Click here & be heard by US Secretary John Kerry. … do it right now, it only takes 30-seconds.

Please approve the Keystone XL pipeline as quickly as possible. Every day we continue to delay this important piece of U.S. energy infrastructure inhibits our economic growth and weakens American security.

As a military veteran and a well-known supporter of military personnel, veterans and their families, you understand the importance of protecting our national security. Approving the Keystone XL pipeline would directly enhance America’s security, diminishing our dependence on unfriendly foreign oil states and strengthening our relationship with our next-door neighbor and longtime ally, Canada.

The full Keystone XL pipeline would bring in an additional 830,000 barrels of North American oil per day, reducing our need to import oil from places like the Middle East. With Keystone XL, our crude imports from Canada could reach 4 million barrels per day by 2020, twice the amount we now import from the Persian Gulf.

Canada will develop and market their oil reserves regardless of what we do about Keystone XL. It just makes sense to approve this pipeline and bring that fuel to the U.S., to grow our economy, provide jobs for our workers and power our businesses and homes. Americans have waited nearly five years for this pipeline to be approved and for America’s government to increase our energy security. After all the delays, it is time to act.

For almost three decades you exhibited strong leadership in the U.S. Senate. Bring that same leadership to the Department of State and approve the Keystone XL pipeline without delay.

Senate Tax heard Senate Bill 295, a bill to repeal the oil and gas “tax holiday” sponsored by Senator Christine Kaufmann (D-Helena) this morning.

Several turned out to testify in opposition of the measure which would kill the oil and gas production incentive passed by the legislature over a decade ago. The incentive, which lasts only the first 12-18 of production, was created to spur economic growth in Montana.

Proponents of SB 295 included the Montana Conservation Voters, Montana Environmental Information Center, and the Northern Plains Resource Council. The chief argument for the bill was that incentives are no longer necessary, and that production taxes are needed to cover the cost of production impacts. Opponents of the bill, however, believe that repealing the incentive would directly impact production and Montana’s economy.

“Exploration in the Bakken is occurring only because of the tax holiday,” said John Alke, opposing the bill on behalf of Fidelity Exploration and Production Company. Alke explained that wells across the border will produce three to four times the volume of those in Montana. “If you eliminate the tax holiday you will not affect the tax burden, but determine where companies will drill for oil.”

Testifying against the bill was Dave Galt for the Montana Petroleum Association who presented information showing a decline in recent production. Montana’s rig count is down to 12, representing a 31.6% drop since last year. Meanwhile, North Dakota’s rig count is more than 175 as of this week.

Also opposing SB 295 was the Montana Contractors Association, Northern Montana Oil & Gas Association, Montana Taxpayers Association, Montana Association of Oil, Gas & Coal Counties, the Montana Chamber of Commerce, and several oil and gas employers.

“Tax breaks exist to create jobs,” explained Nancy Schlepp of the Montana Taxpayers Association. Oil and gas projects have created nearly 30,000 jobs statewide, from Sidney to Kalispell, from oilfield employment, to construction, to retail and hospitality.

“These companies are generating a lot of tax dollars in a log of other ways,” said Webb Brown, President of the Montana Chamber of Commerce. Oil and gas companies paid more than 200 million last year in taxes to fund government programs and local schools, while property taxes paid by the Billings refineries represented one fourth of all property taxes paid in the city. Since 1999, when the production incentive was created, the state has collected over a billion dollars from oil and gas companies.

Bob Gilbert of the Montana Assoc. of Oil, Gas and Coal Counties presented impassioned testimony.  “Let us in Eastern Montana survive,” exclaimed Gilbert. “A skeptic would say this bill is designed to slow down or stop production of oil and gas in Montana; and I’m a skeptic.”

Retreived 3-5-2013. The Montana Petroleum Association, Inc.  A voluntary, non-profit trade association, serving a membership of oil and natural gas producers, gathering and pipeline companies, petroleum refiners, service providers and consultants.

Bob McTeer, Contributor
A former Dallas Fed president, I cover the economy.

The direct way fracking can reduce the budget is by stimulating economic activity and thus tax revenues. This is obvious.

