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NPC calls for 'prudent' development of abundant N. American oil, gas

https://www.chemnet.com   Sep 21,2011 Platts
North America has abundant natural gas and oil resources that can last for decades, but they must be developed in an environmentally responsible way, a two-year study the National Petroleum Council released Thursday said.

The study also concluded that opening up new offshore areas for exploration and the increasing ability to access tight oil sources onshore will result in a more robust supply of North American oil that also can last for decades and cut dependence on imported oil.

The NPC conducted the study at the request of Energy Secretary Steven Chu, who said the report would be "very useful in guiding policy."

While the report detailed the benefits of increased access to oil and gas resources, it also concluded that those resources must be developed "prudently." The report made a number of policy recommendations, including the creation of regional "councils of excellence," where companies can share their best environmental and safety practices and communicate more directly with state and local residents.

The report, conducted by 400 participants -- half of whom came from outside the oil and gas industry -- acknowledged that "public confidence in natural gas and oil development and in some of the associated regulatory mechanisms has frayed" in recent years, especially in the wake of last year's Deepwater Horizon disaster in the Gulf of Mexico and growing concerns about the impact of hydraulic fracturing on water supplies.

To restore confidence, encourage best practices and improve communication with regulators and residents, the report recommended establishing regional councils that would, among other things, "promote more consistently high-quality performance on environment, safety and health issues across all companies."

The report also recommends that all companies using hydraulic fracturing should participate in FracFocus, a website where companies can post information about the chemicals used in hydraulic fracturing of oil and gas wells. The report recommends that the Department of the Interior require all companies that use hydraulic fracturing on federal lands participate in FracFocus.

The report also emphasized the importance of developing carbon capture and sequestration technology, not only for coal burning power plants, but for gas as a means of lowering greenhouse gas emissions during the decades-long transition to more reliance on renewable fuel sources.

In discussing ways in which natural gas could contribute to the transition to a lower carbon fuel mix, the report noted that absent a price on carbon, "energy efficiency, and those power sources with lower carbon intensity," such as renewables, nuclear and natural gas, "will tend to be undervalued as individuals, businesses and government make decisions."

The report went on to say that as Congress, the administration and agencies consider energy policy, "they should recognize that the most effective and efficient method to further reduce GHG emissions would be a mechanism for putting a price on carbon emissions that is national, economy-wide, market-based, visible, predictable, transparent, applicable to all sources of emissions, and part of an effective global framework."

The report called for opening up new areas to oil exploration, including the Atlantic, Pacific and the eastern Gulf of Mexico.

The report also recommended extending the current 10-year Outer Continental Shelf lease term in some frontier areas where development takes longer, such as in the Arctic, where the drilling season is shorter and the permitting process is more complex.

The report argued against adopting a "use it or lose it" policy on federal offshore leases and encouraged the continuation of royalty relief programs to encourage "pre-commercial investments by early adopters of new technology or entrants into new types of resources with potential for long-term resource development.

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