The People of America's Oil and Natural Gas Indusry

A Sea Change in American Energy

Mark Green

Mark Green
Posted October 10, 2014

The U.S. Energy Information Administration (EIA) has another report on oil imports that underscores the incredible sea change in America’s energy picture – due to increased domestic production of oil and natural gas. EIA says net imports of energy as a share of energy consumption fell their lowest level in 29 years for the first six months of 2014. EIA’s chart:

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As you can see, the dark blue and light blue lines, representing energy consumption and domestic production, respectively, are converging. At the bottom, the rust-colored space represents declining net energy imports (mostly crude oil) as a share of consumption. EIA:

The increase in total energy production was almost entirely concentrated in petroleum and natural gas. Petroleum accounted for 52% of the 2014 year-to-date increase, natural gas for 27%, renewable energy for 9%, and nuclear electric power for 2%. … The increased liquids production reflects the use of advanced drilling methods, including hydraulic fracturing and horizontal drilling. These techniques have led to higher production in areas such as the Bakken Region, Marcellus Region, Eagle Ford play, and Permian Basin, and have greatly increased U.S. oil and natural gas production.

This is a snapshot of America’s energy revolution – the fundamental shift from energy scarcity to abundance that would have been unthinkable less than a decade ago. The shift is the result of surging oil and natural gas production using advanced hydraulic fracturing and horizontal drilling, harnessing oil and gas reserves in shale and other tight-rock formations. Safe, responsible energy development has made the United States the world’s No. 1 natural gas producer, and the U.S. could become the world’s top producer of crude oil related liquids before the year is out, the International Energy Agency reports (h/t Financial Times.com, subscription required). EIA projects September output of crude and liquid fuels at more than 12 million barrels per day:

liquids 

This unquestionably is great news. But let’s put it into a real-world context: The U.S. energy revolution is neither an accident nor some fantastic stroke of good fortune. It’s the product of vast resource wealth, technologies like advanced fracking and horizontal drilling, a robust oil and natural gas industry employing some of the highest-skilled workers in the world and private investment which, in partnership with state and local governments and private landowners, is redefining energy entrepreneurship.

The natural follow-up question: How do we keep this energy revolution rolling, to keep increasing home-grown energy while creating jobs and boosting our economy? Answer: By choosing the right energy policies for the future, as well as the leadership needed to implement them.

JG_coastalAPI President and CEO Jack Gerard underscored these issues during a speech at the North Carolina Coastal Energy Summit in Wilmington – an apt venue given the potential for energy development in that state, especially if access to the Atlantic outer continental shelf can be gained.

Gerard said America needs political leaders who understand that all domestically produced energy is essential to the country’s future and that energy is a dynamic driver of economic growth. He said the United States isn’t getting that kind of leadership from the Obama administration:

“The United States is the world’s leading producer of natural gas and will, in very short order, become the world’s leader in crude oil production, not because of government regulation, investment or leadership, but in spite of it. America is a global energy leader because of the hard work, creativity and innovation of the private sector. While we appreciate President Obama’s fine speeches on energy policy, and we are proud of the gains we’ve made during his time in office, unfortunately, too often, this administration has been an obstacle when it comes to energy development and production.”

Examples:

  • 87 percent of federal offshore areas are off limits to oil and natural gas production.
  • Onshore, the number of drilling permits issued on federally controlled land dropped 43 percent from 2008 to 2013, according to the Bureau of Land Management. The actual number of wells drilled dropped 52 percent.
  • A Congressional Research Service report found that in federal areas, production from 2009 through 2013 was down 6 percent for crude oil and 28 percent for natural gas. On private and state lands, oil production is up 61 percent and natural gas 33 percent.

Gerard:

“Too much of our nation’s energy resources are off limits because of short-sighted federal government policies, outdated assumptions or political agendas that have nothing to do with American energy security or global energy leadership, but everything to do with short-term electoral politics. … While it is true that the Obama administration has evolved, somewhat, from their original hostile and ill-informed position that fossil fuels were a social ill that needed to be solved, the plain fact remains that his administration’s energy policies have, on balance, dampened our nation’s energy outlook.”

The choice going forward is for forward-looking leaders who understand America’s energy opportunity while rejecting a “false narrative,” as Gerard put it, that’s being advanced by those who’re not for safer oil and natural gas development – but are for no energy development, offering little in the way of a realistic plan for the world they envision. It’s an extreme view that Americans reject in public polling but one, unfortunately, that has had the administration’s ear.

The choice before Americans is one of opportunity, growing prosperity and greater national security or one of energy scarcity, economic constraint and less security in the world. Gerard:

“Now is not the time to pull back or impede one of the few bright spots in our economy.  Now is not the time to deny the millions of people who are underemployed, or college graduates living in their parents’ basements, or working two or three part-time jobs the opportunity of a well-paying career, based on the misrepresentations advanced by anti-oil advocates. Because make no mistake: Those who are leading the anti-oil movement have as their ultimate purpose an economy without fossil fuel. Their vision for our nation and the world is of decline and a lower standard of living that most of us would find intolerable.” 

It’s America’s energy, America’s choice. Gerard said getting energy policy right is critical right now, requiring leaders at all levels of government who will pursue a “fact-based, forward-looking energy policy” that positions the United States to be a “global energy leader well into the future.” Gerard:

“The question we must answer is whether our nation will pursue policies that encourage American global leadership or stifle it. … We need leaders who reject the outdated political ideology of the professional environmental fringe and the political dilettantes who advance the irresponsible and unrealistic “off fossil fuel” agenda. Because if we get our energy policy right today, we can be the generation that erases what for decades has been our country’s most potent and intractable economic vulnerability, dependence on energy resources from less stable regions and countries hostile to our goals, ideals and way of life.” 

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.