 So, good afternoon. My name is Frank Barastro. I'm the Director of the Energy and National Security Program here. And I've got to tell you, this is a great pleasure of the guests who are having here this afternoon. One of the clear signs that we've seen in terms of U.S. energy development, a clear success story over the last couple of years has been the enormous development of our enormous shale gas reserves. Some of you were present last week when the National Petroleum Council unveiled its study. There are some outlier estimates in the NPC report that talk about a resource equivalent of 4,000 trillion cubic feet. We had the Canadian Energy Resources down, bored down here about a month ago, and they were using for North America a similar number of 10,000 trillion cubic feet. All parties, though, seem to agree that the only way that you get to develop this resource is if you manage it prudently and responsibly. So that's not only economically and environmentally, and to make sure safety requirements and community engagement. And so that's part of that message. President Obama last November talked about the benefits of natural gas, the benefits of natural gas in terms of job creation in this country, the benefits in terms of climate change and reduced greenhouse gas emissions, and we're going to talk a little bit about that, especially about fugitive emissions, and also just in terms of energy security and the great potential. So much so that he asked in January Secretary Chu to assemble a subgroup, or he actually charged him with responsibility to look at this issue of fracking and natural gas development, and the secretary wisely turned to his energy advisory board. And the energy advisory board he looked at created a subgroup to specifically deal with natural gas and look at the shale development. As chairman of that subgroup, Dr. John Deutsch of MIT was designated. There was a number of other people, some of which worked on the study. They're all familiar faces that constituted the board, and they delivered a report, an interim report to the secretary not long ago. We have Dr. Deutsch here today to talk about some of the highlights of the report, the secretary's advisory board, but also to talk about some of the other experiences that he's developed as he listened to producers and regulators and NGOs in development. Dr. Deutsch probably needs no introduction to this group. He's more familiar for his public sector involvement. He's an emeritus professor at MIT, has been on the faculty since 1970, still teaches a physical chemistry class up there, but he's also been provost and chairman of the department. In the public sector, however, I first met John back in the 1970s. So before the formation of the department of energy, there he was director of energy and technology. He was assistant secretary and he was the first under secretary for the department. Since that time, he's also been appointed as director of the CIA, his deputy secretary of defense. He's been on numerous boards, both Republican and Democratic presidents have appointed him to commissions ranging from things like aviation safety to nuclear safety to technology development. It is my great pleasure to present to you this morning, Dr. John Deutsch. Thank you very much, Frank. Can everybody hear me? At this National Petroleum Council meeting last week, one of the officers said there's a short distance between being a rooster in the bar yard and being a feather duster. I'm more towards the feather duster side and past many of the experiences that Frank so kindly mentioned. And I also want to thank Frank for the help he gave to our committee in its work on shell gas production. What I would like to do is to spend a few minutes describing some of the salient findings and reasoning of our committee and then have a discussion with you all about this subject. It is a vitally important subject for the energy future of this country and I might say for other countries around the world who also have unexpected but very, very substantial shell gas resources. So let me begin by mentioning to you the members of this subcommittee. We had Sue Territy and Katie McGinty as members. Sue Territy is a former commissioner for regulation of utilities in Massachusetts. Katie has had the same position in Pennsylvania and also was chairman of the Council on Environmental Quality during Clinton's first term. Fred Krupp, the head of the Environmental Defense Fund, Steve Holditch, a distinguished professor from Texas A&M who's an expert on shell gas production, Dan Juergen, the founder of CIRA and Mark Zoback, a professor of geophysics from Stanford, a very diverse but interesting group. We were tasked with making a report within 90 days to suggest measures to recommend measures that would reduce the environmental impact of shell gas production. Let me tell you a few items which are part of the approach we took to this problem. First, and I want to underline this heavily, it was not a net assessment of the benefits of shell gas production and the environmental costs. We were asked only to look at those measures that could reduce environmental burdens over time. Secondly, we did not consider only the impact of hydraulic fracturing, but we considered the entire environmental impact of shell gas production from the beginning of the drilling and planning operation all the way to the disposition of water and solids and air emissions. So we looked at the environmental effects of the entire shell gas production process. Third, our findings and recommendations are exclusively about shell gas production. There is a temptation by some to extend our findings and recommendations to conventional gas or offshore gas production or oil production. All of that