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February 13, 2013
Yergin testifies on energy 'revolution'

An assessment of an “unconventional revolution in oil and gas” by Pulitzer Prize-winning energy analyst Daniel Yergin highlighted the first in a series of House hearings titled America’s Energy Security and Innovation.

The core of the revolution is the use of horizontal drilling and hydraulic fracturing to greatly increase production from shale gas rock and tight oil reservoirs, says Yergin.  (Tight oil is conventional oil in reservoirs with very low permeability.)  While increased production has not converted the United States from an energy importer to an exporter, the balance is shifting.  Yergin notes that U.S. net imports of oil have declined from a peak of 60 percent in 2005 to about 40 percent today.  Opportunities for the U.S. to become a liquefied natural gas (LNG) exporter are also growing, says Yergin.

3 million jobs by 2020

“Today the industry supports 1.7 million jobs–a considerable accomplishment given the relative newness of the technology,” said Yergin in a written statement.  “That number could rise to 3 million by 2020.  In 2012, this revolution added $62 billion to federal and state government revenues, a number that we project could rise to about $113 billion by 2020.  It is helping to stimulate a manufacturing renaissance in the United States, improving the competitive position of the United States in the global economy, and beginning to affect global geopolitics.”

Federal ‘roadblocks’

But America’s energy renaissance may not be realized if federal laws continue to introduce “roadblock after roadblock,” stated Rep. Fred Upton (R-MI), chair of the House Energy and Power Subcommittee, which is holding the hearings.  One type of “roadblock” is environmental regulation.

Yergin notes that hydraulic fracturing has been in use since the late 1940s, but never near the scale and intensity seen today.  In particular, fracking has been increasing dramatically in more densely populated regions.  “Understandably, the environmental impacts need to be carefully assessed and monitored,” said Yergin, “and the public needs to be confident about these impacts.”

Yergin was a member of a subcommittee of the Department of Energy’s Advisory Board, which identified three major environmental issues–water, local air pollution, and community impact.  “Each, the subcommittee concluded, needs to be managed with great attention and can be managed through best practices in operations and regulation, continuing technological innovation, and community engagement,” said Yergin.  “We see continuing effort going into these endeavors–with, for instance, recycling of water and new approaches to waste water treatment.”

Regulatory misconception

One observation that came out of the work of Yergin’s subcommittee is that there appears to be a mismatch between perceptions of regulation and actual regulation, Yergin added.  “Drilling is a highly regulated activity, but it is mostly regulated at the state level,” he said.  “We identified the need to continue to support, with what amounts to very small funding, the activities of STRONGER– State Review of Oil and Natural Gas Environmental Regulations–a collaborative benchmarking and standard-setting organization that evaluates and promotes continuing improvement of regulatory activities among the states.”

Click here for testimony by Yergin and others at the House hearing.

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