US Chamber of Commerce Blog
We continue to reap the benefits from fracking and the shale energy boom, a new report finds.
The United States’ energy security ranking moved up two spots in the latest International Energy Security Index published by the U.S. Chamber’s Institute for 21st Century Energy.
Norway claimed the top spot in the index, while the Ukraine is at the bottom.
There was overall improvement among the 25 largest energy consuming countries. This rests largely on reduced oil price volatility resulting from hydraulic fracturing and the U.S. shale energy boom.u-s-oil-production-2008-2015.png U.S. oil production: 2008-2015
In 2014 “global crude oil production surged nearly 1.6 million barrels per day (bbl/d).” Two-thirds of that came from increased U.S. output.
Karen Harbert, the institute’s president and CEO, sees the innovation behind the shale boom as a major driver for improved energy security in the years ahead:
U.S. energy producers are incredibly nimble, and through the use of advanced technologies, they are able to lower constantly the price point at which oil and natural gas can be produced profitably. If in increasing production the Saudi’s hope was to kill the U.S. shale industry, it has not worked. It is true that many companies find themselves in trouble and production is slipping, as is the number of rigs being deployed. The fact remains, however, that U.S. producers are so skillful at what they do that they will be able to ramp up production on short notice at the first indication of rising prices.
The lifting of the ban on crude oil exports also should result in greater U.S. participation in global oil and natural gas markets on the supply side to limit the use of energy as a geopolitical weapon and smoothing out volatility.
Another takeaway from the index is how industry is responding to energy prices and the deteriorating energy situation in Europe. Renewable energy mandates that lead to high energy prices in the U.K., Germany, and other European countries are pushing industrial production of steel, aluminum, chemicals, and other materials out of Europe and in some cases towards the United States which “pays two to four times less for natural gas, coal, and electricity than many of its global competitors.”
“Seven of the bottom ten countries among large users in our electricity risk Index metrics are in Western Europe, which is making industries like manufacturing and chemicals an endangered species there,” said Stephen Eule, vice president at the institute.
Yet instead of enhancing U.S. energy abundance and reinforcing the United States' competitive advantage, the Obama administration choses to embrace the anti-fossil fuel “Keep it in the ground” movement, Harbert writes:
The irony in all of this from the U.S. perspective is the attitude of the Obama Administration, which appears more than willing to relinquish America’s energy edge by raising energy prices on American consumers and industry. The president’s call for new taxes and regulations on oil and natural gas production, not to mention U.S. Environmental Protection Agency’s Clean Power Plan—which the Supreme Court wisely put on hold—would saddle consumers and businesses with significantly higher energy costs. America’s energy revolution has not only improved the nation’s energy security posture vis-à-vis other countries—we moved from a ranking of number six to number four in 2014— it has given U.S. business a critical leg up in today’s intensely competitive global economy.
The energy security index is derived from such metrics as fuel diversity, exposure to reliable energy sources, price volatility, energy use intensity, and energy efficiency. 2014 data, the latest available, is used to construct the index.
The Energy Institute has a web tool to visually understand the vast data collected in the index.
Top five countries in the 2016 International Energy Security Index:Norway Mexico New Zealand United States Denmark
Bottom five countries in the 2016 International Energy Security Index:Ukraine Thailand Brazil South Korea China
Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.
John Hopkins isn't one to shy away from a challenge.
Hopkins arrived at NuScale Power at a pivotal moment in the company’s history. Only months removed from some investment-related turbulence and recently acquired by an outside company, NuScale — then a team of about 30 scientists and engineers — needed a leader with a steady hand and tremendous business savvy. It needed someone who could help put the company’s innovative nuclear reactor technology on a clear path to commercialization.
Four years later, 650 NuScale engineers are now moving briskly down the path that Hopkins laid out, and under the chairman’s and CEO’s leadership, the Oregon-based company has emerged as the world leader in small nuclear reactor technology.
Now Hopkins steps into a new role — chairman of the U.S. Chamber of Commerce — at a no less critical juncture in Washington, D.C.
