Senate Energy Committee Debates Shale Regulation Report

An approach to the regulation of shale gas development at the Federal level may be emerging following the release of President Obama’s Shale Advisory board’s first report and its warm reception on Capitol Hill. Positive sentiments were echoed during this week’s hearing before the Senate Energy and Natural Resources Committee, although ultimately the debate over which regulations and at what cost rages on. In today's GR Outlook, Garten Rothkopf examines the political and economic impacts the report and hearing will have on shale gas industry.

Amidst the frenzy over the Utica shale field in Ohio, President Obama’s Shale Advisory board has, with little fanfare, issued its first report and just today reported back to the Senate Energy and Natural Resources (ENR) Committee. Though the hearing and the report have not received significant public attention, they lay out what Capitol Hill insiders believe could be a credible path forward and out of the polarized political debates that have developed as the size of the country’s known gas reserves has grown. As the draft report notes, gas from shale represented only 2 percent of U.S. production in 2001 but represents nearly 30 percent today. Now, the key issue is what level of regulation is appropriate and what the costs will be. Today’s GR Energy and Climate Brief examines the committee’s first report, today’s Senate hearing and the political reactions emanating out of Washington - where the economic potential of the resource is trumping other concerns.

The Panel: Given the controversy regarding shale gas, President Obama directed the Secretary of Energy Steven Chu to form a subcommittee of the Secretary of Energy Advisory Board (SEAB), referred to as the Deutch Commission, to make safety and environmental performance recommendations regarding shale gas production. In discussions with members of the committee, GR learned that the recommendations were subject to heated political battles but every member of the committee shared a common view that shale presents an important resource going forward. The debate was about how, not whether to develop shale gas. The subcommittee of seven is made up of both industry and academic representatives across the ideological spectrum and was charged with outlining steps to improve the safety and environmental performance of fracturing by August 2011. A second, final report is due by February 2012. Initially, the panel was criticized by environmentalists for a pro-industry orientation. Now that they have issued their first report and made recommendations on regulations, the fact that they come from a committee where 6 of 7 members have an industry background, it is clear at the very least what the industry side’s beginning negotiating position will be.

See full article here.