The shale revolution -- first in natural gas and then in oil -- has placed the United States at the beginning of an energy system turnaround in the 21st century; however, if the country is to benefit from its new-found energy wealth, government will have to get out of the way, John Hofmeister, founder and CEO of Citizens for Affordable Energy, told a Houston audience Wednesday.
During his keynote address to the NAPE Expo Business Conference, Hofmeister, a former president of Shell Oil Co., proposed a plan by which the country could say goodbye to foreign oil dependence.
For one, oil production needs to be restored -- and can be -- to the level of 10 million b/d, which is where it was during the 1970s, he said. Another 4 million b/d worth of supply could be added to the transportation sector from natural gas and fuels derived from natural gas. Further, vehicles need to be more efficient and should be when possible. Finally, the United States should partner with Canada and Mexico in the goal of North American energy independence.
"I've had...in my career and my lifetime as a citizen and a consumer enough of the antics of an organized cartel [OPEC] operating solely in the self-interest of sovereign nations other than our own," Hofmeister said.
To be sure, energy independence has been a goal since at least 1973 when then-President Nixon promised as much in the near future. Since that time, eight presidents and 19 congresses have failed to deliver on the promise, Hofmeister said. That means it's time for the American people to lead the way.
The energy industry, too, has its work cut out for it. "You get the policy you deserve based upon how the people in that democracy see you," Hofmeister said.
Perhaps the way the oil and gas industry is most visible to people today -- at least in a negative light -- is the controversy surrounding hydraulic fracturing (fracking) well stimulation.
With regard to fracking, the industry is tangling with a federal government bent on expanding regulation of the practice to the federal level at practically any cost, Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, said at the conference.
Fuller said there are 10 federal agencies currently addressing exploration and production activities in the context of environmental issues. "Their target really is to federalize regulation of exploration and production," he said.
The Environmental Protection Agency's (EPA) study of potential groundwater contamination from hydraulic fracturing in Pavillion, WY, is fraught with incompetence, he said. "The science that's been used there has been appalling...EPA has been criticized extensively for it by the state of Wyoming."
Fuller said there is no evidence of systemic problems with fracking regulation that cannot be addressed with the existing regulatory structure. Yet EPA in Pavillion, as well as in Dimock, PA, and even energy-friendly North Texas, has sought to link fracking with water contamination.
Getting energy regulation out of the hands of entities subject to political whims, driven by the election cycle, would go a long way toward bringing the country's energy resources to market, Hofmeister said.
During his talk he proposed an "energy Fed," something like the Federal Reserve, that would be dedicated to managing and planning for the development and use of the country's energy resources. In the case of the Federal Reserve, politicians "outsourced" the job of managing something they don't know much about, and Hofmeister said it should be the same with energy.
Such an "energy resources board" would have the authority to govern to keep energy supply ahead of demand, mandate efficiency improvements where practical, align environmental needs with those of energy development, and approve the infrastructure necessary to get energy to market, he said.
Hofmeister, a Democrat, said not to expect a proposal for such a board to come from either party, or even from the energy industry for that matter.
He said that once his Citizens for Affordable Energy -- a nonindustry funded social network initiative -- has signed up 15 million members, it will have the kind of grassroots clout necessary to give citizens a voice in Washington, DC, on energy issues, including fracking and the Keystone XL oil pipeline, among other things.