This piece is about another, less obvious, less intuitive, indirect way fracking can reduce the budget deficit. It is based on the fact that the sum of the budget deficit, the capital inflow to finance the trade deficit, and the difference between domestic saving and domestic investment equals zero. If you expand or shrink any of these three imbalances, it puts pressure on the others to expand or shrink to maintain the net zero balance.

As fracking expands domestic oil and gas production, it likely will reduce U.S. demand for energy imports and shrink our trade deficit. This reduces the net capital inflow required to finance the trade deficit. The reduced capital inflow will tend to reduce the gaps between domestic investment and saving and government expenditures and tax revenue—the deficit in question.

Let me back up and elaborate. Income minus consumption gives us saving, by definition. Income minus consumption also gives us investment, since investment represents output not consumed. Therefore, taking consumption out of the equation, total saving must equal total investment.

National saving is composed of personal saving, business saving, and government saving, i.e. an excess of tax revenue over expenditures. Personal saving, as we know, is low but positive these days. Business saving is moderately positive. However, net negative government saving (the budget deficit) overwhelms the others and make total national saving negative. Since we invest more than we save domestically, the saving deficit must be made up by importing foreign saving in the form of the capital inflow that finances the trade deficit. (See the postscript for a further explanation of this.

Therefore, I repeat, these three variables—the investment saving imbalance, the government spending-taxing imbalance and the inverse of the export-import imbalance are linked together (they total zero) and are mutually determined. Other things equal, the reduction in the trade deficit due to fracking will reduce imported capital and put pressure on investment relative to saving and government spending relative to taxing. At least some of the correction is likely to lead to a smaller budget deficit.

Got it?

P.S. In a closed economy with no government, income will adjust to make saving and investment equal in equilibrium. Introducing, government spending and taxing, the two injections into the income stream (other than consumption) will be investment and government spending while the two leakages will be saving and taxing. Therefore, the sum of the injections will equal the sum of the leakages in equilibrium, although there is no requirement for a separate balance of taxing and spending and saving and investment. Introducing foreign trade, exports become a third injection while imports become a third leakage. In equilibrium, investment plus government spending plus exports will equal saving plus taxes plus imports. In our recent past, the excess of government spending over taxes requires a net capital inflow (to finance the excess of imports over exports) to finance the excess of domestic investment over saving. If fracking reduces the excess of imports over exports the other two imbalances must adjust, thus putting downward pressure on the budget deficit.

Retrieved 3-4-2013. Forbes.

BISMARCK, ND – Eighty-nine percent of North Dakotans statewide said they favor oil and gas development in state, and 55 percent said they strongly favor it according to a survey commissioned by the North Dakota Petroleum Council (NDPC) in November.

“North Dakotans continue to overwhelmingly support oil and gas development in the state because of the strong impact it has on growing our economy, creating tens of thousands of new, good-paying jobs, and in helping increase our nation’s energy security,” said Ron Ness, president of the NDPC. “We have seen an increase in the number of residents who strongly favor oil and gas development, and I believe that is an indication that the industry is developing these resources responsibly and with great consideration to the communities and landowners in western North Dakota.”

The survey is conducted annually to help the industry better gauge how North Dakotans feel about oil and gas development in the state and to identify key issues and challenges that the industry may work to address. The survey found that while a majority of North Dakotans favor oil development, more than 70 percent are concerned about truck traffic and cost and availability of housing. When asked about progress in these areas, however, 45 percent said progress was being made on roads and highways, 41 percent said progress was being made on availability of housing, and 60 percent said progress was being made on affordable housing.

Despite concerns for these and other areas, about the same number (71 percent) of North Dakotans believed that the benefits of oil development outweigh the risks. In fact, when asked if oil development should slow down on private land, 76 percent of North Dakotans said no, and 58 percent said development should not be slowed down on public lands.

“The industry recognizes that communities in western North Dakota are impacted by the rapid growth brought on by oil development, but this survey shows that we are making progress,” said Ness. “By and large, North Dakotans agree that while we do have challenges with our growth, these are good challenges to have, especially in light of high unemployment and a struggling economy nationwide.”

Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 400 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

View or Download the Survey here.

By: Edgar Ang, opisnet.com

The U.S. may be marching toward the politically charged “energy independence day” amid growing domestic oil production.

However, “the gap between U.S. oil production and consumption is large and may not close in the forecast period (2022),” Credit Suisse said in a report on U.S. oil production outlook.

