Path to Progress – In Pennsylvania and Beyond

Mike Sommers
Posted September 23, 2021

This week I addressed the Economic Club of Pittsburgh – in the heart of Pennsylvania’s natural gas and oil region – and I talked about the state’s critical importance to the larger U.S. energy picture and the key role our industry plays in meeting the challenge of supplying the energy that powers our nation and also in reducing emissions, toward a lower-carbon future.

Energy has transformed Pennsylvania and continues to do so. Pennsylvania’s natural gas and oil industry directly and indirectly supported nearly a half million jobs across the commonwealth’s economy in 2019. Our industry’s total economic contribution to Pennsylvania ranked among the highest in the nation, with more than $78 billion directed to the state’s GDP – including nearly $41 billion in labor income. Some other highlights from the speech:

Pennsylvania’s “Keystone” Role in Energy

Pittsburgh is one of the energy capitals of the world. The resourceful basins that surround [it] have transformed [the} city, state, the region, our nation and the globe. Without Pennsylvania energy resources, America wouldn’t be the world’s top producer of natural gas and oil – reversing decades of foreign imports. Without support from Pennsylvania natural gas, America couldn’t have reduced power-related CO₂ emissions 40% in the past 16 years – outpacing coal as the top source of U.S. electricity generation. And without Pennsylvania natural gas, America wouldn’t be in a position to continue exporting environmental progress – in the form of LNG – all over the world to power both a growing population and reverse energy poverty. …

Thanks in large part to Pennsylvania, America has reduced dependence on foreign producers and increased reliance on our own resources – cleaner, safer and better. And it’s important to note that energy is everything. It’s not just your car’s gas tank. It’s about a region’s jobs and economic growth. And it’s about the products Americans need each day and what other industries – from manufacturing to agriculture to construction – depend on.

Shale Energy Re-Energized America

[T]he transformation isn’t limited to Pennsylvania. The shale revolution has spread and revitalized America. Import terminals became export terminals. America reduced its trade deficit. U.S. greenhouse gas emissions are at generational lows. We reduced our energy dependence on foreign nations and unreliable regimes. And in the process, the state’s environmental progress transformed the world.

In 2019, federal estimates show that natural gas from Pennsylvania’s Marcellus and Utica Shale has been shipped out to 20 different countries. It’s a tangible success story and an example of American energy bringing the light – quite literally – around the world, where natural gas can replace less clean and less reliable energy sources to sustain life.

Needed: Local, State and Federal Policies for More Progress

To continue this momentum, Pennsylvania’s short- and long-term economic outlook depends on policies – at the local, state and federal levels – that support natural gas and oil development and critical energy infrastructure. Yet, that outlook is facing headwinds from policymakers in Washington.

Congress is currently considering proposals to restrict access to American energy.  Their proposals would make it more difficult to develop energy on federal and private lands.  And could return us to days of greater dependence on foreign energy sources – in fact, we have seen record Russian oil imports to the U.S. in five of the last six months.

Lawmakers have also proposed new, targeted tax measures on American energy development. Instead of addressing challenges we’re seeing from the pandemic, like demand outpacing supply and increasing energy costs, some lawmakers are proposing to add to these economic headwinds.

In fact, in the fine print of their budget proposal is a punitive natural gas tax – or methane fee – levied on top of EPA’s direct regulation of methane emissions, which API supports for new and existing sources. According to EPA and EIA data, our industry is driving down methane emissions intensity today, and targeted taxes and fees are self-inflicted and will hurt American competitiveness and family budgets.

Over the past 10 years, the cost for families of housing, health care and education have all gone up by as much as 75%, while energy costs have fallen more than 25%. More affordable energy has been a relief, but policies under consideration in Washington could add to already higher inflation.

A course correction in Washington policymaking is urgent, and we’re making the case every day for this industry. Not much time is left as the broader, multi-trillion-dollar reconciliation package takes shape. We urge President Biden and Congress to reject these “import more oil” policies layered into the budget reconciliation.

Addressing Our Energy and Climate Needs

The challenge of meeting the world’s growing energy needs at the same time that we are building a lower-carbon future is massive, intertwined and fundamental. Our industry also views it as the opportunity of our time, and one we are uniquely positioned to meet with our scale and expertise, aided by smart policies and relentless innovation. …

We are committed to ongoing innovation: transforming our business, bringing more voices to the table, and broadening our circle to a point where we have the intellectual diversity to solve the world’s biggest problems, right now and deep into the future.

With that in mind, this year, API established a new initiative – API Energy Excellence, which is designed to accelerate environmental performance. Then, in April, we released the industry’s Climate Action Framework of policy proposals and industry initiatives to further reduce emissions while fueling economic growth. The framework calls for accelerating technologies and innovation to drive down methane emissions. We endorsed an economy-wide carbon price policy as the most effective and transparent way to reduce emissions. We committed the industry to continue developing cleaner fuels.

API later revealed a new template for individual companies in the natural gas and oil industry to more consistently report and track greenhouse gas emissions. While our industry has been a leader in sustainability for decades, our template provides a consistent and uniform set of core indicators to enable greater comparability in climate-related reporting. API expects to release additions to the template later this year.

Reducing Industry’s Emissions

This month we shared results in The Environmental Partnership’s new annual report. It outlines the work of more than 90 companies to detect and cut methane emissions intensity from their operations. Launched in 2018, companies in The Partnership reported a 50% drop in flare volumes associated with oilfield operations from 2019 to 2020 – even as their oil and natural gas production remained nearly constant despite the onset of the pandemic.

To put the Partnership’s achievements into perspective, the amount of flare gas that was avoided or diverted for beneficial uses was roughly equal to the typical winter natural gas consumption of 2.9 million American homes.

As an industry of engineers and problem solvers, we measure and track progress in everything we do and aim to share relevant data transparently. By advocating for the acceleration of emissions-reducing technologies, encouraging transparency in climate reporting, and advancing cleaner fuels, API member companies in Pennsylvania and beyond are demonstrating their support for continuous innovation, new economy-wide market mechanisms and sensible policy proposals to enable a better tomorrow.

Toward a Better Tomorrow

The world’s population is expected to jump from 7.8 billion people today to nearly 10 billion by 2050, and energy demand is expected to grow with it. Independent analysts even estimate that nearly 50% of the world’s energy will come from natural gas and oil in 2040 – even in a scenario where every nation meets its Paris Agreement emissions goals.

Given those realities, do we want natural gas and oil companies to keep working toward a cleaner energy future with government partners, other industries and fellow innovators to meeting energy needs? Or do we want policies that could put America at a disadvantage – jeopardizing jobs, increasing energy costs and harming American competitiveness? …

Will we continue the long-established Pennsylvanian and American energy success story, or go a different route that restricts local operators? Will we get our energy from Pennsylvania, Ohio and West Virginia, or unstable regions across the globe?

There are many routes to support U.S. communities, meet energy demand and tackle climate change. They share two things in common: American energy from U.S. natural gas and oil.