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Shale revolution heats up global energy market, economist says

Alhajji shares insights on North American energy as part of J.P. Morgan Center for Commodities Encana Lecture Series

11/12/2013
Anas Alhajji, chief economist at NGP Energy Capital Management, speaks about the shale revolution at CU Denver

By Chris Casey | University Communications

DENVER - Thanks to the shale revolution, which is bringing the petrochemical industry back to the United States and increasing our oil and gas production, the global energy market is more competitive than ever.

Those were among the insights shared on Monday by Anas Alhajji, Ph.D., a chief economist at NGP Energy Capital Management in Irving, Texas. Alhajji spoke on "The Economic and Political Impact of North America's Shale Gas Revolution" as part of the Encana Distinguished Lecture Series presented by the J.P. Morgan Center for Commodities at the CU Denver Business School.

North American shale plays are so robust, Alhajji said, that the term "energy crisis" has all but disappeared. Still, despite the gains made in domestic energy production, oil independence is not imminent for the United States, he noted. "We will see improvement, yes, but this idea of complete independence is nonsense."

He said there is a possibility for North American energy independence -- including Canada and Mexico -- but that takes into account production of other energy sources, such as natural gas liquids (NGLs) and liquefied natural gas (LNG).

"It's very clear that the energy sector in North America is a great opportunity right now," Alhajji said. "As people who are managing people's money, we are seeing more interest in this area in the last three years than ever."

He said the revolution is sparking a revival of the industrial sector, which is creating jobs and revenues in the United States.

Alhajji said the shale gas explosion has produced limited political impact. "U.S. interest will stay (in the Middle East) whether there is oil there or not."

On the environmental front, he acknowledged there are concerns related to hydraulic fracturing. However, the trend toward cleaner-burning utilities has resulted in emissions that are close to meeting the Kyoto Protocol standards. "We are seeing massive improvements because of switching to natural gas," he said.

If not for the shale revolution, current oil prices could be pushing $150 a barrel, Alhajji said. "In terms of technology itself, in terms of unlocking the resources, we are ensuring, in a sense, the continuity of the use of energy for generations to come without running into a crisis. Notice that if you read the literature in the last three or four years the expression 'energy crisis' has disappeared."

His most sage advice to students: never say never. He gave the example of his grandfather, who at age 36 was diagnosed with a terminal disease and doctors gave him only six months. He ended up living to 105.

"If you are a student, be thinking about that long run," he said. "It's important because 10 years ago we had a lot of people telling us it's the end of natural gas in the United States. We are going to import LNG. It's the end of oil in the United States. We're going to have to import a lot of oil from the Middle East. Look, in the longer term, things flipped upside down."

The event was sponsored by Encana, a leading North American energy producer that is focused on growing its strong portfolio of diverse resource plays producing natural gas, oil and natural gas liquids.

The J.P. Morgan Center for Commodities at the University of Colorado Denver Business School is the first center of its kind focused on a broad range of commodities, including agriculture, energy and mining. Established in 2012, this innovative center provides educational programs and research in commodities markets, regulation, trading, financial ​fundamentals, investing, risk management and ethics. 

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Contact: christopher.casey@ucdenver.edu


 

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