“North American oil independence (U.S., Canada, Mexico) looks more achievable with appropriate policies to promote safe drilling, energy efficiency, regional coordination and gas substitution. However, we don’t hold out high hopes of the same low cost dividend to the U.S. economy provided by natural gas due to the relatively higher cost of oil shales and Canadian oil sands. Natural gas appears the best low cost energy policy bet,” the bank said.

U.S. oil production could reach just over 10 million b/d by 2020 and maintain this level for a number of years, according to Credit Suisse. The strong oil production growth estimate is based on high oil prices, a 27% higher oil well count by 2016 versus 2012, (58% higher than 2011) and a 25% improvement in 30-day initial production (IP) rates per well. Although the well count increases by 27%, the oil rig count only increases by 11% owing to improvements in drilling efficiency, which is defined as the number of days to drill a well.

Key shale plays to watch include the Eagle Ford, Bakken and Permian. After recent exploration success, the offshore Gulf of Mexico and potentially Alaska should also contribute some growth.

Single well economics suggest breakevens in the $60-75/bbl range for U.S. shales today. However, driving growth at forecast rates requires substantial capital — access to capital could be a greater constraint.

In a simple calculation, the U.S. oil industry needs around $95/bbl Brent near term to fund the capex required to deliver this growth, based on self-generated cash flow alone. This could be lowered by external funding, but we are already seeing some companies reduce capex when WTI recently fell through $90/bbl.

As U.S. oil production volumes rise, this breakeven could fall toward $80/bbl. It is important to note that the average recovery of a gas well is three to five times the recovery of a typical oil well on a Btu basis. The shale oil revolution should help meet rising global demand but looks less likely to lead to a collapse in domestic pricing similar to U.S. gas markets.

Price Impact

For downstream implications, the U.S. will require new trunkline pipes and gathering system to accommodate 600,000 b/d of annual oil production growth from the U.S. and 300,000 b/d of Canadian annual production growth through 2017, the bank said.

“Our short term model suggests WTI-LLS will remain wide through the second half of 2012 but narrow as Seaway, southern Keystone XL and Permian pipes are built through 2013,” Credit Suisse said. “Even as WTI-LLS spreads narrow, it is likely that a wider discount will remain for Bakken and Canadian Heavy crude through 2014,” it added.

Although oil supply from the U.S. and Canada is visibly growing, outside North America, non-OPEC supply growth is negative in 2012. Oil spare capacity increases towards 3% by 2015 (from 2% today) but markets may still reflect some risk premium over marginal costs, the bank said. “Risks to this view seem balanced. Spare capacity could rise faster if curtailments in Nigeria, Iran, Venezuela, Sudan were resolved. Spare capacity could fall, if a global economic recovery takes hold,” Credit Suisse said.

The rising oil and gas production is also expected to have an impact on the U.S. economy. The bank’s U.S. industry capex model suggests around $1.3 trillion dollars of spend between now and 2020. Low U.S. gas prices should encourage some $35 billion of petrochemical capex and a manufacturing renaissance. The logistics to bring shale hydrocarbons to market could total an additional $80 billion this decade.

Article republished, courtesy of Oil Price Information Service

(HELENA) The State of Montana will offer detailed training on a range of topics that includes air quality and discharge permitting, compliance requirements, and best business practices for contractors, opencut mining, materials processors, and the oil and gas industry.

The trainings will be in Sidney on October 1 – 3 at the Mondak Heritage Center, 120 3rd Ave SE,  and will be conducted by representatives of the Departments of Environmental Quality (DEQ) and Transportation (MDT). The trainings are free of charge and open to qualified registrants.

The three-day series is designed specifically to address practices surrounding opencut mining and associated development and growth seen in recent years throughout northeastern Montana.

“This training series provides valuable information that will save owner-operators and contractors time and money as they grow with the region,” said Darrick Turner, manager of DEQ’s Small Business Environmental Assistance Program. “Attendees will come away with a better understanding of the state’s environmental regulations and the permitting processes.”

Topics will include air quality and discharge permitting, and inspections. A full day is devoted to siting and compliance requirements and permitting for opencut operations. Enforcement and transportation issues will also be addressed.

