By Paul Puri
Executive Vice President and Principal
Every story always has two sides. On one are the enthusiasts; on the other, the naysayers. Although truth most often ends up somewhere in the middle, it’s always a moving target. Take a look at our energy situation in the US, and specifically in Texas, and you’ll see what I mean.
There’s the good news, like the International Energy Agency’s (IEA) World Energy Outlook 2013 report, which predicted the US will be the largest oil producing country in the world next year, surpassing Saudi Arabia, Russia and every member country in OPEC. We’ll soon be energy independent, this side of the story goes, and should consider exporting our excess energy.
Of course, much of this optimism is founded on undeniably reliable research. Fracking and new unconventional production techniques have unlocked huge deposits of oil and natural gas, much of it in Texas. In fact, figures from the Texas Railroad Commission show that oil production in the Eagle Ford Shale nearly tripled from 2011 to 2012. And the Railroad Commission thinks oil production in the state will double by 2020.
But then the naysayers chime in with the other side of the story. That same World Energy Outlook 2013 report predicted that energy production in the US would peak in 2025 and slowly decline thereafter. Other critics like the Post Carbon Institute project a dire drop-off in production from fracked wells after their first year, forcing the industry to constantly search for new deposits and drill more new wells. Expenses go up, profits decrease.
Maybe, maybe not. Maybe both sides of the story have some truth to them.
For me, I have confidence in the oil and gas industry’s ability to innovate new exploration and production technologies to keep the supply of fossil fuels flowing. In fact, there are plenty of exciting technological developments on the horizon.
Enhanced 3D computer modeling is already boosting our exploration prowess. Advancements in drilling techniques, like flexible drilling and directional long-reach drilling, are tapping into new fields in deeper water and under the frozen tundra. And fracking itself is only beginning a long journey toward its full potential. I recently read a quote from a noted research analyst who said: “The most optimistic of people believe that we’ve only seen the beginning of a burst of technological innovation, and if you look back from 2020 to fracking techniques in 2013, by 2020 you’ll think these are sort of feudal times.” (Edward Morse, global head of commodities research for Citigroup, quoted in the New York Times, Dec. 18, 2013)
I come down on that side of the story.