Businesses and the free enterprise system are under assault in the nation’s capital and out on the campaign trail, Washington’s regulatory engine has been kicked into overdrive, and the American economy continues to sputter. Yet Hopkins is optimistic.
“I know politics can be divisive, but I think business brings people together,” Hopkins says. “I usually find that when you bring businesses together and get them working toward solutions, it can alleviate a lot of problems on the political front.”
Dale Atkinson, NuScale’s chief operating officer and chief nuclear officer, says that he is confident Hopkins will excel in his new role, particularly when it comes to building those connections.
“The guy’s gregarious, and he’s got this big smile, so people warm up to him very quickly and feel like they can engage easily with him,” Atkinson says. “And then you get to talking, and you realize, ‘Oh my gosh, this guy has been around awhile and really knows what he’s talking about.’ He has an uncanny ability to make complicated business issues and government issues easy to understand.”From Main Street to Multinationals
A native of Austin, Texas, Hopkins earned a business degree just down the road at the University of Texas. After college he took on a NATO assignment for nearly three years in Turkey before returning to the Lone Star State to work for Conoco in Houston. There he met an entrepreneur running an upstart environmental cleanup business.
“We got to chatting, and it became clear he was looking for someone who could help him expand to new markets,” Hopkins recalls. “I thought, ‘Now this sounds like an adventure.’”
Hopkins made the leap. He was initially handed some overhead capital and sent to San Francisco to start and build the company’s West Coast outpost from scratch. The company, SOS International, then sent him to Phoenix and next to New York City.
“I really liked doing the startups and running those small businesses,” he says.
It became clear that further expansion would require additional resources. Hopkins facilitated the eventual purchase of SOS International in 1989 by Fluor Corporation, a global engineering construction company based in Irving, Texas, specializing in energy and infrastructure.
Soon he found himself transitioning to lead Fluor’s commodity chemical business and quickly ascended to a corporate officer role. His portfolio expanded to include global sales, corporate affairs, government relations, and mergers and acquisitions. There was little Hopkins didn’t have a hand in.
Under his leadership, Fluor’s contracting portfolio ballooned as the company started doing more work for the Defense and Energy departments. With his eyes on the future, Hopkins started and led an ambitious program in the company called New Ventures and Emerging Markets.
“We were watching the emergence of renewables, biomass … there was just a lot happening that wasn’t necessarily in our wheelhouse at the time,” he says. “So we set up this small internal organization to look across industries and businesses and identify what Fluor’s role should be in the future and what technologies we should be looking at.”
That’s when Hopkins came across NuScale.New Ventures and New Opportunities
More than a decade earlier, scientists at Oregon State University and the Idaho National Laboratory had set out to redesign a nuclear reactor that was smaller, safer, and more effective than the ones in use at the time. Equipped with grant funding from the Department of Energy, they started from the ground up, looking not to make minor or incremental improvements to existing reactors but to rethink how nuclear power sources were designed.
After a series of breakthroughs, scientists involved with the research patented some underlying technology in 2007 and started a venture called NuScale. Oregon State received a small stake in the venture. The research continued, and by 2011 the company had raised approximately $35 million and had roughly 100 employees working across the Northwest.
What they had developed was unprecedentedly safe, self-contained nuclear power units (called small modular reactors) based on what’s known as light water reactor technology. One NuScale unit is about 70 feet long and 15 feet in diameter; for context, about 126 of NuScale’s reactors could be squeezed inside one of today’s typical nuclear power plants. Each unit operates individually and pumps out 50 megawatts of electricity – particularly ideal for remote locations.
Because of the way the reactors are designed, they do not require outside water, outside AC or DC power, or outside intervention from a human operator to cool down or even shut down completely if necessary — an improvement that vastly reduces the risk of accidents. Instead, NuScale’s reactors harness the natural forces of gravity, convection, and conduction to handle normal cool-down operations and, in case of an emergency, total shutdown.
NuScale became the first to enter the small modular reactor market, and in 2008 the company began the preapplication process with the Nuclear Regulatory Commission (NRC). But in January 2011, one of the firm’s largest investors had its assets frozen, cutting off NuScale’s flow of funds at a crucial moment.
