 So thanks and good morning. I'm Frank Ferrasto. I'm Director of the Energy and National Security Program here and it's really my pleasure today to have the folks that worked on the National Petroleum Council study. This study was two years in the making. It involved at least 400 people. There's some question whether it was more or less than 400. But a lot of good work came up from the task groups and we're fortunate enough to have several of the task group leads. And these are the guys that actually do the work. So a lot of white papers developed from the bottom. They work their way up to be key findings of the study but most people only read the executive summary. And what we wanted to try to do today was to have the task group leaders kind of drill down no pun intended so that we can get a better sense of what the main findings and some of the key determinants coming out of this study because it is so important. We're going to have ample time for question and answer. The study, as many of you know, it was really, I asked for, requested by Secretary Chu since the NPC is a Federal Advisory Committee in September of 2009. He requested two studies. So one was on alternative transportation fuels that's still underway and one was on North American resources and prudent development. And specifically with a tie towards how we get in a low carbon environment to use natural gas and other liquids to have 80% reduction in greenhouse gas emissions. That at least was the desired outcome. This morning we have for you Chris Smith. Chris is the Deputy Assistant Secretary for Oil and Gas in the Office of Fossil Energy. Chris is, for those of you that understand the NPC structure, this will not be unfamiliar. But when you see the Petroleum Council and you see the chairman, so Jim Hackett of Anadarko, the CEO, chairs the study, there's various chairman of the various task groups. In DOE's case, Dan Poneman, the Deputy Secretary is the government co-chair. Chris works with the Coordinating Subcommittee. The Coordinating Subcommittee is really the integrating force of all the studies. It's comprised of basically the task group leads and other folks within the study, but they pull all the threads together. And that's what you see in the study. I've had the pleasure and privilege of working on at least five NPC studies. And my first one was as the government co-chair a long, long time ago. In the Hartruth study, the Coordinating Subcommittee actually worked through a lot of the findings. And you produced this 30 or 40 page executive summary. Chris will talk about the process a little bit and what led to the request. And then we're going to ask the task group chairman to come up in a separate panel and give you the highlights of the study. So with that, let me just say to Chris, for those of you that don't know, Chris has been involved in his role within DOE. In the offshore Mekondo accident and the follow up to that, he staffs the SEAB group, the Secretary's Energy Advisory Committee on the natural gas study. John Deutsch is chairing that. He was involved in a number of different things, including the fossil energy office deals with the SPR. So he's been quite a busy boy outside of his NPC activities. But ladies and gentlemen, pleasure to introduce Chris Smith. Thank you very much for those kind comments, Frank. And good to see that you started out as a government co chair and you've turned out okay. So that's very encouraging for me. I'm not going to talk very long today. I think that the thing that you're really interested in hearing from is the results of the study. I'm really encouraged to see all of the principles from the study here together in one place. I know that there's a lot of outreach that this group is going to be doing to try to ensure that we get a broad range of groups with a good understanding of the work that this team did. And it's always a challenge to get the right people in the right room at the same time. So this is going to be a good event here today where we get to hear straight from the subject matter experts who really did this work, what the insights of the study was. I'm just going to give a little bit of an overview of kind of what led to this study, what the genesis was, what the thinking was within the Department of Energy and how this kind of ties in with some of the priorities that we're working on within the Department of Energy in support of the administration's objectives. First of all, this was I think a really challenging study. Not only are we working on one study here, we actually have two going on at the same time. The first, which you're going to hear about today, which is the prudent development of North American oil and gas resources. And the second, which is the future of transportation fuels. So if you look at the scope of these two studies, first of all, that we're taking on two things at once. And the second is that both of these studies have a view to the clean energy economy of the future, a view to the big challenges which our nation has. And so we've really asked the National Petroleum Council to bite off an awful lot, undertake a serious intellectual challenge of thinking through what are all the forces and what are all the elements that lead to how we develop energy here in the United States and how we transform our economy. And come to an agreement about what we can say about the next steps. What are the recommendations that industry needs to undertake? What are the recommendations that government and NGOs should consider in order to accomplish that goal? So there are various times as we were going through the process of the study where we're in this room full of subject matter experts from diverse industries, from industry, from government, from NGOs, environmentalists, producers. And we're going through that brainstorming intellectual process of trying to figure out what we're going to say. And there are many points in which I was thinking, well, how are we going to get this group of people to agree on words that are going to go into a page that we're all going to sign off on? It was really a daunting challenge. But two things I can say about that. First, the leadership of the study, which is sitting here in the front row, I think, did a tremendous job of going through that process of taking on that intellectual challenge. And the real insight that I got is when you think about the challenges that face our nation, when it comes to producing the energy that our economy needs in terms of protecting the environment and human health in terms of innovating such we create jobs in the United States, in terms of reducing our alliance on oil and giving new options to American consumers, in terms of using natural gas to help accomplish some of those goals. There's a big overlap between the concerns of government, what we're trying to accomplish here within the administration, with the interests of industry and the concerns of non-governmental organizations. There's a considerable overlap. And I think you'll see that presented here in the presentations that the group makes. There are some smart things that we can do going forward to help make sure that we keep our country moving in the right direction. So if you look at, I guess, some of our core beliefs of things that we're trying to accomplish, I think if you go back and you take a look at some of the things that the President has said recently about oil and natural gas and its role in the economy, and that's a good frame for what we're trying to accomplish here within the Department of Energy. So if you look back to November of last year in response to some questions that the President got around, how are we going to make sure that we're making progress in moving our economy forward? How are we going to make sure that we are taking steps in the right direction in a politically challenging environment? On a couple of occasions in response to that question, the President said, well, we know that we've got a great natural gas resource here in this country. Are we doing everything that we can to make sure that we're developing it? Back in March of last year, the President specifically set out a goal of, in the next decade, reducing the amount of oil that we're importing into the United States by a third over a decade. The path to both of those objectives is making sure that we prudently develop the resources that we have here in the United States. That means that we're getting the most out of the resource, and we're also doing it in a way that protects human health and that minimizes impact the environment. And that's at the core of what this study is all about. It's also at the core of the second study that we have going on right now, which is the future transportation fuels. So if you look at the goal which Secretary Chu gave the NPC on that second study, which is the future of transportation fuels, it's how do we reduce the greenhouse gas emissions in the transportation sector by 50% by 2050? So that's a big goal. If you look right now at our transportation sector, over 98% of the miles that have traveled here in the US are powered by oil. So moving from that type of single commodity dominance to an economy that has greater flexibility for American consumers that has greater options for our economy, that's a big move. It's a big challenge. And I think the size of that challenge is reflected by the fact that we're not talking about 2020 or 2025. We're talking about 2050. It's a four decade runway to getting from where we are now, where we're almost entirely reliant on oil to a situation in the future where we've got greater, where we've got greater options. So a couple things to mention on that point. First, given that the challenge is so great, and that we are so reliant right now on our current fossil fuels, it's extremely important that we understand how to prudently develop this resource right now. We're interested in the clean energy economy in the future, but we're also interested in making sure that in the immediate term, we're doing the smart things to make sure that we're taking the more difficult resources that we're pushing out into now and talking about Deeper Water Gulf of Mexico, talking about unconventional gas resources in the United States, and making sure that we're prudently developing those in a way that builds the right type of economic development, but also protects human health and the environment. And the second is that it's going to be a great technological challenge to move from where we are now to where we want to be. And that's going to require smart innovation. It's going to require the efforts of American workers. And we firmly believe that we're in a position to compete and that we can lead that transition. As we look at industry and we look at the innovative capacity and the technological wear with all that we have here in the United States, it's hard to find an industry that is more technologically sophisticated and has a suite of resources and capabilities that's greater than this energy industry, greater than the oil and gas industry. So as we think about the challenges, and this is something that Secretary Chiu, a point that he made clearly when he was giving this particular study or presenting this challenge to the National Petroleum Council, was let's think about how we can prudently develop this resource, but let's also think about how we can take this innovative capacity, this intellectual capability that we have in the oil and gas industry and point that through to the problems that we have in the future. So that's, we see that as a challenge and an opportunity. We see that there are some things, some ways that we can work together with industry to ensure that we're moving in the right direction. So the last thing I'll mention before I hand the floor back is that we've got a number of studies that are creating recommendations, both for industry and for government. This is an important one, which we'll hear a lot about today. We've got the future transportation fuels which is coming up. We also recently had a study that was presented by the sector of energy's advisory board that was specifically looking at development of shale gas, how do we make sure that we are prudently developing that specific resource and that we're quantifying the risk appropriately and we're mitigating them appropriately. And then another study which was previously completed, which Frank mentioned, was the National Commission on the BP Deepwater Horizon oil spill, which was created by the president after the Macondo disaster. If you look at the recommendations that came out of that study, the recommendations that were made by the CIIB and the recommendations that are made by this study, which you'll hear about today, I think you'll see a fair degree of overlap. You'll see that there's some consistency. And when it comes to understanding best practices, understanding the things that we need to do in order to develop this resource to the best of its potential, and to reduce its impact on the environment and ensure that we are protecting human health and safety, you'll see that there are some commonalities, some common threads that run through all of those. That's encouraging, right? So I think it points us towards some smart things to do. I think that there are some some responsible and capable producers out there who are going to help us to achieve that mission. And, you know, we're looking forward to taking this message out, getting some feedback from groups like this in terms of kind of how do you see this effort as meeting the objectives or the challenges that our economy faces. So with that, I think those