Gas Industry: State Should Be Sole Regulator

Jan 9, 2012

In a speech made in Washington, D.C. last week, the leader of the American Petroleum Institute said that the industry wants state governments to be the sole regulators of shale gas exploration, production, and supply.

API President & CEO Jack Gerard said that putting several strata of regulation on energy companies is redundant.

"If you talk to governors, and you talk to state regulators, they will tell you that they are very aggressively and actively regulating hydraulic fracturing activities," said Gerard. "There is no need to create duplication and inconsistent regulation, which only slows energy development — in fact, in some cases, makes it beyond our reach."

Gerard said that the industry welcomes "appropriate regulations."

"We're not asking for no regulation," said Gerard. "We're asking for thoughtful, efficient, timely regulation. We need to sort through the duplicative activities that occur between state, federal, [and] local levels."

PennFuture Vice President Heather Sage said not all regulation should be centralized at the state. "The type of regulations that would be occurring at a local level are really kind of specific and are specific to individual conditions that you might be encountering in that area." said Sage, "So there are some types of regulations, zoning maters, that are really appropriate at the local level."

Sage said federal regulations are also key to properly regulating the oil and gas industry.

Legislation in the Pennsylvania General Assembly would provide a comprehensive legal framework for shale gas development. Senate Bill 1100 and House Bill 1950 would put the power of zoning shale infrastructure in the hands of the state government, rather than allowing municipalities to decide where well pads, pipelines, and other facilities can be built.

Gerard did not address the environmental concerns often raised by hydraulic fracturing, the process in which drillers break up rock layers with a water-sand-chemical mixture. Environmental groups and citizens contend that the flowback of toxic chemicals from such "fracking" pollutes the environment, particularly if the fluid enters rivers, streams, or groundwater.

The API chief praised the Marcellus Shale natural gas industry for its contribution to the Pennsylvania economy. Gerard said that the industry created 90,000 jobs in the Commonwealth over the past 18 months and added millions of dollars to the state's treasury.

In addition, Gerard said that the increased production of natural gas is driving down prices for consumers.

"On a panel with Governor Corbett in Pennsylvania just a few months ago, he indicated the reduction or price-savings in the state of Pennsylvania have saved their consumers over $245 million in energy costs," said Gerard.