America is Fracking Back at the US EPA Restoring Our Energy Mojo!

While the US EPA declares virtual war on coal and other fossil fuels with a deluge of new regulations designed to advance the industrial policy of choosing clean energy winners by turning real energy performers into losers, a funny thing is happening across America.

America is fighting back—and winning!

The United States imported only about 49% of the petroleum in 2010 and our dependence upon imports continues to fall. According to the Energy Information Administration net imports of oil and fossil fuel liquids have decreased to 8.0 to 9.5 million barrels per day in 2010 and 2011 (average about 9.0 million barrel per day). From 2005 to 2007, the net imported crude oil and petroleum products was 12.0 to 13.3 million barrels per day (average about 12.8 million barrels per day)

The total petroleum supplied to the United States from 2005 to 2007 was 19.7 to 21.4 million barrels per day (average about 20.8 million barrels per day). In 2010 and 2011 the petroleum used has been 18.1 to 20.2 million barrels per day (average petroleum used has been 19.0 million barrels per day). Domestic crude oil production has increased about 500,000 to 700,000 barrels per day.

This success story from the combination of high global oil prices, applied American technology in horizontal drilling and hydraulic fracturing, the rejection of claims that these technologies are fouling groundwater as unfounded, and real job creation of unconventional oil and gas is hard to beat. And lower oil usage is also because of the higher prices for oil and our weaker economy reducing demand.

Wood Mackenzie released a study recently finding that domestic production from unconventional oil and gas could grow by over 10 million barrels of oil equivalent per day (boed) by 2030. That production growth would create an additional 1.4 million jobs, and produce more than $800 billion of cumulative additional government revenue.

What must the government do to achieve that potential for growth?


But Lynn Helms, Director of the North Dakota Department of Mineral Resources in a recent presentation quantified the fears the industry has that US EPA will turn its sights on unconventional oil and gas production to open a new front in its war against fossil fuels to mitigate its losses on cap and trade and forced retreat on new emissions rules:

  • Administration budget contains tax rule changes that could reduce activity an estimated 35-50%
  • Oil price below $50 WTI could reduce activity an estimated 25-30%
  • EPA rules on hydraulic fracturing could halt drilling for 18-24 months cutting production 25-30%
  • Federal minor source air permits require 6 -12 months for approval

The bottom line according to Lynn Helms is the US could easily increase domestic oil production by 500,000 to 1 million barrels per day through 2015 from existing unconventional plays.  The biggest problem is lagging infrastructure to get that oil and gas from the fields to refineries and terminals.

Since attacking unconventional oil and gas production directly has proven risky business, opponents of fossil fuel use including the US Government are using their regulatory authority to slow down pipeline construction thus starving the unconventional plays of transport capabilities.  That is the battle most visibly playing out over the keystone XL pipeline that would bring supply from the Alberta oil sands into the US and create a substantial new transport vehicle.  Pipeline construction within North Dakota is a high priority to keep production growth going. At current production growth rates North Dakota will become the second biggest oil producing state after Texas in 2012 or 2013 passing Alaska and California.