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America, world's largest petro-state, or What in the frack is going on now?

By Judith Pannebaker BCC Editor

Pictured: Dr. Bernard Weinstein, left, met with Angelika Inzanti and Bandera County businessman Gary Johnston after his presentation on Sept. 24 at the Plaza Club.

Dr. Bernard Weinstein recently discussed sustaining America's - and Texas' - current oil boom.

On Wednesday, Sept. 24, the headline on the front page of the San Antonio Express-News announced: "Eagle Ford rivaling SA's productivity" and a subhead read "Shale's economic clout increased to $87B in 2013."
The article outlining the economic benefits of oil and gas exploration segued neatly into a presentation by Bernard Weinstein, PhD, associate director of the Maguire Energy Institute's Cox School of Business, at Southern Methodist University in Dallas. Weinstein's presentation, "From Scarcity to Abundance: The Challenge of Sustaining America's and Texas' Energy Boom," took place at the Plaza Club atop the Frost Bank building in downtown San Antonio.
Sustaining US
petro boom
Speaking to a clearly conservative and capitalistic choir, Weinstein said, "Ten years ago, we thought we'd run out of oil and gas, now scarcity has turned to abundance. The question has now become, 'Can we sustain this'?"
Weinstein's answer was a resounding "yes."
He noted that, in the last three years, the US has seen a 60 percent increase in oil production and in the last two years, production has increased to three million barrels of oil per day - making this country the largest non-OPEC oil producer in the world. "In the next few years, the United States should be the number one oil-producing company in the world," Weinstein predicted, noting that production has actually decreased in Russia and is essentially flat in Saudi Arabia.
On the other side of the equation, however, gas consumption has fallen. "We're using less gas than we used to due to more efficient energy use," Weinstein said. "As domestic production has increased, the demand for oil has decreased."
Additionally, the importation of foreign oil - mostly from Canada and Mexico - has declined steadily. "We now import less than 10 percent of oil from OPEC," he added. "For those who continually say, 'We need to wean ourselves off OPEC oil,' I say, 'We did that years ago'."
Adding natural
gas to mix
Weinstein also noted adding natural gas to this country's petroleum production would make the US the largest producer in the world. "The International Energy Agency forecast that by 2018, increased production in the US would exceed the worldwide demand for oil," he said. As the global demand for oil rises, the US will add enough capacity to meet much of the increase, according to the Wall Street Journal.
Weinstein noted that 33 of the 50 states produce oil and natural gas with Texas being number one, courtesy of the Eagle Ford and Permian Basin, followed by the Bakken in North Dakota and Alaska. "The Eagle Ford Shale oil fields produce 1.2 million barrels per day and the oil business accounts for 155,000 jobs in Texas and elsewhere," he said.
Weinstein predicted that oil drilling in the Gulf of Mexico, which currently accounts for 25 percent of domestic production, would pick up once again in 2015 and 2016. Production in the Gulf slowed four years ago as a result of the Macondo well explosion and oil spill - aka Deepwater Horizon oil spill.
Enter fracking
The process of hydraulic fracturing - aka fracking - has enabled the United States to become the number one natural gas producing country in the world - with Russia coming in a distant second, followed by the "also rans."
That being said, this country does not export liquefied natural gas (LNG), Weinstein said. "We're not a player on the global market," he added. Currently, the US has only two facilities for LNG exportation in Texas and Louisiana, but a third is now under construction. "It's an expensive process and takes about $5 to 7 billion dollars to build a facility," he said. "You can't get a construction loan until you've secured a long term supply agreement." The already up-and-running LNP facilities sell natural gas to Asia, via tankers traveling through the Panama Canal.
The LNG export facility currently under construction is located at Cove Point, Maryland on the Chesapeake Bay. The first proposed LNG export terminal on the East Coast, Cove Point was built in the 1970s as a facility for the importation of natural gas. Morphing the present terminal into a LNG export facility is estimated to cost $2.5 billion to $3.5 billion. If all goes according to schedule, the plant will be online by 2017 with a capacity of about 750 million cubic feet a day.
Due to its location, Cove Point would take natural gas mined in Ohio, Pennsylvania and West Virginia and export it to Europe, Weinstein said. He cautioned, however, "Lawsuits - as well as legislation and regulatory restrictions - can inhibit or kill construction of facilities related to fossil fuel consumption."
Another bane of environmentalists is the Keystone Pipeline, according to Weinstein. "They hate the pipeline. What's the big deal?" he asked. "The Keystone Pipeline will bring more crude oil from Alberta, Canada to the lower 48 states and pick up oil produced in the Bakken."
This huge shale formation sprawls from Saskatchewan and Manitoba, Canada through North Dakota and Montana.
Despite environmentalists' dire predictions of aquifer pollution, Weinstein contended, "If this pipeline is built, it will be the safest one ever."
He feels the pipeline has become not a litmus test for clean and efficient energy, but rather a political decision for President Barack Obama. "I think he's considering, 'Would this be better or worse for the (Democratic) Party in 2016'?" Other political considerations are Obama's decisions to prohibit drilling off the east and west coasts, as well as on federal lands until 2022.
And, while he was debunking popular myths, Weinstein also put to rest another liberal bugaboo - greenhouse gas emissions. "Greenhouse gas emissions are at a 20 year low in the United States," he said. If the climate is changing, blaming human activity probably makes sense, Weinsten admitted, But added, "We have done more than any other country in that regard. We can decrease our emissions to zero and it won't make a bit of difference to climate change. The biggest polluters, China, India and Indonesia, aren't doing a thing."
Meanwhile, back in Texas
Turning to the Lone Star State, Texas' oil production has reached the level it was at when the oil bust occurred in the 1980s, Weinstein said. Since January 2001, Texas has been responsible for 36.5 percent of all the jobs created in the US - "and the energy boom is the reason Texas and North Dakota are now above pre-recession (2008) job levels."
Weinstein continued, "It's been a slow recovery from 2010 when the Great Recession technically ended - a really hard slog. If there had been no increase in oil and gas production jobs across the country, the Great Recession would have been even worse."
The oil and gas industry has accounted for a 25 percent increase in employment since 2010. The economic benefits include:
• Decreased costs for electrical power and heating
• Revival of US manufacturing sectors and economies in cities making up the so-called "Rust Belt," such as Pittsburgh, Pennsylvania and Youngstown, Ohio
• Knock-on affects from growing LNG exports from the US
• Smaller traditional deficits associated with decreased energy imports
• Cheap natural gas attracts foreign investments
US as petro-state
"Although the president doesn't acknowledge it, the United States is a petro-state," Weinstein said. "We're number one in natural gas, nuclear power and renewable fuels production; and number two or three in coal and oil production. The United States is an energy powerhouse. Fossil fuels will be the mainstay of our economy for the next 50 to 100 years."
In closing, Weinstein posed a conundrum for environmentalists touting the virtues of electric vehicles to decrease pollution. "How do they power electric cars? By plugging them into an electrical socket. Where do they think electricity comes from? Do you think it maybe comes from a coal plant somewhere? Their naiveté is astounding."