Growing production reduces energy risk, but more is needed

Phil Castle, The Business Times

Christopher Guith

Increasing production of oil and natural gas from unconventional plays in the United States and the development of oil sands in Canada have substantially decreased the risk the U.S. won’t keep pace with growing energy demands.

Still, far more could be done to tap ample resources to not only meet energy needs, but also create jobs, said Christopher Guith, vice president of policy for the U.S. Chamber of Commerce Institute for 21st Century Energy.

There’s at least an opportunity for changing federal policy as rising gasoline prices attract the attention of lawmakers, Guith said during a presentation at the Energy Forum & Expo in Grand Junction. “Congress tends to listen when that happens.”

The Institute for 21st Century Energy has developed an index assessing U.S. energy security risk. The index takes into account more than 40 different factors in calculating a composite score. Guith said increased production of oil and natural gas from shale formations in the U.S. has reduced risk. “It’s having beyond a profound impact.” So has the development of Canadian oil sands.

Nonetheless, more is needed to meet what’s expected will be a 33 percent increase in energy demand in the U.S and a 53 percent increase in energy demand worldwide by 2035, he said.

The good news, Guith said, is projected reserves in the U.S. “We’re sitting on boatloads and boatloads of resources.”

By one estimate of technically recoverable resources, there’s a 120-year supply of natural gas, a 200-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.

Plus, there’s more oil shale in the United States than the rest of the world combined, he added.

Nonetheless, federal energy policy has decreased energy production on public lands even as increased regulation has driven up production costs, Guith said. “The federal government has done a really bad job over the last three or four years to harness those resources.”

A decision by President Barack Obama delaying construction of the full length of the proposed Keystone XL pipeline to carry crude oil from Canada to refineries on the U.S. Gulf Coast dealt another blow not only to increased energy supplies, but also more jobs, Guith said.

The pipeline could create hundreds of thousands of jobs in construction and manufacturing and on down a supply chain extending to nearly every state, he said.

If the pipeline doesn’t ultimately connect Canadian oil sands to U.S. refineries, crude could be piped instead across Canada to the Pacific Coast and sold to Asian markets, including China, Guith said. “We’re going to cut our nose off to spite our face.”