API Sees Bright Outlook
The United States currently stands as the world’s largest producer of oil, refined products and natural gas, in part because of industry innovations and technological breakthroughs, said Jack Gerard, president and CEO of the American Petroleum Institute (API). Leading the world in production, the U.S. petroleum industry looks to boom times, reports Contributing Writer Maura Keller.
“We’ve taken the nation from energy scarcity to energy abundance,” Gerard said. “From making products abroad to a rebirth of U.S. manufacturing. And today we are increasing energy development as we’re contributing to lower greenhouse gas emissions—a reality many believed was implausible, if not impossible.”
The recent tax reform is a very positive development for the country, enabling it to compete in the global marketplace, Gerard added.
Speaking at the Institute’s 2018 State of American Energy luncheon in Washington D.C., Gerard reflected on the future role of oil and natural gas in the world, exploring high-tech innovations that he said are resulting in breakthroughs in myriad industries.
Reliability, safety and environmental performance are also top of mind within the industry. The high-tech nature of today’s oil and natural gas industry is driving innovators to analyze enormous volumes of data in real time in order to improve efficiencies and identify trends that will affect the industry’s future. Some of the most advanced technologies available, including infrared devices, fiber optics and drones are being deployed to enhance safety, Gerard said.
“We’ve deployed technological advances throughout the supply chain,” Gerard said. “From 3D mapping and petrophysics to machine learning and sensor technology.”
As a result of these efforts, the industry is experiencing a manufacturing revival, lower consumer costs, and reduced carbon and other air emissions. In addition, refining and production has increased significantly.
Gerard said U.S economy-wide CO2 emissions are at a near 25-year low and for the past 10 years energy-related carbon dioxide emissions have fallen in 43 states. And most importantly, key air pollutants in the U.S. have declined 73% since 1970, he said.
Efforts have also focused on methane emissions. The Institute said that these emissions have declined as natural gas production has soared. API recently launched the Environmental Partnership to accelerate reductions in methane and volatile organic compound (VOC) emissions from U.S. operations. As a result of the initiative, 28 U.S. producers of natural gas have joined the partnership in order to collaborate and build upon the industry’s strong record of emissions reductions.
“Industry innovations have done more than lower emissions and unlock new energy resources, they have also reduced the cost of energy for Americans,” Gerard said. In 2015, lower energy costs led to an extra $1,337 in average household budgets, according to the Institute. And, according to AAA, motorists saved nearly $550 at the gasoline pump during 2014 due to growing U.S. oil production.
While U.S. consumers are feeling the positive affects of the industry’s growth and advancements, U.S. manufacturers are also embracing the industry’s efforts. In 2017, the economy added more than 170,000 manufacturing jobs throughout steel, chemical, refined fuels, plastics, fertilizer, and other manufacturing industries, Gerard said.
Among private investors there is strong interest in the U.S. energy sector, including its infrastructure, Gerard said. A recent study indicated that private investment of more than $1 trillion could support more than one million jobs per year through 2035, he said.
“By expanding our focus beyond traditional infrastructure and considering the great opportunity of energy infrastructure investments, we could potentially double the economic benefits of infrastructure in this country,” Gerard said.
When an industry experiences growth and advancements like the natural gas and oil industry has, the employment scene within the industry follows suit. Today, the average pay within the natural gas and oil industry is nearly $50,000 higher than the U.S. average salary, according to API. Not only is the industry attracting and retaining some of the best and brightest workers, but as many as 1.9 million job opportunities are projected in the natural gas, oil and petrochemical industries by 2035, Gerard said. It is projected that nearly 40% of positions will be held by women and minorities, including African-American and Hispanic workers. And the role that millennials play in the industry is expected to grow, making up nearly 41% percent of the workforce—a 20% increase—by 2025, according to API.
So how does API plan on working with the minority community to communicate the benefits of working within the energy sector?
