MILLS: Trump Orders Agencies to Identify Obstacles to Energy Production

Insider’s ENERGY REPORT: Texas Economy Improves, Led By Oil Industry Activity

By Alex Mills

AUSTIN, Texas (Texas Insider Report) — Energy policy has taken an about-face in the nation’s capital. Instead of the President implementing policies to restrict the use of the nation’s most plentiful energy sources, the nation’s new leader is encouraging domestic energy production and believes in limiting imports.

Some have used the phrase “Energy Independent.” Others tout the idea that increasing supplies of energy produced domestically will also increases our financial and national security.

On Tuesday, March 28th, President Trump issued an Executive Order reversing many of the detrimental policies implemented by the Obama Administration.

One of the most controversial orders issued by Obama dealt with the adoption of a policy that allowed for the administration of compute the social cost of carbon, and use this to justify their energy and environmental policies. This concept was never authorized by Congress, and never adopted using the Administrative Procedure Act. It is based on questionable processes to calculate the impact of carbon reductions on climate changes.

Trump’s order requires reconsideration of the process that was used to justify a wide range of regulations. The order also instructs the Department of Justice to tell the U.S. Court of Appeals that it wants to delay a legal case, brought by states and industry groups, which challenges the Clean Power Plan.

A key component of the Clean Power Plan was the adoption of EPA’s Methane Rule in the final year of the Obama Administration. States and industry organization filed a lawsuit against the rule, which is pending from the U.S. Court of Appeals in D.C. The oil and gas industry had stressed to EPA and other federal agencies that methane and CO2 emissions have been declining for years, and that the strict standards set by the Clean Power Plan were not necessary.

According to the U.S. Energy Information Administration (EIA), U.S. energy-related carbon dioxide (CO2) emissions during the first six months of 2016 declined to the lowest emission levels since 1991. EIA reported CO2 emissions totaled 2,530 million metric tons in the first six months of 2016. EIA attributed the reduction to mild weather and changes in the fuels used to generate electricity, which contributed to the decline in energy-related emissions.

EIA’s Short-Term Energy Outlook projects that energy-associated CO2 emissions will fall to 5,179 million metric tons in 2016, the lowest annual level since 1992. Also, EPA recorded another drop in methane released from the nation’s petroleum and natural gas sector, prompting calls from industry to take down the Obama Administration’s efforts to control emissions from oil and gas sources.

Across production fields in oil-rich Texas, methane emissions fell by a combined 3.58 million metric tons of CO2 equivalent between 2011 and 2015.

The White House said the order will direct each federal agency to identify rules and policies that serve as obstacles or impediments to domestic energy production.

Texas Economy Improves, Led By Oil Industry Activity

The economy in Texas has shifted into second gear and is expected to grow in 2017 according to a study released recently by the Federal Reserve Bank of Dallas.

“The outlook for the Texas economy has improved considerably from a year ago,” Robert Kaplan, President & Chief Executive Officer of the Dallas Fed, said.

“Texas jobs are expected to increase between 1.5% and 2.5%, as the energy sector improves and the service sector grows at a moderate pace,” the report stated.

“The largest risk to the outlook is a sharp change in oil prices. A continued appreciation of the U.S. dollar, making Texas goods more expensive abroad, also poses a significant risk to Texas exporters,” said the report.

The report said oil prices held steady above $44 per barrel since May 2016, and provided “a great sense of stability in energy markets.” Near the end of last year, OPEC agreed to cut production of oil, and a new president was elected that issued executive orders repealing many regulations on the domestic energy industry.

The Texas Petro Index also confirms the report’s findings. Crude oil prices rose from an average of $27.08 per barrel in February 2016 to $50.03 per barrel in February 2017. Natural gas prices at the wellhead increased from $1.84 per million Btu to $2.70. Also, drilling permits issued by the Texas Railroad Commission increased from 1,083 to 1,947 and the drilling rig count rose from 244 to 370 in Texas during the same period.

“Although energy prices are not expected to rise significantly in 2017, optimism among energy company executives has surged, and drilling activity is expected to pick up,” the Fed’s report stated.

“The Dallas Fed’s Energy Survey shows a much higher share of respondents reporting a positive outlook in exploration and production firms as well as support services companies in the fourth quarter 2016. Given this optimism, a more robust recovery is likely this year as capital expenditures rise and oil and gas employment stabilizes.”

Two oil and gas industry publications recently forecast a rise in drilling, production, and capital spending this year.

The Oil and Gas Journal proclaimed, “North American upstream spending to soar in 2017.”

World Oil Magazine stated: “Drilling in the Lone Star State will rise 26.4 percent with double-digit increases expected for all 12 of the Railroad Commission districts.”

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Alex Mills is President of the Texas Alliance of Energy Producers.  The opinions expressed are solely those of the author. The Texas Alliance of Energy Producers is an oil & gas trade association that represents some 3,000 members. It has offices in Austin, Houston, Fort Worth & Wichita Falls.

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