U.S. Energy secretary touts oil, gas industry as avenue for economic recovery

The U.S. oil and gas industry, which leads the world in production, is a vehicle for recovery from the pandemic-driven economic downturn, Energy Secretary Dan Brouillette said Wednesday in a virtual, round table discussion with Colorado policy and business leaders.

Brouillette joined Mike Sommers, president and CEO of the American Petroleum Institute, in talking with Colorado legislators, industry workers and representatives of trade organizations. They later took questions from reporters.

Before the API-sponsored session, Brouillette visited the National Renewable Energy Laboratory in Golden, where he announced the launch of a new research platform. The Advanced Research on Integrated Energy Systems, or ARIES, is intended to address integrating different energy resources on the electric grid.

Referring to his visit to NREL, Brouillette said renewable energy works “hand in glove” with oil and gas. He said wind and solar power are dependent on natural gas to provide the base-load power for daily use.

As more utilities and communities increase their use of renewable energy because of declining prices and climate change concerns, debate over how long natural gas will be needed to generate electricity has grown. Brouillette made clear where he stands on the issue.

“Until we reach a day in America where we have battery technology that allows grid-scale storage, which is not in the near term,” Brouillette said, “renewable energy will be in fact dependent on this energy.”

His bullishness on the oil and gas industry comes as thousands of jobs have been lost in Colorado and other energy-producing states because of a crash in demand as businesses and activities cut back or shut down to try to curb the coronavirus pandemic. The drastic drop in demand combined with a pre-pandemic glut of oil and a price war between Russia and Saudi Arabia sent prices into negative territory for a brief time.

However, oil prices and demand have started rising, Sommers said. During the worst of the pandemic, oil use dropped to about 70 million barrels a day worldwide from 100 million barrels and is now at about 90 million barrels a day, he added.

The U.S. was producing about 13 million barrels of oil a day before the coronavirus crisis hit .Brouillette said. The daily production is now roughly 11 million barrels.

Sommers and Brouillette said the energy industry can play a big part in restoring the U.S. economy, but there are regulatory and legal challenges.

“We’ve done a great job producing energy. One of our bigger challenges, however, is getting that product to the marketplace, developing infrastructure to move that product from point A to point B and, importantly, to get it to the coast so we can get it to the open ocean to sell it around the world,” Brouillette said.

On July 6, the energy secretary issued an order authorizing the export of liquefied natural gas from the proposed Jordan Cove terminal in Coos Bay, Ore. The terminal is opposed by Oregon state officials, landowners and some members of the congressional delegation. It’s supported by industry backers in western Colorado because of the opportunities it would create for companies there.

Other challenges are regulations, Brouillette and Sommers said. The Trump administration is expected to roll back methane-pollution regulations approved in 2015. An announcement could come this week that the administration is rescinding required inspections for leaks and repairs at newer oil and gas sites to capture methane, a greenhouse gas that is more than 80 times more potent than carbon dioxide in the short term.

Sommers said the regulations aren’t necessary because emissions from oil and gas sites have dropped as production has more than doubled. Through API, the industry is collaborating on technology and techniques to cut emissions even further, he said.

However, Lauren Pagel, policy director at Earthworks, said that isn’t what the environmental organization sees on the ground. She said that trained staff members using optical gas imaging cameras consistently see a lot of emissions streaming from oil and gas well sites. Environmentalists working with academics on monitoring the sites believe emissions are seriously under reported, she added.

Pagel noted that the industry was party to the negotiations that resulted in Colorado’s methane regulations in 2014, the first state-level rules in the nation. And the industry continued to thrive after the regulations were adopted, she said.

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