EPA Says Its Climate Plan Will Help Natural Gas Beat Out Coal — So Why Does the Biggest Oil-and-Gas Lobby Hate It?

They fear their industry is the next target for strict rules.

WATFORD CITY, ND - JULY 30: Pumpjacks are seen in an aerial view in the early morning hours of July 30, 2013 near Watford City, North Dakota. North Dakota has seen a boom in oil production thanks to new drilling techniques including horizontal drilling and hydraulic fracturing. 
National Journal
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Ben Geman
June 4, 2014, 12:08 p.m.

Nat­ur­al gas would be a win­ner in com­ing years un­der the En­vir­on­ment­al Pro­tec­tion Agency’s plan to cut car­bon emis­sions from power plants, a pro­pos­al that would push elec­tri­city pro­duc­tion away from coal to­ward clean­er-burn­ing gas and re­new­ables.

But that doesn’t mean the Belt­way’s most power­ful oil-and-gas-in­dustry lob­by­ing group is go­ing to en­dorse the pro­pos­al, or even stay neut­ral. In­stead, the Amer­ic­an Pet­ro­leum In­sti­tute has come out guns blaz­ing, even though the rule is pro­jec­ted to boost de­mand for nat­ur­al gas for sev­er­al years (and the U.S. barely uses oil to make elec­tri­city any­more).

“The un­cer­tainty cre­ated will have a chilling ef­fect on en­ergy in­vest­ment that could cost jobs, raise elec­tri­city prices, and make en­ergy less re­li­able,” API Pres­id­ent Jack Ger­ard said.

But in con­trast to API, Amer­ica’s Nat­ur­al Gas Al­li­ance, a group that rep­res­ents large in­de­pend­ent gas pro­du­cers, offered an ag­nost­ic take that steered clear of any cri­ti­cism and notes that ANGA looks for­ward to work­ing with the ad­min­is­tra­tion on the rule as the “pro­cess moves for­ward.”

“As we con­sider EPA’s pro­pos­al with our mem­bers and with our power-gen­er­a­tion cus­tom­ers, we agree the rules should be flex­ible and fair, and we be­lieve they should re­cog­nize the abil­ity of nat­ur­al gas to play an in­creas­ing role in the de­liv­ery of re­li­able, safe, and clean power,” said ANGA Pres­id­ent Marty Durbin.

Con­cerns among re­fin­ing and pet­ro­chem­ic­al in­terests are likely among the ma­jor reas­ons why API, which rep­res­ents all fa­cets of the oil-and-gas in­dustry, is tak­ing such a strong po­s­i­tion.

Elec­tri­city is the “second-largest cost com­pon­ent for the re­fin­ing sec­tor and is also a ma­jor cost for pet­ro­chem­ic­al fa­cil­it­ies,” ac­cord­ing to Charles Dre­vna, head of a sep­ar­ate re­fin­ing in­dustry trade group — Amer­ic­an Fuel and Pet­ro­chem­ic­al Man­u­fac­tur­ers — that also op­poses the rule.

And bey­ond con­cerns about high­er power prices ex­pec­ted un­der EPA’s rule, in­dustry sources say the pet­ro­leum in­dustry has an­oth­er mo­tiv­a­tion to battle reg­u­la­tion of car­bon emis­sions un­der the Clean Air Act: They could be next.

For now, EPA has punted on an earli­er pledge to write car­bon emis­sions stand­ards for re­finer­ies, the na­tion’s second-largest source of in­dus­tri­al car­bon pol­lu­tion after power plants. But lob­by­ists are still bra­cing for that fight to hap­pen even­tu­ally.

“Cheer­ing [EPA] now be­cause they’ll of­fer a tem­por­ary boost to one product would look pretty silly in a few years when the same agency pro­poses a sim­il­ar re­stric­tion on re­finer­ies or even up­stream activ­it­ies,” said one gas-in­dustry source. (“Up­stream” refers to oil-and-gas ex­plor­a­tion and pro­duc­tion.)

“There are some com­pan­ies with­in the oil-and-gas in­dustry that are will­ing to at­tack coal, but most of them are not. In this par­tic­u­lar in­stance [EPA’s car­bon rule], I think the en­ergy in­dustry sees not just a lim­ited threat to one power source, but the be­gin­ning of a wave of re­stric­tions on green­house gases,” this source adds.

And more broadly, many fossil-fuel in­terests see EPA, in the main, as an ad­versary when its en­tire reg­u­lat­ory agenda is looked at in sum.