Could both parties agree on the future of oil and gas?
Though congressional opinions run the gamut, two distinct visions for the fuels cleave largely along party lines — with a few prominent exceptions. Calls from the left to phase out oil and gas to address climate change seem to contradict right-wing plans to accommodate the fuels in order to build a low-carbon economy around them.
For now, at least, true bipartisanship appears stubbornly out of reach. But one sentiment stretches across party lines: hope that consensus is possible.
“It’s when things get rough in energy markets, when Americans have felt the turbulence of instability in places like California, Texas or New England, that we can see energy as the bipartisan priority it should be,” Mike Sommers, president and CEO of the American Petroleum Institute (API), said during the trade association’s annual State of American Energy event on Wednesday.
Sommers urged policymakers to find ways to collaborate on energy policy that surmounted partisanship. Doing so, he said, would ease the economic burden of climbing energy costs in the near term and boost the resilience of the U.S. grid in the long run.
Neither party shares a clear-cut stance on oil and gas. Still, most policymakers fall into one of two camps: Proponents of adopting industry-wide carbon capture and storage face off against the technology’s skeptics.
Obstacle 1: Carbon
Either option — keeping the fuels or phasing them out — comes with its own advantages and drawbacks, and plenty of uncertainty.
Shannon Anderson, staff attorney for the Powder River Basin Resource Council, likened taking a stance to gambling with the national debt.
“The question is, right now, in 2022, how much do we bet on new technology coming up and going, or do we bet on what we already have, and scale that up?” Anderson said.
API is betting on that new technology. According to Sommers, the oil and gas industry is investing heavily in the commercialization of carbon capture and storage.
“One of America’s strengths is how it has repeatedly shown the way in technology and environmental progress,” Sommers said. “Time and again, we’ve illustrated that some major breakthroughs come not by forced regulations and mandates, but through innovation and technology.”
Equipping gas-fired power plants with carbon capture would also boost grid reliability by allowing utilities to switch to natural gas when wind turbines and solar panels weren’t producing enough electricity, Sommers said.
At present, carbon capture, which has already come too late to save most coal-fired power plants, is still too expensive to be deployed commercially. A trial run at a U.S. coal plant succeeded at capturing carbon, but was shut down after several years due to cost. The technology hasn’t been tested at scale at a natural gas plant — yet.
Anderson is among those unconvinced that carbon capture and storage can be commercialized quickly enough to meet the nation’s decarbonization targets. Nor does she think it’s necessary.
“If I was a betting person and I was betting the national debt — which, essentially, we’re all doing as Americans here — I would bet it on renewables and battery storage over carbon capture,” Anderson said.
Obstacle 2: Supply and demand
Ratepayers are already feeling the pinch of high natural gas prices this winter. Though prices have declined more than a dollar since surpassing $5 per million British thermal units in the fall, production’s glacial rebound has left it well below pre-pandemic levels — and present fuel demand.
Nearly two years after COVID-19 brought the nation to a standstill, the threat of additional lockdowns — and subsequent hits to demand — continue to worry oil and gas producers, impeding recovery. And the process, like other leasing activity, has moved even more slowly on public lands than private lands.
In Wyoming, the No. 1 natural gas producer and No. 2 oil producer on federal lands, recovery has been especially gradual. The state’s rig count, which remained at 15 through November and December, finally increased by one last week.
Industry has pointed to other factors to explain the sluggishness, particularly on federal land, including, frequently, President Joe Biden.
“It’s easier to permit on private lands,” Anderson said. “It always has been. But it’s not specific to policies of this administration. It’s challenges with just development of the federal mineral estate.”
During the first year of Biden’s presidency, however, industry criticized several of the administration’s policy decisions for fostering uncertainty among producers, including opting not to hold any onshore lease sales in 2021, canceling the Keystone XL pipeline and proposing an increase to federal royalty rates for oil and gas drilling.
Such policies are “aimed at restricting production and delivery of U.S. natural gas and oil,” Sommers said, and “don’t put America on a path to progress nor help us meet basic energy needs.”
Many climate advocates were unsatisfied with those same actions, though for the opposite reasons: They felt the leasing pause was too short, the cancellation of Keystone XL insufficient, the proposed increase to royalty rates inadequate.
“Policymaking, of course, is always challenging,” Anderson said. “It always takes way longer than you think it will. It always frustrates, I think, everybody on every side, because the solution is going to be about art of compromise.”
Anderson, like Sommers, hopes it can be done.