What role will natural gas play in the United States' energy future? During today's OnPoint, George Solich, president of the Independent Petroleum Association of Mountain States, explains how he believes the Senate's new plan for capping emissions will affect his industry. He also gives his take on the Obama administration's federal lands policy for oil and gas development.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is George Solich, president of the Independent Petroleum Association of Mountain States. George, thanks for coming on the show.
George Solich: Thank you for having me.
Monica Trauzzi: George, talk on the Hill this week focusing on a draft proposal by Senators Graham, Kerry, and Lieberman on climate and the idea for the new proposal is to cap different industries separately. How do you believe your industry would fare in a situation like this?
George Solich: Well, from a hydrocarbon perspective we have the cleanest burning fuel, natural gas, and it's the most abundant for our energy needs here in the future. I think as long as there's a level playing field, Monica, I think natural gas is an obvious solution in any carbon constrained economy.
Monica Trauzzi: The indications that you've gotten so far though, are you hearing that there will be a level playing field? I mean it sounds like certain industries might be regulated sooner than others. What's your take?
George Solich: We haven't heard whether the level playing field is completely played out. I think what we continue to stress to policy makers here in Washington is the game has changed in natural gas. We have an abundant supply, over 100 years supply of natural gas, and that's something very new. We didn't have that information three years ago and we have it today. Now we can use natural gas domestically for our energy needs on the electric generation side and the transportation side reducing greenhouse gas emissions while improving the job picture. Just the last three years alone the natural gas industry has increased their jobs by 20 percent.
Monica Trauzzi: And do you all still see it as sort of this bridge fuel that will take us into a future of even less carbon emissions?
George Solich: Certainly natural gas plays a great role alongside renewables and those of us in the natural gas industry believe that renewables are moving as part of our future. But married with natural gas we have a great deal more success in using renewables, but it is not a bridge, it is a foundation. With natural gas currently shouldering 24 percent of the electric generation mix we have a much more abundant supply to shoulder even more as we build the renewable infrastructure throughout the country.
Monica Trauzzi: A foundation for how long though? I mean what kind of resources do we have to sustain it?
George Solich: The Potential Gas Committee just recently, last year, released their study that we have over 100 years supply of natural gas with 2000 trillion cubic feet of natural gas domestically. That's domestic resource. We currently produce 97 percent of our own natural gas in this country, so it's a fuel that we can find here, we can create jobs here and its clean burning and we don't have to look to foreign sources for that supply.
Monica Trauzzi: If lawmakers choose a clean energy standard as opposed to a cap on emissions this year, as has been introduced by Senator Graham, how might that impact your industry, because the proposal by Senator Graham focuses on nuclear and clean coal as sort of these clean energy industries? So, why isn't the message about natural gas getting across, especially when you look at a bill like this?
George Solich: Well, Monica, I think the best way I can answer that, I get that question quite a bit, we focused hard over the last decade with a massive investment in capital and resources to find an energy source that we could guarantee that is available for future use. As I said before, three years ago we didn't know we had this abundant supply. Today we do. Certainly we're new to the political game in Washington and we're inexperienced, but our product speaks for itself. It's 50 percent of the carbon footprint of coal and it's an abundant supply here in the U.S. I think we are starting to get heard. We are here on Capitol Hill this week extolling the virtues of a great product that heretofore hasn't been thought of as being able to shoulder a bigger piece of our domestic energy use.
Monica Trauzzi: EPA is another factor to consider. What are the key questions you have about how this type of regulation will impact your industry?
George Solich: Well, our industry is already the highest regulated industry there is. We have industry at the federal level, the state level and, frankly, our industry is committed to safety and we have a great track record in that commitment of safety. The difficulty behind regulation is the uncertainty for capital investment, not only from a timing standpoint, but where and when, on public lands or private lands.
Monica Trauzzi: So, how are your member companies preparing for this future that has many unknowns? What are they doing to set themselves up in an appropriate way?
George Solich: Well, as I said before, the natural gas industry has increased jobs by 20 percent since 2006. So even in a more stable pricing environment, where you can assume that with an increased supply in domestic natural gas we'll have less volatility in prices, what we're doing about it is we're going about our business to produce this clean burning natural gas in America in new places and new plays, like unconventional shales in the Marcellus Shale, the Barnett Shale, the Haynesville Shale, the Fayetteville Shale, and what we call tight gas sand reservoirs. They're unconventional gas, places that we didn't think years ago could bear the types of resources of gas that we're finding today. So, we're going about our business trying to have the supply available, but for the first time producers, such as the ones that are associated with IPAMS, are really taking a lot closer look at how natural gas is dispatched in the market. Or, to say it another way, we're taking a much closer look at the demand picture and hope that our voice is heard that we are here standing ready to provide the supply for future needs of energy.
Monica Trauzzi: I want to switch gears slightly for a moment and talk about a debate between your industry, the Interior Department, and enviro groups on the administration's federal lands policy. Last year IPAMS released a report asserting that the Interior Department intended to curtail oil and gas development on public lands. Since then enviros have come out responding by saying it's actually your industry that's not jumping on certain opportunities. Do you want to respond to what the enviros have recently said?
George Solich: Well, certainly our industry believes in the balance of public lands, but if you start looking at public lands as a whole, 700 million acres of public lands, and there's only 0.07 percent of those public lands that have any kind of surface disturbance for natural gas. Only 6.4 percent of those public lands are even leased for oil and gas, so we believe the balance that the interior secretary is looking for already exists. We also believe that our commitment to safety and from the high technological advancements we've made in our industry over the course of the last decade, that we can responsibly develop oil and gas on public lands today.
Monica Trauzzi: So, is your sense still that the Interior Department is putting the brakes on oil and gas development or has your stance changed since the November 2009 report?
George Solich: Our position is that the Interior Department holding almost $100 million of leases still to be issued, when those leases have been paid for, when there's been seven years of study from an environmental standpoint that we can responsibly develop natural gas on those lands, it's time to move forward. The uncertainty of capital investment on those lands will continue to make operators go elsewhere.
Monica Trauzzi: OK, we're going to end it there. Thank you for coming on the show.
George Solich: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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