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Report: The West Could Hold Vast Gas Resource

While others have touted U.S. shale gas potential as equivalent to two Saudi Arabias, the western United States by itself could equal one, according to a report released Monday by an oil and natural gas advocacy group, Denver-based Western Energy Alliance. It contends that resources in the West could exceed today's major U.S. energy imports by 2020.

Including 13 western states, but not California, the report projects gas production of 6.2 Tcf annually by 2020, compared to the 1 Tcf level last year, and 1.3 million bbl of oil and condensate annually by the same year, the latter amount representing more than current combined oil imports from Russia, Iraq and Kuwait. Western oil and gas production combined in 2020 would exceed current total energy imports from eight major U.S. import sources (Saudi Arabia, Iraq, Kuwait, Venezuela, Colombia, Algeria, Nigeria and Russia) combined.

Citing Utah as an example, the report, "The Blueprint for Western Energy Prosperity," estimated that natural gas production in that traditionally coal-dependent state could increase by 42% during the next 10 years, as outlined by EIS Solutions with data projections from ICF International. Part of ICF's assessment included an evaluation of 25 major North American shale gas plays.

A key to this potential being realized depends on western oil and gas producers getting approval to produce what are considered potential vast energy resources on public lands, according to the report by the alliance, which includes more than 400 oil and gas companies in the West. With that sort of mandate, energy development in the West could increase to $58 billion annually by 2020, the report predicted.

By that same year, the number of indirect and induced jobs in oil and natural gas are projected to increase by 16% to 504,120. State severance taxes could be bolstered, too, increasing from $2.1 billion last year to $5.6 billion in 2020.

While the report paints the region's vast potential, it also cites "grave" concerns among western producers, noting they are worried that "current and future government policies are significantly undermining these projections of growth, investment and expansion. Because much of western oil and natural gas is located on federal land, redundant and burdensome government regulations and bureaucratic red tape are making western energy production more difficult and expensive compared to other regions."

The report makes five recommendations to address these concerns:

"Federal policies that stymie growth, investment and expansion need to be abolished, and a moratorium on new and expanded layers of regulation should be invoked," the report said.

The 44-page report has been in development for some time, and the Western Energy Alliance felt it was important to get it out now, a Denver-based spokesperson told NGI, despite the fact that it comes in the wake of the recent Montana rupture in an ExxonMobil oil pipeline.

Separately, the western-focused industry advocacy group enjoyed a recent partial victory when a federal judge in Wyoming ordered the U.S. Interior Department to decide on 47 long-pending oil/gas leases (see Daily GPI, July 5). U.S. District Judge Nancy Freudenthal gave the federal agency 30 days to act. The ruling came following an oral argument late last month before Freudenthal in a lawsuit brought by the alliance on behalf of six producers against Interior Secretary Ken Salazar.

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