Trump executive order on domestic energy policy

U.S. President Donald Trump has signed an executive order affecting domestic energy policy.  His March 28, 2017 Presidential Executive Order on Promoting Energy Independence and Economic Growth includes a variety of directives, generally aimed at reducing federal regulations affecting domestic energy production.  Here's a look at his Executive Order targeting Obama-administration climate regulations and other agency actions that potentially burden the development or use of domestically produced energy resources.

The Executive Order includes 8 operative sections.  One provides policy statements; six call for regulatory reviews that could lead to rule changes or revocations, or directly revoke and rescind Obama-era actions.  The final section includes general provisions.

Section 1 includes five policy statements, such as that "is in the national interest to promote clean and safe development of our Nation's vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation."  It also sets a federal policy "that executive departments and agencies (agencies) immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law."

Section 2 calls for an immediate review of all agency actions that potentially burden the safe, efficient development of domestic energy resources, "with particular attention to oil, natural gas, coal, and nuclear energy resources."  It directs agency heads to submit a memorandum to the Office of Management and Budget detailing such potentially burdensome actions, and including "specific recommendations that, to the extent permitted by law, could alleviate or eliminate aspects of agency actions that burden domestic energy production."  With respect to actions targeted with specific recommendations in a final report, agency heads are directed to "as soon as practicable, suspend, revise, or rescind, or publish for notice and comment proposed rules suspending, revising, or rescinding, those actions, as appropriate and consistent with law."

Section 3 rescinds or revokes a variety of Presidential actions and reports, including several of President Obama's executive orders regarding climate change, the President's 2013 Climate Action Plan, and the Council on Environmental Quality's 2016 final guidance for federal agencies on consideration of greenhouse gas and climate issues in performing reviews of agency actions under the National Environmental Policy Act.

Section 4 calls for the Administrator of the Environmental Protection Agency to "immediately take all steps necessary to review" the Clean Power Plan governing electricity-sector emissions and related rules "for consistency with the policy set forth in section 1 of this order and, if appropriate, shall, as soon as practicable, suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules."

Section 5 disbands a working group on the social cost of greenhouse gas emissions, and restricts the ways agencies may account for the monetary value of changes in greenhouse gas emissions resulting from regulations.

Section 6 calls for the Secretary of Interior to lift moratoria on federal land coal leasing activities imposed under a 2015 order, and to commence federal coal leasing activities.

Section 7 calls for review of federal regulations affecting emissions from the oil and gas sector, including 2016 emissions standards for new, reconstructed and modified sources, and a 2015 rule governing hydraulic fracturing on federal and Indian lands, among others.

Section 8 includes general provisions, generally similar to those found in other executive orders.

Marcellus shale gas drilling slows

Natural gas drilling activity has declined in parts of the Marcellus Shale formation under Pennsylvania and other eastern states, largely as a result of low gas prices.  These prices in turn are largely the result of significant increases in the available supply of recoverable natural gas made possible by horizontal drilling techniques and hydraulic fracturing or fracking.  As a consequence, many natural gas producers are focusing on areas of shale rich in both gas and natural gas liquids.

The Marcellus Shale, a layer of ancient marine sediment rich in organic material and extending beneath Pennsylvania, Ohio, West Virginia, New York, and Maryland, is believed to be one of the world's largest natural gas fields.  In 2008, drilling activity in the Marcellus Shale began to increase significantly, as these newer drilling techniques and increases in the price of other fuels like oil made the shale gas economically feasible to recover.  (Compare this map of Marcellus shale drilling activity in Pennsylvania from 7/25/2008 to this map of permits issued as of March 9, 2012.)  As of this spring, Pennsylvania alone had issued 11,772 permits for vertical and horizontal gas wells in the Marcellus formation.

One result of the expansion of shale gas production is a significant decrease in the price of natural gas.  Since 2008, natural gas prices at the Henry Hub in Louisiana (where gas as a commodity is typically priced) have fallen from over $12 per million British thermal units (MMBtu) to as low as $2 per MMBtu.  Other factors have played a role in this price decline, such as a mild winter with lower-than-expected heating demand and the overall economic slowdown, but the increase in supply due to shale gas production is viewed as a major cause of the price decline.

Now, one of the effects of the price decline is a decrease in natural gas drilling activity.  This decrease is particularly marked in areas where the shale produces "dry gas", or natural gas that is primarily methane and is low in so-called natural gas liquids.  Natural gas liquids -- hydrocarbons other than methane that are extracted when natural gas is processed in a natural gas treatment facility -- include ethane, propane, and butanes.  These natural gas liquids are important feedstocks for the production of many chemicals and plastics, and add value to the natural gas produced from "wet" shales.

Where shale gas contains significant amounts of natural gas liquids, production appears steady or increasing, while gas producers in areas with lower amounts of natural gas liquids are now saying that they are having a hard time making money off gas alone.  If this trend continues, areas of dry gas like much of the known portions of the Marcellus Shale may continue to see a slowdown in drilling activity while producers focus on areas rich in natural gas liquids.