Phil Castle, The Business Times
Christopher Guith cites three factors that bode well for the energy industry — increasing global demand, rising commodity prices and especially a more receptive political environment.
And what bodes well for the energy industry bodes well for Western Colorado and the Grand Valley, said Guith, senior vice president of policy for the U.S. Chamber of Commerce Institute for 21st Century Energy.
Speaking at an event hosted by the Grand Junction Area Chamber of Commerce, Guith offered an overview of the energy market as well as a forecast of what he expects could happen under a new presidential administration and Republican-controlled Congress.
By one estimate, overall global energy demand will grow 56 percent and electricity demand will increase 76 percent between now and 2040, with most of that growth occurring in China, India and other developing countries, Guith said.
By another estimate, new investments of $38 trillion will be required through 2035 to keep pace with rising energy demand, he said.
Energy demand is expected to increase 11 percent in the United States through 2040. Fossil fuels will continue to account for the bulk of that supply, Guith said, although more diverse energy sources mean more stability and reliability.
There’s ample resources to meet increased energy demand, he said. By one estimate of technically recoverable resources, there’s a 120-year supply of natural gas, 206-year supply of oil and a 464-year supply of coal, he said. By another estimate of resources in place, the supply of natural gas and oil stretches to more than 500 years and the supply of coal to nearly 1,000 years. That gives the U.S. the deepest energy resource base of any country in the world. “We outpace everyone.”
Advances in technology, including hydraulic fracturing, have bolstered oil and natural gas production, he said. “What has happened over the last decade has been nothing short of astonishing.”
A 70 percent increase in crude oil production in the U.S. since 2007 topped the combined output of all other countries except for Saudi Arabia and Russia, he said.
But increased production also created a glut in the market that pulled down oil and natural gas prices and, in turn, energy development activity, he added.
Prices have begun to rebound, though, and along with them the counts for oil and natural gas drilling rigs in the United States as well as in Colorado, Guith said.
Given that energy producers can respond more quickly to market conditions, more volatile prices and production levels could follow.
Meanwhile, a more receptive political environment also could bolster the energy industry, Guith said.
The biggest difference, he said, is who’s in charge with Donald Trump as president, Mitch McConnell as majority leader in the Senate and Paul Ryan as speaker of the House. Republican control of both the White House and Congress makes it more likely changes will occur.
President Trump already has made changes with executive orders intended to revive construction of the Dakota Access and Keystone XL pipelines, Guith said.
Such orders also send a message, he said, the administration plans to change energy policies.
Meanwhile, Congress is considering the use of the Congressional Review Act to repeal regulations imposed under the Barack Obama administration, Guith said. The act enables Congress to undo regulations with a majority vote and the signature of the president. While presidents typically are reluctant to repeal regulations imposed under their own administrations, that situation is different with Trump and Obama administration rules, he said.
One of the rules that could be repealed enables the U.S. Bureau of Land Management to regulate methane gas venting and flaring as part of energy development on public lands. The so-called Planning 2.0 rule is designed to reduce greenhouse gas emissions as well as the loss of potential royalties from natural gas production.
Guith called for support of lobbying efforts to repeal the rule in part because he said the BLM has no authority to regulate air quality.
Proposed reforms to the federal tax code and financial regulations also could benefit the energy industry, Guith said, as could increased spending on infrastructure.
Prospects also have improved for plans to construct a liquefied natural gas export facility on the Oregon coast and a pipeline to supply it. The end result of building the Jordan Cove terminal and Pacific Connector Gas Pipeline could be long-term Asian markets for natural gas produced in Western Colorado.