is not what we would recommend. We exclusively were looking at measures which had to do with shell gas production and the very specific technical and geological aspects of shell gas. We also did not make recommendations or examine the regulatory design that this country has for shell gas production. That was not part of our charter, our charge, but we want to make it clear that we believe that strong regulation, both at the state and federal level, is an absolute requirement here for assuring the public that the development process for shell gas extraction will be done responsibly. We also formed an opinion as a result of studying this problem, that there is a lot to be said for reexamining both the efficacy and the division of responsibility for regulatory practices in the area of shell gas production. So those are kind of the backgrounds for how we approach this problem. Let me also say it was a unanimous report. This report composed by seven individuals with very different backgrounds came forward with a unanimous report. That says a great deal. And I might say that there was much greater agreement among the members of the group about the 24 plus recommendations than there was about the tone and framing of this problem in the overall document. Each person on this panel would have written the report in a different way, but all would have put in the 24 or so recommendations that we have. So I'm here today to give you my sense of this report. I'm not speaking for the group. They don't have clear remarks. I'm just going to tell you the way I think about this problem and what the experience means to me. Let me say that the committee began with a uniform belief that the unexpected and entirely welcome appearance of massive shale resources across North America has enormous economic potential for this country and enormous possibilities to improve our energy security. In my judgment, it is the best piece of news about energy in the United States in the last 50 years, the availability of this gas. It is an inexpensive and plentiful domestic supply source. It creates hundreds of thousands of jobs. It reduces our trade deficit. It has the potential over the long term of displacing liquid fuels in the United States and the rest of the world. EIA reminds us that in 2006, shale gas production accounted for about 2% of U.S. natural gas consumption. It's over 20% of U.S. natural gas consumption today and it's projected by EIA, the Energy Information Administration, who I gather was here this morning, to be 40% of domestic U.S. gas supply by the year 2035. The acquisition cost for individuals using natural gas in the United States has fallen from a level of about eight bucks in 2008 to under $4 today. This is an advantage to people who use natural gas to heat their homes or people who purchase natural gas for electrical power production. We are going to be able to realize this tremendous potential for the American consumer only if the significant environmental impacts that accompany shale gas production are reduced over time and the public gains confidence that they are being reduced over time. So that simple proposition to realize these benefits, we have to be successful in managing the environmental impacts is absolutely key to this problem for the country. Now let me say some of our basic findings, general findings of which I'll mention three or four. First is that public concerns about environmental impacts of shale gas production are very widespread across the country and as you know shale gas production is going on all over the country in North Dakota, Colorado, Wyoming, Texas, Louisiana, Oklahoma, Arkansas, Pennsylvania and possibly soon in New York as well. So it's a very widespread across the country. But the concern is greatest in those areas of the country which are not accustomed to a high level of oil and gas development, notably in the east. Second, shale gas plays have very different characteristics with regard to liquid content, with regard to depth, with regard to water content. And so regional differences are very important here both with designing how the gas is produced but also what regulations make sense for that geology. So regional differences here are very important. Third, it's important to recognize that modern shale gas fracturing technology is a relatively recent, recent activity and that the technology is evolving rapidly. Industry has every reason to continue to push the technology advances because it allows them to produce more gas at lower costs. We should anticipate advances that will take place very significant advances from the history of how the oil industry has developed in this country and that very frequently these advances will be accompanied by significant environmental improvements. And let me give you two examples. Just a short time ago, most shale gas production wells were drilled individually. Today, it's much more of a manufacturing operation where up to a dozen wells are drilled from one pad, thereby decreasing significantly the surface burden of shale gas production activities. For example, 60% reduction in the number of truck visits that are needed for the activity. Another example, you can expect that in the future water usage per well will go down significantly because of technology which allows near term micro seismic measurements to see how fractures are being placed and how they are growing. So you'll have much more efficient use of energy of water for shale gas production. Fourth, there is an urgent need for measured field data. Measured data where you collect and analyze measurements from the field. The basic message underlying our entire report is the following. Measure disclosed the results of the measurements and show that over time