STATEMENT OF JOE KIELY, VICE PRESIDENT OF OPERATIONS

PORTS-TO-PLAINS ALLIANCE

BEFORE

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

OPPORTUNITY FOR STAKEHOLDER INPUT ON HYDRAULIC FRACTURING

DENVER, CO

JULY 13, 2010

I am Joe Kiely, Vice President of Operations for the Ports-to-Plains Alliance. The Ports-to-
Plains Alliance is a coalition of local governments, economic development agencies, chambers
of commerce and business interests representing primarily rural areas in the Ports-to-Plains
region that reaches from Texas on the south and Montana and North Dakota on the north. The
Ports-to-Plains Alliance supports a national all-energy strategy because all forms of energy are
needed to support a strong economy. Oil, gas, wind and other renewables create jobs in our
communities and fuel our nation. North American energy makes our nation more secure.

Thank you for the opportunity to comment on this important topic that will affect the economies
of the communities I represent. The new opportunities for natural gas plays in our region could
have a significantly positive economic effect on the Ports-to-Plains communities. Reducing the
ability to use hydraulic fracturing could also result in a significantly negative economic effect.

Hydraulic fracturing is not something new. It has been used in various forms for over 25 years
and has been regulated well by state regulatory agencies. It is a primary question: Why is the
federal government now studying something that has been successfully regulated by states in
the past?

ECONOMIC AND JOBS

In the ten states I represent, over 2.7 million jobs depend on the oil and gas industry. Oil and
gas represents over $400 billion of the U.S. GDP reaching 31% of GDP in Oklahoma, 29% in
Wyoming, and 24% in Texas.

Since we are meeting in Colorado, I offer the following:

• Oil and natural gas development, of which 90 percent is accomplished via hydraulic
fracturing, is integral to Colorado’s economy. In fact, the total economic contribution for
all oil and gas related activity in Colorado is $22.9 billion.
• Energy activity within the State employs approximately 71,000 people. For every one
direct job that is created by oil and gas activities, almost 2 additional indirect jobs are
generated by this activity, according to a Colorado School of Mines report.
• Natural gas development also contributes to the economic well-being of many other
industries within Colorado. From all of the oil and gas activities in Colorado,
approximately 22 percent of employment is specific to oil and gas industry, followed by
14 percent in government, nine percent in professional services, eight percent in retail
 and seven percent in health care and social services. All of these major industries’
employment rates are significantly impacted by oil and gas activity.
• Oil and natural gas activities within Colorado account for approximately 6.1 percent of
Colorado’s total industry revenues, 2.2 percent of employment and 3.2 percent of total
earnings. In general, oil and gas development generates average earnings of
approximately $61,000 – 32 percent higher than the state’s average.

ADDRESSING REGULATORY CHANGES

The Ports-to-Plains Alliance asks that any federal study looking to additional regulations
addressing hydraulic fracturing address the following points:

• The Science Advisory Board should make sure that any study examining the impacts of
hydraulic fracturing on drinking water is an objective assessment that takes into account
the impacts of current state regulatory programs covering hydraulic fracturing.
• The EPA study needs participation from industry experts with extensive experience in
hydraulic fracturing best practices. This study should be based on the principles of
sound science and include valid and accurate data from independent, credible sources.
• The EPA should also include the participation of the state regulatory agencies, the
Interstate Oil and Gas Compact Commission and the Groundwater Protection Council,
as well as state-level regulatory officials who have been involved in developing and
implementing hydraulic fracturing regulations for decades.

OPPORTUNITY GAINED OR LOST

I will close this comment with several points that show the opportunities that may be gained or
lost by the federal government begins engaging in regulation where state agencies have
successfully managed in prior years.

• We are now able to produce natural gas from places previously thought impossible to
develop because of advances in technology – this has given us the potential to
transform our nation’s energy future, especially as we consider how to develop cleaner
and more efficient energy.
• New shale gas supplies can provide us with over a hundred years of natural gas if they
are allowed to be developed. This significant domestic resource has the potential to
reduce foreign oil imports, increase and diversify U.S. fuel supplies, create thousands of
American jobs and fuel U.S. economic growth.
• Development of U.S. oil shale resources will generate significant employment
opportunities and substantial government revenues.
• Hydraulic Fracturing of unconventional shale gas is a “game-changer.” Development of
clean, domestic, natural gas could potentially reduce our reliance on imported oil from
OPEC.
• U.S. manufacturing grows when natural gas is stable, reliable and affordable.
Development of domestic, natural gas supplies is essential to keep us competitive
globally.
• U.S. Manufacturing can grow again with stable, reliable development of new
unconventional natural gas supplies.
• Shutting down, or over-regulating hydraulic fracturing will cause too much volatility in
natural gas markets and will cause production to move overseas.
• The overall natural gas industry employed 550,000 workers nationwide in 2008 and was
responsible for the creation of an additional 2.4 million jobs in supporting industries,
adding more than $400 billion to the U.S. economy, according to IHS Global Insight.
• Even temporarily halting hydraulic fracturing while federal regulations are determined
and/or implemented by industries could result in significant loss to U.S. GDP and
employment.
• A 2009 study determined that if fracturing were prohibited between 2009 and 2012, the
loss to real GDP would total $255 billion and 1.859 million jobs could be lost.

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