The Future of Oil and Gas

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The Future of Oil and Gas

Every industry is subject to fads, and energy is no exception.  In recent years, it has become very popular to build windmills and solar farms, and the government is helping to subsidize the fad.  Congress approved $80 billion for various renewable energy subsidies last year, and that's in addition to the tens of billions already spent. 

But the best minds in the energy business still don't see wind and solar accounting for any more than 8 percent of the nation's energy supply within the next quarter-century.  And there are problems with geothermal as well, as was demonstrated by the shutdown of a project in California after an investment of $30 million in venture capital and $6 million from the Department of Energy failed to produce results.  Similarly, The New York Times1 reported that Switzerland shut down a geothermal project because it was causing damaging earthquakes. 

So, as we have pointed out before, barring a totally unexpected breakthrough, those technologies are not going to meet a large part of U.S. or global energy needs anytime soon.  Obviously, they will play a supporting role, but we are still going to be using fossil fuels of one sort or another for a very long time to come. 

Does that mean that we'll always be reliant on foreign energy supplies?  The answer is no, but only if we make the right decisions today. 

Fortunately, we have other options for providing energy that go beyond solar, wind, and foreign oil.  The three most promising energy sources are:

  • Newly discovered sources of natural gas
  • Newly accessible sources of oil
  • To a much lesser extent, synthetic liquid fuels made from coal

Let's discuss natural gas first.  MIT Technology Review2 recently published an article about the game-changing nature of new natural gas discoveries in the Appalachian Basin.  The so-called Marcellus Shale deposit extends below millions of acres of land in New York, Pennsylvania, Ohio, West Virginia, Maryland, and Kentucky.  Calculations by geologists predict that these black rocks hold some 500 trillion cubic feet of natural gas — in other words, enough fuel to power the United States and meet all of its energy needs for decades.

But that's not all.  According to Investor's Business Daily,3 "the United States is the Saudi Arabia of natural gas."  In addition to the Marcellus Shale formation, we have the Barnett Shale rock formation of Texas and Louisiana, the Bakken Shale formation in Montana and North Dakota, and many more, smaller "mother lodes...

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