As the natural gas industry faces another game-changing year of regulations, legislation and market volatility, what are the industry's plans for increasing market share? During today's OnPoint, Marty Durbin, president and CEO of America's Natural Gas Alliance, discusses the role the Clean Power Plan, proposed methane emissions regulations and congressional momentum on an energy bill will play in his industry's future. He also addresses reports that his organization is in talks to merge with the American Petroleum Institute.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Marty Durbin, president and CEO of America's Natural Gas Alliance. Marty, good to have you back on the show.
Marty Durbin: Thanks, happy to be back.
Monica Trauzzi: So, Marty, this is shaping up to be another game-changing year for the natural gas industry in the United States on the regulatory front -- the Clean Power Plan, methane emissions regulations. On the legislative front there's strong momentum in Congress for an energy package to pass with some natural gas and LNG export measures included. And now Politico is also reporting that your organization and the American Petroleum Institute are in talks to merge. Can you confirm that there are conversations happening about the two organizations merging?
Marty Durbin: Well, Monica, I can't confirm that. I can't comment on the report itself. But I will say that in a time of commodity prices being as low as they are and the prices we've been experiencing there's not a single company in the oil and gas industry that isn't absolutely focused on innovation, efficiency improvements and cost-cutting, and they expect the same thing from their trade associations. So we're certainly looking at all those things and we'll continue with the very good track record we have of working with API and other associations to make sure that our members are seeing the value from us.
Monica Trauzzi: And you previously served as executive vice president at API. What role do you see yourself playing moving forward as natural gas continues to be a major moneymaker but also a source of debate in the United States?
Marty Durbin: Monica, I only have one role right now and that's president and CEO of America's Natural Gas Alliance. And I think what's important to say is that we're providing a lot of value to our members right now because ANGA's focus really is on growing markets for natural gas in power generation and exports, manufacturing, and transportation. That's bringing real value to the industry today, and I'm confident that we're going to continue to do that going forward.
Monica Trauzzi: All right, let's move on. In August the Obama administration released its anticipated regulations for methane emissions. How does this compare to the strategy that we saw released by the administration in January?
Marty Durbin: Well, I think our issue with the strategy or the rule that was released -- I think that methane is an area where there's a real opportunity for a win-win here with the industry and the administration. The fact is that we've seen natural gas production increase by 35 percent since 2005, and during that time methane emissions just from our production have been decreased by 38 percent. Now that's because of innovation that's come from the industry, but also from existing regulations from EPA, that frankly there's been a very good relationship with the administration and with the agency. So we would've preferred a much more collaborative approach to say, you know, let's continue that success. It's been dramatic reductions on our end. So our concern is that adding another layer of regulation here and changing the way they're doing it is simply going to muddle our ability to reach those goals.
Monica Trauzzi: But how big of a layer is this actually? I mean, you mentioned 38 percent emissions reductions already. We're talking about an additional 2 to 7 percent. How difficult would it be to achieve those values?
Marty Durbin: Well, don't get me wrong. We're going to see further reductions because of what the industry is doing, and our -- I think we have a shared goal here on reaching further reductions of methane emissions, and again we have a track record of showing that we can do that and we are doing that. We take issue with the idea that now we have to add yet another layer of regulation here when we had a path forward to do this in a more collaborative way. But we will get the job done.
Monica Trauzzi: So then these regulations won't chill growth in your industry as some people contend, I mean if you're on the path to make those reductions anyway?
Marty Durbin: Well, we don't know yet, and that's the problem. You know, here we thought we had a more certain path to say let's deal with the existing regulation, and the industry was ready to say, "And here are some additional voluntary efforts that we can take." Now we've got more uncertainty on how long it will take us to get to the implementation phase and exactly what the cost will be. You know, we thought we had a pretty clear shot on how to get the job done, and now there's just more uncertainty.
Monica Trauzzi: So you would say that there is some type of financial or market challenge here?
Marty Durbin: Well, potentially. Again, we won't know yet till we get to the end of this process, but we do know that the reductions we've seen have a market aspect to them as well. I mean, it's in our interest to capture that methane, and we have been doing that and continue to do that even in a low-price environment.
Monica Trauzzi: So then what's your lobbying strategy moving forward through the public comment phase?
Marty Durbin: Well, we're going to continue to work with both the agency and with the other organizations that we've been partnering with all along on the methane front in hopes that we can continue to show that there are faster, easier ways to get to what we think is a shared objective.
Monica Trauzzi: Let's switch to the Clean Power Plan. The final rule is significantly different from EPA's draft proposal and there is a shift on natural gas in that final rule. Do you see EPA's decision to place more of an emphasis on renewables as a signal that the administration is retracting its long-standing support for natural gas?
Marty Durbin: Well, some of this is yet to be seen, but I think our concern -- I think frankly the White House and the talking points they put out on the Clean Power Plan were simply wrong, to take a tack that says, "We have to hold natural gas back in order to have more renewables," a talking point that essentially said, "The early rush to gas will be eliminated." There's been no rush. What we've seen is a controlled shift to natural gas that's driven entirely by market dynamics that frankly are compelling. We're going to see more natural gas used in power generation because again the market fundamentals are so compelling, and if anything the estimates that EPA has made and even EIA's most recent outlook I think is underestimating the resource case and the amount of natural gas we have. So we feel very good about the ability to -- you know, going forward in power generation, and where we're focused is on the states. How they implement the rule is going to be critical, and we think -- we know that natural gas is going to provide that low-cost compliance option for them because it's cleaner fuel and provides both the reliability and the affordability that the states have to provide.
Monica Trauzzi: ClearView Energy Partners' Kevin Book said on this show that with the Clean Power Plan the natural gas bridge got cut a lot shorter. Natural gas is always referred to as a bridge fuel. How long is the bridge right now?
Marty Durbin: I don't even buy into the bridge fuel. We're a foundation. This is no longer a bridge; it's a foundation for the economy and will be for a long time. And you know, not to disagree with Kevin, but I think that from a rhetorical standpoint I think the administration took a step back and said let's -- you know, they're perpetuating this myth that in order to have renewables you have to hold back natural gas. And the fact of the matter is we're going to be a bigger part of this, and even on renewables I don't have any issue with saying let's see if we can't bring more renewables in here. But the administration knows as well and the EPA administrator has said as much -- you have to have natural gas to help bring in more renewables to the system.
Monica Trauzzi: So you're confident that natural gas will continue to increase its market share despite how the Clean Power Plan has been written and structured?
Marty Durbin: I am. I think the market fundamentals are just too strong, and as we continue to work with both the utilities directly, the states and EPA as we move forward -- and the administration -- again, the case is going to be compelling that natural gas is going to provide that low-cost compliance option for the states.
Monica Trauzzi: On the Hill there's movement in both chambers on a comprehensive energy bill. Bills have moved through the committees of jurisdiction but without the inclusion of the more controversial measures. Will LNG and crude oil export measures kind of muddy the chances of a final bill passing?
Marty Durbin: I don't think so. First of all, we have -- of course it's in the Senate bill that got through committee on LNG exports. On the House side we'll see what comes in the markup. I believe it's maybe scheduled for next week. But we're seeing movement this week in the House on crude oil exports. I think that's a positive movement. I think that, again, as time moves on we're seeing greater momentum in support for exports of both LNG and crude oil. And I will just say I think it's a great thing all around that both houses of Congress are operating in bipartisan ways in their committees to move energy legislation forward.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show.
Marty Durbin: Happy to be here.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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