Oil
US Needs to Invest in E&P, Infrastructure for 21st Century Demand-Hofmeister
By Joseph BAMIDELE
The United States needs to invest in developing its energy resources and updating its energy refining and transportation infrastructure governance system in order to meet U.S. energy needs in the 21st century, John Hofmeister told attendees Tuesday at the XV Rice Global Engineering & Construction Forum at Rice University in Houston.
The large, technologically advanced energy system built in the United States in the 20th century catapulted the nation into the world’s number one position economically, enabling two world wars to be won for freedom that benefited the entire world, said Hofmeister, the former president of Shell and head of the Citizens for Affordable Energy.
With planned coal-fired power generation plants on hold, no new nuclear power projects in 20 years, hydropower dam projects coming down, peaking demand gas power plants running constantly and aging energy infrastructure, “It doesn’t take a math genius to figure out we’re coming to the end of an age,” Hofmeister said.
The country’s existing nuclear reactors on average are 30 years old, approaching the end of their 40-year life expectations, and dams that were built to generate hydropower have been found to become less efficient at generating power over time due to the to buildup of silt. Many existing gas-fired power plants are also aging, Hofmeister said.
While the United States has “acres and acres” of solar panels, these panels “use model T Ford technology on America’s modern superhighways,” Hofmeister said.
Nanotechnology has just begun the effort to identify previously unknown materials which Hofmeister believes will generate 40 plus percent efficiency and turn solar into a reliable product. However, it remains unclear when this will occur, Hofmeister noted.
With a population expected to reach 400 million in 28 years, Hofmeister questioned w
John Hofmeister
hy the United States was not investing more in developing its oil and natural gas resources as well as its infrastructure.
“It’s a matter of grabbing the proverbial bull by the horns and saying we can’t continue on a 20th century energy system forever as we enter the second decade of the 21st century.”
The United States will also have to contend with future Chinese oil demand, which is expected to reach 20 million barrels of oil per day by 2020. With China investing in exploration programs worldwide in exchange for future oil deliveries, the rest of the world will be left to bid up the price of the remaining oil supply, meaning that some countries such as Israel may be at the end of the line, Hofmeister said.
While the economic recession hit U.S. transportation fuel demand hard, the nation will still need to invest not only in increasing oil production, but displacing oil with natural gas, either through compressed natural gas vehicles or methanol mixed with gasoline, to displace oil imports.
“If you think we can live off imports to meet 20 million barrel demand, we’re buying something that doesn’t exist,” Hofmeister said.
However, the United States’ efforts to invest in developing its energy resources and infrastructure are being held back not only by the far left wing groups, but right-wing political groups as well, or what Hofmeister calls the “perversity of partisanship”.
“The fact that political time trumps energy time 100 percent of the time also is a barrier to the United States moving from the cusp of prosperity becoming a reality,” Hofmeister said.
He cited the federal government’s stance on hydrogen fuel cell development as an example of political time trumping energy time. Federal funding for hydrogen fuel cells dropped to zero after former President George W. Bush, who advocated research in hydrogen fuel cell development, left office.
However, in June 2012, Energy Secretary Steven Chu reversed his previous stance on hydrogen fuel cells, saying that research in this area should be a part of future U.S. energy development.
The continuing morass of governance, or number of regulatory agencies that oil and gas companies must file with to conduct exploratory drilling, is also delaying investment in developing U.S. energy resources, Hofmeister said, citing the lengthy permitting process Shell faced since it acquired leases in the Chukchi and Beaufort seas in 2005.
Greater voter turnout to elect public officials is one remedy Hofmeister sees to addressing these issues.
“We can’t achieve a 21st energy system under the current government,” said Hofmeister, adding that the United States could be facing blackouts, brownouts, and lines at the gasoline pump within the next decade if steps are taken to address the nation’s energy needs and infrastructure.
“We need an independent regulatory agency that is activated by citizens,” said Hofmeister. “We should demand what it takes to govern an energy system.”
Hofmeister does not see shale gas and oil as the game changer to achieve an energy system with zero imports, pointing out the decline rates of as much as 50 percent in the first year.
“There aren’t enough steel tubulars and rigs to keep shale exploration and production activity going,” said Hofmeister, noting that shale production has a natural ceiling and will reach a sustained maximum. “We won’t solve the problem with just shale.”
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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