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Speakers update state, global needs

“Energy is the engine of modern economies, and the bridge for a fossil-present to an alternate-energy future will span many decades,” Dr. Scott Tinker told those attending Wednesday morning’s session of the Texas Alliance of Energy Producers Expo and annual meeting.

“As with building any bridge, a strong foundation is vital. A well-designed energy bridge can move the world ahead in a reasonably smooth fashion,” he said.

He said it won’t be easy, though, “because it recognizes the delicate interplay among energy, the environment, the economy and public energy policy.”

Tinker, the director of the Bureau of Economic Geology at the University of Texas, gave a presentation entitled “Global Energy — Bridges, Not Walls.”

His presentation followed Texas Railroad Commissioner Victor Carrillo, who updated the crowd on the state’s energy sector.

Tinker said fossil fuels represent 87 percent of the global energy mix, and “under any stable scenario, the foundation of any alternate, cleaner energy future will be built with fossil fuels.”

He also said “new conventional oil and natural gas frontiers include ultra-deep water, the Arctic, and other extreme operational environments and that unconventional oil and growing natural gas represent a vital part of the future fossil energy mix and will require significant research investments.”

The industry expert said the U.S. consumes more energy than any place in the world and that the “challenge is energy efficiency.”

“Energy efficiency is a must across the board,” he said.


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Tinker said diversification of the global portfolio is critical, too, including liquid transportation fuels from unconventional sources of oil, coal and gas to liquids, and certain biofuels. Also vital, he said, is electricity diversity, which includes coal with sequestration, expanded natural gas and nuclear, and investments in other alternative forms to bring them up to scale over several decades.

To improve global energy security, Tinker said an international energy road map should “integrate energy, economic and environmental components into policy discussions; strengthen global energy trade and investment; broaden dialogue between developing and developed nations; and evaluate global workforce balancing opportunities.”

In his overview of the state’s oil and gas industry, Carrillo said there are more than 7,500 active oil/gas operators in the state with 151,861 oil and 95,826 natural gas producing wells in Texas.

“We have the largest pipeline infrastructure in the nation and 27 percent of the nation’s U.S. refinery capacity,” Carrillo said.

He also mentioned that the industry employed more than 200,000 people as of last year and oil and gas petrochemicals equated to $160 billion in 2008.

He said the RRC issued more than 24,000 drilling permits last year, compared to 9,716 in 2002, but, because of very low crude oil and natural gas prices, the numbers have dropped dramatically; and the lower crude oil and natural gas prices have had a negative impact on the number of active drilling rigs in the state.

But Carrillo said, “We are starting to see some recovery in oil. But natural gas shows no such trend. For the rest of the year, natural gas prices will remain weak, but I am optimistic about the (future) price of natural gas.”

Carrillo said the U.S. is much less dependent on natural gas imports, and Texas had 33 percent of U.S. marketed production last year.

“Without Texas, the U.S. would import 50 percent of its natural gas,” he said.

The chairman said the Barnett Shale, located over 19 counties in North Texas, had 10,539 wells (229 operators) as of March 3.

Carrillo said he was concerned with some of President Barack Obama’s administration proposals, and that they would impact big oil and independents, particularly independents.

He listed some of the areas of concern: repealing the percentage depletion allowance, repeal expensing of intangible drilling costs, removal of the marginal well tax credits, and increasing amortization of geological and geophysical costs.

He summed up his talk saying there is a “silver lining” in light of the setbacks and challenges facing the oil and gas industry.

“This is a cyclical business. We will see better days again,” he insisted. “The economy will stabilize. Energy demand will grow and we will rely on hydrocarbons for decades to come. Independent producers are fighters, and are resilient — and survivors.”

Business editor Lee Anderson may be reached at (940) 763-7533 from 8:30 a.m. to 4 p.m. weekdays. His e-mail address is andersonl(at)

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