[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
A SOLUTION IN SEARCH OF A PROBLEM:
EPA'S METHANE REGULATIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
September 15, 2016
__________
Serial No. 114-93
__________
Printed for the use of the Committee on Science, Space, and Technology
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma EDDIE BERNICE JOHNSON, Texas
F. JAMES SENSENBRENNER, JR., ZOE LOFGREN, California
Wisconsin DANIEL LIPINSKI, Illinois
DANA ROHRABACHER, California DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
MO BROOKS, Alabama ALAN GRAYSON, Florida
RANDY HULTGREN, Illinois AMI BERA, California
BILL POSEY, Florida ELIZABETH H. ESTY, Connecticut
THOMAS MASSIE, Kentucky MARC A. VEASEY, Texas
JIM BRIDENSTINE, Oklahoma KATHERINE M. CLARK, Massachusetts
RANDY K. WEBER, Texas DON S. BEYER, JR., Virginia
JOHN R. MOOLENAAR, Michigan ED PERLMUTTER, Colorado
STEVE KNIGHT, California PAUL TONKO, New York
BRIAN BABIN, Texas MARK TAKANO, California
BRUCE WESTERMAN, Arkansas BILL FOSTER, Illinois
BARBARA COMSTOCK, Virginia
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia
RALPH LEE ABRAHAM, Louisiana
DARIN LaHOOD, Illinois
WARREN DAVIDSON, Ohio
------
Subcommittee on Environment
HON. JIM BRIDENSTINE, Oklahoma, Chair
F. JAMES SENSENBRENNER, JR. SUZANNE BONAMICI, Oregon
RANDY NEUGEBAUER, Texas DONNA F. EDWARDS, Maryland
RANDY WEBER, Texas ALAN GRAYSON, Florida
JOHN MOOLENAAR, Michigan AMI BERA, California
BRIAN BABIN, Texas MARK TAKANO, California
BRUCE WESTERMAN, Arkansas BILL FOSTER, Illinois
GARY PALMER, Alabama EDDIE BERNICE JOHNSON, Texas
RALPH LEE ABRAHAM, Louisiana
C O N T E N T S
September 15, 2016
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Jim Bridenstine, Chairman,
Subcommittee on Environment, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 4
Written Statement............................................ 6
Statement by Representative Suzanne Bonamici, Ranking Minority
Member, Subcommittee on Enviorment, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 8
Written Statement............................................ 9
Statement by Representative Lamar S. Smith, Chairman, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 10
Written Statement............................................ 12
Witnesses:
Mr. Erik Milito, Director, Upstream and Industry Operations,
American Petroleum Institute
Oral Statement............................................... 14
Written Statement............................................ 16
Dr. Bernard Weinstein, Professor, Associate Director, Maguire
Energy Institute, Cox School of Business, Southern Methodist
University
Oral Statement............................................... 23
Written Statement............................................ 25
Mr. Elgie Holstein, Senior Director for Strategic Planning,
Environmental Defense Fund
Oral Statement............................................... 30
Written Statement............................................ 32
Mr. Anthony J. Ventello, Executive Director, Progress Authority
Oral Statement............................................... 39
Written Statement............................................ 42
Discussion....................................................... 70
Appendix I: Answers to Post-Hearing Questions
Mr. Erik Milito, Director, Upstream and Industry Operations,
American Petroleum Institute................................... 86
Mr. Elgie Holstein, Senior Director for Strategic Planning,
Environmental Defense Fund..................................... 91
Appendix II: Additional Material for the Record
Statement submitted by Representative Eddie Bernice Johnson,
Ranking Member, Committee on Science, Space, and Technology,
U.S. House of Representatives.................................. 100
Documents submitted by Representative Gary Palmer, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 101
Documents submitted by Representative Donna F. Edwards, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 106
Documents submitted by Suzanne Bonamici, Ranking Minority Member,
Subcommittee on Enviorment, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 118
Documents submitted by Representative Lamar S. Smith, Chairman,
Committee on Science, Space, and Technology, U.S. House of
Representatives................................................ 120
A SOLUTION IN SEARCH OF A PROBLEM:.
EPA'S METHANE REGULATIONS
----------
THURSDAY, SEPTEMBER 15, 2016
House of Representatives,
Subcommittee on Environment,
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 2318, Rayburn House Office Building, Hon. Jim Bridenstine
[Chairman of the Subcommittee] presiding.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. All right. We're going to go ahead
and get started. We have votes happening between 10:00 and
10:30, so we're going to start just as soon as we can here if
our witnesses can take their positions.
When we break for votes, we'll come back here and continue
the hearing immediately following votes. I think we'll only
have one vote, so it shouldn't take too long and get as much
information as we can before we all fly home for the weekend.
The Subcommittee on the Environment will come to order.
Without objection, the Chair is authorized to declare recesses
of the subcommittee at any time.
Welcome to today's hearing entitled ``A Solution in Search
of a Problem: EPA's Methane Regulations.'' I recognize myself
for five minutes for an opening statement.
Today's hearing will examine the impact of the
Environmental Protection Agency's recent regulatory activity on
methane gas. We will also discuss implementation, economic
impacts, and other associated issues regarding the methane
rules at the national and the state level.
I am concerned about the EPA's expansive interpretation of
its regulatory scope and its continued use of questionable
scientific bases for rulemaking. My concern extends to the
EPA's methane rule.
This past May, EPA Administrator McCarthy stated that she
will expedite issuing regulations for reducing methane
emissions from existing sources. Rather than expedite methane
regulation, EPA should take a breath and realize that the best
available science does not support new rulemaking. But once
again, EPA is back at it with cherry-picking and fudging data
to fit a politically driven agenda aided by a cabal of
establishment environmentalists.
A study published earlier this year by National Oceanic and
Atmospheric Administration scientists found that the expansion
of oil and gas production is not to blame for a global increase
in methane emissions. That was NOAA. That was their study. And
according to the study's author, ``The U.S. energy industry
contributes little to the overall burden of global fossil fuel
emissions.'' According to this NOAA study, wetlands, which
naturally generate methane, and agriculture from sources
outside the United States are the main contributors to
emissions.
Here at home, the oil and gas industry has drastically cut
methane emissions through responsible voluntary efforts.
Technological advances under development and implemented by
industry will only lead to further reductions, without the need
for costly and burdensome EPA regulations.
Leading energy researchers, including the National Economic
Research Associates, dispute and challenge EPA's claims that
reducing methane leaks by 45 percent by 2025 will be equivalent
to shutting down one third of the world's coal-fired power
plants. EPA is simply exaggerating their claims. A study by
NERA concludes that the supposed benefits from EPA's methane
rules are highly uncertain and very likely overstated.
The actual reduction in global temperatures is also
minimal. Energy In Depth found that the rules would reduce
global temperatures by a mere 4/1000 of a degree Celsius over
the next 84 years, 4/1000 of a degree Celsius. We can't even
measure that. Even if we shut down and stopped all American oil
and gas production, it will have no impact on global
temperatures.
And the cherry-picking of the science does not stop there.
Issues of data integrity have continually dogged EPA during and
after the regulatory process behind the methane rules. Before
the final methane rule for new sources was released, the EPA
conveniently increased its estimates of methane emissions from
petroleum and natural gas systems without specifically
identifying these emissions. It conveniently revised the
greenhouse gas inventory for methane, adding 85 million metric
tons to the U.S. methane emissions. Of course, EPA released
this report ahead of their final rule.
And it gets worse. In order for EPA to justify their new-
found activism, EPA assumed that the emissions from marginal
wellheads, their profiles were similar to those of higher-
producing wells and claimed the use of ``new methodology.''
However, EPA had previously admitted that marginal wells have
``inherently low'' emissions.
What is clear and supported by the facts is that the recent
economic boom is real. Communities have benefited tremendously
from the resurgence of natural gas extraction when extracted
safely and efficiently and responsibly. While states like New
York have seen good-paying jobs and the associated economic
benefits go to the wayside because of their moratorium on
hydraulic fracturing for natural gas extraction, States like my
State of Oklahoma have experienced the opposite.
Ranking fifth in energy production, Oklahoma practices an
all-of-the-above strategy when it comes to energy. Last year,
Oklahoma produced an all-time high, 2.5 trillion cubic feet of
natural gas. That number indicates a 50 percent increase in
production over ten years. The increased production of natural
gas has coincided with a decrease in methane emissions. In the
last ten years, the state of Oklahoma has increased its
production of natural gas by 50 percent, and it has coincided
with a decrease in methane emissions.
Oklahoma is leading the way in demonstrating that
responsible exploration and production with industry-led
voluntary emission reduction practices realizes decreased
emissions without burdensome mandates from the EPA. I would
also like to applaud my Attorney General, Scott Pruitt, for
joining the lawsuit challenging the methane emissions
regulations.
