By Gabe Rozsa
Fracking – The Golden Age of Gas? Hydraulic fracturing or “fracking” is a relatively newly implemented technology that is based on injecting fluids into rock or shale formations to cause a fracturing of the formations, allowing trapped oil or gas to be released into reservoirs where it can more easily be extracted.
The use of the techniques has resulted in a 50% increase in projected yields and that has heralded a “golden age of gas” and a huge decline in gas prices due to increased supply. Increased domestic production has led some to speculate that the U.S. could become energy independent. But recent exports to Europe and elsewhere using liquefied natural gas pipelines, ships and terminals have raised export and safety concerns.
The principle issue surrounding the fracking debate, however, has to do with water and air quality concerns, which are mostly playing out at the state level. Environmental activists allege that the process has led to groundwater contamination resulting from the release of toxic chemicals found in some hydraulic fluids used in fracking operations. Other environmental concerns raised relate to the air emissions tied to the fracking process and the potential to release methane gas, which is estimated to be 20 times more potent than carbon dioxide, in terms of greenhouse gas impacts. EPA and the Department of the Interior are increasingly looking at what they can and should do to regulate fracking, either directly or by regulating air, surface water or groundwater discharges. This has triggered concern in the industry that the Administration will obstruct the significant progress in oil and gas production that is driving down natural gas prices.
While fracking is seen primarily as a natural gas issue, some of the same concerns come into play in the oil industry, where fracking and enhanced oil recovery techniques are being used. Given the real impact this technology could have on actually reducing energy prices, it will be the source of significant debate as a part of any energy bill.
Keystone XL Pipeline
– The Energy Focal Point - Politically.
This was put on the front burner as part of the debt ceiling compromise by requiring that the President act on the project one way or the other. The President decided against the project in January and has been trying to blame Republicans for forcing a quick decision. More recently, he has tried to advance portions of the pipeline that are less controversial with the environmental community and to bolster his record on job creation. Republicans have, thus far, been painting the White House as the obstructionist and appear to be winning the public opinion war on this, putting a great deal of pressure on the White House and Democrats to accept the project as part of some later compromise. Given that Republicans see the Keystone pipeline as a symbolic and winning election year issue, they will continue to insist on inserting it into legislative vehicles moving this summer, including as part of transportation reauthorization, where the House added the provision in their short term extension and are seeking to carry the day in conference with the Senate. Since the last vote in the Senate garnered 56 votes in favor of Keystone and only a majority vote is required in the Senate to approve a conference report, the House is pushing hard to retain it in a transportation bill extension.