Released January 08, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. has attained a level of energy self-sufficiency unseen in generations, but "outdated and misguided" policies, as well as wrongheaded potential future policies, could curtail or even reverse the domestic energy revolution, Mike Sommers, president and chief executive of the American Petroleum Institute (API) (Washington, D.C.), told reporters Tuesday during a press briefing preceding release of the organization's annual "State of American Energy" report.
U.S. crude oil production averaged about 12 million barrels per day (BBL/d) in 2019, more than double what is was a decade ago, at the start of the "American energy revolution." The U.S. became a net exporter of hydrocarbons last year, sending an average of 89,000 BBL/d of oil to foreign nations.
But there is talk among Democratic presidential candidates, some state and local elected officials and some non-government organizations, of banning hydraulic fracturing, Sommers said, which could:
Abundant, low-cost supplies of domestic natural gas, produced by hydraulic fracturing, have displaced coal for power plants in the U.S. and around the world, thus leading to lower greenhouse gas emissions, he noted. "The U.S. leads the world in carbon dioxide (CO2) emissions reduction, and I'd take our environmental record and compare it to anyone's."
Several reporters asked the API chief about methane emissions, particularly in the Permian Basin and Bakken Shale, which have received increased media coverage recently. "This industry has no interest in flaring methane," Sommers said. "We need to keep the product in the pipe so we can get it to the market." Sommers said the methane issue pointed up the need to "get more infrastructure online so we can move the product from where it is produced to where it is needed."
One reporter remarked that Sommers' was sounding defensive on methane emissions, to which he replied, "We're not on the defensive. We're going on the offensive to tell our story."
In a report accompanying Sommers' address, the trade group noted that $1 trillion of new investment in infrastructure would be needed to keep up with rising U.S. oil and gas demand through 2035. "Pipelines are the safest and most efficient way to transport natural gas and petroleum for everyday use," said the report, State of American Energy 2020. "Over the past five years, liquids pipeline mileage increased by nearly 12% to accommodate America's energy production growth. Infrastructure expansion will ensure that our abundant, homegrown energy reaches American households, businesses and U.S. trading partners."
In addition to expanding U.S. energy infrastructure, the API report focused on these other "policy priorities to continue energy progress."
U.S. crude oil production averaged about 12 million barrels per day (BBL/d) in 2019, more than double what is was a decade ago, at the start of the "American energy revolution." The U.S. became a net exporter of hydrocarbons last year, sending an average of 89,000 BBL/d of oil to foreign nations.
But there is talk among Democratic presidential candidates, some state and local elected officials and some non-government organizations, of banning hydraulic fracturing, Sommers said, which could:
- Drive up home energy costs by $900 million through 2030
- Reduce U.S. household income by $6.3 trillion
- Cause $7.1 trillion in potential losses to the U.S. economy
- Cost as many as 7.3 million people their jobs
Abundant, low-cost supplies of domestic natural gas, produced by hydraulic fracturing, have displaced coal for power plants in the U.S. and around the world, thus leading to lower greenhouse gas emissions, he noted. "The U.S. leads the world in carbon dioxide (CO2) emissions reduction, and I'd take our environmental record and compare it to anyone's."
Several reporters asked the API chief about methane emissions, particularly in the Permian Basin and Bakken Shale, which have received increased media coverage recently. "This industry has no interest in flaring methane," Sommers said. "We need to keep the product in the pipe so we can get it to the market." Sommers said the methane issue pointed up the need to "get more infrastructure online so we can move the product from where it is produced to where it is needed."
One reporter remarked that Sommers' was sounding defensive on methane emissions, to which he replied, "We're not on the defensive. We're going on the offensive to tell our story."
In a report accompanying Sommers' address, the trade group noted that $1 trillion of new investment in infrastructure would be needed to keep up with rising U.S. oil and gas demand through 2035. "Pipelines are the safest and most efficient way to transport natural gas and petroleum for everyday use," said the report, State of American Energy 2020. "Over the past five years, liquids pipeline mileage increased by nearly 12% to accommodate America's energy production growth. Infrastructure expansion will ensure that our abundant, homegrown energy reaches American households, businesses and U.S. trading partners."
In addition to expanding U.S. energy infrastructure, the API report focused on these other "policy priorities to continue energy progress."
- Support American Energy Development: "The federal government should expand offshore natural gas and oil leasing opportunities to promote continued domestic production," the report said, because "offshore natural gas and oil reserves can take over 10 years to develop and will help to secure our country's long-term security. Transparent, streamlined and expedited federal permitting processes are necessary for the timely review of natural gas and oil production -- which in turn promotes economic growth for local communities, investments in parks, roads, and schools, and good-paying jobs."
- Remove U.S. Trade Barriers and Open Global Markets: On this issue, the normally free-trade, Republican-leaning trade group has taken exception to some of the Trump administration's actions on trade. While API supported the U.S.-Mexico-Canada Agreement (USMCA), it parted company with the president on the trade war with China, which has cost domestic oil and gas companies billions of dollars of lost revenue. "The U.S. needs to de-escalate the trade war with China through commitments that remove U.S. tariffs that still remain on hundreds of industrial components that are used in the U.S. natural gas and oil industry and that remove retaliatory Chinese tariffs against U.S. exports of crude oil, LNG, and chemicals products," the report urged.
"We're a free-trade organization but we're very discouraged on trade with China," Sommers said on Tuesday. "We're excited about Phase One tariff reductions (which did not include Oil & Gas) and we're very eager for a Phase Two agreement."
A reporter said the trade war has cut U.S. oil exports to China by 50% and gas exports by an even greater level. Sommers could not immediately confirm those numbers.
Click on images at right to see graphics on how U.S. oil and gas exports to China have suffered since the trade war started.
- Level the Playing Field for Transportation: The API report slammed subsidies for electric vehicles and renewable transportation fuels like ethanol: "Consumer-friendly transportation policies require a free-market approach to ensure a level-playing field for all Americans. Government mandates and subsidies harm consumers by unfairly disrupting market decisions. For example, biofuel mandates distort the marketplace to use products that can damage vehicles, while electric vehicle (EV) tax credits subsidize upper-income households purchasing luxury vehicles at the expense of taxpayers."
- Adopt Climate Solutions: Sommers noted that API members support the use of carbon capture and sequestration (CCS) and have backed draft legislation that supported CCS. "API and its members commit to delivering solutions that reduce the risks of climate change while meeting society's growing energy needs," State of American Energy 2020 said. "We support global action that drives greenhouse gas emissions reductions and economic development. The natural gas and oil industry is part of the global solution and plays a vital role in developing and deploying technologies and products that continue to reduce GHG emissions while advancing human and economic prosperity."
In response to a reporter's question on renewable energy, the API CEO said, "Renewable energy will have a key role in the power mix, and we're excited about that. But you need natural gas to back up renewable generation." - Unlock Innovation and Partnerships: The API report pointed to its Environmental Partnership, where companies in the U.S. oil and gas industry are exchanging best practices to lower methane emissions, as a practical way to improve field performance and lower methane emissions. The trade group said it is committed to "continuously improving the industry's environmental performance. ... Constant innovation, smart regulations, collaborative efforts, and industry initiatives, help to ensure that industry is providing affordable and reliable energy to consumers, while reducing its environmental footprint."
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