Abstract: Impacts of Environmental Requirements on U.S. Oil and Gas Activities: Lessons for International Approaches to Regulation

Michael L. Godec, Glenda E. Smith

Oil and gas producers confront an ever-changing set of environmental requirements, both in the U.S. and internationally, that affect the compliance costs incurred during exploration and production (E and P) activities. Recent initiatives proposed to strengthen requirements under U.S. environmental statutes could have wide-ranging impacts on U.S. E and P activities and could establish the standard for requirements worldwide. This presentation summarizes recent studies by the National Petroleum Council and the U.S. Department of Energy that identify possible environmental initiatives affecting U.S. E and P operations, characterize the potential impacts of these initiatives on future compliance costs, and evaluate the effect of these initiatives on future domestic oil and gas supplies.

The results reviewed in this presentation demonstrate that the impacts of potential regulatory initiatives on domestic oil and gas supplies could be significant, resulting in as much as a 25 percent drop in domestic supply potential. These results are discussed, recognizing that many in the petroleum industry are becoming increasingly concerned that the compliance costs they incur are not balanced by measurable environmental benefits. They are also questioning whether regulators are focusing on the correct problems to achieve the desired solutions in terms of improved environmental conditions. This paper also describes how concerns about protecting the environment have sometimes resulted in inappropriate regulations in the U.S., and how lessons learned from the U.S. experience can be sed as an analog to assist in the development of more appropriate regulatory approaches worldwide.

AAPG Search and Discovery Article #90986©1994 AAPG Annual Convention, Denver, Colorado, June 12-15, 1994