AS PREPARED FOR DELIVERY
Press briefing teleconference on oil and gas future
Rayola Dougher, API senior economic adviser
Thursday, December 13, 2012
Good morning everyone. Thanks for calling in.
U.S. oil and natural gas development is expanding and contributing more to our economy and energy security. Our oil and gas companies are producing more and more oil and natural gas, much of it from promising shale reserves in North Dakota, Texas, Pennsylvania and other places. More jobs are being created. Imports are down. And more revenue is being sent to government.
Continuation of this trend is vital to America’s economic recovery and long-term prosperity. Recent energy projections and economic analysis suggest it can continue. They also suggest the United States can become far more energy self-sufficient. However, the right government policies will be important to facilitating this.
IHS Global Insight says that since 2008 liquid fuels production, primarily oil, has grown faster in the U.S. than in any other country. In 2012, U.S. oil production rose more than in any year for more than a century. In the past four years, we have increased crude oil production by 28 percent and onshore natural gas production by more than 27 percent – an accomplishment most energy experts thought impossible.
And rapid growth in U.S. natural gas production has lowered energy prices for families and businesses while also helping to reduce U.S. greenhouse gas emissions. IHS Global Insight estimates that abundant U.S. oil and gas is saving the average American family $1,000 in energy costs this year.
North Dakota, one of the centers of our nation’s new oil production, will have a $1.6 billion surplus from oil revenues this year, on top of more than $1 billion in other oil-related revenues accumulating in special funds. IHS Global Insight estimates the development of shale resources has already generated almost $62 billion in federal, state and local tax receipts. And the Interior Department recently said the federal government has collected more than $12 billion in 2012 from energy development on public lands and waters. This does not count the huge income taxes the industry will also deliver to the government this year.
The emergence of a new era of oil and gas development has been a game-changer, but there is potentially much more to come because the United States has the energy reserves and the technology to step development up to a new level.
Technology is key. It goes a long way to explaining why an energy revolution is happening in the United States instead of many other countries, and it can continue to help increase oil and gas production from our nation’s ample reserves.
Out of all the innovative technologies, hydraulic fracturing may be the most significant. Hydraulic fracturing is a safe, well regulated, 65-year-old technology. Its combination with directional drilling has propelled the shale energy revolution, and it eventually could be needed for most of our nation’s oil and gas development. As a result, costly or duplicative regulation of hydraulic fracturing could be extremely counterproductive.
Projections by the U.S. Energy Information Administration and others give an idea of where oil and natural gas development could be headed – how much more potential growth is possible along with attendant benefits.
The U.S. EIA estimates that oil production could increase 19 percent by 2019 and that natural gas production could increase by 39 percent by 2040. Rising exports of natural gas could cut the nation’s trade deficit. According to a Wall Street Journal analysis, increased U.S. oil production coupled with lower demand has already helped shrink the trade deficit by nearly 40 percent over the past five years.
The International Energy Agency says America could become the world’s largest oil producer in the second half of this decade and could be nearly self-sufficient in energy by 2035.
The U.S. EIA projects that in 2040 imports could total just 9 percent of total U.S. energy consumption, compared with 19 percent in 2011 and 30 percent in 2005.
API’s own analysis – assuming a full program of domestic development – concludes that domestic oil and biofuels and Canadian imports could supply all of our liquid fuels within a dozen years.
Most important are the jobs and economic growth expanded new development could provide. EIA expects increased shale gas production and low natural gas prices to boost U.S. industrial production. New U.S. chemical plants are already being planned, and domestic steel and fertilizer operations are being expanded. The American Chemistry Council reported that $40 billion of new investment in chemicals manufacturing have been announced.
Citigroup says the rise in U.S. oil and gas development could create as many as 3.6 million new jobs by 2020 and increase annual GDP by between 2 percent and 3.3 percent. According to IHS Global Insight more than 1.7 million jobs have already been created since 2008 as a result of shale energy development.
The numbers indicate a strong future path for domestic oil and gas development that could continue to strengthen our nation’s energy security and position in the world while building our economy and putting Americans to work.
This potential growth is a way to make our future better. Most Americans support it, and we look forward to working with all of our nation’s policymakers to encourage the kind of sensible policies on access, taxes and regulations that can help make it a reality.
Thanks, and now I’d be happy to take your questions.