• Lucian Pugliaresi Testifies Before the House Committee on Energy and Commerce

    On Tuesday, November 16 2021, EPRINC President Lucian Pugliaresi participated in a marathon hearing with the House Committee on Energy and Commerce. Some of the notable comments he made, pulling from EPRINC’s research on the ongoing energy transition, are listed below. In addition, the full testimony with charts is here and a video of the hearing in its entirety can be found here.

    1. The Energy System is highly complicated, inter-connected regionally and globally in ways that are not always apparent. The energy transition presents a new set of supply and price risks for consumers and manufacturers. Fully implementing an energy transition over the next 30 years is neither easy nor can it be assured.

    2. Achieving net zero in the developed world will reduce carbon emissions by only a small amount, likely no more than 20 percent of expected global emissions.

    3. Regulatory programs as well as private sector commitments to accelerate the energy transition – whether it be mandates, targets, financial and procurement guidelines create uncertainty and financial risks that limit investment commitments to current legacy fuels, many of which are likely to remain in demand for years to come.

    4. Most of the recent escalation in energy prices can be tied directly to dislocations in energy supplies (largely oil and gas) from the Covid-19 pandemic. However, government policies, such as the halt on leasing on federal lands, the cancellation of the Keystone Pipeline, the potential cancellation of line 5 from Canada, rising regulatory requirements and permitting delays are all threatening North American oil and gas production. We undermine this strategic asset at our peril if we abandon these fuels before the energy transition is well established.

    5. Policy Matters. The US should see the current energy crisis in Europe as a cautionary tale and learn from it.

    6. Policy initiatives that seek to accelerate the U.S. to a fully renewable energy complex will have global implications for energy security.

    7. The transition will establish new environmental challenges and energy security issues in addition to the old.

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  • “The Future of Venezuela’s Oil Industry” by Rafael Sandrea and Martin Essenfeld

    Throughout much of the developed world, there is a consensus that concern over climate change is leading to a rapid downturn in petroleum use and that petroleum will likely have a rapidly declining role in the world’s energy mix over the next 30 years. However, a rapid energy transition to a world no longer reliant on fossil fuels represents a formidable challenge and a high likelihood remains, especially in the developing world, that petroleum’s important and large contribution to the world energy mix will not be so easily displaced. Recent EIA forecasts show that world oil and gas demand has reverted to trend. Supply requirements for the end of 2022 are likely to exceed 100 million barrels/day, a remarkable recovery from a decline in liquids demands of over 15 million barrels a day in 2020 from the Covid-19 pandemic. Although Venezuelan oil production has been constrained by both technical mismanagement and sanctions, the size of its reserve base documents its potentially important role in meeting future world oil demand.

    The timing of Venezuela’s petroleum future depends on whether it can enter the world oil market under traditional commercial conditions. On June 25, 2021, the U.S., Canada, and the E.U. issued a joint communiqué that made clear that a decision regarding the timing and specifics of the sanctions on Venezuela remains the primary determining factor on when and if Venezuela can play a larger role in the world oil market.

    Even if Venezuela were somehow to find its way free of sanctions, the road back to higher production will require massive capital investment. Venezuela, which produced over 3 million barrels in day in the 1970s, is now at only 600,000 barrels per day. The authors estimate that the level of investment and amount of time required to rehabilitate the production potential of Venezuela would approach $30 billion USD in two stages:

    Stage 1 – Pre-sanctions recovery: An investment of $7-9 billion over 2-3 years to get back to production prevalent before sanctions started in 2017 (about 2 million barrels/day).

    Stage 2 – Post-recovery: An investment of an additional $20 billion/year for 2-3 years. These investments would take 4-5 years to yield additional production. This would require investment into offshore and underdeveloped onshore projects to bring them up to full production capacity. With proper investment, Venezuela can sustain a production output of approximately 2.5 million b/d over the next 20-30 years.

    The authors provide an overview of Venezuela’s production potential, and evaluate the technical obstacles that must be addressed to restore Venezuelan oil production. Their paper can be found here.

