Oil industry addresses change, looks to future

Talk about it

BISMARCK — These are times of significant change and challenge for our global community and the oil and gas industry in particular. The decisions we make today in addressing energy issues will have profound implications for our collective future.

First and foremost, we must not forget the tragic Deepwater Horizon incident in the Gulf of Mexico, which resulted in the death of 11 industry co-workers and caused substantial environmental and economic harm to the region. Our thoughts and prayers continue for the families of the deceased and injured workers and all others impacted.

The facts are clear that this type of event is unprecedented. In the past 60 years, oil and gas companies have drilled more than 42,000 wells in the Gulf of Mexico — including more than 2,000 deep-water wells — without an incident of this magnitude.

Still, we must face the reality that the image, reputation and credibility of our industry have been damaged. We understand this, and we’re taking steps to implement lessons learned and ensure this type of accident doesn’t happen again.

The industry has formed several task forces, composed of the world’s leading experts, which are working in cooperation with the Department of Interior to address long- and short-term issues regarding oil-spill prevention, containment, response and cleanup. Many improvements have already been implemented and others are under way.

Yet our nation’s energy security could become even more tenuous if reactionary policies restrict or prevent oil and gas companies from developing domestic resources in a safe and environmentally responsible manner. These resources —North Dakota’s rich Bakken oil shale included — are vital to our nation’s economic interests, standard of living and the livelihoods of millions of Americans.

Thus forms one of the most important public policy debates facing our nation: how do we chart a realistic path for achieving both energy security and environmental sustainability, two issues that are inextricably linked and critical to our nation’s long-term health and prosperity.

Ask anyone and you’re likely to find strong agreement that we need to transition as quickly as practical to a more secure, sustainable means for powering the planet — a path forward that must include:

- A more diverse portfolio of increasingly cleaner forms of energy

- The ability to produce and consume energy in ways that minimize impacts to air, land and water

- Energy supplies that are readily available and affordable and permit or enhance economic growth and global competitiveness

- An energy industry that creates millions of good-paying, long-term jobs with an increasing focus on the development and deployment of advanced technologies

But then the debate begins: how do we get there, how quickly and at what cost?

First, there’s no question global energy demand will continue to increase, driven largely by population growth and the desire of developing countries to achieve economic prosperity and a better standard of living. The International Energy Agency (IEA) forecasts that demand for energy will increase about 40 percent between 2007 and 2030, with essentially all growth coming from developing countries.

What may be surprising to many people is that IEA projections show fossil fuels comprising about 80 percent of total world energy demand in 2030 — about the same as today. Even the agency’s most aggressive case for emissions reductions shows 68 percent of the world’s energy in 2030 coming from fossil fuels.

Why, in 20 to 25 years, will fossil fuels still represent such a high percentage of projected global energy use? It’s simply the reality of the immense scale of the global energy infrastructure and the time and investment required to build assets like nuclear plants or develop renewable fuels at sufficient scale to make a difference.

Can we overcome these challenges? Can we do better than the IEA projections? You bet.

We need a comprehensive, integrated plan to transition to an environmentally sustainable energy future that focuses on three key elements:

- Greater energy efficiency and conservation

- The need to diversify and expand our sources of increasingly cleaner energy supplies

- The need for innovation and new technologies

For example, the greatest source of near-term greenhouse gas (GHG) emissions reductions comes from energy efficiency, which is the least expensive and fastest means of doing so.

In the U.S., the new, higher CAFE or fuel efficiency standard of 36 miles per gallon for the combined U.S. fleet of cars and light trucks by model year 2020 is a step in the right direction, but further increases in the efficiency of the internal combustion engine, enhanced materials technology and greater use of hybrids could generate further reductions on an accelerated basis.

The other near-term action is greater use of natural gas. In the U.S., estimated gas resources have more than doubled — an estimated 100-year supply at current consumption levels — thanks to technology that allows us to economically develop shale-gas reservoirs. Because natural gas emits up to 60 percent less CO2 than coal, we could reduce GHG emissions with relatively small investment by increasing the utilization of installed gas-fired generation capacity.

Technology and innovation are also vitally important for increasing the supply of energy, moderating demand and protecting the environment.

Look no further than North Dakota, which has emerged as the fourth-largest oil producer in the nation — an impressive feat driven by the ingenuity, creativity and expertise of our industry’s men and women. How else could you explain the ability to drill vertically for two miles, horizontally for two miles and safely produce hydrocarbons that until recent years were thought to be either inaccessible or non-commercial.

The success of the Bakken Shale formation is truly a remarkable story that illustrates the long-standing and ongoing technology evolution that enables us to deliver the energy that consumers need while creating jobs and other economic benefits that cascade throughout and embolden our economy.

So now the toughest question of all: How do we get this done? We need a shared vision coupled with strong, rational leadership to bring together all the disparate opinions and factions and develop and implement the type of comprehensive energy security and environmental sustainability plan I’ve outlined.

We can’t afford to fail. The stakes are too great. The challenge is too grave. And our time is too short to indulge further in the kinds of discourse that have tied us in knots. We know what we want. We know how to get there. And we know it will take all of us working together.

Cazalot Jr. is president and CEO of Marathon Oil Corp. He is a guest speaker at the Great Plains Energy Expo and Showcase in Bismarck that began Monday and continues today.

Tags: opinion, columns, guest, marathon