As we will hear today, the shale revolution has changed the
U.S. economy and has been responsible for creating good-paying
jobs. Instead of focusing on environmental protection, however,
the EPA is now pursuing a war on natural gas.
I want to thank each of our witnesses for coming. I look
forward to hearing your testimonies. And I will yield back the
balance of my time, of which there is none remaining.
[The prepared statement of Chairman Bridenstine follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. I will now recognize the Ranking
Member from Oregon, Ms. Bonamici, for five minutes.
Ms. Bonamici. Thank you, Mr. Chairman, and thank you to the
witnesses for being here today.
Methane leaks and releases are a real problem for the
health and safety of Americans across the country. Unlike the
billowing smoke that rises from some coal-fired power plants,
methane releases and leaks are nearly indistinguishable to a
passerby. Oftentimes, environmental repercussions stemming from
atmospheric pollution are easy to recognize. Higher ozone
levels reduce visibility in the form of smog, which is easy to
see. Higher concentrations of carbon dioxide in the atmosphere
are ultimately absorbed by the ocean, resulting in a more
acidic ocean that has a visible impact on shellfish in coastal
economies.
Methane emissions have similar environmental repercussions,
but because methane is colorless and odorless, it is easy to
forget that it is a highly potent greenhouse gas. Once methane
is released into the atmosphere, it is 80 percent more potent
than carbon dioxide for the following 20 years in terms of its
effect on the climate.
I'd like to put up a slide that will better provide an
understanding of what a methane leak looks like.
[Slide.]
Ms. Bonamici. Last fall, a natural gas storage tank at
Aliso Canyon outside of Los Angeles began leaking methane at an
alarming rate. The leak was discovered by the gas company on
October 23, and it took 4 months for that leak to be completely
fixed. In that time, those plumes continued to rise and
thousands of gallons of methane poured into the atmosphere;
8,000 residents were displaced from their homes for months;
residents suffered headaches, nosebleeds, and nausea.
And just to clarify, here on the right there is infrared
camera revealing the wafting cloud of methane over the Aliso
Canyon.
Incidents like this highlight the importance of EPA's
methane regulations, specifically the leak detection component.
Although the new rule only addresses methane emissions at new,
reconstructed, and modified oil and gas sources, it represents
an important first step, a step that needs to be made so that
the problems of today are not the problems of tomorrow.
We don't want another Aliso Canyon. We need to work
together so that we do not have methane emissions in our
country. I look forward to discussing this important issue
today. I want to allow plenty of time for the witnesses, so I
yield back the balance of my time, Mr. Chairman.
[The prepared statement of Ms. Bonamici follows:]
[GRAPHIC] [TIFF OMITTED] T2562.005
Chairman Bridenstine. The gentlelady yields back the
balance of her time. I now recognize the Chairman of the full
committee, Mr. Smith, for five minutes.
Chairman Smith. Thank you, Mr. Chairman.
I just want to say to our panelists here today, a vote has
been called and so we'll be interrupted, regrettably. And
furthermore, it's oftentimes difficult to get members to come
back after the last vote of the day. They're running to the
airport and so forth. So if our attendance is not as great as
we would like, that doesn't diminish the value of your
testimony today.
Mr. Chairman, the Environmental Protection Agency has
become an agency that promotes an extreme political agenda
rather than reasonable policies based on sound science. The EPA
knows its regulatory agenda would have little to no significant
impact on the environment. But that hasn't stopped the EPA from
imposing some of the most expensive and expansive regulations
in its history.
These rules will cost billions of dollars, place a heavy
burden on American families, and diminish the ability of
American businesses to compete around the world. EPA's
political agenda is to rearrange the American economy and
institute ``command and control'' by the Obama Administration.
This committee's investigations have revealed that the EPA
intentionally chooses to ignore good science. EPA cherry-picks
the science that fits its agenda and ignores the science that
does not support its position. When the science falls short,
EPA resorts to propaganda campaign techniques designed to
mislead the public.
Today's hearing will examine yet another EPA regulation
that has relied on suspect science, questionable legal
interpretations, and flawed analysis to justify its existence.
Like all regulations promulgated by the EPA, the methane
regulation is no different. It stifles economic growth,
destroys American jobs, and increases energy prices. That means
costs will rise, from electricity to gasoline to food,
disproportionately hurting low-income Americans.
According to Energy In Depth, by the end of this century
the EPA's supposed benefits from the final methane rule for new
sources will only result in a reduction--now, the Chairman just
mentioned this a moment ago--reduction of 4/1000 of one degree
Celsius in temperature rise. That is incredible.
Recent studies involving National Oceanographic and
Atmospheric Administration scientists conclude that the rise in
methane emissions are not due to the oil and gas sector, which
are the target of the EPA's regulations. These scientists
conclude that the likely rise in methane emissions are from
natural sources like tropical wetlands.
Emissions from the oil and gas sector continue to decrease
in large part because of the voluntary emissions reductions
programs and advances in technologies. This indicates the
futility of new and burdensome EPA regulations. During the last
year, federal courts have halted several of EPA's major
regulations. Many of these regulations trample on the
constitutional rights of individuals and rely on suspect legal
interpretations of the law.
EPA's methane rule relies on faulty scientific evidence and
data, and the final rule constitutes an abuse of authority. For
this reason, my home state of Texas, along with North Dakota,
are planning to pursue legal action. Instead of wasting
taxpayers' money on frivolous rules that do little to protect
the environment, the EPA should spend its resources on
developing sound science that will lead to technological
breakthrough.
The methane rule is more of the same from the EPA: a costly
and burdensome regulation that is all pain and no gain.
Thank you, Mr. Chairman. I yield back.
[The prepared statement of Chairman Smith follows:]
[GRAPHIC] [TIFF OMITTED] T2562.006
[GRAPHIC] [TIFF OMITTED] T2562.007
Chairman Bridenstine. Thank you, Mr. Chairman.
What we're going to do now is recess. We have one vote.
I'll be right back to introduce the witnesses and hear your
testimony. So until we get back from voting, we'll be in
recess. Thank you.
[Recess.]
Chairman Bridenstine. The Subcommittee on Environment will
come back to order.
Let me introduce our witnesses. Our first witness today is
Mr. Erik Milito, Director of Upstream and Industry Operations
at the American Petroleum Institute. Mr. Milito received his
bachelor's degree in business administration from Notre Dame
and his law degree from Marquette University.
Our next witness today is Dr. Bernard Weinstein--
Weinstein--Weinstein?
Dr. Weinstein. Weinstein.
Chairman Bridenstine. Stein, got it. I'm Bridenstine so
everybody calls me Bridenstine so--Professor and Associate
Director at the Maguire Energy Institute at Southern Methodist
University's Cox School of Business. Dr. Weinstein received his
bachelor's degree in public administration from Dartmouth
University and his master's degree and Ph.D. in economics from
Columbia.
Our third witness today is Mr. Elgie Holstein----
Mr. Holstein. Holstein.
Chairman Bridenstine. Holstein, got it--Senior Director for
Strategic Planning at the Environmental Defense Fund. Mr.
Holstein received his bachelor's degree from Syracuse
University.
Our final witness today is Mr. Anthony Ventello, Executive
Director of Progress Authority. Mr. Ventello received his
bachelor's degree in geographic and regional planning from
Mansfield University, his master's degree in public
administration from Marywood University, and his American
Economic Development Council certification from Penn State.
I now recognize Mr. Milito for five minutes for your
opening testimony.
TESTIMONY OF MR. ERIK MILITO, DIRECTOR,
UPSTREAM AND INDUSTRY OPERATIONS,
AMERICAN PETROLEUM INSTITUTE
Mr. Milito. Thank you, Chairman Bridenstine, Ranking Member
Bonamici, and Members of the Subcommittee.
My name is Erik Milito, and I'm the Director of Upstream
and Industry Operations for the American Petroleum Institute.
We have witnessed a dramatic transformation of the energy
landscape over the past ten years both here in the United
States and globally. Looking back ten years ago, we spoke in
terms of energy scarcity, and the expectation was that we as a
country would be importing billions of dollars of natural gas
from places like the Middle East, Russia, and West Africa. The
outlook was the same on the petroleum side. We were expecting
U.S. oil production to flatten or decline to about 5 million
barrels per day.
Fortunately, we have experienced an energy resurgence that
has brought with it tremendous benefits for everyday Americans.
We as a nation rely on oil and natural gas in everything that
we do from getting to work, getting our kids to school, to
heating and cooling our homes, and to using the stovetop to put
dinner on the table.
Because of innovation and the advancement of engineering
technologies such as hydraulic fracturing and horizontal
drilling, the United States is now the world's largest natural
gas producer. And on the petroleum side, we've increased our
production from 5 million barrels per day in 2009 to a peak of
9.4 million barrels a day, and this is all because of advanced
technology, hydraulic fracturing, horizontal drilling, and
being able to tap into those resources in our shale formations.
