Energy Tomorrow Blog
Posted August 18, 2015
So, the EPA looked at declining methane emissions …
Down 79 percent from hydraulically fractured wells since 2005; down 38 percent from natural gas production overall from 2005 to 2013; and emissions down – while natural gas production soared ...
... and decided new methane regulations were the thing to do anyway.
Posted August 14, 2015
We’ve put up a number of posts recently that argue for lifting the United States’ decades-old ban on exporting domestic crude oil – citing sound economic, trade and security reasons. Underlying them all is this: As an energy superpower, America will see more benefits here at home, be more secure and help make the world safer if U.S. crude is allowed to trade freely in the global marketplace.
Now, there is a compelling, market reason for urgency in ending the export ban – a self-sanctioning relic of the 1970s that hinders U.S. global competitiveness while impeding domestic energy development and economic growth. That would be the impacts on global crude markets if/when Iran resumes exporting oil under the proposed nuclear agreement the White House is advancing.
Posted August 11, 2015
The U.S. Commerce Department’s recent mid-year trade report illustrates how surging domestic oil and natural gas production is helping our economy – and strongly suggests what increased domestic output could do if U.S. crude oil and liquefied natural gas (LNG) had unhindered access to global markets.
According to Commerce, the U.S. trade deficit among petroleum and petroleum products fell 56.1 percent the first six months of this year compared to the first six months of 2014 (exhibit 9). That growth helped hold the total U.S. year-over-year trade balance steady, even as the trade deficit in non-petroleum products increased 23.1 percent. API Chief Economist John Felmy:
“Despite a very competitive global market, the U.S. energy revolution continues to push our trade balance in a positive direction. Oil imports remain on the decline, and strong exports of petroleum and refined products are creating new opportunities for America to bring wealth and jobs back to U.S. shores.”
For that trend to continue, though, the United States must pursue energy trading opportunities with the same vigor it pursues trade in other areas. A 1970s-era ban on crude oil exports should be lifted, and LNG export projects should be approved by the government so that domestic producers have every chance to access global markets.
Posted August 4, 2015
Something we hear frequently (and too often from people who should know better), is that as long as the United States is an oil importer it shouldn’t export domestic crude. It sounds logical and certainly makes for a good headline. But the idea ignores reality and sound economic analysis.
A quick skim of government data on U.S. trade shows that goods imported into the United States are often goods that also are exported from the United States. The fact is that oil is traded globally, and the ebbs and flows of global supply affect us here in the U.S. Bruce Everett, who teaches oil market economics at Tufts University, explained in a recent article for Politico:
… it’s certainly true that the US will still require imported oil for the foreseeable future to meet our needs. But the implication here is that exporting US crude oil would increase our import needs and therefore undermine national security. And that’s not how the oil market works. The US has an open economy, and American consumers pay world prices for oil – just as they do for wheat, corn, copper, gold and other internationally traded commodities. Crude oil is sold in a single, integrated global market. If the world oil price spikes, the US will suffer, along with everyone else, to the extent we rely on the global market for imports. But exporting some domestically produced oil would not affect this equation.
Energy isolationism isn’t in the United States’ best interest – economically or from a security standpoint. While some argue that shutting in U.S. crude oil is better for America, that kind of faulty thinking ignores the way free markets work – and can work to America’s benefit if we lift the ban on exporting domestic crude.
Posted July 14, 2015
A potential nuclear deal with Iran that would permit the Iranians to resume exporting crude oil to global markets – short-term and long-term – underscores questions about our own oil export policies. Here are two: What are the implications of Iranian crude oil exports for U.S. production? And: When will our government lift de facto sanctions against the export of U.S. oil?
Bloomberg reports that Iran’s oil minister says the country can increase exports by 500,000 barrels a day as soon as economic sanctions are lifted, then an additional 500,000 barrels a day in the following six months. Richard Nephew of Columbia University’s Center on Global Energy Policy is less optimistic about that kind of ramp-up. The U.S. Energy Information Administration (EIA) has said Iran could reach 700,000 barrels per day by the end of 2016.
