Domestic energy policy needed

Oct. 30, 2000
The US is using 22 million bbl of the world's daily consumption of 76 million bbl of oil.

The US is using 22 million bbl of the world's daily consumption of 76 million bbl of oil. World oil consumption is expected to rise to 84 million b/d by 2005. US oil imports have increased to nearly 60% of daily needs. In the next decade, there will be a shortfall of 10 billion bbl of oil annually worldwide. Our history of onshore and offshore drilling clearly shows that we can manage so that oil and gas drilling is environmentally safe.

For national and economic security reasons, our government must encourage rather than penalize the industry to reverse the decline in US oil and gas production. The projected 30% increase in gas demand from 22 tcf in 1999 to 28 tcf in 2010 will maintain a tight supply/demand balance. The only way to improve the tight oil and gas supply/demand balance is to drill and develop additional reserves. Despite the near unanimity over the fact that world markets require more crude oil, it's unlikely that OPEC will increase its output anytime soon.

Energy consumption has doubled in the past 25 years, and fossil fuels (oil, gas, and coal) continue to account for 85% of the energy consumed in the US. Moreover, the US produces 53 bcfd of natural gas, and that production would decline by 5 bcfd each year without new gas production. Oil and gas are crucial for everything from transportation and heating fuels to petrochemicals and plastics. The nation cannot remain a superpower without oil and gas to fuel our military and economic growth. America's greatness is dependent upon secure supplies Two-thirds of the world's oil supplies are concentrated in the Middle East, and this area of the world is a powder keg that could explode at any moment.

The US deepwater sector needs and deserves both the continued royalty relief and stable, consistent lease terms. In addition, the US needs to update its marine infrastructure to support the construction of production facilities that are needed for deepwater development. The only feasible substitute for oil in the next few years is natural gas. And most natural gas supplies throughout the world will be directed toward creating electricity as a substitute for coal. The problem will be availability and price. Without incentives and the tempering of environmental disincentives, the industry will be hard pressed to meet the growing demands.

Overall energy consumption will rise 60% during the next 20 years, and faster than average growth is expected for developing nations. Natural gas will be the fastest growing component of primary world energy consumption, more than doubling the past couple of decades. Gas will account for the largest incremental increase in electricity generation with 4% of the additional energy used for generation.

The current assessment for the US Gulf of Mexico is 10 billion bbl of liquids and 140 tcf of gas. There are currently far too many restrictions in developing this badly needed energy source. The eastern Gulf has faced access restrictions, and most areas outside the Mobile Bay area are presently off limits to exploration and production. The eastern Gulf area includes over 161,000 square miles, or 52% of the entire Gulf. We have to assume that the current access restriction will continue indefinitely. This means we cannot move toward energy self-sufficiency under the present restrictions.

Total US fossil fuel-related capital expenditures last year amounted to less than $35 billion. Yet the DOE budget for next year is $19 billion, almost two-thirds as big as the total amount of money spent by the private sector fuel development last year. And less than 5% of this enormous DOE budget is directly related to fossil fuels. Yet, they and the Federal Trade Commission are threatening an investigation of rumors that Big Oil was engaged in price fixing. It's apparent someone has to be blamed for this energy mismanagement. Even though nuclear energy consumption amounts to less than 8% of all energy consumed, it accounts for more than half on the entire DOE budget.

Instead of investigating the oil companies Congress should focus on dismantling the incompetent DOE for its colossal failures overall, and the less than 5% of the DOE budget allocated to oil, gas, or coal projects.

Dailey J. Berard
President
Unifab International Inc.
New Ibera, La.