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Oil Industry Under Siege

Alex Mills
Op Ed Piece
San Angelo Standard Times
July 10, 2010

SAN ANGELO, Texas — The current administration and environmental extremists have declared that they intend to end the “tyranny of oil,” as President Obama has proclaimed.

The attacks come from the administration’s Justice Department, Environmental Protection Agency, Interior Department, Treasury Department and Department of Energy. They are using the legislative process, the federal budget, the courts and regulatory agencies to attack the domestic oil and natural gas industry.

Obama recommended in his 2010 and 2011 budgets that the tax law be changed, which would result in an increase in taxes by an estimated $35 billion for domestic oil and gas industry. Most of the tax increase would come from small independent producers, who drilled 96 percent of the wells in Texas in 2008 and produced 88 percent of the oil and natural gas.

The Justice Department has appealed a U.S. District Court ruling against the Obama administration’s moratorium on drilling in the Gulf of Mexico because of the blowout. The moratorium would cause serious economic damage to the offshore exploration industry in Louisiana and Texas. The district judge noted that the airline industry is not shut down following an airplane crash, and the offshore exploration industry should not be shut down because of one incident in the last 40 years.

On the environmental front, EPA has proclaimed carbon dioxide a “pollutant” and wants to bypass Congress because it cannot pass a cap-and-trade bill.

In Texas, EPA Region 6 Director Al Armendariz has decided that EPA can regulate air emissions from the petroleum industry better than Texas regulators, and he has declared that Texas refineries must obtain a federal permit. States have the authority to issue air permits under the Clean Air Act, and EPA has approved Texas’ permitting process for more than 15 years until last week.

EPA also has decided to conduct another “study” of hydraulic fracturing even though there has never been a confirmed instance where ground water has been contaminated by the fracturing process. EPA held a hearing in Fort Worth on July 8 and learned that hydraulic fracturing occurs thousands of feet below freshwater zones. For example, the average well in the Barnett Shale is more than 8,000 feet below the freshwater table. That’s more than a mile and a half of solid rock between the fractured zone and the freshwater zone. Put another way, you could stack the five tallest buildings in North America — the CN Tower in Toronto, the Sears Tower in Chicago, the Trump Tower in Chicago, the John Hancock Building in Chicago and the Empire State Building in New York, which total 7,797 feet in height — and still not equal the distance between the freshwater zone and most fractured zones.

Additionally, during the past 25 years, the Congress, federal regulatory agencies, state regulatory agencies, state legislatures, and the courts have examined hydraulic fracturing extensively. Yet, not one case of contamination by hydraulic fracturing has been proven.

In 1995, EPA Administrator Carol Browner, who serves as Obama’s energy and environmental czar, wrote that hydraulic fracturing closely was regulated by the states and, “EPA is not legally required to regulate hydraulic fracturing.” Most importantly, she further wrote that there was “no evidence that hydraulic fracturing resulted in any drinking water contamination” in the litigation involved. Also, two EPA officials testified just a few months ago that they did not know of any contamination caused by hydraulic fracturing.

All of these actions against the No. 1 industry in Texas have made some wonder if the results of EPA’s “study” have been predetermined even though state regulators still have not found a case where hydraulic fracturing has contaminated ground water.
Additionally, many Texans are concerned that the actions of the federal government will send the oil and gas industry into a tailspin and damage the entire economy of Texas.

Alex Mills is president of the Texas Alliance of Energy Producers. Contact him at alliance@wf.net.