Ex-Oil Exec at Harvard Presents Bold Energy Plan for Texas: More Oil

Categories: Environment

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A powerful ex-oil industry executive has proposed a new energy plan for Texas, and it may not surprise you to learn that his plan involves oil. Lots and lots of oil.

Leonardo Maugeri used to be a top executive at Eni, a company that has the double honor of being Italy's biggest oil company, as well as just being Italy's biggest company.

Now, he has an important-sounding job at Harvard's Belfer Center for Science and International Affairs (number of words in his job title: 11), where he serves as an associate on the school's Environment and Natural Resources Program, because who better than a former leader at multinational oil corporation to serve on an environment program?

Maugeri's latest report, published by the Harvard Kennedy School's Belfer Center for Science and International Affairs, talks optimistically about Texas' capability to produce more oil.

When it comes to shale oil production, Maugeri claims that Texas is just getting started. He writes that the entire United States could produce 5 million barrels of shale oil per day by 2017, and that North Dakota and Texas could be capable of holding more than 100,000 working wells in North Dakota and Texas by 2030. The Dallas Business Journal reports that there are currently 10,000 wells in Texas and North Dakota.

"The combination of vast geologic supply of shale oil and low population density in these areas allows for intense, sustained production unique to the United States," Maugeri writes.

Sounds awesome. What could possibly go wrong? Oh yeah, global warming, air pollution and water pollution, three things that go unmentioned in the report.

We checked in with Mark Jacobson, a researcher at Stanford University who directs the school's Atmosphere/Energy Program. Jacobson joins the chorus of other climate scientists who say that shale oil production causes methane, a potent greenhouse gas, to be released into the atmosphere. (And there's plenty of research to back methane concerns up).

Last month, a report by the Australian Climate Commission urged restraint, warning that 80 percent of our fossil fuels must stay underground if we humans want to keep our climate from changing too much. That report comes after the International Energy Agency released similarly dire warnings last November.

If we have to leave 80 percent of our fossil fuels in the ground, then does that mean we'll have to cancel our binge drilling parties in Texas and North Dakota? Maybe. But Maugeri, the Harvard fellow, indicated in an editorial he wrote last year for the Wall Street Journal that oil is going through a tough time, too: "To make matters worse, articles and comments about any oil issue often tend to be negative."

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16 comments
holmantx
holmantx topcommenter

And what does it portend for the state of Texas, Dallas and the DO's circulation (and their scribes' salaries and professional future in a target rich "environment)?

The other side of the economic coin needs to be married up with the wild-eyed chicken little rants.  This just released today quoting the same Italian:

http://tinyurl.com/m3y2dsb


ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

comments from the Jacobites, Luddites and hair shirt environmentalists in ... 3 ... 2 ... 1 ...


Oh and BTW, publishing the photo of the Spindletop discovery well in 1903 is oh so appropriate (he says dripping with sarcasm just in case no one realizes it.) ...

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@holmantx  

If you look back in economic history, it is truly amazing that most economic growth and wealth creation is based upon the development of some natural resource.  The remainder is nothing more than a complicated shell game that is no different than the rearranging of the deck chairs on the Titanic.

The only exception that I can think of is the development of intellectual property in the 20th century.

schermbeck
schermbeck

@ThePosterFormerlyKnownasPaul So no problem with a report that recommends relying more heavily on fossil fuels in the 21st Century without even addressing the well-documented complicating factors that might be in play? Doesn't sound rational.

holmantx
holmantx topcommenter

@ThePosterFormerlyKnownasPaul @holmantx

In 1980, the United States enacted the Crude Oil Windfall Profit Tax Act as part of a compromise between the Carter Administration and the Congress over the decontrol of crude oil prices. The Act was intended to recoup the revenue earned by oil producers as a result of the sharp increase in oil prices brought about by the OPEC oil embargo.  It crushed the life out of Texas.

Declining profits from oil production sharply reduced drilling and exploration expenditures and employment. Two states in particular, Texas and Louisiana, were hit hard by low crude oil prices. In these states, oil and oil dependent businesses (such as banks and other financial institutions, and real estate) became bankrupt, large numbers of employees were laid off, and revenues to State and local governments plummeted. According to the Bureau of Labor Statistics, the oil and gas extraction industry between 1982 and 1988 lost about one-third of its jobs.

Texas spent a generation in ruinous decline.  Drifting along in some modicum of low-grade misery.

On August 23, 1988, amid low oil prices, the tax was repealed when President Ronald Reagan signed P.L. 100-418, The Omnibus Trade and Competitiveness Act of 1988.

From then on, it has been the Grapes of Wrath.  Millions came to a state of mind called Texas.

and they still are.

But we can always go back the other way.

C-a-l-i-f-o-r-n-i-a here we come . . . 

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@schermbeck @ThePosterFormerlyKnownasPaul  

Yep, lets all move back to our caves.

"Global warming" or "Climate Change" is more a matter of economic dislocation than it is the ability of humans (or other life forms) to live on the planet.


As far as I am concerned, the current oil and gas boom is the swan song of the industry as we are now producing from the source rock that supplied the hydrocarbons for the reservoirs that have already been produced.

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@primi_timpano @holmantx @ThePosterFormerlyKnownasPaul  

How about the brief period of $6/BBL when the Saudis got PO-ed and flooded the market in 1986?

Of course there was also the fiction that the Saudi's could lift 20MMBPD for years on end.

The WPT did make a lot of projects uneconomic as the incremental production would have been subject to the tax.

Also what made it even more of a mess was the "new oil" / "old oil" distinction as the "new oil" was subject to the tax at a different rate.

To see just how big of a mess the whole thing was look into the settlements on WPT pricing and classification on oil produced by Exxon from the Hawkins Oil Field.  Exxon tried to take the position that all of the production was exempt because if they had not unitized the field it would have been abandoned.  The real shock was when the royalty owners got hit with the penalties for overpayment when Exxon decided to settle.


Basically, the main reason for Texas production decline starting in 1986 was the fact that capital was no longer being invested in existing or new prospects.

holmantx
holmantx topcommenter

@primi_timpano @holmantx @ThePosterFormerlyKnownasPaul 

guess you would have had to been there . . . 

the effect was immediate.

primi_timpano
primi_timpano topcommenter

@holmantx @ThePosterFormerlyKnownasPaul 

While the windfall profits tax certainly was a mess, I question your conclusion the tax crushed the life out of Texas. The loss of oil related productivity was not caused by the tax, but by substantially lower oil prices, which began to drop precipitously in 1980, from approximately $70 per barrel to the low twenties in 1986.

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