Clearly, we now speak in terms of energy abundance.
Consumers are the first ones to benefit from our energy
resurgence. A recent study by IHS concludes that the average
household had an additional $1,300 in 2015 because of U.S.
shale gas production. AAA estimates that the average American
saved $550 at the pump in 2015, and this also relates to U.S.
crude oil production.
We have also seen major benefits from a global geopolitical
and energy security standpoint. The United States now plays a
major role in global energy markets, and this has helped our
allies tremendously because there are now greater, more diverse
energy supplies on the global market.
We have proven as a nation and as an industry that we are
able to achieve these economic and national security benefits
while not only protecting the environment but by providing
tangible environmental benefits. From a climate standpoint, the
United States has seen its greenhouse gas emissions dropped to
20-year lows. This is directly attributable to the increased
use of clean-burning, abundant, affordable natural gas in the
power generation sector. Not only has natural gas helped us
achieve important reductions in greenhouse gas emissions, but
it also produces little to no particulate matter, nitrogen
dioxide, and sulfur dioxide, contributing to cleaner air for
all Americans.
Interestingly enough, in spite of this dramatic increase in
U.S. production of natural gas, emissions of methane from our
industry have decreased over the past 20 years. Now, the story
here is the same. We've accomplish this by advancing the
technologies to ensure that we are capturing methane, which is
the primary component of natural gas. We have shown that the
solution to addressing methane emissions is through the
development and application of technologies through innovation,
not through a command-and-control regulatory approach that can
effectively stifle innovation and add unnecessary costs.
I'd like to point out that methane emissions were declining
before EPA promulgated any regulations, demonstrating that
these regulations are simply not necessary. Our policies should
effectively promote U.S. energy production and the benefits for
everyday Americans, not jeopardize the success that we have
achieved and that we should continue to achieve with smart
policy choices.
Thank you. I look forward to your questions.
[The prepared statement of Mr. Milito follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you for your testimony.
Dr. Weinstein, you're recognized for five minutes.
TESTIMONY OF DR. BERNARD WEINSTEIN,
PROFESSOR, ASSOCIATE DIRECTOR,
MAGUIRE ENERGY INSTITUTE,
COX SCHOOL OF BUSINESS,
SOUTHERN METHODIST UNIVERSITY
Dr. Weinstein. Thank you, Mr. Chairman, Members of the
Committee, for the opportunity to speak today. I'm Bernard
Weinstein. I'm Associate Director of the Maguire Energy
Institute, as the Chairman mentioned, and we do a bunch of
things at the Institute. We do student education, professional
development, and we also do research on energy issues and
policies. And we've worked for a number of organizations, done
studies for--most recently for the Small Gasoline Retailers
Coalition, we've worked with the Nuclear Energy Institute,
Consumer Energy Alliance. We've done some work for the American
Wind Energy Association, so we're across the board when it
comes to energy.
But we're here to talk about methane, especially errant
methane, and we all know this is a potent greenhouse gas and we
don't want a lot of it going into the air. Recently, as you
know, EPA did finalize a rule requiring drilling companies to
install new monitoring equipment on production and transmission
of oil and natural gas. EPA itself estimates the compliance
costs will reach about $530 million annually by 2025. And
they're also developing new regs for existing wells and
processing equipment.
And the question is, and I guess the question of this
hearing is do we really need more federal intervention, more
regulatory oversight? How big a problem are we dealing with?
And if you could put up the first slide.
[Slide.]
Dr. Weinstein. Mr. Milito mentioned this, but you can see
that U.S. methane emissions today are lower than they were in
1990. And when you consider that the economy is 75 percent
larger and that oil and gas production has nearly doubled, that
is a pretty amazing accomplishment.
And what's more, again, as Mr. Milito mentioned, only about
23 percent of errant methane is attributable to the oil and gas
industry, and that's been declining. Emissions from fracked
wells are down 79 percent, down 94 percent from pipelines.
There are other sources of methane, as we all know, that
probably contribute a lot more: wetlands, agriculture,
landfills, et cetera.
We heard the Chairman talking about different studies. I
refer to those studies in my final testimony so I won't repeat
the findings. But even if we did shut in all of our oil and gas
wells, that would have little or no impact on the environment
as long as other countries continue doing what they're doing. I
mean, you know, China builds a new coal plant every week.
Turkey just announced they're building 30 new coal plants. They
are 50 or 60 on the drawing board in India.
And so I think we need a dose of realism when we talk
about, you know, what we can do in the United States. And I
would argue that we've done a lot. If you put the next slide
up----
[Slide.]
Dr. Weinstein. --carbon emissions--again, we've already
heard this--have dropped dramatically over the past decade. You
can see that on the right. They dropped by about, you know, 1
trillion tons per year, which again is pretty incredible.
And why has this happened? It's because we're using more
natural gas and because we're substituting natural gas in power
generation for coal, we're using more natural gas in
transportation, we're using more natural gas in industrial
boilers, and that is helping to clean up the environment. Now,
I would argue that greater use of natural gas, not EPA
regulations, deserves most of the credit for our reductions in
greenhouse gases, and to some degree methane.
So I'm an economist. Economists, I think, would all agree
that regulation is not cost-free. And if you're going to impose
new regulations, there are going to be economic consequences.
As you know, the oil and gas industry has been under some
stress of late. I'm not sure it would make a lot of political
sense to apply new regulations, new costs on the industry
today, especially because the industry on its own has taken
steps to capture errant methane.
I would argue that voluntary and market-based solutions to
reducing methane make a lot more sense and can probably achieve
the Administration's goals better than new EPA regulations. If
we monitor everything, we're simply wasting resources.
In my prepared testimony, I discuss a voluntary program
called ONE Future in which a number of gas producers are
working with EDF to reduce methane leaks to less than one
percent of production. Maybe Mr. Holstein is going to talk
about that program. I don't believe they're doing that out of
environmental altruism. I think they're doing it because it
makes economic sense because methane has value, so why wouldn't
you want to capture it? It's used for power, it's used for
heating, it's used for transportation, it's used for
petrochemicals. If there are market-based or voluntary
solutions that can achieve the goals of regulation at lower
cost, those are the ones that should be pursued first.
So thanks for your attention. I'm happy to answer any
questions at the appropriate time.
[The prepared statement of Dr. Weinstein follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you, Dr. Weinstein.
Mr. Holstein, you're recognized for five minutes.
TESTIMONY OF MR. ELGIE HOLSTEIN,
SENIOR DIRECTOR FOR STRATEGIC PLANNING,
ENVIRONMENTAL DEFENSE FUND
Mr. Holstein. Thank you very much, Mr. Chairman. Chairman
Smith, nice to see you again. And, Ranking Member Bonamici,
Members of the Subcommittee, I'm very grateful for this
opportunity to discuss the role of methane with you today as a
potent greenhouse gas pollutant and the need for EPA's rules to
guide the industry in minimizing those emissions.
Our scientific understanding of the extent of methane
pollution and its effects has been growing steadily, and mostly
in the last several years have we been getting a better
scientific handle on the extent of the pollution and its
impacts. But there is no question at this point that methane is
a powerful and harmful climate pollutant.
As Ms. Bonamici mentioned, over the first 20 years
following its release methane is some 84 times more potent than
CO2 in terms of the climate damage that it does. So
while CO2 is of concern and does represent a
continuing long-term threat, methane drives near-term climate
effects. The result is that 25 percent of the global warming we
are experiencing right now is due to methane emissions, and
that's why we need action to address both sides of that
equation.
Across our economy, the oil and gas sector represents 33
percent of U.S. methane emissions, and it's the largest of all
industrial U.S. sources. EPA's latest inventory estimates that
in 2014 oil and gas industry operations released 9.8 million
metric tons of methane into the atmosphere, and that was a 34
percent increase over their previous estimates. That amount of
methane packs the same climate punch over the first 20 years
after it's released as the CO2 emissions for more
than 220 coal-fired power plants. And 220 plants is more than
half of the coal plants we have in this country.
But the good news is that doing something about methane
pollution, including complying with methane--EPA's methane
rules, can be accomplished at low cost using existing
technology. ICF Incorporated did a landmark study in 2014 in
which they found that a relative handful of specific remedial
actions could yield a 40 percent reduction in methane emissions
from the oil and gas sector at an average cost of about 1 cent
per 1,000 cubic feet of gas produced.
As I mentioned, EPA's recent inventory reflected an
increase of 34 percent over previous estimates, but we would
suggest that that number is still understated because
scientific evidence suggests that even that dramatic revision
does not reflect the additional methane pollution represented
by high random emissions coming from a small percentage of
sites.
