Posts Tagged ‘energy’

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Video: oil dependence

December 26, 2012

Do you want OPEC to keep calling the shots in the 21st Century?  Do you enjoy seeing American presidents literally holding hands with or bowing down to the Saudi king?

Regular readers know that this blog supports expanded domestic oil drilling to help North America decrease its dependence on Middle East oil.  Although Eyal Aronoff of the Fuel Freedom Foundation (@fuelfreedomnow on Twitter) offers a different course of action to deal with the problem of oil financing terrorism, this video as a must-watch:

Aronoff lays out compelling ideas for reduced oil dependence, and Money Jihad has as well.  Wouldn’t it be nice if national political leaders embraced just some of these ideas as part of a genuine “all of the above” approach to energy to reduce our reliance on Saudi sharia oil?

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Energy independence from Arab oil

December 9, 2012

A recent column by Tom Keane points out the tremendous growth in U.S. energy production thanks in large part to American innovation in hydraulic fracturing.  As he indicates, freedom from Middle East oil presents several benefits:

  • Reduced influence of OPEC
  • The risk of supply interruptions decreases
  • Military spending could decrease without jeopardizing security
  • Domestic economic/job growth

The purpose of independence isn’t necessarily about the price at the gas pump—that is a straw man set up by fans of foreign oil dependence and environmental extremism as a reason to halt progress toward energy freedom.

But let Keane tell it:

A new world of American energy independence

The United States is soon to be awash in oil and natural gas, positively brimming with the stuff whose scarcity and unreliability of supply has plagued us since the end of World War II. It is a remarkable, stunning turn of events — largely unforeseen just a few years ago yet now an imminent although still hard-to-believe reality. And the implications of this new reality will be dramatic too — almost all of them positive although not without some risks. Remember when the United States once trembled at the power of OPEC? In a short while, we may be running the thing.

Last month the well-respected International Energy Agency declared, “A new global energy landscape is emerging . . . redrawn by the resurgence in oil and gas production in the United States.” Within eight years, the America is expected to be the planet’s largest producer of oil. By 2030, we’ll be producing more than we need — exporting, not importing. The reason is technology. Techniques such as hydraulic fracturing have been invented and improved so that they can now economically unlock the vast stores of oil and natural gas across the middle of the country. The flyover states may finally start getting some respect.

It’s uncomfortable to admit this, but Sarah Palin had a point: The key to American energy independence is “drill, baby, drill” — or perhaps more correctly, “frack, baby, frack.”

Don’t count on this abundance making for cheaper gasoline, however. Oil is a global commodity, and, unless the United States decided to subsidize its price, it will still sell to the highest bidder. Nevertheless, the fears of supply disruptions and embargoes — remember the gas lines of 1973? — will largely disappear. Should some country decide to block the Strait of Hormuz, it’ll be other nations, not the United States, feeling the pain. (US law currently prohibits us from exporting oil. Even though it likely will be changed, we’ll still make sure our domestic needs are met first before shipping overseas.)

On the other hand, these newfound supplies may get us a cheaper military budget. Why is the United States so deeply involved in the Middle East but not in, say, Africa? Oil. For at least the last 60 years, its constant supply has been a paramount worry: without energy, the economy collapses. But that policy, while necessary, cost us blood, treasure, and integrity. Too often, we sacrificed our ideals to support a local strongman who could keep pipelines safe. And the wars, both far afield as well as attacks on our soil, have been a burden.

What happens when we no longer need Middle East oil? Foreign policy changes. Conflict is reduced, and our goals can, one hopes, become principled — less tarnished by economic exigencies, more focused on human rights.

There will be dramatic changes at home too. The states with oil reserves will see a huge bump in their economies (already shale-rich North Dakota has the lowest unemployment rate in the country). The entire nation’s economy will benefit too. With energy supplies and prices abundant and stable, business will thrive.

There are risks, two of which are obvious. Fracking can contaminate underground water supplies (and uses lots of water to boot). That’s an issue of smart regulation, however. We already take huge risks with offshore drilling — BP oil, for example. Fracking’s potential impact is arguably less risky and also more manageable.

