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With new technology tapping unconventional resources, the life of North American oil and gas reserves will be lengthened by several decades.
Contrary to conventional wisdom, the North American oil resource base also could provide substantial supply for decades ahead, according to a major new report by the National Petroleum Council (NPC) titled Prudent Development: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources.
Released on Sept. 15, the 18-month study cited four major conclusions. One of those is that the North American oil resource base offers substantial supply for decades ahead and could help the United States reduce, but not eliminate, its requirements and costs for oil imported from outside North America.
“This landmark study represents a comprehensive and candid view of our nation’s energy future that we hope will serve as an important tool in creating an informed energy policy for America,” said Jim Hackett, chairman and chief executive officer, Anadarko Petroleum Corp., and chairman of the NPC’s Resource Development Committee, which conducted the study at the request of U.S. Secretary of Energy, Dr. Steven Chu.
“Prudent development of our domestic energy resources, particularly natural gas and oil, drives economic development, creates jobs, and enhances our nation’s energy security, and this report recognizes those opportunities, as well as candidly addresses the challenges and potential solutions. It also suggests that natural gas is a good near-term answer for reducing America’s carbon footprint.”
Not surprisingly, the study concluded that the potential supply of natural gas is far greater than was estimated even a few years ago. In 2007, it looked as though a shortage of natural gas would lead to higher imports of liquefied natural gas (LNG). However, with LNG imports hitting the lowest levels in years, that has not occurred because of the domestic gas resources and the technology to develop those resources.
As noted, “These resources have the potential to meet even the highest projections of demand reviewed by this study.”
And, given the success in tapping unconventional oil and gas resources, there are significant, new opportunities for global technological leadership and an expanded global role for U.S. oil and gas companies, stated the study.
The third conclusion was that North America would still need the oil and gas resources along with strides in energy efficiency and alternative energy.
“Americans will need natural gas and oil for much of their energy requirements for the foreseeable future. Moreover, the natural gas and oil industry is vital to the U.S. economy, generating millions of high-paying jobs and providing tax revenues to federal, state, and local governments,” the report stated.
Finally, the study emphasized that the benefits of gas and oil would result from working in an environmentally responsible way.
“The critical path to sustained and expanded resource development in North America includes effective regulation and a commitment of industry and regulators to continuous improvement in practices to eliminate or minimize environmental risk. These steps are necessary for public trust,” according to the study.
Without the industry improving its environmental, safety and health practices, access to available resources could be undermined. For greater access for the industry, consumers, and all other stakeholders, industry participants must continually improve their environmental, safety, and health practices to preserve the benefits for all.
For the study, the NPC examined a broad range of energy supply, demand, environmental, and technology outlooks through 2050, including issues related to public health, safety, environmental risks associated with production and delivery practices, and opportunities for natural gas to reduce emissions from energy use.
In the study, the NPC proposed five core strategies. The first is to support prudent development and regulation of natural gas and oil resources. Those measures could include councils of excellence covering environmental, safety, and health practices. Corporate and regulatory commitment to advancing environmental performance is needed. Affected communities must be engaged. Policies must also be structured to support prudent development of and access to resources.
Second, there must be a mechanism to put a price on greenhouse gas (GHG) emissions that is economy-wide, market-based, predictable, transparent and part of a global framework. It will be difficult for the U.S. to reduce GHG emissions without that mechanism. Options must be kept open for carbon capture and sequestration, full fuel cycle and technology choices, and developing methodologies to minimize environmental footprints.
A focus on energy efficiency is the third strategy. Policies are needed that support continued progress to adopt cost-effective efficiency standards for buildings and appliances. Disincentives for utilities to deploy efficiency measures should be removed. Barriers to combined heat and power as a way to increase the efficiency of electricity production should be removed.
Fourth, the function of energy markets should be enhanced with policies and regulations that improve mechanisms for utilities to manage the impacts of price volatility, harmonize market rules and service arrangements between the wholesale natural gas and electric markets. Environmental regulatory certainty affecting investments and fuel choices in the power sector must be increased.
Finally, a skilled workforce must be developed through increased public and private financial support for educational and training activities.
The study was approved by the NPC at its 121st meeting today, and formally presented to Chu. The study is available on the NPC website, where a webcast of the meeting and the press conference are also available.
Contact the author, Scott Weeden, at email@example.com.