there is improvement in the environmental effects of shale gas production. Measure, disclose, and improve. The subcommittee believes that industry should adopt a much more aggressive policy towards best engineering and environmental practice on field operations based on this philosophy of measurement and disclosure. Such a policy benefits all parties in shale gas production. Regulators will have field data on which to construct their more complete and accurate and effective set of regulations. Information will be available to industry to improve their operations and the public, most importantly, will gain confidence that there are continuous measurable improvements in shale gas activities across the country. Those are the general observations of the subcommittee. Let me now briefly summarize for you some of the categories of recommendations that the subcommittee proposed. I believe there are about 24 recommendations in total in this report, but I just want to summarize the categories that we addressed. First, we believe that there should be more public information about shale gas production operations today. We propose the creation of a public website where information that is currently available in different states, in different regulatory entities, in different state geologist offices are collected and brought forward in a common way so industry regulators and the public can see what the facts are of shale gas production. We were struck by the number of anecdotal opinions we heard expressed about the effects of shale gas production, and we were unconvinced by general remarks such as 50,000 wells have been fracked in this country over the last 60 years and nothing has ever happened. There is a need for information out there so that interested parties can consider what is actually going on and track improvements over time. Secondly, there are several very successful regional arrangements between the different stakeholders, public interest groups, regulatory bodies and industry to improve the management of regulation and operations across the country. There is for example the state review of oil and gas environmental regulations, a group called Stronger that does peer reviews of different state regulatory bodies sharing information among different states. The Ground Water Protection Council has a risk based management system and other projects of that type to share and communicate and tools and information about how operations are being regulated across the country. We believe that those activities deserve some modest level of public support and that they can do a lot more in the areas of air and water quality which are becoming increasingly areas of public concern about shale gas production. With regard to air quality, currently EPA is considering new rules for oil and gas emissions of air emissions. We believe that simultaneously there needs to be a subset of producers in different basins who show willingness to undertake creation of measurement systems to begin to collect information about criteria pollutants and especially methane which is emitted to the atmosphere both from production and from surface activities. There is an increasingly important issue out in the public which is growing in its importance and that has to do with the greenhouse gas footprint not only of shale gas production but all natural gas production here and elsewhere in the world. This is the one place where we deviated from our attention to shale gas production exclusively. We call on the Office of Science and Technology Policy to begin planning a comprehensive study of the greenhouse gas footprint of natural gas operations in this country. We made a series of recommendations about improving water quality. Water quality is not regulated as one system in shale gas production but different slices of it are regulated from the national point of view, different slices that are regulated at the local point of view. The whole question of cradle to grave management of water with regard to quantities and composition is not part of the current operational practice of shale gas production we believe it should be. A particularly important question having to do with water quality concerns the possibility of methane leakage during production to surrounding reservoirs and water wells in a region. This is usually attributed, commonly attributed to improper or incomplete casing and cementing operations. It is an example of why best practices attention is needed in the field very urgently. We believe additional studies are needed to examine this question of the migration of methane from a producing shale gas production well to surrounding wells and that greater attention is needed for cement bond logs and pressure production logs after a well is completed to assure that the completion is got adequate integrity. Background water measurements, water quality measurements in an area before production of shale gas is important so as to be able to have a balance, having a benchmark for where methane may be present in a well which has not have its origin from the shale gas production. All of these issues will take time. All of these issues can be addressed. The technical expertise to do that in the oil and gas industry is certainly present but it needs to be done now and it needs to be done in a way where they are based on field measurements, objective field measurements that are reported and available for scrutiny by outside interested parties. I will note that the Environmental Protection Agency has underway a study about water quality in oil and gas production which extends to 2014 and out of that will be a rule making process that eventually will lead to water quality regulations. We urge that progress takes place along the