Transcript AES summit - ASPO Australia

THE ECONOMIC ADVANTAGES OF
ENERGY SECURITY AND
INDEPENDENCE
Roger H. Bezdek, Ph.D.
Management Information Services, Inc.
Oakton, Virginia
Presented at the American Energy Security
Summit: “Energy Independence Through
Domestic Alternative Liquid Fuels”
Alexandria, Virginia
April 2007
THIS PRESENTATION
•
•
•
•
•
•
•
Risks and concerns
Strategic and economic issues
Magnitude of the problem
U.S. resources and technologies available
SSEB study
Path to U.S. energy independence
National economic benefits
-- Oil imports displaced
-- Industry sales and profits
-- Employment
-- Jobs and skills
-- Tax revenues
• Benefits to a state
2
No, we’re facing a liquid fuels crisis
3
U.S. ENERGY IMPORTS ARE INCREASING
EIA forecasts that by 2030 U.S. will be importing 2/3 of its oil and
nearly 25% of its natural gas
2030
70%
2005
60%
Imports
50%
40%
30%
2030
2005
20%
10%
0%
Oil
Source: EIA, Annual Energy Outlook 2007, December 2006
Natural Gas
4
SECURITY CONCERNS: U.S.
IMPORTS CONTINUE TO INCREASE
SERIOUS RISKS TO U.S. OF
INCREASING ENERGY IMPORTS
• Excessive dependence on imported oil from OPEC and
others.
• Potential of excessive dependence on imported natural gas
• World oil production may soon peak and begin to decline.
• Record trade deficit ($764 billion in 2006) driven by energy
prices
• Increased global competition from China, India and others.
• Supply disruptions by natural disasters or terrorism
• National security concerns
6
PRES. BUSH: “REDUCE OIL
IMPORT DEPENDENCE”
First Thing to do: Stop Digging!
Just to keep oil imports at current level will require an additional 5
MMbpd U.S. production of liquid fuels by 2030
30
Supply Gap
20
Projected
Production
15
10
Im ports
held at 2005
level
5
20
24
20
22
20
20
20
18
20
16
20
14
20
12
20
10
20
08
20
06
0
20
04
million barrels per day
25
7
Remember the 1970s? Stagflation. . . Recession
That was only a short-term disruption
8
STRATEGIC ISSUES
• World Oil Demand is Rising
• U.S. Energy and Economic Security is
Increasingly at Risk
• World Oil Supply will Peak and Decline
• Military Preparedness and Homeland Defense
Requires Secure Fuel Sources
• Current Energy Policy Relies on Middle East
• Energy Options are Limited
America’s Unconventional Fuel Resources Can
Help Bridge the Gap to Future Fuels
9
AMERICA’S OIL CONSUMPTION
22 MILLION BARRELS A DAY
Use by Sector
Percent of Total
Transportation fuels
67 %
Industrial
25 %
Residential
4%
Commercial
2%
Electricity generation
2%
10
U.S. ALTERNATIVE OIL RESOURCES RIVAL TOTAL
WORLDWIDE CONVENTIONAL OIL RESERVES
World Conventional Oil:
2 - 3 Trillion Barrels
U.S. Alternative Oil:
2 - 4 Trillion+ Barrels
11
U.S. RESOURCES AVAILABLE
12
Slide courtesy of the U.S. Department of Energy
COAL FIELDS OF THE UNITED STATES –
LOWER 48 STATES
____________________________________________________________________________________________________
Note: Alaska also has substantial coal reserves.
13
EASTERN & WESTERN OIL SHALE RESERVES
U.S. Geological Survey’s Reserve Estimate: 2.1 Trillion Barrels
14
RESOURCE POTENTIAL OF 500+
MILLION DRY TONS PER YEAR
15
COAL, OIL SHALE, AND BIOMASS PLANTS
16
A PLAN TO REPLACE IMPORTED OIL
• Goal of 5% reduction per year for
20 years, beginning in 2010.
• We must start programs now as
lead times are long.
17
WHY SO LONG TO MITIGATE?
• Energy is inherently very large scale.
- It’s not computers or electronics
- No magic bullets
• Long time to build capacity & savings
• Long lifetimes
• Inherently expensive
The only solution: Start Early!