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    Lucian Pugliaresi Presents at the Energy Mexico Oil Gas Power 2019 Expo & Congress

    Photo: Panelists for the Session on Energy Implications of the new U.S. Mexico Canada (USMCA) Trade Agreement (Left to Right) Jesus Seade Kuri (Key NAFTA Negotiator for the Administration of President Andrés Manuel López Obrador), Ildefonso Guajardo (Former Minister of Economy and Chief Negotiator of NAFTA), Carlos Pascual (Senior Vice President, Global Energy, IHS Markit), Herman Franssen (Panel Chairman, Executive Director,  Energy Intelligence Group), Lucian Pugliaresi (President, Energy Policy Research Foundation), Moisés R. Kalach Balas (Coordinator of the Strategic International Business Council, Consejo Coordinador Empresarial)   Lucian Pugliaresi made two presentations in Mexico City at the Energy Mexico Oil Gas Power 2019 Expo & Congress, a key event for the entire value chain of the Mexican energy sector.  He made presentations on a panel discussion on the new U.S. – Mexico – Canada (USMCA) trade agreement as well as a panel evaluating the implications of shifts in national energy policies.  His two presentations can be found here and here.    

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    IEEJ and EPRINC Commentary on the Future of Asian LNG
    As the 7th Annual LNG Producer Consumer Conference opens in Nagoya, Japan, Masakazu Toyoda, CEO of the Institute of Energy Economics Japan (IEEJ) and Lucian Pugliaresi, President of the Energy Policy Research Foundation, Inc (EPRINC) outlined the important role of  U.S.-Japan cooperation in meeting rising Asian LNG demand with U.S. shale gas exports.  Their views appear in two separate  articles published in the Nikkei Asian Review  and the Japan Times.
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    IEEJ and EPRINC Release 2018 Assessment on the Future of Asian LNG

    The Institute of Energy Economics Japan (IEEJ) and EPRINC have published a follow-on assessment to their 2017 joint report on the future role of liquefied natural gas (LNG) in Asian power and fuel markets. This second year of our joint effort has taken a more in-depth evaluation of trends and longer-term uncertainties in Asian natural gas markets and the potential role of U.S. LNG exports in serving those markets. The joint research findings were presented at the 7th Annual Producer Consumer LNG Conference held in Nagoya, Japan on October 22, 2018. The event was attended by energy ministers, government officials, and industry representatives from the entire LNG value chain.

    A copy of the 2018 joint report can be found here.

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Lucian Pugliaresi Testifies Before the House Committee on Energy and Commerce

On Tuesday, November 16 2021, EPRINC President Lucian Pugliaresi participated in a marathon hearing with the House Committee on Energy and Commerce. Some of the notable comments he made, pulling from EPRINC’s research on the ongoing energy transition, are listed below. In addition, the full testimony with charts is here and a video of the hearing in its entirety can be found here.

1. The Energy System is highly complicated, inter-connected regionally and globally in ways that are not always apparent. The energy transition presents a new set of supply and price risks for consumers and manufacturers. Fully implementing an energy transition over the next 30 years is neither easy nor can it be assured.

2. Achieving net zero in the developed world will reduce carbon emissions by only a small amount, likely no more than 20 percent of expected global emissions.

3. Regulatory programs as well as private sector commitments to accelerate the energy transition – whether it be mandates, targets, financial and procurement guidelines create uncertainty and financial risks that limit investment commitments to current legacy fuels, many of which are likely to remain in demand for years to come.

4. Most of the recent escalation in energy prices can be tied directly to dislocations in energy supplies (largely oil and gas) from the Covid-19 pandemic. However, government policies, such as the halt on leasing on federal lands, the cancellation of the Keystone Pipeline, the potential cancellation of line 5 from Canada, rising regulatory requirements and permitting delays are all threatening North American oil and gas production. We undermine this strategic asset at our peril if we abandon these fuels before the energy transition is well established.

5. Policy Matters. The US should see the current energy crisis in Europe as a cautionary tale and learn from it.

6. Policy initiatives that seek to accelerate the U.S. to a fully renewable energy complex will have global implications for energy security.

7. The transition will establish new environmental challenges and energy security issues in addition to the old.

“Shifting Oil Industry Structure and Energy Security Under Investment Phase-Outs” by Michael Lynch

The International Energy Agency (IEA), a collection of member countries formed in the 1970s to secure the energy security of the advanced Western democracies, is now calling for a halt to the development of new oil and gas resources as a fundamental strategy for addressing the threats from climate change.  The halt in development is viewed by the IEA as essential for the world to reach net zero carbon emissions by 2050. Michael Lynch, Distinguished Fellow at the Energy Policy Research Foundation, Inc. (EPRINC) points out the risks of such a strategy in his paper entitled Shifting Oil Industry Structure and Energy Security Under Investment Phase-Outs.  Since only private oil companies in the West are likely to respond, future oil supply probably would be dominated by Middle Eastern and Russian oil companies, mostly state-owned. Such a policy initiative, if successfully implemented, will see OPEC and allied producers (OPEC+) share of the world oil market supply rise to over 80% by 2040, degrading global energy security and severely limited the capability of the IEA to implement its Emergency Sharing System in the case of an oil crisis. The publication can be found here.

