The 2012 presidential contest has featured a spirited debate between President Obama and Republican nominee Mitt Romney over who is the true friend of shale gas.
"This has not been Mr. Oil or Mr. Gas or Mr. Coal," Romney said in the second debate, aiming a dart at his opponent. "Talk to the people that are working in those industries," he added. "I was in coal country. People grabbed my arm and say, 'Please, save my job.'"
Obama replied, "We continue to make a -- it a priority for us to go after natural gas. We've got potentially 600,000 jobs and a hundred years' worth of energy right beneath our feet with natural gas. And we can do it in an environmentally sound way."
There is a widely shared prediction that a Romney administration would apply a significantly looser -- or more supportive -- hand on the industry, depending on one's perspective.
"I think there will be a big difference" in energy policies generally, said energy attorney and Romney adviser Linda Stuntz. "That's one of the reasons why I support Governor Romney."
"This is a tempest in a teapot," countered Alan Krupnick, director of Resources for the Future's Center for Energy Economics and Policy, speaking of the candidates' debate over the future of gas. "It's not like the Obama administration is somehow seriously limiting the growth of shale gas development."
How far could a Romney U.S. EPA really go in trying to slow the shift from coal-fired power plants to gas generators? Would a second-term Obama EPA try to use a climate argument to tighten federal rules over fracking operations that have been primarily under state regulatory control?
Behind any top-level expectations, Stuntz and other experts agree, are the realities of energy markets, investment dictates, court decisions, current law and congressional paralysis that cloud the horizon.
Gordon Pickering, a director of the Navigant consulting firm, urges skepticism in predicting changes that would significantly change energy policy, noting the Washington policy gridlock. "I would say we're not too far down the road from having had a Republican president," he said. There wasn't a lot that could be done fundamentally on energy or energy policy during George W. Bush's two-term administration, he added.
But what about a second Obama term?
A hot spot in the regulatory debate over fracking and horizontal wells is the methane emissions that can escape during drilling or maintenance, a risk that environmental groups say erodes a green advantage for shale gas. EPA is in a fierce debate with the American Petroleum Institute and the American Gas Association over EPA's estimates of the fugitive methane problem.
Obama's EPA has issued rules to control methane emissions by requiring shale gas producers to adopt green drilling and construction practices for production wells, beginning in 2015. EPA imposed the New Source Performance Standards on fracking operations last April, using its Clean Air Act authority to regulate hydrocarbons and other hazardous air pollutants.
A new analysis by ClearView Energy Partners notes that some environmental organizations are pressing EPA to toughen its regulation of methane by using authority to control greenhouse gases. EPA is also being asked to expand its aim from well construction to focus on methane that escapes during a maintenance process called "liquids unloading," used to remove water that was introduced into the well pipe, the firm reported. "We would suggest that a second-term Obama administration may be inclined to pursue either tack and environmentalists could compel EPA with a 'friendly-fire' lawsuit that the agency might choose to settle," ClearView said.
"We know enviros are talking about how to force EPA's hand in regulating methane emissions. It's not clear what that would look like," said ClearView managing director Christi Tezak.
"To the extent someone comes up with clever legal argument to regulate methane, an Obama administration would be far more receptive than a Romney administration," she added.
"Methane emissions are a very big concern," Stuntz said. "And I think that is an area where the administrations will be different. I think many of the president's constituents would like him to regulate natural gas production to increase the cost, so that other, more politically correct technologies could be more competitive. I think that's the wrong thing to do."
Wrong or right, it would not be easy, some experts predict.
"The debate on regulating greenhouse gases is a particularly volatile one politically," said attorney Harry Weiss, a partner with Ballard Spahr and author of a new book, "Pennsylvania Oil and Gas Law and Practice," reviewing development of the state's Marcellus Shale play. "The ability to regulate methane emissions under greenhouse gas rules may have to wait until we get around to regulating carbon dioxide. If the political will to do that is lacking, does methane jump to the top of the list? I don't think so."
A ticking clock
A new EPA rulemaking on shale gas methane as a greenhouse gas path could be lengthy. Meanwhile, the clock is ticking on EPA's crackdown on coal plant emissions. EPA's Mercury and Air Toxics Standards (MATS) rule gives coal plants until April 2015 to meet new air quality standards, with one extra year available if states provide the leeway and a fifth year for compliance if required to ensure the grid's reliability.
"How much stretch is there under MATS? That is a tough question," Stuntz said. "I believe a new administration could extend the deadline. There is a lot in the record that suggests difficulty in compliance."
A Romney EPA would have to seek supporting comments to back up reliability concerns, she said. "Depending on the answers, you could extend the deadline. I think a Romney administration would take a different look at the answers than this one."
Tezak and colleagues at ClearView commented this week that "regulatory actions aren't as flexible as campaign rhetoric might suggest." As a result, the real outcomes under either presidential scenario tend to differ more in terms of degree than direction.
"Presidents can't simply ignore finished rules -- they have to rewrite them," they said. While a Romney administration might be more lenient in enforcing MATS, undoing it would require a complete about-face of federal policy just as it is being litigated, "and federal courts frown on such actions," the firm said.
More compliance time would ease pressures on power companies to make pollution equipment retrofits and line up skilled engineers and technicians to do the work, with potentially significant cost savings as a result, according to the industry's Electric Power Research Institute.
But another year or two won't change the reality of the huge amounts of gas in the Marcellus and Utica shale plays that the U.S. Geological Survey predicts could be recovered -- gas that lies beneath the Appalachian coal that powers eastern and Midwestern coal plants, Pickering noted.
Investments in pipelines and other infrastructure over the next three years will make even more gas within reach of Midwestern and Eastern customers, a head wind against the return of coal's price advantage over gas.
Navigant, like other analysts, predicts the long-term price of gas will modestly increase to a range of $4 to $6 per million British thermal units, and depending on coal's outlook, gas could lose its advantage, the firm said. "Only time will tell. What we do know is that the 48 gigawatts of coal plant retirements expected between 2011 and 2017 ... are apt to put downward pressure on coal prices. Nevertheless, the recent proliferation of shale gas production should ensure that coal and natural gas prices remain in close proximity," the Navigant report concludes.
And a few more years for compliance won't erase the handicaps faced by older, dirtier and less efficient power plants -- the ones most likely to shut down in the face of EPA's requirements, Pickering said.
"These plants are old. They are having trouble. They are reaching the end of their lives. It's not much to do with the EPA," Pickering added. "They have been overtaken by the market."
"A fair amount of coal-to-gas conversion is going to happen no matter what," Tezak said. "As you take a long view, do you want to have an asset that will be fueled for the next 40 years on gas or on coal?"
Gas wins the long-term debate, she added. "A Romney administration won't stop the trend. It may take longer to hit the same number."