are the kind of introductory comments that I had. I'd be happy to take any questions that the group might have. Great. Just in terms of questions, simple rules here at CSIS, wait for the microphone, identify yourself, and then please pose your question in the form of a question, so that we can get it done now. And I appreciate that last insight that helps me. So I'll touch on what we're doing within the Department of Energy and the administration. I think that the as a team comes up, they can talk about the specific subject matter experts they had working on their individual subgroups. We had over 400 people working on this study. So I think we can get some more detail about exactly who worked on the study. A big part of what we've done as we've gone forward is not only doing the quantitative work, but also doing the outreach work. And I can, I'll point to two examples. During the Macondo disaster, when the President's Commission was down in New Orleans, I said I was a designated federal official for that effort and did the first town hall that was going on or that we did while that well was still belching hydrocarbons in the Gulf of Mexico. And a big part of that effort was not only to talk about what we're going to do and what the process was, but but to hear back from the concerns that people had there in New Orleans who were at in real time, dealing with that tragedy as it as it as it unfolded. That was an important part of that effort, because again, this was not a study that we wanted to in a vacuum. We wanted to be informed by the concerns that communities have. Fast forward to the Secretary of Energy's advisory board where we were out in Pennsylvania doing a very similar thing. Another town hall where we had an auditorium full of folks. And the first thing we wanted to do as we kicked off that study was not to talk about what we were going to do, but to hear the concerns that the communities have. And here's here's an interesting observation that I made having done both of those. The the the town hall we did down in New Orleans during the Macondo disaster. Again, that was happening while that well was still flowing while there's still uncertainty about how the capping stack would work with capping stack hadn't been designed at the point. We're still talking about relief wells, didn't know what the state of the well was, what the potential for an underground breach that would allow hydrocarbons to reach the surface outside of the cementing encasing of the well. Still a tremendous amount of uncertainty. A lot of fear and uncertainty in the room. A lot of concerns that you'd imagine. Fast forward to the the the town hall we we held in in Pennsylvania around shell gas. And as I compare the I guess the mood, the level of concern and in some cases the level of you know outright vitriol of combativeness. Interestingly enough, the the the town hall that we held in Pennsylvania and shell gas was much much much more combative than the town hall that we held down in in in in New Orleans, which I think for me personally, this is something you kind of know academically from what you're reading from what from talking to folks. But you know, when you're sitting up on that stage, and you're actually hearing these concerns, you realize that this is something that people really care about, and that we do have to be very effective at communicating around. So we do have a very specific, you know, outreach plan, which I think will help not only ensure that I mean, first of all, we're ensuring that we're doing the right type of technical work, which you know, we'll talk about at length. But I share your point that it's one thing to understand the risk and quantify them and do things well. It's another thing to make sure you're you're communicating that effectively. So the first step in that was step one, listen. Second step is do the work to quantify and come up with good recommendations. Step three is starting right now, getting groups of people together, talking to very diverse audiences, not only groups like we have here gathered in this room, but but also going out in communities, going out to decision makers to make sure we're communicating this effectively. It's not something it's always easy to do. In fact, as a technical organization, it's full of scientists and engineers, we we like to focus on what we think are the hard things, which is the the quantitative stuff. I mean, that's what I love talking about. But the hard things are often communicating effectively. So your point's well taken and I want you to know that we we understand that challenge and we're we're we're working on it and we're going to try to do it well. Yeah, I mean, see, there's two separate pieces to I think that so part is the glossary of terms, right? And giving the public kind of the lexicon to talk about this stuff. And I don't think the industry's done a terrific job on that. It's energy literacy. Overall, where does this fit and groups like yourself, when you're working with the Defense Department of the government have done that RFF, we try to do the same thing in terms of form. And I do think that the NPC is going to have an extensive outreach to try to get this message out and engage the public in conversation about it. And one thing I'll just make sure I want to emphasize is that it's not just about I mean, from our standpoint, it's not just about educating the public. It's about taking concerns seriously and making sure that that influences the way we look at things. So it's a big challenge, and it's hard to do. And we're going to try to do it effectively. That might be true. Hi, Lee Hendricks with CSIS. I have a quick question. You've talked about prudent development of resources and working with industry. We hear a lot in the news about all of the different approaches taken by various government agencies, whether it's federal, DOE, Department of Interior, EPA, and also about what state and regional actors are doing. But what seems to be overlooked a lot is what they're actually doing to kind of ensure a consistent and effective approach overall. So if you could just talk a little bit about how you're working with other agencies in terms of NPC and SEA recommendations in order to ensure that they're across the entire board. All right. So I'll just make one comment to kind of frame the way that we look at that and then talk about some of the things we're doing. I opened up by talking about our two big challenges, you know, the first being the deep water challenge and the second being unconventional. And there are other challenges, but if we look at where we think the big bulk of new resources are going to be developed, where the reserves are going to be replaced, that we are very seriously using on an annual basis, we see the deep water and unconventional as being the two chunks that we really have to think about. Look at deep water, prodigiously difficult technical challenge, drilling in one mile, two mile water. You've got these floating cities out there, very, very difficult technical challenges, but you've got a regulatory challenge, you can at least get your hands around. You've got generally, you know, a single entity, you've got a single set of rules which are changing and being modified to make sure we mitigate the risks appropriately. Shift to shale gas. So there are some technical challenges with shale gas, which we're doing some work on to make sure we understand and we quantify appropriately. But the regulatory challenge on the shale gas is huge, right? Because most of what we're producing is produced on private lands, which is regulated by the states. You've got 32 different oil and gas producing states, all of which have a different regulatory environment, different set of standards for inspecting, different budgetary processes. And within each state you have different counties, you've got different regions, you've got different municipalities down to cities, which all have different rulemaking processes. So, tremendously difficult challenge in terms of getting some kind of, you know, when the president talks about, are we doing everything we can to permanently develop this national resource, which we do view this as being an important national resource, something that's going to contribute to the competitiveness of this country. You've got the rulemaking cut up into many different pieces. And that's the reality that we live in. It's the challenge that we have to deal with. So one of the specific objectives that the White House came out with in their energy blueprint that came out in March of this year was for DOE and EPA to create a mechanism for providing technical assistance to the states. So if you look at the research program that we have within the Department of Energy that's looking at quantifying risks. And if you look at the work, the investigations that the EPA are doing in terms of making sure we understand the risk to human health, make sure that we understand the impacts on the environment, those are studies, that's work, those are resources that are being deployed, that are going to be of interest to all of those 32 different states, those thousands of municipalities that are out there dealing with this. So we are creating some mechanism by which we're going to be communicating more effectively to the states. So working together with groups like the Interstate Oil and Gas Compact Commission, which is an interstate organization that supports the governors. Working with the National Association of Regional Councils, which helps the regions deal with issues, and also dealing with the state legislatures as they struggle with these issues. Some of the important interactions that we've made have been with state legislatures as we go down and we talk about here's what DOE is doing, here's what the EPA is doing, and here's how those agencies are working together. The last thing I'll mention quickly is that if you look at DOE, EPA, and USGS, the US Geological Survey from part of the Department of Interior, all three of those organizations are working on shell gas, but those three organizations have very, very different core capabilities, core competencies. We work on different areas. DOE is all about technical and technological innovation. We work on studies like these, but we also do the technical work that has to do with quantifying risks, understanding how new technologies, the risks of new technologies have to be mitigated. USGS has prodigious capabilities and competencies when it comes to natural systems and geologies and reservoir engineering. EPA focuses primarily on protecting human health and the environment and investigations that have to do with impacts on those two, including air quality and air studies. So those three organizations, I speak very regularly to my peers in those three organizations. And as we plan our research programs and we plan our outreach, we are doing that together. So this is a moving target. There's a lot of pieces, but one of the things that we're trying to emphasize and trying to work very seamlessly together on is making sure as we talk about what are we working on that's not chopped up into three pieces that we are giving a consistent message. So again, that's a work in progress, very analogous to the first question that we got in a lot of ways, which I think is kind of quarter the challenge. I get lots of questions on submitting and casing and multi-stage frack and fugitive emissions. But I get more questions on, well, how are we going to manage the human factors of making sure the community understands that we're doing the right thing and that we're taking their concerns seriously. So those are some of the things that we're working on. I'd be happy to talk at length on that if anyone is interested. Good morning, Paul Marino with YPFP. I have a question with the premise maybe underlying the theme of the studies that we're presenting, the prudent development of the oil and natural gas. Why not choose instead something more aggressive? That's outside just the realm of oil and natural gas, because it seems to me that oil and natural gas are very old technologies and we've refined it almost ad finitum horizontally. Why not choose instead say something like aggressive expansion into nuclear power railroad semiconductors, change the whole dynamics of the energy system instead of, you know, technology that we've had for a while and we're just sort of taking whatever bugs out that are left. Good question and the answer that is that we are doing that. That is the Department of Energy's core mission is to look at what new technology can bring in terms of transforming our economy and moving forward to the clean energy economy of the future. So those are tremendously important questions that we are addressing. We work closely with the Office of Science and Technology Policy at the White House. We work with other agencies. So those are questions that are at the center of the Department of Energy's mission. Now for this particular study, if you look at the goals that the administration has set out and that the Secretary has articulated in terms of moving towards the clean energy economy of the future, which encompasses many things that you just mentioned, I'll reiterate a point that I made a moment ago is that these are things that don't happen overnight. It's not going to happen next year. It's not going to happen in 10 years. So these are fundamental transformations of our economy that are going to take a lot of smart innovators working very hard to realize the type of innovations that you need in order to move in that direction. Given that it's not going to happen next year, 10 