 Well, good morning. I'm Mark Zobac, professor of geophysics and the director of the natural gas initiative. Arun asked me today to provide something of a bridge between his wonderful and inspirational opening remarks and the discussion you'll hear in the next panel. It's easy to think about the oil industry as it's always been, but I want to give you some insight into current challenges and perhaps future trends. And there are really only three points. One is I want to go into the unconventional oil and gas revolution in a little bit more detail. I want to talk about this new global abundance of natural gas in the context of addressing the pressing need for a thermal fuel for the developing world, something that's been sadly overlooked for many years. And then finally, I want to try to convince you of a personal opinion of mine. I think it's a defensible opinion, but it's a personal opinion that the only way we're going to achieve the two-degree limit is if the oil and gas industry plays a critical role in the massive, the massive injection of CO2 into the subsurface. And I want to put some numbers on that to to bring the point clear. Arun shown you a version of this. You've probably seen other versions in just ten years. There's just been an incredible amount of oil and gas produced from unconventional reservoirs. Reservoirs that have a permeability, the ability for the fluid to move through the pores that is a million times smaller than conventional reservoirs. The result of that in the United States, when it comes to the electrical power sector, is a dramatic reduction in CO2 emissions from making electricity. And you can see that in the in the blue line as natural gas production has increased, CO2 emissions have decreased due to fuel switching driven by economic and practical matters. But fuel switching from cold and natural gas works. We know that. Now, how does this happen? It happens through horizontal drilling and multi-stage hydraulic fracturing. You've heard these terms. Arun showed a slide. You can see a schematic cross-section on the left. Most of the reservoirs are at a depth of about two thousand meters below the surface seven seven thousand ten thousand feet on the right. What I show is a sort of a schematic of what's really happening. In fact, you drill parallel wells at this depth and then you successively hydraulically fracture them from the toe, the most distant part of the well back toward what's called the heel. During this process thousands of micro seismic events are generated. They're indicated by those little tick marks. These are in fact very very small earthquakes. They're so small in fact that you would never know they were happening if you did not have seismometers in the subsurface as well. The size of these earthquakes are magnitude minus two. Well, what does that mean? That means the fault is about a meter in size and it slips less than a tenth of a millimeter. These are really small events. It's like a gallon of milk falling off a kitchen counter. That's the amount of energy that's released. But the cumulative effect of these small events, which are illustrated by the dots in the real data on the lower left, is that you can actually produce hydrocarbons from these essentially impermeable rocks. And on the right, what we're trying to do in the research field is try to understand this process so as to optimize the recovery process. This slide on this map is from Conoco Phillips and they were making the point that when you look at the cumulative production from just four of the major oil and gas producing regions, unconventional regions, they are on the scale of some of the largest oil and gas fields anywhere found in the world. But the reality of the situation is that this success is severely limited in a very important way. And that is after roughly 200,000 wells, three to four million hydraulic fracturing jobs in the United States and Canada, mostly. The recovery factor, the percentage of the resource we extract, is only about 25% in the gas reservoirs. That's not very good. But it's only about five percent, roughly between two and ten percent per well, from the tight oil reservoirs. We're leaving more than 90% of the hydrocarbons behind. And therein lies a tremendous opportunity. So we're only ten years into this. Operational efficiency gains have been incredible because the discovery of these fields was not the discovery of these geologic formations with oil and gas. It was the discovery of the technologies that enabled the oil and gas to be produced in an economically viable way. But we're not doing a very good job when we look at the recovery factors and I think the future holds great promise that this revolution is really in the early days. Now, we are not without economic impacts and pushback against the development of these resources. And in a recent paper, Doug Arendt and I tried to break these resources down as community issues, atmospheric issues, water issues, and land use issues. And these are real issues. But just as many of us would argue that it's wrong to conflate these issues, exaggerate their impact, it's also wrong to ignore the issues. And these are real issues and they can be addressed. And we have to stay engaged with addressing these issues, minimizing these impacts if this development is going to go forward and have the impact we hope it will have. And here at Stanford, we've got a major program looking at the induced seismicity aspect of this and major programs in a number of areas, but especially in the area of greenhouse gas emissions, understanding the sources and dealing with remediation of methane leakage, for example. Now, if we look at the issue of coal and natural gas in a little bit more detail, there's a sobering fact. And the sobering fact is that in the developing world, mostly Asia, they're still building coal-burning power plants at an alarming rate. The histogram in the lower left shows that 300 gigawatts of coal construction is basically underway in China, India, and Southeast Asia. And what the diagram from Exxon shows is that when we look to the future, while CO2 emissions are going down in the developed world, OECD countries, they're likely to continue to go up and go up markedly in the developing world. So 300 gigawatts. What does 300 gigawatts mean anyway? Let's put that into perspective. Well, in this diagram that I showed you, today, coal produces about 30% of the electricity we use. Gas is actually producing slightly more, but coal is responsible for 70% of all of these emissions. And the size of our coal industry in the United States is about 300 gigawatts. So if the United States were completely shut down every coal-burning power plant, replace it with renewable sources, the global benefit with respect to greenhouse gases would be completely offset by just the delta, the difference what's being developed today, this 300 gigawatts that's currently under construction in the developing world. So fuel switching is a pressing and immediate concern that we have to address far more aggressively than we have in the past, because the decisions are made simply on an economic basis. Coal is cheaper, therefore we'll build a coal-burning power plant. So how do you enhance the use of natural gas when coal always appears to be cheaper? And there are two ways. One is to somehow factor in the cost on health and the environment, which are quite appreciable and always sort of left out of the equation. And the other is to consider a cost on carbon. And in one of the first natural gas briefs written by Mark Thurber, an