API Study: New EPA Emissions Rules Will Cut Drilling 52%

If proposed new EPA air emissions regulations go into effect later this year as proposed, the number of wells drilled using hydraulic fracturing will drop by half, according to a study commissioned and just released by the American Petroleum Institute (a copy of the study is embedded below). The Obama administration has given lip service support for shale gas drilling, most notably in Obama’s recent State of the Union speech—but the administration’s actions don’t match their words.

According to the study, the new EPA regulations would result in an 11 percent drop in gas production, and a 37 percent drop in domestic oil production. The federal government will also receive $8.5 billion less in royalty payments from reduced drilling.

The API press release announcing the study’s findings:

The New Source Performance Standards for oil and natural gas production proposed by the Environmental Protection Agency (EPA) would significantly slowdown drilling, resulting in less oil and natural gas production, lower royalties to the federal government, and lower tax payments to state governments, according to a new study funded by the American Petroleum Institute.

“EPA needs to fix these rules in a way that they’ll reduce emissions but not impede oil and natural gas development, which creates jobs and government revenue and improves our energy security,” said Howard Feldman, API director of scientific and regulatory affairs.

The study – by Advanced Resources International – shows that the regulations as proposed would reduce drilling for natural gas using hydraulic fracturing by up to 52 percent, reduce natural gas production by up to 11 percent, and reduce oil production by up to 37 percent. As a result, the federal government would not collect up to $8.5 billion dollars in royalties and state governments would not collect up to $2.3 billion in severance taxes due to reduced drilling and production.

Feldman asked the EPA to avoid the one-size-fits-all approach for emissions completions; to allow more time to implement the requirements; and to streamline the compliance and recordkeeping requirements.

“Natural gas prices are half what they were three years ago because of the shale boom, and this is benefiting consumers and businesses,” Feldman said. “At a time when the government is desperate for revenue, and America’s fuel prices are high, applying overly burdensome regulations would be bad public policy and could place an even bigger burden on Americans in the form of higher energy costs.

API represents more than 500 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.*

*American Petroleum Institute (Mar 15, 2012) – Study: EPA air emissions rules could cause substantial slowdown in drilling, reduced revenue to government

  • Anonymous

    Awhile back I wrote about one of the advantages  LPG fracturing had that is now coming home to roost. The industry is trying to head off air emissions regulations that would stop the huge leakage of methane into the atmosphere at well completion; that is when the water in the hydro-fracked well is purged. Release of methane at well completion constitutes close to one half of the methane lost during the life cycle of natural gas [ from well to end use ].Scientists are worried about the effects on climate because methane is 20 times as potent a green house gas as carbon dioxide. The industry will fight this effort to require a closed loop capture system of gases but it is inevitable; just like car companies lost the fight on the mandatory installation of seat belts.
     For the record, LPG fracturing releases almost no methane because no purging is necessary. The propane used to frack is recovered as a gas with the flow of natural gas immediately at well completion directly into the pipeline or into their new  mobile recovery system if a pipeline is not nearby.Add that to the other environmental advantage of  waterless LPG fracturing and the growing data that LPG fracturing produces 20 – 50% more lifetime production from wells in many formations.

  • Anonymous

     You seem to be coming around Exdent11. I’m proud of your progress, For almost 1 year I have been hoping the big companies would embrace the LPG method. It would certainly be a game changer, and quell the Anti’s water usage issues. Gasfrac a Canadian company uses this method and boasts the stats you stated above.They are small and need the big guys to help fund their growth. I can see LPG taking over the present conventional method  in the near future.Oh by the way Exdent11 I’m waiting for your reply about the costs of Solar energy to electrify and heat an average 2000 sq ft home from a previous post. Thought you would have jumped on that one.

  • Anonymous

    I don’t know where you’ve been but I read Exdent11 speak of GasFrac many months ago.  He refers to it as being “awhile back.”  It would appear that he has been aware of the process for some time.

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  • Anonymous

     Been on this site quite awhile, imforit, only most of exdent posts are against drilling. See MDN Green Energy Hoax article responses. I requested information on his Solar energy news flash. So far as always when I asked for factual data on any Anti rant, I wont receive a response. They go rant somewhere else. I will not let Anti’s,propaganda, lies, and scare tactics, be exploited on this site or any other without a factual answer or reasonable explanation.Ex. The Dimock, Pa, Anti rant of wells being contaminated by Cabot was a big one. Even I ( a staunch Pro) was quick to chastise and condemn Cabot without letting the investigative bodies do their jobs first. DEP also responded with a  knee jerk reaction to the accusations forcing Cabot to supply these home owners with imported water, when all the while these home owners knew their wells were contaminated prior to drilling. The truth of the matter is that Anti’s are blocking our country from climbing out of this long recession with lies. The “cry wolf” scare tactics are losing their luster and the country is tired of being broke.The momentum is changing from extreme caution to lets get our asses moving.I will continue to stand on a mountain top and shout, drill,baby drill. Then when this country starts to pulls its head out of its ass ,all the liberals can say it was their idea.