This kind of distribution in which large volumes are
emitted from a relatively small percentage of sites is
characteristic of methane leakage in the oil and gas sector.
For that reason, leak detection and repair programs such as
those required by EPA's rules and under some state programs,
are an essential part of addressing the methane emissions
problems.
EPA's recently finalized new source performance standards
for methane pollution build on successful regulatory frameworks
that have been adopted over the last several years in some
leading energy-producing States such as Colorado and Wyoming.
So while we support EPA's action to control oil and gas sources
of methane emissions from new and modified sources, we also
strongly encourage the agency to keep making progress toward
addressing methane emissions from existing sources. Again,
according to ICF, nearly 90 percent of the oil and gas methane
emissions in 2018 will have come from sources that were already
in existence by 2012. Again, federal actions build on state
initiatives.
Colorado's rules require leak detection and repair programs
for all wells, both new and existing, conventional and
unconventional. Altogether, the new rules will remove 100,000
tons of methane and 90,000 tons of smog-forming volatile
organic compounds. That's equal to the emissions of all the
cars and trucks in the State of Colorado today, year after year
after year.
Now, I know that this subcommittee is deeply concerned
about the potential cost to the industry of complying with
state and federal methane rules, but the good news on this
issue is not only that cutting methane emissions is generally
very inexpensive but the cost of methane leak detection surveys
is relatively low as well. Today, methane inspections can cost
as little as $250, and of course one of the benefits of the EPA
regulation is that it's already driving innovation in the
private sector.
Today, there are 75 companies in 500 different locations in
46 States providing methane reduction services and support.
Regulating methane emissions from both new and existing sources
is an important and cost-effective step in stopping the worst
effects of climate change.
Thank you for the opportunity to testify today, and I am
happy to take any questions you may have.
[The prepared statement of Mr. Holstein follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you, Mr. Holstein.
Mr. Ventello, you are recognized for five minutes.
TESTIMONY OF MR. ANTHONY J. VENTELLO,
EXECUTIVE DIRECTOR, PROGRESS AUTHORITY
Mr. Ventello. Thank you, Mr. Chairman, Committee Members.
My name is Anthony Ventello. I'm the Executive Director of
the Progress Authority. We're an industrial development and
economic development agency in the northern tier of
Pennsylvania.
I live, work, and have raised a family in the heart of the
Marcellus Shale formation. We rank first, second, and first in
statewide shale gas, both in both Bradford and Susquehanna
Counties, over 5,700 wells, 2,200 drilled, 6.5 billion cubic
feet per day of production, representing about 245,000 jobs and
$33 billion of investment.
The answer lies in vertical integration, utilizing the gas.
Distribution is critical. Please could I have two slides?
[Slide.]
Mr. Ventello. Distribution is critical.
Next slide.
[Slide.]
Mr. Ventello. One of the issues is at a simple very low
level effect is having some of the most prolific wells in the
world or 30 MMcf, there was no local distribution. Nobody could
have access to the gas. We were--we've been able to pipe both
schools--actually, in a situation where a school actually has
wells on it, they were able to do a postsecondary school from
the standpoint of bringing clean natural gas to that location.
Two hospitals had been built in that region, both having
natural gas services. In fact, some of the drilling companies
have participated in the development of that. And you can see
the immense amount of investment and jobs that have been
created, 51 million and 35 million and several hundred jobs as
a result of it.
Infrastructure, next slide, please.
[Slide.]
Mr. Ventello. Infrastructure has been critical. We're now
looking at--in both virtual and new pipelines where new
pipelines have been curtailed, there's been several new virtual
pipelines being developed along interstate corridors both with
LNG--liquefied natural gas--and CNG--compressed natural gas--
but it's--we have to get the gas to locations to be utilized
and marketed.
Under the energy generation, next slide, please.
[Slide.]
Mr. Ventello. I just toured two brand new facilities in our
region. One is an 829 megawatt combined cycle facility, Panda
power station, about 900 million of new investment, eliminating
oil and coal facilities, as well as to your--the smaller
facility, 20 megawatts, there's seven proposed in our area.
I've just toured the second completed one, but they also
represent about 20 million in jobs created along with those.
One of the interesting elements is that combined heat and
power has been a massive undertaking, and a lot of our larger
facilities both in education, industrial development, or
manufacturing, and as well as hospitals have been getting
involved in combined heat and power projects under
construction.
In the instance of hospitals, you're seeing one mainly only
because of medical record demand now with the, you know,
increased automation. Cornell University, GTP, and Procter &
Gamble, two of which I want to identify, but again, substantial
investment, substantial support of job creation.
And one I want to identify for you is a 30 megawatt
combined cycle station that's at Cornell University. They're
very proud of this. I toured this facility. Keep in mind it has
substantial support of over 12,000 employees and 21,000
students, and it's an anti-natural gas institution. They're
very proud of that facility.
Infrastructure along the lines of CNG, we have both public
fueling stations, compressed natural gas stations, private as
well as public transportation is now being funded with--or
fuel, excuse me, with compressed natural gas.
Next slide, please.
[Slide.]
Mr. Ventello. Industrial utilization has led to a lot of
utilization and innovation with natural gas. Over 5,500 local
jobs are being supported with natural gas.
We have strong manufacturing with natural gas in an effort
to re-shore manufacturing into the United States is critical
upon having cheap, clean, cost-effective natural gas available.
A worldwide example, I claim this is the worldwide example
of natural gas utilization, and there's not a better example of
it. Procter & Gamble has about 1,500 acres. They have the
luxury of unconventional drilling on their site. They have a
net zero cost for both energy generation, thermal demand, and
of course they call it tri-generation. Now, they're a paper
producer. They use hot air, which is usually a waste produce
from combined heat and power but supporting over 3,000
employees at that location.
Gas to liquids, this is an innovative project. Most people
don't realize this has gone on--global tungsten, GTP in
Towanda, Pennsylvania, has--one of the largest users of
hydrogen in the United States. They've now--they--most of their
hydrogen came--next to NASA, most of their hydrogen came from
both the Gulf States and Canada, and now they produce and crack
their own hydrogen at that particular location, about a $15
million investment.
We also have gas-to-liquids projects being proposed with
regards to clean diesel fuel, unleaded gas, wax, lube oils, and
they're moving along because of the opportunity with gas.
This project I think I need to identify to you. This is a
company that's using produced water flow back, and they're
actually recycling it and crystallizing it and utilizing those
crystals now, breaking them further down into chemicals to be
used in industry throughout the region.
I want to talk in terms of money that's being invested back
into the local counties, Act 13, about 70 million between two
counties for public safety. I want to highlight environmental
conservation, site development, and housing. All of those are
being invested in in our area.
Here's an example of two housing projects, both elderly--
that was a burned-out furniture store at--in the upper area
that's now about 40 units of residential elderly housing and of
course moderate-income housing at the lower level, both
naturally gas-served.
Locations are being developed substantially by the fact
that we have compression stations, locations with pipelines.
There are target locations for vertical integration throughout
our region, and we've identified those and are working with
companies to try to locate there.
[Slide.]
Mr. Ventello. This is just a slide to show you all the
elements that get involved in natural gas from the standpoint--
all the features from the standpoint of well pads, water
withdrawal locations, compression, and pipelines.
One thing I think is extremely critical is the fact that
agricultural production is on the rise in our area. As a
result, in 2008 it was on the decline. The Marcellus Shale,
since then, it's been on an incline. And if I can just
summarize it by saying natural gas has been a complementary
land use and has kept land in large parcels, which is conducive
to agriculture and maintains a rural way of life. I can--all
aspects of--soybean, beef, swine, egg production, and niche
farming has been on the rise because farmers now have some
income to reinvest in the farm.
And I just want to summarize by saying that increased
regulation will reverse the established initiatives that we
have in environmental benefits, economic investment in jobs,
and energy independence with overregulation.
I want to thank the committee for the opportunity.
[The prepared statement of Mr. Ventello follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you, Mr. Ventello.
I'd like to thank all of the witnesses for their
testimonies. Your written testimonies will be made part of the
record. So even though this might be a short hearing, we have
all of your information here with the committee.
Members are reminded that committee rules limit questioning
to five minutes. I'll recognize myself for the first five
minutes.
Dr. Weinstein, you're an economist. Do the benefits of the
methane rule outweigh the costs, and can you explain?
Dr. Weinstein. I don't believe so. I think there are costs
that are currently unaccounted for and typical, you know, EPA
cost-benefit analysis. But don't misunderstand me. I think, you
know, methane releases are a serious environmental issue. I
just believe there are better ways to deal with these issues.
I actually attended a seminar two days ago. It was actually
a webinar, and it was sponsored by Stanford University and
Resources for the Future. They made some very good points. And
actually, Mr. Holstein mentioned one of them. The huge amount
of methane release comes from what are called super-emitters.
