In his latest INFLEXION POINTS column, Dr Arunabha Ghosh draws on the first US Quadrennial Energy Review, discusses risks to the energy system and the lessons that India can learn from this exercise.
Shifts and risks in energy
In 2014, 49 per cent of US crude oil production (4.2 million barrels a day) came from tight oil resources - that is, oil embedded in shale, sandstone and carbonate rock formations. This revolution in US energy has been a function, of course, of technological breakthroughs in horizontal drilling and hydraulic fracturing, but also of an ecosystem that supports financial risk-takers, gives clear property rights to landowners, encourages thousands of entrepreneurs and has a deep infrastructure to deliver energy resources. The United States has, consequently, become the world's leading producer of oil and natural gas combined. Yet, thanks to the fall in oil prices, more than half of the rigs have been laid down. Some investors are questioning their long-term viability. But such price and production volatility aside, there is now growing focus on assessing broader risks to this evolving energy system.
Last month, the United States published its first Quadrennial Energy Review (QER). Twenty-two federal agencies coordinated to report on the energy system's economic, environmental and security priorities, the adequacy of energy policy and priorities for research and development (R&D).
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