lines. I have briefly sketched here more rapidly and that this is done in cooperation with the states but it is an urgent matter. We also recommend an acceleration in the disclosure of the composition of fracturing fluids beyond what is done today to the composition of the entire suite of chemicals which are added to fracturing fluids in the production process. We don't believe there is any reason technical or economic to use diesel fuels as a fracturing fluid and propose that that should be accepted as a standard practice not to use diesel fuel. Let me briefly end with a few other observations. One has to do, there are going to be hundreds of thousands of wells drilled here if the full potential, economic potential is realized. That means there is going to be tremendous impact on communities, on land use, on wildlife and on ecologies. This goes beyond the responsibility of a single production site by a single company but rather has to do with accumulative effects on communities and the surrounding environment. Those kinds of issues are important. They are important for everybody who lives in an area and really there is very little attention being given to these regional development impacts. Those that will accompany the great economic benefits. We see a tremendous need for industry best practices and we propose the creation of a national, industry led institution designed to encourage best practices in shale gas production activities. Doesn't mean you come up with a single static answer for best practices but do you have a process which based on the measures that you make in the field will cumulatively improve the practices which are done by companies. The companies will police how well they are complying with us and be able to report to the public every year that environmental effects are declining. Finally let me say that over the years, many years, all the way back, all the way back to when Senator Bennett Johnston did these matters. But the apartment of energy would ask for research and development for oil and gas. Problems which had a social purpose, basic research like methane hydrates, safety questions. Every time under all administrations red and blue, OMB zero those out and every time some chairman of the Senate water, energy and water committee would put back those funds. We need to have a recognition that there is some public need here, a significant public need here for unconventional gas research and development appropriate for taxpayers to pay for and not for companies. The real energy here of technology development will occur through the companies. So we believe that some greater attention needs to be done for that and we've made such a recommendation. In sum, if the recommendations of our subcommittee were adopted, we believe it would put a continuing focus and a commitment to measurable progress on the environmental impacts of shale gas production. And that will give the public a reason to support this very, very beneficial economic opportunity for the country. It's not going to happen overnight. There are lots of complications, state, federal complications, lots of technical jobs that need to be done. But fundamentally, this is a problem of measure, disclose and act to improve performance. Let me stop there and thank you very much for your attention. Again, I'm very pleased to see an audience here who's interested in this subject and I look forward to discussing any aspects that you wish to bring up. And I thank you very much for your attention. Thank you, John. It was a great summary of a very extensive report and all the work that's gone into it. Let me ask a procedural question. So there was a 90-day reporting requirement to get to the secretary, basic impressions and recommendations, and then there's a six-month requirement. How did the two differ? What do you foresee with the final report? The second report gives us another 90 days, and as chairman, I'm urging my colleagues although this isn't quite settled, that we focus only on one question. And that question is which one of these recommendations that we've made are being implemented or are being begun the process of implementation? So we are going to provide a scorecard of progress which is being made. This is kind of unusual in studies in Washington, but which one of these recommendations have found favor either with industry, with state regulators, or an agency of the federal government, and what steps are being done to begin to implement some of these recommendations? Not all of them, as I said, are easy and not all of them certainly will happen overnight. And then one quick follow-up question. So I was struck by your remarks about it's really not about fracking. It's about well integrity and design and cementing and casing, which we totally agree with. How do we change the narrative to move the debate away from words like hydraulic fracturing? Because the contamination is clearly coming as you penetrate the aquifer as opposed to coming from 6,000 feet below and coming to the surface. Well, first of all, I believe that regulators and industry understand that it is not only the hydraulic fracturing fluid. In fact, it seems most people recognize in the industry or among regulators that that's the least of the words. It is important to stress, like all energy, this is a systems problem and you have to consider the overall operation, all the water use, all the air quality effects. And that's going to begin with a rhetoric which is used in the same way by companies, by regulators and by federal agencies. Excellent. Before we open it up to questions, we have three general rules around here that you're all familiar with now having attended these sessions because of the large size of the crowd. If you could