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The Good News
A Revolution In Oil And Gas
2013 May
Pg 3 - The Sunshine Express
Clean Energy Collaboration
ply chains, the job impacts are being felt across
the United States, including in states with no shale
gas or tight oil activity. For instance, New York
State, with a ban presently in effect on shale gas
development, nevertheless has benefitted with
44,000 jobs. Illinois, debating how to go forward,
already registers 39,000 jobs.
The total revenues flowing to governments from
unconventional amounted to $62 billion last year.
Companies are now committing or planning
investments that in total appear to go into the
hundreds of billions of dollars. A large number of
chemical companies, for instance, have announced
plans to build or expand facilities in North Ameri-
ca, with capital expenditures totaling close to $100
billion. Will all be built? Time will tell. But what is
striking is that, half a decade ago, these companies
would have scoffed if they had been told that they
would be investing back into the United States.
The investments are coming both from U.S. based
companies, which are ¡°on-shoring¡± in response to
lower energy costs, and from foreign companies.
Many other kinds of manufacturing firms are also
investing and expanding based upon this growing
business.
The most notable (environmental) impact is in
terms of CO2 emissions. U.S. carbon dioxide emis-
sions from energy consumption are down 13 per-
cent since 2007. The economic downturn is part of
the story. But the most significant part is the result
of natural gas supplanting coal in electric genera-
tion at a rapid rate.
Hydraulic fracturing has been used since the
late 1940s, as already indicated. However, it has
only been recently applied at this scale and with
this degree of intensity in regions that are more
densely populated and that are not accustomed
to oil and gas development. Understandably, the
environmental impacts need to be carefully as-
sessed and monitored, and the public needs to be
confident about these impacts.
In March, 2011, President Obama spoke about
how ¡°recent innovations have given us the op-
portunity to tap¡± large reserves of natural gas,
¡°perhaps a century¡¯s worth of reserves.¡± But he
added that the public needs to be assured that it is
being produced safely.
As a consequence, a subcommittee to the Sec-
retary of Energy¡¯s Advisory Board was estab-
lished to examine the environmental questions. I
served on that committee under Chairman John
Deutch of MIT. Our work identified three major
environmental issues, water, local air pollution,
and community impact. Each, the subcommittee
concluded, needs to be managed with great atten-
tion and can be managed through best practices in
operations and regulation, continuing technologi-
cal innovation, and community engagement. We
see continuing effort going into these endeavors
with, for instance, recycling of water and new ap-
proaches to waste water treatment.
This unconventional revolution has turned
around the direction of imports. U.S. net imports
of oil have declined from a peak of 60 percent in
2005 to about 40 percent today. That is the con-
sequence of surging tight oil production, and
reduced demand, owing to both greater efficiency
and the weak economy.
Moreover, the flow of imports has changed.
Canada now supplies about 27 percent of total
U.S. imports.
Net imports of crude will continue to decline.
But the United States will continue to remain a
net importer for some time. Our import levels are
still higher than they were at the time of the first
oil crisis, in the 1970s. However, we will see the
Western Hemisphere, and North America in par-
ticular, moving towards greater self sufficiency. At
the same time, the very large, technicallyadvanced
refining complex on the Gulf Coast, along with
the shifting domestic product demand, will put
the United States in the position to continue to
expand exports of refined products.
Altogether, the unconventional oil and gas revolu-
tion has already had major impact in multiple
There is a revolution in energy occuring that is
bringing huge changes. To help understand the
immensity of what is happening, here are excerpts
from a very informative testimony submitted by
Dr. Daniel Yergin, Vice Chairman and founder
of IHS Cambridge Energy Research Associates,
for Hearings in February on ¡°America¡¯s Energy
Security and Innovation¡±, to the Subcommittee on
Energy and Power of the House Energy and Com-
merce Committee:
Dr. Yergin: ¡°The United States is in the midst of
the ¡°unconventional revolution in oil and gas¡±
that, it becomes increasingly apparent, goes be-
yond energy itself.
Today, the industry supports 1.7 million jobs, a
considerable accomplishment given the relative
newness of the technology. That number could
rise to 3 million by 2020. In 2012, this revolution
added $62 billion to federal and state government
revenues, a number that we project could rise to
about $113 billion by 2020.
It is helping to stimulate a manufacturing renais-
sance in the United States, improving the com-
petitive position of the United States in the global
economy, and beginning to affect global geopoli-
tics.
The unconventional revolution has unfolded
pretty fast. This Committee has held many im-
portant hearings on energy over the decades. Yet
it is striking to think back to the hearings of even
just half a decade ago, during the turmoil of 2008,
when it was widely assumed that a permanent era
of energy shortage was at hand.