That’s when Hopkins stumbled upon the company and began pitching it as an acquisition target. By October, a deal had been reached.
“This wasn’t about quick returns. It was about asking Fluor’s senior leaders and board members to look 15 or 20 years down the road and make a bet on our future,” Hopkins says. “That was my pitch.”
It was clear that NuScale — which was still mostly composed of scientists and engineers — needed a leader with private sector experience and business know-how who could chart a course to commercialization. Hopkins volunteered for the challenge.
He took over as NuScale’s chairman and CEO shortly after the acquisition, and in two years’ time he had helped the company secure $217 million in funding over five years from the Department of Energy (which called for some additional cost-sharing investments from Fluor) to accelerate NuScale’s path to market. Today, the firm is working through the NRC’s extensive licensing and approval processes, with testing taking place in the United States, Germany, Italy, and Canada. NuScale remains the only company to receive funding support from the U.S. government to advance its small modular reactor technology.
Atkinson pegs much of the company’s success to Hopkins’ unwavering leadership and business smarts.
“John brought a business focus to NuScale that, frankly, it really needed at the time,” says Atkinson. “He’s such an outside-the-box thinker and seems to know everybody, so he’s able to make connections and get conversations moving very quickly when challenges arise.”
NuScale also landed its first customer. A conglomerate of utilities in Utah agreed to purchase what Hopkins refers to as a standard NuScale “12-pack" — that is, a 12-unit, 600-MWe batch of reactors. Under the agreement, the units must be ready for installation by 2024.A Chairman Up for the Challenge
Hopkins’ relationship with the U.S. Chamber dates back to his time with Fluor when he led the company’s government relations efforts and worked with business advocacy groups and trade associations.
“At that time, I thought of the Chamber as just another business organization,” Hopkins says. “Frankly, it took me a while to really understand the Chamber’s enormous importance and the scope, size, and breadth of its work, particularly internationally.”
He joined the Chamber’s board a little more than a decade ago. Shortly afterward, he was invited by Chamber President and CEO Tom Donohue to attend a White House meeting. It was at that meeting that the Chamber’s unparalleled resources and access started to come into focus, he says.
“There were maybe five of us, and we simply walked over there and had a roundtable conversation with President Bush and Vice President Cheney at the White House,” Hopkins says. “That’s the kind of access the Chamber brings to the table.”
It’s not merely access that Hopkins has come to value at the Chamber.
“Over the years it has become clear that the depth of resources and the quality of the people are just amazing,” Hopkins says. “I call it the ‘shadow of the leader’ effect. People like to emulate their leader, and when you have somebody like Tom Donohue, who is out there making it happen 24/7, you can see the passion. It transcends throughout the organization.”
Hopkins steps into the role of chairman at a time when his unwavering passion to make things happen is needed more than ever.
Fortunately, Hopkins is itching to get started.
“I have a fire in my belly about this stuff and believe we can get things done,” Hopkins says. “I’m passionate about the work the Chamber is doing.”
Among the issues Hopkins wants to prioritize in the coming year is the passage of the Trans-Pacific Partnership, a 12-nation deal that would vastly expand American businesses’ access to Asian markets and help reduce the cost of goods for U.S. consumers.
This won’t be new territory for Hopkins. Upon his election as the Chamber’s vice chairman last year, Donohue commented, “John has done a great job of promoting international trade and helping open up new global markets for companies and investors.”
In addition, Hopkins plans to push for more support for our country’s energy producers, including those advancing nuclear technology. He notes that investing in and reducing legal and regulatory barriers for America’s energy sector will lead to more reliable and affordable energy for American businesses and consumers while decreasing dependence on foreign sources.
Hopkins says that he aspires to be an even more vocal advocate for the entire American business community, reminding those inside the Beltway and across the country that innovators, entrepreneurs, and private companies can and must be a big part of the solution to the many daunting challenges we face.
“When I meet with friends and business leaders from around the country or around the world and we start talking about what’s important, it’s all the same things. We’re thinking about the health and safety of our families,” Hopkins says. “No matter where I go, businesspeople want to grow their businesses, want to be good corporate citizens, and want to support the countries they represent.”