years or 15 years, it's incumbent on us to ensure that we are producing this resource that we have here domestically today now in a manner that creates economic opportunity, that gives our economy the potential to grow, that protects human health, that protects the environment. These are things that we have to keep our eye on, not only on the future, but on the ball that we're playing here today in real time. So both things are very important. That's the focus of this particular study is to make sure as we move on this transformation that we're doing the right things that we need to do right now to take care of the economy of this decade, so that as we're moving forward to the clean energy economy of decades to come, that we're executing that transition in a way that's prudent and effective. We're going to change out the panel. I'm going to ask the task group leads to come up. And while we're doing that, John Guy is in the front row here. So for those of you that don't know the petroleum council, Marshall Nichols and John Guy have done I think an enormous service to this country over a 30 year span that I've known him to take a concept in some of these studies, identify the people that ought to be involved in them, organize, reorganize in terms of working groups and then taskings and then somehow this all comes together within a year and a half or two years. And it's an integrated whole. And I just want to make sure that you're one of those folks that stays in the background all the time, but the amount of substantive expertise you and Marshall both is just outstanding. And I just think that it's appropriate that we recognize your role as well. So thanks. So Clay Scott, why don't you come on. We have one change to the program that was initially sent out. Thanks, Chris. And Scott Moore, who's the vice president of gas marketing for Anadarko will be taking the place of Paul Hagemeyer. Scott worked on the coordinating subcommittee. He's intimately involved in this in the study and knowledgeable about the all facets of the study. So we've asked him to step in today as Paul was unable to join us. When I spoke earlier about Jim Hackett's role, so Jim Hackett is chairman of the study designated a trusted ally within the company that knows these issues to be his coordinating committee chairman on the industry side. And that responsibility fell to Clay Bridges. Clay has been outstanding during this entire session. He's in over the course of the last two years has developed and Mitzi to your point has actually encouraged discussion of a number of issues from a number of different parties. I think as we go through the slides, you'll see that the number of people and affiliations, associations, perspectives that were brought into this. And this we try to do in the hard truths as well are atypical of what the studies in the past had looked like because there's a recognition, as Chris said, that more of these issues as you move forward or above ground, not below ground and dealing with this and confidence level in the American public is going to help progress these regulations and the policies going forward. In addition to Clay, Ken Easting will be here representing the demand segment. Ken and his real job as senior director of global gas for North America for IHS Sierra and use and emissions and carbon regulation Fiji George is director of carbon strategies for El Paso Corporation and he's joining us today as well. I had mentioned that Scott, his vice president of marking for Anadarko and he'll be doing operations and environment. And we've actually asked Clay to pick up the policy pieces as well as set the stage. So with out for the do Clay welcome and thank you so much for joining us. Thank you, Frank. And good morning to everyone. I would like to thank you, Frank Rastrow and CSIS for hosting this this morning and allowing us to spend some time with you and describe the prudent development report and go into a bit of a deeper dive in describing some of the findings that came from the report as well that led to our ultimate recommendations. Frank mentioned earlier about the 30 or 40 page executive summary, which I always found comical because I've read 30 or 40 page reports, but never a 30 or 40 page executive summary. But I'm here to tell you that that 30 to 40 page executive summary was read by just about every executive on the National Petroleum Council, because I heard from all of them. And so it really is read. For those of you who want the absolute summarized version, if you will go to npc.org, you will find the executive summary. You will also find the very detailed chapters on that website, which also find the transmittal letter that went to the Secretary of Energy. That transmittal letter is actually a fantastic executive summary. So if you really want to take a look at what the framing of the report without going into a 30 or 40 page executive summary, just to watch your whistle and see if you want to endeavor upon that, I would suggest you read that transmittal letter. It was very well done and it's a very good summary of the work that was done. OK, let's see. Do I have a way to. OK, great. Just a little bit of a description about the National Petroleum Council. It's sole purpose is to advise the federal government. It is not an advocacy group. I just wanted to reiterate that. Frank had mentioned it, but I wanted to make sure that was clear. Approximately 200 in number. Council members are selected by an energy secretary to assure well balanced representation from all segments of the oil and gas industry, all sections of the country, large and small companies. Members are also selected from outside the interest industry, representing academic financial research, Native American and public interest organizations and institutions. OK, so the genesis of this report occurred two years ago in September 2009 when Secretary to send a letter to the National Petroleum Council requesting five key tasks be performed assessing the North American resource base, describing the operating practices and technologies that will be used to minimize environmental impacts and expanding accessible resources, assess supply and demand through two thousand thirty five views through two thousand fifty. Identify emissions reduction stemming from the use of natural gas and advise on policy options that will allow prudent development consistent with the objectives of environmental protection, economic prosperity and energy security. Participation in the study was broad with over four hundred participants from the members organizations and beyond. At the end of the study, it seemed like there were more than four hundred participants. It seemed like about a thousand because we got a lot of input from those who didn't even participate in the study. So we talk about four hundred, but that's actually a very conservative number from those who provided input on the study itself. You will see here that over fifty percent of the participants came from outside the oil and gas industry. In total, the participants in the study represent over one hundred companies, agencies and institutions. In addition, we conducted outreach presentations to multiple third parties involved in the energy sector and gathered their ideas and opinions throughout the study. So before we go into the details of the study, let me outline some of the highlights of what you're about to hear and just frame it a bit for you. First, there is a tremendous amount of natural gas and oil in North America and estimates of the resource space have increased substantially since the last resource study that was done as recently as 2007. Many of you will remember the hard truth study performed by the National Petroleum Council. This resource space can produce huge quantities if the industry is allowed access and there is enough natural gas to meet even the highest levels of demand. And you'll see that in just a moment. There are big needle movers for reductions in greenhouse gas stemming from for greenhouse gas reductions stemming from the use of natural gas. And there are other material economic benefits as well. Millions of high paying jobs, robust domestic industrial development and enormous tax and royalty revenues for federal, state and local governments. But the only way that we can realize these benefits is if we produce the resource prudently. And prudent development is the linchpin. With that lead in, I'll ask our study leaders to review and detail our outlook for supply, demand, macroeconomics, emissions, as well as the environment. Andrew Slaughter, who led our resource and supply task group, will lead us off. So Andrew. I should mention that I omitted Andrew in the introduction, in part because I'm so familiar with Andrew. We do a lot more work with him and he's a familiar face around here. His real job is with Shell, but he works on many supply issues and he's actually helping us put together a tight oil segment for later on in November. So we welcome Andrew to the podium and believe me, it was not an oversight that way. Well, thank you, Frank. You've just kept me in the room rather than going somewhere else this morning. Well, it's a great privilege to be here. I love working with CSIS and despite all the hard work that we've gone through and the difficult processes, it's been a great privilege and pleasure to work on this study once again with such a great, distinguished, knowledgeable group of people. I think hopefully if you look at the report, some of that will come through in terms of our engagement and our willingness to work together. I'm going to cover the supply, both from the resource side and the production potential side going through for the next several decades from oil and gas. North America, for this study, focuses primarily on the US and Canada. We did look at Mexico to some extent. We have a topic paper on that subject and we have a short summary in the report, but really we're talking about the huge resources that are available to be developed in the US and Canada. And I think it's worth starting off with some context as to where we're starting from. There is a tremendous platform in place for current activities and for future activities, both in natural gas and oil. If you look at the position globally of the US and Canada, this chart shows natural gas and it focuses on 2010. But you can see the US has overtaken Russia as the leading gas producer in the world. If you add Canada on top of that and say those two countries have the resources available for North America, we are considerably higher than any other country in the world. Not only is that true volumetrically, but the more important thing is that the technology is to develop this gas on a global scale, have been developed and deployed here first. If we look back to offshore drilling, both for gas and for oil, that started here. The technologies are moving out to the deep water. Unconventional gas really started and took off in North America from coal bed methane through tight gas and in recent years through shale gas. So the technology innovation that we've seen in North America so far gives a tremendous platform for moving forward. And it's a similar position for oil. If we look at the crude oil production in 2010, again, the USA and Canada together are right up there with the global energy giants, again, Russia and Saudi Arabia. So we don't, our first thought generally is not of North America or the US as a big producer, but in fact, it really is if you look at the numbers. And so that what that translates into is a set of capabilities and industry structure and innovation culture, which can take us forward into the future decades. And again, the technologies that have been deployed globally to unlock more oil have been generally developed here. Arctic exploration, Arctic drilling and production started in the US in the 1970s, as you know, with the with the North Slope and then moving into offshore, moving deeper in deeper and deeper water, the oil sands in Canada, both from the mining operations and the in-situ operations, again, large scale innovative technology development right here. And again, the horizontal drilling and multi-stage fracturing, which have unlocked unconventional gas in a big way, is now being applied to oil and liquids resources. So this current situation is a tremendous place to start if we're looking at realizing future potential of the resource base. Let's focus on natural gas for a minute. This chart shows estimates of the technically recoverable resource base of natural gas produced by various different institutions and organizations. And they all have their different methods. They have their different uses of these assessments. So naturally, they differ between them. They're all looking at it in a slightly different way. But the common picture is that if you compare the set of resource estimates 10 years ago with the set of resource estimates in the last three years, they're all moving up tremendously. The understanding of the technically available natural gas resource base has increased tremendously from the 1,000 to 1,500 TCF range up to now the 2,000 to 3,000 TCF range. As we're understanding resources better and bringing them more into the technically recoverable status. And so what this says is that these are not just molecules in the ground. This says these are the production potential of these resources has improved tremendously and gives us enormous scope for the future much more than we realized several years ago. Here's another way of looking at it. And this shows this chart shows a three resource curves on the horizontal access. You have trillion cubic