Tue, 7 Dec 2010|
Automatically Generated Transcript (may not be 100% accurate)
Good afternoon and thank you Susan and thank you Chris. Thank you Tim and tell us would like to point out Greg staples here today aggregates the CEO of the American -- -- foundation. I'm here really firm for one reason and one reason only and that is to drive home the point. That Chris and and it -- them or introduce to you today. There's been a revolution and discovery. In America and the last. Three to four years that changes everything. About the way you can think about. How to -- the car organized the world economy do so quickly and do so actually by saving money not -- spending more money. And the company that I co founded twenty years ago called Chesapeake energy corporation. Has been at the forefront. Making these discoveries in the U. We have -- more shale wells -- anybody else not in the world. We're most active -- of any kind of well in the world today about 60% of our production shell gas today and as we go forward. That will increase. Very dramatically. What -- want to also take you through today's that this is not just say discovery. That will change the course of American history but we think you can change the course. But world history as well not only to -- harmonize. The economy. But also to I don't know how quite say -- the. Natural gas reserves we believe are distributed broadly across the globe. And as nations begin to address natural gas not just -- reduce the consumption of coal. But also to reduce consumption of oil I think you'll see some dramatic. Changes in the world. -- today in the future and things that will be good for all of us. So with that just. A few more comments about our company were headquartered in Oakland city. Oklahoma. Again relatively young company twenty years old. Focused exclusively now on developing. Shale reserves of natural gas and what we found. Over the last two years is that we've been able. To take our country from only having about a ten or twenty year supply of natural gas -- over a hundred years. So what's changed since Kyoto and in 1997. In my view. Well certainly what -- not change necessarily is there's been a whole lot of progress. In IndyCar organization. Of the world economy but I think. But certainly has changed is that there is now a broad consensus that action needs to be taken now. And we can't wait another fifteen years to figure out what to do here. As Chris mentioned there are some promising. Technologies on the on the horizon I'm sure we all hope. CCS work someday but it's not available today it's not affordable today it's not scalable today and nobody ever talks about the fact that. A CCS technologies look like they'll consume about fifteen to 20%. The power plants power. Requiring you -- yet more power plants as you go forward solar wind are certainly nice but there intermittent difficult to scale. And then nuclear -- if for no other challenges. It has cost challenges in time challenges. The natural gas available today and so if you go back to Kyoto 1997. He could have easily arrived at the conclusion. The natural gas is good. However you would also concluded. Or learned that gas is scarce and that the world's supply of natural gas was such that she really couldn't. Take it out of its traditional. Uses which work to make chemicals to make plastics make fertilizers to use for residential commercial. Heating and cooling. And at the margin to make electricity is well. It's nice but it's not scale and that's what's changed. In the last 345 years. In in the US and it's this discovery that when you can apply -- new technology of course zone drilling. To a rock. And I'd like for you describe for you what I'm talking about shale. Is the most abundant sedimentary rock -- on earth by some calculations -- that makes it the most abundant. Rock song. Owner threw for decades we've known. That shale is the kitchen of the oil and gas business it's where the hydrocarbons. Are generated in the first place. And then over geological time certainly hundreds of millions of years those hydrocarbons are expelled from the -- formations and trapped. And then we try to go find those small little traps. And and produce those hydrocarbons. We now know how to go into the kitchen and didn't get the natural gas half and we learn how to do that. You find out that the reserves. Are not only abundant but for any practical perspective or are almost limitless. And as I mentioned this is this is not just a solution that can address America's challenges this is a solution. They can be spread around the world. And all the focus the conference here in Copenhagen. Is on CO2 I would like to also point out there are many other. Problems and then burning natural gas can address. Not the least of which is you have Knox emissions Sox emissions that come with cold. Mercury in various particulate matters and all of those basically go away. -- when you begin to burn natural gas. -- a lot of talk of green jobs unfortunately. Green jobs today in many places means Johnson that have to be subsidized natural gas jobs whether they be. In North America -- that'd be in other countries around the world. I think you'll find them to be highly competitive and do not need socialization. In the