As workers continue to battle the aftermath of the oil spill in the Gulf of Mexico and real questions are being asked about the regulatory and industry safeguards for domestic oil and gas development, the time is now to step back and reflect on our nation’s overall energy needs, current energy policy and consider implementation of a safe and balanced energy policy for America.
In recent days, President Obama has made it clear that despite the current crisis and the panic that some are feeling, he believes in the necessity of American oil and gas development, referring to it as “an essential part of our overall energy strategy.” Consumer Energy Alliance strongly agrees with the President’s view of the importance of oil & gas resources to the nation’s security, economic recovery and future potential for tremendous job and national revenue growth. President Obama, too, has said, “Our dependence on foreign oil endangers our security and our economy.” CEA agrees with the President and recognizes the necessity of developing American resources.
The President has made the point that in order to produce American oil and gas, “all drilling must be safe.” And, without a doubt, safety must be the top priority in moving forward from the oil spill.
Regarding alternative energy, such as wind, solar and biofuels, President Obama has said that investments must be made in a whole range of approaches to cleaner energy sources as well as a renewed focus on energy efficiency. CEA agrees that development of new sources of energy is a necessary and valuable addition to the country’s overall energy policy.
Still, those who gain attention in the media loudly advocating an immediate switch from traditional sources, such as oil and gas, solely over to renewable sources of energy, are not taking a realistic approach to America’s energy needs or the capabilities of current technology. President Obama, who is a strong and committed supporter of new alternative energy technologies, recognizes that switching America over to only alternative energy immediately is impossible. Many years of research, hard work and technological breakthroughs are necessary before that could become even a remote possibility.
Right now, the American economy is dependent on oil and gas resources – the nation needs 18 million barrels of oil each and every day. Of that, 1.7 million barrels a day comes from the Gulf of Mexico, with 1.4 million barrels directly from deepwater Gulf operations. Without deepwater oil, the nation’s consumers will face additional hardship in an already fragile economy with more than 14 million Americans still out of work.
More than 60 percent of oil used by Americans is currently imported, which causes an unnecessary dependence on often unstable foreign sources of energy. Recognizing this, President Obama said earlier this week, “To the extent that we’re using oil, it makes sense for us to develop our oil and natural gas resources here in the United States and not simply rely on imports. That’s important for our economy; that’s important for economic growth.”
Oil and natural gas currently provide more than 60 percent of country’s energy needs and coal provides an additional 23 percent approximately. Nuclear energy represents 9 percent of American energy use, while renewable energy sources – including solar, wind, biomass, hydropower, geothermal and all other alternative sources combined – only meet about 7 percent of the nation’s energy needs!
Clearly, with the country’s strong dependence on oil and gas and the possibility of a real alternative energy economy at least decades from reality, now is the appropriate time to take a time-out and carefully review our offshore oil and gas operations from top to bottom and recognize their importance. America’s offshore resources, including those in offshore Alaska, are some of its greatest and most necessary assets, but they must be developed in a safe, thoughtful and environmentally sustainable manner.
The nation as a whole and consumers are still mired in a recession. Unemployment remains very high. The impacts of the gulf spill on the overall economy haven’t even been felt yet, but they are there and they are real.
That said, for better or worse, our nation (and the world) long ago tied our collective future to oil and gas. That will not change for the next several decades, even as we strive to add significant sources of alternative renewable energy to a balanced long-term plan for America.
As the oil spill is resolved and its economic and environmental effects are cleaned up and returned to normal, let’s take a time out and regroup with a renewed focus on safety, with the hope that a robust energy plan that includes the safe development of all American resources is the end result … and, yes, offshore oil & natural gas will be an essential, reasonable and responsible part of that plan.
David Holt
President
CEA is proud to announce the addition of a new affiliate member who has joined our alliance: Chevron. For a complete list of CEA’s valued affiliates, click here.
Remember this post about generating power from cow manure?
It’s catching on.
Computer and software giant Hewlett-Packard has produced a paper outlining how dairy farmers could partner with technology companies by converting manure into fuel for power-intensive data and server centers. This proposed partnership results partly from improvements in high-speed data transfer that are enabling tech companies to locate their servers further from population centers, in places like rural Iowa. It’s also partly the result of the massive and always growing power needs of these data centers or server farms. Read more …
Did you know that a leaky faucet in your home can cause your water bill to increase significantly? Even a slow drip can cost you a hefty chunk of change! Make sure to fix any drips to reduce your water bills as well as be a good steward of this important resource.
