissions that has taken place in the past 10 years in the U.S. Methane emission rates relative to production – which is an important distinction since U.S. producers set record production levels prior to the COVID-19 pandemic – declined nearly 70% in five of the largest producing regions between 2011 and 2019, API said, using data from EPA and the Energy Information Administration.

API wants to be a willing partner on methane regulation because “it’s a social license to operate issue,” Sommers said during API’s annual State of American Energy event and a press conference held after the online event.

Other topics Sommers touched on during the press conference include political contributions following the January 6 riot at the U.S. Capitol, working with Democrats in Congress that have a majority in the House of Representatives and control of the Senate, opposition to forced electrification policies and subsidies for electric vehicles, increasing LNG exports, project siting reforms under the National Environmental Policy Act (NEPA) and opposition to midstream facilities that support production and LNG exports.

Addressing pipeline construction and efforts to halt pipeline development, Sommers indicated that API’s eight regional offices will take a more active role in advocating for pipeline development and construction. Pipelines have become “a magnet for obstruction” and a few have been canceled, Sommers noted.

API closed several state offices during 2020 and reduced staff in field offices to focus on the eight regional offices. Those regional offices will be advocating and educating consumers in the face of new “activist campaigns” against pipelines, and API is pleased that pipeline safety legislation was passed by Congress that provides for safe construction and operations, Sommers said.

API has always worked with Democrats and Republicans in the White House and Congress during its 101-year history, and it will continue to do so under the Biden administration. A key advantage Biden has is that he’s coming into the White House in a time of energy abundance in the U.S., with ample supplies and affordable energy prices, Sommers noted. The question for policymakers will be whether the future includes benefitting from that abundance or restricting investment and turning to foreign sources of energy, higher costs for U.S. consumers and fewer jobs, he said.

Reflecting on the events of January 6 and scenes at the Capitol, Sommers said he is concerned about the tone and tenor that exists in American politics today and expressed outrage at what happened. Several API member companies have cut back on political contributions in light of those events, and API will examine its political contributions, Sommers said. He declined to specify if any particular members of Congress would be affected, stating that API wants to make sure political participation reflects the values of API and the mission of its members.

Turning to Biden’s campaign promise to limit fracking on federal lands, Sommers referred to an API study of that, showing it would increase costs for consumers, result in more coal use and harm the environment. “We hope that they change course on that kind of draconian policy that they’ve put forward,” because the consequences would be devastating to consumers and the U.S. economy, he said.

API will use every tool at its disposal to fight that kind of a proposal, because federal land was meant to be available for multiple uses, including underground resources, and roughly 25% of U.S. oil and natural gas supplies come from federal lands or waters. Filing a lawsuit is among the tools available if a federal proposal is not done legally, Sommers said.

Referring to higher costs if a ban on fracking on federal land is pursued, Sommers said a majority of Americans would not support such a plan. “We’ll be on the winning side of that argument,” he said.

Summing up API’s stance with the incoming administration during the online event, Sommers said “we’ll support them when we can, and oppose them when we must.”

Sommers and others who spoke during the online event noted that the U.S. has reduced greenhouse gas emissions, while economic growth continued, and the U.S. is now the world’s leading producer of natural gas and oil. The emission reductions have come from increased gas use and less coal-fired power generation, among other measures, but the country does not have to limit oil and gas use to see environmental benefits, speakers said.

If the Permian Basin were a country, it would be the third-highest producing nation in the world, and U.S. energy resources will be needed for quite some time, Sommers said. Even by 2040, oil and natural gas are expected to account for 46% of global energy demand, he said.

Source: API

LNG exports are projected to rise as facilities are completed and they should lead to increased gas use overseas, which can reduce emissions as coal-fired power plants are used less, Sommers added. The LNG export policies should continue under Biden as they are in line with a cleaner energy future globally, he said. U.S. LNG exports are forecast to rise by 30% in 2021, accelerating environmental progress for power generation in places like China, India and nations in Southeast Asia.

Environmental progress is better to come from markets and technology gains than mandates, Sommers said, pointing to California as an example of where mandates for renewable power, phasing out internal combustion engines for vehicles and shutting down gas-fired power plants has resulted in high costs for consumers and blackouts. “The logic of that is a mystery, and Californians have a chance to think about it every time there’s a heat wave and the system requires a blackout,” he said.

On the NEPA reform effort, API is hoping that the process can be improved to aid infrastructure development, Sommers said. While that could help on pipeline additions, clean energy advocates also recognize the importance of permitting certainty and NEPA reform to improve siting for wind power facilities and solar projects, he said.

By Tom Tiernan ttiernan@fosterreport.com

Want to try it out? Sign up for a free trial!
Subscribe Here