Technology Assessment Division

Summary of Comments on National Energy Policy

April 17, 2001

Submitted to the United States, Office of the Vice-President
By the Louisiana Department of Natural Resources

The following is a list of some of the most crucial energy policy issues that need to be effectively addressed in a comprehensive U.S. energy policy:
Petroleum: Insufficient incentives and even financial disincentives in the tax laws for oil and gas exploration continue to drive U.S. petroleum investments overseas. Inconsistent offshore drilling policies (i.e., derived from development off the coasts of Texas, Louisiana, Mississippi, and Alabama with drilling banned everywhere else except for Alaska) have a debilitating impact on developing new supplies of our most flexible energy resource. If natural gas is to be the "ultimate" fuel to replace other fuels as the "cleaner" alternative, then some serious plans must be made to develop future supplies. Much of the future gas supply will have to come from undiscovered gas supply areas that are currently off limits to exploration, or from deposits that are deep and expensive to produce. Significant new incentives are needed to further develop and reduce the cost of technology to develop deep reservoirs.

Nuclear Power: Constantly changing regulatory requirements and institutional obstacles have diminished interest in the future development of nuclear power in this country while most of the world continues to exploit and improve this energy source. Realistic and stable regulatory requirements combined with streamlined approval of standardized designs, and definitively resolving the safe disposal of nuclear wastes could restore public confidence in atomic energy and revitalize the nuclear power industry. Additionally, if nuclear power is to have a long term role, commercialization of the fast breeder reactor is necessary to stretch nuclear fuel supply from about half a century to a couple of centuries.

Energy Conservation and Renewable Energy: Energy conservation standards, targets, etc. should be strengthened, not eased. The U.S deperately needs to build an infrastructure of fast, reliable, high speed urban and rural public rail transportation to unload the choking highways of heavy trucks and passenger cars and their consumption of premium liquid fuels. Having the most voracious energy consuming appetite in the world dictates that a continued commitment to the gradual long term reduction of energy requirements and development of renewable energy is essential for long term prosperity and security. This nation cannot conserve itself into prosperity, but unlike a BTU of energy produced, which has to have a source to be produced again and again, a BTU of energy saved through conservation is like a perpetual BTU, never having to be produced again. Renewable energy is similar, in that the source is not depleted.

Coal: Any energy supply picture must include coal, which is the nation's most abundant energy resource. Transportation access and costs can drastically be reduced by implementing coal slurry pipeline legislation. Coal can and must be utilized in an environmentally safe way through clean coal technology and by converting coal to clean liquid and gaseous fuels to replace dwindling supplies of petroleum.

Fusion: Ultimately, the technology that will free the world from its bondage to limited economical energy will be nuclear fusion. The recent retreat from the already lacking nuclear fusion research effort amounts to negligent disregard of our children's long term energy future.

Promoting Sound Policy and Louisiana' s Perspective: A national energy policy cannot be implemented only in oil and gas states or limited to energy producing states. Often misunderstood or overlooked is the fact that about two thirds of the production from this state is in the federal OCS (Outer Continental Shelf) territory and, hence, produces no revenue for Louisiana while at the same time incurring great cost to the state in terms of damage to the wetlands and funding of onshore public works support infrastructure necessary to facilitate OCS exploration and production. Though Louisiana is the 2nd highest energy producing state in the nation, Louisiana is 2nd highest in per capita energy consumption and 5th highest in total energy consumption. Louisiana's difficulties as a key consuming state are rarely given the concern warranted at the federal level.
Additionally, Louisiana is consuming most of this energy as a through-processor of energy supplies for the rest of the nation, consuming colossal amounts of energy for country-wide benefit. For example, Louisiana nitrogenous fertilizer manufacturers represent about one-third of U.S. capacity, but employ less than 1500 people and use approximately 20% of all natural gas consumed in the state to transform natural gas into ammonia and urea, 98% of which is shipped out of state for use as fertilizer. Louisiana has 16% of U.S. oil refinery capacity and employs less than 10,000 workers, but consumes the energy equivalent of 10% of Louisiana's entire petroleum consumption to fuel the processes that refine crude oil into gasoline, jet fuel, heating oil and other products consumed out of state. Who is going to be the worst hit when poor energy policy results in these plants not being able to obtain sufficient and/or affordable crude oil and natural gas feedstock - the nation's farm belt or Louisiana? Tens of millions of jobs throughout the country are dependent on the affordability and availability of the products from the continued operation of these facilities in Louisiana. Perhaps hundreds of thousands of out of state agricultural jobs and tens of millions of food consumers are dependent on the energy intensive Louisiana petrochemical industry, yet how often have the "consuming" states been concerned about the cost and availability of natural gas in Louisiana?

Conclusion: The essence of this discussion is that the rest of the country needs to realize that Louisiana and other producing states are as much, or even more, consuming states than they are. Moreover, since Louisiana's and other oil and gas producing states' consumption is primarily that of through-processors of fuel derived products, the rest of the country needs to understand that their economies are indirectly as dependent as the oil and gas states on sound energy policy that fosters the economic and available supply of energy in Louisiana and all energy producing states. Additionally, states that support consumption of energy produced elsewhere, but resist development of energy resources within their borders, need to realize that such a situation cannot be perpetuated indefinitely without imperiling energy supplies, costs, and security.