July 1, 2021

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Climate Change – A Different Perspective on Oil and Gas Production

Originally Published February 4, 2021

By Jerry D. Worsham II, Shareholder with Ryley Carlock & Applewhite

After review of the Biden/Harris campaign literature1, the Biden/Harris Transition Fact Sheet: List of Agency Actions for Review (January 20, 2021), and the most recent “Executive Order on Tackling the Climate Crisis at Home and Abroad” (Executive Order January 27, 2021), it is quite clear that we are plunging headlong into the business of “Climate Change.” We even now have a new High Priest or Climate Czar appointed to the global Climate Change movement – former United States Senator John Kerry, the Biden Administration’s Special Presidential Envoy for Climate.2 It has been reported that Biden’s plan has a $2 trillion dollar price tag, which will take a bulldozer to the United States energy production industry. The initial blow for Climate Change is the scrapping of the Keystone XL pipeline, which was designed to bring 830,000 barrels of Canadian oil into refineries in Texas, with the cancellation of an estimated 10,000 high-paying construction jobs.3 Expect more announcements, regulation and litigation on Climate Change in the future as the Biden Administration is just getting started to limit oil and gas production.

Although we are now going headlong into the Biden Administration’s Climate Change agenda, renewable energy advocates, environmental attorneys, and the public need to understand that we will still need oil and gas for the near term and foreseeable future. Instead of attacking the oil and gas production industry, we should consider the concept of an orderly transition to lower Greenhouse Gas (GHG) emissions with the oil and gas production industry as a key part of the solution. We will crash our economy if the Biden Administration won’t realistically view the positive role of oil and gas production in the Climate Change discussion and goals.

The two best examples are transportation (28% of GHG in 2018) and electrical power generation (27% of GHG in 2018). Although GM and other automobile manufactures promise to be all-electric by 2035 in the personal automotive transportation sector, many forms of transportation will not likely meet that 2035 goal (i.e. semi-trucks, airplanes, ships, locomotives).4 Gasoline used for automobiles and aviation is the largest (by volume) of petroleum product accounting for almost half of the United States petroleum production. Like it or not, we will still need a significant, reliable source of oil and gas production for the future in the transportation sector despite the success of the Tesla Model 3 electric car. Federal and/or state regulations have supported the development of renewable energy projects. While we have made great strides in wind and solar power to produce electricity and less carbon emissions, we currently do not have the technology to store vast amounts of electrical energy and this scale of battery technology is far off on the horizon. Hopefully, engineers, technology and innovation can help solve these challenges. Like it or not, we will need oil and gas production well into the future to produce much of the electrical power for the United States economy.

Since 2000, we have been steadily moving from coal fired power plants to more efficient natural gas fired power plants for electricity production and the main drivers have been the air quality regulations, the abundant supply of inexpensive natural gas, and the fact that natural gas is a cleaner fuel (i.e. less GHG). This has greatly reduced GHG emissions in the United States. Market forces and Climate Change regulation can speed that up but renewable energy (i.e. wind and solar) cannot fill the gap. Many states have already put into place plans to invest in renewable energy projects to augment their existing power generation network. However, you will still need to provide reliable electricity to the consumer for the present and the future needs of the country. Natural gas fills that transition role for now and the foreseeable future.

What has not been acknowledged in the Biden Administration’s Climate Change agenda is that oil and natural gas are still needed to supply the petrochemicals required for everyday life in America. For example, plastics, nylons, polyesters, packaging, clothing, medical equipment, chemicals, pharmaceuticals, tires, lubricants for machinery, fertilizers, etc. are all examples of where the demand for oil and natural gas will not change unless the American public has a radical change in modern lifestyle.

I believe that today we are in a similar situation as the period between 1890 to 1920 which ushered in the transition from the horse to the “horseless carriage” as the primary source of personal transportation. The horse, and all the small businesses that supported the horse from farriers to buggy whip makers, was the backbone of 19th Century life.5 City dwellers used the horse to get their daily provisions and for getting around. American cities were filled with carriage makers, harness makers, saddle makers, feed stores, stables and blacksmiths, which supported the horse economy. By 1900 it has been estimated that there were 24 million horses used in America for travel and agricultural work. However, the horse had quite a few environmental problems that plagued the cities. The urban horse dumped between 20 and 50 pounds of manure a day on the street and an estimated gallon of urine. Some cities collected the manure and sent it out to dumps, while others dumped it into rivers. Children wandering streets had to avoid the “road apples” and it was not uncommon for a horse owner to abandon a dead horse where he died. The stables were unsightly and smelly. The horse manure attracted disease carrying rodents and flies.

