Natural Gas

John Podesta is President-elect Obama’s transition chief. During a recent TV interview he aid the incoming president will probably look at reversing an executive order by President Bush that allows drilling for oil and gas in Utah.

Before the ink on the newspapers reporting his comments was even dry, the greens in the U.S. have come together with a very long laundry list of areas they don’t want to see any, or may just limited, E&P operations in.

In addition to Utah, the greens want Obama to reconsider allowing drilling in the Chukchi and Beaufort seas off Alaska, New Mexico and a very large part of Colorado.

And of course, the greens also brought up the fact that Bush lifted the executive order banning E&P off the East and West coasts. They didn’t bring up the fact that Congress let the congressional ban die without debate–mainly because more than 60% of Americans want to know why Congress forces the nation to continue to depend on foreign energy sources while refusing to allow drilling here at home.

The House of Representatives did pass an energy bill that allows offshore drilling 50 miles from the East and West coasts if the states involved allow it and completely open up areas 100 miles of the coast to E&P operations.

This has created a paradox–Congress continues to clamor for energy independence, but tie the hands of the industry that could come close to achieving that goal–the U.S. energy industry. And by continually saying “energy independence,” they continue the myth, says Gary P. Luquette, president of Chevron North America Exploration and Production Co. The correct phrase is energy security, he says.

In a recent presentation at the Houston Petroleum Club, Luquette said, “I say energy security because energy independence is a myth,” Luquette says. “It is a myth and it is not going to happen.” He says the U.S. will always have to import some energy from foreign sources, and that shutting off the OCS will only increase the nation’s dependency.

The new president and members of Congress are leaning towards boosting alternative energy sources such as tidal, solar, geothermal and wind–and that’s good. But what is not being said is that this conversion cannot be done overnight and the two fuels the nation will need until the infrastructure is built to sustain alternative energy developments will be oil and natural gas.

Stay tuned. More to come. Expect the greens to continue piling on the list of places they do not want to see drilling and expect Congress to continue saying “energy independence” at the same time. The next few years will be, if anything, very interesting.

–John A. Sullivan, News Editor, Oil and Gas Investor, www.OilandGasInvestor.com, jsullivan@hartenergy.com

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