“From our vantage point, energy is opportunity for everybody,” Gerard said. “When you look at a variety of society’s challenges all across the country, the uniqueness of the energy renaissance is that it now expands well beyond the traditional oil and gas states such as Texas and Oklahoma. Pennsylvania is a major natural gas producer, as we know, and North Dakota is now the number two oil producer in the country. No one would have predicted this ten years ago, but today it’s a reality.”
As API looks for that rising generation in the workforce, the organization is going to pay attention to the changing demographics of society. Of the 1.9 million projected job opportunities by 2035, 700,000 are projected to go to the African-American community and another 200,000 of those are expected to go to women, Gerard said.
“That’s why we need to focus on diversity in order to give everyone equal opportunity,” Gerard said. “That will be a long-term discussion as to how to give everyone the opportunity to get involved in the energy renaissance.”
Safety within the natural gas and oil industry is paramount. As part of its ongoing efforts, API continues to establish safety standards. The institute has more than 700 standards that are continually being cited to help improve operations and maintenance on the state, federal and international level.
API works closely in monitoring efforts on the part of the administration and members of Congress from both parties to continually enhance the American energy landscape.
“We look forward to working with the administration, the Congress, and with state, local and tribal leaders to advance environmentally responsible domestic energy production on and offshore,” Gerard said.
He noted that the administration’s five-year plan considers new areas for developing in the outer continental shelf, which reflects the industry’s advancements in technology to safely access U.S energy resources. In addition, NAFTA improves opportunities for U.S. companies in Canada and Mexico, making energy more affordable. API will monitor the work on the part of the administration when negotiating with Canada and Mexico to maintain these opportunities for companies, Gerard said.
Pro-growth tax reform will allow the natural gas and oil industry to continue building on the millions of jobs supported and the billions of dollars invested into the U.S. economy each year. According to API, the oil and natural gas industry supported $1.3 trillion of the U.S. GDP, $714 billion in earnings for U.S. workers in 2015, and contributed more than $70 million every day to the U.S. Treasury.
Asked how the recent tax reform is going to affect the industry’s infrastructure, Gerard said the tax reform is a very positive development for the country and for those who compete in the global marketplace.
“As it relates to infrastructure, too often we think about the traditional forms of infrastructure such as bridges, highways, roads, etc., but we should not overlook the energy infrastructure opportunity,” Gerard said. Recent studies show that over the next dozen years there is a potential for $1.1 trillion investment in just energy infrastructure in this country, which are all private sector dollars.
“So, let’s not overlook the energy equation here,” Gerard said. “The concerns there may fall more in the areas of expediting permitting, to make sure we can bring certainty to the marketplace. And make sure we can have the equipment and supplies necessary to build this infrastructure throughout the country. Those in New England pay much high electricity prices due to the lack of infrastructure. As we work with the administration and the Congress, there is a real opportunity to add that to the tax measure.”
API looks forward to working with the administration and Congress on trade policy. “Global trade flows have played a critical role in America’s energy renaissance—spurring economic growth and investment and creating American jobs,” Gerard said.
During the Jan. 9 address, Gerard indicated that in addition to continued efforts to enhance safety, API is eager to create a regulatory environment that gives consumers access to reliable and affordable domestic energy.
“We support ending and significantly reforming the Renewable Fuel Standard,” Gerard said. “Forcing higher ethanol blends into the fuel supply hurts consumers and is incompatible with many car engines. America’s energy reality in 2018 is vastly different from when the law was enacted a decade ago.”
The Institute is a national trade association based in Washington, D.C., representing all facets of the oil and natural gas industry. API’s more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms.
As the political environment heats up in 2018, API plans on staying focused on solutions for the American consumer—from supporting more jobs and lower energy costs to ensuring clean air and water.
“We share a common vision for our future,” Gerard said. “One that includes clean, reliable, and abundant energy, economic prosperity and continued environmental progress. Meeting global energy demands requires constant innovation, unconventional creativity and a commitment not to be satisfied with the status quo or to accept what others consider impossible today.”
Photo courtesy of API.