LABI'S Outlook

Message in a Bottle

If natural gas is the ‘champagne of hydrocarborns,’ Congress and the Obama team would be well served to start with a tall glass. Some 30 years ago, I was coordinating a group of independent oil and gas operators from the Lafayette area lobbying members of Congress on energy legislation. During that time, we pushed successfully for some of the critical production incentives that are now being threatened by the Obama administration and their supporters on Capitol Hill. On one of my visits, I met with the chief legislative aide of then-Sen. Lowell Weicker of Connecticut. She was the most intelligent person I met on the Hill — elected or non-elected. The first time I mentioned the words “natural gas,” she replied: “Ah yes, the champagne of the hydrocarbons.” As Congress and the Obama team thrash about in search of an energy policy, they would be well served to start with a tall glass of that champagne.

A sound energy policy for America should focus on what we have, what we need, and what reduces dependence on foreign energy sources. We need reliable sources for electricity and transportation. We have abundant energy sources in place. We need a rational energy policy to maximize domestic sources with national energy needs. We may get the opposite.

A few years ago, the conventional wisdom was that natural gas supplies had peaked and were entering a period of decline. That “conventional wisdom” was wrong. During the last two years, natural gas production increased by a total of 10 percent, and new discoveries expanded proven reserves by 12.6 percent to 6.73 trillion cubic meters. The outlook for natural gas reserves is now improving, not declining, due to the huge amounts of gas located in shale deposits such as the Haynesville Shale field in northwest Louisiana (estimated to be the fourth largest natural gas field in the world). A sound energy policy should maximize the use of compressed natural gas, commonly called CNG, in vehicles, lessening dependence on foreign oil to meet those needs.

An increase in nuclear-generated electrical power is also a no-brainer. France gets most of its electricity from these plants, and 30 years ago the U.S. was moving in the same direction. America’s electrical generation mix should see an increase in nuclear generation to bring more stability and reliability to the effort of meeting ever-increasing electricity demands.

The powers that be in Washington talk about spending trillions of dollars to increase “alternative” energy sources. Wind and solar power seem to be their favored candidates for huge amounts of federal funding. Science and economics indicate that these alternatives can be minor players in diversifying our energy mix, but cannot become major replacements for the fossil fuels that light our homes and power our cars.

Investments in clean coal technology, incentives for the natural gas vehicle marketplace, and a more streamlined permitting process for nuclear power plants should be the foundation of an energy policy that better protects the environment and has a decent chance of meeting future energy needs. It currently takes about 10 years to permit a nuclear reactor, seven years to permit a coal-fired power plant, and five years for a natural gas-powered facility. Bringing nuclear plant permitting more in line with other generation facilities would be a significant step forward.

Oil and natural gas are not going to disappear from our energy mix any time soon. Current efforts to subsidize solar and wind technologies by removing incentives for exploration and production of domestic oil and natural gas supplies are counterintuitive. We should maximize our domestic energy stocks, particularly those that wean us away from foreign sources of energy.

If we don’t, we are tilting at windmills in our quest for energy independence and reliability.

Dan Juneau is president of the Louisiana Association of Business & Industry. To comment on this column, e-mail [email protected]