feet of recoverable resource on the vertical access. You have the the well head development cost, the yellow the kind of beige box on that chart is the range of cumulative demand over the next 25 years from a relatively low demand growth or relatively high demand growth. The curves were taken from the MIT natural gas study. We looked at a lot of studies. We did surveys. We looked at a lot of data. These are fairly representative of the type of resource curves that we were looking at. And the point to take away from this slide is that even in the highest demand growth outlooks and scenarios the gas to meet those high demand and high market size scenarios is available at relatively moderate cost compared to expectations of five years ago. And when you get 25 years out there's an enormous length of the resource curve which is still available. So the gas resource can supply the market for potentially as we say on the slide decades to come beyond certainly beyond the 2035 which was the main time horizon of this study. If we look at the resource types for natural gas and oil if we look at natural gas first the size of the bubbles on this chart really looks at the range of production potential in trillion cubic feet a year from now through the future. And as you can see there is growth potential in each of the major segments of the resource of the resource type. Clearly the onshore gas has been very much bolstered by the success in unconventional gas drilling. We see that continuing to grow over the next several decades as we understand the resource better and as we as we apply the technology in more places that has tremendous growth potential. But even so other types of resource the Arctic the offshore will remain very very important particularly if we're able to access more areas offshore and then in time methane hydrates is enormous resource of gas which is found in both the Arctic and in the Gulf of Mexico enormous tremendous potential there. But the technology is not there right now to develop that economically. So we've got a lot of technological work to do to develop that resource and it can be available and grow very considerably probably in the second half of this century. So if you think of it as a continuum over time this is something that can take natural gas supply beyond unconventional gas currently and take it into the the decades after 2050. If you look at oil and here again we see a comparison of potential production outlooks for the different elements of the resource types of oil compared to 2010. The unconventional as you see as with gas plays a very major role but I want to tell you that unconventional is not the only game in town. They're also very considerable scope remains in conventional oil particularly in offshore and Arctic Arctic zones and the natural gas liquids which come in natural gas development. It's not quite a substitute for crude oil but it can add a very substantial production potential. What you see in the two 2035 charts there is basically the consequence of choices about how and whether we go after these resources, how we develop them. So it's choices about access, it's choices about leasing regimes, it's choices about fiscal regimes and it's the rate of success and deployment of current and new technologies. If those don't develop in a way that that is enabling to resource development then North American oil production could actually decline which has been the conventional pathway over the last decade or decade and a half. If however we put in enabling mechanisms and enabling structures around access, around leasing, around taxation, around clearly environmentally sensitive development then there is tremendous upside potential. Now clearly you would not expect each of the segments to be developed to at its maximum rate, some will be developed faster than others even in a favorable outcome so it's unlikely that we would add up to the 20 million barrels a day plus in 2035 you see here but the potential is there to significantly substitute domestic supply for globally traded supply and that brings economic benefits, it brings the jobs and the balance of trade benefits and the economic multiplier benefits into this economy rather than other economies in the Middle East or Latin America, West Africa etc. So there are some benefits to looking at an enabling environment for our resource development benefits which go beyond simply capturing and delivering the molecules. So how I think about all this as a portfolio of supply options, we all know it's nice to have a good portfolio in our financial management stocks, bonds, sectors, geographers, etc. We also have a very nice portfolio of supply options and you can think about that portfolio in terms of resource type in terms of geography, in terms of technology intensity and in terms of profile over time and development. So there's a lot of elements that we can optimize to make sure that this fits market needs in a good way. In the near term we have developments and basins which are producing now. Many of these are world class, world scale producing sources, the Gulf of Mexico, deep water, the oil sands in Canada, onshore unconventional gas. Clearly these are huge producing contributors right now and so as Chris was saying earlier, these like it or not, these are core in our energy economy today and to maintain the reliability of that system and to maintain that contribution we need to sustain these currently producing basins. Moving forward into time there are other high potential resources. The Arctic, the Arctic generally not just the US and Canadian Arctic but the Russian Arctic also is one of the few really huge, relatively untapped resources of hydrocarbons. And the US and Canada has a big part of that. You know we're talking about multiple hundreds of millions of barrels both of oil and gas and so over time as we develop new exploration in the Arctic we can add to the portfolio of supply options. And then we have new offshore regions like the offshore Atlantic and the offshore Pacific. We know there are resources there. We would like to do appraisal to find out exactly what the scope is. And in the longer term there are more novel resources which depend on new technology and that would probably need to be combined with new access regimes and new frameworks for development in terms of fiscal frameworks and regulatory frameworks. And here I mentioned methane hydrates which are potentially very large. Then there's the shale oil in the West, Colorado shale oil. Again people have been working on that but the technologies are not ready to make that commercially large scale and probably won't be for several decades. There is also oil sands in the US which has different characteristics from Canadian oil sands rather harder to extract. Probably needs better technology than they're using in the current operation or different technology. And then plus we're sustaining all the others over time. So this portfolio of supply options of oil and gas is quite rich. I can't think of quite another place around the world which has a similar type of choices and type of portfolio of options. So I think we're very fortunate to be able to choose among these and go after resources which will really power the economy. As I mentioned the long term options and the medium options need sustained effort, preparatory to development even if they're not going to be developed now the next five years the next 10 years. We won't get there unless we're thinking now about the technologies needed and the frameworks needed to develop them. OK, if we if we wait until we run out of the other molecules and then start thinking about how to develop these it's too late. On infrastructure infrastructure is often the forgotten element in the value chain. We think of supply development and we think of markets and then somehow magically the infrastructure will appear to link them up. We look quite hard in this study both on the natural gas side and the crude oil side of our pipelines processing facilities and the like to link supply to markets. And in general the frameworks and the permitting processes to get those in place works relatively well. But we need to pay attention to that, not forget that to ensure that the that infrastructure gets developed in a safe and responsible way as well as on the supply side. So when we looked at the overall concept of development of hydrocarbon resources, basically there were five main areas of of recommendations that we came up with. First of all, I mentioned develop appropriate leasing and royalty frameworks. Let me give you one example on on that and I can compare the Arctic and the Gulf of Mexico. We have a leasing system which is very linearically. But your drilling window purely from weather conditions and ice conditions, your drilling window in the Arctic is much, much shorter than in the Gulf of Mexico on an annual basis. It might be 70 to 90 days versus 365 days. So the length of lease in the Arctic actually gives you much less time for exploration, appraisal and development capacity than a length of lease in the Gulf of Mexico or elsewhere. There are other similar examples. So we need to develop appropriate regimes for each of these these locations. Technology is going to be important. We have capabilities in the industry, but the industry needs to see some kind of commercial opportunity within at least the visible future. So for the longer term, I think it would be appropriate on the national interest to develop technology partnerships involving industry but also involving government and academia in some of these novel technologies like hydrates and oil shales. And there are many successful examples of this type of thing in the past with DOE where that has been very helpful in developing a technology base. Energy data and analysis capabilities kind of underpin our understanding of how markets fit together, what supply is needed and how it's going to be developed. And so the capabilities of developing and maintaining that analysis and data are very important for all the stakeholders for policymakers, for industry and for consumers to make sure we have a common understanding of how the industry works. So we would like to encourage government to maintain and perhaps even build on the capabilities that are in place right now. Resource assessments are very important. They're the foundation for knowing which are the most prospective areas and which are the most prospective resource types. So as we think about new resource types and new areas to properly assess the place of that and the policy and energy mix, new resource assessments for new areas are a very desirable component of that analysis. And then the infrastructure, I mentioned that earlier, maintain effective infrastructure permitting systems. That's really the glue that brings the whole thing together. And the natural gas permitting infrastructure is rather different from the crude oil system. But they both seem to function relatively well in most cases. And we need to pay attention to make sure that that continues. I'm going to skip over these last two slides I have because they just give some more color to the overall points that I just made. And really the resource and supply picture that we've portrayed here keep people kind of understanding that the gas had been transformed. I think the news to a lot of people in this study was that actually oil resources in North America and the US and Canada are also really important and have real potential. So the resource development side is one side of it. We also need markets and I'll hand it over to Ken to talk about demand. Thank you, Andrew. As Andrew said, we have a lot of supply. The question is, what is the potential for demand? In this study, just as we did in the hard truth study, we chose to do a study of studies. So we and one of the reasons for doing that is there's a lot of studies out there in the public domain that have differing assumptions. So we were trying to bring in a lot of perspectives and get a wide range of outlook rather than develop our own forecast. One limitation of a study of studies that we had to overcome is that a lot of the forecasts such as those done by IHS here are considered proprietary and the results are not in the public domain. So we used the technique just like we did in the hard truth study where the group both supply and demand developed data templates. These data templates were then sent out to various proprietary organizations through the vehicle of a third-party accounting firm who asked them to fill in the data, templates, send them back. That firm did some reasonableness checking and data integrity checking and then aggregated the results if they had at least three responses. So that way we were able to expand our study of studies to include ranges of numbers from proprietary outlooks. What you have here is the results of demand outlooks for 2020 and 2030. The first two set of columns are from the publicly available EIA-AEO reference cases. And the last three are the high, medium, and low outlooks from the proprietary, although other publicly available were available, what we found is that proprietary forecasts had a much larger range. As you look at the results of these ranges is you'll see that for the U.S., most of the variation in demand is driven by power. That variation in demand is driven by different economic assumptions which are driving different electricity demand outlooks. But more importantly, there's a lot of policy impacts that could potentially affect the power industry. For example, as you'll hear from Fiji later, there's a wide range and assessment of what EPA's