Witnesses: 
Panel 1
Michael Nedd
Assistant. Director, Minerals and Realty Management, Bureau of Land Management
Mary Wagner
Associate Chief, U.S. Forest Service
Adam Sieminski
Administrator, U.S. Energy Information Administration

 

Panel 2
Lynn Helms
Director, North Dakota Department of Mineral Resources
Dan Sullivan
Commissioner, Alaska Department of Natural Resources
Thomas Clements
Owner, Oilfield CNC Machining, LLC
Kathleen Sgamma
Vice President, Government and Public Affairs, Western Energy Alliance
Reed Williams
President, WillSource Enterprise, LLC
Christy Goldfuss
Director, Public Lands Project, Center for American Progress
Corey Fisher
Assistant Energy Director, Trout Unlimited and Sportsmen’s Conservation Project

 

Subcommittee Members Present:
Edward Whitfield (R-KY), Chair
Bobby Rush (D-IL), Ranking Member
John Shimkus (R-IL)
Lee Terry (R-NE)
Brian Bilbray (R-CA)
Steve Scalise (R-LA)
Cory Gardner (R-CO)
Morgan Griffith (R-VA)

 

Full Committee Members Present:
Fred Upton (R-MI), Chair
Henry Waxman (D-CA), Ranking Member

 

On August 2, the House Committee on Energy and Commerce Subcommittee on Energy and Power held its 27th hearing on the American Energy Initiative, the Republican’s energy plan which would reduce government regulation on energy production.

 

Subcommittee Chairman Edward Whitfield (R-KY) opened the hearing by saying the American Energy Initiative seeks to solve two “primary problems” facing the government - dependence on foreign energy sources and high unemployment rate. Whitfield explained that this hearing would focus on the difference between oil and gas production on private and public lands. He said North Dakota is “doing it right” with a three percent increase in oil and gas production and the majority of production in the state is on private or state land. Since 2008, North Dakota has grown from the eighth largest producer in the country to the second largest. Whitfield complimented the situation in North Dakota with the decrease in oil production in Alaska. He attributed this difference to the fact that most of the oil in Alaska is found on federal lands. The chairman claimed that regulations from the federal government, including an overcomplicated permitting process, impede oil development.

 

Subcommittee Ranking Member Bobby Rush (D-IL) stressed the need to address climate change in his opening statement. He repeated a request for a hearing on the science behind climate change. The ranking member said it would clarify the relationship between increased carbon dioxide in the atmosphere and rising temperatures and even the drought experienced by much of the U.S. during the summer of 2012. He criticized his Republican colleagues for “taking a cue” from former governor of Alaska and 2008 Vice-Presidential candidate Sarah Palin’s “drill, baby drill” mantra. Rush recommended the committee focus on investing federal dollars to renewable energy research. American demand for oil has decreased according to the ranking member, and he said the committee’s focus should reflect this.

 

Full Committee Chairman Fred Upton (R-MI) discussed the dichotomist energy states in the U.S. in his opening statement. He said across the U.S. oil and gas production is either growing or stagnant and 96 percent of the increased oil supply since 2007 comes from private land. The production in Alaska has been “blocked by bureaucrats” according to Upton.

 

Full Committee Ranking Member Henry Waxman (D-CA) supported the regulations in place on public lands in his opening statement. He addressed the Republican rhetoric that the Obama administration is hostile to the oil and gas industry saying production has increased even in the Gulf Coast, despite the effects of Hurricane Katrina and the 2010 BP Deepwater Horizon oil spill. The permitting process has been extradited under President Barack Obama according to Waxman. The ranking member explained there are many uses for public lands other than oil and gas exploitation saying that federal lands are “held for people, not oil companies.” He doubted whether the oil production model in North Dakota could be applied to other states. Waxman said his state has more oil than the North Dakota but its model could not work in the more densely populated California. Because of this, Waxman asserted that the other uses of public lands, recreation, hunting and even renewable energy production, must be protected.

