By Robert L. Bradley, CEO, Institute for Energy Research
President Obama recently nominated Sally Jewell to head the Department of Interior. Her bona fides include growing Recreational Equipment Inc. (REI) to nearly $2 billion in revenue last year. But in her new job, the question is whether she’ll grow America’s untapped energy resources.
Jewell is now at the gulf between what is and what could be. The Interior Department is responsible for oil and natural gas drilling off our coast – or rather, the absence of new drilling.
Consider ExxonMobil’s $14 billion plan to develop one of the largest oil fields in the North Atlantic. That drilling will be off Canada’s Newfoundland. But the Hebron oil field is believed to extend southward into U.S. waters with its billion-barrel potential. Unfortunately, the United States won’t see a drop of it -- unless Secretary Jewell and others in the Obama hierarchy open it up. Simple permission is all that is required.
The United States could become the world’s largest producer of oil by 2017, surpassing Saudi Arabia and Russia, according to the International Energy Agency (IEA). By 2035, the United States will be nearly energy self-sufficient.
The prospect of U.S. self-sufficiency overturns a half-century of conventional wisdom. Oil and gas critics have long warned of “peak” supply – the point at which extraction is at its highest possible rate. At this “peak,” wells will start running dry for good. But this theory is nothing more than a myth-and scare tactic by those favoring subsidized energies such as ethanol, wind and solar.
Today, according to both the IEA and the U.S. Department of Energy, America has an astounding 1.4 trillion barrels of recoverable oil, the majority of which is oil shale in the Rocky Mountain West. Large crude oil deposits are also offshore in portions of Alaska. When combined with the recoverable oil reserves of Canada and Mexico, North America has more than 1.7 trillion barrels of oil - more oil than the world has used since the first oil well was drilled in Pennsylvania 150 years ago.
There’s no guarantee all these reserves can be developed. But if American energy producers can tap into even a fraction of this supply, our domestic energy production could well outstrip that of Saudi Arabia.
Already, U.S. oil production has surged to its highest level in a decade. And that’s with minimal access to federal resources, currently closed to exploration. Between 2007 and 2012, 96 percent of increased domestic oil production was driven by development on state and private lands. And with these prospects, estimates of U.S. oil reserves will certainly increase. Domestic supplies of technically recoverable oil could fuel 200 years of usage at current consumption rates.
America’s natural gas bounty also defies naysayers. The U.S. Energy Information Administration estimates the United States has approximately 318 trillion cubic feet of extraction-ready natural gas reserves. Estimated total reserves have increased annually for the past 12 years. Approximately 2.7 quadrillion cubic feet of gas reserves are recoverable – enough to supply the United States for 110 years at current rates of consumption.
Opening federal lands has another reward: $36 billion in annual new revenue (not to mention a $127 billion boost to GDP) over the next seven years, according to a new study. This would close more than three percent of the current annual federal deficit.
The United States is at the center of the oil, gas, and coal world. The sooner federal officials relent, the sooner jobs and needed revenue can flow. It is a win-win-win for producers, consumers, and taxpayers at a most opportune time.
It’s past time for politics to legalize economics.
Robert L. Bradley is CEO of the Institute for Energy Research and author of seven books on energy. He blogs at www.masterresource.org.