It is a pleasure to be here in North Carolina where in a few weeks, the Democratic National Convention comes to Charlotte and the power of American democracy will be on center stage. While a number of issues are certain to be discussed at the convention, not one is more important to the future of our nation’s economy than having a reasonable and responsible energy policy. Here in North Carolina, you are blessed with reserves off the coast and with shale gas onshore.
With the right policies in place, North Carolina has a unique opportunity to create its own legacy of energy production. Both through production and through the manufacturing benefits that energy production brings. Because of this, the state has a bright future. Developing North Carolina’s shale energy resources and offshore energy could lead to more than 45,000 new jobs by 2020 and add $200 million of new revenue for the state each year through 2030, according to a recent study. This is in addition to the 135,165 jobs, the $6.1 billion in labor income and the $11 billion added to the state economy the industry already supports annually.
Energy development will create more jobs, raise living standards and enhance our energy security, but doing so will require a clear understanding of the potential benefits and an effective partnership between industry and government. We as an industry must foster a straightforward discussion on how North Carolina, following the lead of states like Pennsylvania and North Dakota, can build an energy future founded on public policies that encourage greater development of our vast domestic energy supplies. And the appetite for energy production in the state is strong. Our own recent polling in North Carolina shows that 75 percent of voters support increased oil and natural gas production.
In July, members of the North Carolina state legislature listened to these voters and blocked a veto attempt from Governor Bev Perdue, overturning a ban on hydraulic fracturing in the state. The legislature recognized the benefits that energy production will bring to North Carolina and moved past the rhetoric surrounding hydraulic fracturing, a process that has safely fractured more than one million wells since 1940. The actions by the legislature helped reinforce that North Carolina is a state that understands the importance of having productive and reasonable discussions on our energy future.
North Carolina has an opportunity to increase energy production thanks to natural gas finds in the state and vast offshore resources. It is the industry’s use of new technology like horizontal drilling, hydraulic fracturing and seismic imaging of the ocean floor that has given fresh life to energy development in North Carolina.
The opportunities in North Carolina are in fact something we’re seeing all over the country. The safe implementation of the latest technology is moving domestic energy development into a new era. And in the process employing hundreds of thousands of Americans, generating revenues for governments at all levels, and improving our nation’s energy security. And to put all of the recent developments in perspective, and to prioritize the steps policymakers can make to improve our energy economy even further, we at API earlier this year released our second annual “State of American Energy” report.
Our report highlights the fact that we are the most energy rich nation in the world. When you consider U.S. fossil fuels, nuclear energy, renewable and alternative energy sources such as biofuels – you see a country with the largest energy resources in the world, more than Saudi Arabia, more than China, more than Iran – Iraq –Libya – and Kuwait combined. The oil and natural gas industry is proud to be part of this good news about domestic energy.
New discoveries, enhanced production technologies and efficiency improvements mean we have more oil and natural gas resources than anyone thought possible just 20 years ago. And that’s good news for our country. And that’s also good news for North Carolina and your economic development.
The growth of oil and natural gas development across the country has also created a ripple effect for other industries, specifically in the manufacturing sector. The materials needed to extract oil and natural gas are the same materials that are made in North Carolina – steel, pipes, pumps and other manufactured materials. The oil and natural gas industry already supports 9.2 million jobs nationwide and 7.7 percent of U.S. gross domestic product and it provides $86 million dollars a day in revenues to the federal government during a time of enormous budgetary pressure.
At a time when millions of Americans are unemployed, we have to have the political will to develop more domestic oil and natural gas so that there will be more jobs (one million of them in just seven years), and more revenue for state and federal treasuries: more than $800 billion by 2030. This isn’t just wishful thinking: there are a number of positive steps policymakers can take to make this our new energy reality, including:
- First, increasing access to areas currently off limits and restoring efficient and timely leasing and permitting.
- Second, pursuing common sense rules that support the development of domestic energy resources and avoiding unnecessarily burdensome or duplicative actions.
- And finally, approving the entire Keystone XL pipeline, after more than three years of review, is critical to our national interest.
