Last week the U. S. Congress passed the Energy Policy Act of 2005. The bill now awaits President Bush’s signature. Key provisions of the act that directly affect oil and gas are outlined below:
¨ The energy bill includes provisions to streamline oil and gas development on existing federal lease sites to bring the fuels to market sooner. ¨ The bill permanently authorizes the Strategic Petroleum Reserve and authorizes the DOE Secretary to fill the reserve to 1 billion barrels. ¨ Calls for a DOI inventory of oil and gas resources on the Outer Continental Shelf to enable to the federal government to better assess the extent of these resources. ¨ Facilitates the construction of needed gas infrastructure by improving and streamlining the process to permit pipeline infrastructure with FERC as the lead agency and with a consolidated record ¨ Provides coastal impact assistance of $1 billion over four years to energy-producing states to encourage ongoing production by assisting in coastal enhancement and conservation programs. ¨ Ensures an adequate supply of natural gas in the coming years, including clarification of FERC’s exclusive authority to site LNG facilities. The bill further ensures supply by creating a clear process for siting natural gas infrastructure such as pipelines and storage. |
As you can see there is nothing in the bill that makes oil and gas drilling projects more or less expensive. Other provisions of the bill encourage conservation in homes and automobiles and encourage new technologies such as hydrogen and alternative fuels. To me it looks like these provisions mainly encourage research and implementation of these technologies and can be expected to take many years to bear fruit. There’s no doubt that Congress tried to take some steps towards reducing dependence on foreign oil and gas. But, for the most part, these were baby steps like helping to facilitate the development of clean coal technologies, encouraging automobile efficiencies, and pushing hydrogen fuel cell technology. The most likely provision to affect U.S. oil consumption is a provision for 5 billion gallons of renewal fuels to be introduced into the marketplace by 2010. Other provisions in the bill have goals with dates like 2012 (federal government goals for the use of renewable energy) and 2020 (hydrogen fuel cell cars on the road). So it’s going to be awhile before these measures begin to affect oil and gas supply and demand. One interesting provision establishes a task force to make recommendations on a national oil shale and tar sands leasing program in western states and directs the DOI (Department of Interior) Secretary to conduct a commercial lease sale for oil shale in states where the Secretary finds support and interest for do so. Perhaps some of the newer production technologies will help unlock some of this oil, assuming that exploration and productions companies are willing to risk it.
My bottom line is that it’s going to be years, perhaps many years, before the provisions of this bill stint our ever growing demand for oil and gas.
In the meantime, as investors in oil and gas drilling projects, we should all be pleased that the very generous tax deductions for oil and gas drilling projects were left in place.
The Energy Policy Act of 2005 does just the opposite. It's without question the most environmentally-damaging national legislation ever to be passed in the U.S. It's a gigantic subsidy bill, providing support to almost every conceivable dirty energy technology, including nuclear power, fossil fuels, and polluting "alternative" fuels.
Posted by: alternative energy | May 28, 2009 at 02:09 AM