Thanks to significant advances in technology, developers are now able to tap into previously inaccessible stores of natural gas and oil trapped in shale formations across the country, which has fundamentally re-framed the nation's energy conversation, analysts told a House panel Tuesday.
Now instead of talking about dwindling domestic energy resources and scrambling to find new import sources, policymakers and energy companies are faced with more supply than they know what to do with. Bucking a long decline, U.S. oil output has increased by about 38 percent since 2008 according to the Energy Information Administration, equivalent to the entire output of Nigeria, the 7th largest producing country in OPEC.
The EIA projects the U.S. will produce about 8 million barrels of oil per day by 2014, with the vast majority of growth coming from increased production of so-called "tight oil" which is trapped in shale rock formations and extracted with hydraulic fracturing. On the natural gas front, supplies have jumped from just 2 percent in 2008 to about 27 percent today, prompting dozens of companies to apply for export licenses.
"This is such a different hearing than we had in this very room in 2008," said Texas Republican Rep. Michael Burgess of U.S. energy windfall. "It's good news for the American people. It's good news for the American economy, regardless of political party or persuasion."
But federal policy is lagging behind the advances that have propelled the United States into a world energy production leader, experts said at the House Energy and Commerce subcommittee meeting Tuesday.
"Our thinking needs to catch up with reality," said Daniel Yergin, vice chairman of analytics firm IHS CERA, who testified in front of the panel. "Our logistics need to catch up with production—everything's been turned upside down."
Yergin keyed into the ongoing natural gas exports debate, which has divided the industry, arguing that expanded exports are crucial to keep the shale boom going. Proponents of exports say shipping surplus supplies to friendly, energy-hungry nations such as Japan and Taiwan would boost the economy and strengthen national security. Critics of the plan say it could drive up prices for consumers and manufacturers at home.
"We don't see exports having a major impact on price," Yergin said. "We see a gain to national security [as a result of the U.S.] becoming a net exporter."
Texas Democratic Rep. Gene Green echoed Yergin's sentiments supporting natural gas exports, deploring the many natural gas flares in South Texas that result from burning off gas emerging in new oil fields. Instead, Green argued pipeline and transmission infrastructure should be updated to make it easier for companies to collect the escaping natural gas and potentially export it to friendly, energy-hungry nations such as Japan.
While the discussion largely centered on the nation's newfound abundance of fossil fuels, the potential negative consequences of the shale boom figured into the discussion. Panel members and experts alike stressed that while the U.S. has immense opportunity to develop fossil fuel resources in its shale formations, doing so irresponsibly could cause irreversible damage to the environment.
"As we congratulate ourselves for these new discoveries, we need to discuss how energy choices we're making today will have long-term impacts for our climate," said California Democratic Rep. Henry Waxman, the ranking Democrat on the Energy and Commerce Committee. "You can't have a conversation about America's energy policy without also having a conversation about climate change."