call for lawmakers and federal policymakers to move quickly on crafting
an energy strategy resounded repeatedly at the inaugural AAPG President's
Conference on National issues: A
Summit on U.S. Energy Policy.
The 21 presenters at the one-day conference at the
Army Navy Club near the White House in Washington, D.C., almost
universally cited rising demand, ample U.S. gas resources and difficulties
in gaining access to productive U.S. lands.
Environmental protection under the backdrop of global
climate change concerns also was at the forefront of the discussions,
as was taxation of the energy industry.
All agreed that it is time to adopt a comprehensive
"We do not yet have an energy crisis," said William
L. Fisher, who summarized the proceedings for those at the Washington
gathering, "but things are a little tight, and the situation looks
a bit ominous.
"After a decade and a half of the lowest prices and
plentiful energy, we now see volatility, we see price hikes," Fisher
continued, adding that the public is now fixated on the energy situation.
"We're not fundamentally in a bad way. It's just
apparent we got lazy about a lot of things," he said.
"It's time to act."
The Summit drew over 100 people, including top aides
of the U.S. Senate Energy and Natural Resources Committee, the Department
of Energy, the Minerals Management Service, the U.S. Geological
Survey and a representative from the U.S. Army Materials Command.
AAPG's Division of Professional Affairs, through its
Governmental Affairs Committee (GAC), organized the Summit. Coordinators
Lee Gerhard, chairman of the GAC, and Carl J. Smith said they were
pleased with the quality of the presentations and the number of
organizations represented by attendees.
"AAPG has been warmly received in Washington," Gerhard
said, "proving that science can be part of public policy, but that
scientists must go to government rather than expect that government
will seek out science. AAPG testimony has been clinical and forceful,
without the trappings of political rhetoric. Perhaps that is why
we are so well received."
Gerhard, with the Kansas Geological Survey, and Smith,
with the West Virginia Geological Survey, are preparing an audio/video
CD-ROM summarizing the key points of the Summit, which will be made
available to legislative and regulatory decision-makers.
'Solutions Cost Money'
DOWNEY AND CHIP GROAT
In opening the Summit, AAPG President Marlan Downey
called for "an open-minded re-look at our national energy policy."
He reiterated his recent statements before the Senate
energy committee (May EXPLORER).
"Domestic drilling for natural gas is largely done
by small independents who are heavily dependent on their own cash
flow to drill wells for increased gas production," Downey said.
"They need to get their drilling money back before they drill new
"The simple device of allowing gas drillers to immediately
recover their costs of drilling against their production revenue
would allow much more rapid reinvestment in gas drilling," he said,
"and would greatly accelerate growth of gas production ... at little
cost to the Treasury."
Downey also made some brief personal comments on
the demand side of the energy policy equation, saying he believes
"we should attack the voracious demand for imported oil, which is
largely used for gasoline ... by adding a 50-cent a gallon tax on
"We need such a tax to prepare for, to fund, to actually
solve our national energy problems," he said. "Talk's cheap. Solutions
He also proposed the monies collected be used in
the state in which they are collected to deal with the differing
energy problems facing each state, with some having demand problems
and others facing supply difficulties.
Downey then said, "I do not think there is a chance
in hell of such a tax being enacted."
Downey was one of several speakers in Washington.
In remarks that were reported on the Reuters international news
wire, acting assistant secretary for fossil energy at U.S. Department
of Energy Robert Kripowicz said gasoline inventories are at 193
million barrels, down 13 million barrels from a year ago and way
below the historical levels for this time of the year."
"If anything unforeseen should happen -- a refinery
go down unexpectedly, a pipeline taken out of service -- we would
see gasoline prices skyrocket. We are on the razor's edge of gasoline
supply and demand.
"The last three recessions in this country have all
been tied in some way to rising energy prices," he continued, "and
there is evidence that today's energy problems are contributing
to the economic slowdown."
Bryan Hannegan, majority staff scientist of the Senate Energy and
Natural Resources Committee, and Robert F. Simon, minority staff
director of the same committee, gave their views on what should
be included in the energy policy. Both agreed they were quite similar
-- but both agreed the sticking points were access to the Arctic
National Wildlife Refuge in Alaska, and the role coal and nuclear
power would play due to environmental concerns.
Simon also said there needs to be additional study
of the cuts in the DOE research budget, saying they were made "on
a top-down basis rather than any real analysis as to what is actually
The Summit included a panel of the presidents of the conference's
co-convenors. Organizations represented were the American Association
of Professional Landmen, the American Institute of Professional
Geologists, the Association of American State Geologists, the Society
of Independent Professional Earth Scientists and the Society of
Exploration Geophysicists, whose president, Sally Zinke, could not
attend due to airline cancellations.
