This week, New York energy markets firm PIRA Energy released a report confirming that the U.S. is now the world’s largest producer of oil.
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The United States was able to overtake Saudi Arabia as the world’s top producer thanks in part to developments in the controversial technique of fracking, which is an industry game-changer, according to Graham Lawlor. Lawlor is the founder of Future Energy, which hosts a series of pitch competitions for energy entrepreneurs that are sponsored by industry insiders like Shell (NYSE:RDS.A). He says the low cost of natural gas has caused a major shift among the early-stage entrepreneurs who participate in the series.
“Five years ago, the price of natural gas was much higher, and there was almost a parity between renewables like wind and solar … Now with fracking, there’s so much reserves coming online and so much more production in oil and gas,” says Lawlor.
Lawlor says the price of gas has fallen by a factor of five – making renewable energy startups much less enticing.
“There’s definitely innovation going on within all those sectors, and there’s ways to make solar and wind and biofuels a lot more efficient. And we’re seeing a lot of those technologies at Future Energy, but there’s also a lot more innovation in the gas and fracking and oil industries that’s been new in the past five years,” says Lawlor.
In addition to fracking developments, Lawlor says many of the early-stage entrepreneurs are interested in distributed power generation. He says natural disasters like Superstorm Sandy sparked the trend, by revealing the shortcomings of the U.S. electric grid.
“A few pockets … had their own power generation and were able to continue uninterrupted,” says Lawlor. “Responses to natural disasters are a big driver of distributed power.”
Lastly, Lawlor says the Fukushima disaster in Japan hasn’t deterred aspiring entrepreneurs from venturing into the nuclear space.
“There’s a company out of MIT that is producing a military-use battlefield nuclear power plant,” says Lawlor.
While nuclear generation on a battlefield sounds like a disastrous mix, the MIT developers say it can be done safely and effectively. Lawlor says bringing energy sources to battlefields is extremely ineffective, creating a demand for on-site energy generation.
“They have great answers for it, but it hasn’t been deployed yet, so we don’t know,” says Lawlor.