August 24, 2018

Mr. Al Christopher, Director Energy Division

Department of Mines, Minerals and Energy

1100 Bank Street #817

Richmond, Virginia  23219

Dear Mr. Christopher:

The Virginia Oil & Gas Association (VOGA) appreciates the opportunity to provide comments regarding the current review and update of Virginia’s Energy Plan (the “Plan”).  The significant role played by natural gas in meeting Virginia’s energy needs and in contributing to a robust economy in the Commonwealth has been highlighted in every iteration of the Energy Plan to date.  As the Plan is updated, VOGA respectfully recommends that it fully recognize the even greater reliance in Virginia today on natural gas to generate electricity, warm our homes and water, fuel cooking and power the industrial sector of the economy all the while dramatically contributing to significant improvement in the Commonwealth’s environment.

VOGA supports an “all of the above” approach to meeting Virginia’s energy needs but today, and for the foreseeable future, meeting those needs begins and ends with natural gas.  The Commonwealth is moving in the right direction by reducing carbon dioxide emissions and VOGA is proud of the overwhelming contribution natural gas has and will continue to make in achieving this goal.  Efforts to promote a diversified, clean and reliable energy portfolio should be encouraged but the Plan should not pick “winners and losers”.  The Plan should recommend stable, reasonable and effective policies and regulations that allow the marketplace to evolve as energy sources and options mature to viability.

The Code of Virginia sets forth the purpose and various topics that are to be included in Virginia’s Energy Plan.  Virginia Code Section 67-201 lists a number of requirements for the Plan and requires that the Plan propose actions that are consistent with the Commonwealth’s enacted energy objectives and will implement the Commonwealth’s energy policies found, respectively, in Sections 67-101 and 67-102 of the Code.  In these comments we will address several of these requirements as well as several of those stated objectives and policies.

Ensuring an adequate energy supply and Virginia-based energy production capacity.

As provided in the adopted energy policy of the Commonwealth, the Plan should promote “the availability of affordable natural gas throughout the Commonwealth by expanding Virginia’s natural gas distribution and transmission pipeline infrastructure; developing coalbed methane gas resources and methane hydrate resources; encouraging the production of landfill gas; and siting one or more liquefied natural gas terminals.”

Virginia is blessed with natural gas resources and those resources have, for well over a half-century, been produced to the benefit of the local and state economies while providing significant and well-paying employment opportunities and generating royalty payments to those fortunate enough to own gas interests and significant tax revenue to the Commonwealth and cash-starved localities.  There are over 8,000 producing wells in Virginia today and, with reasonable and appropriate regulations, the number will continue to grow.  We would be remiss in not pointing out that Virginia’s natural gas industry has a remarkable record of safe, environmentally sensitive and efficient production.  The Plan should further Virginia’s stated energy objective of removing impediments to the use of abundant low-cost natural gas energy resources located within the Commonwealth and ensure the economic viability of the natural gas producers in the Commonwealth.

 Virginia currently has nearly 3,000 miles of interstate natural gas pipelines and thousands more miles of intrastate pipelines but in order to satisfy the goals of Virginia’s energy policy and, quite frankly, the demands of consumers and existing and prospective businesses, additional infrastructure is a necessity.  Much of the Commonwealth does not have access to clean and affordable natural gas and some areas that do have access are subject to constraints and bottlenecks in the infrastructure system such that supply shortages have impacted existing demand and threaten desired economic growth.  Virginia must avoid the mistakes made in some other states that have restricted or prohibited new gas infrastructure to the detriment of its consumers resulting from higher electricity prices and of its business prospects from industry rightly looking for reliable and affordable energy, including natural gas.  Likewise, the Plan should encourage access to liquefied natural gas terminals in order to expand the markets for the natural gas produced in Virginia. As stipulated in the Code, the Plan should analyze siting requirements for natural gas transmission and distribution resources.  We are confident that such an analysis will confirm the need for policies that will encourage new natural gas infrastructure.

Energy consumption and adequacy of supply.

The Plan is required to make projections for energy demands, fuel sources and costs.  The Plan also must analyze the adequacy of electricity generation and the resources for transmission and distribution of natural gas and electricity.

Virginia experienced a 400% increase in natural gas powered electric generation from 2004 to 2014 and as of March 2018, natural gas generated 52% of Virginia’s electricity largely from displacement of coal-fired generation.  This percentage is expected to increase, even as solar and wind generated power are developing.  Virginia’s economic future is significantly dependent upon assurance that supplies of natural gas are sufficient for growth.  As the result of industry investment and innovation Virginia and most of the United States have available tremendous previously inaccessible natural gas resources.  This means we will be able to meet the increasing demand for energy while also resulting in a remarkable reduction in cost to consumers and businesses.  The cost of natural gas has fallen from $18 an MCF in 2005 to $2.90 an MCF as recently as July of this year.  The analysis required to produce the Energy Plan will undoubtedly recognize that natural gas will be the means of assuring an adequate and affordable energy supply for the foreseeable future and will, in furtherance of Virginia’s energy objectives, minimize the Commonwealth’s exposure to volatility and increases in world energy prices through greater energy independence.

The Plan is also expected to promote the Commonwealth’s policy in favor of energy conservation.  VOGA’s members include Virginia local distribution utilities.  Those utilities have led the way in the passage of enabling legislation and in proposing energy efficiency programs.  The Energy Plan should evaluate policies that have inhibited the implementation of energy efficiency programs that have proven effective in reducing energy consumption in other states.

New Sources and New Uses.

As part of the Code’s requirement for it to analyze the efficient use of energy resources and conservation initiatives, the Plan should also take a hard look at promoting the development of landfill and other waste generated gas.  While there are several successful Virginia projects capturing methane from landfills that would otherwise be flared or vented to the environment, Virginia should enact policies that will lead to expanded and improved capture and use of this renewable energy source.  This will go further than just supporting the Commonwealth’s energy policy promoting electric generation through means that do not contribute to greenhouse gases.  It will actually reduce greenhouse gas emissions and provide additional economic benefits to the Commonwealth’s agricultural and waste collection industries.

The use of natural gas to fuel transportation has grown 75% during the past five years but has still only scratched the surface of the potential to improve Virginia’s environment through its use as a highly efficient alternate fuel for cars and trucks.  The Plan should consider how expanding natural gas fueling infrastructure could encourage the continued increase in natural gas fueled vehicles and the resulting improvement of our environment.

Thank you for the opportunity to comment and for considering our input.

Virginia Oil & Gas Association

By:  ________________________

                Ian Landon, President

Formed in 1977 the Virginia Oil and Gas Association is a non-profit trade association representing the interests of companies, partnerships, individuals or other entities having an interest in the oil and gas industry and who are primarily engaged in the exploration, production, development, transportation and distribution of natural gas and oil in Virginia.