18
SSEB STUDY
“American Energy Security: Building a Bridge to
Energy Independence and a Sustainable Energy
Future”
U.S. faces 4 oil-related risks:
• World oil production may soon peak
• Dependence on unstable foreign supplies
• Increasing global competition for oil
• Natural disasters (e.g. Katrina) and terrorism
To mitigate these, U.S. must produce its own liquid
fuels
19
SSEB STUDY - 2
This study:
• Developed a plan for the U.S. to establish
energy security and independence through
the production of alternative oil and liquid fuels
from U.S. domestic resources that include coal,
biomass, and oil shale
• Emphasized need for domestic enhanced oil
recovery programs using CO2, increased
transportation fuel efficiency, and sensible
energy conservation
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SSEB STUDY - 3
The study focused on:
• Oil market analysis and forecasts
• U.S. resource assessment of biomass, coal, oil
shale, CO2 enhanced oil recovery (EOR)
• Technology assessments and cost estimates for
biomass, coal, and oil shale to liquid fuel
production plants and CO2 EOR
• Forecasts and analysis of the U.S. economy
• Environmental challenges and benefits
• Policy recommendations to stimulate growth of
the alternative liquid fuels
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SSEB STUDY - 4
Impacts on variables of interest:
• GDP, inflation, and interest rates
• Oil imports
• Price and price volatility of liquid fuels
• Federal, state, and local government revenues
• Federal budget deficit
• U.S. trade deficit
• Industry sales and profits
• Employment created (industries and occupations)
• Capital formation and requirements
• Export opportunities
• Personal income
22
THE PATH TO U.S. ENERGY
SECURITY AND INDEPENDENCE
i
30
Trans.Efficiency
25
EOR
Oil Shale
Import Gap
Biomass
15
CTL
10
Conventional
Oil Production
5
20
29
20
27
20
25
20
23
20
21
20
19
20
17
20
15
20
13
20
11
20
09
0
20
07
MMbpd
20
23
ESTIMATED CONTRIBUTIONS OF EACH RESOURCE
TO ELIMINATION OF U.S. OIL IMPORTS IN 2030
Transportation
Effiiency
16%
Coal-toLiquids
29%
Biomass
24%
Oil Shale
Enhanced
Oil Recovery
16%
15%
24
TOTAL LIQUID FUELS CONTRIBUTIONS
FROM EACH INITIATIVE IN 2030
Initiative
CTL
Oil Shale
EOR
Biomass
Transportation Energy
Efficiency
TOTAL
MM Barrels/day Total
Contribution Required
in 2030
Percent Contribution to
Total U.S. Liquid
Fuels Requirements
5.6
3.0
2.8
4.5
3.0
20
11
10
16
11
18.9
68
25
REDUCTION IN U.S. OIL IMPORTS
100%
90%
80%
U.S. Oil Imports
70%
60%
50%
40%
30%
20%
10%
0%
2007
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
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ECONOMIC IMPACT
Summary of the Economic Impacts of the AES Initiatives
(billions of 2005 dollars)
AES Initiatives Capital Expenditures
AES Initiatives O&M Expenditures
Total Industry Sales Generated
Jobs Created
Industry Profits
Federal, State, and Local Government
Tax Revenues Generated
Reduction in U.S. Trade Deficit
2020
2030
$51
$49
$182
894,000
$8
$56
$53
$132
$332
1,403,000
$14
$94
$250
$625
Source: Southern States Energy Board and Management Information Services, Inc., 2006.
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ECONOMIC IMPACT OF THE AES
INITIATIVES WILL BE ENORMOUS
The AES initiatives will reduce risk and lower oil prices, facilitate an
industrial boom, create millions of jobs, foster new technology,
revitalize the manufacturing sector, enhance economic growth, and
help eliminate the trade and budget deficits. In 2030 they will
generate annually (2005 dollars):
•
•
•
•
•
New investments of nearly $200 billion
One-third of a trillion dollars in increased industry sales
More than 1.4 million new jobs
$14 billion in profits
Nearly $100 billion in increased federal, state, and local
government tax revenues
• A reduction of over $600 billion in the U.S. trade deficit
28
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THE AES INITIATIVES WILL CREATE $100’S
OF BILLIONS OF SALES FOR INDUSTRIES
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THE AES INITIATIVES WILL CREATE MILLIONS
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THE AES INITIATIVES WILL GENERATE MILLIONS
OF PROFESSIONAL AND SKILLED JOBS
30000
25000
20000
15000
10000
5000
0
2020
2030
31
THE AES INITIATIVES WILL CREATE
SKILLED, WELL-PAYING JOBS NOT
SUBJECT TO FOREIGN OUTSOURCING
The AES initiatives will create many jobs in two categories that
states and localities are eager to attract:
1. College-educated professional workers, many with advanced
degrees
2. Highly skilled, technical workers, with advanced training and
technical expertise, many of them in the manufacturing sector
The initiatives thus generate jobs that are disproportionately for
highly skilled, well-paid, technical and professional workers, who
provide the foundation for entrepreneurship and economic growth.
These are the high-skilled, high-wage, technical and
professional jobs that states seeks to attract
THE AES INITIATIVES WILL GENERATE $100’S
OF BILLIONS OF TAX REVENUES FOR
FEDERAL, STATE, & LOCAL GOVT.
$100
$90
$80
Billions of 2005 Dollars
$70
$60
$50
$40
$30
$20
$10
$0
Federal Tax Revenues
State & Local Govt. Tax Revenues
2020
Total Tax Revenues
2030
33
BENEFITS TO A STATE
•
•
•
•
•
•
•
•
Volumes and timeframes of oil displacement
Total industry sales
Industry profits
Total (direct and indirect) employment created
Specific jobs created by occupation
Tax revenues for the state and local governments
Technology development and spin-offs
Revitalization of coal mining regions
34
BENEFITS TO A STATE OF A 30,000
BARRELS/DAY COAL LIQUEFACTION PLANT
•
•
•
•
•
•
•
•
•
•
Development & Construction Expenditures: $2.5 billion
Annual O&M expenditures: $400 million
Direct development & construction jobs: 2,000 +
Development & construction payroll: $100 million
Annual direct O&M jobs: 400
Annual O&M payroll: $25 million
Expenditure, job, and payroll multiplier: 2.0 – 2.6
Total new jobs annually: 1,000+
Annual industry profits: $50 million+ (national)
Annual state & local govt. tax revenues: $10 - $20 million
35
HOWEVER, UNLESS AGGRESSIVE MITIGATION
INITIATIVES ARE BEGUN SOON……..
It could happen again!
36
THANK YOU!
ROGER H. BEZDEK, PH.D.
PRESIDENT
MANAGEMENT INFORMATION SERVICES, INC.
202-889-1324
[email protected]
www.misi-net.com
37
LOCAL CONTACT INFORMATION
While in Australia through July 6,
Dr. Bezdek can be contacted via ASPO Australia
Association for the Study of Peak Oil and Gas
International
Australia
www.ASPO-Australia.org.au
38