"Dueling studies" is the phrase one former US Federal Energy Regulatory Commission member used to describe anticipated cost/benefit reports on contentious power market designs. But, the image of consultants riffing with research reports like dueling bangos in American folk music applies to just about every US energy debate, and even more so in a presidential election year.
On August 14, President Barack Obama and presumptive Republican candidate Mitt Romney squared off, with Obama touting wind power and Romney emphasizing coal. For its part, American Petroleum Institute has launched a Vote4Energy.org campaign, which aims to bring focus to how energy is linked to jobs. It also is not trying to take sides, according to Martin Durbin, API executive vice president of government affairs.
"We very clearly say this can't be pitting one against the other," Durbin told Platts in an August 15 interview. It cannot be an either/or proposition between traditional energy and green energy, especially when API member companies invest in low-carbon fuels, solar power and algae-based fuel research, he noted. "We are truly all of the above. We're going to need it all," he said, adding that "the debate too often is in order to have this, we ought to have less" of that.
But, an API-commissioned poll last weekend showed American voters may be more in sync on energy issues, regardless of political affiliation, Durbin said. "I was shocked at how high the numbers were agreeing with some of these questions, Republicans and Democrats," he said.
Asked whether they supported increased access to oil and gas resources in the United States, 47% strongly supported it and 24% somewhat supported while 17% opposed (the remainder answered they neither supported or opposed, or did not know/declined to answer). Breaking down the total support by party, it was stronger among Republicans (85%), but a majority of Democrats agreed or somewhat agreed, too (60%). Of the independent voters, 72% agreed.
When asked if such increased access to oil and gas resources could lead to more American jobs, 90% of those polled agreed or somewhat agreed, and by affiliation that was 95% of Republicans agreeing, 91% of independents and 85% of Democrats. The telephone poll of 1,016 registered voters in the U.S. was taken August 9-12 by pollster Harris Interactive. (The poll results details are here.
"That's why we see such an opportunity to talk about jobs because the public sees such a connection between energy and jobs," Durbin said.
But what about the perceived connection between API and the Republican Party? "There's no question" that industry and individual political contributions tend to align with Republicans, he said, but "I'm a Democrat myself."
Plus, API does not endorse candidates, he noted. "We are always looking for alignment, we're looking for alignment on both sides of the aisle," Durbin added.
Given there will continue to be polarized debates over energy, API is trying to "make sure that we're out there in the middle of the debate" with facts, Durbin said. "The public gets it. We're essentially asking the administration to come where the American public is."
The Vote4Energy campaign puts an emphasize on what the oil and gas industry contributes, especially in terms of jobs and economic growth. Among its nuggets: $476 billion "delivered to the U.S. economy" in 2010 (think capital expenditures, salaries, dividends, explains Durbin), which roughly equates to 60% of the 2009 government stimulus, API says.
Let's take a look at how this sort of discussion went in the 1950s, back when API was in Manhattan, not Washington. As a school kid at the time, my mother collected a set of energy pamphets for a school report, including a couple of API titles, "Oil Con-Serves for You, The Least Wasteful Withdrawal of Needed Oil, The Greatest Possible Use of Every Gallon," and "Petroleum in Your Life." They include some statistic tidbits, such as that in 1951, there were 32.2 billion barrels of "known underground petroleum supplies." Another data point from a quaint pamphlet involved a discussion of recovery rates: "A few decades ago, only about one-fifth the oil in any field could be recovered. Today the recovery ratio has risen as high as four-fifths. That is true conservation."
Lo, would it be so simple to discuss today in a new era of stacked and emerging plays, varying economics between oil and gas production, regional differences, different assay results within a play, and evolving technologies.
Taking an overview, proved reserves in the US of crude oil and lease condensate were 25.2 billion barrels at the end of 2010, up 13%, or the largest annual increase since 1977, and reaching the highest total level since 1991, according to Energy Information Administration data. Wet natural gas proved reserves rose 11.9% year-on-year to 317.6 Tcf at the end of 2010. On August 14, the US Geological Survey released new estimates for potential additions to domestic oil and gas reserves from reserve growth in discovered, conventional accumulations, with a total of 32 billion barrels for crude, 291 Tcf for gas, and 10 billion barrels of natural gas liquids.
And, any intelligent examination of the possibilities will have dueling assumptions or even gradations of assumptions. Take the EIA's Annual Energy Outlook 2012 discussion on oil and gas resource "uncertainty." It notes that the metric commonly used for gauging what would be available is the technically recoverable resource (TRR). "Estimates of TRR are highly uncertain, however, particularly in emerging plays where few wells have been drilled," EIA said in this report. "Early estimates tend to vary and shift significantly over time as new geological information is gained through additional drilling, as long-term productivity is clarified for existing wells, and as the productivity of new wells increases."
It cited how in the Marcellus, Fayetteville and Woodford shale gas plays, almost 65% of the well estimated ultimate recovery (EUR) is produced in the first four years, while in the Haynesville and Eagle Ford plays, 95% and 82%, respectively, of well EUR is produced in the first four years.
Still, even laying out different cases -- reference, low EUR, high EUR and high TRR -- trend lines are apparent for oil and gas in the coming decades.
The oversimplied answer: there will be more production. But, look at the ranges. Take the total US production of crude oil and natural gas liquids. For 2010, it was 7.5 million b/d, and for 2020, it could be 9.6 million b/d (reference), 8.8 million b/d (low EUR), 10.3 million b/d (high EUR) or 11.6 million (high TRR).
But, API's Durbin points to another sets of stats there in the EIA Annual Energy Outlook -- the respective amounts of renewable energy and fossil fuel energy. For 2010, the combined amount of petroleum, other liquids and gas out of total energy use in the United States was 62% and for 2035 that is expected to be 58%. At the same time, liquid biofuels would grow from 1% to 4% and renewables excluding biofuels would grow from 7% to 11%. Even with a doubling in green energy, the United States will still see the majority of its energy from oil and gas. "It is not a question of do we want more oil and gas? It's where do we want to get it?," he said.
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