Dec. 17–Early in my career, I believed environmental regulations were nothing more than a drag on business.
I worked manual labor to supervisory roles in the steel and foundry industries in Pennsylvania. Steel-toed boots, shop floor, sweat — this is where I developed my early views on regulatory matters.
Distaste for environmental regulation was common, particularly in senior management and investor circles.
But as the years passed and I transitioned into the private equity industry, I saw the benefits of sound regulation across heavy manufacturing industries. Safer facilities, healthier workers, cleaner air and water for surrounding communities.
Even companies that years ago fought regulations are today better off for them.
After all, safer, cleaner operations create more productive employees, better business leaders, reduced legal liability and a more competitive way of doing business.
Today, a brewing debate about the need for regulation of the natural gas industry reminds me of lessons I learned years ago, lessons that can help industry mitigate risk and forge a more sustainable path forward.
Natural gas has been creating economic opportunity that society should maximize, but also environmental risks that must be addressed for natural gas to have a viable future.
Leaks of natural gas are bad for the climate, for communities and for the competitiveness of natural gas in the future energy mix. Recent studies found that natural gas leaks — specifically methane — from America’s oil and gas industry are 60 percent higher than government inventories have reported.
It doesn’t have to be that way. There are sound investments that help fix the problem, such as hiring inspectors to use specialized cameras to search for invisible gas leaks.
The chief financial officer of EQT, a leading Pennsylvania natural gas driller, confirmed publicly that in EQT’s field experience, the economics of these investments are attractive. The International Energy Agency estimates that half of global oil and gas methane emissions could be eliminated at no net cost to operators.
A number of energy-producing states already understand this. California, Colorado and Wyoming have had emissions standards for oil and gas operations on the books for years, and none has experienced any kind of economic turmoil unfold as a result.
California has the single largest economy in the U.S., and Colorado recently experienced record-breaking production levels while employment in the oil and gas sector remains strong. Even dark-red Wyoming is currently expanding its emission control requirements.
But America’s oil and gas industry is so fragmented that without comprehensive state and federal action, some companies will lag behind, dragging the entire industry’s performance and reputation backward with them.
That threat is real: Today, less than 1 percent of oil and gas producers in the United States have disclosed their targets for methane emissions reductions.
That is why stakes are so high for government action that creates a level playing field for everyone.
In Pennsylvania, Gov. Tom Wolf has an important opportunity to issue regulations that require cost effective practices such as leak detection and repair for today’s facilities, building on efforts in his last term to incorporate emission controls into new permit applications.
But not all states with oil and gas facilities have leadership that understands the need to control emissions. So, protecting the Environmental Protection Agency’s nationwide methane regulations is essential if industry wants to show that it can be part of the solution.
Companies such as BP, ExxonMobil and Shell have set methane targets of their own and committed to support methane policies and regulations. However, with the Trump administration taking aim at weakening and ultimately eliminating these EPA regulations, companies like these have remained mostly silent so far.
Meanwhile, investors with a vested interest in the future of American natural gas are right to worry that rollbacks are short-sighted given that the fuels of tomorrow must compete not just on price, but on carbon footprint.
And without rules in place, the carbon footprint of American natural gas looks risky, particularly as the Liquefied Natural Gas trade creates global markets in which dirtiness could become a commercial disadvantage.
Some in the oil and gas industry still think about environmental regulations the way I used to, and I hope they can learn the same lessons I did.
I hope they will realize before it’s too late that regulations that keep natural gas out of the atmosphere are really an investment in the future of the natural gas industry in a changing world. Investments that can create good-paying jobs in leak detection technologies and repair services across many regions of our country, including Pennsylvania.
Bob Taylor is a retired managing partner for Advent International. He hails from Coatesville, Chester County.
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