Changes in the political landscape will alter the
course of natural gas development. With a Democratic
congress headed to Washington in January, it is unlikely
that any ambitious new drilling programs will get
underway.
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Ken Silverstein
EnergyBiz Insider
Editor-in-Chief |
Natural gas developers and their supporters on Capitol
Hill and in the White House have long noted that the
demand for energy in the United States has outstripped the
domestic supply -- with shortfalls made up through
dwindling Canadian imports. That crunch will worsen as
demand grows, which is a problem that the industry says
could be rectified if producers had greater access to
federal lands thought to be rich with natural gas.
But those additional rights are not coming anytime
soon. Many Democrats in Congress are sympathetic to the
concerns of the environmental community, which has argued
that the United States cannot drill its way out of the
energy conundrum that it is in. Because there is said to
be only 50 to 75 years of natural gas on domestic
property, such groups maintain that policymakers ought to
pursue a sustainable energy strategy.
The effects of a new political dawning in Washington
are already evident. For example, both chambers earlier
passed legislation to allow producers more off-shore
access in the Outer Continental Shelf. While the Senate
voted out a moderate bill that would open up an additional
8 million acres in the Gulf of Mexico, the House okayed
legislation that would also allow more drilling off the
Atlantic and Pacific coastlines.
But, the upcoming change in leadership has meant that
the House's version had no chance of becoming law. So,
Republican House members were forced to acquiesce and
support the Senate's more conservative approach. That
bill, now approved by both chambers and which awaits the
president's signature, motivates the states that line the
Gulf Coast - Alabama, Louisiana, Mississippi and Texas --
to push for passage by raising their royalty shares from
less than 2 percent to 37.5 percent.
"The U.S. remains the only nation in the industrialized
world that restricts access to our own deep sea energy
resources," says Jack Gerard, CEO of the American
Chemistry Council. "One of the biggest sources of rising
natural gas demand is for generating electricity, and more
natural gas also will be needed to produce ethanol,
hydrogen, ultra-low sulfur diesel fuel, solar panels, wind
power blades, and energy-efficient materials such as
insulation and plastics for light-weight cars."
And the shift in political winds is prompting President
Bush to consider lifting a ban on oil and gas drilling in
federal waters off Alaska's Bristol Bay. The area, which
is home to endangered whales, has been closed to
production since the Exxon Valdez accident in 1989. Today,
though, the administration points out that natural gas
prices are high and consumers need relief -- something
strongly opposed by environmentalists, who fear oil spills
and irreparable harm to the local ecology.
Political Jockeying
Drilling opponents in environmentally sensitive areas
that include areas off the shores of Alaska and Florida
say that the latest strategies employed by the Bush
administration and Republican members of Congress are just
last ditch efforts to satisfy their supporters and salvage
parts of their policy platform. It's "a last minute
giveaway of public lands as an early Christmas present to
the big oil companies," says Rep. Edward Markey,
D-Massachusetts, senior member of the House Resources
Committee, in a prepared statement.
The political jockeying is not new. Long before the
Republicans thought they would lose control of both
chambers, they were able to insert a provision in the
massive energy bill that passed in 2005 to change the way
calculations to drilling rights are done. The practical
implications are that surveys completed this year differ
dramatically from those taken just three years ago.
The 2006 report performed by the Department of the
Interior's Bureau of Land Management says that half of the
oil and more than a quarter of the natural gas that lay
beneath 99 million acres of federal land are off limits to
producers. By extension, it says that 3 percent of oil and
13 percent of natural gas in those federally-controlled
lands are accessible under standard lease terms while
another 46 percent of oil and 60 percent of natural gas
could be developed with "additional restrictions" like
protecting endangered wildlife.
The survey taken three years ago, and that came to
different conclusions, is the one referenced by the
environmental community. It covered 59 million acres in
the Rocky Mountains and said that 80 percent of all oil
and gas there was accessible with some restrictions --
something that oil and gas producers said is a
misrepresentation, noting that the restrictions were so
burdensome that they precluded any possibility of
development.
Their views resonated with the Republican-controlled
House and Senate, which "clarified" the terms of the
survey and the manner in which it is conducted. Now, the
Bureau of Land Management has included more acreage in its
analysis while taking into consideration various
restrictions, all of which leads to the new figures that a
preponderance of the federal land is off limits to oil and
gas drilling. In the new study, natural gas accessibility
fell from 87 trillion cubic feet to 25 trillion cubic
feet.
It's "a more complete and accurate picture" and "a
helpful tool as we consider the road forward and the needs
of the growing nation," says Kathleen Clarke, director of
the Bureau of Land Management, in a prepared statement.
While enough natural gas is in storage to meet next
year's energy demand, the same can't be said for the
future -- if double-digit growth projections are to be
met. Natural gas producers say that they can meet that
future need if they could get access to areas off-shore
and in the Rocky Mountains. Even though they do not have
the political support to significantly expand their
rights, they should not alienate the Democrats, given that
they might ease their opposition if the drilling
techniques prove to be much less invasive.
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