Oil trade group blasts wave of regulations

The oil and gas industry is being hit by “a tsunami of regulations” that threaten to add costs, suppress job growth and curb domestic energy production, the American Petroleum Institute said today.

In a conference call with reporters timed just two months before the Nov. 6 election, API officials accused the Obama administration of imposing unneeded regulations and ignoring industry input on the rules.

“We’ve seen numerous examples of regulatory decisions that move in the wrong direction,” said Erik Milito, API’s upstream group director. In particular, Milito singled out the Interior Department’s five-year plan for offshore energy development, which includes a dozen sales of Gulf of Mexico leases, and three auctions of drilling rights in waters around Alaska.

Milito and other industry representatives have characterized the plan as anemic and complained that it does not include Atlantic offerings; administration officials say the program smartly balances exploration in proven areas such as the Gulf with targeted leasing in the Arctic frontier.

Milito also flagged the administration’s Aug. 13 decision to allow oil and gas development in 11.8 million acres of the National Petroleum Reserve-Alaska while explicitly walling off the activity in other areas that are home to caribou herds and polar bears. Industry officials say the management plan will restrict access to promising oil and natural gas resources in a reserve specifically set aside for hydrocarbon development.

At the time, Interior Secretary Ken Salazar told reporters the plan would allow U.S. energy development to be balanced with wildlife protection and safeguards for the subsistence rights of Alaska natives.

API’s director of scientific and regulatory affairs, Howard Feldman, blasted the administration for advancing “a tsunami” environmental rules that would apply only to U.S. refineries, but not their overseas competitors. Among the regulations at issue, possible mandates governing sulfur in fuel and greenhouse gas emissions limits on refineries.

In a global marketplace, “now is not the time to impose still more requirements unless the need is indisputable,” Feldman said. “When jobs are paramount, additional regulations are not helping.”

The API also took aim at a proposed rule unveiled in May that would govern the design of wells on federal lands that are hydraulically fractured. The measure also would force companies to reveal the chemicals they use when drilling for oil and natural gas on public lands.

Milito said it “could prove to be a major impediment” to developing shale gas and tight oil on federal lands. And he cast the Interior Department’s philosophy as “more regulation and less development.”

Obama administration officials rejected the trade group’s argument.

“Despite misleading rhetoric by some in Washington, President Obama has made expanding responsible oil and gas production here at home a clear priority and the facts speak for themselves,” said Interior Department spokesman Blake Androff. “Since the President took office, domestic oil and gas production has increased each year with oil production higher than any time in eight years, and production of domestic natural gas at an all-time high. Total oil production from federal lands and waters has increased 13 percent during the first three years of this Administration, compared to the last three years of the previous administration.”

Salazar has repeatedly stressed the importance of balancing environmental needs with energy development.

The proposed rule on hydraulically fractured wells is one example. The measure included a major concession to oil and gas companies, by allowing chemical disclosures to happen after a well is drilled and the substances are pumped underground, not a month beforehand, as federal regulators had originally considered.

Salazar has insisted that the measure is necessary to help bolster public confidence in hydraulic fracturing.