Crude oil and natural gas remain the state’s economic foundation, but oil will become less and less important, relative to other sources of energy in the future, said Robert Wegener, Oklahoma secretary of energy.
“This economy isn’t going anywhere without a continued dependence on petroleum,” Wegener said. “There is no debate about that.”
The state’s energy secretary made the comments during a one-day conference Dec. 8. The Oklahoma Independent Petroleum Association and the Oklahoma Unconventional Resources Forum sponsored the “Mid-Continent Coalbed Methane and Shale Gas Symposium.” The event, held at the downtown Tulsa Doubletree Hotel, featured technical presentations focused on coalbed methane and shale gas.
The goal, Wegener said, is to diversify the feedstocks for power generation.
“The viability of Oklahoma is due to natural gas,” Wegener said. “We know that natural gas is the economic engine behind Oklahoma. Understand natural gas if you want to understand Oklahoma.”
He stressed that alternative fuels will be critical, as they complement fossil fuels.
“Neither domestic oil nor natural gas can survive on their own without alternatives,” he said. “That does not mean alternatives will be equal. But, fuel diversity in the transportation and power generation fuel supply market should continue.
Wegener said Oklahoma should continue to develop biofuels and expand the use of natural gas for the production of electricity.
Over the past 30 years, the fastest growing sector in terms of energy consumption is power generation. The demand comes from advances in technology across the spectrum — from cell phones and electronics to manufacturing.
“What does it mean for us?” he asked. “That if we are looking for demand for our product, where we have increasingly modes of supply, then there are opportunities.”
Natural gas must be the foundation of the state’s power generation policy.
“Baseload electric generation must have natural gas at its core,” Wegener said. “Then wind, solar, geothermal will all increase with market demand.”
Using coal and nuclear power for power generation is less attractive because building either a coal or nuclear power plant would cost billions.
“It would be impossible to finance a nuke facility,” he said. “Coal and nuclear will play a role in U.S. energy policy — but not in Oklahoma.”
Another alternative opportunity is geothermal, he said.
Geothermal heat pumps are efficient — replacing 3 to 5 kilowatt-hours on the power grid for every kwh taken off the grid to power the pump.
Using wind for power generation is exploding across the U.S., Wegener said. Last year, 42 percent of all new electric generation came from wind.
He admitted wind benefits from huge tax credits.
“Certainly, there is policy support for wind,” he said. “Without the 30 percent credit, wind is not competitive.”
Moving that power from a wind farm to the city is another matter. Ironically, just as demands for power generation have grown since the mid-1970s, there has not been any major improvements in transmission in three decades.
“Transmission is the key,” Wegener said. “Without it, development in Oklahoma or Kansas or Nebraska or North Dakota or South Dakota will not happen.”
Expansion of the transmission grid is needed in this country — not just for renewables, but also baseload electric generational reliability, he said.
“Saying ‘no’ to electric transmission is like saying ‘no’ to oil and natural gas pipelines,” he said. “It is the same thing. You have to move product to the market.”
Natural gas is clean and abundant, but price volatility is a big issue, he said.
“When it comes to energy at the national level, there will always be a strong push back to the notion of relying too much on natural gas,” he said. “Whether it is fair or not is another issue. We have to figure out how to address that issue and find alternative (fuels) that do not compete at a significant level.
“We are not going anywhere without domestic oil and natural gas, but alternatives are important.”