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ENERGY REALITIES

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ENERGY REALITIES. Karen A. Harbert Executive Vice President Institute for 21 st Century Energy US Chamber of Commerce . The New Energy Reality Energy Security is central to our national and economic security. Demand to increase 50% by 2030 70% in developing world - PowerPoint PPT Presentation
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ENERGY REALITIES ENERGY REALITIES Karen A. Harbert Karen A. Harbert Executive Vice President Executive Vice President Institute for 21 Institute for 21 st st Century Energy Century Energy US Chamber of Commerce US Chamber of Commerce
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Page 1: ENERGY REALITIES

ENERGY REALITIESENERGY REALITIES

Karen A. HarbertKaren A. HarbertExecutive Vice PresidentExecutive Vice President

Institute for 21Institute for 21stst Century Energy Century Energy US Chamber of Commerce US Chamber of Commerce

Page 2: ENERGY REALITIES
Page 3: ENERGY REALITIES

The New Energy RealityThe New Energy RealityEnergy Security is central to our national and economic Energy Security is central to our national and economic securitysecurity

Demand to increase 50% by 2030Demand to increase 50% by 2030 70% in developing world70% in developing world

Electricity demand to increase 100%Electricity demand to increase 100% 1.6 billion people without electricity1.6 billion people without electricity $26 trillion of new investment by $26 trillion of new investment by

2030 to meet rising demand2030 to meet rising demand Environmental Realities - over 70% Environmental Realities - over 70%

of the current GHG emissions are of the current GHG emissions are energy relatedenergy related

Page 4: ENERGY REALITIES

The New Energy RealityThe New Energy RealityEnergy Security is central to our national and economic Energy Security is central to our national and economic securitysecurity

Access to reserves is limitedAccess to reserves is limited 2/3 of world’s reserves becoming 2/3 of world’s reserves becoming

inaccessibleinaccessible Rising importance of NOCsRising importance of NOCs

Own 80% of reservesOwn 80% of reserves Lack of investment in explorationLack of investment in exploration Significant rise in project costsSignificant rise in project costs Resource NationalismResource Nationalism Lack of qualified engineers/skilled laborLack of qualified engineers/skilled labor BANANA SyndromeBANANA Syndrome

Page 5: ENERGY REALITIES

Global ChallengesGlobal ChallengesChinaChina China relies on coal for 70% of their energy needs, China relies on coal for 70% of their energy needs,

building approximately one coal-fired plant a weekbuilding approximately one coal-fired plant a week By 2025, they could have 300 million cars on the By 2025, they could have 300 million cars on the

road, compared to 30 million todayroad, compared to 30 million today By 2030, energy-related CO2 emissions from China By 2030, energy-related CO2 emissions from China

are projected to account for 26% of the world total are projected to account for 26% of the world total and 48% of total coal-related emissions worldwideand 48% of total coal-related emissions worldwide

IndiaIndia Oil consumption has increased sixfold over the past Oil consumption has increased sixfold over the past

25 years25 years

Page 6: ENERGY REALITIES

GLOBAL ENERGY DEMANDGLOBAL ENERGY DEMAND

Page 7: ENERGY REALITIES

World oil production by OPEC/non-OPEC

Production rises to 104 mb/d in 2030, with Middle East OPEC taking the lion’s share of oil market growth as conventional non-OPEC production declines

Source: IEA 2008

0

20

40

60

80

100

120

2000 2007 2015 2030

OPEC - other

OPEC - Middle East

Non-OPEC - non-conventional

Non-OPEC -conventional

OPEC share

mb/

d

38%

40%

42%

44%

46%

48%

50%

52%

Page 8: ENERGY REALITIES

0

20

40

60

80

100

120

1990 2000 2010 2020 2030

mb/

d

Natural gas liquids

Non-conventional oil

Crude oil - yet to be developed (inc. EOR) or found

Crude oil - currently producing fields

World oil production by source

64 mb/d of gross capacity needs to be installed between 2007 & 2030 – six times the current capacity of Saudi Arabia – to meet demand growth & offset decline

Source: IEA 2008

Page 9: ENERGY REALITIES

Cumulative energy-supply investment 2007-2030

Investment of $26 trillion, or over $1 trillion/year, is needed, but the credit squeeze could delay spending, potentially setting up a supply-crunch once the economy recovers

Power generation

50%

Transmission & distribution

50%Mining

91%

Shipping & ports

9%

Exploration and development

80%

Refining16%

Shipping4%

Exploration & development

61%LNG chain

8%

Transmission & distribution

31%

Power 52%

$13.6 trillion

Oil 24%

$6.3 trillion

Gas21%

$5.5 trillion

Coal 3%

$0.7 trillion

Biofuels <1%

$0.2 trillion

Page 10: ENERGY REALITIES

Market SituationMarket SituationMarket fundamentalsMarket fundamentals

Economic growth still boosting demandEconomic growth still boosting demand OPEC production decisions (ex: cuts in production)OPEC production decisions (ex: cuts in production) Moderating non-OPEC production –growthModerating non-OPEC production –growth Stock buildsStock builds

Economic Crisis – Demand uncertaintyEconomic Crisis – Demand uncertainty Credit CrunchCredit Crunch Geopolitical risks Geopolitical risks Dollar FluctuationsDollar Fluctuations

VOLATILITYVOLATILITY

Page 11: ENERGY REALITIES

What’s happening at home?

