The Hill recently published an op-ed by Bernard L. Weinstein, associate director of the Maguire Energy Institute and adjunct professor at Southern Methodist University, emphasizing the importance of continuing to invest in the American energy industry amidst the global challenges presented by COVID-19.
Thankfully, Saudi Arabia and Russia have reached a deal to curb oil production – a key step in stabilizing the global energy market. But as Weinstein writes, there are immediate initiatives and policy changes that we can enact to help sustain the strength of our energy industry:
Here at home, we need to think long term. Oil and gas aren’t going away, at least for the next 50 to 60 years. Once the global economy starts to recover from the coronavirus, the demand for energy will grow quickly. To ensure America is able to meet that growing demand we should use this downtime to improve the infrastructure for transporting and processing our oil and gas resources. For example, in recent years serious mid-stream bottlenecks have occurred in the Permian because of a lack of pipeline takeaway capacity.
Similarly, as production of natural gas has surged in the Marcellus and Utica shales of the Northeast, investment in pipeline infrastructure has lagged. Consequently, Marcellus gas sells at up to a 50 percent discount to the national benchmark at Henry Hub while New England relies heavily on imported liquefied natural gas (LNG), sometimes from Russia. Expediting the issuance of state and federal construction permits can help unclog these chokepoints.
The same is true for LNG facilities and export terminals. LNG demand is projected to reach 500 million tons per year within a decade, with Asia the leading customer. This means permitting and building additional LNG trains and related infrastructure so U.S. producers can capture a substantial share of that market. Here again, regulations should be streamlined to expedite the construction of these facilities.
American energy production is more important now than ever before. As we continue to work through these unprecedented challenges, streamlining the permitting process and greenlighting shovel-ready infrastructure investments will play a key role in boosting the economy.