Sector News

Why the Oil and Gas Industry Likes Rules

January 27, 2015
Some oil and gas companies, along with supportive conservative think tanks, have gone on the warpath over the Obama administration’s new plans to reduce the industry’s methane emissions. That should not discourage the White House from putting firm regulations in place against willful or careless releases of this potent greenhouse gas.
Pushing back against new government regulations is what the industry’s leaders and public relation teams are paid to do. But underneath their pro forma protests, smart oil and gas companies actually like reasonable regulations. And when they know regulators will stand fast, the industry will often come to the table to cooperate and to help shape the rules.
The evidence can be found in Colorado where oil and gas companies have collaborated with state officials to produce some of the nation’s most progressive policies to protect the public’s as well as the industry’s interests.
As a result of government/industry collaboration, Colorado is the first state to require oil and gas producers to disclose the types of chemicals in their fracking agents and to limit methane emissions from their operations.
Colorado State University (CSU) and Noble Energy — an 80-year-old independent international oil company — are collaborating to monitor the water table at 10 of the company’s gas production sites in Colorado. Instruments in the wells transmit real-time data around the clock to detect any changes in water quality. The data allow experts to respond quickly to find the cause of any changes. In a refreshing example of transparency, the data also are exhibited on the Internet in a user-friendly format for the public to view.
Behind closed doors, thoughtful oil and gas executives acknowledge that they benefit from reasonable government regulation. In 2013, the Center for the New Energy Economy (CNEE) at CSU held several roundtables with energy industry executives and national environmental leaders to discuss what more the Obama Administration should do to advance clean energy technologies. One of the roundtables focused on natural gas production. In an account of this conversation delivered to the White House in January 2014, CNEE reported:
“Several leaders in the natural gas industry told CNEE they generally support effective government regulations that enable production as well as continuous improvement in the sector’s environmental and social performance…Reasonable and effective regulation is important to natural gas producers because it creates business planning certainty; screens out the “bad actors”; reduces the chances that companies within the energy sector will obtain unfair advantage by engaging in irresponsible practices; and strengthens the industry’s “social license to operate” — i.e., public trust that energy is being produced in ways that are consistent with public health, welfare and quality of life…The challenge for government and the gas industry is to find the “sweet spot” between reasonable regulations and the responsible production and use of the nation’s natural gas resources.”
The administration’s latest methane control initiatives include several opportunities for the oil and gas industry to partner voluntarily with the federal government. But regulations are important both for the reasons industry leaders themselves have identified and because the environmental consequences are unacceptable for allowing the gas to be treated as a waste product and the atmosphere as its dump.
Methane is among the most potent of greenhouse gases. It accounts for 10% of the nation’s greenhouse gas pollution, 30% of it from oil and gas wells and infrastructure. According to the White House, greenhouse gas emissions from the oil and gas sector will rise more than 25% in the next 20 years without additional measures to reduce them.
Methane releases are among the reasons that greenhouse gas emissions are still rising despite warnings from climate scientists that this year, 2015, is when the emissions must stabilize and begin trending downward. The latest research includes findings that on our present course, the planet will heat up by the end of the century to at least twice the level world governments consider dangerous.
Second, a new study at Stanford University concludes that the societal costs of climate change are likely to be six times worse than the Obama administration has estimated so far, amounting to about $220 a ton of carbon. Researchers at ICF International have concluded that cost-effective methods are available for the oil and gas industry to help reduce the social costs of carbon by controlling its methane releases.
Third, methane releases are not only bad environmental practice; they also are bad business and bad politics. They undermine the best argument the oil and gas industry has — the low-carbon content of natural gas compared to other fossil fuels — for an ongoing role in a carbon-constrained world.
The industry will have a chance to comment on any new rules EPA produces. It would be smart for them to come to the table with regulators — state and federal — to find that sweet spot between reasonable regulation and responsible gas production.

comments closed

Related News

August 23, 2019

The higher purpose of being a CEO

Borderless Leadership

LinkedIn Twitter Xing EmailWhen I left my second large company experience to become President of a small manufacturing company I did so driven by ego; I fancied the title. Soon […]

August 23, 2019

As Brexit nears, Britain’s drugs, devices and pricing regulators seek the exit

Life sciences

LinkedIn Twitter Xing EmailFirm details on exactly how the U.K. will regulate new medicines is still to be decided after it leaves the EU later this year (caveats on timing […]

August 23, 2019

The Simply Good Foods Company acquires Quest Nutrition for $1bn

Consumer Packaged Goods

LinkedIn Twitter Xing EmailThe Simply Good Foods Company, the owner of Atkins-branded food products, has secured a deal to acquire protein snack maker Quest Nutrition for $1 billion. Quest, which […]

How can we help you?

We're easy to reach