We have an amazing opportunity to transform our nation from one that imports energy into one that’s independent from the whims of the world’s oil markets, possibly even one that others depend on for their energy. According to ConocoPhillips (NYSE:COP) CEO Ryan Lance, “The new landscape is like someone picked up the energy world and tilted it.” As the CEO of the largest independent oil and gas company in the country, that’s saying a lot. His company has operations spanning the globe; however, he sees some of its greatest potential here at home. That’s why his company is spending more than $25 billion over the course of its five-year plan to grow its U.S. production, but the company could spend more, given the right opportunity. According to some of his other comments at the CERAWeek conference, he believes the U.S. government needs to work with the energy industry to unlock our resources to meet our future demand.
Given the sometimes hostile relationship between the government and the energy industry, it’s going to take a concerted effort to get everyone on the same page and working together. There’s a lot at stake here, not only in future potential but also in costs we’ve already incurred as a nation. It’s no secret that a good portion of our foreign policy has, in the past, been driven by our need to secure access to foreign oil.
That being said, this is not a cut-and-dried issue. Simply accessing the riches that lie underneath our soil puts our environment at risk. There are unresolved issues with water quality, with fracking fluids, and in the overall protection of nature that need to be addressed if we plan on moving forward. Part and parcel of protecting our environment is the energy industry’s desire to see us open up more areas of it to future development.
That overall environmental issue is what’s been behind the White House hold-up of the approval of the Keystone XL pipeline that TransCanada Corporation (USA) (NYSE:TRP) is proposing to build. The proposed project, which will take oil from Canada to the U.S., had been delayed because of previous environmental concerns. However, the industry has worked to find what it views is a more palpable solution, and the question remains whether the government is willing to work with the industry. The fact that the U.S. State Department has come out saying that it doesn’t see any environmental damage if the Keystone XL project moves forward means the ball is now in the White House’s court.
This is a White House that’s said many times that creating jobs is important to it. Well, the energy industry supplies more than 9 million jobs and wants to add many more. According to Lance, there are “huge drilling programs that need more people to run them.” That’s just part of the potential jobs equation here, as there are pipelines like the Keystone XL to be built and manufacturing facilities that will need to be staffed as they begin to thrive on low-cost domestic energy resources.
That’s why we simply cannot tolerate politics as usual here. What’s at stake is our very place in the world as the economies of China and Brazil continue to emerge onto the world scene. We’re even seeing an increasing amount of our future production being sold to Chinese companies as that country tries to lock up its own supply. However, the risk here is that we could be jeopardizing our own energy independence. Not more than a few weeks ago, Chesapeake Energy Corporation (NYSE:CHK) , the second largest producer of natural gas in the U.S., sold a 50% interest in 850,000 acres in the promising Mississippian Lime formation. This is just one of the many slivers of domestic energy production that have been sold to foreign companies over the past few years. While I’m not saying this should be outlawed, it is something that needs to be addressed.