“We herd sheep. We drive cattle. We lead people. Lead me, follow me, or get out of my way.”
~ Gen. George Patton
“Whoever thinks that the European economy can be competitive without economic cooperation with Russia, whoever thinks that energy security can exist in Europe without energy that comes from Russia is chasing ghosts.”
~ Viktor Orban, Prime Minister of Hungary
“First, we have to find a common vocabulary for energy security. This notion has a radically different meaning for different people. For Americans it is a geopolitical question. For the Europeans right now, it is very much focused on the dependence on imported natural gas.”
~ Daniel Yergin
When did we become so small in our thinking that “either/or” is an acceptable answer? When as a nation did we seemingly decide to remove the “All of the Above” option from the answer list for every question? At least some fraction of the American psyche requires a small portion of brashness. Historically, in order for this country to accomplish anything of any real substance or worth it took a somewhat unified effort. After hearing Roosevelt declare a day of infamy and request a declaration of war, the Senate voted 82-0 in favor of entering the Second World War. The House, that bastion of congeniality and unanimity, voted 388-1 in favor (that lone dissenter had to hide in a cloak room until escorted out of the building by police). At its peak, NASA’s Apollo Program involved a workforce of 400,000 people and the support of 20,000 industrial companies and universities throughout the nation. Regardless of whether you choose to believe that Neil Armstrong took one small step onto the moon or skipped around a warehouse in Arizona, it took the efforts of a wide swath of America to get it done. So why, then, do we now divide ourselves into those who define energy solely as coming up out of a well bore and those who see it in panel arrays and windmills? Of all the subjects we could have chosen to polarize this one makes very little sense.
As is its stated purpose, this discussion will find its way back to land management and acquisition, albeit after a slight detour. But before we get there it is important to understand the reasons underpinning the need for more land to be consumed by energy production activities.
The United States is in many ways fortunate, but this discussion will confine itself to its good fortune as to the many sources of energy found within its borders. The Permian is one of the world’s largest oil basins that can be recovered and produced at relatively low cost. Several large natural gas basins throughout the nation produce not only enough for our ever-growing domestic needs but also more than enough to also liquify, transport, and sell in markets around the world. The nation’s scientists and engineers have built and maintained nuclear reactors throughout the country able to consistently produce reliable power. Rich coal seams provide the cost-efficient fuel source needed as a last reserve when the temperatures soar and industry calls. The intermountain west has the elevation required for hydroelectric generation and the nation’s plains, fields, and deserts provide the necessary acreage for the generation of gigawatts of electricity powered by the sun and wind. Many nations are not so fortunate.
Figure 1. Predominant Sources of Power By State
Figure 1 shows just how fractured the nation’s power supply grid is. Depending on where you call home, there are six different (primary) power sources that could be turning the lights on for you. These different sources do not exist or indeed persist for reasons of nostalgia, but because they still provide the necessary power either with a superior cost profile to regional competitors or because they enjoy some natural geological or physical advantage in that region.
The question becomes what does the nation do with this bounty? There is a tremendous domestic need for every molecule of fuel and every electron of power that can be produced within the nation’s borders. Being able to secure and satisfy those needs allows the nation both energy security and energy independence. There is also a concurrent need for this energy on the international stage. Being able to meet the needs of our allies and constrain our “enemies” allows for energy dominance.
Energy has always been a lever used to propel the world. Some countries are fortunate enough to control ample or even abundant supplies of fuel and some do not. But regardless of whether a nation has a reliable source of energy, it will still have a basic level of demand for that energy. People need to stay warm in cold regions and search for any comfort or escape from the heat in hotter regions. For much of the world, gone are the days when a person would be born, live, and die within thirty miles of their birthplace. It wasn’t just the steam, gasoline, and jet engine that made that movement possible but the access to abundant sources of affordable fuels that would power those engines. Modern economies require not only sophisticated factories and data centers, but a near limitless supply of natural gas and electricity to power them. In the years since the end of World War II more of the globe has moved into the modern electricity-driven world. In many ways the modern world is defined and delineated by access to power and the possibilities, comforts, and progress it affords.
Figure 2. Evolution of Energy Use & Power Generation Around the Globe Over Time
Figure 2 visualizes the growth and expansion of the world’s developed economies over the preceding fifteen years with regard to their evolving energy use. To complicate matters the reference scale shifted in the most recent charts so comparing shades from map to map becomes slightly more difficult. But that difficulty highlights the reality that energy use and generation per capita has increased to such an extent globally that a scale shift was necessary to compensate for it. As the world continues to enter the digital economy and as more transportation resources around the world become electrified the need for ever greater amounts of power continues to escalate.
Figure 3. Natural Gas & Coal Export and Import Flows
Figure 3 demonstrates the interdependence that characterizes the global power generation landscape. Some countries are fortunate enough to have sufficient reserves of natural gas to be able to liquify and export the excess not needed for domestic demand. The same goes for extractable coal reserves. While the world has questioned the future viability of coal usage due to its environmental impacts, it nonetheless has an important role to play in the current power generation matrix utilized by industries and residences the world over. Other countries are not so fortunate and find themselves to be continual net importers of these necessary fuel sources. While oil is still the primary source of fuel used for transportation, natural gas and coal are the world’s dominant sources of fuel used for the generation of electricity. By comparing the evolution of energy demand and use in Figure 2 with the realities of global supply and demand demonstrated in Figure 3 it becomes readily apparent that the United States is indeed fortunate in the wealth and abundance of natural reserves located within its borders. Even while being one of the top sources of energy demand in the world, the United States is still in a position to serve as a net exporter of oil, natural gas, and coal to markets around the world.
