The focus of this issue of SHALE Oil & Gas Business Magazine is on managing resources. For a magazine that covers the oil and gas industry, it is only fitting that our focus would be on managing our natural resources — as in oil and gas. For our friends who are opposed to oil and gas as being an important resource, we might even shift the emphasis to managing our natural resources — that is, not “keeping it in the ground” or otherwise self-imposing some kind of prohibition against using oil and gas, as if they were the carbon cousin to cyanide.
But managing our natural resources to what end? Environmental extremists would prefer that we leave no trace of man’s presence in the world; we should return to living without power plants, electric grids, refineries, manufacturing facilities, modern forms of transportation — a lifestyle that was described by Thomas Hobbes in the 17th century as “solitary, poor, nasty, brutish, and short.” Alex Epstein, author of The Moral Case for Fossil Fuels, has a different thought. He would say that the principal purpose for managing our natural resources responsibly is to promote the flourishing of mankind. I think I’ll go with Alex.
But by whom would our natural resources — our oil and gas — be managed? Through some very undeserved providential blessing, we find ourselves living in the United States of America. Not only is the U.S. abundant with seemingly endless reserves of oil and natural gas (and coal), America can also boast about a system of ownership that exists (for all practical purposes) nowhere else in the world. Only in the U.S. (and the few exceptions of a very small part of Canada and the Caribbean islands of Trinidad and Tobago) can minerals such as oil and gas be owned privately; elsewhere worldwide, the national government or sovereign state owns the minerals.
It is no coincidence, then, that the U.S. has always led the way in the oil and gas industry’s evolution. The incentive provided through private ownership has a way of leading to innovation, progress and success. We need only contrast the bureaucratic quagmire of trying to develop our oil and gas on lands and waters owned by our own federal government with how dominant and successful the same operations have been on privately owned lands to understand the “millstone around the neck of progress” that government resource ownership can be.
So, are we irresponsibly depleting our oil and gas reserves to our detriment? Since the first commercial production of oil in 1859 at Titusville, Pa., there have been many petroleum prophets that predicted the imminent depletion of our global supply of oil. And yet, in 2018, after more than 150 years of relentless and prolific production of oil and natural gas across our nation, we actually have identified more remaining reserves than we’ve ever had before.
In 2016, the U.S. Geological Survey (USGS) released a study regarding the Wolfcamp Shale Formation in the Permian Basin, estimating that there are still 20 billion barrels of oil and 16 trillion cubic feet of associated natural gas yet to be produced. That’s just one formation in one basin. The USGS published another report in 2017 regarding the Haynesville Shale Formation in East Texas, estimating that there is another 61 trillion cubic feet of natural gas, waiting to be produced. Finally, if your eyes haven’t glazed over yet, another 2016 study estimated that total recoverable gas reserves in the U.S. now stand at 2.8 quadrillion cubic feet. (How often do you get to write “quadrillion” about anything?) In other words, we won’t be running out of oil or natural gas in the U.S. for at least another 100 years.
Are we paying too high a price to continue using oil and gas as our principal energy source and manufacturing building block? In other words, are we failing to weigh the benefits of oil and gas against the risks of earthquakes, pollution and climate change? It would be refreshing if the question was ever this fairly posed. When any of these risks are raised, do those who challenge the use of oil and gas ever as much as tip their hat to the countless benefits these resources provide? It has become standard operating procedure to rant and rave exclusively about the alleged risks, as if to wonder what benefit could possibly justify our continued use of these agents of death.
That stance is intellectual dishonesty, pure and simple. But, to be candid, it is purposeful intellectual dishonesty, executed by those who subscribe to that well-worn, unpleasant battle cry of mankind that the end justifies the means. In other words, exaggerate the bad and ignore the good, because the goal itself is worthy. And with regard to those alleged risks: earthquakes can be effectively managed by properly regulating the pressure and volume rates of disposed produced water, and pollution minimization is an American success story in the oilfield — it can always be better, but it is already the gold standard for the rest of the world.
But what about climate change? Are we willing to risk the catastrophic end of the planet, just so we can continue driving our pick-up trucks? Despite the constant preachifying from our elites in government, Silicon Valley and Hollywood, it is still quite a leap to posit that our continued use of oil and natural gas will unquestionably lead to catastrophic climate change. Opponents proclaim that it is a risk they are not willing to take. In January, elites aboard hundreds of private jets attending the World Economic Forum in Davos, Switzerland, decried the excessive carbon output on our planet — apparently by others, not them. They want to keep our oil and gas in the ground, and they don’t much care what kind of economic disruptions it will cause.
The rest of us care. Shutting down our economy and, frankly, our way of life, is an awful lot to ask, all as a result of a computer model that articulates what may happen in the future and why. The endless list of contributions that oil and natural gas make to our lives is tangible and real. These benefits surround us, support us and permeate our day. The products they generate warm us, cool us, feed us, make our water potable, clothe us, transport us, heal us, edify us. It might be difficult to think of some aspect of our modern life that isn’t somehow touched, affected or improved on by oil and gas.
But the opponents point to the risks of continued use, as embodied in their all-knowing computer models. Climate change doesn’t necessarily equate to catastrophic climate change. Climate change doesn’t necessarily mean change caused only by oil and gas, or even primarily by oil and gas.
Responsibly managing our resources begins with common sense.
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.