wait for the microphones once you're recognized. If you could identify yourself, name an affiliation and then to the extent you can make some commentary but pose your questions in the form of a question, that would be greatly appreciated. I'd also like to mention and I forgot to set the outset that John has just finished publishing a book on the crisis in U.S. energy policy and it's available through Harvard Press. He was going to bring copies here to sign and give away but we weren't able to pull that. So let's start with questions. Please. Please. Hi, David McCabe from Clean Air Task Force. We're a small environmental NGO. I found that the 90-day report really highlighted the issue of methane emissions from the natural gas sector really well and really called for some creative approaches to assessing that climate footprint of natural gas. Those, I'd like to ask you to drill down just a second because the climate footprint of natural gas is completely dependent on knowing the well to plant emissions. And we've had emissions inventories for years and they've had problems for years. How are we going to fix that process beyond saying industry step up from a process point of view? Well, you're quite right about what you say. It's a popular thing in Washington and Cambridge I might add to make estimates of difficult numbers. But in fact what you're going to have to do if you're going to do anything responsibly is you're going to have to have some measurements. And you are really going to have to see people willing whether, you know, the mechanism by which that's done, you could argue about, but we have to have better numbers. And I've been struck by how few numbers there are on this issue of methane emissions. How important it is to assess the footprint of the methane and not clear who in the government would be or in private industry who is going to be able to set up to that. On the other hand remember these are anthropogenic sources of methane. The net flux of methane from natural sources of the atmosphere are quite large and undoubtedly dwarf this number. But that does not mean that you don't need to have good numbers here. And we do ask for a certain amount as you point out projects to be undertaken today to get some data on what these methane emissions are. Yes, ma'am. Hi, Kimberly Underwood from the Foster Natural Gas Report. Do you speak a little bit more about the recommendation to disclose fracking fluid kind of what the committee found to make that recommendation? And also what would you say to companies who want to protect their, you know, corporate recipe there as a trade secret? I mean, I'm a chemistry guy. I mean, I'm a chemist, yeah. So I couldn't get anybody to tell me why they shouldn't just reveal it all. All the chemicals. Now, full stop, I mean all the chemical compositions that are used in fracturing fluids. We say that acknowledging that there are few, if any, documented cases of fracking fluid invading water supplies. But the public concern on this issue is so high that it makes no sense not to fully reveal the entire composition of all the chemicals that are added, which I understand is less than 1%, much less than 1% by weight. Now, you said to me, well, what happens if I have a secret molecule that I want to keep? First of all, I want to tell you I like secret. I like molecules and I like secret. So put it together, I really like secret. But the number of times that this is going to occur is extremely small. There will be people who have formulations of a number of ingredients, which together but we're not saying tell us the formulation. We're telling you tell us the chemical separately. And if by, look, you have a secret sauce, a molecule, I think an exception should be made. I can't tell you how rare it will be. Yes, sir. Hi, John Sehn with McKenna Long and Aldridge's law firm here in D.C. Dr. Deutch, thanks for your presentation this morning. I'm wondering if you could talk a little bit more about this whole best practices issue and the two sort of reactions I've heard in general to that area of the report one from some industry perspectives that this is sort of a call to reinvent the wheel. There's already best practices, processes out there with API and elsewhere. And on the other hand, some of the environmental NGO perspectives that actually what we need is more regulation and better regulation, not self-policing by industry. So I'm wondering if you could just dig a little deeper on that. With respect to the second point, I don't think that best practices displaces the role or the need for regulation. Now you say more regulation. I don't know what that means. You need effective regulation. And you need effective regulation not prescriptively one at a time, but you mean it needed to adapt as more information comes in. So the regulatory process will profit from best practice. What do you mean by best practice? All you have to do is to ask the person who says we're doing it already, ask do you measure the results and use that to guide tomorrow's performance. And if they say yes, we do the measurements in order to govern our system of best practices you've got what we're looking for. I'm not sure that that happens as much as we think is necessary. And certainly in some of the companies do it quite well, but generally speaking much of what is called best practice is complying with standards which are not supported by measurement so that you can see what's changing. Tom. Tom Cochran with NRDC you mentioned the community and regional issues. Do you have any numbers on what fraction of the areas are the mineral rights owned separately from the land rights where companies can come in and set a pad down next door and spoil somebody's farm or home. And how do you