Our energy outlook is at a real watershed.
Tremendous change has taken place and we haven't
quite yet understood its significance, but it is a
positive change.
Usually, energy only brings us bad or discouraging
news. But now there is a great deal of potential for
a more optimistic outlook, brought to North America
by the tremendous availability of gas and oil from
unconventional shale deposits.
The outlook for gas is that we are going to have an
extended supply available at a reasonable cost of
extraction for the foreseeable future. This implies
that gas prices will be low and that gas will become
a substitute for renewables, nuclear, and coal
plants, especially older ones. We will be generating
electricity from gas at a much lower cost than other
developed countries, our competitors, will have to
pay.
In the meantime, there is a great deal more
potential for oil production in North America from
shale. North Dakota is becoming the third-largest
state producer in the United States. North America
will be producing a higher percentage of its oil
requirements than it is currently and importing less
oil from abroad. The economic consequences are
enormous.
This is a pattern that will be repeated to some
degree in other parts of the world, including Asia,
Latin America, North Africa and Europe. We are in a
position where our dependence on major resource
holders in the Persian Gulf, Middle East and
elsewhere is declining, along with their market
power. The geopolitical implications are more
advantageous to the United States, as there will be
a greater supply for the rapidly growing emerging
economies and the United States and Europe will have
a more secure supply of cheaper oil and gas.
Turning to nuclear power, the United States is not
pursuing nuclear energy in a steady and consistent
pattern. To a large extent, the nuclear option has
been more embraced by France, Germany and Japan.
Since the early '80s, nuclear dominance has
certainly moved outside our borders.
As for renewables, there will be less money
available for assistance programs. There will also
be a new examination of what the best tools are and
how we can use cost-effective renewable technology
in the long run.
The future of coal depends on a robust demonstration
of carbon capture and storage technology. We need to
have this done at scale at three to five facilities
in the United States.
When considering external threats to our energy
world, solutions have to come both from the private
sector and the federal government. We are still far
from having a well-understood procedure for doing
that. It's a very complicated subject. The
Department of Homeland Security has not yet clearly
developed a road map that both the government and
the private sector can actually turn into practice.
Cooperation with Europe and developed Asia would be
helpful in streamlining the process.
Former directors of the Central Intelligence Agency
have had the tendency to expect the worst and hope
for the best. The likelihood of something
interrupting the grid in the United States or Europe
is high, and is more likely to be an attack on the
information systems that control the grid rather
than a physical attack. It is a serious risk.
Homeland Security has taken a great deal of time to
get itself up to speed. The agency still doesn't
have the kind of smooth operations with respect to
planning or developing that are necessary. So, we
have to wait and see how it goes. It could take some
time.
Industry thought leaders will be discussing this
topic and more at the upcoming EnergyBiz Leadership
Forum, Harnessing Disruption, taking place in
Washington D.C., March 19-21, 2012. Review full
conference details by visiting
www.energybizforum.com
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