Oil & Gas:

Western Energy Alliance's Sgamma discusses future of Interior's fracking rule

How will the Interior Department revise its controversial draft rule to regulate hydraulic fracturing? During today's OnPoint, Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, discusses potential changes to the draft rule and the impact of a new chief at Interior on access to federal lands for oil and gas exploration.

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 back on the show.

Katherine Sgamma: Thanks for having me.

Monica Trauzzi: Kathleen, the Interior Department has announced it will be revising a controversial draft rule to regulate fracking. This news was welcomed by the oil and gas industry. What are you hearing about the proposed changes that we might see?

Katherine Sgamma: Well, we don't have a lot of intel at this point as to what the changes were from the first draft to the second draft that will come out I guess in a couple of months at the latest. So I'm not really sure if it's going to be better or if it's going to be more onerous. We'll have to wait and see.

Monica Trauzzi: Are you confident that BLM will sort of work to maximize flexibility and make things a bit more workable with the states? I mean, is that what they're trying to do by revising this?

Katherine Sgamma: Well, I would suspect it's that, with the states and the tribes as well, because they heard quite a bit from in particular Western states and from tribes that the rule was too burdensome ,that it was not flexible enough. So hopefully we'll see that they've taken those comments into consideration.

Monica Trauzzi: So, and just the sheer fact that they are revisiting that, would you take it as a positive sign?

Katherine Sgamma: I definitely take it as a positive sign, that they're being more deliberative about it. I think they were, the first schedule they announced, they seemed to be rushing that in, and it's a very complex rule. They're trying to do a lot with that rule, and that will have a lot of unintended consequences, particularly on state water rights, tribal relations. So it's not a very easy cut and dry rule, so it's good to see that they're being more deliberative about it.

Monica Trauzzi: We're heard strong indicators from both the President and inside Congress that there will be a focus on addressing climate change over the next four years. How should the administrative square those goals with the goals that it has to expand federal exploration and development?

Katherine Sgamma: Well, I think if you look at natural gas in particular, the reason that the United States has significantly reduced greenhouse gas emissions on path towards those Kyoto goals of 1990 emissions rates, and it's because of natural gas, because we have switched over a considerable portion of our electricity generation from coal to natural gas. And so we're the only industrialized country that has seen significant drop in greenhouse gases, and it's because of natural gas. So it's definitely easy to square those two together, because the more natural gas we produce domestically, we can export it overseas, we can use it here at home, and it's clean burning, and it reduces greenhouse gas emissions.

Monica Trauzzi: So lots of changes coming to the Cabinet. How might a new chief at Interior sort of shape the discussion surrounding federal land access?

Katherine Sgamma: Well, I'm not sure that we'll see too much difference in direction from, between two different secretaries. It's hard to say at this point.

Monica Trauzzi: All right. But are you hopeful that there will be a shift away from what we saw over the last four years, or ...

Katherine Sgamma: I would ...

Monica Trauzzi: .... are you satisfied with the trend?

Katherine Sgamma: I would think so. I mean, Secretary Salazar came in. His rhetoric right from the get-go, his action from the get-go, was that he needed to constrain oil and gas development. And so we've seen that in the production numbers. Federal lands, production has gone down. Meanwhile, dramatically up on private and state lands. So we're hoping that a new Secretary has more of a focus on increasing that domestic production on federal lands as well.

Monica Trauzzi: LNG exports. Western Energy Alliance has submitted comments to DOE ...

Katherine Sgamma: Yes.

Monica Trauzzi: ... on the exports issue. It's getting an increased amount of attention on the Hill. Where do you see DOE going with this? And how strict are they going to be in terms of access, moving forward?

Katherine Sgamma: Well, we see it as another commodity, another product that we should be able to export, just like corn and chemicals and whatever other products we produce in the United States. We should be able to export. There are issues of free trade. There are issues of balance of payments. It's beneficial for the United States. And in fact, DOE just completed an LNG exports study, and that study found that in all scenarios, the United States benefits from increased LNG exports. And the more we export, the more the United States benefits.

Monica Trauzzi: How effective do you think the anti-oil and gas lobby has been over the last four years? And do you think that trend will continue?

Katherine Sgamma: I think they've been very effective. Just look at people questioning hydraulic fracturing, for example. It's a safe technology. It's been used in over a million wells, over 60 years. And they've been successful in causing the public to fear something that is a very safe process that is managed correctly by the States. So I think they're very effective. I think their agenda is to shut down oil and gas development, and they're using whatever issue they can. So if it's LNG exports, that's not good. If it's hydraulic fracturing, that's not good. The bottom line is we have a huge success story in the United States. We've opened up huge news supplies of natural gas and oil. We're importing less oil. We're using more natural gas, reducing our greenhouse gas emissions. But it's still not good enough for the environmental lobby, so we're seeing them continue to try to shut down oil and, or the Keystone Pipeline is another great example of that.

Monica Trauzzi: The oil and gas industry is often criticized for having so much money and lobbying power, but it's interesting to see the juxtaposition.

Katherine Sgamma: Oh, goodness, we are so outclassed by the green lobby. They've got a lot more money and a lot more horsepower, so ...

Monica Trauzzi: All right. Interesting point. We'll end it there. Thank you for coming on the show.

Katherine Sgamma: Thanks for having me.

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

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