To find out just how much that drippy faucet is costing you, check out the WaterWiser Drip Calculator. This cool tool will let you know how many gallons of water that drip-drip-drip is wasting on a daily, monthly and yearly basis. For instance, if a faucet leaks just 3 drips per minute, that wastes nearly 13 gallons a month – which amounts to more than 157 gallons annually!
To learn more about how to conserve water, visit www.drinktap.org, a consumer-geared website of the American Water Works Association.
Global Leaders Meet to Collaborate on Energy Efficiency Goals
Leaders of 15 countries, including representatives from the U.S. Department of Energy, recently met to discuss global collaboration on energy-saving programs and policies, outlining numerous projects including a Sustainable Buildings Network and Energy Management Action Network for Industrial Efficiency. Read article…
Salazar Divides the U.S. Department of the Interior’s Minerals Management Service
Secretary of the Interior Ken Salazar recently announced the division of the Minerals Management Service into three separate entities with independent missions, including: the Bureau of Ocean Energy Management; the Bureau of Safety and Environmental Enforcement; and the Office of Natural Resources Revenue. Read article…
Deepwater Horizon, Lease Sale 220 and the Atlantic OCS
Although the full ramifications of the Deepwater Horizon incident in the Gulf of Mexico will not be apparent for years, we can clearly tell that the explosion and resultant oil spill is a seismic event for the offshore exploration and production community. In the immediate aftermath of the incident, Interior Secretary ken Salazar announced plans to break the Minerals Management Service (MMS) into three separate agencies, dismissed the Director of the MMS, announced a six-month moratorium on all Outer Continental Shelf (OCS) permits, cancelled permits to drill exploratory wells off the Alaska coast this summer and initiated a comprehensive review of all OCS activities and permitting. The Secretary also cancelled Lease Sale 220 off the coast of Virginia, which had been scheduled for 2011. We have also seen a tremendous surge of activity from groups opposed to offshore drilling, as well as several proposals to ban offshore exploration and production from members of both the House of Representatives and the Senate in Washington, DC.
Since our creation in 2006, the Southeast Energy Alliance and our members have written multiple letters to Congress and filed dozens of comments with the Department of the Interior (DOI) and MMS supporting access to offshore resources in the Atlantic under two conditions. First, we have always urged MMS to conduct seismic activity that will give us a full picture of the resource base in the Atlantic Outer Continental Shelf (OCS). In fact, we filed a set of comments on this very topic just a few weeks ago. Second, we have argued that MMS should conduct comprehensive Environmental Impact Statements (EISs) to thoroughly identify any environmental sensitivities in the Atlantic OCS and ensure that exploration and development can take place safely and protect the environment. We have supported seismic and environmental studies so strongly because they give policy makers the essential information that they need to determine whether we should move forward with exploration and production – i.e., whether the resource base exists and whether we can produce it in an environmentally responsible way.
While SEA agrees with Secretary Salazar that we need to completely reassess offshore exploration and production technologies and regulations in light of the Deepwater Horizon incident, we feel that putting a full stop on all OCS activities is the wrong step to take in response to the recent events in the Gulf of Mexico. Instead, it is imperative that we find out what went wrong with this well, take all necessary steps to move forward responsibly with OCS activities while ensuring that this type of tragedy never occurs again.
Pulling the plug on Lease Sale 220 without conducting an EIS (which would certainly have been informed by the events currently taking place in the Gulf of Mexico) not only disregards years worth of study and analysis conducted by MMS on this region, it deprives the Department of the very information that it needs to make an informed decision about moving forward with Atlantic exploration and production.
President Obama and the Administration have a very difficult path in front of them as they contemplate moving forward with OCS exploration and production once the leak in the Gulf of Mexico is successfully plugged. SEA stands ready to provide any assistance possible to the President and Secretary Salazar as they head down that path and hopes that the Department will continue with plans to conduct seismic activities in the Mid and South Atlantic regions and not take the Atlantic off the table when developing a new OCS leasing program for 2012-2107.
Natural gas production in the Marcellus, Fayetteville, and Haynesville shale has generated an estimated 80,000 jobs with the potential for hundreds of thousands more American jobs with expanded production over the next two decades.
Consumer Energy Alliance attended a conference, held May 21, on hydraulic fracturing hosted by the U.S. Chamber of Commerce as part of their Environment, Technology, & Regulatory Affairs special briefing series. The briefing addressed the environmental, economic and technological issues raised with the expansion of hydraulic fracturing, particularly in unconventional shale gas, and focused on efforts to expand federal regulation over the technology.
