Looking back on 2019, it is amazing how the headlines in the energy world continue to be more of the same, in terms of both achievements and challenges — only more so. In fact, on the day I’m writing this column, one of the headlines is, “US crude oil production breaks new record high” at 12.6 million barrels per day. That new record high in domestic production happened, despite the fact (and, more likely, the reason) that crude-oil prices have dropped to $53 a barrel. The Energy Information Administration (EIA) estimates even more production in 2020 of 13.23 million bpd.
The news on natural gas that week was equally impressive. The Potential Gas Committee reported that the amount of total recoverable natural gas in the U.S. has risen to a new record high of 3,374 trillion cubic feet. At current levels of consumption, that amount would last more than 100 years. In other words, even with all of the prolific production of crude oil and natural gas in the U.S. since it all began in 1859, we still have more oil and gas reserves than we have ever had before. That is an incredibly crazy, counterintuitive fact that should both astonish us and cause us to be humble and eternally grateful to be blessed with such abundant and critical natural resources.
This tremendous growth in our oil and gas resources, because of the shale revolution, has been the long-playing headline for several years now. Even so, rank-and-file Americans still seem to be unaware and continue to operate on the ever-present misconception that we are somehow running out of oil and gas. Every semester, students in my oil and gas law class are under that mistaken notion. Where do they get that idea? Needless to say, there are anti-fossil fuel agendas that are not shy about perpetuating that storyline for their own purposes — the facts be damned. But I recently confirmed another likely source of bad information (if not indoctrination).
I was invited to speak to high school students in a small New Mexico town, literally surrounded by Permian Basin oil and gas production. My presentation included these statistics about our incredible production rates and seemingly endless reserve estimates. One of the teachers listening to my remarks was the first to ask me a question, which went something like this: “Can you actually look at these students and tell them that there will be any oil and gas left by the time they graduate from college to be able to pursue a career in that field?”
I was shocked — but, I guess, not that shocked — to hear a high school English teacher ask such a clearly uninformed question, especially living and working in the middle of an oil field, in a state that just set a new record for annual production and was enjoying a substantial budget surplus because of the tax revenue generated by their increased oil and gas activity. Do high school teachers not watch the news or read newspapers anymore? If she didn’t know that, what else doesn’t she know? And what kinds of things is she teaching those students? And now I have a clearer understanding of why students in my law school class don’t know what they don’t know — or, even worse, think they know things that are just wrong.
Having an abundant domestic supply of oil and gas also means that we are no longer dependent on other countries. As recently as 15 years ago, the U.S. was importing 60% of our oil from other countries. Today, we are importing only 6%. It is hard to overstate how significant just that one statistic is to our national security.
In spite of that indisputably, incredibly, overwhelmingly great news, opposition to the continued use of oil and gas in the form of every possible kind of challenge imaginable grows more widespread, virulent and irrational.
Coincident with Indian Prime Minister Modi’s visit to Houston and meeting with President Trump to discuss U.S. exports of natural gas to India, 11 protesters with Greenpeace shut down traffic in the Houston Ship Channel by dangling from a bridge to call attention to the climate crisis. I wonder how much their parents paid for their college education.
State governments are one-upping each other in their race to require 100% electricity from renewable energy sources. Maine, California, Hawaii, Nevada and New Mexico are all declaring that goal by 2050; New York and D.C. by 2040. Here’s a tip: Declaring something doesn’t make it so.
A California bill already passed by their state legislature would effectively prevent any oil and gas produced under new leases on federal land from being able to move off the property. It awaits Governor Newsom’s signature. The California cities of Berkeley and San Jose have passed ordinances that will ban the use of natural gas in new buildings in those cities. Ironically, as California continues to dig a deeper energy-poverty hole, they are becoming more dependent on importing what they need from foreign countries. Do they teach logic in California schools?
Another headline this week is that California’s main utility company, PG&E, is having to implement forced blackouts to prevent their power lines from sparking more wildfires because of the intense winds. The reality of such blackouts could quickly drive home the point that no one wants to live in a world of uncertain electricity — that’s the hallmark of a third-world country. In Texas this past August, ERCOT reached a stage-one emergency because of record demand and limited excess capacity. As more coal-fired, natural-gas-fired, and nuclear-fired power plants are retired, due to sub-market prices charged by wind and solar sources still being subsidized by federal tax credits, the potential for blackouts here will only increase because there will no longer be enough baseload power to step in when the wind stops blowing and the sun stops shining.
Lawsuits continue across the country, in which plaintiffs are suing for a constitutional right to a clean (read: no oil or gas) environment and for substantial damages from oil companies for fraud and criminal conspiracy (read: tobacco and asbestos). And that’s just the tip of the proverbial iceberg (which is melting anyway because of global warming).
The good news keeps getting better, and the bad news keeps getting worse. How is it that Americans can see this issue in such diametrically opposed ways? One side frantically proclaims that computer models predict that life as we know it will end if we don’t abruptly and completely stop using oil and gas. The other side can actually and empirically demonstrate that, should we stop using oil and gas, life as we know it will, in fact, end.
About the author: Bill Keffer is a contributing columnist to SHALE Oil & Gas Business Magazine. He teaches at the Texas Tech University School of Law and continues to consult. He also served in the Texas Legislature from 2003 to 2007.
