* Builds on Jan. pledge to promote gas development
* Creates interagency group to regulate fracking
* Business group says directive is solid first step
(Adds Boehner quotes, details on industry reaction)
By Timothy Gardner
WASHINGTON, April 13 President Barack Obama
streamlined oversight of the natural gas drilling boom on Friday
as his administration faced increasing pressure to allow exports
of the fuel as supplies swell.
Obama issued an executive order creating an interagency
group to oversee development of natural gas, building on a
pledge he made in his State of the Union address in January to
support the industry while increasing safety.
A government source said the panel, to be led largely by
Obama's deputy assistant for energy and climate Heather Zichal,
would not increase regulation.
The order seeks to coordinate regulation among agencies and
their efforts to boost use of natural gas in cars and trucks.
Several energy industry groups, including the American
Petroleum Institute and America's Natural Gas Alliance, praised
the directive for its acknowledgement that states, not the
federal government, are the primary regulators of natural gas.
But not everyone welcomed it.
"We don't need another working group, or any more
bureaucracy," said Kevin Smith, spokesman for House Speaker John
Boehner. "We need a president who will work in a bipartisan way
on expanding American energy production to lower gas prices and
create more jobs."
Vast new sources of shale gas, which drillers access with
techniques including hydraulic fracturing, or fracking, have
flooded the United States with the fuel, decreasing costs for
industrial and residential users. Natural gas prices have fallen
to 10-year lows, leading some producers to ask for permission to
export it just years after the country was expected to become a
The boom has also alarmed environmentalists and health
groups which say that fracking operations near homes and schools
can pollute air and water.
"It is vital that we take full advantage of our natural gas
resources, while giving American families and communities
confidence that natural and cultural resources, air and water
quality, and public health and safety will not be compromised,"
Obama's directive said.
EXPANDED OUTPUT, HIGHER COSTS?
Most drilling for natural gas occurs on private land, which
has limited the administration's authority over the practice,
and state governments provide most of the regulation for the
As natural gas drilling has expanded, several federal
government agencies and departments have pledged to step up
oversight, leading to cries from industry to back off.
The working group will include representatives from at least
13 federal agencies including the Departments of Defense,
Interior and Energy, plus the Environmental Protection Agency.
Kevin Book, an energy policy analyst at ClearView Energy
Partners, said the working group could provide transparency that
would expand natural gas output in the future.
"But it could also standardize environmental policy in a way
that uniformly increases wellhead costs," he said. Pending
federal agency actions could add millions of dollars per well
for some wells by the end of 2014, he added.
The Interior Department crafted draft rules that would
require natural gas drillers to disclose which chemicals they
use while fracking on public lands.
Next week, the EPA is expected to finalize rules to slash
smog-forming emissions from fracking.
The EPA also is conducting a study about whether the process
of fracking, in which companies blast large amounts of sand and
water laced with chemicals deep underground to free natural gas
and bring it to the surface, is polluting water supplies.
Also pending is a decision from the Energy Department, which
is considering seven applications to export natural gas, from
companies including Southern, BG and Sempra
. Its study on exporting the fuel is expected later this
(Reporting By Timothy Gardner, Roberta Rampton; Editing by
Gerald E. McCormick, Bob Burgdorfer and Jim Marshall)