Powell: America must start thinking beyond energy independence

Original Article

When President Barack Obama was elected in 2008, energy independence was considered impossible, with imported oil accounting for 66 percent of the oil refined in the U.S. That predicament was a troublesome weak link in U.S. national security.

But unexpectedly, with the technology-driven energy boom that began a half dozen years ago, that longstanding vulnerability is close to being remedied. What Americans can do now is understand and support three key initiatives that work together to provide more self-sufficiency at home and a stronger energy position in the world.

The first game changer started with extracting oil from shale deposits on private lands in the continental U.S. with novel horizontal drilling and fracking extraction technologies. The Bakken formation in North Dakota, Eagle Ford in Texas and the Monterey shale in California are the best known, having some 45 billion recoverable barrels. But there are many lesser known and undeveloped deposits, like the Wolfcamp shale in Texas, which is estimated to have 50 billion in reserves. These four deposits alone more than quadruple 2010 estimated U.S. oil reserves.

But the greatest bonanza may be on public land. The Bureau of Land Management (BLM) reports that, “More than 70 percent of American shale oil … lays on federal land in Colorado, Utah, and Wyoming … an estimated 1.23 trillion barrels of oil — more than 50 times the nation’s proven conventional oil reserves.” However, not all shale deposits can be developed economically because shale drilling is more costly than conventional drilling.

A second factor is successful extraction of crude oil from oil sands, such as those in Alberta, Canada. Canada has the world’s third largest proven oil reserves and is far more dependable for imports than OPEC countries of the Middle East, Africa, or Venezuela. The problem with Canadian heavy crude is the shortage of refineries that can handle it. Thus, the Keystone XL Pipeline was proposed in 2008 as the most efficient and safest way to transport the oil to Gulf coast plants in Texas and Louisiana designed for refining heavy crude into gasoline, diesel and jet fuel by-products.

The third contributing factor for U.S. energy independence is the shale fracking revolution in natural gas production and the substitution of natural gas for oil. The U.S. is now the Saudi Arabia of the world in natural gas, producing more than any other nation. As the U.S. retrofits power plants and internal combustion engines to burn natural gas, the consumption of oil naturally declines

U.S. energy independence would be further along, but for the Obama administration’s green obstructionism and anti-fossil fuel environmentalists who find his favor. Now at a time when an export capacity could bolster NATO’s energy needs to counter Vladimir Putin’s natural gas blackmail and further land grabs in the Ukraine, we have none. Consider:

  • U.S. public lands remain off limits to oil and gas exploration and development.
  • The 1,200-mile Keystone XL pipeline remains stalled after five plus years — notwithstanding complaints from grain producers and manufacturers that rail lines are clogged with oil transport and prone to accidents and spills, while 175,000 miles of existing pipeline already safely transport oil and gas all over the country.

Reducing energy costs by increasing supply and providing more jobs are real benefits, but protecting national security with energy independence and having the capacity to sell and export natural gas to allies in the face of tyrants, terrorists and bad actors make this a top priority.

Scott Powell is senior fellow at the Discovery Institute in Seattle.

Scott S. Powell

Senior Fellow, Center on Wealth and Poverty
Scott Powell has enjoyed a career split between theory and practice with over 25 years of experience as an entrepreneur and rainmaker in several industries. He joins the Discovery Institute after having been a fellow at Stanford’s Hoover Institution for six years and serving as a managing partner at a consulting firm, RemingtonRand. His research and writing has resulted in over 250 published articles on economics, business and regulation. Scott Powell graduated from the University of Chicago with honors (B.A. and M.A.) and received his Ph.D. in political and economic theory from Boston University in 1987, writing his dissertation on the determinants of entrepreneurial activity and economic growth.