Registration is available by calling 800-433-8773 or by emailing Darrick Turner at: dturner2@mt.gov.

A video criticizing the current U.S. administration’s business and energy policies has gone viral, as American gear up for election season.

Americans For Limited Government (ALG), a non-partisan group, launched ‘If I wanted America to fail’, inspired by Paul Harvey’s essay, If I Were The Devil, slamming President Obama’s policies on a raft of issues, from housing to mining.

The video starts with the haunting words:

“If I wanted America to fail, to follow, not lead; to suffer, not prosper; to despair, not dream; I’d start with energy.
I’d cut off America’s supply of cheap abundant energy.
I couldn’t take it by force.
I’d make Americans feel guilty for using energy that heats their homes, fuels their cars, runs their businesses and powers their economy.
I’d make cheap energy expensive so that expensive energy would seem cheap.
I would empower unelected bureaucrats to outlaw America’s most abundant sources of energy.
After banning its use in America, I would make it illegal for American companies to ship it overseas….”

Testimony of Karen A. Harbert
President & Chief Executive Officer
Institute for 21st Century Energy
U.S. Chamber of Commerce

Tuesday, April 17th, 2012

Thank you, Chairman Hall, Ranking Member Johnson, and members of the Committee. I am Karen Harbert, President and CEO of the Institute for 21st Century Energy (Institute), an affiliate of the U.S. Chamber of Commerce. The U.S. Chamber of Commerce is the world’s largest business federation, representing the interests of more than three million businesses and organizations of every size, sector and region.

The mission of the Institute is to unify policymakers, regulators, business leaders, and the American public behind common sense energy strategy to help keep America secure, prosperous, and clean. In that regard we hope to be of service to this Committee, this Congress as a whole, and the administration.

I appreciate this opportunity to discuss an issue area that gets very little coverage in the public policy debate, the potential benefits and the existing obstacles to greater development of the nation’s vast unconventional oil and natural gas resources. There has been much discussion about America’s oil reserves recently, but rarely does it accurately capture the full extent of our resources. The country’s unconventional oil resources are some of, if not the largest the world and one of the single greatest assets we as Americans possess.

We have hundreds of years of oil supply stored in unconventional formations in the United States. In fact, the three states of Colorado, Wyoming and Utah alone contain more oil from oil shale than all of the conventional oil contained in the Middle East. This resource is so vast that when made commercial, it has the real potential to completely alter the global oil markets and secure America’s energy future at the same time. Yet it is the current policy of our government to ignore the value of these resources, sacrificing the revenue, jobs and huge security dividends Americans would realize from developing them.

Historical Context

After the Arab oil embargo, the price of a barrel of oil almost doubled between 1973 and 1974. By 1980, the price of oil had increased more than tenfold since 1972. In response, the United States, along with most of the Western world, reshuffled its energy policy with a focus on weaning itself off imported oil to insulate it from another supply disruption. Efforts were made by the Department of Energy and private industry to begin a Research and Development (R&D) program to foster technology that could economically produce our unconventional oil resources, primarily focused on our vast oil shale deposits. Canada began similar programs to develop its huge supply of oil sands in Alberta.

However, between 1980 and 1986 oil prices declined by more than 60%, falling by nearly half between 1985 and 1986 alone. In the United States, this decline served as justification to stop virtually all federal R&D focused on unconventional oil. Canada however, maintained its commitment to developing unconventional resources and has seen oil production more than double between 1982 and 2008. Over that same period U.S. domestic oil production declined by 43%.

Yet in 2009, the United States began to see an increase in domestic oil production, the first year-to-year increase since 1985. Innovation in the private sector has generated this nascent renaissance. The combination of hydraulic fracturing and horizontal drilling has catalyzed an energy revolution in America, enabling the economic production of trillions of cubic feet of natural gas from shale formations around the country. More recently industry has evolved these technologies further to produce millions of barrels of oil, putting us on a path that could quite possibly make the United States the largest oil producer in the world once again. If the federal government were to allow access to the country’s tremendous unconventional resources, our production levels could completely reshape the current geopolitical paradigm that has existed for more than 40 years.

