John Royall, President, Gulf Energy Information/World Oil 03/09/2022


Biden

It is high time for the United States to forge a new energy policy, based on facts and common sense. Prior to Tuesday’s decision to halt the import of Russian oil and gas, the Biden administration imposed more sanctions on U.S. oil and gas than on Russian oil and gas. Public lands were made off-limits to drilling. The cancellation of the Keystone XL pipeline and restrictions on other pipelines have blocked the efficient distribution and export of energy in the United States. FERC approvals and EPA requirements have hampered the development of several gas export projects. Only the Russian assault on Ukraine stopped Nord Stream 2, and Germany’s, not the United States

Supply. It was nice to imagine that we could power a modern economy with wind turbines and solar farms, but Russian energy policy shattered that nice dream. Oil and natural gas are necessary to power modern economies, allowing us to heat our homes, transport food and essentials, and manufacture important items, such as medicine and materials. As I write this from London, the cost of natural gas heating for homes here in the UK has doubled in the last year, and natural gas is trading at 10 times its cost ago a year. Brent is trading well above $115 today, and it appears to be making its way to eventually surpass the all-time high of $147.50, set in 2008.

As in the United States with soaring gasoline prices, this hits the middle class particularly hard.

The release of oil from the Strategic Petroleum Reserves on March 1 was a largely symbolic gesture, as crude oil prices continued to rise.

Security. There is no substitute for increased oil and natural gas production in the United States and Europe for energy security.

The United States has significant reserves of raw and natural gas, in the form of unconventional gas and conventional gas. Estimated proven natural gas reserves are 473.4 Tcf, at the end of 2020, according to the US EIA. Thanks to the policies of the current administration, U.S. oil production has remained at levels about 2.0 MMbpd lower than pre-pandemic levels. Natural gas production also fell, largely due to a decrease in associated gas production and the restriction of new pipelines from the Marcellus shale.

Prior to the Russian invasion of Ukraine, Russia exported 7 MMbpd of oil and petroleum products, and accounted for 25% of Europe’s oil supply and 40% of its gas supply. The United States can replace much of the Russian supply in Europe, but the industry is deliberately restricted for a policy based largely on energy poverty, that is, the restriction of the main source of energy. energy, petroleum and natural gas.

In 1982, then-US President Ronald Reagan warned German Chancellor Helmut Schmidt that the new Trans-Siberian pipeline, carrying Russian gas through Ukraine to Germany, would bring the country and Europe under the Russian dependence and, therefore, manipulation. The mixed response from Europe and the United States to the Russian criminal act in Ukraine is due to Europe’s dependence on Russian gas and the United States on imported oil .

Policy Changes. The United States has the resources to largely replace Russian gas and oil. In order to replace Russian oil and gas on the world market and bring down prices, the following measures should be taken:

  • Open the exploration of American lands and renew the exploration and development of the the North Sea. There is still plenty of life left in the Gulf of Mexico and the North Sea. Additionally, the Arctic National Wildlife Refuge (ANWR) in the United States is conventional oil that can replace dirty Russian crude. Like the US government, Norwegian officials have put their policy behind the development of renewable energy, but what Europe needs is increased production of oil and natural gas, both at home and in the States. -United. The North Sea still holds a potential of 20 to 30 billion boe, according to a recent study by PWC. The Gulf of Mexico, which has been declared dead many times, holds just as much if not more potential. And the ANWR holds a potential of 10 billion boe.
  • Make capital for energy projects more readily available. Banks in the United States, and particularly in Europe, are reluctant to finance hydrocarbon projects. In fact, I have heard directly from many European bankers that they cannot be associated with the words “oil” or “gas” or “oil” for advertising purposes. Governments must reaffirm that we need oil and gas for our economies and ask banks to move forward with financing oil and gas projects. Banks must move forward with exploration financing and energy infrastructure development, such as pipelines and LNG export and import terminals.
  • Remove Restrictions on US Energy Infrastructure. The Keystone XL pipeline will transport approximately 800,000 bpd of heavy oil from Canada’s tar sands to refineries on the US Gulf Coast. That alone will replace Russian imports and make the United States and Canada largely energy self-sufficient. Equally important, and what remained largely unheard of: restrictions on US interstate gas pipelines, particularly on the US East Coast, have not allowed the natural gas resources of the Marcellus to be properly developed.

It makes no sense that the Exelon LNG facility in Boston exists as an import facility, when one of the largest gas fields in the world (the Marcellus) is only 300 miles away. Only resistance to gas pipelines on the East Coast of the United States prevented this import facility from becoming an export facility.

The US Environmental Protection Agency restrictions, which are intended to halt the development of the industry, must be repealed immediately. Additionally, Biden’s decision to halt federal land lease sales again for environmental reasons must be reversed; and the “invalidation” of the most recent offshore lease sale in the Gulf of Mexico has now cast a veil over all future lease sale attempts. For midstream infrastructure, including pipelines and LNG export facilities, FERC approvals and relentless legal challenges have barred construction. The federal government has not lifted any of these obstacles, quite the contrary.

President Biden has repeatedly asserted that his administration has not interfered with the production, distribution, and refining of oil and gas in the United States. However, the actions of the Biden administration drown out the words. It is time for the United States to change its energy policy, not only for the good of Americans, but also for Europe.