Posted June 24, 2013
More from last week’s energy conference hosted by the U.S. Energy Information Administration ...
The Big Takeaway: Analysts, statisticians, academics, producers – the U.S. Energy secretary – all acknowledge the unfolding of a significant, American revolution in oil and natural gas production, which is reflected in EIA’s chart showing decreasing U.S. dependence on imported liquids:
The issue, as noted in this post, is whether policy will help us parlay this sudden, mostly unexpected arrival of oil and gas abundance into jobs, economic growth and energy security.
Getting the policy right clearly remains a work in progress. During last year’s election campaign President Obama promised an all-of-the-above approach to energy, including increased oil and natural gas production. Industry certainly is willing do its part. But we need actions that back up the rhetoric, including opening new access to reserves. We also need buy-in from more policy leaders – that America’s oil and natural gas wealth is a generational opportunity that must not be missed.
Southern Company Chairman, President and CEO Thomas Fanning addressed the opportunity America’s energy renaissance provides:
“When you look around the globe today there’s an economic malaise, and we have our challenges here in the United States. We have unacceptably high unemployment, we have a slow-growing economy. But despite those challenges, the thing that really strikes me is that some are starting to talk about a ‘new normal.’ … I think we owe it to the American people to reject that ‘new normal.’ Today, energy provides us an opportunity to do just that.”
Natural gas and oil from vast U.S. shale plays is leading the way. Jim Tramuto of Southwestern Energy Company, a leading producer of shale gas:
“In 2005 we were looking at what do we need to do to import natural gas, because we were at that point in a state where the whole mindset was we’re going to be short. … Now we have abundant supply, and as business owners, and the board rooms, and as fuel procurement managers, all of a sudden you can now think about how we now have that abundant supply here, right beneath our feet. … This unconventional gas paradigm is creating a new world with new long-term, low-price implications.”
Southwestern Energy’s chart showing various estimates of America’s shale gas reserves:
Unconventional oil and natural gas production from shale is an American phenomenon. We have the reserves – much of it individually or privately owned – the technology, the innovative spirit and the developmental history to turn energy potential into reality. IHS’ Andrew Slaughter said there is a competitive upstream environment in which a number of players are making significant investments in acreage and infrastructure, which incentivizes development. Slaughter estimated U.S. technically recoverable, economically feasible tight oil reserves at more than 40 billion barrels:
“These unique conditions come together in the U.S. in a way that really doesn’t quite happen the same way in the rest of the world. … Deepwater is still there, conventional oil is still there. We mustn’t forget those. But the growth is all coming from the unconventional oil, and it will probably carry on as we go forward in the next 10, 15, 20 years. We see rising production then a plateau. We don’t see long-term declines if the price level is such to maintain activity.”
The upside to domestic oil and natural gas development looks dynamic. Wood Mackenzie estimates pro-development energy policies, including increased access, could create more than 1 million new U.S. jobs, $127 billion in additional cumulative revenue for government and more than 4 million barrels’ worth of oil and natural gas by 2020. This will require, as Fanning suggested, a rejection of a “new normal” of energy and economic status quo – which is to say, limited vision and strategies based on scarcity. Tramuto:
“We can now think of energy security for this country. We can now think of what do we do with abundance, as opposed to being with a shortage.”
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.