I fell into the energy business midway between the two shortage-plagued oil shocks of the 1970s and I relish several high points during my career: visits to the North Sea and Prudhoe Bay; a tour of Henry Hub; time at Kenai, Alaska, within the nation’s first LNG liquefaction plant; and an itinerary around Singapore’s sprawling refinery/petrochemical industry.
Alas, I endured some low points. One of the lowest was an energy investor conference in early 2005 in Boston. A world-famous economist was the keynote speaker, who expounded on the obvious truth of Hubbert’s Peak. His extensive PowerPoint presentation backed up his argument that the days of oil and gas were numbered. The world was on the downhill side of the famed geophysicist’s curve—and the nation in the worst shape of them all was the U.S.
Energy demand continued to surge while our gray-haired domestic oil fields were drying up. There was no more gas to be found either. We were a nation of growing energy imports as far as he could see into some sort of future lit by solar panels, windmills or, perhaps, improved nuclear reactors.
Applause at the end was sparse. The several hundred of us in the big hotel ballroom had deer-in-the-headlights expressions: We were telegraphers making buggy whips. We had no future.
Nearly 14 years later and things have not quite turned out that way. Thanks to the late George Mitchell and his crew, and later a rare positive gesture to the oil business by President Obama, we live in a world that’s the opposite of that gloomy Boston forecast.
As surely as Shakespeare’s characters, instead we have come “into something rich and strange.”
The U.S. is today the world’s largest crude oil producer, roughly one in every six barrels. It has more natural gas than it knows what to do with. This nation has emerged as a major exporter of both, as well as a major supplier of petroleum products.
We confront a major and unexpected challenge in the midstream. This nation has excellent midstream infrastructure, but much of it is in the wrong place. Much of the repurposing that could be done has been done. Now, we face the need for greenfield projects costing well into the billions of dollars.
Perhaps the greatest challenge of all is how to handle exports. Crude that once moved from, say, the Permian Basin to inland refiners must have access to Gulf Coast docks. And what of those docks? Most were built to unload tankers, not load them.
It’s a daunting proposition for the midstream and worthy of the big word Shakespeare created in his play: Sea-change. An appropriate term, given that seaborne commerce is key to making it all work.
We pause here as 2018 ends and a new year begins to look at what has happened and what needs to occur. All of this seems bewildering and overpowering at times, but it’s a nice problem to have. It certainly beats work as a telegrapher making buggy whips.
My best wishes to all of you for a wonderful holiday season.
Paul Hart can be reached at email@example.com or 713-260-6427.
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