Oil, Natural Gas Exploratory Drilling Down in 2nd Quarter

“America’s shale energy revolution has helped the U.S. lower our greenhouse gas emissions while lowering the cost of energy for American consumers,” said Hazem Arafa, director of API’s statistics department. “To continue this
progress, we must revisit current energy policy, speed up the LNG export approval process, and avoid unnecessary regulations to help U.S. producers to compete effectively in the global market under the low-price environment.”

Related to regulations, API midstream director Robin Rorick is criticizing a notice of proposed rulemaking (NPRM) by the Pipeline and Hazardous Materials Safety Administration (PHMSA) relating to natural gas transmission and gathering lines. Rorick asserts the proposed rule grossly underestimates costs and would do little to advance safety. “Natural gas pipelines are 99.999% safe,” he said. “This is not by chance, but achieved through an industrywide, comprehensive approach to ensure safe operations. The new NPRM does little to enhance safety and weakens America’s energy renaissance, which has helped consumers save on energy bills and reduce emissions to near 20-year lows.”

Rorick added that the energy industry continues to lead on creating new standards to enhance pipeline safety. “Operators spend billions each year and countless man hours to evaluate, inspect, and maintain pipelines. We have a better path forward that is safer for the public and the environment. We support regulations that efficiently and, most importantly, effectively further pipeline safety, but these additional proposals are not based on sound calculations.”

API comments that PHMSA estimated that it would cost $597 million over 15 years to implement its proposed new rules, but according to ICF International the cost would be $33.4 billion. The costs would fall particularly hard on small gathering companies, and upon whom estimated annual compliance costs nearly equal their estimated annual revenues from gathering fees, according to ICF. Notably, the consultancy found that instead of generating benefits from $3.5 billion over 15 years, the midpoint estimate, the proposal would yield only a fraction of those benefits.

“PHMSA’s flawed study grossly underestimates the cost of implementing these regulations, which will provide little improvement in safety outcomes,” said Rorick. “We encourage PHMSA to reassess this proposal, conduct the
appropriate data collections and studies that apply sound science, and then reissue proposals that successfully benefit the environment and the public.”

API comments that the oil and natural gas industry works with expert stakeholders in federal and state agencies, academia, and the public to develop standards and recommended practices for safe operations. API currently has more than 650 standards and technical publications. Over 200 have been incorporated into U.S. regulations, and they are widely cited by international regulators. All of these activities create a robust program while sustaining a commitment to prevent incidents, as well as efficiently mitigate and respond in the rare event of an incident.