These innovations originated in the oil fields of north Texas in the late 1970s, when an experienced and single-minded oilman named George Phydias Mitchell defied the conventional wisdom in the industry, the advice of his employees, and sometimes even the will of his shareholders and invested millions of dollars attempting to produce gas from the Barnett shale formation. Under his direction, Mitchell Energy pioneered the use hydraulic fracturing to unleash methane from this thin, but dense shale formation. Ultimately Devon Energy purchased Mitchell Energy in 2001 and married Mitchell’s experience fracking shale formations with its experience using horizontal drilling technology to make it the pioneer of shale exploration and production.

While it was risk-taking entrepreneurs in the private sector like George Mitchell who created these innovations, the federal government has also played a role in making the technology more efficient and safer, as well as accelerating its development. In 1991, the National Energy Technology Lab collaborated with Mitchell Energy’s first horizontal well in the Barnett and brought a significant body of technological knowledge and experience to Mitchell’s operation, informed by its own work in the Eastern Gas Shales Project started in 1976. The federal government lacks the mission or technical capability to develop these commercial technologies. First movers in industry tend to lack broader data and comparative experience that can be applied to use of their technology to improve efficiencies. Together though, cooperative work between the National Laboratories and the private sector has helped accelerate technological innovation. This is the same type of cooperation that Americans expect when it comes to the development of our unconventional oil assets, but are no longer receiving.

Federal Energy Policy Impact on Competitiveness

Current federal policies that hamper production not only threaten our energy security, but also severely undermine our competitiveness. The International Energy Agency (IEA) projects that global energy demand could increase by nearly 50% by 2035. It also projects that fossil fuels will account for 80% of the world’s energy supply, only slightly down from today’s 86%. Fossil fuels, and oil specifically, will continue to fuel the world’s economies, and countries that are realizing the most economic growth are thinking and acting strategically to ensure future supplies will be available to maintain economic growth and competitiveness.

International competitors are not only increasing their own production, but they are exploiting the tie between their governments and their oil companies to invest in new oil reserves in other countries. It is very difficult for a private corporation, no matter how large it may be, to compete against central governments. These other countries are taking positive steps to ensure they have the energy resources to fuel economic growth well into the future.

However, the United States is set on an opposite course. Under this administration, more than 86% of federal OCS lands and 83% of federal interior lands are completely off limits to energy exploration. In 2008, the Department of Interior’s Bureau of Land Management (BLM) proposed making up to 2 million acres of public lands available for commercial oil shale leasing in Utah, Colorado, and Wyoming and 431,000 acres available for oil sands leasing in Utah. In February 2012, the BLM retreated from that proposal and significantly reduced the acreage available for industry to undertake research and development activities. Specifically, BLM reduced the acreages for oil shale activities in Colorado, Utah and Wyoming by over threequarters, from 2 million to 461,965 acres. In addition, BLM reduced available acreage in eastern Utah for activities related to oil sands development by nearly 80%, from 431,000 to 91,045 acres.

Not only has the federal government been reducing access to the country’s energy resources, but it has also been making it more difficult and expensive to produce on the areas that remain available. New and proposed regulations will add to the cost of production, making it even less attractive for industry to invest and produce oil in the U.S. The largest publicly traded oil companies are increasingly looking overseas to the remaining areas that have not already been locked up by other countries’ national oil companies.

Demand for oil will continue to increase as the global economy recovers and the developing world’s thirst for energy only grows. The claim that U.S. oil production is rising is accurate but the reason is even more telling. Production of oil from federal lands is down 11% from 2011 compared to 2010 but has increased by 14% on private and state lands. The picture is equally as lopsided for production of natural gas, which is down 6% on federal lands but is up 12% on private lands. The most significant reserves are located on public lands so this trend is not sustainable over the long term. Without increased access to federal resources, we will see a return to more of our demand being met by imports.

And, of course, we are paying more for what we do import. Our net imports of petroleum and related products rose to $331 billion in 2011, accounting for 60% of our total trade deficit and about two-thirds of the trade deficits increase from 2010.

In short, America’s access to oil, our predominant source of energy, is declining at home and abroad. The same cannot be said for our global competitors, and our ability to compete, generate investment and revenue and foster economic growth is tremendously diminished as a result.

