Energy and the State of the Union

Mark Green
Posted January 25, 2012

There were lots of energy mentions in the president’s State of the Union speech, and we appreciate every one of them because they likely will stimulate increased discussion of energy issues in our country. In that way we join the president in trying to make more Americans aware of the country’s stake in energy  – in terms of jobs, economic growth and security.

We agree with a number of things the president said. Indeed, the men and women of America’s oil and natural gas companies already have been working in many of the areas mentioned by the president. And they’re willing to do more.

The president said:

“This country needs an all-out, all-of-the-above strategy that develops every available source of American energy …”

Absolutely. The United States will need all available energy sources in the future – oil and natural gas, coal, nuclear, biofuels, renewables and more. We should start by acknowledging that, according to the Energy Information Administration’s most recent analysis, oil and natural gas provide about 62 percent of the energy we use today and will supply about 57 percent of our energy in 2035. No real discussion of America’s energy present and future can diminish or omit the role to be played by oil and natural gas.

The president:

“Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my administration to open more than 75 percent of our potential offshore oil and gas resources. Right now, American oil production is the highest that it’s been in eight years. That’s right – eight years. Not only that – last year, we relied less on foreign oil than in any of the past sixteen years.”

Increased domestic oil and natural gas production is great news, dropping imports to their lowest level since 1995. Going forward, let’s build on the sound decisions and investments made years ago that resulted in today’s production increases. Start by opening access to areas currently off-limits to development – in Alaska, the outer continental shelf and the West, where leased federal acreage has fallen steadily since 2008. With the right access policies, the oil and natural gas industry could create more jobs, more oil and natural gas and more revenue for government. By 2026, the United States could see 100 percent of its liquid fuel needs supplied domestically and from Canada.

The president:

“We have a supply of natural gas that can last America nearly one hundred years, and my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use.  America will develop this resource without putting the health and safety of our citizens at risk.”

Again, the president is on target. Because of a revolution in hydraulic fracturing and horizontal drilling techniques, the U.S. is experiencing a revolution in producing natural gas from shale and other subterranean formations. EIA says shale gas and tight gas, both produced through “fracking,” will account for 70 percent of our natural gas supply by 2035.

Industry already is committed to safety and responsible natural gas development, reflected in field-tested operating standards and cooperation with state and local officials in building effective regulatory regimes. And, companies are on top of the transparency the president called for in hydraulic fracturing operations.

Natural gas and oil developed through fracking is driving economic booms in North Dakota, Pennsylvania, Texas and other states, which the president’s Jobs Council recently noted. There’s a bonus, too. According to a recent study, affordable and reliable supplies of natural gas will help the reinvigoration of U.S. manufacturing the president wants, as companies that use natural gas for energy or as a feed stock sprout and expand.

That’s all great, but we need to keep the ball rolling. Certainly, the president recognizing natural gas’ dynamic potential is important. He can help that potential become reality – with presidential action to curb the chilling effect on investment and development resulting from eight different federal agencies exploring new regulatory layers.

The president:

“Of course, the easiest way to save money is to waste less energy.”

Agreed, which is why industry has made efficiency a core value, pioneering co-generation technology and techniques from oil field to the refinery that allows us to use about half as much energy for every dollar of GDP today than we did in 1980.

The president:

“Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. … There’s never been a better time to build, especially since the construction industry was one of the hardest-hit when the housing bubble burst.”

Infrastructure means direct jobs in construction-related activity, jobs for supporting industries and services and economic growth – which is why the president should change course and approve the Keystone XL pipeline, the largest shovel-ready infrastructure project around. The Keystone XL could create 20,000 U.S. jobs during its construction phase and be an integral part of a strategy to fully utilize Canada’s oil sands, supporting nearly 500,000 new U.S. jobs by 2035.

The president:

“Finally, none of these reforms can happen unless we also lower the temperature in this town. We need to end the notion that the two parties must be locked in a perpetual campaign of mutual destruction; that politics is about clinging to rigid ideologies instead of building consensus around common-sense ideas.”

Amen. Too much of the energy debate has been dominated by the hyper-partisanship the president notes. Let’s have a debate that’s based on fact, not ideological agendas, straw-man arguments and caricature-like depictions. API President and CEO Jack Gerard:

“We need our president, our leaders in Congress and state and local officials to talk about the energy choices we face, the challenges and the opportunities ahead for us, and a vision for our country’s energy future. …  An electorate that is educated on energy issues will demand of all candidates, all offices, a commitment to honest, common-sense discussion of how we can achieve energy security.”

As the president said, when Americans apply themselves, America wins. That’s especially true about energy and the policy choices an energy-rich nation can make now and for the future.