Well, I don't believe a kind of blanket regulation that would
apply to, you know, all producers of natural gas, oil,
transmission companies, what have you makes any sense if we
can--you know, if there are, you know, targeted areas that can
be addressed in terms of controlling emissions.
You know, there are a number of other specific areas that I
think can be dealt with a lot more simply than passing a new
slew of federal regulations. Another source of omissions is
orphan wells. The States have traditionally done--dealt with
orphan wells and any emissions associated with that.
We also have some old cities in the Northeast where there
are pipelines that are leaking methane. I don't see where, you
know, EPA has a role to play there. It makes a lot of sense for
the cities and the States to initiate policies and take steps,
along with the distribution companies, to replace those old
lead pipelines. And that is going on.
So on balance I think what's being proposed in terms of new
regulations from EPA on methane emissions, that the costs
overall are going to far exceed any benefits.
Chairman Bridenstine. As far as when you think about the
cost and the benefit regarding our impact as one country in the
entire world, does that change the calculus?
Dr. Weinstein. I would put it this way. If the rest of the
world were doing what we're doing in terms of both, you know,
regulatory and private policies towards reducing greenhouse gas
emissions, that would do a lot more to address climate change
concerns than just what we do in the United States. As I showed
in those two slides, you know, with little--how should I say--
little impact from regulations per se, we have seen a
tremendous drop in CO2 emissions. We've seen a drop
in methane emissions as well.
And I go back to the fact that we're not a stagnant
economy. We're a growing economy. We're almost as--twice as
large as we were 20 years ago. We've had 100 percent increase
in oil and gas production, and yet emissions are falling. So
the industry must be doing something right.
Chairman Bridenstine. Mr. Milito, I wanted to get you on
the record. Could you please describe the technological
advances that the industry has made to reduce methane
emissions?
Mr. Milito. Yes, there are several. I think the first one
you look at is what we call reduced emission completions, also
called green completions. And this is an industry of solutions,
and we understand that methane is a main component of natural
gas so we want to capture it. We want to sell it, and we want
to put it into the market. And one of the technologies that
have been----
Chairman Bridenstine. Can you make sure your--is your mike
on?
Mr. Milito. Sorry.
Chairman Bridenstine. Okay.
Mr. Milito. Appreciate that. I was talking about how the
industry is an industry of solutions, and when we--when we're
looking at an issue like methane, we're looking at the primary
component of natural gas. It's the product that this industry
sells, every incentive to make sure we're capturing it. And one
of the areas that we realized we need to be proactive was when
we're done with hydraulic fracturing and putting the well into
production, the period called completion so we put together
equipment and machinery to make sure that that process doesn't
result in venting of gas, venting of methane, and that we're
actually capturing it and using it for on-site fuel or for
putting it into the market.
Other examples are reduction in the use of pneumatic valves
and controllers that utilize natural gas and sometimes vented
off, taking those away from the equation or moving to lower-
venting ones, eliminating emissions from storage tanks, and the
list goes on. But the idea here is that we are an industry that
has been very active in deploying these technologies well
before EPA put any regulations forward. And I would say that
the EPA regulations are in many respects a lagging indicator of
the industry because they're based upon technologies the
industry has proactively developed.
Chairman Bridenstine. Now, when you think about the study I
mentioned earlier from Energy In Depth, we're talking about a
change in global temperatures of .004 degrees Celsius over the
next 84 years. Does that assume that the technological advances
that are currently being made are not implemented or are
implemented?
Mr. Milito. Well, I think there's different ways to look at
it. One way to look at it is understanding U.S. overall GHG
emissions, of which methane constitutes ten percent, of which
U.S. oil and gas methane emissions are about four percent. So
think about that. We're talking about four percent of total
greenhouse gas emissions, of which these rules are intended to
maybe get 40 percent.
So you're--we're not talking about fractions of U.S.
greenhouse gas emissions that these rules are intended to go
after, yet at the same time, it's unclear if they're going to
provide any appreciable benefit beyond what the industry is
already doing. So we're adding tremendous costs that could be
ultimately applied to a million wells, ultimately impacting the
consumer in a very negative way because when our supply goes
down, what happens to prices? The pressure is upward on prices.
So we've got a very--we've got to question the types of actions
when we're talking about fractions in the overall scheme of
things.
Chairman Bridenstine. Copy that.
I'd like to recognize Ms. Bonamici for five minutes.
Ms. Bonamici. Thank you, Mr. Chairman.
Before I begin my question, I just want to comment on the
opening statement of the Chairman. There was a citation to a
NOAA study for the premise that the U.S. energy industry
contributes little to the overall burden of global fossil fuel
emissions. I'm a little concerned about the attribution of that
comment because the NOAA study did not separate out United
States from global emissions. So we're just for the record
going to be following up to--with NOAA and correcting--putting
any correcting information in the record.
Mr. Holstein, we talked a little bit about Aliso Canyon and
how alarming that was and the thousands of people who had to
evacuate and many became ill, and I know no one wants to see
that kind of incident repeated. So would you please talk a
little bit about what can be done to prevent similar incidents
in a newly constructed facility? And importantly, will you
please address the notion that's come up both in some of the
statements from the dais but also in some of the testimony that
voluntary efforts will be sufficient? Can you address that
issue? Will voluntary efforts be sufficient without the EPA's
involvement? Thank you.
Mr. Holstein. Certainly. Thank you. Aliso Canyon was a
terrible tragedy, and I know your question was--is about new
facilities of that kind, but we should note that there are
400--some 400 similar facilities all around the United States,
and so we do need to be concerned about the existing facilities
as well.
But with respect to both those and especially a new
facility, the single most important thing to address in the
construction of a new storage facility would be well integrity.
And now, typically, these facilities make use of old oil and
gas--depleted oil and gas fields in order to re-inject natural
gas into those fields for long-term and sometimes short-term
storage also in order to help meet spikes in demand that may
occur during a heating season, for example, and--or for sudden
surges in demand for electricity in the summertime.
So the first step, of course, is well integrity, to make
sure that you've got the well constructed correctly. The second
category of actions you want to take is to have a leak
detection and repair set of protocols so that you see what's
happening so that you can get a handle on these problems before
they become a 3- or 4-month disaster requiring thousands of
people to be evacuated.
And indeed, just 2 days ago, the company responsible for
that leak did agree to a comprehensive new set of leak
detection and repair protocols in their legal discussions or
negotiations with the county. The State is still developing
their case, but I think the fact that there is this focus on
using the new leak detection technologies that are becoming
available is instructive for the larger issues relating to
methane.
Ms. Bonamici. And what is your response to the suggestion
that the industry can address this issue without regulation?
Mr. Holstein. If we look at the scale of the problem, which
I--which has been detailed by EPA's recent inventory showing a
34 percent increase over the previous estimates, but in
particular if we look at the power of the methane molecule,
it's an enormously powerful, nasty climate actor, and as you
stated, 84 times more powerful than a molecule of carbon
dioxide. And that--what that really means is we can't afford to
wait for the industry to play catch-up with the science.
And part of the problem that the industry has--Dr.
Weinstein is correct as far as he goes in saying that these
random events are significant, but the emphasis I have to place
is on the word random. You--a lot of this is counterintuitive.
You can't simply take--make an assumption that old facilities
are going to leak more than new facilities or the other way
around, enormously random and that's why you need comprehensive
leak detection.
Ms. Bonamici. And can you talk a little bit about--you
mentioned Colorado. They were successful in developing----
Mr. Holstein. They were.
Ms. Bonamici. --regulations and how is that working in
Colorado?
Mr. Holstein. Oh, it's working spectacularly well, and the
best example I can give you of that is the fact that they've
removed pollutants from the air there as a direct result of
those rules equivalent to all the cars and trucks on the road
in the State of Colorado. And I would note that those rules,
which are really national--you know, really leading the
country, those rules were put in place with the collaboration
of the three largest oil and gas developers in that State at
the time.
Environmental Defense Fund was there as well to help
provide some technical input as well. And it was an open
process, but it was truly led by the industry in saying we do
need a comprehensive set of rules, we need them uniform, and we
need the rest of the industry to get on board.
Ms. Bonamici. Terrific. Thank you very much. And my--I see
my time is expired. Thank you, Mr. Chairman.
Chairman Bridenstine. Before going to Chairman Smith, Mr.
Milito, would you comment on Aliso Canyon and how it relates
specifically to the rule?
Mr. Milito. Yes, Aliso Canyon is a very serious situation,
something we never want to see happen, don't want to see happen
again, but it's completely unrelated to the EPA rules we're
talking about today.
We take this very seriously. And the oil and gas industry,
as I mentioned, is an industry of solutions. We as API are a
standard-setting organization. We create the standards for safe
and environmentally responsible operations that are relied upon
around the world. That's how we started.
