Energy / Environment

Can Oil and Gas, Government, and Environmentalists Work Together?

It must be frustrating for President Obama when his policies make no one happy. Recently the administration announced plans to regulate methane emissions, and while the oil and gas industry grumbled about new regulations and added costs, environmental groups complained the new measures don’t go far enough.

Is it possible for policymakers to appease environmental groups and the energy industry? It seems like one group’s gain is always the other group’s loss. The increased polarization of U.S. politics highlights the need to foster cooperation between opposing groups when implementing new policies. While it may seem implausible to expect the energy industry and environmental groups to work together, some states have proven it possible.

For example, last year Colorado used a collaborative approach to become the first state to regulate the amount of methane emitted by oil and gas producers. The regulations came about after John Hickenlooper, the governor of Colorado, asked oil company leaders and environmental groups to come up with the rules together.

The Environmental Defense Fund, Sierra Club and other environmental groups conferred with oil companies like Andarko, Encana and Noble Energy for months to address concerns over methane leaks and other pollutants. The resulting policy was adopted in February last year by the state’s Air Quality Control Commission. Although the new policy included some of the most strict regulations in the country, it was supported by both environmentalists and the energy industry.

While Colorado’s policymaking process seems ideal, this collaborative approach will be difficult to replicate for Obama’s new methane regulations. Colorado was able to foster cooperation because energy companies, the government, and environmental groups were all willing to work together. In contrast, there is very little trust between the White House and the oil and gas industry. Obama’s announcement to regulate methane has only succeeded in further alienating oil and gas producers, as evidenced by a statement from Marty Durbin, CEO of American Natural Gas Alliance:

“We are disappointed the Administration is choosing to take a regulatory approach that will take years to implement rather than a cooperative approach with the industry that we believe will ultimately result in greater emissions reductions in a shorter timeframe.”

If Obama wants to gain the trust of the oil and gas industry, he will need to signal to producers that he knows and cares about their concerns. Announcing added regulation while the industry is struggling with record low oil prices is not a friendly gesture. Most within the energy industry feel the policy is meant to pacify Obama’s environmental supporters instead of addressing a real issue. The oil and gas industry may also need to take steps to work with the Obama administration.

When the oil companies in Colorado worked with the state government to regulate methane, industry leaders realized they should take advantage of the opportunity to shape advantageous policies. As Chuck Davidson, the CEO of Noble Energy, said, “If it’s there and we’re facing it, we might as well face it head on, don’t dodge it.”

Our system of government was built to allow multiple and opposing groups to create meaningful policies. Cooperation can be difficult to achieve, however the debate surrounding Obama’s recent plan to regulate methane emissions highlights the need for more trust and cooperation between the federal government and the oil and gas industry.