Chamber’s Harbert: energy boom will help Alaska over time
Alaskans should take a long and holistic view of energy prices despite the immediate challenges their state faces, according to the leader of the U.S. Chamber of Commerce Institute for 21st Century Energy.
Chamber Energy Institute President Karen Harbert said in an interview with the Journal that the long-term benefits the country will see from the Lower 48 fracking revolution that has once again made the U.S. the world’s premier energy producer will eventually reach north.
She was in Anchorage July 25 to present Sen. Lisa Murkowski with the institute’s Spirit of Enterprise Award for her positions on “pro-growth, pro-America policies,” she explained.
Harbert, who also served as an assistant secretary in the Department of Energy during George W. Bush’s second term, presented Murkowski with the award during an Anchorage Chamber of Commerce luncheon.
“(Murkowski) has really stood out as not only putting Alaska and her communities first, but putting the nation first and voting for things — hard votes, tough votes, but the right votes,” Harbert said during the Anchorage Chamber event.
Murkowski, who chairs the Senate Energy and Natural Resources Committee, drafted and moved the country’s first comprehensive energy policy reform bill since 2007 this year, along with help from ranking committee Democrat, Washington Sen. Maria Cantwell.
The House and Senate versions of the energy bill are set to be taken up by a conference committee after the summer recess. Whether the major piece of legislation will reach the White House in time to be signed by President Barack Obama this year, and whether or not he is amenable to what the conference committee produces, remains to be seen.
Harbert later endorsed Murkowski on behalf of the U.S. Chamber of Commerce in her reelection campaign.
Those energy upsides could be manifested in Alaska through strengthened national security, closely tied with energy supplies, increased domestic and international trade and other ways.
Harbert noted that the world population is expected to grow by about 2 billion people over the next 35 years and the continued modernization of Asia and Africa will drive energy demand over that time as well. She cited a U.S. Energy Information Administration forecast that predicts global energy demand will grow by up to 40 percent over the next 30 years.
Alaska’s financial mess — state revenue has fallen by 80 percent in the last three years because of its reliance on oil — has left state leaders fighting over budget solutions and yearning for significantly higher oil prices, which aren’t in anyone’s near-term forecast.
“While commodity prices today are low, natural gas prices are low and oil prices are low, and that has been a benefit to some of the consumers, the reality is we’re going to need a whole lot more energy to fuel those 2 billion people in an economy that is industrializing around the world,” Harbert said.
“We want to be able to be the provider of energy. Commodity prices are going to come back. We have seen boom and bust cycles before. The Lower 48 and Alaska will have a big part to play in fueling the global energy landscape of the future and we want to make sure that we remain open to investment.”
Daily U.S. oil and natural gas liquids production grew more than 35 percent over five years to average more than 15 million barrels of oil equivalent per day in 2015, making the country the world’s largest producer, and it’s not even close. According to the latest EIA data, the U.S. production outpaced Saudi Arabia, the world’s second-largest producer of oil, by more than 20 percent last year.
As recently as 2011 the U.S. was third in world oil production behind both Russia and Saudi Arabia.
The natural gas picture looks much the same over a slightly longer period. Domestic natural gas production bottomed out in 2005 at just more than 18 billion cubic feet, or bcf, per day. Since, it has grown by about 40 percent to nearly 26 bcf daily in 2014, according to the EIA, to lead the world and exceed Russia, the world’s second-largest gas producer, by more than 20 percent.
It’s well documented that numerous LNG import terminals built across the country in the last decade are being converted to export facilities. The U.S. is expected to become a net exporter of natural gas in 2017, Harbert added.
She said the remarkable ramp-up in production of traditional energy sources in the country with the world’s largest economy, which heavily dictates global economic health, should help “inoculate that (economic) volatility” that has historically followed oil price swings. She noted that a spike in oil prices has preceded every U.S. recession in the past century.
The energy business that was historically limited to the producing states of Alaska, Texas, Oklahoma and California has spread beyond even the newest shale producers of North Dakota, Pennsylvania and Ohio, Harbert said.
“Every state in our country is now in the energy business in one way or another. If they’re not a producer they’re part of the supply chain so this is really now embedded in everyone’s economy,” she said.
“I don’t think we should ever be in a position to think this is the Lower 48 versus Alaska. I can see the inverse argument currently, but over time all boats rise together.”
On the Alaska LNG Project, Harbert said Lower 48 gas exports shouldn’t be seen as competition to Alaska because of the state’s location adjacent to Asian markets — and again, Alaskans need to look at the long game.
“(AK LNG) has to work (economically) for the capital to be there and if you look at the long-term demand forecasts the demand is there. It’s what’s going to happen in the next five-to-eight years,” she said. “It will happen. I’m thoroughly convinced that no matter who’s your governor or what the state Legislature looks like it’s inevitable. I think the question is when and who gets what part.”
She also said the U.S. Chamber Institute for 21st Century Energy is preparing what it is calling its Energy Accountability Series for later this year, examining the statements and policy goals of candidates running for high office in November.
In the presidential race, for example, the potential economic impact of Hillary Clinton’s declaration that she would ban future oil, gas and coal leasing on federal lands will be modeled, Harbert said. On the other side, Donald Trump’s positions on foreign trade will be scrutinized, she added.
“Let’s not give them a free pass anymore. Let’s look at what, in our case energy, is being said and let’s start putting the numbers to that,” Harbert said.
The intent of the reports, she said, is to give voters detailed and unbiased information on what would happen if the candidates followed through on their campaign promises.
Elwood Brehmer can be reached at [email protected].