Energy Center - CCTR

Indiana as an Energy Exporter

September 28, 2012

Executive Summary:

The basis of a nation’s economy is its production of goods and services.  What the nation consumes is equal to what it produces through its own labor plus what it imports.  This is also true of states.  In any economy you must produce something either for your own consumption or for export to another consumer.  Obviously you also need to import what you use but don’t produce.  The economic comeback of the USA will depend on successfully regrowing its ability to produce goods and services for its own use and export.  The USA and Indiana needs to export goods and services rather than export capital and jobs for the economy to grow.

For 100 years the USA was the world’s leading manufacturer.  That is until 2011, when we ceded that title to China.  By 2016 China will surpass the USA as the leading economy in the world.

In the late 19th and early 20th century Indiana became a manufacturing powerhouse because of its geographic location and the discovery and exploitation of huge underground stores of natural gas and high energy coal.  Natural gas from the Trenton Field was practically free for the taking.  All one had to do was put a pipe in the group and use the free flowing fuel.  This continued for nearly 30 years when the field played out.  Now there are nearly 15,000 gas wells in the region many of which are still uncapped making the area unsuitable for Enhanced Oil Recovery (EOR).

Our economy was built on Homegrown Energy.  In 2005 Indiana produced the “Hoosier Homegrown Energy, Indiana’s Strategic Energy Plan” as a guideline for how to grow Indiana jobs and incomes by producing more of the energy we consume from our own natural resources, while encouraging conservation and increasing the efficiency of the energy we use.

Indiana currently imports nearly 67% of the energy we consume (Indiana produces 968.6 trillion BTUs of energy while consuming 2,916.9 trillion BTUs, 2010 US EIA), but we export over 90% of the energy dollars used to purchase this energy.  Domestically we produce lower cost energy, coal, and import the more costly commodities of oil and gas.  As stated in the Hoosier Homegrown Energy: importing energy means exporting capital and jobs.

In 2010 Indiana mined around 35 million tons of coal and consumed nearly 65 million tons.  Looking to the future, Indiana has more energy underground in the form of coal reserves than the entire United States (including the Bakken region) does in the form of oil and gas reserves.

Indiana’s demonstrated coal reserve base of over 17 billion short tons is enough to maintain current level of production for over 500 years.  The reserve base for the entire Illinois Basins, which includes Indiana coal, is over 130 billion tons or 25% of total demonstrated coal reserves in the United States – and is enough to meet entire U.S. coal demands for over 100 years.

The point is that the Midwest in general and Indiana in particular, has an enormous relatively untapped energy source which can be increasingly used as the cost of gas and oil increase.  Indiana is in a prime position to produce a great deal more of the energy it consumes and to increase the amount of energy its exports.  New rules from the EPA will be the stimulus for this action, but a great deal of work is needed within the state to maximize this potential.

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CONTACTS

Marty W. Irwin, Director
Phone:  765.494.7414 or 317.232.8970
mwirwin@purdue.edu

Steven F. Son, Associate Director
Phone:  765.494.8208
sson@purdue.edu

Indiana Center for Coal Technology Research
Energy Center at Discovery Park
Purdue University
203 S Martin Jischke Drive
West Lafayette IN 47907-1971 USA
cctr@ecn.purdue.edu
Phone: 765.494.7037 (leave message, please)
Fax: 765.494.6298