We have two new documents related to underground storage to
make sure this type of incident doesn't happen. They relate to
issues such as well integrity so we've come forward with a
solution.
The other thing I would add is this is not being ignored by
the federal government. It's not an EPA issued. PHMSA is
looking at this and addressing it and working with an
interagency task force that includes API, our companies, and
we're moving forward in a way where the companies are already
implementing these standards. So it is wrong to conflate Aliso
Canyon with emissions of methane from production facilities.
They're totally separate issues.
Chairman Bridenstine. Thank you. I just want to get that on
the record.
Chairman Smith, you are recognized for five minutes.
Chairman Smith. Thank you, Mr. Chairman.
First of all, let me say it's a credit to our witnesses
today and to the importance of the subject matter that so many
members came back after our only vote of the day to be at this
hearing.
I just want to follow up before I get to my first question
and say I agree with those who have expressed the sentiment
today that obviously methane and carbon emissions have been
going down but largely because of technological breakthroughs.
The last thing we need are more government regulations which
are ineffective and don't have any significant impact. It is
much better to let technology provide the solution, as it
always has for the history of our country. The mindset that the
government knows best is not, I think, a productive mindset.
Mr. Milito, let me address my first question to you and it
is this. In what ways do you feel that the EPA has misled us
when it comes to the benefits of the methane regulations?
Mr. Milito. Well, I think this gets back to the underlying
science and whether or not we have a system, an economy, an
industry that are already effectively addressing the methane
issue. And if you look at some of the research of Environmental
Defense Fund, you know, they've come forward and said, you
know, if we keep supply chain emissions of methane below a 2.7
to 3.2 percent range, we get the environmental benefit. Now,
the EDF studies that look at the equipment on sites, the EPA
inventory, this data shows that 1.5 percent, maybe 1.8 percent,
all the data shows we're well below that.
So we are in a situation right now where the data shows
that we get this huge benefit from producing natural gas
because it's clean burning not just from the climate change
standpoint but from traditional pollutants as well, things like
NOx, SOx, particulate matter. So we are winning. We're doing
what we need to do----
Chairman Smith. Exactly.
Mr. Milito. --without the regulations.
Now, we have EPA regulations put forward. They do a
regulatory impact analysis. It's a wash. If you look at EPA's
own numbers, it's a wash, but then when you go back and apply
the real data, the better data, the more certain data, it shows
that in a year like 2025 and beyond we can be looking at cost
more than $1 billion----
Chairman Smith. Yes.
Mr. Milito. --from a ruling.
Chairman Smith. Mr. Milito, this is exactly the information
we need to get out, and I thank you for making those points.
Dr. Weinstein, in what ways is the modeling system used by
the EPA flawed or biased?
Dr. Weinstein. I'm not really qualified to speak about the
specifics of the EPA models. I have not studied them. My----
Chairman Smith. Okay.
Dr. Weinstein. My knowledge or my understanding is solely
based on----
Chairman Smith. Okay. That's perfectly fine.
Dr. Weinstein. Okay. Yes.
Chairman Smith. We'll come back in a minute.
Mr. Ventello, let me ask you about the impact of the EPA
regulations. And I might ask Dr. Weinstein and Mr. Milito as
well. What is the impact of the regulations likely to be on
economic growth and job creation?
Mr. Ventello. Well, I--you know, I--from the standpoint of
the industry itself, additional burden with low cost right now
with pricing being down, as well as the fact that the industry
has been pretty much self-policing. We see a lot of
improvements in what they've done. And of course, as has been
stated, the--you know, the release of methane is a loss of
dollars, so there's a lot of effort to try to make sure that
they do things with--to current standards.
But in essence, right now, in a low-cost environment it
would have a substantial impact long-term just because of
additional cost in nod only improving the wells but also
completions and transmitting.
The key really lies in moving the gas so that you can
minimize the amount of methane that is emitted from an idle
situation.
Chairman Smith. Okay. Thank you.
Dr. Weinstein. But we tend to forget that we are the
world's number one natural gas-producing country, and that
we're also getting into the business of exporting natural gas.
That has tremendous economic benefits in addition to the
environmental benefits of natural gas that we've discussed. The
fact that we are number one, that this is an industry that is
not only empowering the U.S. economy but employs lots and lots
of people and now we're getting into the export business.
So I think we need to be very careful in assessing new
policies and regulations that can make it more expensive for us
to produce and sell natural gas unless there's overwhelming
evidence that the benefits of regulation exceed the cost.
Chairman Smith. Okay. Thank you, Dr. Weinstein.
Mr. Milito, what about you? What about the economic impact
and what about the impact on jobs?
Mr. Milito. It could be huge. The general rule--I'm sorry.
I've got to get better with my button here. It could be huge.
The general rule of thumb, based upon--and what about a lot of
the economists will look at is that for each Bcf of production
that we have of natural gas in the United States, you get
32,000 jobs. So we've gone from 52 Bcf per day in 2007. We're
at about 74 now, so, you know, just do the math and we're
talking hundreds of thousands of jobs.
So you have regulations that could increase the cost on the
industry dramatically. A more recent ICF study shows it could
be $3.35 per Mcf, and that's based upon applying a lot of the
same technologies EDF says will cost a penny. Natural gas now
is $2.90. Doubling the cost of developing a resource or a
product that you're selling for $2.90, it just could be
devastating to consumers overall.
Chairman Smith. All right. Thank you, Mr. Milito. Thank
you, Mr. Chairman.
Ms. Bonamici. Mr. Chairman?
Chairman Bridenstine. Thank you, Mr. Chairman.
Ms. Bonamici. Mr. Chairman, may I--before we go on, because
Mr. Milito mentioned the EDF and Mr. Holstein is here, is it
appropriate to have Mr. Holstein respond to the mention of his
work?
Chairman Bridenstine. We can--let's go to Ms. Edwards, and
then maybe she can yield.
Ms. Bonamici. Thank you.
Chairman Bridenstine. Okay. Ms. Edwards, you're recognized
for five minutes.
Ms. Edwards. I might yield. Thank you very much, Mr.
Chairman, and thank you to the witnesses as well.
Mr. Holstein, in his testimony Dr. Weinstein described the
methane regulations as a ``solution in search of a problem,''
and I wonder if based on your testimony I suppose you would
disagree with that. You mentioned that the knowledge base for
methane is just kind of catching up. We have a huge knowledge
base for CO2 emissions. Where relatively would you
put our knowledge base of methane emissions with respect to
carbon--to CO2?
Mr. Holstein. I would say catching up fast. Five years ago,
nobody was paying attention to methane as a major climate
pollutant. The NOAA study that was referred to earlier in its
very first sentence references the fact of--that there are
emissions that are of concern and throughout that study
mentioned methane prominently.
Mr. Milito did mention EDF studies. I actually appreciate
that mention because I think it's been remarkable how we've
come together on the environmental side with the industry in
conducting some of these studies, which are peer-reviewed and
which are supervised by--and designed by outside independent
scientists.
We can disagree about what the policy implications of those
results are, but I do have to correct him on one point, which
is we believe that the cumulative result of our scientific work
show that we need to get methane emissions from this sector
down at or below one percent, not 2.7, at or below one percent
if you're going to have an improvement over what you would
otherwise get if you were, for example, burning coal.
Ms. Edwards. So let me ask you a little bit about that
because I think there's some confusion. First of all, the EPA
regulations that we have discussed, EPA has imposed
regulations--has put forward final regulations on new and
future methane productions, right?
Mr. Holstein. Yes.
Ms. Edwards. And they have not done any regulating on
existing--there are no proposed regulations on existing
operations, is that correct?
Mr. Holstein. Also correct, yes.
Ms. Edwards. And so we're really speculating here as to
what EPA's going to do just because they're gathering
information. It's kind of their job to gather information,
isn't it?
Mr. Holstein. It is.
Ms. Edwards. So--and--so I wonder, can you also clarify,
natural gas is still a fossil fuel, right?
Mr. Holstein. It is.
Ms. Edwards. And it's cleaner-burning than coal and other
fossil fuels, is that right?
Mr. Holstein. Yes.
Ms. Edwards. Which is good. But there are still
environmental impacts and public health impacts for--from
methane emissions?
Mr. Holstein. Yes, and it's cleaner-burning relative to
coal--to answer your question of a moment ago--only if you get
the emission--the fugitive emissions down at or below one
percent. And that is not where we are, and that's where we need
to be. Otherwise, those environmental benefits simply don't
accrue.
Ms. Edwards. And so in your examination of some of the
industry-led reports of cost-benefit analyses, do they take
into consideration--in your experience, do they take into
consideration the public health cost?
Mr. Holstein. They often do not, and I gave the example of
Colorado where the measures that are undertaken--and remember
this was a program put in place with the collaboration and
cooperation of industry itself, the biggest producers in the
State--puts the industry in the position of under--in Colorado
of taking huge amounts of pollutants out of the air, not just
the climate change.
