The Future of U.S. Energy
Brigham A. McCown
With enormous supplies and massive investments in natural gas and oil in the US, the nation's domestic supply of energy continues to grow at a record rate.
The US is poised to surpass Russia as the world's largest natural gas producer by 2015. For the first time in nearly 20 years, the United States is now producing more oil than it is importing.
Yet, an often-underreported inevitability of the remarkable energy renaissance is the need to safely transport resources - particularly crude oil - to market.
The United States' energy delivery system includes millions of miles of pipeline and rail infrastructure, creating an incredibly complex and sophisticated system. It is a system built before the current energy renaissance and one even the Administration's top energy official acknowledges requires updating:
"The Bakken shale has gone from close to nothing to a million barrels a day in a very short time, and the infrastructure certainly just is not there, certainly in terms of pipelines," Energy Secretary Ernest Moniz told an Albany newspaper earlier this year.
The lack of necessary infrastructure capacity is forcing producers to waste resources across the country, such as North Dakota, compelling states to pass laws limiting the legal amount of natural gas flared.
Without sufficient pipeline capability, other transportation modes are working overtime to meet the growing demands. Last year, U.S. railroads shipped more than 260 million barrels of oil, an enormous increase from the 7 million barrels they shipped in 2008.
Nevertheless, to truly embrace our energy potential, we must modernize our entire infrastructure portfolio.
Rail will always play a critical role in moving our energy supply, as a rapid form of transportation. Many companies rely upon rail to transport goods where pipeline infrastructure does not currently exist. By enforcing higher standards, federal regulations are increasing the safety of rail, improving its viability across the nation.
While rail is certainly part of the solution, nothing is as safe or cost-effective as transporting crude oil by pipeline. As Secretary Moniz astutely pointed out, pipeline construction must increase to meet our energy needs.
The current regulatory climate and permitting process has been detrimental to new pipeline construction, crippling oil production. As a result, many projects and new advances in pipeline technologies have become stonewalled, most notably, the Keystone XL pipeline.
For the last half of a decade, the Keystone XL pipeline has been held hostage by environmental and opposition groups who are fighting energy transportation. As a result, the pipeline, which would carry an estimated 300 million barrels of crude a year, has been needlessly delayed.
Environmental attacks on Keystone are only the beginning. North Dakota Senator Heidi Heitkamp recently warned of overzealous environmental groups who, if "successful in shutting down the oil sands," would turn their ire toward "the transportation of energy" as a whole.
Modernizing and streamlining the regulatory process for pipeline projects will address Sen. Heitkamp's concerns. Federal regulators must have more leeway to tap new technologies and approve new projects. There are substantive advancements, including flexible steel composites, as options for safe and efficient transportation of our energy resources. In a white paper released earlier this year, the authors outlined recommendations to increase flexibility to make safer, but quicker decisions.
In his State of the Union Address this year, President Obama pledged to "keep working with the [energy] industry to sustain production." According to Purdue University economists, the energy growth is contributing $473 billion, or approximately 3 percent of GDP, to the economy. Moreover, since 2007, the oil and gas sector has seen a 40 percent increase in job growth, compared to a 1 percent increase in job growth elsewhere in the economy.
According to a study released earlier this year by the McKinsey Global Institute, it is only going to improve. By 2020, new oil and gas production could increase the country's economic output by 2 to 4 percent beyond what it otherwise would be, adding as many as 1.7 million jobs--and could reduce the bill for energy imports to zero.
Updating and modernizing our energy infrastructure embraces the full potential of this unique moment in our history, poising America as the global leader on energy production and development.
Brigham A. McCown is an attorney and public policy expert. With nearly three decades of combined public service, Mr. McCown formerly headed a federal agency and served as a key federal regulator over the energy and transportation industries. He is also a retired Naval Aviator and an avid baseball fan who calls it as he sees it, right down the middle. To learn more, visit him on National Journal, Forbes, and Fuel Fix or follow him on Twitter and Facebook.