Wealth & Poverty Review Energy Independence Is Within Reach for the U.S.

Editor’s Note: This article was co-authored by Scott Tiefenthaler, a Houston-based seismic geophysicist, with Discovery Institute Senior Fellow Scott Powell.
After some 40 years of OPEC cartel codependence, many Americans recognize the real and symbolic importance of the Keystone XL pipeline.
It means greater freedom and security. So the recent decision to delay the pipeline construction also calls into question the commitment of Washington to the vital and very achievable goal of U.S. energy independence.
When Barack Obama was elected president in 2008, energy independence was considered impossible, with imported oil accounting for 66 percent of the oil refined in the U.S. That predicament was a troublesome weak link in U.S. national security.
But unexpectedly, with the technology-driven energy boom that began half a dozen years ago, that longstanding vulnerability is now close to being remedied. What’s needed now is to understand and support three key initiatives that together provide more self-sufficiency at home and a stronger energy position in the world.
The first game changer started with extracting oil on private lands in the continental U.S. with novel horizontal drilling and fracking extraction technologies.
The Bakken formation in North Dakota, Eagle Ford in Texas and the Monterey shale in California are the best-known, having some 45 billion recoverable barrels – twice the 2010 estimated U.S. oil reserves. Then there are newfound undeveloped deposits, such as the Wolfcamp shale in Texas, which is estimated to have 50 billion in reserves.
But the greatest bonanza may be on public land. The Bureau of Land Management reports that, “More than 70 percent of American shale oil … lays on federal land in Colorado, Utah and Wyoming … an estimated 1.23 trillion barrels of oil – more than 50 times the nation’s proven conventional oil reserves.”
Shale drilling is more costly than conventional drilling, so not all shale deposits can be developed economically. But even if only a quarter of the Bureau of Land Management’s shale estimates are recoverable, the U.S. would be ranked No. 1 in the world in proven oil reserves.
A second factor is extracting crude oil from oil sands. Alberta, Canada’s Athabasca region has the world’s third-largest oil deposit and provides a friendly, dependable source for imports, unlike many OPEC nations.
The problem with Canadian heavy crude is that few refineries handle it. Thus, the Keystone XL Pipeline was proposed in 2008 as the most efficient and safe way to transport the oil to plants in Texas and Louisiana designed for refining heavy crude it into gasoline, diesel and jet fuel byproducts.
The third contributing factor for U.S. energy independence is the shale fracking revolution in natural gas production and the substitution of natural gas for oil, with power plants and internal combustion engines being retrofitted to burn natural gas.
The U.S. is now the Saudi Arabia of the world in natural gas, producing more than any other nation and a surplus for export.
Four years ago, Houston-based Cheniere Energy totally revamped its business strategy as a liquefied natural gas importer to become the nation’s first LNG exporter. But with layers of bureaucratic red tape requiring some 40 different permits, Cheniere management won’t complete Phase 1 of its first facility in Sabine Pass, La., until 2015 at the earliest.
U.S. energy independence would be further along if not for the Obama administration’s obstructionism and opposition to fossil fuels.
Now at a time when export facilities’ capability could bolster NATO’s energy needs to counter Vladimir Putin’s natural gas blackmail and further land grabs in the Ukraine, we have none on line. Consider:

  • The Obama administration has increasingly restricted public lands for energy development, with the Bureau of Land Management leasing 600,000 fewer acres in 2013 than the previous year and the smallest area leased since the late 1980s.
  • The 1,200-mile Keystone XL pipeline remains stalled after five-plus years – notwithstanding 175,000 miles of existing pipeline already safely transporting oil and gas all over the country.
  • LNG exports face new hurdles with the U.S. Environmental Protection Agency now instructing the Federal Energy Regulatory Commission to withhold permits pending assessment of alleged environmental harm from increased natural gas drilling for export.

Russian aggression in Ukraine is a wake-up call to support gas and oil exploration and development on public lands, to break ground on the Keystone Pipeline, and to streamline bureaucratic red tape on constructing LNG export facilities, which currently take years and require some 40 different permits.
Reducing energy costs by increasing supply creates new tax revenues and jobs – two important benefits.
But protecting national security with energy independence and providing natural gas to help allies thwart tyrants, terrorists and bad actors make this a top priority.
Originally published in the Houston Chronicle.

Scott S. Powell

Senior Fellow, Center on Wealth and Poverty
Scott Powell has enjoyed a career split between theory and practice with over 25 years of experience as an entrepreneur and rainmaker in several industries. He joins the Discovery Institute after having been a fellow at Stanford’s Hoover Institution for six years and serving as a managing partner at a consulting firm, RemingtonRand. His research and writing has resulted in over 250 published articles on economics, business and regulation. Scott Powell graduated from the University of Chicago with honors (B.A. and M.A.) and received his Ph.D. in political and economic theory from Boston University in 1987, writing his dissertation on the determinants of entrepreneurial activity and economic growth.