As the world’s largest natural gas producer and a solid leader in terms of oil production (see story this page), the U.S. is positioned to transform its economy.
At the Great Plains and EmPower North Dakota Energy Conference in Bismarck on Oct. 14, keynote speaker Karen Alderman Harbert, president and chief executive officer of the U.S. Chamber of Commerce’s Institute for 21st Century Energy, outlined reasons why that transformation could be either irreversible or reversible, depending on factors varying from creative innovation to excessive regulation. She noted that in prior oil booms, the benefits of the development were localized, but today’s energy production is having an impact across the nation. While there are 33 states producing oil and gas in the U.S., the other 17 states are in the supply chain business and some are reaping huge benefits such as Illinois which is sending out more supply than any other state.
“The center of gravity of the world’s oil market could start to shift to North America over time which is a tremendously different oil outlook than we’ve ever had,” Harbert said.
The energy industry also impacts other industries. Harbert said the country has returned to manufacturing of steel and machinery. “It had gone and left, and it is now coming back,” she said.
This energy “renaissance” will bring 4 million new jobs to America, she said, and will generate $2.5 trillion of revenue while committing $5 trillion in private investments. Not having to import oil is very advantageous to the country as well, she added.
“Energy is the largest contributor today to reducing our trade deficit which is a really good thing for the strength of the U.S. dollar,” Harbert said.
The keys to America’s energy success
Harbert outlined six critical components to fuel the oil and gas growth in America. The first is to gain access to producing formations. She said North Dakota has an advantage since oil and gas development is primarily on state and private lands, whereas the country as a whole has increasingly more onshore and 85 percent of offshore property that is off limits due to federal regulation.
“We’re designating more and more of our national lands as permanent conservatories and permanent national monuments,” Harbert said. “In fact, the president just did that in California - another 2 million acres were put off limits last week.”
She said natural gas production is down 33 percent on federal land but up 44 percent on state and private lands. “That’s not sustainable. The federal government is the largest owner of our resources,” she said. “We’re going to have to get more access.”
In addition, she said if the U.S. wants to be a strong part of the natural gas market, export terminals need to be permitted and long term contracts secured because “it won’t wait forever and we need to move quickly.” On the oil side, the export debate will be a very emotional one, she said.
“Most of us grew up in the overhang of an era of scarcity, not like the era of abundance we live in today.” Harbert then told the story of only being able to fill the family vehicle with gasoline on designated days when she was a young girl. “We’re still living, for all intents and purposes, under the energy policy of 1970. We’re going to have to export oil for all the reasons you know all too well on a daily basis here in the Bakken.”
Harbert reiterated the need for more infrastructure and pipeline capacity to move the commodities and said the U.S should take a cue from Canada because it determined energy was an important part of its economy and implemented some permitting reform that now allows permitting to be complete in two years.
“We need to get some surety to the markets that we are in the business to stay in the energy business rather than being just another boom or bust,” she said. Innovation will continue to drive the industry and the added benefit is that those technological advancements can be exported and used around the world.
Public opinion is another key aspect that the industry cannot ignore. She said there are currently more than 375 moratoriums in 21 states on fracking. She pointed out that her agency is in litigation with a number of counties in Colorado that put a ban on fracking.
“If Colorado, which is an energy state, can ban fracking because of a small group of activists who are trying to convince people that it’s going to damage their lungs, then we’re in trouble people,” she said.
She also cited the measure on the ballot in Denton, Texas, that could ban fracking in that community if voters choose to do so in November.
“That would send reverberations across the industry,” she said.
She encouraged the industry to be in the “truth-telling business” and obtain the public’s trust. “We’ve got to be worried about this and be more active … and we need to do this more responsibly.”
A stack of federal regulations
From exploration to transportation to the utilization of energy, Harbert described the federal regulations as stacking up “in a pancake approach” where new regulations are added on to old ones that are no longer relevant to the industry.
“We have an appetite in Washington that is insatiable right now for regulation,” she said.
While the industry’s need for greater certainty is met with more proposed rules and changes, Harbert said North Dakota is taking steps to allow companies to build plants and refineries, but that’s not true elsewhere in the country.
“It is easier not to do it than do it right now,” she said “That is not the America that will be competitive.”
Finally, she pointed to the youth within the population saying the industry needs to make energy jobs attractive for them. She said for every engineer America graduates, China graduates nine.
“So we’re losing that game,” she said. “Fifty percent of minority kids don’t graduate from high school. That’s not a competitive workforce going forward, so having that strong intellectual foundation of skilled and unskilled labor will be hugely important to sustaining the energy revolution that we are witnessing.”
Overall, she commended the industry on its success and said it has the opportunity to rebrand itself as the solution, and not the problem that opponents claim it to be.
“For too long you’ve been tattooed as dirty, greedy, nasty, profit-seeking, but by the way, you’re the ones that are hiring, investing and innovating,” she said. “And I think you should claim that mantle with a great deal of pride.”
