By James A. Gibbs

The National Petroleum Council (“NPC”) is a federally chartered and privately funded advisory committee, established in 1946 by President Harry S. Truman. Its sole purpose is to advise, inform and make recommendations to the Secretary of Energy with respect to any matter relating to oil and natural gas. NCP membership of approximately 200 persons is selected and appointed by the Secretary of Energy. Individual members serve without compensation as representatives of their industry and the nation as a whole, not as representatives of their particular companies. The goal in selection of members is to assure a well-balanced representation from all segments of the oil and gas industry, including individuals from academic, financial, research, and public interest organizations and institutions.

The advice of the NPC is transmitted to the Secretary of Energy in the form of NPC-approved reports that are provided to the government as a public service. The cost of providing this advisory service is borne by voluntary contributions from NPC members. The NPC conducts studies in response to specific requests by the Secretary. Since its formation in 1946, the NPC has prepared over 200 reports, which deal with virtually every aspect of oil and gas operations. As a member of the NPC for almost a decade, I have witnessed the many hours of detailed and exhausting work required to complete each report requested by the active Secretary.

At our meeting in late September, the NPC approved the draft of the 2011 report entitled “Prudent Development: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources.”

In his 2009 letter asking the NPC to conduct this study, the Secretary of Energy requested the assessment concentrate on two tasks: (1) develop an up-to-date understanding of the potential natural gas and oil supply opportunities in North America, and (2) examine the contribution natural gas could make in a transition to a lower carbon fuel mix.

The study developed four conclusions about natural gas and oil with the intent that these findings will help guide the nation’s future policy decisions.

  • First, the potential supply of North American natural gas is far bigger than was thought even a few years ago. As late as 2007, it was thought that the United States would become increasingly dependent on imported liquefied natural gas, owing to what appeared to be a constrained domestic supply. It is now understood that the natural gas resource base is enormous, and its development is potentially transformative for the American economy, energy security and the environment. These newly discovered resources have the potential to meeting even the highest projections of demand and amount to over 100 years of supply at today’s consumption rates.
  • Second, and perhaps surprising to many, America’s oil resources are also proving to be much larger than previously thought. The North American oil and natural gas resource base offers substantial supply for decades to come and could help the United States reduce, but not eliminate, its need for and resulting cost of oil imported from outside of North America. Thanks to advances in the application of technology, North America has a massive, economically accessible oil resource base, which includes huge quantities of unconventional gas such as shale gas.
  • Third, America needs these natural gas and oil resources even as efficiency reduces energy demand and alternatives become more economically available on a large scale. Even presuming the United States uses energy much more efficiently, diversifies its energy mix and transitions to a low carbon fuel mix, Americans will need natural gas and oil for much of their energy requirements for the foreseeable future. Moreover, the natural gas and oil industry is vital to the U.S. economy, generating millions of high-paying jobs and providing tax revenues to federal, state and local governments. Every additional unit of energy produced domestically reduces foreign imports and our balance of payments deficit.
  • Fourth, recognize the impact of natural gas and oil dependence on environmentally responsible development. In order to actualize the benefits of these larger natural gas and oil resources, safe, responsible and environmentally acceptable production and delivery must be ensured in all circumstances.

It is hoped that the conclusions of the NPC’s report will ameliorate the opinions of the current administration in Washington, which still holds to the view that natural gas is simply a “bridge” fuel to a future dominated by subsidized wind, solar and ethanol. In the meantime, it is comforting to know the U.S. has the resources to continue to provide clean, abundant and cheap energy to U.S. consumers—provided our oil and natural gas companies are not impeded by governmental actions engendered by a hostile business atmosphere.