Thursday, January 12, 2012
“We can't solve problems by using the same kind of
thinking we used when we created them.” - Einstein.
In March 2011, the Obama administration released “The Blueprint for a Secure Energy Future.” (Obama’s Blueprint can be found here: http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf)
This report calls for the development of America’s energy supplies through the use of innovation and technology emphasizing that safe responsible development of our domestic energy supplies is necessary to position the United States as leaders in the global energy economy. A critical element to reaching these goals: “Expand safe and responsible domestic oil and gas development and production.”
While meeting our energy needs is one of the most fundamental issues for the economy, often there is a gap between public expectations and the realities of exploration, production and development. The lack of certainty over rules, politics and expectations defines the reality of our energy landscape. This affects the consumer because due to the complexities of the energy landscape, over burdening one industry can cause a ripple effect and negative consequences to the environment, our energy security and our economy. It is therefore beneficial for the consumer to understand the impact that certain regulations have on development.
Natural gas is a key resource in reducing U.S. energy dependency because we have the supply, it generates low air emissions (natural gas electricity generation produces virtually no mercury emissions, no sulfur-dioxide emissions and no lead emissions), and it is affordable.
The good news is that unconventional gas discoveries have increased total undiscovered recoverable natural gas resources by 100% since 1999. This statement is truly remarkable because a little more than a decade ago, the nation’s leading energy analysts believed that the United States’ supply of natural gas would be depleted in 57 years. With that sort of supply outlook, there was no way to broadly integrate natural gas into American markets. “This revolutionary increase in natural gas supply means that by 2035, less than 1% of the nation’s overall natural gas usage is projected to come from foreign imports.” Importantly, our domestic natural gas supply directly impacts our energy security.
The bad news is that while western independent oil and natural gas producers are able to help solve some of our nation’s problems, there are significant impediments to domestic production that negatively impact the full promise of western energy production. Some of these challenges are explained in the Blueprint for Western Energy Prosperity, a report prepared for Western Energy Alliance by EIS Solutions.
The Blueprint identifies key findings (http://westernenergyalliance.org/blueprint/) relating to the benefits of western production:
1. The West is projected to generate 1.3 million barrels of domestic oil and condensate production a day by the year 2020, an amount that exceeds the current daily oil imports from Russia, Iraq, and Kuwait combined.
2. The West has the potential to produce 6.2 trillion cubic feet (Tcf) of natural gas annually by 2020, an additional one Tcf from 2010 levels.
3. Combined, western oil and natural gas is projected to produce more energy on a daily basis than the total U.S. imports from Saudi Arabia, Iraq, Kuwait, Venezuela, Colombia, Algeria, Nigeria, and Russia.
4. Investment in western energy development could increase to $58 billion annually by 2020. This prospective growth is more than double the investment made in 2010.
5. The number of direct, indirect and induced jobs in the oil and natural gas sector is projected to increase by 16% to 504,120 by 2020.
6. Annual state severance tax collections in the West are projected to increase from $2.1 billion in 2010 to $5.6 billion by 2020, generating a significant revenue windfall for schools, infrastructure and other basic services.
According to the report however, government policies are significantly undermining these projections of growth, investment and expansion by increasing risk, uncertainty and regulatory burden. “New regulations implemented in the last two years have added three additional layers on top of a process that already involved five layers of burdensome regulations.”
Policies and regulations should be clear and reasonable to prevent introduction of uncertainty. Uncertainty prevents economic growth, job creation and government revenue. The report recommends specific actions that must be taken if America is to reap the full benefit of western energy:
1. A thorough review and comprehensive reform of the entire federal onshore process, including leasing, project environmental analysis, and permitting is needed.
2. A moratorium on new and expanded layers of regulation is needed. The industry is committed to continued environmental improvements and best management practices, but through a more efficient, predictable means than the current and ever expanding maze of haphazard federal regulation. In particular, legislative and administrative efforts to take jurisdiction for regulating hydraulic fracturing away from the states and impose federal restrictions should be rejected.
3. Measures must be taken to limit litigation that unreasonably obstructs domestic energy productions and economic growth.
4. Renewable portfolio standards should be amended to allow natural gas to compete for electricity generation capacity on the basis of fuel-neutral performance criteria such as cost and emissions profile.
5. State and federal governments should adopt market-based alternative transportation policies that are fuel and technology neutral to remove barriers that prevent natural gas from fully competing as a transportation fuel.
By working together to identify barriers to energy development in Colorado and the west, we can develop a path forward to the benefit of all Americans.
Kathleen Sgamma, Vice President of Government Affairs for Western Energy Alliance, will be discussing the Blueprint for Western Energy Prosperity on ICOSA radio’s Connect and Collaborate segment with Jan Mazotti http://www.theicosamagazine.com/icosaradio, Kelly de la Torre and Experience Pros radio http://www.experiencepros.com/ on Monday, January 16th at 11:20 AM on 560 AM in Denver. A webcast of the show can be found here: http://radiotime.com/station/s_33938/The_Source_560.aspx.