A.T. "Toby" Carleton, former AAPG president who spoke as SIPES president,
clicked off the list of energy policy recommendations his group
recommends, which closely represents the endorsements of AAPG and
the other meeting co-conveners, from taxation to access concerns.
Concerning the environment, Carleton said that "we
cannot succumb to the radical environmental movement that would
unnecessarily restrict and punish the prudent exploration and development
of essential energy resources.
"Present exploration, drilling and production techniques
have come a long way in recent years," Carleton said. "Chances of
permanent environmental damage from these activities are very remote
in this high-tech world. Any energy policy should and must endorse
U.S. Geological Survey director Charles "Chip" Groat gave a report
on the U.S. resource base, focusing on the federal lands assessment
of 1998, which is being updated with interim results expected next
year. He said the present ANWR technically recoverable resources
in the 1002 area are 4.3 to 11.8 billion barrels equivalent, and
that the federal lands numbers are evolving with the estimates for
the National Petroleum Reserve-Alaska forthcoming.
Groat, an AAPG member, grinned that "there is much
interest in 'national monuments' of late."
John S. Hull, of Texaco, and Edward Gilliard, of Burlington Resources
gave a report on the National Petroleum Council's study, which concluded
that by 2010 natural demand will be 7 TCF greater than it is today.
"Of the 7 TCF increase, about one-half will be accounted
for from increased power generation needs," he added.
Hull and Gilliard both served in a variety of leadership
roles for the study, which is being studied as the White House and
the Congress consider national energy policies.
The study concluded that the likely source of supply
to satisfy the demand growth will come from the Gulf of Mexico,
the Rockies and the Arkansas/Louisiana/Texas region, with U.S. production
increasing from 19 TCF in 1998 to 25 TCF in 2010 and 27 TCF in 2015.
Imports from Canada will flow from 3 TCF to 4.5 TCF,
but will still represent about 14 percent of the overall supply,
During a panel discussion on national issues, Division of Professional
Affairs president G. Warfield "Skip" Hobbs said "this nation has
huge undeveloped gas resources." Nevertheless, the levels of investment
required will occur only if:
- Investors have confidence that commodity prices will be stable
within a predictable range, and at a value that can provide
competitive rates of return.
- Access will be granted to the resources.
- The petroleum industry is able to work in a fair regulatory
"This will require an entirely new 'attitude' toward
the petroleum industry in Washington," Hobbs said.
Other panel members included:
- Mike Decker, chairman of the Potential Gas Committee.
- Jeremy Platt, past president of the AAPG Energy Minerals Division.
- Ron Grubbs, EMD president, who emphasized the importance of
nuclear energy to supply electrical power, reiterating the points
made in the EMD Column in the May EXPLORER.
- Charles Mankin, of the Oklahoma Geological Survey.
Each panel member discussed issues confronting gas,
electricity, nuclear, coal and alternative energy sources.
In the summation, Fisher, of the University of Texas
at Austin and past AAPG president, noted that the general points
of the presentations indicated the key question to be confronted
by lawmakers faced with crafting an energy policy.
"There is access on one side versus global warming
on the other," he said. "There are going to be trade-offs."
Fisher also noted the presentations generally touched
on both negative and positive influences on the future of energy
On the positive side was:
- Strong technology to find, develop and use energy resources
in an environmentally sensitive manner.
- Greater global access, noting the privatization trends in
South America, Russia and the opening of the Middle East to
- Unprecedented economic growth on a worldwide basis.
- Moving to hydrogen fuels, especially natural gas.
On the negative side, there is:
- Price volatility, which is not positive for neither the industry
nor the consumer.
- We have used a lot of capacity as far as oil is concerned.
- The infrastructure has been ignored throughout the energy-providing
- The movement to stricter environmental standards.
"Gasoline is now being produced in 56 different
varieties," Fisher observed. "It is almost a 'Balkanization'
of requirements" the industry faces.
- The push and drive in research and development.
"There is an assumption the pace of technology will
continue," he said. "Are we making the type of investment to keep
Fisher said "When there are price hikes, they get
action. When there is low prices, producers suffer," he said. "The
question is, is there anything in between?"
Summit co-sponsors were the American Geological Institute,
Interstate Oil & Gas Compact Commission, the Potential Gas Committee,
National Petroleum Council and the National Association of State