Interestingly, if we expand utilization of Canada’s oil sands, increase U.S. oil production and continue development of domestic biofuels, we could produce 100 percent of our liquid transportation fuel needs from North American sources in just 12 years.
While we have abundant resources – and the ability to access those resources safely, responsibly, and with care for the environment – the U.S. seems to lack one thing … the political will to act. When it comes to domestic resources, what we hear and what we see from the current administration are often two different things. President Obama said last year that many of the shovel-ready jobs imagined by his stimulus program were “not as shovel-ready as we expected.”
But the full Keystone XL pipeline would create 20,000 new U.S. construction and manufacturing-related jobs over the next two years, without any need for stimulus money. More importantly, it would help support the creation of half-a-million new U.S. jobs by 2035 through greater utilization of Canada’s oil sands. The president went out of his way to voice support for natural gas during the unveiling of his Blueprint for a Secure Energy Future last year, but the administration’s regulatory actions suggest they’re considering a top-heavy, go-slow regulatory approach, which will keep those resources in the ground and off limits to our economic needs.
There are now at least 10 federal departments and agencies contemplating new regulations or seeking to delay hydraulic fracturing, the technology that has made the shale revolution possible. And yet without hydraulic fracturing, a proven technology that has been safely used for over 60 years, the bulk of our future natural gas production is impossible.
From the Energy Information Administration to the National Energy Technology Laboratory, experts agree: if we shut down hydraulic fracturing, 69 percent of our natural gas supply will be in jeopardy by 2035. You cannot be for natural gas and against hydraulic fracturing.
And the contradictions from the administration extend offshore. API welcomed the administration’s announcement of the next Five Year Plan as a good first step, but it left much of our resources still off-limits, including the Atlantic coast. In 2003, the Minerals Management Service estimated undiscovered recoverable oil and gas resources in the Atlantic to be 3.5 billion barrels of oil and 33.3 trillion cubic feet of gas. By tapping these oil and natural gas resources, we would be able to create thousands of new jobs and create billions in local, state and federal revenues.
Oil and natural gas leasing and permitting – the preparatory steps to production – is down on federal lands onshore as well as offshore. The number of new federal oil and natural gas leases onshore in Western states was down 44 percent in 2009/2010 compared to the previous two year period. The same troubling trends have developed for drilling permits in these areas and the number of new wells drilled on federal land … due to the slow-walking of development by this administration.
In 2010 alone, non-federal drilling permits across the Western U.S. increased by 31 percent, even as federal drilling permits dropped by 13 percent. The disparity is compelling – the private sector is enabling economic growth while the federal sector is preventing it. This administration’s policies are disconnected from our economic and energy reality, and ignore the jobs, economic growth and energy security available through domestic energy. Instead, it’s on a course for less energy—not more—through policies that place domestic oil and natural gas resources off limits, through unnecessary and burdensome regulations, and through policies that say “no” to certain U.S. energy resources.
We are moving in the wrong direction and most Americans understand this. Poll after poll shows that the vast majority of American voters think we’re on the wrong energy track. The important question is: How do we get on the right track? We are an energy rich nation. We have the people, the technology, and the ability to access and develop those energy resources safely and responsibly.
We cannot stay trapped by policies driven by a zero-sum game philosophy for energy. A philosophy that says we must have less oil and natural gas so that we can have more of something else. The federal government predicts we’ll need 16 percent more energy of all types to meet our nation’s projected demand in 2035. To get there, we must abandon policies that pit one resource against another, and discard political rhetoric that isn’t supported by action.
We must make the choices that move us in the right direction. Getting on this right track also requires engaging the American people. Elected officials and candidates need to hear from voters regarding our energy challenges and our choices , so this year API launched a new campaign, called “Vote 4 Energy”, that encourages voters to make energy a ballot box issue in 2012. We are hosting events across the country including at a number of fairs across North Carolina.
A vote for energy is not a vote for a person, or a party, or even a philosophy, but rather, it’s a vote for America and our future. We have the resources to meet our energy challenges and with the right leadership and vision, we can turn these challenges into a great opportunity that will make our country stronger. I look forward to working with all of you to make that vision a reality.