  • Anonymous

    You are completely wrong. I have posted about LPG fracking and Gasfrac so many times that Jim requested that I stop. I am FOR DRILLING  and, like all right wingers, you can’t tell the difference between factual support for renewables and and anti -drilling rants. I did write a long explanation of cost for pvs but it got lost in the sending. I will  respond again when I have the time.

  • Anonymous

     I stand corrected exdent11, my apologies, after our back and forth posts it seemed to me that you jumped ship and went greenie. As I have said before, I just don’t see green energy as a viable cost effective option at this time. Even if it was an option ,I would not want thousands of those ” turbines” dotting the mountain tops and farm fields. my memory has been enlightened and I now remember your many posts about Gasfrac and using LPG.

  • Anonymous

    March 20th
     I am responding to wacoyaco  but this information might be of interest to other pro drilling people [ as am I ]  who are also interested in the competitive position of photovoltaic [ PV ] market and how it is doing in the U. S..
    The U.S. installation of PVs more that doubled in 2011 to 1855 megawatts [ from 887 megawatts in 2010]; enough to power 370,000 homes. Windpower added  6800 megawatts in the U.S. in 2011 [ enough to power 1,356,300 homes ] by comparison.
     The price for PV panels has dropped from $1.85 per watt in Jan. 2011 to a current price of $ .80 per watt.Some companies such as Twin Creeks tech. and Ampulse Corp. say they have developed ultra thin cells that will soon  bring the price to $.50 per watt . Current cost for inverters is about $.60 per watt and BOS components about $.40 per watt. The rest is labor , overhead and profit margin. At a recent  NESEA building energy conference Jigar Shah , former founder of SunEdison, said that solar  installation companies [for homes ] are competitive at $  3.45 per watt  INSTALLED!
     I have a friend [ in upstate N.Y. ] who had a 7500 watt rated system installed in mid July  2011 that cost $ 44,000 before subsidies . It has produced 3750 kwh  in 8 months. That is 462.5 kwh per month. It pays more than half of the  electric bill in his 3000 plus square foot house plus a large workshop in his barn . The price  for  the  same system today [only 9 months later ]  would cost $ 26,250 before federal credits and state, and utility subsidies [ rounding up to 3.50$ times 7500 watt system]. A 7500 watt  system would easily supply 75% of the electric bill for a 2000 square foot well insulated home with energy saving appliances. By the way, my friend sells excess power back to the utility at the price he pays per kwh. In some states or communities that own their utilities , the excess solar power  is sold back at a premium because that is the time of day  when the utilities need to turn on more power generation [ which is expensive for them ].
     My point for this discussion  is not to denigrate the need for using natural gas but to show the  incredible  decline in price for solar energy which will continue . Within  a decade solar energy will be at parity with other sources of energy without subsidies in most places.All it needs is some continued support from government and utilities until that point is reached.The unpriced  [ for this discussion ] climate and health benefits are the icing on the cake.

  • Anonymous

     Very informative exdent11, But , until Solar panels become affordable to the average person, those numbers you quoted are way out of reach for most of the population. Who has an extra $44,000 or $26,000  laying around to invest? Certainly not me.But I do understand and agree that Solar will “someday” be a viable option. Explain to me how your friend sells back his excess power ,  when he only produces 1/2 his electrical needs? How is there a surplus? How much of your buddies roof was covered by those panels? Was there a need to put additional panels in his yard to get to 7500 watts? Now on to the turbines.How many turbines did it take to produce that 6800 mw ? exdent11,you seem like a reasonable person ,who has done his homework on energy. so why all the arguing? You and I both know that NG is the cheapest most efficient way to go.We are a fossil fuel society, with a huge abundance of it.It  will take some time before Solar catches on and is in reach of ” every ” family. A homeowner can easily covert over to NG for a fraction of the costs in materials and construction. In the end that is all most people want, to save money, less construction hassles, and everyone that converts from oil to NG will feel fuzzy inside because they feel they helped some of the emission issues.

  • Anonymous

    My friend’s solar system AFTER credits from federal ,state and utility company cost less than 17000$.He figures payback will be about 9 years .After that his fuel [ the sun ] is FREE for the next 16 years under warranty although the contractor said it should last with minimal degradation of efficiency for forty years or more. Can you say that about any fossil fuel or what price you will pay in 10 or 20 years ? Historically, natural gas has been volatile .Natural gas for heating will be the fuel of choice for decades but not necessarily for electricity. The panels cover most of one side of his south facing roof only. His system produces a surplus most days in in the middle of the day and of course he buys electricity at night. Remember , New York is not the sunniest place . In southern and western states there many more sunny days that make the payback even shorter.
    Just coming on the market in California are hybrid panels that make electricity and utilize the waste heat to heat hot water or the house space. These new units have astounding efficiencies approaching 70%. Current PVs on the market convert sunlight to electricity at about 15% efficiency without utilizing the waste heat but even these PVs are expected to double to 30% in the next five years. So we can expect hybrid systems in 5 years that will have efficiencies around 90%. More’s Law does not just apply to computers or transistors .
    Also utility companies are starting to build hybrid natural gas – solar or natural gas-wind systems. You say solar someday,,, I say someday is
    very near.

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