Oil industry braces for Obama’s final climate push

Source: By Devin Henry, The Hill • Posted: Tuesday, September 8, 2015

The oil and gas industry is hunkering down to weather the final stretch of the Obama administration.

Industry groups and their backers had hoped President Obama would use his trip last week to Alaska to say something about the need for more oil and gas drilling in the United States.

Instead, Obama kept his focus on global warming, leaving oil interests in a familiar position: left out and on the defensive.

Obama has pledged to keep oil and gas part of the nation’s energy mix, but has also moved to crack down on the industry as part of his fight against climate change.

Warning against over-regulation, industry officials have opposed those efforts and stressed that they need more support from federal officials — be it from regulators, members of Congress, or even a new president in 2017.

“That would be a shift because there are some agencies that fail to recognize the potential Alaska has,” Alaska Oil and Gas Association President Kara Moriarty said.

“So it just constantly feels like we have continual roadblocks, and that there doesn’t seem a willingness to get more development from the federal lands we do have.”

Oil groups had hoped Obama would at least tip his cap to potential development of Alaska’s vast oil reserves during his visit to the state.

But he kept to the topic at hand: climate change and its effects on the state. His only mentions of oil were to reiterate his opposition to drilling in the state’s Bristol Bay — something he blocked last December — and to declare that the U.S. has become a leader in oil and gas production during his time in office.

Louis Finkel, the American Petroleum Institute’s executive vice president for legislative affairs, said the administration’s approach to oil has “clearly evolved” during Obama’s presidency.

Obama took office in the depths of a recession, and mostly left the industry alone, Finkel said, allowing it to build both its production volume and its employment rolls

“There was a lot of promise in the administration’s early kind of rhetoric, on the heels of the economic downturn, as they were trying to rebuild the economy, talking about the all-of-the-above energy policy,” he said.

But as the administration has increasingly focused on policies to combat climate change, Finkel said his industry has suffered.

“We’ve seen the administration move more and more towards picking winners and losers, showing preferences for certain renewables” over oil and gas, he said.

To be sure, Obama hasn’t abandoned his all-of-the-above energy philosophy, earning him scorn from green groups who say he’s still giving away too much to fossil fuel interests, especially in his decision to allow Royal Dutch Shell to explore for oil in the Arctic Ocean.

He’s told audiences — including Alaskans last week and a green energy crowd in Las Vegas the week before — that decarbonizing the energy sector is going to take time, and that oil and gas, especially from American sources, will remain in the mix.

But over time, Obama adds, that should change.

“We are the number one producer of oil and gas,” Obama said in Kotzebue, Alaska on Wednesday.

“But we’re transitioning away from energy that creates the carbon that’s warming the planet and threatening our health and our environment, and we’re going all in on clean, renewable energy sources like wind and solar. And Alaska has the natural resources to be a global leader in this effort.”

Still, even amid the climate push, Obama hasn’t completely shut out oil and gas.

Industry supporters say the administration has been hinting at its willingness to support lifting the crude oil export ban. The Energy Information Administration (EIA) last week released a report promoting the economic benefits of easing the ban.

Obama’s Interior Department in January proposed opening up new areas of the Arctic and Atlantic Oceans for oil exploration. And he took heavy criticism from green groups for approving Shell’s drilling permit, something the administration has vigorously defended.

But oil industry advocates say that’s not enough.

Drilling has slowed on federal lands, they say, because of delayed decisions from federal regulators. They also scorn Obama’s handling of the Keystone XL pipeline, which is stuck in a protracted administration review.

The industry was incensed when Obama’s finalized power plant rule diminished the role of natural gas. The administration is also pushing a slate of new regulations — new hydraulic fracturing rules, renewable fuel standards and limits on ozone and methane emissions at natural gas production sites — that gas interests warn will be expensive to implement.

“There is this broad avalanche of regulation that is out there,” Finkel said. “We’re in a situation where it’s death by 1,000 cuts.”

The industry has defended itself. Finkel said API has a grassroots network 35 million people strong that supports its policies and pushes back against new government rules.

Oil’s backers in Congress have also looked to pressure Obama on production.

Sen. Lisa Murkowski (R-Alaska) sent Obama a letter last month highlighting several green energy projects in her state, while also encouraging him to support more oil production there.

“Many renewable energy projects in our state were made possible with state revenues derived from oil production,” she wrote. “As you will see, Alaska has developed institutions and programs that maximize the benefits of resource production to improve the lives of our people.”

Murkowski, along with Sen. Heidi Heitkamp (D-N.D.), a Democrat from an oil state, are pushing a bill lifting the crude oil export ban, something Congress is expected to consider this fall.

Heitkamp said in a statement that the administration “doesn’t follow through” on an all-of-the-above strategy, and plugged the export bill as a way to support the oil sector.

“The administration has taken some good steps when dealing with the development and use of various energy resources, but there seems to be no comprehensive plan or vision as to how we can best harness all of the nation’s energy resources in a responsible and environmentally sound manner,” she said.