propose to address that given that you can buy county legislatures or state legislatures at a small price? Well I can't do that in the United States. You know, you're quite right. There is unitization. Developing an area coherently, a larger area is much more economical, has much less environmental footprint as a matter of fact. So there's a great advantage to doing so. And if you have one farm certainly happens a good deal in Pennsylvania for example which doesn't wish to participate, you have to design around that farm which leads to particular problems, both legal and political problems. And as you know in Europe everything underground belongs to the government so it's an entirely different issue in other countries. But I don't have an answer to this, but it is clearly something which is important in the local developments. I guess some states do have different rules on unitization but many states do not and it is a serious problem and the recourse available to the farm that doesn't want to participate with their neighbors for one reason or another leads to very difficult local issues which I do not have a resolution for. I have no data about how often that happens either. Yes, well, Professor Zoback is the world's authority on induced seismicity. I'm going to speak for him but he would do a better job. Firstly, it's the one case where we really have an example of a seismic event induced by hydraulic or by shale gas production was at a well disposal, water disposal, not in the fracking itself. And I think in general the view of Mark is that there's more of a concern with induced seismicity from carbon sequestration than there is from shale gas production. I do believe that the report notes that there is reason as a matter of example research being supported by the Department of Energy to ask what are potential signatures that you might easily acquire before you do a shale gas production activity to avoid the issues of induced seismicity. But we did discuss it. It is something which should be taken into account. It does not in any way appear to be a showstopper and it really is yet another example of where some research sponsored by the government or USGS or DOE would make a good deal of sense. Yes, sir. Hi, Gugarats. Hi, Gugarats. Argus Media, I'm a natural gas reporter. I wanted to go back to one of your points on communication, communicating the findings from well sites, fracturing, disclosure. I was wondering if you can comment on or offer your own personal opinion with the efficacy of such efforts, whether the public opinion on some of this matter is too well entrenched to be shaken even by credible data and what can be done about it in long term, just in terms of communicating it, whether it's a lost effort or is it something that can be achieved with more money by PR effort or more research. Is it going to work or not? Well, what I think information does influence people's opinions and judgment. It doesn't influence everybody every time and it may take a good deal of time before their confidence in their belief in your credibility is established. So I believe not in public relations here, not in making arguments, but just saying here are the numbers that have been turned in in different locales. Here are the number of wells that have been produced. Here's what the experience has been with them and let that be available to form opinions. And there will be people who do analysis of these results and come up with generalizations. It will be open for public scrutiny. But I'm not necessarily an optimist, but I believe that having such information available is better than not. John, when you talk about community impacts and we talk about regional hydrology and geology and water quality and then local politics of communities and actually the public surrounding these areas and affected communities, what did the group hear and where did they come out on federal versus state or regional regulation? As I mentioned to you, our charge did not include commentary on regulation. We certainly observed the fact that there was a huge tension around the country between national, EPA, and local regulation. Huge tension. It's really quite striking. I'm not an expert in that area, but I report that it is certainly very visible. Because of the differences among geology, I think that my, certainly my instinct on this particular matter is to go more with state regulation and federal regulation, but different people have different views on that, but it is a big issue. Big problem. Yes, sir. Hi, Michael Ratner with Congressional Research Service. My question is a bit beyond your mandate, but I would appreciate any comments that you could give to discuss how the results of your research may or may not be applied to shale oil and how potentially the rising prominence of shale oil may affect the debate on fracking. If you mean by shale oil, what I mean by shale oil, I would say to you that I should have every time said shale oil and gas. That is, we just consider shale oil to be wet shale gas. It may be very wet or not so wet. Eagleford or Bakken, of course, and of course now, I guess most of the activity is with shale oil. And indeed, because we are so slow at using the gas, a great deal of the gas is being flared, as opposed to being used in automobiles or power plants and the like, but we would say that we were addressing both shale oil and shale gas, but not oil shale. Do you think that shale oil, the rise of shale oil being more prominent now will change the debate at all regarding fracking? No, I do not. And I do not. Yes, ma'am. Very much, Margaret Ryan with AOL Energy. The natural gas industry is an extremely varied industry with some much smaller companies, much larger companies and they're