• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Energy Solution Needed Quickly, Says Co-Founder of Tulsa-Based SemGroup LP

Posted on: Friday, 23 December 2005, 21:00 CST

By Janice Francis-Smith

Government and private industry need to start talking seriously - right now - about the impending global energy crisis, said the guest speaker at Thursday's Energy Team Meeting Luncheon in Oklahoma City.

The problem is not that the world is running out of fossil fuels - the problem is the energy industry can't find the fossil fuels and get them to market fast enough to meet demand, said Tom Kivisto, co- founder of Tulsa-based SemGroup LP. With $3.6 billion in assets, SemGroup describes itself as a midstream service company that helps energy companies get their products from the wellhead to the wholesale market.

There's this tsunami of demand coming at us, said Kivisto. To keep the children from drowning in the huge wave of demand building even now, the leaders of business and government need to be forming policies that enhance the energy resources available today and create new energy sources for tomorrow, he said.

Today, the United States represents less than 5 percent of the world's population but consumes about 25 percent of the world's energy product, Kivisto said. On the other hand, China's 2 billion residents consume only about 7 percent, he said. But as China continues to develop its economy, those percentages are changing quickly.

Global demand for fossil fuels is growing by 2 percent per year. In order to keep up with demand over the next 25 years, crude oil production alone would need to climb from 85 million barrels a day to 125 million barrels a day. That's the equivalency of finding 10 Saudi Arabias, said Kivisto.

Developing countries are growing at roughly twice the pace of developed countries, and their citizens not only need transportation but also electricity, he said. Electricity is the single largest driver to enhancing a population's quality of life and to building and growing an economy, he said.

Now is not the time to be taxing anybody, Kivisto said of a congressional proposal to tax the windfall record-level profits energy companies have generated over the last few years. There is an urgent need for energy companies to invest those profits in exploration, expansion and research and development, he said.

We are in a very fragile supply-demand curve on products, he said. It's just temporary right now, but we're still going to see higher prices going forward. We've got to have those incentives for people to invest, and adding windfall profit language on an emotional basis without really entertaining all the facts or having the dialogue to know the facts, I think, does damage to the investment community that's going to help solve these problems.

The alternative forms of energy currently available are not yet viable alternatives to fossil fuels. Replacing just 5 percent of the United States' gasoline consumption with ethanol would require one- sixth of all planted lands in the United States to be devoted to ethanol crops, he said. And the processes which yield hydrogen make it expensive to produce.

Though some in America have been averse to developing more nuclear power facilities, nuclear plants could produce hydrogen as a byproduct cheaply enough to make a hydrogen-powered transportation industry feasible.

Nuclear is the only green solution to making electricity - I'm sorry it is, said Kivisto. We need a little bit of a wakeup call in that we have this obstacle to clear thinking about nuclear power, Kivisto said after the luncheon. And while we're stuck in that dialogue, the rest of the world is building their nuclear facilities. In the next 15 years, China will build another 15 nuclear power plants.

Nuclear is the cheapest source of electrons of anything we've got out there, he said, though startup costs are high. I'm not saying nuclear power is the answer. What I'm disappointed in is we're not looking at all the alternatives in the full spectrum.

Considering the long-term weather forecasts that say the Gulf Coast could be in for more hurricanes over the next few years, the country would do well to build or expand refining capacity in other states. In Oklahoma, the best idea would be to expand the capabilities of the handful of refineries already operating in the state, he said. However, Kivisto cautioned against the grass-roots efforts of some leaders to build refineries without giving careful consideration to location, making sure the facility would have access to the product it is designed to refine.

I don't have all the answers, Kivisto said. That's why more dialogue is needed among policy-makers and energy producers. We can see as reasonable people that we're not making policy decisions to make room for the solution of that answer, he said.

Source: Journal Record - Oklahoma City

More News in this Category