Jack Gerard, CEO of the American Petroleum Institute, touted natural gas and other domestic energy sources as a key to economic recovery in a speech Thursday to the World Affairs Council of Charlotte.
Gerard defended hydraulic fracturing, approved by North Carolina legislators last month over environmental protests, to tap shale gas deposits. He called for common-sense rules to police his industry, expanded offshore drilling and approval of the controversial Keystone XL oil pipeline from Canada.
Gerard later spoke with Observer reporter Bruce Henderson; responses are edited for clarity and space.
Q: What in your view would reasonable fracking rules for North Carolina look like?
There are already some models out there, like Colorado. The unique thing about North Carolina is you really dont have the foundational regulatory structure because youve never been an energy production state. Theres a need to have an efficient permitting process that brings great clarity and certainty in a time-efficient way. The transparency issues are important: What are we doing? Where is it were doing this activity? And then the local issues, things from roads to local infrastructure. Your state did it well, they found a good balance where they said we want to produce this energy but were going to put a framework in place.
Q: Is offshore drilling or shale gas more promising for North Carolina?
Both are very promising, but if you look at it longer term, the offshore potential is probably more significant. In the shorter term, I think the greatest positive impact would be onshore, but even that resource is not fully defined. Once they secure permits and are allowed to produce, you might find out 10 years from now that you have vast resources. A lot of people think, we know where it is, we just have to get permission to go put a straw in it. Its not that easy.
Q: Natural gas reserves are growing and prices falling. What are the implications for other forms of energy?
It will have an impact on all of them. As long as were allowed to produce it in this country, it will keep downward pressure on price. Even in the environment we have, natural gas is competitive with coal, which was always thought to be the lowest-cost energy. Coal provided 51 percent of our capacity just three or four years ago, and today its down to 32 percent. If you look at nuclear capacity, which has very significant capital costs to build, it could reshape the whole energy equation in this country.
Q: How do see the future role of renewable energy?
Its unclear in the longer-term marketplace what will happen, but renewables will always have a place. My biggest companies are constantly saying, dont forget about the ethanols, the winds and the solars, so they are looking for those technologies. They will not displace oil and gas, 50 to 60 percent of the energy marketplace, unless we can get some significant breakthroughs.
Q: Mitt Romney says he can make the U.S. energy-independent by 2020. Is that realistic?
Our own analysis shows that if we develop our own resources in this country, coupled with what we bring in from Canada, and add to that the projected growth in renewables, we could be self-sufficient in 12 years. The governors plan is very robust, very thoughtful, and it really puts energy at the heart of the economic recovery debate.
Q: What do you view as common-sense regulation?
It goes back to what your good state is going through now: How do you find the balance between developing a resource, protecting the environment, protecting the workforce and doing it safely but at the same time getting the job done? Too often in government, no decision is a good decision because nobody can blame you for the decision. If you start from the premise that we have a shared vision, like lets develop our own energy resources, it makes the process more common sense and more focused on outcome.
Q: What did your industry learn from the Deepwater Horizon spill?
We put together the best minds in the industry and formed joint industry task forces, and said what can we learn from this and how do we do better? We also developed new standards and practices. Weve been in the Gulf 60 years, drilled 42,000 wells, and its the first time anything of that magnitude has ever happened.
Q: Is climate change real?
Nobody would have predicted five or six years ago that by bringing clean-burning natural gas to the marketplace, displacing some of the coal, these emissions would come down. Its clearly a challenge thats been identified, and we need to do what we can to address it.