American Oil and Gas Reporter - January 2015 - 40

talk about things in simple sound bites."
Lance cited the Brookings Institution's
conclusion that U.S. crude exports could
trim $0.09-$0.12 a gallon from domestic
gasoline prices because the North Sea
Brent oil price exerts a much greater influence over U.S. pump prices than does
the price of West Texas Intermediate.
Furthermore, he noted, Brookings estimated the United States would not export
more than 2.5 million barrels a day. "Unlike Russia and Saudi Arabia, we will
export only the surplus that does not
match U.S. refining capability," he predicted. "I tell independent refiners that
oppose exports that there still will be
plenty of light crude to satisfy their
needs."
Later, he warned producers about possible downsides if the United States built
the Keystone XL pipeline to import Canadian oil sands without lifting the crude
exports ban. "If Keystone is approved,
the Gulf Coast is going to have a better
way to get cheaper crude for which its
refineries are configured, and then there
is less room for light sweet crude to
blend with that," he reasoned. "That
would only exacerbate the issue for light
sweet crude. We would see a broader
WTI discount because the only way a refiner would take WTI was if it was
cheaper than the alternative crudes."
The National Interest
IPAA Executive Vice President Lee
Fuller advised association members that
a legislative push might not prove the
best way to change U.S. policy on crude
exports. During the cooperating associations meeting on the convention's second
day and the crude oil and taxes session
on the convention's final day, he noted
that the law gave the Obama administration
considerable latitude.
"There is authority under the law for
the president to determine that it is in the
national interest to export crude oil,"
Fuller stated. "The administration could
determine that production was at such a
level that U.S. refining capacity simply
was incapable of assimilating it without
dramatically discounting the price."
Some signals suggested President Obama eventually could take that step, Fuller
indicated. "We are starting to see a slow
dynamic within the administration to look
at these issues, mainly in response to individual companies seeking opportunities
to export condensate or certain products,
or the possibility of swapping crude with
other countries," he characterized. "We
hope the administration will continue to
evaluate the potential impact broader
crude exports would have on American
national security."
40 THE AMERICAN OIL & GAS REPORTER

The way in which anti-development
groups' pilloried HR 4315 demonstrates
their probable reaction to even the
mildest Endangered Species Act reform,
relates IPAA Manager of Government
Relations Samantha McDonald. Despite
the fierce denunciations, McDonald said
the legislation's modest provisions included capping attorney's fees and making the government's listing decisions
more transparent.

Even so, he acknowledged, other strong
currents running through the Obama administration are likely to encourage skepticism. "There is tension because its internal climate advocacy participants do
not see expanded crude oil production as
consistent with the administration's climate
agenda," Fuller related.
With the GOP having won a majority
in the U.S. Senate, he noted the issue
could get more attention in Congress,
but he expressed hope that it would not
become an ideological battleground. "One
of our great fears is that this becomes a
partisan issue," Fuller acknowledged.
"Absent the ability of Congress to enact
something that the president will sign,
the cards largely are in the administration's
hands."
Fuller lauded Senator Lisa Murkowski,
R-Ak., the incoming chairwoman of the
Senate Energy Natural Resources Committee, as a champion on the issue.
"Murkowski gets it at both levels," he
praised. "She gets that it is a critical
issue. She also gets that she may not
really be able to facilitate it legislatively,
and she does not want to take a legislative
path if it has the potential to adversely
affect decisions the administration may
make on its own. She does not want to
make it partisan in a way that would
thwart it."

ESA Developments
During the cooperating associations
and the IPAA Land and Royalty Issues
Committee sessions, IPAA Manager of
Government Relations Samantha McDonald reported that ESA issues had
prompted the association to submit several
sets of comments to the U.S. Fish &
Wildlife Service in late 2014. She noted
that USFWS had listed the Gunnison
sage grouse as threatened, and called attention to other pending ESA classifications with the potential to have an even
greater effect on oil and gas projects.
"The northern long-eared bat has a
38-state range. Species complications
have been the result of white nose syndrome and not necessarily habitat issues,"
she remarked. "And a determination will
be made on the greater sage grouse in
September 2015. That occupies 11 Western
states, including prime areas of oil and
gas production."
McDonald also noted the USFWS and
the National Marine Fisheries Service
had proposed a rule to expand their power
to designate areas unoccupied by a species
as part of its critical habitat. She explained
that the agency was seeking to include
unoccupied areas that had no biological
features that supported the species, but
which it could nevertheless designate as
critical habitat because of climate change
projections. "They do not delineate what
climate change means-whether it includes
flood, tornado, drought or hurricanes,"
she described.
IPAA also has filed comments regarding the government's program to provide
incentives for private landowners to implement conservation measures before a
species is listed. Recent history demonstrates that the program's ambiguity and
lack of long-term goals makes landowners
question the value of participating, she
said.
"Even if you take all these extensive
steps to help preserve a species or its
habitat, there may be no reward if it is
listed," McDonald observed. "If it is
listed, you have additional restrictions
on your land, despite being a responsible
steward."
Nevertheless, even if a listing decision
disregards contrary evidence or gives insufficient weight to private mitigation efforts, BakerHostetler attorney Mark Barron
urged industry advocates to undertake
such efforts. "What is the point of taking
all the time and resources to respond if
we are confident the agencies are going
to ignore us anyway?" he posed. "ESA
listing challenges come under the Administrative Procedures Act, so if the
data are in the records ahead of time,

American Oil and Gas Reporter - January 2015

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