Energy policy for the 21st century is no easy matter, as a conversation with Christopher Guith proves, and the biggest challenge lies in reaching the public with the facts.
Christopher Guith
“The energy industry is led by engineers. American engineers have built the world, but they are the worst communicators in the world.” – Christopher Guith
As the senior vice president for policy at the U.S. Chamber of Commerce Institute for 21st Energy Policy, Christopher Guith knows how to communicate. He understands the engineering and technology involved in searching for energy, in drilling and producing it, in refining it. And he sees the benefits this industry has brought to the towns and cities where it operates. This is what he communicates as he travels across the United States speaking to various city gatherings and chamber memberships, as well as to conference attendees.
With the 2014 mid-year elections rapidly approaching, Guith is battling the opposing forces with facts and figures.
Guith stopped in the Permian Basin earlier this summer and explained his role for the U.S. Chamber while commenting on selected upcoming races and political issues, including the Keystone Pipeline and Clean Air Act. He is responsible for developing the Institute’s policies and initiatives as they apply to the legislative, executive, and regulatory branches of the federal and state governments—a position that combines his background working for the Department of Energy and for two legislators.
In June he served as a closing keynote speaker at the DUG East conference in Pittsburgh, Pa., when he spoke on “The Manufacturing Renaissance in the U.S. Northeast.” He also spent several days in Colorado preparing officials with information on the energy industry in light of the contested U.S. senatorial race between Democrat Mark Udall and Republican Cory Gardner. Colorado is becoming a battleground between environmentalists and the energy industry.
“The industry is starting to embrace the fact there is a de facto social compact and they need to be more open,” Guith said.
The U.S. Chamber is conducting seminars around the country explaining the industry and its benefits to communities and its leaders. The chamber has worked with IHS to produce reports on “America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy.” These reports focus on a manufacturing renaissance and state economic contributions from the energy industry, citing numerous facts and figures.
The Sierra Club has posed a problem in some areas, combating the energy industry with emotional appeals from individual citizens and also stating they have a plan to get the United States to reduce its use of fossil fuels and nuclear energy by 90 percent by the year 2040, he noted. “Some groups want to keep fossil fuels in the ground and use replacement, or renewable, energy,” Guith said.
Colorado is one of those states targeted by groups for and against the energy industry this summer. “Colorado has several initiatives on the ballot in November that will hamper the industry. Local chambers are bringing in tours of people to see what is happening in their area with the industry,” Guith said. “Drilling is going above and beyond safety issues. They can drill 18 holes off one pad and frac at the same time. This is minimizing their footprint. Along I-25 north of Denver you can see dozens of derricks.”
The Denver-Julesberg Basin is “rich with oil,” he said.
The December 15, 2013, edition of the Denver Post noted that Whiting Petroleum had sold its Texas holdings and planned to use the cash to “accelerate development of Colorado’s Niobrara shale. Whiting is just one of the companies pumping money into Colorado to tap the equivalent of at least 3.8 billion barrels of oil beneath the plains.”
The article, written by Mark Jaffe, notes, “As the pace of drilling increases and pushes industrial activity closer to suburbs, it has also led to a political pushback as some communities pass ordinances, moratoriums, and bans to control or blunt drilling.”
Guith said, “These initiatives are a threat. It has forced the industry to re-evaluate how they do community relations. You can’t assume people understand what is going on. You have to explain it to them.”
Colorado, he said, “has the attitude that their economy is fine” and they don’t need the energy industry. But they do.
However, the Denver Post article pointed out that in November 2013, 50 rigs were operating in the Denver-Julesburg Basin, which marked a 50 percent increase in 22 months. Nearly 1,000 drilling permits were issued in that basin by the state in 2013.
Environmental groups utilize similar tactics, according to Guith. “They find homeowners who are not the ‘crazy hippie’ type and put them out in front. This other side comes with emotional appeals and they will win every time.”
That could explain the July 1 meeting at Alpine when residents voiced opposition to companies coming into the area and conducting hydraulic fracturing operations. NewsWest 9 reporter Anum Valliani stated in her segment, “Nearly a dozen people took to the podium to relay their thoughts about all the potential negative about drilling, from water pollution to other environmental hazards and potential health risks and drops in the vibrant tourism business in the area.”
That is why the U.S. Chamber works to educate the public and community officials. “In Colorado, they think the [drilling] process is completely unregulated and that it has to be regulated by the Environmental Protection Agency,” Guith said.
When the drilling revolution started a few years ago, he noted, “regulations had to be updated. Texas crafted a new regulatory plan. It was a bi-partisan compromise. Colorado put together the most stringent of regulatory policies.”