“The Future of Venezuela’s Oil Industry” by Rafael Sandrea and Martin Essenfeld

Throughout much of the developed world, there is a consensus that concern over climate change is leading to a rapid downturn in petroleum use and that petroleum will likely have a rapidly declining role in the world’s energy mix over the next 30 years. However, a rapid energy transition to a world no longer reliant on fossil fuels represents a formidable challenge and a high likelihood remains, especially in the developing world, that petroleum’s important and large contribution to the world energy mix will not be so easily displaced. Recent EIA forecasts show that world oil and gas demand has reverted to trend. Supply requirements for the end of 2022 are likely to exceed 100 million barrels/day, a remarkable recovery from a decline in liquids demands of over 15 million barrels a day in 2020 from the Covid-19 pandemic. Although Venezuelan oil production has been constrained by both technical mismanagement and sanctions, the size of its reserve base documents its potentially important role in meeting future world oil demand.

The timing of Venezuela’s petroleum future depends on whether it can enter the world oil market under traditional commercial conditions. On June 25, 2021, the U.S., Canada, and the E.U. issued a joint communiqué that made clear that a decision regarding the timing and specifics of the sanctions on Venezuela remains the primary determining factor on when and if Venezuela can play a larger role in the world oil market.

Even if Venezuela were somehow to find its way free of sanctions, the road back to higher production will require massive capital investment. Venezuela, which produced over 3 million barrels in day in the 1970s, is now at only 600,000 barrels per day. The authors estimate that the level of investment and amount of time required to rehabilitate the production potential of Venezuela would approach $30 billion USD in two stages:

Stage 1 – Pre-sanctions recovery: An investment of $7-9 billion over 2-3 years to get back to production prevalent before sanctions started in 2017 (about 2 million barrels/day).

Stage 2 – Post-recovery: An investment of an additional $20 billion/year for 2-3 years. These investments would take 4-5 years to yield additional production. This would require investment into offshore and underdeveloped onshore projects to bring them up to full production capacity. With proper investment, Venezuela can sustain a production output of approximately 2.5 million b/d over the next 20-30 years.

The authors provide an overview of Venezuela’s production potential, and evaluate the technical obstacles that must be addressed to restore Venezuelan oil production. Their paper can be found here.

Emily Medina on the Future of the U.S.-Mexico Energy Relationship

EPRINC Fellow Emily Medina has published another piece on Mexican public policy and energy economics. This paper, entitled “The U.S.-Mexico Energy Relationship Going Forward,” examines the future of the relationship between the two countries focusing on bilateral energy integration, Mexico’s new nationalist policies, and the incoming Biden administration while keeping the geopolitics of the world in mind. The paper can be found here.

The piece has been published by Mexico Today, an English-language news service by the newspaper Reforma.

EPRINC and IEEJ CoHost Virtual Workshop “Future of Asian LNG: Finding a Path Forward”

The Institute of Energy Economics Japan (IEEJ) and the Energy Policy Research Foundation, Inc. (EPRINC) have jointly hosted a virtual workshop, “Future of Asian LNG: Finding a Path Forward” on September 17, 2020, at 7:30 -11:00 am EDT (20:30 – 24:00 pm JST).
 
U.S., Japanese, and international experts, policy makers, and industry executives provided presentations and a discussion on government initiatives and market developments of importance in sustaining a path forward to LNG growth in the Indo-Pacific market. The workshop highlighted critical issues facing the LNG industry. 
 
Hon. Takeshi Soda, Director, Oil & Gas Division, Agency for Natural Resources, METI and Hon. Steve Winberg, Assistant Secretary, Fossil Energy, U.S. DOE kicked off the workshop. As in recent years, the workshop will also inform the joint IEEJ-EPRINC recommendations to be presented at the Annual LNG Consumer Producer Conference on October 12, 2020 in Tokyo.

The agenda for the event can be found here, and the link to the presentations from the workshop is here.

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