Curbing Demand More Important Than Building Supply

In the future, Oklahoma must focus more on energy demand. Learning how to manage demand will be even more critical than finding the supply, according to the Oklahoma Secretary of Energy Robert Wegener.
Wegener served nearly four years as a deputy to previous Energy Secretary David Fleischaker. In December, Gov. Brad Henry appointed Wegener to the top post when Fleischaker resigned.
The days of secure and plentiful oil are over, Wegener said in an interview with TBJ.
“In the past we knew we could drill our way out of a problem,” Wegener said. “Not anymore. We must focus on conservation efforts as well as develop viable alternative energy sources.”
Over time, the U.S. could no longer produce oil fast enough to keep pace with the ever-increasing demand. Cheap foreign oil was the easy alternative to fill the gap. From a time when imports were negligible, the percentage crept up to today’s 70. The U.S. now imports 13 million barrels of the 18 million barrels of oil consumed per day.
Fossil Fuel King
Crude oil and natural gas remain kings in Oklahoma’s energy future.
State tax records show total oil and condensate production from Oklahoma totals about 14.5 billion barrels over the past 100 years. The state ranks fifth in crude oil produced ?≠— about 70 million barrels a year — and accounts for 3 percent of national production. Today’s annual production is just a quarter of the peak rate reached in 1927: 278 million barrels.
Natural gas is even a bigger commodity. The state ranks third behind Texas and Wyoming, producing 1.7 trillion cubic feet of natural gas annually. That production accounts for almost one-tenth of total U.S. natural gas production. More than a dozen of the 100 largest natural gas fields in the country are found in Oklahoma, and proven reserves of conventional natural gas have been increasing in recent years.
The one constant in the energy business is change. Today, the challenges ahead are greater than ever. During Oklahoma State University’s energy conference in Tulsa last month, one of the sessions featured Harold Hamm, chairman and CEO of Enid-based Continental Resources. Hamm presented his perspective about oil and gas challenges and possibilities.
“Oil fueled the industrial revolution, helped win two world wars and made America the powerhouse of the world,” Hamm said. “The proposition that we can abandon oil and gas in favor of some unknown alternative is not only whimsical, it is dangerous.”
Bridge Solution
Yet that is where policy makers want to take the U.S.
Oil and natural gas must be the bridge to get Oklahoma and the world to the “other side” where alternative fuels reign, Wegener said. The Oklahoma Energy Resources Board has coined the term, “The Bridge,” referring to natural gas as the fuel to the state’s energy future.
“The economy is driven by the energy sector. The globe is dependant on oil and gas,” Wegener said. In spite of the importance of those fuels, alternative fuels and conventional products must work together rather than against each other.
The state does not need to just “turn off” 100-year-old practices, but work to combine them.
Wegener sees a solution to the nation’s energy future as under the ground, with fossil fuels and geothermal, and on top of it through bio-fuel production.
“I think there are many opportunities for that to occur. One area of bio-fuel is from cellulosic commercialization of grains grown in the state,” he said. “The state has made significant investment, leveraging the heritage in its two largest industries ?≠— energy and agriculture.”
Oklahoma is proud to showcase our research and development efforts with renewable energy, Wegener said.
“OSU has a history at developing crops, developing what can grow in that requires minimal input. OU is a leader in developing way to convert feedstocks into fuel,” he said. “We must focus on efforts on how to integrate potential energy resources.”
For example, switch grass has a long growing cycle of 300 days. That land could be productive year-round.
“You could run cattle on it. Let them graze, then pull them off and let the crop grow to harvest for fuel,” he said.
It is important to get policy makers to develop a sustainable energy future. “Sustainable” energy provides enough energy to meet the needs of the present without compromising the ability of future generations to meet their needs. A broader interpretation includes fossil fuels as transitional sources while technology develops alternative sources for future generations.
Better technology will lead to sustainability, Wegener said.
“As the technology improves, it provides hedges against volatility. Then in the long-term we get sustainability,” he said.
Independence
The goal is to reduce the use of imported oil and emissions of greenhouse gas based upon least cost, said Tony Knowles, a past governor of Alaska and president of the National Energy Policy Institute. The initiative, created last fall, is the brainchild of Tulsa oilman and billionaire philanthropist George Kaiser. Kaiser is president and CEO of Tulsa-based Kaiser Francis Oil.
Faced with the fact of America’s shrinking oil supply and growing dependence on foreign sources, Kaiser committed himself to helping the U.S. recover its energy independence, Knowles said, who was a keynote speaker at the OSU Energy Conference. Knowles believes that with better information policy makers would make better choices for the country.
“Clearly what is needed is a coherent, rational energy policy that reflects the sum of our best wisdom, not the sum of all lobbies,” Knowles said in prepared remarks. “Possibly, but first we must arrive at a consensus of what defines energy independence and adopt it as a national goal.”
Knowledge is Power
Oklahomans have to manage energy-use demand, to be intelligent about how we consume, said Wegener.
For example, electric demand is the fastest growing ?≠?≠sector. It is more significant than any other piece of the energy, said Wegener.
“The cost to add electricity supply is growing. A 1,000-megawatt facility would cost $1 billion. To construct a coal facility would cost $30 billion,” he said.
It would be a lot of less expensive to the ratepayer in Oklahoma to invest in demand management, Wegener said.
“When we can increase the knowledge consumers have, when they can understand how much their electricity costs them this minute, then people will curb their habits to make more efficient use of their consumption.”



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