The Australian

By Glenda Korporaal

Australia's energy security picture is becoming more risky with an increasing dependence on oil imports, an electricity industry largely fuelled by coal and rising energy consumption, US energy expert Karen Harbert said yesterday.

This is in contrast with the US, where energy security has been improving compared with the rest of the world as a result of a big increase in locally produced gas and oil and more focus on energy efficiency. "Australia energy security scores have consistently been among the best of the large energy users," said Ms Harbert, who is the president of the Institute for 21st Century Energy, an arm of the US Chamber of Commerce.

But she said a new survey by the institute showed Australia's relative energy security slipping in recent years compared with the situation in other major countries.

The institute's survey shows that Australia's energy security ranking has slipped from third in 2000 to sixth in 2010 in a group of 25 large energy users, while America's energy security ranking rose from 13th in 2000 to seventh in 2010.

"Many of Australia's energy risk scores are moving in the wrong direction, including those related to oil imports, energy use and carbon dioxide emissions," she said.

"Domestic oil production peaked in 2000 and the share of oil demand met by imports is expected to continue growing.

"Risk scores related to energy intensity, energy per capita and carbon dioxide emissions continue to move higher."

Ms Harbert is in Sydney for a conference on energy security today hosted by the US Studies Centre at the University of Sydney.

A former senior policy adviser with the Department of Energy in the recent Bush Administration, Ms Harbert said the US energy picture had turned around dramatically in recent years with the big increase in domestic oil and gas production from shale.

She said the US, which currently imports 50 per cent of its oil needs, down from 70 per cent a few years ago, had the potential to be self-sufficient by 2025 if the industry was able to get access to more land and water for energy production.

"The fact that we are even talking about energy self-sufficiency is mind-boggling for the US," she said.

"The energy landscape has dramatically changed and our energy security and our economic landscape has changed.

"Our whole energy policy, which was designed after the Arab oil embargo, was based on scarcity -- that we were running out of oil. Now we find ourselves, in the 21st century, in an era of abundance."

The institute estimates that production of shale oil has been behind the 25 per cent increase in domestic oil production over the past four years while shale gas has driven a 26 per cent increase in domestic gas production since 2007.

"Shale gas has escalated from 2 per cent of our gas production in 2000 to 25 per cent today and is estimated to rise to 50 per cent by 2025," Ms Harbert said.

"We are awash with natural gas."

She said the increase in gas production had held down energy prices in the US, which had encouraged industries such as chemicals and manufacturing to return to the US.

She predicted that US domestic gas prices would continue to be low for the next few years.

"The market demand is building but we are in this interesting period where we are going to have unusually low prices of gas."

Ms Harbert said she expected that a current review by the US Department of Energy would allow more exports of gas from the US but with a ceiling.

The US has been exporting natural gas from Alaska but the rest of the country had been importing gas and oil with gas exports banned until recently.

Only one company, Chiniere Energy, has been given a licence to export gas from the US, and is converting an LNG receiving terminal in the Gulf of Mexico to an LNG exporting terminal that is expected to begin exporting in 2015.

Ms Harbert said the US would not become a competitor with Australia as a gas exporter.

"I don't see the US and Australia as competitors in the market because I think there is enough opportunity for everyone.

"But if we don't get in there, there is every opportunity for somebody else to take up our market share."

She said the prospect of the US being able to export gas had major geopolitical implications including potentially allowing Europe to be less dependent on gas from Russia.

This article was originally published by The Australian