proposed non-greenhouse gas rules might do as far as retiring coal units and that would have an impact on natural gas. There's also a wide range of what kind of a price on carbon, if any, will be in the forecast. And then, of course, there's other factors. So for the U.S., most of the demand variation is driven by power and it's mostly policy-related. It's got this line. There we go. Okay. For Canada, we also found a wide range in demand. And in this case, we're comparing the National Energy Board's publicly available forecasts to the proprietary results. But what we found is that in Canada, the variation in demand is driven by variation in industrial demand. And that industrial demand is in turn driven by variations in oil sands production outlooks provided by Andrew's group. In Canada, there's a smaller variation on power demand because coal is not nearly a significant part of their existing generation fleet. If I recall correctly, it's about 16% versus 50% in the U.S. So there's a lot less opportunity to displace coal with natural gas in Canada. And therefore, you don't see as wide a range in demand outlooks. Now, as I said a moment ago, we did a study of studies. We did not do our own forecast. So we didn't develop an integrated supply-demand balance. So as an alternative, we chose to develop a stress test of the supply base. And to do that, we wanted to come up with what would be a extremely high potential estimate of gas demand. It's not a forecast, but in the way we constructed that far right column, so we took to the highest proprietary forecast outlook for the U.S. and for Canada, excluding vehicles, we then added an estimate of what would be natural gas demand if 40% of the vehicle fleet were converted either to LNG heavy-duty trucks or plug-in electric vehicles with the kilowatts all supplied by natural gas. That's a very high estimate higher than any of the forecasts we had. For exports to Mexico, we used the EIA's estimate and that's around four BCF a day. On top of that, we also layered in the potential for LNG exports. At the time we were doing this analysis back in March, there were three projects that had been filed and so we used the initial liquefaction capacity of those projects, which totaled another five BCF. So in summary, we came up with a very high estimate of potential supply. If you look at the bar between the two demand outlooks for 2035, which is the supply case, you can see that if we have reasonable access and reasonable regulation, the supply resource can meet even the most high estimate of demand that we could come up with. However, if we have less reasonable regulation, less access, the bottom of the yellow arrow there, we could be in a situation where North American supply is below a minimum expectation of North American demand, which would mean we'd be back to the world we thought we were in five years ago that North America is going to have to import LNG to balance its markets. I wanna talk a little bit about the power sector. As we looked at studies, and some of the studies were as old as 2007 and as we went, we were getting newer and newer studies, but what we found is that there was two variables that were a sea change and that affected the outlook for levelized cost of electricity. Those were that the change in the resource base changed the expectation of future gas costs downward. The other was that there was a major run up in capital costs in 2008 as part of the global boom in energy and all commodities. Those costs have come down, but not much. But when we got behind the costs, what we found is that nuclear costs went up more than coal costs, coal costs went up more than wind costs, and wind costs went up more than gas costs. So gas gained an advantage from a capital X perspective. So when you combine an improvement in CAPEX and an improvement in the cost outlook for natural gas, what you found using data out of the AEO 2011 reference case is that the advanced natural gas combined cycles, the second bar from the top, is cheaper than all other forms of generation other than conventional hydro. And as you know, we're probably not gonna be developing conventional hydro here in the US, but perhaps in Canada. Interestingly, if you go down to the second sort of tannish bar, that's advanced combined cycle with CCS. It's only slightly more expensive than today's advanced pulverized coal. That was the other thing we found is that if you use carbon capture and storage, natural gas is probably gonna be cheaper per megawatt hour than coal CCS. The other thing we looked at was the dispatch cost of electricity. Dispatch cost is basically the variable cost of making a kilowatt hour. Most of that is the fuel cost. For wind, hydro, solar, you'll see there's no variable cost. They always dispatch first. But now if you look at natural gas, again the kind of tannish bars, it has the highest dispatch cost. So ironically, you should choose to build a combined, natural gas combined cycle rather than a coal plant from a levelized cost of electricity basis. But if you build one of each, the coal plant's gonna run, not the natural gas plant, and that's not gonna help you on CO2. So this kind of demonstrates why people like to look at it, putting a price on carbon, because it can change this dispatch order to tilt it towards less fossil emitting fuel, such as natural gas. The other thing we looked at on carbon capture and sequestration is how much CO2 would be emitted if we didn't have it? How much would be emitted if we have it? Because you only capture about 90% of it. And then what is the storage requirement? And as Fiji will talk about in a few moments, natural gas has less carbon content than coal. And then when you look at the efficiency of converting gas to kilowatts versus coal to kilowatts, gas also has an advantage. And so what you see is that natural gas with CCS will have a substantially smaller requirement for storage. I think that's important in the sense that one of the recommendations coming out of our study is that the research and development being done on CCS needs to be fuel-neutral. Right now, it's heavily focused on coal. We think from a natural gas perspective, it could be cheaper, but more importantly, it will require less storage. We also delved into an issue that the NPC has not looked at before, and our shorthand phrase for it was harmonizing. Let's talk about what we mean by harmonizing. First of all, the natural gas and electric industries are becoming increasingly dependent upon each other for reliability. Pipelines are using electric compressors in urban areas to meet NOC standards. If they have no electricity, they can't deliver gas. Processing plants often are vulnerable to electric outages. We saw that in spades after Katrina and Rita, and also after Gustaf. Some storage fields has happened in February of this year. Could not withdraw as much gas because they were relying on electricity. So the gas industry is becoming increasingly reliant on electricity. However, the power industry is becoming increasingly reliant on power. Natural gas, I'm sorry. Natural gas's share of power has been increasing, and so you could see the potential of getting an official cycle. No electricity, no gas, no gas, no electricity, and the focus is that we need, as the industry's become more intertwined, is we need to start looking at reliability more holistically, and I know in particular the FERC is taking a look at this. And part of the problem is that both natural gas and power are very complex networks. They develop separately to serve the interests of their stakeholders, which are not necessarily the same, but as the two industries are starting to become more intertwined, we need to start rationalizing and improving the relationships. For example, for over 15 years now, the natural gas industry has had one gas day or operating day for all in North America. The power industry has four operating days across North America. The other thing is how do you schedule for those days? Within the Eastern Interconnect, you have several different scheduling processes in terms of time, and they're not consistent with gas. And so you either have to buy gas, commit to buying the gas before you knew if you sold the power, or you got to commit to selling the power and be naked gas and have to go into the intraday market. That works most of the time, except when the systems get tight. So that's an area that needs to be re-looked at, and in fact, in February, the North American Energy Standards Board filed to reactivate proceedings to address those issues before the FERC. The other thing we found is the terms and conditions of gas service might not necessarily meet the needs of a power generator. And so the two parties got to come together and work on that. The other thing too is gas is becoming increasingly used to back up intermittent renewables, and so their systems are being impacted and there's costs incurred to do that. The gas industry would like to be compensated for those costs, but the generator also needs to be compensated for those costs if they're gonna enter into contractual relationships with the gas to improve reliability. Now, all of these issues we call harmonizing and our basic recommendation is all the stakeholders with robust participation by NERC, FERC, state PUCs and the North American Energy Standards Board need to come together and work on this to make sure that we have cost effective and reliable supply in the future. Turning to the residential sector, and this chart costs to stir when we first used it at one of the CSC meetings. So let me explain what it is. This chart shows all energy consumed by the residential sector except for vehicles and includes energy consumed on site, but also the energy necessary to bring or transform BTUs to kilowatts and bring that energy to the home. So starting at the bottom left, you see coal. It's basically gone out of the residential sector. You see oil, it's going away. 80% of what's left is still here in the Northeast and that's slowly going away. Then you see a renewable energy sector which is mostly wood. Then natural gas, the kind of tannish. That natural gas has been pretty flat because basically what's happened is energy efficiency improvements are driving down consumption per customer while customers are going up due to population growth and they're more or less matching each other. And that works because the natural gas industry has not created a new appliance that uses natural gas in the home. We added onto that the fuel necessary to gather, process, transport and distribute natural gas to the home. That's about eight and a half percent. The next layer is electricity. And as you can see, it's growing. And unlike the natural gas industry, the electric industry keeps finding new uses for electricity, flat screen TVs, PCs, laptops, iPads, you name it. So despite strong efficiency improvements in things like refrigerators, et cetera, new applications are more than offsetting the efficiency gains. But what most people don't realize is how much energy is used to make a kilowatt. And that is what that orange wedge is at the top. That represents all the BTUs that are lost in converting them from BTUs to kilowatt hours. The last layer is six and a half percent of that total electricity and lost number because that's approximately what is lost on average between the power plant and delivery to the home. This led us to look into something we call the full fuel cycle analysis. And this is kind of an illustrative example of trying to apply the concept of looking at all fuel from the well head or mind mouth through to the burner tip. In this case, we're comparing a gas water heater to an electric water heater. And if you look at this in detail, you'll see that an electric water heater in terms of converting electrons to hot water is much more efficient than a gas water heater. However, if you start taking into account the energy necessary to deliver and make those kilowatts, you end up with a situation where a gas water heater consumes less total energy to provide the same product. And as the little yellow squares show less CO2 emissions to deliver the same amount of hot water. We think that use of this kind of tool and in some cases the methodologies have got to be worked on and the data's got to be worked on, that this kind of tool will help policymakers better, make choices when you've got different energies involved. And in fact, the DOE has, I think recently promulgated their first appliance standard using a full fuel cycle analysis. Didn't want to leave out the industrial sector. One of the key stories coming out of change in natural gas supply outlook is represented by this graph. Although there were many changes between the 2011 and 2010 outlooks, one of the biggest changes was a substantial increase in the natural gas resource space. And this means lower energy costs for the industrial sector and particularly the chemical sector. They went from having some of the highest energy costs in the world to almost the lowest within a period of three years. And we retain at the moment a competitive advantage. In the chemical industry outside the U.S., a lot of it is NAFA-based, which is oil-based. So it's tied to oil prices. A lot of the natural gas delivered into Europe or delivered by LNG has linked to oil prices. And as many of you know that the ratio of gas, oil prices of the gas is widened and stayed substantially wide over the last three years. So this has created a substantial advantage for U.S. energy and particularly the chemical industry. And it's leading to reopening of plants, proposals to construct new ones. So let's