The truth about our energy future

For many of us, our knowledge of energy begins and ends with the flip of a light switch, or the insertion of a nozzle into our car’s gas tank. Seldom do we stop and contemplate what goes on behind the scenes, and the complex choreography taking place around the globe to deliver energy to our fingertips.

Energy is fundamental to human existence. It is as important as affordable food, clean air and water. Part of the reason we saw energy prices escalate so dramatically in 2007 and half of 2008 is that millions of people in developing nations were being lifted out of subjugation, creating a period of rapidly increasing demand worldwide. This was a good thing as it represented more and more people in India, China and other nations gaining access to energy. And while the demand for energy has slowed during the current economic downturn, the truth is that the world’s increasing demand for energy means securing our nation’s long-term energy future will require all forms of energy, especially oil and natural gas.

According to the US Energy Information Administration (EIA), the world will require 50 percent more energy in 2030 than it did in 2005. Alternatives and renewables will play an increasingly important role in meeting that demand, yet the EIA estimates that those sources will still only account for less than nine percent of the energy produced in 2030, while oil and natural gas will account for just under 60 percent of all energy produced.

There is no way around it for the foreseeable future – our world needs to continue to invest in and develop oil and natural gas resources. Without continued investment in these resources, demand will rapidly outpace supply, resulting in tremendous price escalation for every individual who uses energy.

The truth about climate change
I have spent my career around scientists who study rocks that are millions of years old. Understanding the formation of the rock, depositional characteristics and the climate conditions that existed at the time are critically important to finding oil and natural gas. Looking back through millions of years, there is evidence of ancient time periods where global temperatures were significantly warmer than today and where carbon emissions were significantly higher than today. The science is clear that the planet has undergone numerous periods of heating and cooling prior to the industrial age.

Climate is incredibly complex; however, I suspect that nearly all of us agree that we want clean air and that emissions should be addressed in a practical manner that is environmentally effective and economically responsible. To this end, I strongly believe that science, not politics, should lead the way in driving adoption of renewable energy sources and in developing sound energy policy. The science of our own business continues to evolve and we are applying it to reduce emissions and deliver more resources to the American people.

I am proud of the environmental record of America’s oil and natural gas industry, which invested more than $42bn in new low- and zero-emissions technologies between 2000 and 2006. This amount represents nearly half of the total spent by all US companies and the US federal government combined, and our industry’s investments continue.

One example of this commitment to emissions- reduction technology that my company, Anadarko Petroleum Corporation, is implementing is our enhanced oil recovery, carbon sequestration project at the Salt Creek oil field in Wyoming. Salt Creek is among the largest carbon-sequestration projects in the world. We are injecting carbon dioxide, which would otherwise be vented to the atmosphere, under ground into a 100-year-old oil field. The CO2 is sequestered and creates pressure that improves the production of oil. This project alone currently sequesters enough CO2 each day to offset the equivalent emissions of more than half-a-million automobiles. In addition, Anadarko and other companies like ours are voluntarily partnering with the US Environmental Protection Agency in the Natural Gas STAR programme. Since joining the programme in 1996, Anadarko has achieved cumulative emissions reductions of over 38 billion cubic feet of gas, equivalent to the emissions of 2.8 million cars.

Another important part of reducing emissions is increasing our nation’s usage of natural gas – the cleanest-burning fossil fuel. Anadarko is one of the leading independent producers of natural gas in North America, which includes our massive Independence Hub development in the deepwater Gulf of Mexico. This amazing project broke numerous world records for deepest producing platform, deepest pipeline and deepest sub-sea infrastructure in water depths greater than 8,000 feet. The project is currently producing enough clean∞burning natural gas to meet the energy needs of more than five million average American homes each day. This is accomplished from a single floating structure about half the size of a football field and more than 100 miles offshore, well beyond the view from any beach. Projects like this require billions of dollars of investment, deliver clean-burning American energy, create American jobs and can be replicated as long as our government’s energy policy does not restrict our industry’s ability to do so.

Finally, conservation matters and its importance is often overlooked. All manufacturers, businesses and individuals should be conscientious about the energy we use. We should constantly strive for improved efficiencies and conserve where we can. Using less is a personal choice for many of us, and should be a focus every day.

The truth about energy policy
As I’ve pointed out, oil and natural gas will continue to make up the vast majority of our energy mix for the foreseeable future. Our industry has proven its ability to develop these resources safely while respecting the environment. We’ve also demonstrated our commitment to addressing climate change through the tens of billions of dollars we’ve invested in new technologies aimed at reducing emissions. Politics remains the most significant challenge to securing an energy future consumers can afford. Our citizens deserve a balanced, fact-based energy policy that promotes energy efficiency, conservation and greater supplies of all forms of energy.

Raising taxes, even indirectly, in a time of economic decline is fraught with risk. An example of this is the Obama Administration’s budget proposal that calls for an estimated $400bn in new taxes and fees on the American oil and natural gas industry. This policy will result in higher energy costs for every American by reducing investments in the exploration and production of oil and natural gas. A recent study estimates it will result in the loss of more than 270,000 jobs annually, and will very likely prolong the recession, further stifle job creation and increase America’s reliance on foreign sources of energy. Similar policies have been attempted in the past, and they have failed in dramatic fashion.

There’s a better, more constructive path toward our energy future. It involves opening up access to domestic resources offshore and onshore. Norway, one of the most environmentally sensitive nations in the world, produces its own resources for the good of its people. America has the resources, yet we are one of the only nations in the world that keeps much of our own resources off limits. Opening these areas in the eastern Gulf of Mexico and offshore from the east and west coasts of the United States could generate more than $1.7trn in revenue for the US government – more than four times the amount of the Administration’s current tax proposal. Plus, it could create more than 160,000 new jobs by 2030 and would clearly lower the cost of future energy for consumers while improving our nation’s energy security.

At Anadarko, our mission statement emphasises our commitment to explore for, acquire and develop oil and natural gas resources vital to the world’s health and welfare. I can only hope that the world’s political leaders will share the same commitment to the truth about our energy future.

More information: www.anadarko.com