Feature
Story
Energy Resources:
Facing reality, taking stock
As part of District Energy’s effort
to introduce a variety of energy
projections and perspectives, the
publication featured an article by the
Energy Information Administration in
second quarter 2005 and a reprint of an
article from The Economist in the third
quarter 2005. This issue presents perspectives from Emil T. Peña, a member
of the advisory board of Genoil and a
former deputy assistant secretary for the
U.S. Department of Energy’s Office of
Natural Gas and Petroleum Technology.
In the following interview, Peña
brings insight on the world’s energy
resources and how the recent U.S. hurricanes should be a wakeup call to better
educate ourselves on our energy future.
Q. (District Energy). What do you believe
is driving fuel consumption?
A. (Emil Peña). Actually, natural gas consumption in the United States has been
relatively flat over the past five years:
2000: 23.3 trillion cu ft (TCF)
2001: 22. 3 TCF
2002: 23.0 TCF
2003: 22. 4 TCF
2004: 22. 4 TCF
2005*: 22. 2 (* 12 months, July 2004
through June 2005)
But we have to realize that consumption in other countries is growing. Developing nations are fossil-fuel hungry. For
instance, I’ve spent time in China. They
have a voracious economy. They’re growing by leaps and bounds in all sectors.
Being consumer-driven, automobiles are
putting lot of demand on their economy.
In fact, China's natural gas has been rising rapidly, reaching 1. 2 TCF in 2003.
Although just 5 percent of the current U.S.
annual consumption, 1. 1 TCF, is equal to
about one year’s fuel consumption in
China; this is slated to grow dramatically
in the future. So even if we conserved a
lot of oil in the United States, we still
couldn’t offset this incredible consumption growth elsewhere.
When at DOE, I looked at conservation of everything from coal to natural
gas. Even with land-based rigs drilling
natural gas flat out, domestically we
weren’t (and aren’t) replacing natural gas
because our natural gas wells just aren’t
as productive as they used to be. Even
with flat-out domestic production, all we
can do is flatten the production line and
that’s alarming.
And that affects more than just utilities, which are relying increasingly on
natural gas to fuel their plants. We need
to remember that natural gas also is used
as a feedstock for chemical companies.
Feedstock is a precious commodity. If the
natural gas costs go up due to short supply, everything goes up, from plastics to
other consumable goods.
If we quiz petrochemical companies,
their view is that we need more domestic
production because it makes us more
secure and improves national security.
Petrochemical companies are all for the
independent oil and gas producers to go
and drill more domestically because it’s
needed. In fact they think that current
government policies are stimulating consumption rather than curbing it: “The
Consumers Alliance for Affordable Natural
Gas claims U.S. natural gas prices are two
or three times their historical levels – ‘the
highest in the industrial world’ – primarily
because of government policies that have
encouraged use of the clean-burning fuel
while restricting producers’ access to
domestic reserves.” (Oil and Gas Journal,
Jan. 12, 2005) Note this was before the
hurricanes.
Q. How much of the current fuel price
spikes are really related to the hurricane
vs. the underlying ‘situations’ such
refining capabilities, storage levels, etc.?
A. Even before the hurricanes, there were
pressures internationally on oil and natural
gas. Since there is such a small supply
cushion, any type of disruption is going
to be critical – whether it’s a natural disaster or terrorism or economic or political
factors. Anything will upset the tight balance that we have with fossil fuels today.
Hurricanes Katrina and Rita should
be a turning point for us to get more in
line with educating ourselves on the energy
situation we have globally. It’s not going
to go away. It’s a problem that’s going to
exist for a long time. Forever. The problem
will persist. There will be volatility, but we
will never see low prices again, even if we
reduce consumption.
Q. Is global climate change a threat to
our economy and independence on
foreign oil?
A. We’ve already seen the effects of global
warming. All studies and climatologists
see that something has made our Gulf of
Mexico warmer as seasons have passed –