 

Michael Nedd, Assistant Director of Mineral and Realty Management for the U.S. Bureau of Land Management (BLM) testified based on his experience coordinating federal land use for mineral acquisition. He supported BLM’s policies for the use of public land, claiming that one-third of lease land is used for oil and natural gas production. Nedd said $2.9 million were made in royalties in 2011 and in accordance to agreements with oil and gas companies, the money went back to state governments in exchange for state-owned land. He defended BLM saying the Mineral and Realty Management Directorate was working to expedite lease application review and drafting rules on hydraulic fracturing on public land. He acknowledged the importance of hydraulic fracturing, saying improvement of the technique had a role in increased production of oil and natural gas. BLM’s policies for land leasing caused that improvement by requiring a level of environmental sustainability according to Nedd.

 

Mary Wagner, Associate Chief of the U.S. Forest Service, discussed the Department of Agriculture’s role in managing land desired for oil and natural gas production in her testimony. She said the Forest Service provides information on environmental monitoring on oil and gas production sites to inform the public and uses science to inform policy. This information usually involves mapping of local aquifers, as one of the Forest Service’s primary duties is to protect the watershed. Since 2008, Wagner said tourism and resource acquisition other than oil and gas have made $6.5 million per year and provide 110,000 jobs. Given this contribution to the economy, Wagner does not support easing regulations for oil and gas production on National Forests.

 

Adam Sieminski, Administrator of the U.S. Energy Information Administration (EIA), reported research on the oil and gas industry in his testimony. The EIA collects data on oil and gas production from over 240 independent surveyors every month. He said the increase in production is because of shale gas mining on private or state lands. Production on federal lands like the outer continental shelf (OCS) decreased after 2010, but has now begun increasing according to the Sieminski. He stressed that EIA estimates are based on “technically recoverable resources” and will likely change as technology advances.

 

During the question and answer period, Representative John Shimkus (R-IL) discussed working with the Forest Service or BLM to ease production restrictions for oil and natural gas. He mentioned working with Indian tribes as an alternative for companies hoping to avoid leasing regulations from the federal government. Nedd and Wagner acknowledged that this option is utilized in North Dakota.

 

Representative Morgan Griffith (R-VA) asked if natural gas prices will rise which Sieminski confirmed because of delayed production on the Utica Shale Formation in Ohio and Pennsylvania. Prompted by Rush, Sieminski estimated the lull will not last, and production will experience a “tremendous rate of activity” until 2035.

 

Representative Cory Gardner (R-CO) asked if hydraulic fracturing had the potential to pollute groundwater. Nedd and Wagner said it did, which is why environmental awareness is stressed in BLM and Forest Service regulations. Nedd said BLM’s rules could add between $10,000 and $13,000 per permit to the cost of hydraulic fracturing.

 

Representative Brian Bilbray (R-CA) said BLM should consider creating a federal “green zone” to produce renewable fuel. He said it takes years for companies to receive permits, and he asked the panel if their agencies would oppose Congress setting up a zone with “free permitting” to streamline construction of solar power plants. Nedd said he could not speak for BLM on that issue.

 

Representative Lee Terry (R-NE) asked if the proposed 5-year OCS permitting plan will reimpose the moratorium on off-shore drilling. Nedd said the plan is under the Bureau of Ocean Energy Management (BOEM) authority and could not comment on it. Representative Steve Scalise (R-LA) spoke about the potential for domestic oil and gas production to reduce dependence on foreign fuel. He discussed the possibility of oil reserves off the coast of Virginia and Sieminski confirmed there was likely oil on the OCS in the mid-Atlantic.

 

Lynn Helms, Director of the North Dakota Department of Mineral Resources, testified to the “renaissance” in North Dakota due to increased oil and natural gas production. He said there is an estimated 300 billion barrels of oil in the Bakken Formation, a shale formation which crosses North and South Dakota, Montana and into Canada. Because “geology varies from state to state” oil production from the formation, found mostly in North Dakota, falls under state jurisdiction in North Dakota. He attributed “rapidly growing employment” in the state to oil companies producing the Bakken. To address concerns that oil and gas production prevents land use for recreation and other uses, Helms said the private owners in his state allow multiple uses on land being drilled for oil and gas.