If fossil fuel opponents can’t “keep it in the ground” and stop oil, natural gas, and coal development, then the next best thing in their anti-energy march is ensuring that energy can't go to where it’s needed.
After President Barack Obama refused to permit the construction of the Keystone XL pipeline, fossil fuel opponents learned from their success by vigorously targeting other energy infrastructure projects and pressuring regulators to throw up roadblocks. The result, as The Wall Street Journal reports, is billions of dollars in missed opportunities that will hamper the economy:
Many major fossil-fuel projects across the U.S., from pipelines to export terminals, have been shelved or significantly delayed because of a confluence of new regulations, grass-roots opposition and a drop in energy prices.
Overall, more than a dozen projects, worth about $33 billion, have been either rejected by regulators or withdrawn by developers since 2012, with billions more tied up in projects still in regulatory limbo.
Take natural gas pipelines. America’s largest source of natural gas, the Marcellus Shale, is only a few hundred miles away from densely populated states in the Northeast, but it might as well be on another planet if pipelines can’t be built to get that energy to consumers. With electricity generation relying more on natural gas, this problem is already hitting households and businesses in their wallets:
Gordon van Welie, president and CEO of ISO-New England, the region’s power grid operator, said such projects are badly needed. Residential consumers in New York and New England paid between 5% and 41% more than the national average for natural gas in March, the latest month for which data were available. They also paid more for electricity, which itself is increasingly made with natural gas.
But finding ways to move gas into the Northeast has proven difficult. Matthew Piatek, an associate director at consulting firm IHS Energy, said some natural-gas pipeline projects have been delayed by more than a year-and-a-half.
Without new infrastructure, Mr. Piatek said, “certain areas will need to rely on higher-cost sources.”
Despite the Northeast having some of the highest electricity prices in the nation, pipeline projects are being blocked. In May, “New York regulators refused to issue a water quality permit for Constitution, a pipeline to move natural gas out of Pennsylvania to New York, as well other New England markets,” the Journal reports.
Listen to The Business Impact podcast on the value of energy diversity.
Across the country in the Pacific Northwest, coal exports projects are also running into trouble:
In May, the U.S. Army Corps of Engineers rejected a proposed $850 million coal-export terminal proposed for Cherry Point, Wash., a forested, coastal area two hours north of Seattle where two oil refineries and an aluminum facility operate.
Not mentioned in the story is another project proposed by Millennium Bulk Terminals. As Dan Byers of the U.S. Chamber’s Institute for 21st Century Energy explained, Washington State regulators made an unprecedented demand that the company buy carbon offset credits for the “carbon dioxide that will be emitted annually in Asia when the exported coal is used for electricity generation.”
This would set a dangerous precedent, Byers writes:
For decades, the scope of environmental permitting has rightly focused on the site itself, not the product being sold or what happens to it thousands of miles away from the facility under review. A growing push from “keep it in the ground” advocates threatens to impose global life-cycle carbon considerations into EIS reviews of all kinds—be they export facilities, pipelines, exploration and production activities, or even just roads. These requirements will often make projects economically infeasible. For example, at a modest carbon credit price of $20 per ton, Millennium’s 1.3 million tons of additional emissions would essentially cost port owners more than $25 million per year. That amounts to what is effectively an enormous export tariff! Worse, it is not far-fetched to envision environmental extremists working to impose similar requirements on an endless range of other exported products. The implications for oil and natural gas exports are obvious, but what about cars or airplanes? As with coal, their use also results in overseas emissions. What about heavy machinery? Medical equipment? Refrigerators? Computers and electronics? Even agriculture? The same logic applies—use of all these products requires significant amounts of energy, and that energy increases carbon emissions.
Now, there have been some wins--Kinder Morgan won approval to build a liquefied natural gas export facility in Georgia, and Iowa regulators are prepared to approved a pipeline that will transport oil from North Dakota—but activists continue to target necessary energy infrastructure in its extreme “keep it in the ground” campaign to stop American’s from using our energy abundance, and whether they realize it or not, regulators are helping them.
Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.