OIL AND GAS:

Western Energy Alliance's Sgamma discuses latest efforts on Keystone XL pipeline

Could the Keystone XL pipeline benefit Western energy producers? During today's OnPoint, Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, weighs in on Keystone XL, fracking regulation and the Bureau of Land Management's latest round of land leases.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance. Kathleen, thanks for coming on the show.

Kathleen Sgamma: Thanks for having me on.

Monica Trauzzi: Kathleen, the controversy surrounding hydraulic fracturing and its environmental impacts continues to heat up with EPA recently proposing new rules for air quality and wastewater associated with fracking. Do you acknowledge that there is some role for EPA to play here in terms of regulation?

Kathleen Sgamma: Well, I think it's important that EPA finish its study on fracking, which it has been working on for couple of years now. It's slated to come out at the end of 2012 and then be complete, I believe, in 2014. So, I think the first thing to do should be to finish getting that science together and then worry about adding on additional regulation. I mean I know that the states have been fracking or regulating fracking successfully for over 60 years and even the EPA administrator, Lisa Jackson, said, again, that we have no confirmed cases of contamination from fracking. So, we would caution everybody, slow down and wait for that study to be done.

Monica Trauzzi: And there's a lot of debate, in fact, as to whether the federal government really should be stepping in at all or whether it should be left to the states. How do you come down on that debate? Do you think that this is something that the states should be handling?

Kathleen Sgamma: Well, since they've been successfully regulating it for over 60 years, we believe the states should continue to regulate fracking. They have the experience, they have the experience particularly on well construction, which is the key component of ensuring that there's no path of exposure to the population or to underground sources of drinking water. And that's well construction, casing, cementing and making sure that wellbore has integrity. And the states have been doing that for over 100 years. We believe the states should continue regulating fracking.

Monica Trauzzi: But, as fracking expands throughout the country, doesn't there need to be some kind of cohesive national approach to regulation?

Kathleen Sgamma: No, actually I don't believe there should be. Oil and gas development is very specific. Each state has its different geology, it's different conditions and really the states are the best place to regulate hydraulic fracturing. Now, there is the Interstate Oil and Gas Compact Commission, which is a body of state regulators for all of the producing states and they continue to go out and analyze how states are doing, help states to increase and improve the regulations and we see that process going on continually. They have a program called Stronger and so there is structure in place to support the states. But no, there really should not be an overall, federal, top-down approach for regulating something that is best done at state level.

Monica Trauzzi: What are your projections for the economic impacts of fracking if it reaches its full potential in the United States?

Kathleen Sgamma: Well, we look specifically at the West. Western Energy Alliance represents producers in the Western states. We recently did our blueprint for Western Energy Prosperity and in it we project that by 2020 we will produce as much oil and gas from the West, from just six producing states in the West, that we currently import from Russia, Iraq, Kuwait, Saudi Arabia, Venezuela, Algeria, Nigeria and Columbia combined. So, we have a huge energy resource just in the West, not to speak about the rest of the country, and we project that by 2020 we can meet that potential, provide those jobs, provide about $58 billion in investment, 70,000 new jobs just in the West alone. So, and fracking is a big part of that. At least 90 to 95 percent of the wells in the West are fracked.

Monica Trauzzi: And one of the things that's mentioned is that you believe that the government is undermining the growth and investment of energy sources in the United States. Why is that?

Kathleen Sgamma: It could be, yes, because of all the additional regulation. I mean we've talked just now about fracking regulation. We see a lot of policies from the Department of the Interior that are slowing down reasonable access to non-park, non-wilderness lands in the West as well.

Monica Trauzzi: Keystone XL, it's managed to stay in the news despite the president sort of punting on a decision until 2013. It's Canadian oil, but you see some benefits for U.S. producers. What are those?

Kathleen Sgamma: Absolutely. There's an on ramp for oil and gas producers or oil producers in the West. About 25 percent of that capacity on that pipeline would be filled from domestic producers. So that's really important for the Bakken that covers North Dakota and Montana because right now we're having to truck out a lot of oil and put a lot of oil on rail. So obviously, the environmental impact is larger if you're trucking and putting things on rail than if you're going into a pipeline. So that would help to ease some of that transportation burden in the Bakken, which, of course, is booming now.

Monica Trauzzi: And here is another scenario where environmental impacts is a huge part of the discussion. Are you at all concerned about possible leakage from a pipeline or some of the other environmental questions that arise on Keystone XL?

Kathleen Sgamma: Well, I believe that the environmental impact statement for Keystone has addressed those environmental impacts and it was found that it really wouldn't have a significant environmental impact. There are modern pipeline safety measures, construction measures in that EIS and in the plans to make sure that the chance of any kind of incident is very low. And I think it's important to remember that the country is crisscrossed with pipelines and very few incidents occur.

Monica Trauzzi: Much of your work focuses on developing energy on public lands in the United States. Why do you think that this is such a critical piece of the energy puzzle?

Kathleen Sgamma: Well, in the West we have about 31 percent of the natural gas reserves of the country, for example, and the West is over 50 percent public land. So, a lot of that resource is on public lands. Same thing with the oil resource, although we're lucky that the Niobrara and the Bakken are largely on state and fee lands, state and private lands. So, there is a need to access public lands for development of oil and gas resource and I think it's important to note that we provide, right now, about 27 percent of the nation's natural gas, about 14 percent of the nation's oil production, while disturbing less than a 10th of a percentage of public lands. So, we believe we've achieved a very good balance of providing significant energy resource at a very low impact to the environment.

Monica Trauzzi: Do you see BLM's recent leasing of six parcels of land as a game shifter? I mean are they on the right track from your perspective?

Kathleen Sgamma: Well, you know, obviously, we're going to support leasing and keeping that reasonable access open. I think it's important to remember that those six leases were just six of 77 withdrawn by the secretary, now three years ago almost. So, it's been a very slow process getting six of 77 leases back up. And, you know, furthermore, I know the atmospherics on those leases were that they were close to national parks. The closest lease to national parks of the 77 was about 3 to 4 miles away and most of them were in the 20 to 60 mile range away from national parks. So, the messaging on that was never quite right. Those parcels were properly scoped, had proper protections on them and we believe they should come up for auction not, you know, another three years, but that that should move a little bit faster.

Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show, nice to see you.

Kathleen Sgamma: Thank you for having me.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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