Tom Petrie

PETRIE: THE ENERGY REVOLUTION TRANSCRIPT

Energy guru, investment banker and author Tom Petrie discusses some of the revolutionary implications of hydraulic fracturing on the U.S energy sector.

Consuelo Mack: This week on WealthTrack, the Energy Revolution! With oil and gas production increasing rapidly in various parts of the country financial thought leader and energy guru Tom Petrie tells us what it means for energy independence, the economy and national security, next on Consuelo Mack WealthTrack.

Hello and welcome to this special energy edition of WealthTrack, I’m Consuelo Mack. Are we in the midst of an energy revolution? Is it possible that the U.S. could become energy independent with all of the enormous economic and national security implications that would entail? Before I discuss those questions with this week’s guest some perspective might be helpful.

Until the recent shale oil technology revolution the common wisdom was that U.S. oil production had peaked in the late 1960’s/early 1970’s. Called Hubbert’s Peak after M. King Hubbert, the oil geologist who predicted it in 1956, oil production, which had been increasing since the 1900’s was expected to peak as known oil reserves were depleted. Until recent years Hubbert’s Peak was believed to be a fact of life. Then came game-changing technology called hydraulic fracturing or fracking, a process that injects fluids, mostly water, under high pressure into horizontally drilled oil or gas wells. That fracking process forces apart or fractures tight rock formations releasing previously inaccessible oil and gas reserves. The difference in U.S. oil and gas production from fracking is huge. In oil alone, the international energy agency predicts production which had been declining for decades will soar especially in desirable light crude from those tight rock formations. The impact on natural gas production is also enormous. By some estimates it is expected to increase 30-40% from current levels. According to independent research firm Cornerstone Macro increased domestic oil and gas production has already had a dramatic impact on energy imports. Imports have fallen by almost half to the lowest level in more than two decades.

This week’s financial thought leader guest has spent over four decades in the oil and gas industry as an analyst, investment banker and advisor to energy companies and governments and has just written a book about it. He is Tom Petrie, chairman of Petrie Partners, a boutique energy-focused investment banking firm and his book is “Following Oil: Four Decades of Cycle-Testing Experiences and What They Foretell about U.S. Energy Independence”. During those forty years Tom has been vice chairman of Bank of America Merrill Lynch. Co-founder and partner of his previous energy investment banking firm Petrie Parkman and in his analyst days was voted number one oil analyst for eight years running in the exploration/independent oil sector by Institutional Investor Magazine. I began the interview by asking Petrie why he believes we are indeed experiencing an energy revolution.

Tom Petrie: This is a period where there are some major game changers going on in the energy supply. What we now have is a situation where the outlook for the next one, two, possibly three decades is much brighter than we thought it was 10 years ago. That’s revolutionary. It’s a game changer because the model for finding and developing new supplies of oil and gas in North America has totally shifted and …