The other has to do with global climate change. The scarcity of oil (“peak oil” — the theory that supplies are about to diminish — is now, at least for this century, largely kaput) had the beneficial effect of driving us toward conservation and cleaner energy. With a glut of petrochemicals, will that push stop, causing greenhouse gas emissions to worsen? Possibly but not necessarily. The natural gas being extracted by fracking is actually cleaner than oil. Then too, every barrel of oil saved by conservation or alternative energy is a barrel sold overseas — meaning there’s an economic incentive for using renewables.

Those risks notwithstanding, our new world of energy should be a cause of great optimism. Many fear our time is over; the Great American Century finished. The renaissance of domestic oil and gas are of such magnitude, though, it may be another Great American Century is about to begin.

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Energy output falling on federal lands

October 26, 2012

One of the best developments of the last couple years has been increased energy production in the U.S.  No thanks to government policy, crude oil and natural gas production have grown on private land.  Meanwhile, oil and natural gas production on federally owned land have fallen during the Obama administration.

From Energy Tomorrow blog on Oct. 19:

…First, graphing U.S. crude oil production from federal and non-federal areas:

Oil output in America:  public vs. private

As you can see, U.S. crude production has increased steadily since 2008 (blue top line). Remember, the oil production timeline is a long one. Offshore and onshore projects can take up to a decade to develop, from leasing to actual production. Broken out by area, crude production on non-federal lands (69.7 percent of total production) has risen dramatically since 2010 (red line). Since 2010 crude production from areas controlled by the federal government has fallen (green line).

Here’s a look a natural gas production, federal and non-federal:

American nat gas output:  private vs. public

Overall domestic natural gas production (blue line) has climbed sharply – owing to advances in shale development through hydraulic fracturing and horizontal drilling. Look at the red line. Production from non-federal areas parallels the top line, indicating overall growth is being driven by production from areas not controlled by Washington. Indeed, natural gas from federally controlled areas started declining in 2009.

These charts suggest something important: Imagine what could happen with U.S. oil and natural gas production with increased access to public resources, with increased drilling. With the right policies in place the production line for federal areas could mirror that of the non-federal.

Actually, we don’t have to imagine too much. According to Wood Mackenzie’s analysis, we could see more domestic energy produced, more jobs and more revenues to government. In less than 15 years we could see 100 percent of our liquid fuel needs met through domestic oil and gas production, increases in biofuels and crude from friend and neighbor Canada. And we could see all of the plot lines on both these charts heading up, reflecting a more secure U.S. energy future.

As good as the increased growth overall has been to help wean America off Saudi sharia oil, think of how much farther we could be with energy independence if we had leaders willing to use the oil and natural gas sitting underneath land owned by the taxpayers.  We as taxpayers own the land, but we’re not getting a good return on our investment.

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Finding manna from heaven under the sea

September 10, 2012

The Financial Times has an excellent article on recent natural gas discoveries off the coast of Israel.  For many decades, the commonly held perception of Israel was that it is the only country in the Middle East without oil.  The recent discoveries, which involved hard work and long odds, turn the old perception on its head.

Energy independence is extremely important for the U.S. and the West at large.  But it may be a matter of existential survival for Israel.  Israel has had to depend exclusively on imported energy in the past, leaving it vulnerable to price shocks and supply interruptions.  Natural gas deposits at Tamar and Leviathan will go a long way in helping Israel to write its own future.

Here’s a long excerpt, but you should take a look at the full piece:

Field of dreams: Israel’s natural gas

Aug. 31

By Tobias Buck

After decades of importing every drop of fuel, Israel has struck it rich, uncovering vast reserves of natural gas in the Mediterranean

The black and yellow helicopter heads north from Tel Aviv, passing over empty beaches, a yacht harbour and a string of sprawling seafront residences that house some of Israel’s wealthiest families. After a few minutes the pilot makes a sharp turn to the left and steers his ageing Bell 412 towards the open sea.

