American Oil and Gas Reporter - December 2015 - 98

page 96-99_Layout 1 12/2/2015 4:14 PM Page 98

Glenn Wiggle, (left), founder,
partner and chief operating
officer at Independent Solutions Wealth Management
LLC, and John Thur, the
firm's investment portfolio
manager, pose before their
presentation on energy sector opportunities at the Independent Oil & Gas Association of New York's annual convention.

of Vavco LLC in Butler, Pa. Most of
that energy comes from coal, petroleum
and natural gas. Renewables contribute
8 percent of the nation's energy, with
solar providing 1 percent of that small
slice, he said.
"When we talk about energy, it is important to talk about energy choices and
look at it from a common sense analysis,"
he posed. "Nothing we do is free, and
nothing is without some consequence.
Everything has an environmental impact.
The question is, does the benefit outweigh
the impact?"
In their discussion on energy sector opportunities, Glenn Wiggle, founder, partner
and chief operating officer at Independent
Solutions Wealth Management LLC, and
John Thur, the firm's investment portfolio
manager, pointed out the United States,
with larger oil reserves than Saudi Arabia,
could one day be energy independent.
"The problem is the inability to get
government policies that put people to
work and get businesses running better.
We could kill two birds with one stone in
the energy sector, in that we could become
energy independent and we could get the
economy going, if we were able to drill
where we need to drill," Thur said.

"Natural gas fills a lot of the triangle. It
is cheap, and we control the price. If
prices go up, we drill more, and prices
go down. It is predictable, safe, secure
and on-demand because it is here in the
United States. It is not 100 percent safe,
because we have to move it. And it is
clean, but there are environmental impacts.
We build pipelines, well pads and compressor stations."
Petroleum lies more in the middle of
the energy triangle, Vavro indicated: It
is not cheap, the United States has less
control over its sources, and it does not
burn as clean as natural gas. However,
he pointed out that aside from nuclear
elements, petroleum had the highest
energy per unit weight of any fuel source.
One cubic mile of oil, 26.2 billion barrels,
equals 80 percent of annual global consumption. He said to replace that energy
would take either four Three Gorges
dams, 52 nuclear plants, 91 million solar

Energy Choices

Vavro cited an engineering triangle
as a model for energy choices. The scheme
typically guides project planners by setting
up three desired attributes-quality, value
and delivery time-and gauges how much
of each is obtainable. Under the model,
no project could obtain each attribute.
He added that for the energy industry,
the key measured traits were the extent
to which a project was cheap, clean and
predictable, and safe, secure and available
on demand.
"We want an energy source that fills
most of the triangle," Vavro reported.
98 THE AMERICAN OIL & GAS REPORTER

Fossil fuels provide cheap energy for
poor people, and demanding the United
States switch to alternate energy sources
is going to hurt them, Matt Vavro, president of Vavco LLC, tells the Independent
Oil & Gas Association of New York during
its annual meeting, held Oct. 21-22.

panels, 32,000 windmills, or 100 coalfired power plants.
"But that is not the whole story," he
added. "They have to run every year for
the next 50 years to replace the amount
of energy we get from a cubic mile of oil
in one year."
Coal is one of the cheapest power
sources, and for the most part is safe,
with the United States holding vast reserves, Vavro assessed. Unfortunately,
he said, technological gains had not overcome the fuel's perhaps inherent dirtiness.
The renewable power sources-wind,
solar, hydroelectric, biomass and ethanol-
all suffer serious handicaps, Vavro compared, lacking consistency, affordability
or energy density.
According to government projections,
the United States will continue to rely on
fossil fuels for the next 25 years, Vavro
said, with natural gas and renewables
expected to take market shares away
from coal and nuclear. However, he pointed out, coal, oil and gas still will meet 70
percent of U.S. demand.
"If we are going to get away from
fossil fuels and nuclear, we have to make
major changes; changes that you are not
going to like," Vavro warned. "No one
has a plan to replace the 90 percent of
our energy that is fossil fuels and nuclear.
If we did, it would require an unbelievable
amount of money. Our security would
be at risk. You have President Obama
saying natural gas and oil are the bridge
fuels. Bridge to where? It is a bridge to
nowhere, because there is no plan."

Dollar Woes
Independent Solutions Wealth Management's Thur examined the global oil
challenge in economic terms, and focused
on how the strength of the dollar affected
crude prices. At the same time as oil prices
started falling in July 2014, the dollar
began getting stronger, he pointed out.
"Oil is priced in U.S. dollars, so as
the dollar kept getting stronger, it took
fewer dollars to buy a barrel of oil. The
biggest factor involved in the collapse of
oil was the dollar," he assessed.
The dollar gained much more strength
faster than most analysts expected, Thur
said, which accelerated the oil price decline. Many oil-producing nations, such
as Saudi Arabia, have low lifting costs
that are tough for U.S. producers to compete against, but he pointed out those nations typically relied on crude sales for
the bulk of their budgets.
"You finally are starting to see rigs
come off and not be turned back on;
there are very few wells being drilled
and capital expenditures have been cut

American Oil and Gas Reporter - December 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - December 2015