Natural Gas

While the country has been enjoying a surge in domestic energy production due to hydraulic fracturing, it has led to more development of wells close to homes and, in some cases, within city limits. Some cities are pushing back. Residents of the city of Denton, Texas, in November 2014 passed a ballot to ban hydraulic fracturing—often called fracking—within city limits, making it the first major Texas city to do so and igniting a public policy debate. In Texas, state law gives the railroad commission authority and jurisdiction over oil and gas wells. State law, however, also gives local governments the power to impose reasonable health and safety regulations—a specific concern cited in the ballot initiative language for the ban.

State verses local control is not a new issue, but it is an important one for the nation’s top oil and gas producer and is likely to be settled by the courts or the state legislature.

This act creates tax incentives to encourage the collection and use of natural gas that would otherwise be flared. The act: Expands a sales tax exemption to include tangible personal property used to construct or expand gas collection systems; creates a gross production tax exemption for certain gas collected and used at the well site; and creates an oil extraction tax exemption for the liquids produced in association with a collection system.

The comment period closed for the EPA's proposed Clean Power Plan rule on Dec. 1. The total number of comment submissions is on track to reach close to 2 million -maybe even exceed it.  Between now and mid-spring the EPA will be busy sifting through comments to aid in crafting the final rule scheduled to be released in June, 2015.  State environmental agencies, the agencies responsible for developing compliance plans, had much to say about the EPA proposal and most states submitted comments.

Twenty state legislators from 16 states gathered in Denver, CO on Sept. 25-27, 2014, for the second annual Fundamentals of Natural Gas Policy Academy. The meeting provided a comprehensive overview of the economic and regulatory issues that arise with the exploration,...

The U.S. Energy Information Administration issued a report last week detailing the 13,500 megawatts (MW) of electric utility capacity added in 2013.  According to the report, the total capacity added is down roughly 50% from 2012.  Natural gas and solar were the top industries generating additional capacity at just over 50% and 22% respectively. 

State and federal policymakers in the past could be confident that America’s energy demands would increase every year. Now the future isn’t as clear.  Barbara Tyran, director of Washington, D.C., and state relations with the Electric Power Research Institute (EPRI), said the Great Recession, a greater use of locally produced power, a growing interest in energy efficiency and the unprecedented increase in the natural gas supply have turned once staid assumptions about the future of energy on their head. Tyran was one of the featured speakers at a CSG policy academy about natural gas development last week and noted that all three branches of the federal government are currently engaged in shaping energy and environmental outcomes that will impact the future electricity and natural gas sectors. 

Pennsylvania Governor Tom Corbett announced that counties and local municipalities would receive $204 million from impact fees generated by shale drilling as a result of the passage of Act 13 last February. According to the release, $25.5 million will be directed to state agencies with safety and regulatory oversight authority over the natural gas industry, $104 million be disbursed directly to localities, and $72 million will be set aside for competitive grants for infrastructure and recreational improvement projects.

Chapter 9 of the 2012 Book of the States contains the following articles and tables:

Book of the States 2012

Chapter 9: Selected State Policies and Programs


  1. Elections, Greater Federal Grant Scrutiny and Ongoing Disasters Continue to Test Management System
  2. ...

As the process of hydraulic fracturing becomes more prevalent, several municipal governments are using their local zoning power to restrict or prohibit resource exploration. Many of these new local ordinances conflict with state permitting authority; however, some state statutes may be ambiguous when it comes to regulating oil and natural gas exploration.

Natural gas futures prices inched north of $2.30 per 1,000 cubic feet for the first time in several days, but it underscores the pessimism by some utility companies in the economics of building new nuclear, alterative energy, and new coal power plants. The Energy Information Administration (EIA) reported late last week that coal's share of power generation fell below 40 percent for the first time since 1978 during November and December of 2011. According to an article in today's Wall Street Journal, NRG's CEO David Crane observed, "It's killed off new coal and now it's killing off new nuclear."