Energy at nexus of future, author says

Mines engineers in pivotal position, Yergin tells grads

By Janet Forgrieve, Special to the Rocky

Friday, May 9, 2008

Daniel Yergin gave keynote speech at Mines graduation.

Preston Gannaway / The Rocky

Thomas Wells, of Bois D'Arc, Mo., tries to balance on a slack line on the campus of the Colorado School of Mines after graduation Friday in Golden. Wells received a master's degree in electrical engineering.

Darcy Souta didn't have to search long for a job in her field of petroleum engineering. Souta was among 512 seniors awarded bachelor's degrees from the Colorado School of Mines on Friday - the same day oil hit a record $126 a barrel.

This fall, Souta will head to Conoco Phillips in Houston for a job in an industry that's clamoring for new engineers and offers an average annual starting salary of more than $80,000.

Souta and the other graduates listened raptly during the ceremony as keynote speaker and honorary Ph.D. recipient Daniel Yergin told them about the great need for their skills at a time when the world energy situation is facing a crisis and more than half the qualified engineers in the field are slated to retire within the next decade.

"There's no question it's a time of high anxiety when it comes to energy," Yergin said. "A week ago when I was working on this speech, oil was $110 a barrel; now it's $126."

Oil rose to $126.20 on the New York Mercantile Exchange Friday before retreating to settle up $2.27 at a record $125.96, bringing its advance this week to nearly $10. Investors questioned whether a possible confrontation between the U.S. and Venezuela could cut exports from the OPEC member.

Yergin, a Pulitzer Prize winner, holds degrees from Yale and Cambridge. In 1983, he started Cambridge Energy Research Associates, which now employs 250 people in 14 offices worldwide. Three years ago, CERA became part of Denver-based IHS. Yergin is chairman of CERA and executive vice president of IHS. His books include The Prize: The Epic Quest for Oil, Money and Power and Commanding Heights: The Battle for the World Economy.

After the ceremony, he sat down to talk with the Rocky.

On the need for new talent:

There's a people issue in the oil and gas industry today. A school like Colorado School of Mines is right at the center of it, the need is so urgent. It's such an intense emphasis on technology and innovation, and this is one of the top petroleum industry schools in the country.

On ideas and technology:

There's a kind of interaction between them. We have the technology now to have 24-hour economic activity, but it wouldn't exist if there wasn't at the same time an openness to markets and an openness to trade. I think the energy industry in general, oil and gas in particular, is one of the most technology-driven industries in the world and one of the most advanced in terms of using information technology, but the public doesn't see that.

On public stereotypes about the oil and gas industry:

The public just thinks it comes out of the closest gas station or a switch on the wall.

There are stereotypes that go back beyond anybody's lifetime, back to John D. Rockefeller and the founding of the oil industry. I so often feel that, in the public policy process, you sort of see the same drama being acted out again and again.

On a proposed "tax holiday" for consumers and the factors driving up oil prices:

I think the calculation is it would save the average consumer $26.50. I think that what has driven this last wave of a surge in prices has been the fall of the dollar, the weakness in the U.S. economy, and a tremendous influx of investors into the energy markets, so I don't see what a tax holiday does. If you figure it out, it would really be a mini- mini-mini-rebate.

It doesn't compute for a lot of people, but the sub-prime and credit crisis has been the trigger, in part, for this last leg up in oil prices.

It's not only about today, the price at the pump, it's not only about the supply and demand of oil, which is tight, it's also about the supply and demand of dollars in world currency markets.

On revolutionary technology in the energy industry:

A really big change that's important here in the Rockies is unconventional gas, which was going nowhere in the 1990s and has now become a substantial part of our natural gas supply. I would put the development of unconventional gas as a resource as one of the big technological changes. It has given a whole new vibrancy to the industry here in the Rockies, and that's not magic, it's technology.

• May 10, 2008

  4:26 p.m.

  Suggest removal

  SASQUATCH writes:

  Skip the windmills, solar and biofuels; all warmed over technologies from prior generations. If $125 crude, $4 at the pump, skyrocketing home heating bills, taxpayer subsidies and 35 years of standing on the sidelines couldn't make it happen--unreliable, expensive and inefficient alternative energy ain't ever going to happen--they will remain tomorrow's "feel-good" alternatives!

