A number of legislative and regulatory initiatives being considered to protectthe environment could affect the economics of U. S. oil and gas exploration andproduction (E&P). Not all environmental statutes require the Environmental Protection Agency (EPA) or other regulatory agencies to consider costs and/orenergy impacts when establishing regulations or standards. Even when energyimpact analyses are performed, they are often limited in scope, because theygenerally only consider the impacts associated with a specific regulation, andalmost always assume no impacts from regulations in other areas. Many haveexpressed concerns that the cumulative costs of multiple regulatory initiativescould significantly impact U. S. oil and gas operations. This paper summarizesthe results of a more comprehensive assessment of the potential cumulativeenergy and economic impacts of environmental regulatory initiatives on U. S.crude oil supplies (ICF Resources, 1990).

The economic recovery potential of various crude oil resources categories atfour constant oil prices -- $16, $20, $24, and $32 per barrel (in 1988 dollars)-- was considered in this analysis. Future supplies from four categories of U.S crude oil resources were evaluated: oil recoverable from the continuedconventional production of known onshore Lower-48 fields, oil recoverable fromfuture infill drilling and waterflood projects in known onshore Lower-48fields, oil recoverable from future enhanced oil recovery (EOR) projects inknown onshore Lower-48 fields, and oil recoverable from onshore and offshorecrude oil fields remaining to be discovered in the Lower-48 and Alaska (onshoreand offshore).

The results of this analysis clearly demonstrate that increased regulations on U. S. crude oil E&P operations can have a significant impact on potentialultimate crude oil recovery. The extent of regulations imposed clearly willdetermine the level of impact, but the results show that significant impactsare felt over a wide range of regulations, over a wide range of crude oilprices, and at two levels of development for extraction technologies. Allresource categories analyzed in the study are impacted by the regulationsevaluated.


This study is a comprehensive assessment of the cumulative impact of currentregulatory initiatives on future U. S. crude oil production. The assessmentinvolved a review of selected regulatory initiatives that could affect the U.S. oil and gas E&P industry. Potential regulatory initiatives beingconsidered under the authority of some environmental statutes that may affectoil and gas operations are easily quantifiable in terms of estimated compliancecosts. These Statutes include: the Resource Conservation and Recovery Act(RCRA), the Safe Drinking Water Act (SDWA), the Clean Water Act (CWA), and the Clean Air Act (CAA). The nature of an estimated incremental compliance costsassociated with each initiative considered was determined. From a review ofthese initiatives, three regulatory scenarios were developed, representing low, medium, and high levels of incremental compliance costs. The regulatoryinitiatives considered under each scenario are summarized in Tables 1 through4, organized by environmental statute.

Based on available models developed by the U. S. Department of Energy (DOE), the cumulative impacts associated with each scenario were determined.

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