final -- which I mentioned before I'll come back to several times this is a great way to reduce. The power and some. Some people's minds a stranglehold. That OPEC holds on most commercial activities them around the world. They haven't yet -- it yet but to keep in mind American natural -- gas today. Is priced at the equivalent energy equivalent of about 25 to thirty dollars. So oil. Prepare -- so yeah oil traded for eighty dollars a barrel natural gas in America for 25 to thirty dollars. The barrel on -- -- going to be TU equivalency basis not many new technologies can be immediate communities. And reduce the price of the alternative product -- beat the price of the alternative product. By up to two thirds. So let's just take a look now at what has happened to come in and in America. 50% of American powers produced from coal about 20% from nuclear about 20% from natural gas. About 6% from -- -- and about 4% from. From certain renewable -- on you automatically begin to understand. The problem with scaling up -- -- not only -- intermittent. Let him but they start from small -- natural gas on the other hand starts from a base. 20%. American power but our power plants only run about 45% of the time. Naturally -- -- plants would -- about 25% time coal plants run about 75% of the time. So here's another way for our country we don't have to go build a bunch of new things all we have to do. This again to. Initiate policies that either internalize some of the external costs of coal or simply. Mandate. -- low -- and dispatch initiative. That would would favor natural gas and then just fat stack which today tends to favor colts simply because it's considered cheaper. I would because there are no cost mechanism -- cost. Loading mechanisms for their personalities. Okay let's talk about just her second term. This this abundance that we have we now America consumes about twenty trillion cubic feet of gas. Per year. That is about 25%. Of the world's consumption. Natural gas. We believe that we have now over 2000 trillion cubic feet of natural gas and what you find in a few minutes is that does not even put us in first place. In the world in terms of estimated shale reserves. Here's some examples I want him make sure you're aware of some these names of these shale formations because they're household names and in the US and -- in time -- will be the shale formations -- other discoveries around the world are compared to. Barnett Fayetteville. Haynesville composure. In the Marcellus shales of all -- -- changes. In the US and they are the backbone of what will enable our country. If we just come to this realization to not be a follower and global climate change policy. But I think we can be a leader it's something that we can all. Be proud of and US. This case -- good sense of -- geographically. Widespread. Shale basins are in the United States and I've mentioned Canada but their abundant shale resources -- -- as well on a minute I'll show you. World map to -- gives you an indication of now. A nicely spread shale deposits are around the world also. This is a map of for a -- rather the biggest natural gas fields in the world. And we've been producing natural gas commercially in the United States. Since 1849. Predates the discovery of oil in the United States by nineteen years. You think -- over the last 160 years have been a lot of big gas fields found around the world. But I think it's so fascinating. Is it just in the last five years three of the six largest natural gas fields in the world. Have been discovered they all happen to be in the United States a country. That he is the most -- country in all the -- so to imagine that all these years these reserves have been hidden. On this quite remarkable and I think -- quite well for. The likelihood that other huge natural gas fields exist around the world in -- in -- shales. And -- I'm not sure -- completely. Taking you through it but just to make sure that I do. -- -- -- it's dance is so tight. That naturally. -- molecules of natural gas cannot move through it. In the industry did not know how to get those molecules of gas out. It's only through the advent of horizontal drilling. And fracture stimulation techniques that have enabled us. To find a way to get that natural gas to -- to the surface rather than remain locked up. Below the surface them as it has for hundreds of millions of years. Another way to think about this is -- US consumes about sixty billion cubic feet of gas. I'm per day today and again that's about a quarter of the world so I'm consumption. And we believe this through the development of these -- -- reserves the US gas consumption. Can grow by about 40%. Between now and 20s30s -- that's without. Any incentives that's without any -- the reason to do anything other than just kind of grow with the economy over time we certainly thing. That we can do much better than this -- if asked to do so. But one energy equivalent. Of this today is this is about four million barrels of oil that can be backed out of the US system. Yes if if you took all -- in criminal natural gas production. And just took transportation. Sector that would reduce effective imports and you. 80%. And if you think about time today. About twenty. BC. Gas is used for day in