If you didn't care about climate change at all, you would
still welcome the dramatic reductions in smog-forming ground-
level ozone and in the volatile organic compounds that include
toxic air pollutants. And there, we're talking about premature
deaths, asthma, hospitalization. And I refer you to the
American Lung Association's letter on this point of December,
which we'd be happy to submit for the record.
[The information appears in Appendix II]
Ms. Edwards. Thank you. And so my time is running out here.
And so I want to give Mr. Milito an opportunity to respond. In
your testimony, you say there are significant costs--you're
referring to the regulations--without commensurate benefits.
Does your analysis take into consideration public health costs,
as well as the economic costs?
Mr. Milito. We are looking at this from a climate
standpoint. Methane is not a toxic pollutant. This is a climate
question that we're talking about, and we're looking at whether
or not we are achieving methane emission reductions without the
costs imposed by the regulations. So we are----
Ms. Edwards. It is a fossil fuel though, right? It is a
fossil fuel?
Mr. Milito. It is a fossil fuel.
Ms. Edwards. And so--and it does still have some of the
same public health costs as other fossil fuels, maybe just not
to the same extent, isn't that right?
Mr. Milito. Well, it's providing an environmental benefit
to the public when you use it rather than other natural gas--
other fossil fuel-powered power plants.
Ms. Edwards. Thank you, Mr. Milito.
Chairman Bridenstine. The gentlewoman yields back.
I just want to make it clear on the record, back in May EPA
Administrator McCarthy stated that she will expedite issuing
regulations for reducing methane emissions from existing
sources, so that is not speculation. That comes from the EPA
Administrator Gina McCarthy.
I now recognize Mr. Palmer for five minutes.
Mr. Palmer. Thank you, Mr. Chairman. I'd just like to point
out that there's still serious debate over whether or not the
climate is warming. I think there's research out that says we
haven't had a significant increase in temperature in 18 years
so--that's probably--Mr. Chairman, probably going to make me
subject to some kind of government retribution or a trial or
something. I don't know. That is going on with some of these AG
trials.
Mr. Weinstein, according to the Environmental Protection
Agency's own estimates, methane emissions in the United States
have decreased by six percent between 1990 and 2014. During
that time period, has natural gas production in the United
States increased or decreased?
Dr. Weinstein. It's increased about 70 percent.
Mr. Palmer. If we do nothing at all, will the methane
emissions from oil and natural gas sector continue to decrease?
Dr. Weinstein. Yes, I believe so. As we've heard from Mr.
Milito, the industry is embracing the best available technology
to capture methane, and that is one of the reasons that we see
this long-term decline.
Mr. Palmer. And one of the reasons that we have such
abundant supplies of natural gas now is because technology, is
that correct?
Dr. Weinstein. That's correct.
Mr. Palmer. And it continues to improve almost on a daily
basis, is that correct?
Dr. Weinstein. Yes. It's really incredible if you consider
that the rate count is down 70 percent over the last two years
and gas production is only down about seven percent. That
indicates that we're getting much more efficient in our ability
to produce----
Mr. Palmer. Methane capture at the wellhead technology--
that technology is increasing at a rapid rate. Is that also
true?
Dr. Weinstein. Yes, it is. And most States do have
standards for, you know, capturing methane.
Mr. Palmer. And the methane that's emitted from wellheads
is a relatively small amount compared to other methane sources,
is that correct?
Dr. Weinstein. In the overall scheme of things, yes.
Mr. Palmer. Mr. Milito, EPA issued five technical white
papers covering compressors, emissions from well completions,
leaks, liquids unloading, and controllers and pumps. Did the
EPA properly take into account concerns that were raised by
various stakeholders during the supposed peer-review?
Mr. Milito. Not all the concerns that we had with the
rules, particularly with the targeting of methane as the
pollutant in this case. We felt that we could have done it
without that.
Mr. Palmer. In your experience and observations, does EPA
actually take into account these concerns or does it simply
find friendly reviewers who will rubberstamp its agenda?
Mr. Milito. Well, I----
Mr. Palmer. That's a loaded question but I'd like for you
to give me your opinion
Mr. Milito. Well, you know, I would like to say that the
process that we're going through with EPA is actually better in
many respects than what we're seeing with the Bureau of Land
Management. We have meetings with EPA. We talk about them. We
talk about our technology so there's a lot of back-and-forth so
I would commend them for that. And they're going through a
process for understanding what the data is before they move
forward with potential regulations on existing sources.
On the other side of the house, we have Bureau of Land
Management putting forward regulations for existing sources on
federal lands without the benefit of all that data and all that
knowledge. So the preferred path, if you're going to have a
path, is to go through and have an analysis of the data before
you move forward and try to rush regs through.
Mr. Palmer. Well, despite all the voluntary reductions and,
as Mr. Weinstein pointed out, we continue to have reductions in
methane emissions despite the fact that gas production has gone
up tremendously. It kind of comes across like the government is
selectively focusing on your industry, ignoring the benefits.
You know, it's such a contradiction here that they're
concerned about greenhouse gas emissions and they force the
coal industry basically to go bankrupt, as promised by our
President when he was campaigning the first time. They've
destroyed thousands and thousands of jobs. They've forced power
companies to convert from coal to natural gas. And even though
natural gas prices have come way down, energy costs have gone
up.
It just concerns me that there is not a balanced approach
to this in regard to looking at the economic benefits and the
benefits in terms of reduction of greenhouse gases versus the
benefits--versus whatever very limited impact that methane
might have. It just--it appears to me there's another agenda
here.
I appreciate the time, Mr. Chairman. I yield back.
Chairman Bridenstine. The gentleman yields back.
I now recognize the gentleman from Texas, Mr. Weber, for
five minutes.
Mr. Weber. Thank you, Mr. Chairman. Gosh, I don't know who
to direct this to. I'll just make a comment. On Ecology.com
they made the statement that fossil fuels were--I just kind of
read their statement. It looks like they're not--don't have a
big problem with them, but the problem with them was they
weren't renewable and that one day we would run out of them.
Now, it may interest you to know that that article was
written by Eric McLamb on September the 6th, 2011. So things
change.
You know, it seems like there was a rush to judgment. The
EPA has decided that fossil fuels are bad, and I keep hearing
questions from my colleagues over on the other side here, they
keep saying, well, but it's a fossil fuel, isn't it, as if
somehow that's the kiss of death, I guess.
Mr. Milito, EPA issued five technical white papers covering
compressors, emissions from well completions, leaks, liquids
unloading, and controllers and pumps. Did the EPA properly take
into account concerns that were raised by various stakeholders
during that supposed peer-review?
Mr. Milito. No, the final documents that were--I don't even
know if they released five. I think that after taking comment,
they didn't make any changes to the document so nothing was
incorporated from the public input standpoint. They just stuck
with the--really the original peer-reviewed documents.
Mr. Weber. So it was all an exercise in futility is what it
sounds like.
I own an air-conditioning company 34 years. I've dealt with
EPA over refrigerant trade name DuPont Freon issues for a long
time. When I was in the Texas Legislature, we dealt with
licensing regulations, Texas Department of Licensing
Regulations, TDLR, on air-conditioning contractors. I wanted
somebody on the board that actually had experience with air-
conditioning or with--whether it was refrigerant or whether it
was the actual industry, not somebody that had been through
school and through class and read the books and decided under
the tutelage of some professor that their job was to regulate
greenhouse gases or the evil energy industry. Dr. Weinstein,
you have a comment?
Dr. Weinstein. Well, you make a very, very good point. I
think the environmental community overall is trying to tar the
oil and gas industry as being evil like the tobacco industry.
As we sit here today, there was a demonstration going on in
front of the White House by the Keep It in The Ground movement,
and this movement is growing.
So there's so much misinformation about energy, fossil
fuels. Not all fossil fuels are created equally. I mean, there
are lots of reasons that we're using less coal.
Mr. Weber. Actually, they are created equally. They just
decay at different levels. Go ahead.
Dr. Weinstein. Well, that's one way to look at it.
Mr. Weber. Okay.
Dr. Weinstein. But--yes, so the political environment in
which regulation is being crafted today is very highly charged,
and unfortunately, there doesn't seem to be a middle ground or
a rule of reason. There's this growing perception that fossil
fuels are bad. The environmental community used to think that,
oh, natural gas, that's a great bridge to the future. Now, they
say it's a bridge to nowhere.
Mr. Weber. Well, it's a fossil fuel----
Dr. Weinstein. But----
Mr. Weber. --as if that's something bad.
Dr. Weinstein. But the reality is the Department of Energy
says that fossil fuels are going to remain our primary energy
source for the next 40 or 50 years, and that's good news.