very competitive with each other. So I'm curious what the reaction is you've heard to recommendations like they should get together on best practices and get together on safety measures. It's my observation and I mean I may be a little wrong, I'm often a little wrong, but the top 12 or so producers in this country of shale gas, or shale gas and oil if you like, control about 85% of the production. Now there are many, many suppliers that work for them. But with that kind, which is a much greater percentage in the hands of large organizations than conventional oil and gas drilling in places like Louisiana and Massachusetts. So in point of fact there's more of a possibility to develop engineering best practices in that context of shale gas given the large participation now of big organizations that in conventional gas. Yes, sir. I'm sorry about it. Yes, sir. Well I didn't know that Governor Rendell was there. I do know about the meeting you're talking about and I do believe that in point of fact industries appearance there. And there, as I understand discussing the idea of a regional center of excellence for the Marcellus area, through the Marcellus, at the Marcellus coalition there, that that is in fact exactly what they're trying to do is to show that they are going to take this problem and are taking it very seriously. I believe Jim Hackett was there from Anadarko and a variety of other people and my understanding is that they're trying to do exactly what Governor Rendell was asking for. Bennett. In your opening remarks you alluded to the potential for natural gas as a transportation fuel. I wonder if you agree with the MIT natural gas study that concludes that the best way to use natural gas is through methanol and that it has the potential to displace a huge proportion of imported crude oil. Of course I agree with the MIT natural gas study whose outside advisory committee was chaired by the former chairman of the energy committee of the senate. I never fall in love with a molecule you don't know. Whether it's going to be gas to methanol or a fissure trope or something like that is an open question. I do thoroughly agree that we are not pursuing and economic incentives will soon lead us to pursue gas to liquids more generally for transportation fuels and I look forward to the day that US domestic or North American natural gas will displace imported oil. Yes ma'am. Lauren Dickerson with the United States Energy Association drawing from your past experience in Washington DC and also from this experience on this particular commission I was wondering if you could comment on how you think these recommendations will manifest themselves in forthcoming recommendations and what are the chances that these recommendations will be adopted into forthcoming regulations I don't know but I'm certainly planning to keep in this 90 day report attention focused on the issue are regulators across the country government agencies and industry taking first steps to implement these. That's what it's about. If there is no implementation we'll know that the risks to continued expansion are higher than they would be otherwise but that's what as I mentioned we are planning to do in our second phase is to ask the question are people beginning to select among these and at least do some of the easier recommendations and make some progress Yes sir. So you have a subcommittee whether or not you had any comments about some of the controversies by the New York Times on companies providing adequate investor information and some of the controversies about the re-evaluation of the Marcellus Shale resource the whole issue of whether or not people are getting adequate information on resource information with which to make those adjustments I have no comment on New York Times So let me just amplify that. We've actually done a lot of work on that using 2008 information in 2011 given the state of technology and the amount of investment I mean the plays that were developed in 2008 specifically in the case of Chesapeake which was raised in the Times article At the time there was a situation where they had sold forward a lot of their gas and if you remember price rises 2007-2008 gas got up to $12-13 right. They took loans to develop New Acreage and when prices plummeted they were paying the loans in addition to doing development costs. So the strategy in 2009 then was to find equity investors whether it was CNOOK or Statoil or BP and they went on and did that. In 2010 I actually think that things changed again a little bit because of the success folks were concerned about the decline rates that you had to keep the drilling up and even as the drilling the rig rates have gone down production has stayed up because they've hit some of the sweet spots and now some of the move has been on the oil side because as you know the natural gas liquids are more valuable than the regular gas and almost makes the gas free. So some of those I suspect were selectively picked there is an SEC investigation that's going on now on forward looking statements but the development both on the technology side and the perspective development in the field has moved so fast in the last three years that it's going to be hard to go back and pick some of that up. Energy companies. You said there is need for more and better data and a number of studies that should be done. In the Marcellus public debate those opposed to drilling sometimes say there's a lack of information on this or a lack of analysis on that and that is a reason for holding up or putting some sort of a moratory on shale gas drilling until those studies are completed until that better information is available. Did your group find any area that needed to be studied that would be material enough