Critical energy issues loom on the horizon for 2013.
Nearly all pertain to potential actions by the Obama administration.
The single most important issue will be how the administration, specifically the EPA, deals with fracking.
Until now, the states have established the regulations that relate to fracking.
There is a strong possibility that the EPA will try to grab control from the states and issue regulations controlling fracking.
This could have a huge effect on our oil and natural gas supplies.
The EPA has already indicated it believes that fracking can contaminate water supplies. It has also voiced concern about how leaking methane gas can affect climate change.
The issue that may garner the most publicity will be whether the administration allows the construction of the Keystone pipeline.
The primary reason for not allowing the Keystone pipeline to be built is an attempt to hurt the Canadian oil sands industry because it emits CO2. The stated reason is that an oil spill from the pipeline could damage the sensitive Sand Hills area.
Drilling on Federal Lands
The next most serious issue that is under the control of the administration is the degree to which drilling and exploration will be allowed on federal lands.
This is a wide ranging issue that’s difficult to follow. One aspect of the issue involves federal lands in Alaska.
Another involves federal lands in the lower forty-eight states.
These are further complicated because at least three agencies are involved with any decision to allow drilling or exploration on federal lands. There is the Department of the Interior, the EPA, and the Fish and Wildlife Service (part of the Department of Interior) that rules on endangered species.
Then there is the question of drilling in the Gulf of Mexico and along the Outer Continental Shelf on both the East and West Coasts.
To date, the administration has resisted opening federal lands to drilling and exploration.
The issuing of permits in the Gulf has been reduced when compared to prior years, i.e. before the Macondo oil spill.
The administration has been vocal about objecting to drilling in the Outer Continental Shelf.
It will be difficult to determine whether anything more than token approvals are given because the administration will allow some drilling and exploration on federal lands and will continue to issue permits and conduct lease sales in the Gulf.
For example, the administration just conducted a lease sale in the Western Gulf; but there were few bidders because the lease areas have been thoroughly examined previously. This gives the appearance that lease sales are taking place, but new areas with greater potential are being withheld.
The administration has said it wants to pursue an “all of the above” strategy, including nuclear.
Its actions, however, have been deleterious to nuclear power. It has essentially prevented the development of Yucca Mountain for long-term storage of nuclear waste. Without a location for long-term storage, it will be difficult to build new nuclear power plants.
Recently, the nuclear regulatory Commission said it would pursue the licensing of small nuclear reactors that can be buried out of sight and out of harm’s way. SMRs can range in size from very small (less than 50W) to up to about 150 MW. Current reactors are typically above 800 MW.
The EPA has already virtually killed the development of coal-fired power plants in the United States, but it remains on a vendetta to destroy the use of coal.
Its regulations on regulating mercury are still pending. Mercury and Air Toxic Standards (MATS) regulations could have an additional negative effect on the use of coal.
Exporting Natural Gas
This is a complicated issue (see Debate Over Exports and Fracking) that shouldn’t become entwined in politics, but it probably will because some environmental organizations want to prevent the development of additional natural gas. The Sierra Club, for example, has declared war on natural gas.
A just released report, prepared for the Department of Energy (DOE), indicates that exporting natural gas (LNG) will, on balance, be beneficial for the economy. Industries that use NG as feedstock will also probably object.
The administration could continue to seriously impede the development and use of fossil fuels.
The actions it takes with respect to fracking will be the clearest signal as to its approach to energy issues over the next four years.
Grabbing the regulation of fracking from the states will be a clear negative signal.
Withholding federal lands from drilling and development, no matter what reason is given, will also indicate continued opposition to using fossil fuels.
Read more of Donn’s columns at his blog, Power for USA.
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