The point is, if there’s a nuclear deal that lifts economic sanctions against Iran, Iranian oil will be getting to market.
Posted July 10, 2015
The compelling case for lifting America’s decades-old ban on exporting domestic crude oil is multi-faceted.
There's the economic case, with NERA Economic Consulting estimated that lifting the ban could add $200 billion to $1.8 trillion to the U.S. economy between now and 2039. There's the case for consumers, with a variety of studies indicating that lifting the ban could lower prices at the fuel pump from 1.7 cents per gallon to up to 12 cents per gallon. There's the foreign policy case and the way home-grown crude oil could affect global relationships, helping allies and potentially neutralizing the ability of adversaries to use energy as a diplomatic weapon. Then there's the energy case. Domestic production, spurred by greater access to global crude markets, could grow by 2.1 million barrels per day to 4.3 million barrels per day over levels under the status quo, according to NERA.
Certainly, each of these was argued again at a pair of Capitol Hill hearings, one by the House Agriculture Committee (video) and another by the Energy and Commerce Committee’s Energy and Power Subcommittee (video).
Posted June 26, 2015
Forbes (Clemente) – The short answer to the question posed is … a lot. Or at least way more than many groups and people out there want you to believe. Today, the world is swimming in oil, and prices have been sliced in half over the past year. “Peak oil” theory for production is predicated on the work of legendary geologist M.King Hubbert, who in 1956 employed his now famous/infamous “Hubbert curve” to predict U.S. petroleum production would peak in 1970. For many years he appeared to be correct, but the “shale revolution” is on the verge of proving him premature.
False pessimistic predictions regarding future oil production dates back to the beginning of the modern oil era in the mid-1850s, and can quickly ensnare the best experts with the most resources available. To illustrate, the Joint Operating Environment 2010 report (“the JOE report”) from the U.S. Joint Forces Command, the leader for the transformation of U.S. military capabilities from 1999-2011, projected a 10 million b/d global supply shortfall for 2015. Now, just five years later, we have a 2-3 million b/d surplus.
Posted June 16, 2015
Platts – Stabilizing crude oil prices and falling drilling costs could soon boost US production by hundreds of thousands of barrels per day, an upstream oil and gas economist with the US Energy Information Administration, said Monday.
"We're starting to see a turn in production," Grant Nulle said during a panel discussion at EIA's annual conference. "Conditions are conducive for this to happen."
While recent EIA data has shown production declines at existing wells have outpaced production from new wells, a rebound is likely as operators focus on the most efficient wells and look to increase well completions amid falling costs and continued availability of capital, Nulle said.
In a recent survey of 85,000 wells drilled between 2012 and 2014, initial production rates have roughly doubled, he said.
Posted June 12, 2015
Wall Street Journal – Low oil prices and economic growth have helped drive up consumer demand for energy across the world in 2015, the International Energy Agency said Thursday, a phenomenon seen from U.S. gasoline stations to Chinese auto dealerships.
The IEA’s closely watched oil-market report lent some support to an idea pushed by the Organization of the Petroleum Exporting Countries and other producers: that collapsing oil prices would spur more consumer demand and eventually send prices back up. The benchmark U.S. oil price hit a six-month high on Wednesday.
The IEA said world demand for oil would increase by 1.4 million barrels a day this year, 300,000 barrels a day faster than it previously forecast, to a daily average of 94 million barrels this year. Global demand in 2014 was about 92.6 million barrels a day, the IEA said.
Posted June 10, 2015
BloombergBusiness – The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.
U.S. oil production (green line in chart, left) rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.
The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.
“We are truly witnessing a changing of the guard of global energy suppliers,” BP Chief Economist Spencer Dale said in a presentation. “The implications of the shale revolution for the U.S. are profound.”