So where does this leave the United States when it comes to finding the best use for its land and energy resources? A brief listen to the current national discourse would make you believe that we have to choose between one of several options. Do we “drill, baby drill” and pipe everything or are we going to panel over the prairies? While this question is asked in a somewhat hyperbolic fashion it is no less ridiculous than the notion that a nation of this size and complexity cannot choose to do both at the same time.
The United States will continue to be one of if not the world’s greatest user of energy for the coming decades. The amount of energy needed to satisfy its data centers, factories, and citizens is difficult to define in a way that the human mind can easily conceive. A tremendous amount of effort across all energy producing industries and sectors will be required to satiate this demand. Incredible efforts will have to be made to conserve as much energy as often and wherever possible in order to reduce the burden of this process. But beyond those inwardly focused efforts the United States also needs to continue to produce as much exportable fuel as possible so as to allow it to exert the necessary levers of control the world over. It should also be considered that while the United States as a sovereign entity will have an interest in leveraging and manipulating the excess energy produced by this country, it is actually private and public for-profit companies exploring for, extracting, producing, and bringing to market the fuels in question. When operating in a globalized market decisions will have to be made as to whether shareholders are better served by placing their product into the domestic market to fuel data centers and American manufacturing or whether a better price can be gained by transporting their product to overseas markets with higher unit rates.
While this is a large country it is not boundless and much of its land has already been used or reserved for other purposes. Forestland, pastureland, cropland and land set aside for national parks and monuments make up the vast majority of the nation’s footprint. The nation’s cities and suburbs occupy a fair bit of what is left and expand their footprint by one million additional acres each year. That is the equivalent of adding a new Houston, Pheonix, and Los Angeles every year. Much of the land that is left is so remote that logistical concerns, manpower reserves, and transportation costs make those locations uneconomical. This means that the acreage that is left available for new development becomes scarcer and more expensive every year. Those involved in the identification, acquisition, and management of land see this reality every day.
There are essentially three choices left when existing in such a world:
1. The United States can decide to become insular and focus it efforts on securing only enough energy to meet its own domestic needs.
2. The various industries and companies can determine to assume a winner take all approach and ruthlessly compete for whatever acreage is available for the taking.
3. Common ground can be sought, and strategic partnerships can be forged allowing multiple projects to exist, align, and stay cost competitive.
We have, at various points throughout our history, tried the first option. It has never gone well and usually ended with us in a large war somewhere in the world. Referencing back to General Patton’s quote at the start of this discussion, we can choose to get out of the way. But the cost of such an approach is to surrender any right or ability to control events. It may feel good to have no responsibility every now and again, but it tends to end poorly. Unfortunately, competent parties have a responsibility to engage in a process and lead the way.
So, we must take part in the process, but we cannot follow either. This nation has too much capital, expertise, and experience to leave the big decisions to anyone else. Indeed, it took the first 150 years of this nation’s history to finally get in the position to lead so why surrender that hard fought role on such consequential topics as energy independence, security, and dominance to any other party?
If the United States cannot sit idle and watch the world go by (or burn depending on your philosophical point of view), and it cannot stomach following the lead of any other nation, all that is left is for it to lead the way forward. That gets us to Options 2 & 3 above.
If we select the second option above, we need to prepare ourselves for the inevitable carnage associated with a system designed to produce a few winners and many losers. Many say they like that (survival of the fittest, the weak must perish, etc.) but while the spoils might go to the winners, the rest of the nation is left to pick up the pieces. And without wanting to constrain this to a lament of “competitive fairness” (I am not that naïve) we should also consider the very real opportunity costs associated with allowing the system to select out a few winners. What if it would have been in the best interests of the nation for two competing projects to exist simultaneously? What if we could have doubled the expected tax revenue to be generated on a given tract of land? What about providing more high paying jobs than just a single endeavor could have? While each independent private venture does not and should concern themselves with such matters, the community at large must.
That leaves the third option above as the most logical if we are to bring into balance all competing concerns. While it will not always be possible to allow several projects or industries to peacefully coexist, there are many instances where such an end result is possible. A large solar farm should be able to reserve numerous drilling set aside locations allowing a producer to extract oil and gas from beneath the surface. A hard mineral surface miner might wish to operate in seclusion at the outset of their project, but a partner endeavor can bring incredible rewards when it comes time for the mandated reclamation efforts. Wind turbines, or at least the passive revenue they generate are a farmer’s best friend. A slight series of design modifications and every new warehouse could support acres of solar panels on their roofs – likely not enough to supplant a utility-scale solar generating site feeding the utility but certainly enough to satisfy the needs of the surrounding industrial park or community. If you drill down deep enough anywhere in the world you hit “hot rock” allowing for the extraction and production of geothermal heat. This heat can be converted to electricity and used to power onsite operations or, again, nearby communities.
We have a large country with a tremendous bounty of natural resources, but neither are endless. The challenge in the coming decades as the land available for development continually decreases will be to find the most efficient and cost-effective manner in which to extract the maximum benefit from the acreage and resources that we do have remaining. If done correctly everyone, competing industries, citizens, local, state, and federal entities, and the nation as a whole can come out the better for it. Energy independence, security, and dominance, each different in nature and focus, are indeed interrelated concepts. It is in the best interests of this nation to ensure that it places itself into a position of strength with regard to each of these three capabilities if we want to continue to lead the way into and through the 21st Century.
Discover more from Wander Untethered
Subscribe to get the latest posts sent to your email.