• May 10, 2008

  6:04 p.m.

  Suggest removal

  windbourne writes:

  Hank/Sasquatch
  Like so many neo-cons, you are so wrong and so foolish.
  Oil is rising in price and you speak of electrical generation.
  How much oil is used for electrical? very little. IOW, you are griping about something that has NOTHING to do with oil prices.
  However, if you are pushing oil drilling, well, it would take 10-15 years to be able to pump massive amounts more of oil. Long before the oil flows and cools down our markets, we will have lowered our energy demand. The best bet is to push Full and partial Electrical vehicles. Why? Because they will drop our oil demand within 3 years. As it is, over the next 2 years, a number of these cars are coming.

  In addition, we should encourage one of the freight trains systems to get smart and start offering a limited rolling freight train. Trains have done a poor job on freight because they try to hit every stop (slow) and end up losing cars along the way (incompetence). Instead, if a company had a train stop about every 1000 miles (give or take), AND a train rolled every hour or so, that would allow the truckers to do the initial drop-off and the final drop-off, which would be only a couple hundred miles on average. This could transport a good percentage of the freight while playing nice with truckers, and dropping our total national oil usage by 5-10%. That alone would drop prices while making good money for somebody like anshutz.

  As to Alternative Energy, it should be pushed in a big way. The reason is that it is now cheap and getting cheaper. There are several issues with this. The first is that wind and solar are intermitant and can not be used for base load powers. Right now, if CO wanted to own this market, we would combine Geo-thermal with solar and Natural Gas. The shallow geo-thermal can be used to raise the temp to 50-80C, as well as dump the waste heat. The temps are raised further by thermal solar on good days, or natural gas in the night or cloudy days. IOW, we use the gas when needed. In addition, EU and the rest of the world is still worried about Global warming. That means that 100% coal or natural gas is a real bad idea (EU, and probably Japan, Australia, and Canada, will be slapping a carbon tax on within 2 years). For CO, we should persue 2 nukes for our base power plants. A nuke will take 5-10 years to build. An interesting idea would be to use natural gas up front (or coal), and then build the nukes over the 5-10 years. Then leave the original boilers in place for those times that the nuke is down. Combine these with AE, and we have a great low cost system to keep electrical costs down and move towards electrical cars.

  Finally, we need to encourage all those homes that use heating oil for their homes to get off of these. The best choice would be a geo-thermal heat pump. Intermediate costs of install, but lowest cost of running. Amazingly, heating oil is still used heavily back east.

• May 10, 2008

  6:18 p.m.

  Suggest removal

  SASQUATCH writes:

  "...it would take 10-15 years to be able to pump."

  Doing absolutely nothing is never the right answer--it can only get worse and it did. If we did what we should have done 10, 15 and 30 years ago, then we would not have today's problems.

  Ignoring cancer can be dangerous to your health; especially when the solution surrounds you.

• May 10, 2008

  6:38 p.m.

  Suggest removal

  windbourne writes:

  hank/sasquatch, I agree that doing nothing is what is killing us. That is why AE, Nuclear power, and EVs need to be pushed, not oil.

  One of my bigger issues is that Clinton allowed kerry to kill off the IFR. It was within 3 years of a start. Had he allowed it to continue, we would now be building extremely efficient power plants (though more costly) that would burn up what is considered waste today. Sadly, W. does not have enought brains to re-start it. Obama has indicated an interest in re-starting the program, while McCain has not said what he thinks about it.

  Personally, I am in favor of increased drilling, but the problem is that the neo-cons want to drop all environmental concerns. All that has to happen is that the drilling use BEST AVAILABLE technology, rather than lowest costs. Once oil companies accept the idea of that, then they will get these contracts. The funny thing is, that even using best available tech, the oil and natural gas is very profitable.

• May 11, 2008

  12:54 p.m.

  Suggest removal

  SASQUATCH writes:

  "...the neo-cons want to drop all environmental concerns."