Hydraulic fracturing is a technique employed in natural gas development that uses high pressure and fracturing liquids to create pathways for gas to flow through gas-bearing shale rock. Large shale formations in the United States, such as the Marcellus Shale in New York and Pennsylvania, hold approximately 649.2 trillion cubic feet of technically recoverable natural gas. The progressive extraction process is absolutely integral to accessing the gas trapped between shale formations and developing one of the United States’ most promising alternatives to foreign energy sources.
Since the technology’s inception in the 1940s, states have monitored and regulated hydraulic fracturing successfully ensuring the process proceeds in a responsible, safe manner that does not cause environmental harm. Despite successful state regulation, new concerns over the safety of drinking water located near drilling wells have been raised by the U.S. Congress.
In accordance with the Safe Drinking Water Act, Congress has directed the Environmental Protection Agency to investigate the relationship between drinking water and hydraulic fracturing. The EPA and the Science Advisory Board are currently developing the scope and methodology of this study, and Dr. Kevin Teichman from the EPA spoke extensively about how this study will proceed.
Many stakeholders, including CEA, are concerned the study will diverge from its intended scope and recommend unnecessary, additional regulations that would impede further production. CEA has remained active throughout the stakeholder process and will submit additional comments on the proposed study at a teleconference with the Science Advisory Board on June 16, 2010. In addition, various amendments and legislation to extend federal regulation are also under consideration in Congress, and CEA continues to monitor these.
Secretary of Energy for Oklahoma, Robert Wegener, addressed the audience on how Oklahoma regulates hydraulic fracturing and proposed that states should develop cooperative forums to share enforcement mechanisms and knowledge. Such forums would be particularly helpful to states that are currently experiencing rapid expansion in shale gas development.
Representatives from Halliburton and the Independent Petroleum Association of America also spoke about the strong safety record of hydraulic fracturing and expressed concern over how potential federal regulation may interfere with state efforts.
The Fertilizer Institute (TFI), which represents the nation’s fertilizer industry and traces its roots back to 1883, has long been the leading voice of the industry, representing the public policy, communication and statistical needs of producers, manufacturers, retailers and transporters of fertilizer.
“The issues we cover are diverse and, in addition to energy, include environmental issues such as climate change, air and water issues, transportation and product security issues throughout the fertilizer production and distribution pipeline,” says TFI President Ford West, noting that TFI serves its membership with a full-time Washington, D.C.-based staff in various legislative, educational and technical areas as well as with information and public relations programs.
Energy issues significantly affect the fertilizer industry due to the energy-intensive processes required to produce fertilizer, in addition to other concerns such as distribution and transport.
“Fertilizer manufacturing – nitrogen, phosphorus and potash production -is an energy intensive industry and nitrogen production is uniquely sensitive to the price of natural gas, which is required to make nitrogen. The industry uses natural gas as a feedstock in a fixed chemical process that combines nitrogen from the air and hydrogen from the gas to produce nitrogen fertilizer, in a form that the plant can take up,” explains West.
“Consequently, as much as 90 percent of the cost of producing a ton of ammonia, the building block for all other nitrogen fertilizers, can be tied directly to the price of natural gas. In 2008, the nitrogen fertilizer industry spent $3 billion on natural gas. Each $3 MMBtu increase in the cost of natural gas raises nitrogen fertilizer production costs by over $1 billion. These are not costs fertilizer companies can pass on to its customers as the industry is a price taker in the global fertilizer market.”
Historically, the cost of natural gas has exacted a heavy toll on America’s nitrogen fertilizer producers and the farmer customers they supply.
“Specifically, since 1999, the U.S. nitrogen industry has closed 26 nitrogen fertilizer production facilities, due primarily to the high cost of natural gas. Currently, only 30 nitrogen plants are still operating in the United States and over 55 percent of the U.S. farmer’s nitrogen fertilizer is imported,” explains West. “Of this imported fertilizer, 82.7 percent comes from countries without climate change policies in place to regulate carbon and a majority of these countries are those from whom we are striving for energy independence.”
In addition, West points out that any additional loss of U.S. fertilizer production could pose risks for the world’s food supply.
“It is critically important for us to ensure that any new energy or climate change related legislation recognizes the role natural gas plays in our industry and ensures we remain competitive in global markets.”
TFI is an affiliate of Consumer Energy Alliance because, West says, “CEA helps strengthen our voice by bringing consumers and producers together to find commonalities and ways to work together to strategize on and affect sound energy policy. Its support for maximum domestic exploration of natural gas as well as the construction of new nuclear plants benefits both energy consumers and producers.”
For more information on The Fertilizer Institute, visit http://www.tfi.org/.