Mr. Weber. And, Dr. Weinstein, we have how many years of
natural gas by some estimates----
Dr. Weinstein. That----
Mr. Weber. --1 or 200 years?
Dr. Weinstein. That changes by the day. I mean----
Mr. Weber. Right.
Dr. Weinstein. --there was a discovery----
Mr. Weber. Yes.
Dr. Weinstein. --just a couple of days ago in West Texas,
you know the High Alpine----
Mr. Weber. Absolutely.
Dr. Weinstein. --this huge, you know, billions and
billions----
Mr. Weber. Eight billion, right.
Dr. Weinstein. --of cubic feet of natural gas----
Mr. Weber. Well, the article I cited from Ecology.com we're
going to run out of natural gas--this is September the 6th,
2011, clearly before the--Mr. Milito, you also said--I missed
the numbers in your earlier testimony--that one billion cf of
natural gas produces how many jobs? You quoted----
Mr. Milito. One billion, Bcf per day of natural gas equates
to approximately 32,000 jobs.
Mr. Weber. Thirty-two thousand jobs. One of the things I
say when I speak to groups around the country is that the
things that make America great are the things that America
makes. Now, how do we do that? We have a reliable, affordable,
dependable, clean source of energy for the most part. I get
there's problems where the pipelines rupture and you were
talking about PHMSA earlier, and of course you know the
pipeline industry, Mr. Milito, has a 99 percent safety rating.
And so for this idea to be that somehow we've got to kill
all this fossil fuel energy and go on either solar or wind--and
that's not even discounting for nuclear that I used to have in
my district when I was in the State Legislature--it just
boggles my imagination that we've got an agency that we have
reduced their budget to--by $420 million into pre-1989 levels
and they're still pumping out regulations, as you pointed out,
with a supposed comment period. They're still pumping out
regulations at a record rate.
I think we need some cooler heads to prevail, and I think
we need some logic to prevail. You know, the EPA is supposed to
take into account the effects on what it does to the industry
before they issue regulations, and we really quite frankly
don't see them doing that, and I hope that Congress exercises
its oversight control and gets that under control. And I
appreciate you all being here to testify.
Mr. Chairman, I yield back.
Chairman Bridenstine. The gentleman yields back.
I now recognize the gentleman from Texas, Mr. Babin, for
five minutes.
Mr. Babin. Thank you, Mr. Chairman.
Mr. Ventello, according to the Centers for Disease Control
and Prevention, excessive heat is the leading cause of
preventable weather-related deaths each year, particularly
among the elderly. In June of 2013, President Obama in a ``New
York Daily News'' editorial stated that ``The bottom line is
natural gas is creating jobs. It's lowering many families' heat
and power bills.'' Do you find it ironic that these deaths from
excessive heat could be prevented by electricity--cheap,
reliable natural gas from Pennsylvania or even New York instead
of lowering electricity usage that has been encouraged by
Governor Cuomo?
Mr. Ventello. Yes, it is ironic. We--with the surge of
the--of this cheap fuel, obviously the industry itself--energy
generation is probably the most prolific if you will
development with natural gas that reaches more people than any
other single use of natural gas. We all use electricity. So to
answer your point, yes.
Mr. Babin. Okay. And then do you think citizens have been
misinformed by the media and certain advocacy groups about
natural gas well operations?
Mr. Ventello. Yes, I believe so. And let me give you a--
just a simple example.
Mr. Babin. Okay.
Mr. Ventello. Our Emergency Operations Director if a--for
instance, if a tanker of diesel fuel spills delivering fuel to
a family farm, that's one day's news. If a vehicle or some sort
of an accident happens with a gas-related vehicle, he gets a
call from the media looking for that separation. That becomes
news in the New York Times. I see it all the time. People send
me that information. So yes, there is a strong misinformation.
I think the best thing--the most powerful thing I can do is
ask people to come there and see it and make up their own
minds.
Mr. Babin. Do you think that these advocacy groups are
aware of the progress that has been made in this industry on
reducing methane emissions?
Mr. Ventello. I think that they--in many cases they may be
but there's nothing you can say that will convince them to
change their minds.
Mr. Babin. I got you. And then how would poorly thought-
out, hasty regulations stop economic revitalization and
development that has been occurring in northeast Pennsylvania?
Mr. Ventello. Simply by placing unnecessarily--unnecessary
burden by additional costs on the industry, which is already
moving in the right direction.
Mr. Babin. And then would it be fair to say that the
production of natural gas has benefited the entire community
such as the building of new hospitals, thus improving the
health quality of all residents of northeast Pennsylvania?
Mr. Ventello. Yes, and beyond that. Everything that you and
I use, the industry uses, and there's been an extreme--in many
cases where the industry has made--been made to pay impact
fees, those dollars have gone back into a lot of different
benefits to the general community----
Mr. Babin. Right.
Mr. Ventello. --both in health care, as well as housing and
the like.
Mr. Babin. Thank you very much, Mr. Ventello, and I
appreciate all the witnesses today. I yield back the balance of
my time.
Chairman Bridenstine. The gentleman yields back. We're
coming to the end of this hearing.
Mr. Milito, did you want to--I'll give you about a minute
if----
Mr. Milito. Yes, I have a correction----
Chairman Bridenstine. And then just----
Mr. Milito. --for Congresswoman Edwards. I'm actually
looking at our regulatory impact analysis, and we did in fact
look at the benefits of reducing methane emissions. And in one
case there are actually--our estimates show that they were
greater than what the government showed, but at the same time
we saw the cost appreciably higher, which gives you a much
lower net benefit overall.
And I would look at the Intergovernmental Panel on Climate
Change which states that greenhouse gas emissions from energy
supply can be reduced significantly by shifting to modern,
highly efficient natural gas combined cycle power plants.
So we have the data which shows that we're in a good
position and it just begs the question as to whether or not
these regs are required.
And the last thing I would ask is to get some confirmation
from the EDF because it's news to me that it's one percent. All
the studies that we've seen show you have to be lower than 2.7
to 3.2 percent when it comes to coal. I understand that natural
gas in transportation might have a different threshold, but I
think we have to get that information correct, so I think it
would be good for all of us to learn that because that's good
information to know.
Chairman Bridenstine. Mr. Holstein, would you like to take
a minute to respond to that?
Mr. Holstein. Yes, just to commit to Mr. Milito that we'd
be happy to provide it. And we do note two things that have
been referenced. One is that we absolutely do accept and
acknowledge the positive role that natural gas has played in
helping to improve, for example, our air quality and reduce
greenhouse gas emissions, again, underscoring this point that
getting a handle on methane how--is critical to ensuring that
the benefits of gas truly do accrue to the society, to the
world at large.
Whether you're concerned about health benefits or climate
or both, and the voluntary reductions, are--talking about those
are a mixed bag. The green completions that Mr. Milito referred
to and some of the other reductions--reduction-driving measures
that have been taken by industry have been taken as a direct
result of earlier EPA regulations.
That's not to say that there aren't good environmental
values in the industry. I mentioned Colorado where they
certainly came to the fore. And ONE Future is a good example,
but ONE Future's membership is now part of EPA's challenge--
Methane Challenge voluntary program, but there are only 10
companies participating and we need a lot more leadership and
participation from the industry. And I hope Mr. Milito is right
that the industry is headed in that direction.
But we also need, because of some of the complexities of
measuring, of detecting and responding to methane emissions, we
do need to have comprehensive methane detection, leak detection
and repair programs in order to really ensure that the industry
has the information they need so when this invisible gas is
leaking, people know where it is.
I should note in reference to that list of things like
controllers and valves and that sort of thing, many of these
components that we've talked about were designed to leak back
when nobody thought--gave a thought about methane. They were
actually designed to be driven by the pressures in the gas
line. So those are examples of things that are easily fixable
but we need to get on top of it.
Chairman Bridenstine. Ms. Bonamici, you had something?
Ms. Edwards. Mr. Chairman--yes. Mr. Chairman, I just wanted
to note that I was asking about public health benefits, but I'm
going to submit a question for the record along with a
statement from nurses and physicians about the public health--
--
Chairman Bridenstine. Absolutely.
Ms. Edwards. --costs. So thank you very much for that.
Chairman Bridenstine. You bet.
[The information appears in Appendix II]
Chairman Bridenstine. Do you have something final?
Ms. Bonamici. No. That----
Chairman Bridenstine. Okay.
Ms. Bonamici. --was Ms. Edwards.
Chairman Bridenstine. Okay. I'd like to thank the witnesses
for their valuable testimony and Members for their questions.
The record will remain open for two weeks for additional
comments and written questions from Members.
This hearing is adjourned. Thank you all.
[Whereupon, at 11:43 a.m., the Subcommittee was adjourned.]
Appendix I
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Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Mr. Erik Milito
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Responses by Mr. Elgie Holstein
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Appendix II
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Additional Material for the Record
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