talk briefly about the demand recommendations. The first one dealt with CCS that we think it needs to be fuel-neutral because some of the advantages that gas has over coal. The next four deal with efficiency. As we identified in the hard truth and in the current study, efficiency is the cornerstone of any energy policy. If you make cost-effective investments in energy efficiency, you'll improve your standard of living. You'll improve energy security and you'll reduce emissions. That's a cornerstone of any energy policy. And as we identified earlier, one way to help do that is to use a full fuel cycle analysis tool. But also we recommend continuing support for updating building codes and appliance standards and quick implementation of those. We also made some recommendations that there are certain regulatory impediments to greater efficiency. Those include removing or eliminating disincentives for utilities to promote efficiency. If they're under the old traditional rate-making regime where a lot of their return on equity is in their commodity rate, they have incentive to promote greater throughput, not efficiency. So the regulations need to change to change that dynamic. And the other is in the area of combined heat and power. Kojen is probably the most effective use that we can make of energy in terms of natural gas. And there are some regulatory barriers to that too that need to be removed. Lastly, in terms of enhancing the regulation of energy markets, we made recommendations to allow utilities to manage their price risk through hedging and long-term contracts. This is basically dealing with the fact that in some cases, if a utility enters into either of those, they could be subject to an after-the-fact prudence of review and disallowance of costs. So why enter into them in the first place if you could lose money? And lastly, we made a recommendation that the stakeholders in the power and gas industries get together and harmonize their markets some more. With that, I'd like to turn over the conversation to Fiji George. Thank you, Ken. Frank, I appreciate the opportunity to give an overview of the carbon findings as part of the study. First of all, I had the privilege of leading a fantastic group in my team. And my team members range from NGOs, from the Pew Center to EDF, NRTC, and all the way to academics like Ed Rube and Whit Carnegie Mellon, who is a member of the National Academy of Sciences and part of the Nobel Prize-winning IPCC study. And in fact, the oil and gas members of my team were even lesser than the pie chart that Clay mentioned. So I would say 60 to 70% were non-oil and gas experts. So as part of our study, we investigated the role of natural gas in a carbon constrained world. And this chart shows under current business, the usual conditions, the emissions of greenhouse gases in the US will increase. However, as policymakers consider mechanisms to reduce greenhouse gas emissions, natural gas can play a vital role. Increase use of natural gas, as Ken mentioned, especially in the power sector along with policies such as the EPA non-greenhouse gas rules and price on carbon can increase the use of natural gas in the economy while reducing emissions of greenhouse gases. And hence, natural gas can play a very vital role as part of a portfolio of options to meet a 50% target by 2050 in greenhouse gas reductions. However, if you're looking for a deeper reduction of in the range of say 80%, natural gas alone cannot get to there. You need advanced technologies like CCS. As part of the study, we also looked at lifecycle emissions as most of you in this room may have heard about some studies from Cornell coming out challenging the relative emissions intensity of gas versus coal. Most of our work was done much, much before the Cornell study came out. So we started investigating the lifecycle emissions, that there was our emissions from the well head to the burner tip for gas and from the coal mine all the way to the burner tip for coal. So we used the Carnegie Mellon methodology which was published about five years ago. We used that methodology. We accepted as part of the study the updated EPA numbers for natural gas emissions and we updated the coal numbers. And the results are presented in the slide. When you account for end use efficiencies of a combined cycle plant versus a coal plant, natural gas plants are typically about 50 to 60% more, has got less greenhouse gas emissions than coal. So 50 to 60% is what we found as the cleanliness of natural gas on a lifecycle basis. Now we also looked at SO2, NOx and mercury emissions and we relied on the NETL studies for that and the conclusions were gas as 99% lower SO2 and mercury emissions and about 82% lower NOx emissions on a lifecycle basis. And I find as I talk about these issues in many forums, lost is the argument or the discussions about these criteria pollutants and everybody focuses on the new kid on the block that is greenhouse gases. So let's not forget about those emissions from NOx, SOx and mercury where gas has an inherent cleanliness capability. So this inherent capability of natural gas being having lower emissions and higher efficiency makes natural gas a very important choice in a portfolio of options going forward. We also looked at the role of natural gas and carbon constraints and the charts, there are two charts over here. The chart on the right shows overall natural gas demand in 2030 under different carbon constraints and as a result of findings from different studies. The chart on the left shows the percentage of the natural gas share in the power market. Now typically when you have carbon constraints overall energy demand goes down and so does natural gas demand in the overall economy. However, as you can see on the charts on the left, the share of natural gas in the electric market increases. So basically what's happening over there is natural gas because of its lower emissions, higher efficiency is displacing coal. Now on the right hand side, we looked at impacts of constraints, carbon constraints on overall gas demand in the economy. And what we found is that with newer studies like the EIA, AEO 2011 study, which includes a higher resource base, there is a possibility that overall gas demand can increase in the economy with carbon constraints. However, we were not able to draw any specific conclusions because of the sample size where it just limited to one or two studies. So what is the future of natural gas say in 2030 or 2050? And is there a dash to gas? Those are the questions that are often asked. And what we found is the future will involve a resource mix that is diverse and lower emitting and gas will play a very important part in that mix. And we also find that natural gas, it will be a very important part in a 50% portfolio, but however, as I mentioned before, going to a deeper reduction target of 80% or more will require advanced technologies like CCS on natural gas. We looked at over 50 studies, identified 35 relevant studies and came up with 15 discrete natural gas and used technologies in the different sectors. And we were trying to get a range of potential reductions through greater use of natural gas in the end use. So we came up with a range of about 126 million tons through to about to 864 million tons by 2030 through greater use of natural gas. And we use the term accelerated deployment and that's a term that's used by the National Academy of Sciences. So we use that concept in arriving at these numbers. A lot of focus over the past two years have been on the EPA non-greenhouse gas rules. These are the Mercury, utility Mercury, MAC rule, the transport rule now it's called Cross-Date Air Pollution Rule, CSAPR, the cooling water intake rule and so on. What has happened fundamentally is historically the spread between coal and gas generation like Kenneth mentioned was around about $30 per megawatt hour. But because of abundant supplies, lower gas prices and also higher coal prices, that spread as you can see on the right hand graph, that spread has decreased. Now add in the fact that most of these coal plants are older, inefficient and they would have to spend capital expenditure on retrofitting their plants with scrubbers or DSI or other technologies to reduce these emissions. This becomes a tough proposition for an older, inefficient coal plant. And the chart on the left shows basically the levelized cost of energy between an inefficient coal plant and what I call an advanced natural gas combined cycle. So that's the decision point that every coal plant has to go through when they decide to retire or not. As Ken alluded, we looked at several studies on coal plant retirements and then we invited, I would say, to the top five analytical firms to review and peel their models to better understand where they're going. Many of them came back with specific data requests back to us and the results are presented over here. On an average, we see about 58 gigawatts of coal plant retirements through these various rules and this translates to approximately 250 million tons per year and these are by 2020. So pretty important policy decision for lawmakers as we go forward. So what are the different policy options for accelerated deployment of natural gas? We found if policymakers plan to focus on reduction of greenhouse gases, a price on carbon that's market-based, that's economy-wide and global in nature is the best way to go to focus on reduced emissions. However, it is not the only silver bullet to reduce. You may need complementary policies to get in different technologies, including gas technologies and that's what this chart shows. If you see the technologies on the upper right corner, like natural gas combined cycle with CCS, well there is not even a pilot project on CCS with combined cycle. It needs a lot of R&D focus to get it to the bottom left corner. Some of these other technologies like fuel switching, it all depends on say the price on carbon can tip the favorite to gas, as Kent mentioned. So different policies have to work together to make efficient use of natural gas. So what are our recommendations? Our first recommendation is to provide regulatory certainty to the power sector on the EPA non-greenhouse gas rules. Regulatory certainty in terms of timing, scope and frankly what is required. Number two, focus on industry and government partnerships that focuses on measuring and reducing methane emissions along the natural gas value chain. We do have an example, that's the EPA natural gas star program, it's been on since 1993. Over 900 BCF of natural gas has been reported to be reduced, 900 BCF roughly equates to 400 million tons. We have application of 150 different technologies. So such partnerships exist, but it has to be enhanced for greater participation by industry. And as I mentioned before, as policy makers consider different programs, a price on carbon is definitely the most efficient way to go and we feel we should have methods to internalize the cost of carbon into decision making. And finally, as I mentioned, we need to have an option for natural gas CCS, especially if deeper targets are required. That I'll pass it over to Scott. Thanks. Thank you, Meiji. In addition to the potential emissions benefits that can come from the increased use of natural gas, there are substantial economic impacts of oil and gas development. We looked at several factors here, particularly employment and income. According to recent study, the industry directly employs over two million people and including direct and indirect employment that figure reaches nine million. These are good paying jobs. Only gas extraction wages are about 74% above the national average at $77,000. Total labor income, which is wages, salaries, and benefits is estimated at over $500 billion. The industry is also a very important source of tax revenues to the state, local, and federal governments. It is the third largest payer of federal income taxes here at $30 billion a year. But I think the real story is, once you add royalties and government lands, servants' taxes, sales and property use taxes, payroll taxes, excise taxes, and you add it all up, total federal state local government revenue exceeds $250 billion annually. There's a lot of discussion right now obviously in tax policy and the impacts of tax policy on the industry. It's important to appreciate that the industry tends to invest as cash flow. If you look at this chart here, it shows you that for a typical mid cap entity, and you look at the circle in 2010, the blue bar shows operating cash flow about 600 million. The green bar shows capital expenditures of 700 million, so you got a $100 million delta there. The point is that the industry, our study found, reinvests as cash flow and so tax policy will have an impact on capital formation and that capital formation affects productive capacity. We also looked at the impact of volatility and there's two kinds of volatility. There's what traders would call traditional volatility, which is a mathematical discussion of the rate of change of prices. Traditional volatility is a healthy component of functioning markets telling buyers and sellers to adjust their behavior based on costs. The more problematic alternate definition of volatility would be accuracy or inaccuracy in the expectations of market participants versus the outcome. For example, someone builds a gas-fired power plant and the price forecasts they use to determine the viability of their investment turns out to be different than actual outcomes. That can affect future investment decisions. Now there are mitigants for this. I think the good news in the supply story is that as