Natural Gas

U.S. Chamber's Harbert discusses shale development, LNG exports and fracking regs

What impact could ramping up shale development have on the U.S. economy? Can pipeline capacity keep pace with natural gas supplies? During today's OnPoint, Karen Harbert, president of the U.S. Chamber of Commerce's Institute for 21st Century Energy, discusses the Chamber's new campaign promoting the economic benefits of shale development. Harbert talks about the impact of liquefied natural gas exports on U.S. industries that are dependent on gas, and she also weighs in on the state versus federal regulation debate.


Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Karen Harbert, president of the U.S. Chamber of Commerce's Institute for 21st Century Energy. Karen, it's great to see you.

Karen Harbert: Nice to be back, thank you.

Monica Trauzzi: Karen, ahead of the congressional August recess the chamber has rolled out a new campaign that focuses on the economic incentives associated with shale exploration and development. Everyone in Washington seems to be doing some kind of fracking or shale campaign, whether it be for or against, so what is the chamber doing that's different with this campaign?

Karen Harbert: Well, this is a campaign intended to really highlight the enormous potential for our economy for shale development. If we're really serious about getting the economy back on track and creating good, high-paying jobs, shale should be top of the list. And so we really want to show how the economic benefits are not just at the wellhead, how they reverberate throughout the economy. And I think that's a difference that we bring to the table, being able to represent the broader business community.

Monica Trauzzi: Shale production though could depress prices, so what's the incentive right now then for industry to ramp up production if those prices could stay low or go further down?

Karen Harbert: Well, you're right, prices are low. I don't think that anybody expects them to stay low forever, as the potential for gas begins to permeate through our economy, that there's more opportunities for utilization. But we also have to remember the knockoff effects of this development, that it is the Caterpillar dealer, it is the hotels, it is the restaurants, it's the service industry. And those industries are really seeing a revitalization in areas of our country that have really been depressed in this economy.

Monica Trauzzi: There are many industries, the chemical industry for example, they're very dependent on natural gas and so if we're able to ramp up that production, what do you think the net effect is on those industries?

Karen Harbert: Well, we're seeing, you know, the chemical industry is returning to the United States. It had left and had gone to the Middle East. And we're seeing big-name companies come back, make big investments. So the petrochemical industry is back. Manufacturing, which is very dependent on gas as a feedstock, is beginning to bloom again, so this is an American success story that I think many people don't really quite appreciate yet. And that's why we want to bring, you know, our network of chambers, state and local, our business network together to understand what this means for our economy.

Monica Trauzzi: And one of the ideas that plays into this success story is this idea of exporting liquefied natural gas. Should the industry be allowed to export LNG and what are the economic impacts then here at home if they are allowed to?

Karen Harbert: Well, as you know, I mean a scant seven years ago, if we were having this discussion we'd be talking about how do we accelerate liquefied natural gas import terminals. And now we've got the first export terminals. So in seven years, I mean the story is changing and who knows what the story will be seven years from now. What we do know is we've got a lot of it. There is a growing demand around the world for it. It's going to be a global market and should we really artificially, you know, take ourselves out of that market? We don't think that by allowing exports that we're going to completely change the economics of natural gas in this country. So, you know, we're free marketers and we believe the market and the free enterprise system will best work if allowed to operate freely without artificial barriers.

Monica Trauzzi: So, if fully explored, we're talking about potentially very large supplies, can new pipeline capacity though be brought up to speed quickly enough to manage and handle all of those natural gas supplies?

Karen Harbert: Well, there's a good news story there and a challenge, which means we're going to need a lot more infrastructure, which is jobs, it's investment for here. We have to be able to get them permitted, so the regulatory process at both the state level and the federal level is going to have to cooperate with this expansion. But it's a work in progress. I think the other side of it is that we have to look at all of the potential in the next 3 to 4 years for jobs. I mean right now shale development in our country is about 600,000 jobs. That could go up by 25 percent in the next couple of years. And the contribution to GDP when we are looking at a fiscal cliff is enormous and so we have to look at how we can best get the system to work so that we realize those benefits in the amount of time that we need to.

Monica Trauzzi: But are we putting the cart before the horse if we develop all this shale, but don't have the pipeline infrastructure to get it around the country?

Karen Harbert: Well, we were just in West Virginia and we were at the Caterpillar dealer in West Virginia, they have nine offices throughout West Virginia, and I asked to see some of their equipment, particularly the equipment that they use to deliver pipe. There was not one piece of equipment on site there, so they are fully deployed, which is a good story, but it's a challenge. And so industry is beginning to ramp up to be able to build that and we have to make sure that we don't strand a lot of our assets. So it's an opportunity, but I won't shy away from saying that there is a challenge there.

Monica Trauzzi: Much attention has been paid to the movie "Gasland" and its impact on the overall fracking discussion. On a grassroots level though, how much of an impact do you think that's had on the average American?

Karen Harbert: Well, we've been out traveling Pennsylvania, Ohio, West Virginia and there are real local success stories. There are communities that are back on the map because of shale development that were withering away, their children were moving away, the restaurants were closing. And so I think they have a very different story to tell and we plan on telling it to anybody that will listen and we look at where our resource base is, it's in 20 states. It's not just in one or two states. This is an opportunity for our economy more broadly and our country more broadly. And those success stories need to be part of the narrative, not just the negatives and the negative stories have dominated this and we're going to bring out the positives.

Monica Trauzzi: You mentioned regulation, where do you think the Obama administration is overreaching on regulation when it deals with shale development?

Karen Harbert: Well, the shale development has been regulated at the state level, as you know, for many, many years and very successfully. Those states where there's a lot of shale, right now you're seeing governors relook at their regulatory framework, make some changes to it and make sure it's up to the industry standards, that it's very, very environmentally strict. Do we really need the federal government to come in on top of that just for regulations sake? I think we have to take a hard look at whether we just want to layer that or whether we want to let the states, who are closest to the resource, regulate it. We came out in favor of the states. We think that they're doing a pretty good job and we worry that other parts of our federal government, whether it be the interior department or the EPA, might come in and layer additional regulations on there then might make it more difficult or more uneconomic to do business here.

Monica Trauzzi: Does it make it more challenging for industries though to keep up with sort of this patchwork of standards from state to state when many of them may be doing business in multiple states?

Karen Harbert: Well, I think that's a great question and one of the answers to that is that the resource base is different in different places. It's different in Texas and North Dakota than it is in Pennsylvania and Ohio. So some differences do make sense. Community interests need to be taken into account and I think the industry is up to that. They're working in multiple states and trying to impose upon themselves the highest standards so that they can allay any community concerns and, obviously, get back to business.

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

Karen Harbert: Nice to see you.

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

[End of Audio]



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