However, we did not destroy the horse economy and the supporting businesses, we slowly created incentives and transitioned to the automotive age by developing roads, gasoline stations, car dealerships, petroleum products, parts suppliers, parking spaces, etc. to support the new automotive based economy we enjoy today. With the introduction of Henry Ford’s Model T on October 1, 1908, the transition from the horse to the automobile was secured. Ford produced over 15 million Model Ts between 1913 and 1927 in the early 20th Century.6

It has been acknowledged/admitted by John Kerry, that the United States could reduce our GHG emissions to zero and it wouldn’t make much of a difference in the global Climate Change fight.7 Yet, the Biden Administration wants to put $2 trillion to this Climate Change plan. Other countries, like China, Russia and India will not make similar commitments to the reduction of GHG as proposed by the Biden Administration.8

Conclusion
Today in the 21st Century, we are in a similar transition from fossil fuels to renewable energy sources for power generation and electric transportation that occurred in the 20th Century. Let’s take a lesson from the 20th Century and provide incentives9 to reduce GHG and the transition to a goal of a Carbon Neutral or Net Zero economy. We will need the assistance of engineers, technology and innovation and although 2035 is an aspirational goal, we may need more time. However, we will still have a need for oil and gas for the near term and foreseeable future. The Biden Administration should take a different perspective.

Should we continue on a solid path to reduce GHG emissions…I would say yes. Should we declare a war on the oil and gas industry…I would say no. We will crash our economy if the Biden Administration won’t realistically view the positive role for oil and gas production in the Climate Change discussion to achieve the goal to be Carbon Neutral or Net Zero Carbon by 2035.

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Jerry D. Worsham II is a shareholder with Ryley Carlock & Applewhite. He has an extensive practice in environmental compliance, related litigation, and natural resource development. Jerry's experience includes: Climate Change and Environmental and Social Governance (ESG) including comment on issues and regulation development; approvals and permits for natural resource development; litigation defense on numerous cases involving the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA); compliance with the Resource Conservation and Recovery Act (RCRA); civil and criminal liability defense on environmental matters; ASTM Phase I and Phase II Environmental Site Assessments coordination; emergency incident responses; Prospective Purchaser Agreement negotiations; creation of Conservation Easements; and due diligence associated with mergers, acquisitions and initial public offerings. Jerry reviews and comments on federal, state and local laws, rules and regulations on a regular basis and represents clients before federal and state environmental agencies. He can be reached at 602.257.6924 and jworsham@rcalaw.com. 

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1 See “The Biden Plan for a Clean Energy Revolution and Environmental Justice, https://joebiden.com/climate-plan/

2 See “John Kerry, Special Presidential Envoy for Climate,” https://www.state.gov/biographies/john-kerry/

3 See “Keystone XL Project Overview,” https://www.keystonexl.com/about/

4 Note that the United States military is widely acknowledged to be one of the largest consumers of oil and a major source of GHG. The oil and gas industry is crucial to the military readiness of the United States.

5 See “The Big Shift Last Time: From Horse Dung to Car Smog,” Andrew Nikiforuk, https://thetyee.ca/News/2013/03/06/Horse-Dung-Big-Shift/ (March 6, 2013). See also “Horse and Buggy: The Primary Means of Transportation in the 19th Century,” Jenny Ashcraft, https://blog.newspapers.com/horse-and-buggy-the-primary-means-of-transportation-in-the-19thcentury/ (July 17, 2019).

6 “Henry Ford Invents the Model T Engine,” History.com Editors, https://www.history.com/topics/inventions/model-t (May 2, 2019).

7 See (January 27, 2021 nypost.com). “Kerry Admits Zero Emissions in US Wouldn’t Make Difference in Climate Change.”

8 Although the Biden Administration has committed to a Carbon Neutral or Net Zero Carbon economy in the United States by 2035, note that China has recently committed to achieve Carbon Neutral or Net Zero economy by 2060.

9 For example, accelerated depreciation or tax breaks for vapor recovery systems, construction of pipelines, research and development grants for collection and processing of small-scale natural gas plants, etc.

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