Market Influence on Innovation and Production

The recent significant increase in domestic oil production has not occurred in a vacuum. It is important to note that geologists have been aware of the shale resources that have spurred increased domestic production for decades. However, it was not until sustained increases in global demand put oil prices on a relatively predictable upwards trajectory did it become economical to commercially deploy the new technology to produce shale oil resources at the levels we are now seeing.

After oil prices climbed to a record-high $143 per barrel in July 2008, the U.S. and the world entered an economic recession that significantly curbed demand, causing oil prices to plummet 60% over the next seven months. Since then, much of the world began positive economic growth again, led by developing economies like China and India, resulting in a gradual increase in oil prices until last year. Over the past three years, we have seen oil prices triple. However, because demand was down in the U.S. and the increase was gradual, most Americans did not really notice it until recently. The recent political turmoil in North Africa and the Persian Gulf created fears of further instability and supply disruptions, and prices climbed precipitously. It is important to understand that even if the political unrest subsides and global supplies are unaffected, increased global demand has essentially recalibrated the oil market. Given today’s market fundamentals, it is difficult to see prices returning to the low prices seen in 2009.

This presumption has created a level of certainty necessary for the private sector to invest billions of dollars over the past three years in oil-bearing shale formations. It also creates the necessary certainty for the private sector to invest in our other unconventional resources like oil shale and oil sands if it were allowed access to those resources.

Impacts of Fuel Prices on Business & the Economy

Fuel prices have taken an increasingly central role in the political and legislative debate over the last few months, and for good reason—it is a drag on economic growth and acts as an effective tax on American families and business. The cost of transporting goods, getting to work and even driving to the grocery store has increased 140% since January, 2009.

Every one cent increase in the price of gasoline costs Americans roughly an additional $1 billion per annum. The average American household spent $4,155 on gasoline in 2011, consuming 8.4% of median household income, the highest since 1981. Additionally, each $10 increase in oil prices can knock a few tenths of a percent off any increase in GDP. The quicker the increase, the more pronounced the impact on economic growth. Because of the recent global recession, the cumulative amount of money spent on oil has become a larger share of global GDP since most other areas of economic output have remained constant or declined. In 2011 oil accounted for more than 5% of global GDP, a level not seen since 2008 when oil was selling at $150. Based on 2012 projections from IEA, oil’s share of GDP could approach 6% in 2012, the highest mark since the tumultuous 1970s.

Higher energy prices erode expendable income for America’s families and marginal profits for America’s businesses. At a time where we are just beginning to realize positive economic growth again, these price increases can have a profoundly negative impact. U.S. policy alone cannot recalibrate global oil markets on its own. However, U.S. policy can absolutely have a positive impact on U.S. prices just as it has had a negative impact.

As energy costs increase, businesses have less money to pay employees, new or existing. If prices remain elevated long enough, the unemployment rate can be expected to rise. This, of course, would be on top of the current prolonged high unemployment rate. As the administration and some in Congress have made calls to raise taxes on the oil and gas industry, it is also important to remember the consumer and job impacts such policies would have.

While it is factually accurate to say that there are very few mechanisms at the federal government’s disposal to lower fuel prices immediately, it is not accurate that the government can do nothing to affect prices in the future. A signal to the global energy market that the U.S. is committed to accelerating the development of its vast conventional and unconventional oil resources would not go unnoticed. It is also not true that increased U.S. production could never be large enough to impact global prices and any claim to the contrary demonstrates either unawareness of the country’s massive unconventional oil resources or a willful attempt to hide our potential. One need only look back to the first half 1980s to see the impact the addition of oil production from Alaska’s North Slope and other areas such as the North Sea had on putting downward pressure on the world price of oil, contributing to the collapse in global price in 1986. The acceleration of oil sands production in Alberta in the early 2000s is another, more recent example. Similarly, our unconventional resources have the potential to be the gamechanger the U.S. economy needs and upon which our future competitiveness can depend.

Potential Benefits of Increased Unconventional Production

According to a recent Inventory of U.S. Energy Resources produced by the Institute for Energy Research from official U.S. government data, the country has an estimated 2.7 trillion barrels of in-place oil shale and oil sands resources, more than 80% of which is located on federal lands. At current levels of consumption, these resources would meet our demand for more than 380 years. These resources are twice the size of the entire world’s proven conventional oil reserves of 1.3 trillion barrels. However, current technology would only allow for production of a fraction of the total resources. The Energy Information Administration estimates that the Green River Formation in Colorado, Utah, and Wyoming contains 800 billion barrels of recoverable oil.