we take the put more slack in the system and reduce the capacity utilization, it dampens volatility. So it means more predictable price environment. So one of the key findings that comes out of Andrew's work is that we see with increased supply and productive capacity a reduction in the natural gas price volatility. It also takes people for us to convert the resource into useful energy. And not unique to our industry, but the industry is getting older. This is an age distribution in members of Society of Trilling Engineer. And in 1997, 26% of membership were over 15. Today that's over 45%. And in the federal government, that number reaches 62%. Same truth for geoscientists. The point is there's a crude change going on and we have to make sure we educate and train accordingly. And that relies both on industry and the government to be sensitive to this issue. The good news is there's more enrollment in geoscience and engineering programs going forward. As you can see the spike in the 80s and the drop has since been eliminated and we are now back on a recovery. Another important point we looked at is you need a strong K through 12 educational foundation as the pipeline in which the technical professions are fed. Now switching gears over to the, what was really the core theme of the study was prudent development. And we chose our title at the end. And the concept and the ideas behind prudent development was the most commonly discussed recurring theme across all the work of the task groups. And it was actually an easy choice for the report title. So what do you mean by prudent development? We mean development operations and delivery systems that achieve a broadly acceptable balance of several factors, economic growth, environmental stewardship and sustainability, energy security and human health and safety. And prudent development necessarily means involving trade-offs among these factors. Prudent development is essential for public trust and confidence. It's a requirement for continued and expanded access to the resource and it is fundamental to the long-term success of the industry. And this concept crosses the 7,000 E&P companies in the industry, which includes over 2,000 operators and hundreds of service companies. Oil and gas development has been extensive in North America. Over 4.3 million gas wells and oil wells have been drilled in the United States and Canada. Development of this resource has come with environmental impacts. There's been a lot of public attention focused on operation impacts. In the study, we acknowledge these concerns. We address them with facts and information regarding operating practices, environmental concerns in the industry's regulatory framework as they have evolved over time. The study has taken a very deliberate, detailed review of the operating practices and environmental issues and I would commend to you the study in its white papers if you want to further educate yourself on the topic. Now technology drives our industry. The operations environment task group reviewed over 700 individual studies, articles and references and resulted in three core findings. First is that technology leads regulation. Industry adopts new technology and the regulatory framework tends to follow behind. What this means, it's essential for information to be shared both across the industry and between industry and regulators so that regulations can keep pace with industry developments. Second, we noted that technological advancement can benefit both industry and the environment. For example, here you see in the schematic an example of horizontal drilling and multi-stage fracture completions. This technology has really changed the game in productive capacity for natural gas but at the same time, it has also reduced dramatically the surface impacts of development. Proper well-designed construction are also required for protection of groundwater so in this schematic you see where these three ideas come together. And third, the industry and government both need to support innovation because this innovative change is what's really allowed a new suite of policy options for our country. We also looked at the regulatory structure and we found that oil and gas development is very well-regulated, very heavily regulated across all portions of the development cycle. They're comprehensive both in the states and federal level and they govern all phases of production. Now regulatory approaches need to reflect the diversity of operating environments and in general state agencies have been involved in regulating oil and gas development for the longest. They tend to have the most experience and knowledge to respond to local issues, geology, hydrology, environmental, offshore and land use characteristics. Technology also is improving our understanding of the impact of development. This is an interesting chart here. What it shows you on the y-axis is vertical depth and on the x-axis, think of it as distance for more of the well is. And the blue lines on the top are the distance between the surface and the deepest groundwater and the solid red line with the squigglys up and down are the height of fractures from the well bore. And what you can see here is this technology lets us understand the potential for communication between the fracture completion and groundwater. There have been over a million hydraulic fracture treatments in North America and this type of technology is useful to better understanding the potential impacts. We also studied relative impacts across energy sources. We think that's important for the development policy and what this chart here shows two things. We look at water use and land use, water use in the left, land use in the right, across natural gas, coal and oil. And it let us do two things. It lets us see the relative impact between fuel sources but it also let us see the variety between studies looking at the same question. And what we found is that there is still, I think, a significant need for better footprint information for key energy sources. There's not a uniform or consistent methodology. And as a result, policy decisions are less informed than perhaps they could be. So we think we need better information across all energy choices, more data, and a common vocabulary to discuss this issue. So in conclusion on this section, we had the following core recommendations for industry and government. First of all, robust and well-functioning institutions are important in helping both industry and government support prudent development. Regional councils of excellence will help industry share effective environmental health and safety practices. These would be forums where companies can identify and disseminate effective environmental health and safety practices, technologies appropriate to particular regions. They should be industry led but open to companies, regulators, policy makers and geostakeholders and the public. Second, policies for more effective regulation should be pursued. These would include state and federal agencies striking an appropriate balance between prescriptive and performance-based regulations so we can encourage innovation and improvement. It's important to provide regulators with adequate funding to ensure adequate personnel training and expertise. We support multi-stakeholder organizations like Stronger, the State Review of Oil and Natural Gas Environmental Regulation. Further, the industry needs to continue and increase its engagement with the communities in which we operate. And finally, again, we need the consistent methodology for comparative assessment environmental impacts from all energy sources. This will help facilitate informed policy decisions. With that, I'll turn it over to Clay to close. I mentioned earlier a deeper dive and that was deep. But now we're gonna come up for air. If you do wanna go deeper though, I do wanna encourage you to look at the chapters again at npc.org and the individual topic papers because you can really get deep with those. So if there's something that really excites you and we've wet your whistle with some of the topics you heard today, you can look again at that website to get into that depth. Now, before we go into the Q&A, Frank, what I'd like to do is just go through a synopsis of the five core strategies that we came up with as recommendations that came from the study. I think that'll be good as a refresher and pull this all together. These are integrated from the functional slides or from the functional areas. And so therefore they may not match supply, demand, environment exactly, but it was integrated, trying to pull it in as an integrated picture. Okay, so first, support prudent development and regulation of natural gas and oil resources. Through such measures as regional councils of excellence as Scott just spoke about. Also, commitment by leaders of governments to efficient and effective oil and natural gas regulation, bolstering the organization called stronger and increasing the scope of its activities. Engaging affected communities to establish shared understandings and expectations and awareness of issues and facts. Reducing methane emissions and provide sufficient access to resources with an understanding that certain remote leases require longer lead times and that lease provisions should reflect as much. Second, better reflect environmental impacts in markets and fuel technology choices by using full fuel cycle in environmental footprint analyses. Also recognizing that as policy makers consider energy and environmental policies, they should recognize that the most effective and efficient method to further reduce greenhouse gas emissions would be a mechanism to put a price, or excuse me, a price on carbon. And that the deepest cuts in carbon cannot be achieved without advancements in technology such as carbon capture and sequestration. Third, enhance the efficient use of energy and consider incentives for buildings and products that are more efficient than required by law or standards such as energy star qualifying products and remove barriers to utilities promotion of energy efficiency as well as combined heat and power. Fourth, enhance the functioning of energy markets by allowing utilities to effectively manage price risk through hedging and fixed price transactions, harmonizing natural gas and electricity markets and provide investment certainty to power producers with regard to EPA regulations. And fifth, support the development of a skilled workforce through increased public and private financial support for educational and training activities. So the key takeaway for us as a team is that our nation can realize enormous benefits from the abundant resources in North America and the technologies that make it all possible. We can meet even the highest estimates of natural gas demand and we can reduce the reliance on oil from areas outside of North America. The key to realizing these benefits is attaining the highest levels of environmental performance by leveraging technology and commitment to excellence by industry and government alike. So this concludes our presentation. Frank, I turn it back to you. Thanks. Well, thank you all for your attention. I told you at the outset this was content laden and then certainly we're heading with this, but this is so important because the white papers that develop the key findings for the task forces, unless you are able to kind of delve through them and see what actual data is in them and the findings that result from them, it's just, it's phenomenal. We've been working with Andrew on a tight sands or I'm sorry, tight oil session. So this is Bakken-like structures and extensions and one of the earlier slides when you looked at the amount of oil that's available in this country. So this is a gas story, but it's an oil story too and we're actually gonna do a public session on that in November just because we found the white papers just so interesting. Turning to questions and I'm sure there's a variety of them. This was I think the right level so I saw a couple of eyes glazed over but no heads exploded so this is kind of where we like to keep these discussions. So questions please. Hi, my name is Steve Copitz. I'm a managing director of Douglas Westwood in New York. We're energy consultants. Steve. Our forecast as we look forward, envision a series of short cycle oil shocks. So three to four year cycles, four year pro forma for us. And I guess my question is, do you agree with that as a possibility going forward on the oil side? And if so, how does that influence your notion of what a prudent pace of development might be? So Andrew, you wanna take a shot at that and then Clay? By what do you mean price shocks or supply shocks? Exactly, can you categorize that a little better for me? Price shocks? So that. So this study by its very nature didn't take any analysis or didn't undertake any analysis on the pricing environment or price mechanisms or price outlooks. Because of the nature of the study, the companies that are around the table, we had to have antitrust lawyers, of course, pretty much all the meetings. And so we really don't address price expectations. They're not part of the study. We're looking at development potential of the underlying resource. As you know, the history of the oil market is that history shows there can be these episodes of volatility. I think it was beyond our scope to make any kind of determination as to how frequent those would be or what would drive them. Two things, Douglas. First of all, increased North American production means that we have increased energy security. So from that standpoint, this helps in terms of the energy security