economist here at Stanford, what he was looking at in the diagram on the left is a reasonable scenario, a reasonable price for coal, $2.7 per million BTU for generating electricity, and for gas, about $7. Now that $7, of course, is far greater than the cost of natural gas in the United States, but includes LNG transport, which is considerable. So the costs he used were quite reasonable, and along the x-axis here he's looking at different carbon prices. And at a very modest carbon price of less than $25 a ton, suddenly natural gas is cheaper. And so if you really, you know, if we're going to get serious about this, putting a price on carbon is absolutely essential. And once there is a price on carbon, natural economic factors are going to make better decisions possible, such as building natural gas burning power plants and not the continued building of coal burning power plants. I want to adjust this issue of energy poverty a little bit more. Arun introduced it. I think you all understand the issue at a certain level, but this is a picture, either my wife or I took, in the Pamir Mountains of China. This is a hut in a village which are the summer grazing lands of Kyrgyz shepherds. These are yak shepherds taking their herds up into the Highlands during the summer. On the top of this mud hut, you might see the solar panel, and you might see the satellite dish. It's pretty amazing. But you also see the smoke coming out of the chimney from burning dung. And the fact of the matter is that while the developing world needs energy to develop their economies, billions of people on earth require a clean thermal fuel. And there are four million deaths per year caused by indoor air pollution, burning sticks and dung and charcoal for cooking and heating. And that's four million deaths is more than AIDS, malaria, and tuberculosis combined. This is a huge issue. Progress is being made and progress comes in all shapes and sizes. Natural gas liquids, such as propane, are one obvious solution. And at some meetings of the natural gas initiative two weeks ago, we heard a couple startups trying to do well by doing good. Pago is sort of a smart propane company in which the distribution, you know, the purchase via online banking, the refilling, the tracking is all being done in an automated way. And Chi is a modular LNG company. LNG of course happens at an enormous scale, but it's a new idea for how to get the penetration to a much smaller scale and make its use much more widespread in the developing world. Now, when we look to the future, none of us know what the energy mix is going to be, but some things are hard to argue with. And that is when we do look 20 years out, most of the projections, this one's from BP, but if you look at other major oil companies, look at the Energy Information Agency of our own Department of Energy or the International Energy Agency, they all say about the same thing. 20 years from now, 22 years from now, 2040, the amount of oil and coal that are being used are roughly going to stay the same. And the additional energy being used around the world is going to come from natural gas and renewables. Well, what this means when we're thinking about CO2 emissions is that they're going to continue to go up because of natural gas and renewables. They're going to go up at a slower rate than they would have gone up, but they are still going up. So what do we do about it? Well, one group that's looked at this is the oil and gas climate initiative, which is 10 oil companies from around the world. And until recently, companies from outside the United States, but just six weeks ago, Exxon, Chevron, and Occidental have joined. And they've made some projections on how do we meet the CO2, the two-degree warming goal in terms of dealing with the CO2. So what's shown here is the gig of tons of carbon per year that need to be stored as a function of time. And we basically go from roughly today to mid-century. Now, this looks like a cumulative plot. Like over time, we have to store more and more. And cumulatively, we're going to solve the problem. It is not a cumulative plot. This is the amount of CO2 that has to be captured and stored per year. And to put this in perspective, this is where we are today. Projects around the world are sequestering about 30 million tons of CO2 per year. By 2038, 20 years from now, to be following this curve, we have to be capturing, injecting, storing in the earth 3.4 gigatons of CO2 per year. To put that number in perspective, it's supercritical CO2, so it's more like a liquid than it is a gas. To put that number in perspective, that's a volume equivalent to about 30 billion barrels. The reason I express it in that unit in barrels is 30 billion barrels is the size of the global oil industry. What this says is we have to build an infrastructure in a 20-year period that's at the scale of the current global oil industry, which is something like 800,000 wells, hundreds of thousands of kilometers of pipelines, and all of the facilities associated with moving and using oil. That is an enormous endeavor. And by mid-century, we have to have a system that's twice that size. It's truly a remarkable scale. Now, for a long time, this is from IPCC in 2005, we've recognized that there are many options for the geologic storage of CO2 in the subsurface. One is depleted oil and gas reservoirs. We could put it in saline aquifers. These are sedimentary formations with salt water in them at relatively great depth, so they're isolated from the biosphere. They have no commercial or practical value. You can put the CO2 there. You could use it and enhance the oil recovery and so on. But I would argue that if we're going to be injecting this enormous volume in only 20 years, that many of these options are simply not practical. For example, they'll take decades to develop, and we don't have that much time. There's an enormous cost, literally trillions of dollars. There are questions of liability and the potential of having to remediate sites that might be leaking a little bit. And it's going to be very difficult to both obtain and maintain the social license to operate. And there are also some geologic problems. First of all, the poor space is already occupied. There's salt water in them. And when you put the CO2 in at these enormous volumes, the pressure is going to go up, and there's going to be consequences to that. So what do we do? Well, I think what we do is we look to the oil and gas industry to play a major role in the solution to these problems. They have an existing knowledge base of the subsurface, both data and a human resource that's just unparalleled. They have much of the infrastructure already in place. And they have the poor space. What do I mean by that? Well, it's the flip side. They're generating space every year for 3.4 gigatons of CO2 by producing 30 billion barrels of oil. So they're in the business of creating space for that which has to be injected into the subsurface. So there's just enormous potential to close this loop. And it's even possible that there's going to be a role in the development of unconventional resources utilizing CO2. So my final word, and a number of these issues will be revisited over the next two days, is that maybe tomorrow's oil company will be a company that's equally engaged in producing oil and gas, distributing it, selling it, making it available, but also in dealing with CO2 at this enormous scale if we're ever going to achieve the goal, the critical goal of limiting global warming to two degrees on average around the world. Thank you very much.