A white paper released last month1 by Anton Dammer and James Bunger updates previous government estimates and finds that by developing our oil shale and oil sands resources as Congress instructed in 2005, over the next 25 years we could realize a gain in oil production of 1.1 billion barrels, increase economic growth by $153 billion, increase government revenue by $31 billion, and avoid sending overseas $129 billion for imported oil.

The paper noted that original government estimates that were delivered to Congress in 2007 were much higher but the current administration has been adversarial to development of these resources, eroding any progress that had been made in the previous administration. The paper recounts that a Task Force consisting of the Departments of Interior, Energy, and Defense had worked to fulfill Congress’ mandate through 2008. The Task Force inventoried unconventional resources, current R&D work being conducted, and the state of current technology and recommended a strategic plan for accelerating the development of these resources. Additionally, the Department of Interior finalized a Programmatic Environmental Impact Statement (PEIS), produced a Resource Management Plan, promulgated new leasing regulations, and awarded six Research, Development, and Demonstration leases to industry. Implementation of Congress’ mandate was on underway and on schedule at the end of 2008.

Since then, the current administration has essentially killed this effort against the will of Congress. The Department of Interior has withdrawn the leasing program, publicly suggested that terms of existing leases and the Resource Management Plan are under review, and chose not to defend itself in a lawsuit that has killed the leasing program. Moreover, the Unconventional Fuels Program at the Department of Energy has been de-funded and abandoned. The Department of Interior’s new PEIS severely limits new acreage. These actions have spoken loud and clear to the private sector…do not invest your capital in the development of unconventional oil production.

Similar to what has happened in the production of oil and natural gas from shale formations, industry has been forced to focus on development on state and private lands. While the current hydrocarbon boom demonstrates that industry’s innovation and perseverance can sometimes trump governmental obstinace, it should not have to do so. Our energy future is being compromised by the administration picking energy favorites and trumping the nation’s strategic interests.

Industry has developed many different potential methods to develop both oil sands and oil shale resources. In both cases hydrocarbons are trapped in no viscous elements. While oil sands contain producible hydrocarbons, oil shale must be chemically converted to produce hydrocarbons. Because Canada had the foresight to maintain a commitment to unconventional R&D and production, there is a tremendous body of commercial technology that supports oil sands production. As the technology has evolved, it has become more efficient and has considerably lessened its environmental impact. In fact, Albertan oil sands development has become so common-place that it no longer even merits the designation of “unconventional”.

In the initial stages of oil sands production, soil was mined from the surface and then manufactured into crude oil. Recently however, there has been a major shift towards in situ, or “in place” production, whereby heat either through steam or other mediums is applied to the oil sands bitumen to increase its viscosity to the point that it is produced via traditional oil drilling techniques. In situ production has significantly reduced land disturbance and environmental footprint. While U.S. oil sands are chemically divergent from those in Canada, the innovation and experience in Alberta provides a tremendous starting point for production here…if and when the government was to allow access to our oil sands resources.

Lack of access and economic conditions have prevented oil shale development technology from progressing as far as that for oil sands. However, like oil sands, crude oil can be produced from oil shale through surface mining or via in situ methods. Because shale is solid rock, oil shale kerogen must be exposed to higher temperatures to render its hydrocarbons. Industry does believe that knowledge gained in the Albertan oil sands will directly benefit development of U.S. oil shale…if and when the government was to allow access to our oil shale resources. Unlike production of oil and natural gas from shale formations, there is relatively little oil shale to develop on state and private lands. Without access to federal oil shale resources, industry has very little incentive to invest capital into technology when it has no reason to expect that it will ever be able commercially produce oil shale deposits and recoup its R&D investment.

As such, the policy pathway to realizing even a portion of this huge asset is to allow access to our unconventional resources for production. Congress made its will known through its overwhelmingly bipartisan support for the Energy Policy Act of 2005. This administration has ignored its mandate and refuses to move forward with production of unconventional oil on federal lands. Unless this near-sighted approach changes, our largest strategic assets will remain subterranean potential assets until this, or subsequent administrations decide to allow access to these strategic assets and secure our energy future.