The increasing rig count isn’t a true indicator of how well the industry is doing in Colorado, according to the chamber official. “From one pad they can drill several wells. They are shrinking their footprint. That also means less traffic. Operators are putting their vehicles on containment pads, which are like rubber mats” to avoid polluting the ground.
Noble Energy and Anadarko own most of the leases north of Denver, Guith said, and they have installed water pipelines for centralized storage instead of using trucks to haul the water.
“They will work with the farmer,” he said. “The company comes in and takes a soil sample first and they know the characteristics of the soil” before setting up drilling equipment. They ask the farmer what he wants the soil to be after they leave and he gets the land back in that condition for his use.
“They collect all the top soil from the pad site and then get the soil made to the specs the farmer wants,” he said. The soil is replaced when the pad is moved off that site.
By working with the landowners, these companies are creating stakeholders in the industry, according to Guith.
Studies conducted for the Energy Institute followed the trail of capital expenditures by the energy industry all the way through local economies. “Let’s take a machine shop in Odessa where half of its business is dealing with shale development. They are buying more parts and steel. The employees are spending money at the local coffee shop that didn’t exist a few years ago.”
Guith used the example of a hairdresser to illustrate the impact of the Marcellus Shale in Pennsylvania. “This part of Pennsylvania got taken by storm with development by the energy industry. Today, this woman owns three shops and employs 18 people. The residents have more money in their pockets and more people are coming to Pennsylvania.”
The Denver Post article pointed out another benefit from the increased drilling. “These huge investments are benefiting everyone: fire districts, school districts, homeowners,” Upstate Colorado Economic Development president Eric Berglund said in the Dec. 15 edition. “The Greeley-Evans School District has some of the oldest school buses in the state, and Noble Energy donated $1 million in new buses.”
With the increased production throughout the United States, this country faces another problem—what to do with the growing supply.
“We have the largest fossil fuel source in the world,” said Guith, who advocated changing the export policy concerning petroleum products.
Among the first changes would be allowing condensates to be exported. “The Department of Commerce has discretion on this. They can ban exports on a case-by-case basis. Condensates would not need the licensing that crude oil does.”
Another change would allow Alaskan North Slope crude to be shipped to Asia. The state of Washington now is obtaining more of its crude from the Bakken instead of Alaska, he said.
The Texas delegation in Congress needs to advocate for more exports. “There is a bill on the House floor that would expedite the licensing process for LNG exports,” Guith said, adding that he expects it will be passed by the House.
As for the controversial Keystone Pipeline proposed from Canada to the Gulf Coast, Guith expects Canada to withdraw its application. “This Administration is waiting for the Canadian company to pull the plug and then say, ‘We can’t do anything about it now.’
“If Republicans take over the Senate [in the 2014 elections], some people think they can get something on the Keystone Pipeline accepted. But then the President will get out his red pen and veto it.”
He also expects to see more regulations controlling the use of coal and CO2. “Every five to 10 years new regulations are put out to eradicate whatever pollutants it’s going after. I expect that soon we no longer will be able to utilize coal to produce electricity. You can only grow wind power so much but then you still need natural gas to back it up. Regulations will hit coal the hardest and natural gas will benefit as a result. Then around 2020 or 2025 the government regulations will start to push gas out. That will impact the oil and gas industry. They will go after the heavy industry, like petrochemical plants. There will need to be some way to continue utilizing fossil fuels, [some way] that doesn’t emit CO2.”
Congress is trying to regulate CO2 by wedging it into the Clean Air Act and the Supreme Court recently ruled the issue couldn’t be handled in that manner.
“The Supreme Court said the EPA changed the law,” Guith said. “There will now have to be a big compromise to amend the Clean Air Act. The environmentalists and the industry people need to come to the table and come up with a solution that is predictable and workable and takes into account the economics.
“Someone needs to ask, ‘Is this worth it?’ The Clean Air Act is designed to go after pollutants that cause health problems. CO2 doesn’t cause health problems. If we meet the targets laid out recently to reduce emissions by 30 percent by 2020, then CO2 will be reduced globally by 1.4 percent. We face this pain for no gain. We can’t make the whole world change.
“Climate change is a developed world problem; it’s not a Third World problem. For those in the Third World, their problems are not having potable water or power.”
Guith finds himself back at the beginning with the need to educate and communicate the facts about the industry to the public.
Lana Cunningham is a freelance writer who has lived in Midland since it was a pleasant city of 60,000 people.