POWER March 2012 - 6

SPEAKING OF POWER
Abundance of Energy
P
resident Obama's Jan. 24 State of
the Union address did not convince
me that the nation should, in his
words, " double down " on future clean
energy investment. America's abundance
of oil and gas should be the foundation
upon which to build a comprehensive
national energy policy, not subsidies for
government-favored energy technologies
and overreaching energy regulations.
I agree with President Obama's comment
that " nowhere is the promise of innovation
greater than in American-made
energy, " although we differ on which
forms of American-made energy should be
developed. Let me examine his State of
the Union comments on natural gas production,
oil reserves, and climate change.
More Than a Gas Glut
The Energy Information Administration's
(EIA's) Annual Energy Outlook 2012 Early
Release (AEO2012ER), made public the day
before the president's annual address to
Congress, predicts that the U.S. will become
a net exporter of natural gas by 2020 and
that natural gas will " fuel a growing share
of electric power generation. " Tapping natural
gas supplies located more than a mile
underground was a colossal technology
breakthrough that will pay tidy dividends
to all Americans for decades to come.
The quantities of shale gas now produced
are enormous and are expected to quickly
grow for many years (23% today and 49%
by 2035, according to the AEO2012ER),
more than offsetting the declining quantities
of natural gas produced from conventional
well-drilling techniques. These
discoveries were the result of investment
by private energy companies, not by government
assistance or subsidy. Instead of
celebrating and encouraging additional gas
discoveries, the administration is now hyper-focused
on adding an additional layer
of federal regulation on the gas industry.
Massive Oil Reserves
The president's statement about American
oil reserves is misleading. The president
stated that America has " only 2 percent of
the world's oil reserves, " a statistic often
cited as justification for spending billions
6
of dollars on clean energy investments
and carbon controls. According to the EIA,
that 2% statistic (about 20 billion barrels)
represents " proven reserves " rather than
" technically recoverable reserves, " a much
better measure of how much known oil
tion is on private land. North Dakota's
overall oil production, growing 250%
over the past decade, is out of the federal
government's reach. The president's
single-handed denial of the Keystone XL
pipeline demonstrates that he is not truly
The U.S. does not have a shortage of oil,
just a shortage of government policies that
promote recovery of the fuel.
is available for recovery. Proven reserves
describe known reservoirs that have been
thoroughly analyzed and can be economically
tapped. Technically recoverable oil is
oil that can be recovered using existing
drilling and production technologies without
reference to economic profitability.
Technology innovation is rapidly closing
that economic gap every day, much like
the technology that advanced unconventional
gas.
According to EIA estimates, there are
1.4 trillion barrels of oil (about 200 years'
worth at today's rate of consumption) that
are technically recoverable in the U.S.,
out of a total reserve of 3.7 trillion barrels
of oil in the ground. The only logical
conclusion that can be made is that the
U.S. does not have a shortage of oil, just a
shortage of government policies that promote
recovery of the fuel.
The president, in his speech, then noted
the increased oil production in the U.S.
that has occurred in recent years. " American
oil production is the highest that it's
been in eight years. That's right-eight
years. Not only that-last year, we relied
less on foreign oil than in any of the past
16 years, " said Obama.
True statements all, yet none of these
accomplishments occurred as a result of
government policy. In fact, the EIA reports
that oil and natural gas production
on federal lands has fallen by over 40%
since 2000, yet over the same period, oil
production on private and state lands has
risen 11% and gas production has risen
by 40%. For example, the oil coming from
North Dakota's enormous Bakken formawww.powermag.com
interested
in further reducing imports of
foreign oil from outside North America.
Carbon Emissions Dropping
The president segued from oil and gas policy
to his wish for Congress " to pass a comprehensive
plan to fight climate change. " The
stated goal of climate change legislation is
to reduce CO2
emissions from industry, prinand
climate change
cipally the power generation industry. Reduce
anthropogenic CO2
will slow or cease, or so the theory goes.
What the president failed to mention in his
address is that the increasing use of natural
gas helps explain why the U.S. is already
making exceptional progress in reducing
CO2
the accounting measure used: per dollar
spent on energy, per capita, or CO2
In fact, the EIA predicts that CO2
will drop over 40% through 2035.
per GDP.
per GDP
Wrong Energy Policy
The president missed an opportunity to
propose economic policies built on the
firm foundation of world-leading reserves
of fossil fuels and the very real possibility
of true energy independence. Instead, he
again described an energy policy-built
on energy subsidies, further intervention
into the energy markets, and overreaching
executive orders-that is not sustainable.
Which policy path will stimulate private
infrastructure investment and establish
millions of new well-paying jobs that this
country desperately needs? ■
-Dr. Robert Peltier, PE is POWER's
editor-in-chief
POWER | March 2012
emissions. The AEO2012ER shows that
CO2 emissions are in freefall, regardless of
http://www.powermag.com
POWER March 2012

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