notion. It also, by having most of what you saw on the chart, not all, we saw some growth on the offshore, but we saw a lot of growth on the onshore as far as a resource space for oil and for natural gas. But having that closer and being able to respond to prices faster is gonna help on the energy security front as well. So what we're seeing on the onshore plays, both gas and oil, is it actually increases our elasticity of supply. And from that standpoint, that's a good thing. And that while it won't prevent shocks, because we're talking about oil, which is a global commodity and will always be priced on the margin, it will help reduce some of the impact to this nation. I would just add that, and you know this, Douglas, but in the notion of leads and lags, this industry has always suffered through that. So prices, technology, it takes time to catch up. And as demand increases, one of the problems we saw in 2010 was that demand increase was the second largest year on year that we saw in the last 30 years, right? So then as you have supply curtailments that go along with that, whether it's in Venezuela or in Libya, or just the threat of supply, this is the new fundamentals idea. So geopolitics plays a role as well. Sure. Hi, David McCabe with Clean Air Task Force. And my question is mainly for Fiji, might, others might be interested. I didn't see any recommendations about emissions and information and industry's cooperation and work on emissions information. We think this is a critical issue because the uncertainty in the life cycle analysis that you showed for gas versus coal is really driven by the methane emissions because of the high GWP of methane. And of course, those methane emissions are not just on the natural gas side. It's good to remind people. I'm not sure what quality our information is for methane emissions from coal, for example. So just any comments on recommendations about how industry can help EPA improve our knowledge on emissions from the various sectors? Well, Dave, thank you for the question. With respect to a specific response, we in the chapter do make a recommendation that we need to improve the measurement capability of methane emissions. We acknowledge that. We also acknowledge that the EPA numbers, while we used it in the life cycle analysis, there is tremendous uncertainty with those numbers. What I would recommend is the fact that EPA already has a rule out that requires everybody in the natural gas value chain over a certain threshold to report their emissions according to some standard protocols. Those reports will be out by March of 2012 and that will be the first data set that EPA will have rather than relying on outdated emission factors. And for those of you who are not familiar with the estimation process that EPA uses, they basically rely on very old historical factors dating back to the 90s that are not reflective of where the industry is now. So an EPA has tried to use indirect methods to quantify the emissions. And I think since everybody's unhappy, the industry's unhappy, the NGOs aren't happy. And I think even other government entities aren't happy with the methodology. The numbers that will come out through the reporting rule will shed a better light. A follow-up question. So Scott and Clay, the notion of centers of excellence, can you do a deeper dive and put a little more detail on that? What are we really talking about here? You do that. No, you do that. Okay. The centers for excellence, and we actually called them councils for excellence in our report, it came from the integrated work at the coordinating subcommittee level. This is not something that is, you don't see these at least on the onshore currently existing. There are standard settings groups, such as the Society of Petroleum Engineers and API. But what we envisioned when we made this recommendation was that these would be regional councils of excellence that would be per se, for example in the Marcellus Shale area, where you have communities that are affected by the drilling and completion and production operations that here to for have not been affected in a way in a manner that they are being affected today. And there needs to be more communication between the oil and gas companies that are operating in these areas, as well as the service companies, the communities, the regulators, all of the stakeholders that are involved. And as we drill in areas that are closer to residential areas, this becomes more and more important that we do listen to all of the stakeholders and we have an understanding, a clear understanding of how the industry, this new industry development can affect the community. Now it's not always a bad thing. It's not necessarily a bad thing. It can also be a good thing in terms of jobs and economic development and taxes and royalties, et cetera. So there's a benefit, but there are also some downsides traffic in areas that before did not have much traffic at all. There may have been two pickup trucks and a school bus, whereas now you have 15 frack trucks coming down the road on a daily basis. So these things need to be taken into account. And these councils of excellence can actually address these issues and they can try to improve things, not just in terms of the well bore, but also in the effect on the communities. We have to look away from, look at the well bore clearly because we have groundwater issues, right? We have hydraulic fracturing issues, but we also need to take a look at how this affects the community. And that's the way we envision these councils of excellence working. Now I am involved, I'll put on my Anadarko hat for a minute and I'll take off my National Petroleum Council member hat and talk about the fact that a council of excellence has actually been started in the Marcellus just as a recommendation that came from the study. So industry leaders at the highest levels, we're talking about at the CEO level, have already started this in the Marcellus and trying to get the technical facts and such together and get the teams developed, but we will see a council of excellence soon in the first place that we will see it will be in the Marcellus. Scott, you may have some more to add. I think you covered it. It's a multi-stakeholder forum to share practices and discussion of impacts and the Marcellus is obviously a key point of interest at the moment and we would see that then spreading to other areas, but I think Clay, you touched on the key points. Yeah, I'm struck by two things here. So one, fracking seems to be a bit of a red herring here. So almost everyone that's looked at this agree that fracking at 7,000, 8,000 feet highly unlikely to contaminate groundwater that's at 400, 600 feet. So it's about well-designed integrity and management practices, right? So best practices on the surface, that's the first piece. Second piece is that it strikes me that while the technology's advanced, this is about above ground issues, not below ground issues, that's fair to say. Frank, that is fair, but they will also look at below ground issues and they will do this, not trying to create new standards, but they will certainly adopt the standards that come from the groups, the associations like the API and the Society of Petroleum Engineers. So they will incorporate those standards because those are some very good standards. And so when it comes to groundwater protection, casing design, submitting designs, absolutely. Yeah, absolutely, okay. Sure. Robert Schroeder, president of International Investor and speaking from an investment perspective on this. One of our concerns going forward is, and I'm surprised that I haven't heard much on this yet, are the chemicals themselves that are sometimes used in the fracturing process. When we talk about best practices, we will imagine that some of the more responsible, larger players are gonna be very careful about the deployment of these chemicals and where and how they're used. But I wonder if you could do more in terms of studying the after effects of some of these. And again, our concern going forward is when you come down to the smaller players, the wildcatters who might use, God knows what in some cases, are we going to see an industry commitment to, yeah, at least, I don't wanna use the word curtail, but at least offer some pretty strong guidelines of what should be used, where and when. And because as investors, we see a period of 20 years going forward of a lot of litigation and indecision when it comes to making investment decisions, just be based on these unknowns at this time. Sure, and that was a mouthful, Robert, but I appreciate the question, because it's one of the leading causes of concern when we talk about fractures and fracturing. So absolutely, on the chemicals, we are seeing a movement towards more green chemicals, less harmful chemicals for one. We are also seeing a movement towards best practices, effective practices, however you want to term this, in terms of casing design and cementing design to make absolutely sure that we do not have contamination of the groundwater. Now, in order to make sure that you don't have contamination of the groundwater, it requires that you test the groundwater before you drill the well. So you need to know what happens through the drilling phase with drilling mud, through cementing fluids. You need to know what happens during the completion phase with regard to fracturing, and then in the production phase. So it really requires that you set a baseline before you ever drill a well for the groundwater. You need to understand what that baseline looks like for the groundwater. And then you test it after you've completed the well to see if you've done anything to harm it with your fracturing. And then you test it during the production operation to make sure that there is not some form of contamination, say gas migrating from a leak in casing during the production operation. So it really comes down to measuring and managing. Fiji talked about the methane earlier. If you can't measure it, you can't manage it. So part of this technology advancement really requires that we just do a little bit more due diligence as to what are the environmental surroundings when we get there? Are they the same after we've drilled and completed? Are they the same after we've produced in that area? That just requires more work on our part on the front end establishing those baselines. To answer your question about wildcatters, that's an interesting term. And what you find is either wildcatters or companies such as my own, which is quite large, that we typically use the same service companies to perform the services, be it cementing casing or being fracturing of wells. So a lot of this notion that a wildcatter is going to do it much differently, as long as regulations are in place and good regulations and there are enough regulators to oversee all of the activity in a given area. And this is really important. Regulation must come up. And we support that as an employee of Anadarko Petroleum. Absolutely. We want good regulators. We want well-paid regulators. And we want lots of them, because we realize as an industry that we can get a black eye from anyone not performing at the maximum, at the optimum, maximum standards, best practices that they can perform. So it really falls on the service companies that they are being regulated properly, that we have adequate regulators in regulation, particularly in areas that have not had a lot of activity before. So you get into some of these new shale plays in states that haven't had activity in 50 years, or maybe ever. And they don't have the regulators and the infrastructure in place. You have to deal with that in some way, help fund that as an industry. And you will find as a recommendation in this study that we actually suggested some type of a fee mechanism for those areas that don't currently have severance taxes or royalties to help fund their regulatory side, that industries step up and help fund that. Again, industry doesn't want a black eye. They want regulation to be at the highest levels. Well, this goes back to a point that Chris made earlier, and it's on the collaboration. So my sense is government and industry and the public, in some sense, all should be on the same side of this issue. So it's better performance, better operations, and then prudently using the resources, because there's huge advantages. We'll take one other question. I'm Karen St. John with BP. And I was just wondering if you could elaborate on the recommendations around the carbon pricing. Was there particular mechanisms that you're recommending, like attacks or cap and trade, or is this just fairly generic recommendation? Fiji? Karen, as part of the study, the NPC doesn't take a position on attacks or cap and trade or any of such mechanisms. What we're basically saying is, if policymakers choose a method to reduce greenhouse gases, natural gas should play an important role. And if so, a carbon pricing mechanism, a price on carbon is market-based, is the most efficient. So we did not review, per se, a carbon tax versus a cap and trade, or some of the performance-standard-based mechanisms. All we're saying is there has to be a sort of a price if we go that route. We promised you we'd try to get you out of here between 11, 30 and 12. Thank you all for staying. Your attention has been terrific. Content laden, thank you to the panel. This is just terrific. I really appreciate your coming, and thanks very much. We will have the slides from the presentation posted on our website. They'll also be on the NPC website, and then the webcast will be loaded on both websites with a link. Thanks very much.