Full Title: The Role of Unconventional Oil and Gas: A New Paradigm for Energy
Author(s): Frank A. Verrastro
Publisher(s): Center for Strategic and International Studies
Publication Date: April 1, 2012
Full Text: Download Resource
Description (excerpt):
For the last 40 years, U.S. energy policy has been predicated on the dual notions of growing demand and resource scarcity, especially in relation to oil and natural gas—which are responsible for roughly two-thirds of U.S. energy consumption. As a consequence, we have looked to imports to balance our supply-demand needs, and in the process, have experienced periods of significant price volatility. In March 2012, President Obama reiterated his pledge for attaining a secure energy future. He promised nothing less than the transformation of our current fossil fuel–based energy system to one that is cleaner, more secure, and sustainable.
Most analyst agree that for a variety of reasons (growing global demand, concentration of resources, limited access and governance challenges, infrastructure needs, balance of payments outflows, changing geopolitical alliances, and security considerations) the current energy system is simply unsustainable. A transformation is already underway. But make no mistake, it will take decades to complete.
Fossil fuels (coal, oil, and natural gas) account for roughly 85 percent of global energy consumption. Renewables and nuclear make up the rest. And while the growth in solar and wind has been enormous, the base is small, and intermittency and infrastructure challenges remain a significant hurdle to widespread adoption. In the wake of the Macondo oil spill in 2010, the Fukushima nuclear incident in 2011, and the shale gas “revolution,” the energy landscape is changing. Higher prices and technology applications at scale are driving the unconventional resource revolution as there are enormous unconventional oil and gas resources both here and abroad. This phenomenon has the potential for creating a new energy reality, one in which the United States once again becomes a global leader in oil and gas production. This, coupled with efficiency improvements and alternative supplements, can substantially reduce U.S. oil imports, achieving a significant reduction in our balance of payments. It can also simultaneously create an engine for economic growth, a platform for technology and innovation, job creation, new tax and royalty revenues, and the revitalization of domestic industries.
Moreover, if properly and prudently managed, the successful development of these resources will give us the “breathing space” to develop and dispatch the next generation of cleaner- burning/lower-carbon fuels that currently do not exist at scale.