How different things look today. Shale gas has
risen from two percent of domestic production
a decade ago to 37 percent of supply, and prices
have dropped dramatically. U.S. oil output, in-
stead of continuing its long decline, has increased
dramatically, by about 38 percent since 2008. Just
the increase since 2008 is equivalent to the entire
output of Nigeria, the seventh-largest producing
country in OPEC. People talk about the potential
geopolitical impact of the shale gas and tight oil.
That impact is already here.
This development is a story of entrepreneurship
and innovation. Although hydraulic fracturing
dates back to the late 1940s, it took from the early
1980s to the end of the 1990s, in the face of much
skepticism and disappointment, to establish that
natural gas could be economically extracted from
shale rock using that technology. By 2003, it was
successfully yoked with another technology, hori-
zontal drilling, to provide proof of concept.
Still, the dominant conviction for the next few
years was that the United States was going to be-
come increasingly short of natural gas and would
become a large importer of liquefied natural gas
(LNG). Only in 2008 was it observed that U.S.
natural gas production was going up, instead of
down. Many more companies entered into shale
gas development, and the pace of effort intensi-
fied. Since then, output has grown rapidly, indeed
well beyond the capacity of the current market to
absorb it.
It was not until the autumn of 2009 that the shale
revolution became apparent to the policy commu-
nity. And it was only around 2010 that producers
began to shift from focusing on gas production to
producing oil and liquids-rich natural gas using
the same techniques.
While various states had begun to home in on the
economic development aspects of shale gas and
tight oil, it was only in about 2011 that its signifi-
cance for the national economy started to come
into focus. So far, this unconventional revolution
is supporting 1.7 million jobs, direct, indirect, and
induced. It is notable that, owing to the long sup-
ALBERTA, COLORADO MOVE TOWARDS
CLEANER ENERGY FUTURE
The Governments of Alberta and Colorado have
agreed to work together to share ideas, best
practices and information that supports a cleaner
energy future.
The co-operative efforts were discussed and
agreed to after Colorado Governor John Hicken-
looper and Alberta International and Intergov-
ernmental Relations Minister Cal Dallas visited
the oil sands on March 27.
¡°We welcomed the opportunity to explore eco-
nomic development opportunities for Colorado
and see first-hand the operations in Alberta¡¯s
oil sands,¡± said Hickenlooper. ¡°Expectations
are high for North American energy producers
and governments to continue to raise the bar on
environmental management. Colorado looks
forward to building a co-operative relationship
with Alberta that will see both jurisdictions excel
as continental leaders in responsible energy
development.¡±
More than 28 Colorado companies provide
equipment, parts and services to the oil sands.
Dallas commended Governor Hickenlooper for
recently spearheading an initiative between a
number of American states to increase the use of
natural gas vehicles in an effort to reduce green-
house gas emissions and increase fuel efficiency
at a lower cost to consumers.
Dallas said it¡¯s worth a serious look to see
whether Alberta and other provinces can forge
a similar agreement under the Canadian Energy
Strategy.
¡°We applaud Governor Hickenlooper¡¯s vision
and effort to address emissions,¡± said Dallas.
¡°Colorado and Alberta have similar goals and
show leadership on environmental actions.
Alberta is very proud of its leading environmen-
tal actions. However, we are fully committed to
push the bar higher.¡±
Alberta and Colorado have agreed to bring the
agreement on clean energy collaboration to the
summer meeting of Western Governors in Utah
in June. Efforts will be made to strike a working
group between provinces and states to pursue
clean energy initiatives.
Alberta was the first jurisdiction in North
America to require by law all large industry to
take action on greenhouse gas emissions. Our
regulation includes an existing $15 price on
carbon. Through this, Alberta has a clean tech-
nology fund that has generated $312 million and
has already committed $181 million to 49 clean
energy projects. This is in addition to a $1.3-bil-
lion investment in carbon capture and storage
projects.
Over the past 18 months Alberta has taken a
number of other leading environmental actions.
These include an unprecedented commitment to
openness and transparency of energy develop-
ment and environmental management through
an on-line oil sands information portal, a world-
leading oil sands monitoring program, an arm¡¯s
length governance system and a comprehensive
land-use plan for the oil sands region that sets
out vast swaths of protected land.
The Colorado delegation of more than 30 people
toured Edmonton¡¯s world-class Waste Manage-
ment Centre and met with several business lead-
ers. Alberta exports, on average,
$2.27 billion in products yearly to Colorado.
The state key economic sectors include energy
and agriculture. The tour was an effort to foster
strong tied between the two jurisdictions.
(source: www.advancecolorado.com)
dimensions. Its significance will continue to
grow as it continues to unfold.¡±
(Dr. Daniel Yergin is author of The Quest: Energy,
Security, and the Remaking of the Modern World
and received the Pulitzer Prize for his book The Prize.
He serves on the U.S. Secretary of Energy Advisory
Board.)
¡°Just the increase since 2008 is
equivalent to the entire output
of Nigeria, the seventh-largest
producing country in OPEC.¡±
- Dr. Daniel Yergin