Industry executives see energy independence for US in 15 years

An overwhelming majority of energy executive in the United States believes the country can gain energy independence in the next 15 years.

Nearly 70 per cent of executives at middle market energy companies see the potential for US energy independence within 15 years. But, they say, the regulatory environment, along with trouble in the financial world and opposition to fracking, could still dash hopes.

According to the study, `2012 US Energy Sector Outlook' by CIT Group and Forbes Insight, ''renewable subsidies are necessary and at the same time some problems are inevitable.''

The study is based on the views of more than 100 executives at middle market energy companies on the industry and their outlook for their companies, energy prices, and trends in the coming years.

''Despite regulatory headwinds facing the industry, energy executives believe the United States can achieve energy independence within 15 years,'' said Mike Lorusso, group head of CIT Energy.

''Executives believe this drive toward energy independence will be accomplished through a combination of approaches, such as expanding the use of natural gas, increasing domestic production of oil, and expanding the use of renewable natural resources. The optimism in this industry is fueling growth ? 85 per cent of energy executives intend to seek financing in 2012.''

Key findings:

  • Energy independence within reach: Thanks to improving technologies, new discoveries have eliminated the need to import natural gas. Fully half of the respondents characterise these recent discoveries as a ''crucial addition'' to the US energy mix. As a result, executives are more open to seeing a path toward US independence - 70 per cent believe that such independence could be achieved within 15 years.

  • Fracking both controversial and essential: Fracking, the hydraulic fracturing of subterranean rock to facilitate the flow of gas and oil deposits, has become a lightning rod for criticism among many people who fear environmental consequences. Fully 88 per cent of respondents support fracking as either a safe technology or, at worst, agree that it is a developing technology, but that side effects will decrease over time. Almost two-thirds of respondents believe that the industry should educate the population on myths about fracking.

  • Optimism leads to expansion and refinancing: Due to their optimism about the country's energy potential, 85 per cent of energy executives intend to seek financing in 2012. Of those, 43 per cent plan to use funds for infrastructure and capital expenditures, 36 per cent to expand production, and 14 per cent for exploration.

  • Regulatory environment under fire: Many energy industry executives strongly criticise the regulatory environment - 66 per cent of respondents say that regulation is a long-term concern facing the industry, while a sizable minority (40 per cent) favors the abolishment of the Department of Energy (DOE).

    At the core of the anti-DOE sentiment appears to be the divide over ways to handle new climate change and air quality standards issued by the Environmental Protection Agency, cap-and-trade of carbon emissions credits, and national clean energy standards.

  • Fully 55 per cent of executives expect to be affected in a negative way by federal and state legislation in the next year or two.

  • Renewable part of the energy mix: Although executives generally believe that renewable energy can and should be a part of the US energy mix moving forward, they are less supportive of subsidising renewable energy companies, perhaps because there were several controversial failures in 2011. However, nearly one-third of executives agreed with the statement: ''Renewable subsidies are necessary: Some problems are inevitable.''

Survey respondents included 107 energy industry executives. Of these, 101 came from companies with revenues between $10 million and $1 billion. Six executives came from companies with revenues between $1 billion and $5 billion. Most companies (71) were privately held, either by families or private equity investors.