Most energy execs indicate potential for energy independence in US by 2030

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Nearly two-thirds of energy executives think the United States can attain energy independence by 2030, eliminating dependency on foreign oil, according to the annual Energy Industry Outlook Survey by the KPMG Global Energy Institute.

Survey results indicate a 10 percent decrease in those who previously said the U.S. never would attain energy independence. 

KPMG’s annual energy survey, which polled more than 100 senior executives in the U.S. who represent global energy companies, found that 62 percent of respondents think the U.S. can attain energy independence by 2030, up from 52 percent in last year’s survey. Of the 62 percent, 23 percent said energy independence is possible by 2020. The percentage of executives who said U.S. energy independence never will happen dropped 10 percent, from 27 percent in 2012 to 17 percent in 2013.

“Increased domestic production, particularly from shale assets, is having a profound impact on the global energy sector, introducing new sources to the energy matrix,” said John Kunasek, national sector leader for energy and natural resources for KPMG LLP. “This shale gale is certainly contributing to the increased optimism among energy executives on the potential for U.S. energy independence and driving large investments into the development and production from these shale assets, including Greenfield investment plays.”

Price Stability

Given the potential of shale development, energy executives appear more confident as to relative price stability. Seventy-three percent said the price of natural gas will remain steady between $3.01 to $4 for the remainder of the year. Similarly, 39 percent of respondents expect Brent crude oil will peak at $116 to $125/bbl in 2013.

Natural Gas and Industry Growth

Seventy-nine percent of executives in the KPMG survey agree that the energy industry’s emphasis in developing environmentally friendly technologies should focus on natural gas, followed by nuclear (39 percent), solar (33 percent) and clean coal technologies (32 percent), indicating a slight shift from thoughts around natural gas in the 2012 survey to a more balanced view with solar and wind technologies’ making gains.

In addition, 62 percent of energy executives indicate the low natural gas environment in the U.S. will lead to resurgence in manufacturing and economic growth. When asked which region of the U.S. will benefit the most from this, 36 percent of respondents said the Northeast, followed by the Midwest (22 percent), Southwest (17 percent) and South (16 percent).

Growth Opportunities, Barriers

Nearly half (47 percent) of energy executives said the U.S. economy has improved moderately, and their companies’ revenue and U.S. headcount will continue to grow steadily during the next year.

Industry executives indicated that their companies will increase capital spending. They most frequently cited geographic expansion (43 percent), followed by expanding facilities (28 percent), the acquisition of a business (24 percent) and information technology (23 percent).

Despite an overall optimistic outlook, survey respondents most frequently cited regulatory and legislative pressures (47 percent), pricing pressures (26 percent), volatile commodity and input prices (19 percent), and energy prices (19 percent) as the most significant growth barriers facing companies during the next year. In addition, 64 percent point to political and regulatory uncertainty as the biggest threat to business models.

Investment in Alternative Energy

The 2013 KPMG survey also found that 95 percent of energy executives expect continued R&D investment in alternative energy projects. Fifty-five percent anticipate investments will remain unchanged in 2013; however, the percentage of respondents who predict a 10 percent increase in R&D investment nearly tripled, from 11 percent in 2012 to 30 percent in 2013. In addition, 9 percent expect an 11-20 percent increase, and 1 percent expects investments will jump by at least 20 percent.

When asked which alternative energy sources companies will target most for investment during the next three years, executives most frequently cited shale gas and oil (54 percent), followed by solar energy (29 percent), wind energy (25 percent), biofuels (19 percent) and clean coal technologies (17 percent).

Executives, however, cited significant challenges to increasing renewable generation on their systems, including the cost of competitive nonrenewable energy (50 percent), the cost of a new system (39 percent), and the complexity of renewable project financing and transmission (28 percent).

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Electric Light & Power

January 2014
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