For more than half an hour, all there is to see is the blue waters of the Mediterranean. Then suddenly a hulking mass of brightly painted steel rises from the midday haze. Towering more than 100m above the water, this is the Sedco Express, a drilling rig that has been operating in this stretch of ocean for almost three years. As the helicopter touches down on the landing pad, we see a small blue and white Star of David flag fluttering in the wind. It is the only sign that the Sedco Express sits atop one of the greatest treasures that Israel has ever found. Far below, connected to the rig by a slender steel pipe that runs through 1,700m of ocean and another 4,500m of rock and sand, lies a vast reservoir of natural gas known as the Tamar field.

The men on board the Sedco Express are busy testing the field’s multiple wells in preparation for the long-awaited day next April, when a US-Israeli consortium will start pumping the gas onshore. With reserves of almost 10 trillion cubic feet of natural gas, the Tamar field is a hugely valuable asset for the Israeli economy. Discovered in January 2009, it was the biggest gas find in the world that year, and by far the biggest ever made in Israeli waters. But the record held for barely two years. In December 2010, Tamar was dwarfed by the discovery of the Leviathan gasfield some 20 miles farther east – the largest deepwater gas reservoir found anywhere in the world over the past decade. The two fields, together with a string of smaller discoveries, will cover Israel’s domestic demand for gas for at least the next 25 years, and still leave hundreds of billions of cubic feet for sale abroad. The government take from the gasfields alone is forecast to reach at least $140bn over the next three decades – a staggering sum for a relatively small economy such as Israel’s.

Read the rest of this entry ?

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How North America can checkmate Saudi Arabia

July 30, 2012

Citi estimate of global oil production

The U.S., Canada, and Mexico can reduce the relative power of Saudi Arabia by harnessing North American energy sources.  We can actually out-Saudi the Saudis.  From Power Line Blog on July 10:

U.S.–The Saudi Arabia of Oil?

I recall how in the late 1970s, back during the dark ages of the government-caused “energy crisis,” President Jimmy Carter liked to say that the United States is “the Saudi Arabia of coal.”  Yes—there was a time when liberal Democrats were in favor of expanded coal use (unlike today), and Carter’s pro-coal policies led to a significant expansion of coal-fired electricity in the 1980s.

But as usual Carter was too narrow. Turns out the United States might well be regarded as the “Saudi Arabia of oil” as well as coal (not to mention natural gas, about which everyone has caught up to speed).  This is the graven of Mark Mills’s terrific new report out yesterday from the Manhattan Institute, Unleashing the North American Energy Colossus: Hydrocarbons Can Fuel Growth and Prosperity.  Mills is a pal, from whom I’ve learned more about some of the fine points of energy than anyone else.  The point is simple: the United State is a hydrocarbon superpower, and together with Canada and Mexico—no slouches themselves in terms of hydrocarbon reserves—North America could become the dominant hydrocarbon energy supplier for the world.  Forget inward-looking”energy independence” (a stupid idea anyway); let’s become an energy export continent.  It’s enough to give your average Arab oil sheikh night sweats.

Among Mark’s conclusions:

An affirmative policy to expand extraction and export capabilities for all hydrocarbons over the next two decades could yield as much as $7 trillion of value to the North American economy, with $5 trillion of that accruing to the United States, including generating $1–$2 trillion in tax receipts to federal and local governments. Such a policy would also create millions of jobs rippling throughout the economy. While it would require substantial capital investment, essentially all of that would come from the private sector.

The underlying paradigms embedded in American energy policy and regulatory structures are anchored in the idea of shortages and import dependence. A complete reversal in thinking is needed to orient North America around hydrocarbon abundance—and exports.

In collaboration with Canada and Mexico, the United States could—and should—forge a broad pro-development, pro-export policy to realize the benefits of our hydrocarbon resources. Such a policy could lead to North America becoming the largest supplier of fuel to the world by 2030. For the U.S., the single most effective policy change would be to emulate Canada’s solution for permitting major energy projects: create a one-portal, one-permit federal policy for all permits.