  Of course you have proof of that; so how about posting a few solid examples right here? And by the way, its been over 30 years since the last nuke power plant was built--no excuses, your side has been exposed.

  I think that the the "do nothing solution" lead by a crowd of eco-hysterical, enviro-phobes is more descriptive of the current reality that goes back over 30 years. And that's why we have today's problems. Many displaced socialists found a home in the green movement and property rights and private property are their real targets (they don't give a rat's ass about trees), along with helping to reduce America into a second-rate economic and financial power--a less capable foe against European socialism.

  As far as Global Warming is concerned; also please post right here where you folks have been hidding the evidence backed by scientific proof and data. You haven't even established a scientifically backed connection between GW and CO2; you have a lot of work to do.

  So in the meantime, do nothing? $250 at the pump and its still do nothing.

• May 11, 2008

  2:49 p.m.

  Suggest removal

  greenleaf writes:

  Squatch,

  " ..a crowd of eco-hysterical, enviro-phobes.."?

  So now we're running made up words together! So...now you are talking about overly emotional house types that are afraid of the environment?

  And Squatch: "$250.00 at the pump"? Please don't buy gas alone again. Take a buddy with you. I pay about $3.50 at the pump. I'm telling you man, they see you coming!!!

• May 11, 2008

  4:14 p.m.

  Suggest removal

  seeingeyeseesall writes:

  You two need to get a job, or something ... while you've been yanking here the price has gone up even more! LOL

• May 11, 2008

  11:12 p.m.

  Suggest removal

  windbourne writes:

  Ah Hank. When all else fail you, you can be counted on to restort to "look out the window test", or ad hominem. In this case, the latter. I am 12 Y registered Libertarian, who started voting for dems in 2004 because I was sick of the neo-cons running a monster deficit. I predicted in 2000 that the republicans would return us to deficit spending and would focus on keeping us on oil. Sadly, I was right. So, for the moment, I vote dems (though I will not be voting for ritter (just a notch above owens in incompetience) or ken salazar (wants to give immunity to W and the telcos for spying on Americans PRIOR to 9/11) on the next go around). The do-nothing crowd is the ones that say to waste oil as energy and did everything they could to keep us on oil for the last 7 years.

  As to the GW stuff, I have seen what you say. In the end, it really does not matter.
  There are several simple facts that seem to escape you;
  1) oil will remain high, because we are running out and china is increasing demand. America no longer has the ability to provide all of its oil. Even if it was just ours, canadas, mexico, and Saudia Arabia, the prices will remain above 90/bl until we are off of oil as energy.
  2) Wether you are willing to accept the facts of GW is irrelevant. EU, Canada, Australia, and Japan DO. They are all trying hard to lower their emissions. To do so, will mean that they must initially take a hit on costs. That would cost them many jobs. As such, All are quickly moving to the idea of having a carbon tax. Which countries will be hit the hardest by it? China AND America. The simple fact is, that we are the 2 largest carbon polluters. OTH, if we start moving away from Carbon emissions, we can use this to help us, not hurt us.
  3) Oil and coal come at high costs. Why? Because both leave a large amount of pollution in the air, and not just carbon. Even now, every nation on this planet has issues with lead and mercury in the water and food. How exactly do you think that the mercury is getting into the fish, birds, and animals? It is from our gas, diesel, and coal. The simple truth is, that both coal and oil are our absolute most expensive choices for energy (and CO2 sequestering is a total joke).
  4) We can no longer afford to send our money elsewhere; We are running the largest trade and budget deficits that the world has EVER seen. reagan and W in 16 years have done far more damage to America than hitler or the USSR did over their entire lifespan of 40 + years.

  Look, you can run around and attack items that you obviously have no clue about. I am fine with that. But the next president is one of 3 ppl. ALL of them will be pushing hybrids and/or electrical vehicles. ALL of them are pushing Nukes AND AE. ALL of them are opposed to more oil imports and coal plants. As far as EV go, they are coming regardless of what you and other neo-cons do.

  Gee, is this where I show a smiley face and say peace out and all that?