Take the 11thannual Energy Industry Outlook Surveyconducted by the KPMG Global Energy Institute, for example, which polled more than 100 senior executives in the U.S. representing global energy companies.
KPMG’s survey found that 62% of those executives think the U.S. can attain energy independence by 2030, up from 52% in last year's survey, and of that 62%, nearly one quarter (23%) think energy independence is possible by as soon as 2020.Additionally, the percentage of executives who believe that U.S. energy independence will never happen dropped by 10 percentage points this year, from 27% in 2012 to 17% in 2013, noted John Kunasek, national sector leader for energy and natural resources for KPMG LLP.
“Increased domestic production, particularly from shale assets, is having a profound impact on the global energy sector, introducing new sources to the energy matrix," Kunasek (at right) said. "This 'shale gale' is certainly contributing to the increased optimism among energy executives on the potential for U.S. energy independence.”
There’s also more confidence as to relative price stability of natural gas, despite a recent price uptick due to the decision to permit greater U.S. exports of liquefied natural gas or LNG.In KPMG’s survey, some 73% of those executives polled said they are “bullish” about natural gas price stability, and that prices will remain steady between $3.01 and $4.00 per thousand cubic feet for the remainder of the year. Similarly, 39% of respondents expect Brent crude oil will peak between $116 and $125 per barrel in 2013.
"Greater assurance of supply appears to be stabilizing commodity price environments and enabling large investments,” noted Regina Mayor (at left), oil and gas sector leader for KPMG LLP. “At the same time, marginal production remains 'shut in' which could quickly be reinstated should the price picture become even more robust for [natural] gas.”
KPMG also found that 79% of the executives it polled agree that the energy industry's emphasis in developing environmentally friendly technologies should focus on natural gas, followed by nuclear (3%), solar (33%), and clean coal technologies (32 percent), indicating a slight shift to a more balanced view with solar and wind technologies making gains.
When asked which alternative energy sources companies will target most for investment over the next three years, executives most frequently cited shale gas and oil (54%), followed by solar energy (29%), wind energy (25%), biofuels (19%) and clean coal technologies (17%).
However, energy company executives polled cited a number of significant challenges to increasing renewable generation on their systems, including the cost of competitive non-renewable energy (50%), the cost of a new system (39%), and the complexity of renewable project financing and transmission (28%).
Interestingly, 62% of the energy executives in the survey indicated the low-cost natural gas environment in the U.S. should spur a manufacturing resurgence as well as broader economic growth for the nation.When asked which region of the U.S. will benefit the most from this resurgence, 36% of respondents indicate the Northeast, followed by the Midwest (22%), Southwest (17%) and the South (16%).
"Natural gas production, particularly here in the U.S., has drastically shifted the energy paradigm and will be key to the future of the energy industry as exports grow," KPMG’s Mayor pointed out. "The high production rates of natural gas and its reputation as a low-cost alternative to other energy sources continue to contribute to the recent growth in manufacturing, and as companies begin to monetize these new assets we'll also see significant benefits for the local and national economies."
Still, despite an overall optimistic outlook, KMPG noted that many of the executives polled are concerned about a growing number of barriers facing the energy industry, with regulatory and legislative pressures (47%) at the top, followed by pricing pressures (26%), volatile commodity and input prices (19%), and energy prices (19%) as the most significant growth barriers facing their companies over the next year.
Far and away though is political and regulatory uncertainty, which 64% of all the energy executives polled said represented the biggest threat to their business models.
Yet the prospect of energy independence should – one would hope – help overcome such “uncertainty.” Indeed, let’s hope it does.