in your judgment to be a basis for an argument that shale drilling ought to be held up until some further information or analysis has been done? Very good question. There was not anybody in our group who suggested that the severity of these problems were such that there should be a suspension moratorium on shale gas production. Absolutely no such suggestion. There is a concern that if people do not pay attention to the fact that we've identified the public outcry, the public confidence will be so impaired that it will be stopped by political deals. But we saw no technical reason that the environmental effects were so severe that there should be any suspension moratorium delay on shale gas production. I just ask one question to expand on the frack fluid. At lunch the question was raised on fracking and on the cocktail. I think at lunch you made a pointed remark about the chef. It's as much the application of the fluids as it is the mixture. It strikes me that some of the service companies are coming at the same point. They have similar cocktails or composition of fluids but their expertise is how they employ those and apply them. The formulation and the process of what's important, not the composition of the, that's the overwhelming. I think that this is a subject which as far as my impression is as far as industry is concerned is behind us. I do not believe there is much concern about this particular point in industry. Do you have a question over here? Yes sir. I have a sort of two-point question really. The first is about risk. The other one is about urgency. From what you've been saying one gets the impression actually that you think for the most part the issue is about lack of data about better communication. Overall to paraphrase your remarks it almost seems as though what is needed is just an extension and a consolidation of the various methods and best practices that are going on rather than any sort of radical departure. Is it therefore fair to say that the risks are being well managed now and that we just need a small step to improve those risks? And the second question on urgency. I know this is a work in progress. If there is one recommendation that you think really does need to be taken the most seriously and needs to be implemented immediately, which would that be? I measure the second question first. I measure the issue about implementing recommendations not only about which ones are more important but which ones are easier to do. Some of them will take more time because they're more complicated, more difficult more complicated regulatory. So I can't give you an answer about which one is the most important. Some of them are easier to do. But I don't agree with your characterization of the first part. This is not just a little bit of polishing. This is a very significant different approach both by regulators relying on data to progressively modify and change regulations over time depending upon what the data says. And urging industry to take its on as a responsibility that they are going to commit themselves to better performance over time based on measurement and being able to follow it on measurement. Those are not small modifications today's practices. It's a very different approach which there are certain industries certainly capable of doing but they have not come out and said this is the way we're going to do it. Tom? Shouldn't you have responded to the gentleman over here that the issue of a moratorium on certain Marcella gas production was beyond the scope and rather than just say we didn't identify anything that would call for a moratorium because there are certainly local issues where the moratorium issue may have been appropriate. I didn't say that there weren't places where moratorium were going to be put into place. I said that we did not see any environmental damage potential so significant us to suggest that we should stop a practice in some region of the country or not. We know that there are places like in the whole I guess Delaware watershed where there is effectively, as I understand it, a moratorium. That's what political system does that's a prerogative but we did not see a technical risk of environmental damage sufficient for us to consider. Let me just go a little bit off topic. Last week there was the NPC report. Secretary asked for two reports. One was the North American resource study the second Senator Johnson going back to your question on alternative transportation which Dr. Joyce is the vice chair for. Can you tell us what the status of that report is and when you expect to have that available? I'm the vice chair so I can't tell you where the chairman expects it to be. But I believe at the last meeting there's a commitment to have it done by June of 2012. Yes sir. I'm Mike Costi. I just retired from the Senate Armed Services Committee. Nice to see you again. My question I'm curious. My old home of Cornell University was sort of the hotbed of anti production because it lies in the Marcello-Shale area. Have you heard or seen any reaction at all yet from academia but Cornell particularly to your report that was just recently released? Only that I think some of the Cornell faculty involved in a study up there along with several other people wrote a letter to Secretary Chu saying I should be fired. Let me just tell you it takes a rare individual to exhaust questions from this crowd but John you've hung in there and answered every question that's come forward. We very much appreciate the work that you've done. It's been terrific. Very much appreciate you coming here to share your insights and to answer questions and engage in this dialogue. We plan to do a lot more on natural gas and if you all join me in thanking Dr. Deutsch for coming to us.