85% of oil and gas has been off limits Just from the OCS, we could fuel 80 million cars for 35 years Just from the OCS, we could fuel 80 million cars for 35 years

and heat 60 million homes for 100 yearsand heat 60 million homes for 100 years No nuclear plants built in 30 years New coal fired power plants stalled New LNG import terminals cancelled Transmission lines in litigation Intermittent subsidies for renewables

UNPREDICTABLE INVESTMENT ENVIRONMENT

Page 12: ENERGY REALITIES

Growing Support for Oil ExplorationGrowing Support for Oil Exploration

75% support increased exploration 75% support increased exploration to reduce our dependence on to reduce our dependence on foreign oil; 77% of independents foreign oil; 77% of independents and 66% of Democrats (July Fox and 66% of Democrats (July Fox News Poll)News Poll)

73% favor more exploration (June 73% favor more exploration (June CNN)CNN)

68% (June LA Times)68% (June LA Times)

Page 13: ENERGY REALITIES

Administration Action FridayAdministration Action Friday

MMS Draft Proposed 5 year Lease Plan MMS Draft Proposed 5 year Lease Plan Announcement FridayAnnouncement Friday

1) Entire Eastern Coast; 1) Entire Eastern Coast; 2) Areas off the coast of Northern AND Southern 2) Areas off the coast of Northern AND Southern

California; California; 3) An area in the Eastern Gulf 75 south of FL; and 3) An area in the Eastern Gulf 75 south of FL; and 4) Various areas in AK not already available for lease.4) Various areas in AK not already available for lease.

HOWEVER, BUFFER UNCLEARHOWEVER, BUFFER UNCLEAR

Page 14: ENERGY REALITIES

Obama Campaign Energy Plan Enact a Windfall Profits Tax to Provide a $1,000

Emergency Energy Rebate to American Families Use it or Lose it $150 billion on clean energy R&D Establish a low carbon national fuel standard and

mandate 60 billion gallons of advanced biofuels to be phased into our fuel supply by 2030

Increase CAFE Standards and Mandate all new vehicles are flex fuel

Mandate 10 percent of electricity from renewable sources by 2012, and 25 percent by 2025

Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.

Page 15: ENERGY REALITIES

Obama Evolving Energy Plan Qualified support for more domestic

exploration IF part of a comprehensive plan Qualified support for nuclear – only if it is safe Different messages on coal STIMULUS

Amount for energy unclear Green jobs – green federal workforce Renewable tax incentives refundable Double renewable energy in three years Smart Grid Federal government building retrofits Weatherization assistance

Cap and Trade

DEALINGS WITH CONGRESS

Page 16: ENERGY REALITIES

Public Views on Climate Change The public views climate change as a serious

problem but not as a planetary emergency. Public believes energy security more important

than addressing climate change. Technology can solve climate change. Public not willing to make great personal

sacrifices. Public wants a joint cooperative effort between

government, business and the citizens to solve the challenge.

U.S. politics: Administration and Congressional approaches are in flux.

Page 17: ENERGY REALITIES

Obama’s Team

Carol Browner, White House Coordinator for Energy and Climate Policy

Larry Summers, Director of National Economic Council

General Jim Jones, Director of National Security Council

Steve Chu, Secretary of Energy Ken Salazar, Secretary of Interior Ray LaHood, Secretary of Transportation Lisa Jackson, Administrator of EPA Hillary Clinton, Secretary of State USDA, Commerce, CEQ, FERC, NRC, Defense

Page 18: ENERGY REALITIES

U.S. Energy Strategy-More RealismU.S. Energy Strategy-More Realism

Increase domestic oil and gas Recognize role for nuclear and clean coal New alternative transportation fuels that

do not conflict with rising food demands Sustainable policy on renewables Modernize our infrastructure Exert authority to get beyond NOPE

syndrome (less burdensome regulation) Invest in our technology solutions and our

intellectual foundation for innovation

Page 19: ENERGY REALITIES

Road AheadRoad Ahead Huge Public Expectations for next Huge Public Expectations for next

PresidentPresident Growing desire to capitalize on American Growing desire to capitalize on American

resources, create American jobsresources, create American jobs Energy Policy had become a Political Energy Policy had become a Political

Football – is it the new Economic Football – is it the new Economic Football?Football?

Public needs better informed debatePublic needs better informed debate You need certainty to unlock projects and You need certainty to unlock projects and

capitalcapital Role of private sector vs. public sectorRole of private sector vs. public sector Challenges will grow internationally – will Challenges will grow internationally – will

the US counter shift in power? the US counter shift in power?


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