Posted June 1, 2015
Pittsburgh Post-Gazette op-ed (Eberhart): ... Since 2000, global LNG demand has grown an estimated 7.6 percent per year. And that rate is expected to increase: Ernst & Young predicts that by 2030 global demand will reach 500 million metric tons, doubling 2012 levels.
At the same time, because of the surge of natural gas from American shale, the United States is awash in the stuff, with domestic natural gas production increasing 41 percent in the past decade alone.
Ten years ago we were an LNG importer. Today we’re the world’s largest natural gas producer.
And with the amount of technically recoverable natural gas in the United States 100 times greater than our current consumption, we have a boon to the economy that is expected to contribute up to 665,000 net jobs and $115 billion to GDP by 2035. We are expected to have enough gas to meet our own needs while also helping to satisfy staggering demand in places like Japan, Korea, India, China and Taiwan.
Clearly, this is an opportunity we don’t want to miss. But a protracted, redundant and expensive approval process could put it just out of reach.
Posted May 28, 2015
Time: As the battle wages on in Congress over President Barack Obama’s signature trade agreements and the needed fast-track trade promotion authority (TPA), the president would be wise to consider alternatives that would enhance his trade legacy and also further our strategic priorities overseas. While energy is not included in the Trans-Pacific Partnership (TPP) or Transatlantic Trade and Investment Partnership (T-TIP) negotiations, many of the same Asian, European, and Latin American partners are calling for greater partnership with the United States on energy issues. By allowing the U.S. to become a stable source of supply to global energy markets, counteracting supply disruptions that will inevitably affect other energy-rich regions, President Obama and Congress can double down on promoting long-term economic growth and reinforcing U.S. foreign policy leadership.
The U.S. can do more with its energy resources to support this strategic vision. A direct way of leveraging this opportunity is to lift the ban on the export of crude oil and accelerate approvals for the export of liquefied natural gas (LNG). A series of policies and laws in the 1970s banned exports of U.S. crude oil with only limited exceptions. This ban is a relic from an age of energy scarcity and should be adjusted to reflect present realities. By working with Congress, and via executive order, the president can start taking steps today to boost U.S. exports.
Posted May 27, 2015
Wall Street Journal commentary (Engler and McGarvey): America’s business and labor leaders agree: President Obama and Congress can do more to modernize the permitting process for infrastructure projects—airports, factories, power plants and pipelines—which at the moment is burdensome, slow and inconsistent.
Gaining approval to build a new bridge or factory typically involves review by multiple federal agencies—such as the Environmental Protection Agency, the U.S. Forest Service, the Interior Department, the U.S. Army Corps of Engineers and the Bureau of Land Management—with overlapping jurisdictions and no real deadlines. Often, no single federal entity is responsible for managing the process. Even after a project is granted permits, lawsuits can hold things up for years—or, worse, halt a half-completed construction project.
Posted May 20, 2015
The Wall Street Journal (Leon Panetta and Stephen Hadley): The United States faces a startling array of global security threats, demanding national resolve and the resolve of our closest allies in Europe and Asia. Iran’s moves to become a regional hegemon, Russia’s aggression in Ukraine, and conflicts driven by Islamic terrorism throughout the Middle East and North Africa are a few of the challenges calling for steadfast commitment to American democratic principles and military readiness. The pathway to achieving U.S. goals also can be economic—as simple as ensuring that allies and friends have access to secure supplies of energy.
Blocking access to these supplies is the ban on exporting U.S. crude oil that was enacted, along with domestic price controls, after the 1973 Arab oil embargo. The price controls ended in 1981 but the export ban lives on, though America is awash in oil.
The U.S. has broken free of its dependence on energy from unstable sources. Only 27% of the petroleum consumed here last year was imported, the lowest level in 30 years. Nearly half of those imports came from Canada and Mexico. But our friends and allies, particularly in Europe, do not enjoy the same degree of independence. The moment has come for the U.S. to deploy its oil and gas in support of its security interests around the world.
Posted May 19, 2015
Oil and Gas Investor: The technology that fueled the U.S. shale revolution could breathe new life into old oil fields outside of North America.
More than 170 mature oil plays worldwide have the potential from horizontal drilling and hydraulic fracturing to produce as much as 141 billion barrels (Bbbl) of oil, according to an IHS report on May 13.
Of the estimated 141 Bbbl of potentially recoverable oil using unconventional techniques, 135 Bbbl exist in plays that would likely require hydraulic fracture stimulation to produce. Roughly 6 Bbbl sit in plays that may not require hydraulic fracturing.
Posted May 14, 2015
Wall Street Journal: After slashing production for months, U.S. shale-oil companies say they are ready to bring rigs back into service, setting up the first big test of their ability to quickly react to rising crude prices.
