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Reaction to State of the Union | Russell T. Rudy Energy LLC

The January 29 issue of “Rigzone” included a synopsis of President Obama’s State of the Union Address and the industry’s reaction to the energy aspects of the speech.  The President correctly pointed out that for the first time in two decades, the United States is producing more oil than it imports.  What he failed to mention is that almost all of the recent increase in domestic oil and gas production is from private and state lands.  He also failed to acknowledge the strategically leveraging issues which could move us closer to energy independence if the federal government played a positive role; the XL Pipeline, crude oil and LNG exports, and pipeline safety.  While President Obama supports an expanded role for natural gas, this is more from the perspective of displacing coal, rather a step toward energy independence.

Dean Whitten of the American Natural Gas Alliance gave the Obama administration credit for largely deferring to the states for regulating hydraulic fracturing, at least for the time being.  However he feels that the administration’s position on taxes related to the energy industry has been counterproductive.  Whitten projects that 1.4 million U.S. jobs will be supported by the domestic natural gas industry by 2015, and cites the positive impact that this will have on state and federal tax revenues.  He also stressed the positive environmental and economic impact natural gas vehicles could have and the role the federal government could play in making this a reality.

T. Boone Pickens was somewhat encouraged by the President’s remarks regarding natural gas and transportation, but commented “a plan without action is not a plan, it’s a speech”.

Dave Spigelmeyer, President of the Marcellus Shale Coalition was encouraged by Obama’s apparent commitment to natural gas, but said “it is a false choice to suggest that we can either produce natural gas and create jobs, or protect and enhance our environment.”  Spigelmeyer credited increased domestic energy production with reducing the U.S. trade defecit, strengthening our geopolitical standing, reducing greenhouse gas emissions and bolstering consumer savings, noting that natural gas heats half of all U.S. homes.

Consumer Energy Alliance President David Holt reiterated the consumer benefits from higher levels of natural gas production noting that prices have fallen and job opportunities and government revenues have increased, thereby boosting household incomes by an average of over $1,200 in 2012.

API President and CEO Jack Gerard expressed concern with Obama’s implied threats of tax and regulatory measures aimed at the industry, noting that it already pays $85 million a day to the federal government-more than any other industry.

Randall Luthi, National Ocean Industries Association President expressed the same concerns and noted that 85% of the U.S. Outer Continental Shelf is off limits to oil and gas exploration.

Charles McConnell is currently the Executive Director of Rice University’s Energy and Environment Initiative, and former Assistant Secretary of Energy in charge of fossil fuels.  He contends that it is obvious that the Keystone XL pipeline should move forward from a business, environmental and Congressional perspective.  However, he feels that the Obama Administration will use it as a bargaining chip to eliminate intangible drilling costs, impose federal regulations on fracing, or other political gains which would help solidify the political base.  McConnell also sees pipeline and power transmission infrastructure, LNG export terminals, and EPA regulations as strategic issues for the industry which will be subject to negotiations with the federal government.

To read the article in its entirety, please go to http://www.rigzone.com/news/article_pf.asp?a_id=131337.