the US to make electricity. And you begin to think about if we can increase gas production by 25 BCF -- so -- over the next twenty years. You could begin. To appreciate the fact that we can probably back out about half of the coal consumption. In the United States by using these incremental supplies of natural gas. 101 basis replace coal but natural gas. Here's a map of the world that I'm talking about time we've been blessed us -- human population with this. World that happens to just sit in this. Perfect place where we can you group things we can find police and that's what we're all trying to protect the future generations. And -- as you look at this map there are large scale sedimentary basins scattered. Around the world there are some that are smaller yet still we think important enough that don't. We'll show up on a map of this size and basically. With the exception of Antarctica and -- probably exist there but that's not good place to look. Every continent in the united in the in the world has shale formations that we believe are likely to be productive. Let's look at the natural gas and advantage wanted to thank you heard them Chris -- talk about. Is that when you substitute natural gas power for coal how are you reduce CO2 emissions somewhere between. Fifty to 70% I think we show here 44%. If you reduce gasoline. Consumption you reduce CO2 by about 25%. Yet you also reduce the price of gasoline. By about half of us in the US of course. In Europe and you could reduce it much more dramatically than that. But there are other benefits. And in some respects -- very very important benefits. -- replacing coal natural gas as well look at carbon monoxide and 81% reduction. Nitrogen oxide and 80% reduction sulfur dioxide and almost some 100%. Reduction. Particulate matter again almost a 100% and Mercury. Exactly 100% so every one of these additional pollutants. I'm X extracts the toll. On human health and so what we're all focused on C -- -- I would like to remind you. That there are many other benefits. Consuming natural gas. In lieu of coal. Let's talk about price -- right now the United States and many other countries around the world. Burn more coal and -- natural gas because. Cole has its mind in the ground on the ground and then put in -- power plant is cheaper than natural gas -- because we've not yet. The -- to internalize the cost the external costs of burning coal. You can see here that somewhere between thirty and forty dollars a ton. Tax or some kind of see placed on coal would clearly -- natural gas always the preferred. -- so if you think about all the different fees and structures that have been talked about. We think this is a recently modesty -- can be placed. On carbon overtime. Which under any. Environment. Would lead almost any consumer of power. To -- natural gas. Wind and solar fabulous you can't ever be discouraged in my opinion. About the future of the world when you walk out every morning and -- -- of sunshine and told it doesn't always happen here. But it did happen this morning and thrilled to see some sworn -- as everyone knows wind and solar -- Abundant around us and powerful around this -- C someday we'll obviously figure out a way to. To capture -- right now. There intermittent sources of power. And they are more expensive than natural gas to you think about -- you the alternative fuel. Trying -- we think that natural gas forms the foundation. The base of that and so we -- trying. Very hard to form relationships with the solar industry and -- in the wind industry because we think at least in America they oftentimes have a hard. Time convincing regulators will be to be favored because they can't prove. Their reliability when you pair them with natural gas power you have absolutely -- low carbon reliable. Affordable scalable system. -- mentioned. The utility. Now the difference in. Inefficiency of the usage of the power plants and coal power plants -- -- about 77%. Of the time. Natural gas power plants will run about 25% at times actually more. And stole. Megawatts. Power. Generation capability in the US -- there is. Cold the differences coal -- used to about two and half times the rate and gases and so. When we make this commitment to natural gas once we understand its abundance we don't have to go build a much -- the power lines we don't have to build pipelines. We don't have to build new power plants is all right there. And also like to get a plug. Into the transportation sector coal gets most of the tension in the conference -- today because. It is square for example United States 41%. Of all CO2 emissions come. From coal fired power plants yet at same time. We have a problem in our country. The transportation network that is a huge contributor to -- And we import about two thirds or oil. I think that's financially unsustainable it's the largest wealth transfer in the history of the world. About 400 billion dollars -- here we -- transferring to oil. Exporters. And yet here we sit on top of the world's largest natural gas reserves United States is Saudi Arabia natural gas. If we were to begin to embrace natural gas and our transportation sector. You could also finding yet another path -- powerful pathway. To reduce CO2 emissions but same time again.