National Petroleum Council meetings usually don't include surprises. The reports that are presented, voted on, and conveyed to the secretary of the US Department of Energy are thoughtful, authoritative, and substantial. The secretary accepts them, graciously thanks the council, and commends its members and committees for their time and efforts in the national interest.
Energy Sec. Steven Chu did all these things at the NPC's Sept. 14 meeting in Washington. Then he did more.
He noted that oil and gas technologies have made huge contributions to US economic prosperity and personal comforts for several decades. He cited US Energy Information Administration predictions that world oil consumption could grow 25% to about 125 million b/d by 2025. "Your market will not go away," he said. "There's going to be a need for oil and gas for several decades."
Then Chu said he wanted to express how important oil and gas technology's growth has been. Oil recovery rates have gone from 20-30% to as high as 75% in some instances, he noted. "Horizontal drilling has transformed the gas industry and is beginning to transform the oil industry," he said. The next studies will examine carbon capture and storage aspects, particularly how carbon dioxide reacts with rock formations, he indicated.
Chu asserted that evidence is growing—not shrinking—that human behavior is accelerating global climate change, and described how measurements of different carbon emission types support that point. "Gas is a very important US and transition fuel, and we'll need to use it for decades," he said. "But given the time it takes to make transitions, we need to start conducting research and development on alternatives and renewables now."
'No matter what'
But the Energy secretary also suggested that there is a federal role in basic oil field research. "I, for one, believe there are certain oil and gas research efforts we should be funding no matter what," he said. These are areas where companies in the industry might not be interested because they would divert capital from more immediate needs, he explained.
Areas such as safety, operations controls, CCS, and methane hydrates deserve federal R&D support because their potential long-term benefits are significant, Chu maintained. "There are other people [in the administration] who feel differently, and I have to convince them," he said.
While he didn't mention names, one such person might be Alan B. Krueger, who was nominated by President Obama to chair his Council of Economic Advisors, and who memorably minimized the industry's economic significance at a 2009 US Senate Finance subcommittee hearing.
The idea that Chu might take the industry's side in a White House intellectual smackdown with him feels reassuring.
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About the Author
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.