There’s more; worth looking over the whole thing.  By the way, despite the efforts of the government to stand in the way, and environmentalists to rend their garments, the new hydrocarbon revolution is likely unstoppable. Double good news: the environmental movement is about to get run over flat by a hydrocarbon-fueled, coal-bearing freight train.

But again, it will take political commitment to use our own resources.  The Obama administration poses a particular obstacle by limiting offshore oil production, by reducing production on federal lands, by opposing the Keystone Pipeline, and by impeding hydraulic fracturing efforts.  Out-performing Saudi Arabia will require a pro-energy American president and Congress.

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U.S. oil shale clobbers Saudi reserves

July 1, 2012

Even among the counter-jihad community, there is a great deal of pessimism and defeatism about the stranglehold that Saudi Arabia and the other Persian Gulf states have on the world oil economy.  We routinely hear things like, “every time you fill your gas tank, you’re funding terror.”

But it doesn’t have to be that way.  We can out-produce the Saudis if we only had the political will to tap into the resources beneath our feet.

An excerpt from a recent Cato’s Domain post sheds light on the subject, and includes an Institute for Research Energy graph that shows potential U.S. oil shale is nearly eight times larger than Saudi oil reserves!

…If we can sweep the carbon jihad aside this could lead to enormous benefits for the US, ranging from millions of well-paying jobs to strengthened diplomatic clout and a rejuvenated military policy. That reducing imports will affect our policies on both of those foreign policy fronts in the Middle East, for example, needs no elaboration.

We read about the potential in the shale fields for natural gas production, and that is stunning. But shale oil has nearly as large a potential, some on private and a great deal on federally-controlled land. Under Obama’s administration federal lands have been put off-limits for development. Locking that potential away is way beyond foolish: it’s economically, socially and politically criminal. The amount of oil in these shale formations is game-changing not only for the USA but for the world. Just opening up the federal lands NOT recognized as national treasures (think Yellowstone and Yosemite), even under tight and necessary environmental controls, would yield unbelievably positive outcomes.

Institute for Energy Research bar graph shows that the US has 2,118 billion barrels of potential oil shale while Saudi Arabia, our next closest rival, has only 200 billion barrels in oil reserves.

We are now and will be for the indefinite future a petroleum-based economy, as will every other major economy on the planet. In the last 30 years of carbon jihad the percentage of energy created by “renewables” has actually dropped. It will still be under 11% in 2030. Shutting down O&G production on the theory that we could replace those BTUs with alternative sources is incredibly stupid; progressive’s mindless war on carbon must be ended and replaced with reality-based policies…

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How fracking frees us from foreign fuel

June 11, 2012

U.S.-led innovation in drilling is increasing energy production, reducing our demand for Persian Gulf oil, lowering natural gas prices, and, as an added bonus, boosting employment in states with shale deposits.

It is a common misconception that filling your gas tank funds terrorism.  That isn’t necessarily or directly the case.  The Saudi oil sheikhs have money from oil that they can divert toward Wahhabi “charities” that do indeed fund terrorism.  But the more energy the U.S. and Western economies produce, the farther energy prices can fall worldwide, and the slimmer the profit margins for the Arab states.

Western energy production also limits the trump card that the Middle East can play to affect our foreign policy.  If we tap into our own resources through technologies such as fracking (hydraulic fracturing), we won’t need to hold hands or bow down to the Saudi royals.

You do not have to feel guilty about filling your gas tank.  But you deserve to feel guilty if you elect politicians who oppose domestic energy expansion.  Strangling our own economy and nibbling around the edges by reducing our own energy consumption is not a viable, long-term solution.  The best way forward is to beat the Saudis at their own game.

Check out this article from Medill Reports earlier this year which notes that “Fracking has the potential to make the United States ‘largely independent of foreign sources of natural gas and significantly less dependent on foreign sources of oil’.”

Need a visual?  Also from Medill:

Depiction of fracking process