 

Dan Sullivan, Commissioner of the Department of Natural Resources in Alaska, discussed the lack of oil and gas production in his state in his testimony. Even though the U.S. owns land with the most oil in the Arctic of the Arctic nations, there has been very little production because it lies on federal lands, according to Sullivan. He said the state has as many critical mineral deposits as the top ten critical mineral-containing countries. Sullivan lamented the fact that Alaska was not participating in an “energy renaissance” and reminded the committee that many technological innovations for mining and drilling came from mines in the state. With Alaska’s deposits on and off-shore, Sullivan said the U.S. could be the largest hydrocarbon producer in the world by 2020.

 

Thomas Clements, owner of Oilfield CNC Machining Inc, testified as one of the many small business owners in the oil and natural gas industry. He said he was “shocked” by the possibility of another moratorium and the 2012-2017 OCS permit plan “does nothing.” Clements said relaxing oil and gas production regulations on federal lands would help his business. He said he hoped the federal government would do more to support the oil and natural gas industry saying, “all natural energy is good.”

 

Kathleen Sgamma, Vice President for Government and Public Affairs at Western Energy Alliance, discussed the impedance to oil and natural gas production due to federal regulations in her testimony. She said the increase in production since 2008 is “in spite of, not because of, the federal government.” She said federal regulations have slowed production and even stopped it for small companies looking to drill for oil in western states. Sgamma cited seven or eight year long environmental analyses under the National Environmental Policy Act (NEPA P.L. 91-190) as a “burdensome” regulation.

 

Reed Williams, President of WillSource Enterprise, testified to how federal regulations interfere with oil and natural gas production. WillSource Enterprise is a small prospecting and drilling company working on the Western Colorado Slope. He said the Forest Service and BLM have required multiple rounds of environmental analysis, delaying production in some cases for 16 years.

 

Christy Goldfuss, Director of the Public Lands Project for the Center for American Progress Action Fund, defended BLM and Forest Service regulations in her testimony. Goldfuss said regulations seem strict because there are many more interests invested in public land than just oil and gas companies. The outdoor industry, hunting and fishing and timber industries must be considered, she said. She said public lands are open for oil and gas development and the choice by companies to produce on private land is because of a lack of demand. Goldfuss said most shale gas development occurs on private lands because of geology - most shale formations just do not happen to fall on public land.

 

Corey Fisher, Assistant Energy Director for Trout Unlimited and representing the Sportsmen’s Conservation Project, discuss the need to keep public land open for hunting and fishing in his testimony. He argued there are many uses for public land saying, “No one use is allowed to trump another” and BLM manages those needs well.

 

During the question and answer section, Whitfield brought up the Washington Post article describing the “gritty side” of the oil boom in North Dakota. The article asserts people who move to North Dakota cannot find affordable housing, and residents are being displaced by oil companies looking to drill on private land. The article includes the claim by the Sierra Club that pollution is “out of control” in the state because of the oil production boom. Helms responded to the question saying, “The article is filled with inaccuracies.” He said regulations in North Dakota comply with the Environmental Protection Agency’s rules regarding production of Class II injection wells.

 

Rush asked about the opportunities for production of other, “more sustainable” resources on public lands. Goldfuss responded that the Department of the Interior (DOI) is streamlining the approach to solar wind and geothermal energy development and passed new rules for permitting in April and May of 2012.

 

Gardner asked how many jobs have been delayed by “burdensome” regulations for production on public lands. Sgamma responded that the “backlog” of environmental analyses is preventing 65,000 jobs from being created by the oil and gas industry. She said the Obama Administration is “making it easier for solar and wind energy” but not for oil and gas. She went further to say only 48 percent of leases are being utilized because of government regulations.

 

Opening statements, witness testimonies, and an archived web cast of the hearing can be found at the House Committee on Energy and Commerce.