National energy report highlights struggles of Western states' production

National energy report highlights struggles of Western states' production

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SALT LAKE CITY — The stark challenges of oil and natural gas production on Western public lands are highlighted in a national energy report released Tuesday, with one example illustrating the Utah story compared with that of Pennsylvania over a six-year period.

"The State of American Energy 2016 report," unveiled by the American Petroleum Institute, shows how Pennsylvania — with 2.1 percent of its land in federal control — experienced a 2,000 percent increase in natural gas production from 2008 to 2014.

By comparison, Utah, with 66.5 percent of its land in federal ownership, experienced a 1 percent increase in natural gas production.

"The numbers are quite amazing," said Jack Gerard, the American Petroleum Institute's president and CEO. "There is a dramatic difference between federal ownership and state ownership."

Pennsylvania is one of six Northeast states that are home to the Marcellus shale formation — the largest in the United States — but Gerard argues that the differences in production are not a symptom of "geologic science, but a matter of federal energy policy."

Gerard, in a teleconference Tuesday accompanying the release of the report, said Western states with vast federal land ownership are at a production disadvantage because regulatory uncertainty and environmental review delays drive investment by companies elsewhere.


Pennsylvania — with 2.1 percent of its land in federal control — experienced a 2,000 percent increase in natural gas production from 2008 to 2014. By comparison, Utah, with 66.5 percent of its land in federal ownership, experienced a 1 percent increase in natural gas production.

Environmental groups say the story isn't as simple as that, saying the Pennsylvania-Utah comparison is nothing more than a red herring.

"It's comparing apples to oranges," said Stephen Bloch, legal director for the Southern Utah Wilderness Alliance, pointing out that prior to being able to tap into the Marcellus play, Pennsylvania experienced very little oil and gas production.

"Bottom line, while oil and gas production in Pennsylvania did outstrip Utah from 2008-2014, that's because Pennsylvania was starting at such a low point while Utah already had a well-established and robust energy sector," he said.

Bloch said Utah's boom and bust cycle is a symptom of market forces and resources that are more expensive to get at, not federal land ownership like industry groups like to blame.

In fact, Bloch pointed to more than 3.5 million acres of land in Utah under lease to oil and gas companies, but just 1.1 million acres in production — underscoring how industry is tying up the land while simply waiting for better market conditions to sink a rig.

But Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance, stressed that federal policies have brought new production on public lands to nearly a halt. So while there may be leases, there is not development.

"If you look at Utah compared to Pennsylvania, there are some market factors, but the biggest thing is there is just a standstill in Utah now because of all the federal lands," she said.

Graphic credit: Deseret News
Graphic credit: Deseret News

Sgamma said lengthy environmental reviews mandated by the National Environmental Policy Act tell the story of what is happening on federal lands and elsewhere in the West when it comes to any new production.

"The (National Environmental Policy Act) delays are very telling. The Interior Department has only approved three major projects during the Obama administration," she said, "and meanwhile there are other projects they won't move forward … so companies are just stuck in a holding pattern waiting for NEPA documents to get approved."

For the eight states that make up the Mountain West in the institute's report — Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming — crude oil production on federal land was relatively flat, while natural gas production actually went down between from 2009 to 2014 by 35 percent.

On private and state lands, according to the report, the same region experienced an 88 percent increase in crude oil production, and natural gas production jumped by 43 percent.

"You can see a stark contrast between what is happening on federal lands controlled by the federal government and on what governors are allowing to happen on state lands," Gerard said.

Critics of fossil fuel production decry its climate change impacts and damage to the environment, but Gerard said the United States is the global leader in carbon reductions and is producing natural gas and oil in ways that minimize harm to the environment.

"It is pretty significant what has taken place in this country," he said, noting that carbon emissions have decreased while production has more than doubled in the past five or six years.

"The untold story is the U.S. model," Gerard said. "The reality is we are now a major producer of natural gas. It is cleaner burning and produces few carbon emissions, and I don't think that is recognized by the current administration."

There are more than 100 pending regulations aimed at the oil and gas industry, he said, regulations that will only make it tougher on producers and harm consumers in the long run.

"All we are asking for is opportunity," Gerard said. "Give us a chance to compete with everyone else around the world, and the key beneficiary is the consumer."

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