Q&A: Energy Futurist, Jimmy Vallee

Why did you write your new book, Giant Shifts?

I’ve spent the bulk of my life – personally and professionally – in and around the energy industry. I wanted to share my observations with others in order to participate in the development of our 21st century energy business.

What’s your experience in the energy industry?

I’m a fifth-generation Texan, and the descendent of four generations of East Texas oilfield service providers. Professionally, I have led over $70 billion in global energy transactions over the past 17 years as an energy M&A attorney. I’ve been touched by the industry in a very personal way; experiencing the highest highs, with the creation of multibillion dollar oil and gas companies, and the lowest lows, with the death of my father in an oilfield accident at a very young age.

What are the “Giant Shifts” in the energy industry which you see happening?

There are several, and they are aligning on top of each other at this very point in our history. One of the most significant shifts is the rapid departure of our knowledge base as the baby boom drifts off into retirement. We have two petro-trained professionals departing our industry for every one that enters. How we will navigate the transfer of knowledge to the next generation in sufficient time to keep pace with demand is one of the issues that keeps me up at night.

How did we get to this point in the energy industry?

Short term, quarter-to-quarter based thinking. The “Great Crew Change” that we must now navigate in our industry is the result of over 15 years of layoffs and downsizing that took place from the mid-1980s until 2000. The industry continues to go through boom and bust cycles that have significant implications to future generations.

A lot of us only think of energy when we’re paying our utility bill or filling up our tanks at the gas station. How do you think we should be thinking about the energy industry?

We are so very blessed in this country. We don’t even have to think – when we flick on a light switch or fill up our cars at the gas pump – that the energy we consume has been provided to us through a sophisticated network of wells, gathering systems, refineries and local distribution networks. Imagine it all stopped this afternoon. Blackouts, gasoline shortages . . . the inability to supply food and water to your area. From this perspective, cheap, stable, secure and abundant energy supply is everything.

One of your chapters discusses the Geopolitics of Oil. That’s a big topic to cover in just a few pages – I’ll ask you to try and sum up in a few sentences. What does the global oil industry mean to each of us here?

For the better part of the last 40 years, the United States has sent massive amounts of capital – literally trillions of dollars – to foreign countries to access the energy supplies we so desperately needed in this country. This was done largely based on the belief that U.S. oil production was in rapid decline; U.S. oil production had actually peaked in 1970. Turns out, that’s not true. The U.S. now boasts more economically recoverable reserves than any other country in the entire world – more than Russia, more than even Saudi Arabia.

What do you see as the role of alternative energy in our energy future?

I believe all forms of energy supply have a role to play in our energy future. Some forms of alternative energy may prove to be much better for a given task than hydrocarbons – take, for example, the electric car. But, any sober forecast suggests that hydrocarbons will continue to be our dominant source of energy for the foreseeable future.

You talk about New Deal 2.0. How much does who is in the White House impact the direction you see the energy industry going?

I really believe that American energy independence will allow us to reinvest our capital into American infrastructure, instead of sending that money overseas. To that end, regulatory and diplomatic policies can have a significant impact on whether that development is encouraged or frustrated.

What is you biggest concern what will happen if Giant Shifts are ignored?

If we fail to seize the day and successfully transition American energy to the next generation, America will cease to be the leader of the free world. Failure to act will mean we become solely reliant on others that act more swiftly and strategically.

What’s your advice for the first steps to address Giant Shifts in the energy industry?

I wrote this book in part to inform the 21st century oil and gas executive. If there were a Google Oil & Gas, how would it be run and what trends would it seek to take advantage of. Let’s find and support those new leaders in our business. Let’s abandon business as usual, and bring about a new era in American energy.