“We’re having a revolution. And we’re just scratching the surface.”—G. Steven Farris, CEO of Apache Corporation.
That quote comes from an illuminating article entitled “U.S. Inches Toward Goal of Energy Independence,” published March 22, 2012 by The New York Times. Ironically, the article came out at the same time President Obama was pictured at a TransCanada pipe yard near Cushing, OK, pledging to expedite the southern leg of Keystone XL along with other necessary infrastructure.
No doubt the Times–along with the president–have had to be dragged kicking and screaming to the realization that a New Energy Order is now upon us–but both seem to realize there is no turning back.
The article is a balanced perspective of the changes, both technologically and politically, that are changing the nation’s energy landscape at a dizzying pace that has taken everyone by surprise. So much so, that the full scope of this New Energy Order will take years to sort out, but, if we play our cards right, the book on strategic relations around the world will be rewritten.
The article credits the “turnabout” as a result of “industry-friendly policies started by President Bush and largely continued by President Obama – many over the objections of environmental advocates – as well as technological advances.”
The U.S. has reduced oil imports from OPEC by more than 20% in the last three years (primarily because of the economic situation and less so because of increased vehicle fuel standards). The U.S. has become a net exporter of refined petroleum products such as gasoline for the first time since 1949. In 2011, the nation exported a record average of 660,000 b/d of gasoline, reports the Energy Information Administration.
Oil production in the U.S. fell to 4.95 million b/d in 2008, but has risen to an estimated 6 million b/d in 2012 with the Energy Department projecting that it could reach 7 million b/d by 2020, and some experts even surmising that 10 million b/d is reachable – matching Saudi Arabia.
In February, U.S. and Mexico signed an agreement to jointly explore for oil and gas in the shared maritime border in the Gulf of Mexico, though the return to drilling in the Gulf still lags. Efforts are also under way to expedite oil development off the coast of Alaska.
Natural gas production has increased each year after 2005 after a long period of relatively flat production. Natural gas net imports peaked in 2007, falling successively in each year since, said the EIA. Now so much natural gas is available that prices seem likely to remain in the $2 per Mcf range for at least the rest of the year. Instead of importing liquefied natural gas, companies are seeking to export LNG. Industries that use gas as a feedstock are resurfacing in the U.S. because of a guaranteed long-term supply of cheap fuel.
Michael Levi, energy and environmental senior fellow at the Council On Foreign relations, offered this view in the Times: “There is no question that many national security policy makers will believe that they have much more flexibility and will think about the world differently if the U.S. is importing a lot less oil. For decades, consumption rose, production fell and imports increased, and now every one of those trends is going the other way.”
One comment the president made in Oklahoma reflects what dozens of oilmen told me when I wrote “The Oil Makers, An Insider’s Perspective of the Petroleum Industry,” 20 years ago. This nation must must follow an “all-of-the-above” energy policy from a variety of energy sources, including fossil and bio fuels, wind and solar.
“We want every source of American-made energy,” the president asserted.
So I make these predictions: the Keystone XL pipeline will be built in total, and after Nov. 6, the oil and gas industry will have a different relationship with whoever sits in the White House – if they want it.
You don’t turn your back on what already works.