Last week, EOG Resources Inc. EOG, -0.08% said it would ramp up output if U.S. prices hold at recent levels, while Occidental Petroleum Corp. OXY, +0.93% boosted planned production for the year. Other drillers said they would open the taps if U.S. benchmark West Texas Intermediate CLM5, -0.88% reaches $70 a barrel. WTI settled at $60.50 Wednesday, while global benchmark Brent LCOM5, -0.13% settled at $66.81.
An increase in U.S. production, coupled with rising output by suppliers such as Russia and Brazil, could put a cap on the 40% rally in crude prices since March and even push them lower later in the year, some analysts say.
“U.S. supply could quickly rebound in response to the recent recovery in prices,” said Tom Pugh, a commodities economist at Capital Economics. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months.”
Posted May 13, 2015
The Hill: Sens. Lisa Murkowski (R-Alaska) and Heidi Heitkamp (D-N.D.) have introduced a bill to lift the 40-year-old ban on crude oil exports.
The bill would fulfill one of Murkowski’s biggest energy priorities and allow American oil companies to export crude oil as they do petroleum products. It would also allow exports of condensate, a type of light crude oil.
“America’s energy landscape has changed dramatically since the export ban was put in place in the 1970s. We have moved from energy scarcity to energy abundance. Unfortunately, our energy policies have not kept pace,” Murkowski said in a statement.
“This legislation builds from bipartisan ideas, linking energy security and infrastructure to expanding exports and helping our allies. Our nation has an opportunity to embrace its role as a global energy powerhouse, sending a signal to the world that we are open for business and will stand by our friends in need.”
Posted May 12, 2015
Encana President and CEO Doug Suttles participated in the U.S. Chamber of Commerce’s CEO Leadership Series last week with a luncheon address and a Q&A session with Linda Harbert of the Institute for 21st Century Energy. Highlights of the conversation below. Suttles joined Alberta-based Encana as president and CEO in June 2013. He has 30 years of oil and natural gas industry experience in various engineering and leadership roles. Before joining Encana, Suttles held a number of leadership posts with BP, including chief operating officer of BP Exploration & Production and BP Alaska president.
Q: You opened your talk by saying I’m a North American energy company. … Can you shed a little light on the differences and similarities between operating in Canada and the U.S.?
Suttles: They’re not as big as many people would think. First of all, in the places we operate – Colorado, Wyoming, New Mexico, Texas, Louisiana and Mississippi, and then Alberta and British Columbia – these are all natural resource states, and they understand that and I think the people and political leaders understand the importance, too. Both countries have high environmental expectations.
Probably the biggest difference you’d really see between them is the remoteness of operations, which creates a unique challenge in Canada. Many of our operations are away from large towns and cities … But you have an environment where I think people understand the benefits of our industry. They promote the industry, they support it.
Posted May 11, 2015
Breaking Energy Opinion (Thorning): The Department of Energy recently approved an application from Alaska LNG to export natural gas. But there’s a catch: these exports can only go to nations where the United States has a free-trade agreement in place.
Never mind the fact that the top markets for LNG are India, China, and Japan, where we don’t have free-trade agreements set up.So essentially, the company is stuck alongside the 20-plus U.S. natural gas companies that are awaiting approval to sell abroad. Some have been waiting for nearly three years.
Despite the rapid expansion of the American energy sector, the American regulatory apparatus hasn’t kept pace with the industry’s growth. New exploration techniques like fracking have opened up giant swaths of underground energy reserves in places like North Dakota and Pennsylvania. And the operations established to dig up the embedded oil and natural gas have created hundreds of thousands of new jobs and driven billions in new economic activity.
But now, unnecessary regulations are stifling firms with outdated rules. Most notably, the federal approval process energy producers have to navigate in order to sell in foreign markets is extremely restrictive. It’s needlessly difficult for firms to ship surplus oil and gas to eager customers abroad.
Posted May 7, 2015
The oil and natural gas industry’s recent tax revenue and economic contributions to the Commonwealth of Pennsylvania look like this: more than $630 million through the state’s existing local impact fee since 2012, including $224 million in 2014 alone; more than $2.1 billion in state and local taxes; annual contributions to the state economy of $34.7 billion, boosting the bottom lines of more than 1,300 businesses in the energy supply chain.
Gov. Tom Wolf, who has proposed new industry taxes, says the state is “getting a bad deal.” We suspect a lot of states would like to have things so rough.
Nevertheless, the governor is pushing for an additional natural gas severance tax of 5 percent on the gross market value of production, plus a fixed fee of 4.7 cents per thousand cubic feet (Mcf) produced. The governor also wants an artificial floor of $2.97 per Mcf regardless of the actual price of natural gas. All suggest unfamiliarity with the story of the goose that laid golden eggs.