API Understanding Todays Energy Needs

7/29/2019 API Understanding Todays Energy Needs

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Understanding TodayUnderstanding TodayssEnergy Needs and PlanningEnergy Needs and Planning

for Tomorrowfor Tomorrowss


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Toward a secure energy futureToward a secure energy future

We are part of an interdependent globalWe are part of an interdependent global

marketplacemarketplaceConsumers are best served by multipleConsumers are best served by multiple

sources of supply from the US and aroundsources of supply from the US and aroundthe worldthe world

What we can conserve, and what we canWhat we can conserve, and what we can

produce here, we donproduce here, we dont have to importt have to import


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Major flows of crude oilMajor flows of crude oil


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World Oil Consumption GrowthWorld Oil Consumption Growth

EIA, Short-Term Energy Outlook, August 2006


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World Oil Surplus Production CapacityWorld Oil Surplus Production Capacity

EIA, Short-term Energy Outlook, August 2006.


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Iran

Iraq post-warinsurgency

OPEC decisions

Venezuela Nigerian civil strife

Weather

NOAA

VOANews

Factors affecting marketsFactors affecting markets


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Changes in gasoline and diesel fuelChanges in gasoline and diesel fuel

prices mirror changes in crude oil pricesprices mirror changes in crude oil prices

$0.00

$0.64

$1.29

$1.93

$2.58

$3.22

$3.87

May-01

May-02

May-03

May-04

May-05

May-06

Pricep

erGallon

8/ 28/ 2006

Diesel (EI A) $3.027

Retail Gasoline (EI A) $2.845

Crude Oil ( NYMEX) $1.681


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GASOLINE

CRUDE OIL

TAXES

RE-TAIL-ING

31% 16%53%

REFINING TAXES

54%54% 22%22% 8%8% 16%16%

What consumers are paying for at

the gasoline pump

EARNINGS 9.9% (Q2, 2006) *

Source: EIA, June 2006* API calculations based on company reports filed with federal government and reported by Oil Daily.


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Who ownsWho owns Big OilBig Oil??

(Holdings of oil stocks, 2004)(Holdings of oil stocks, 2004)

Pension Plans

andRetirement

Accounts

41%

All Other

Holdings59%

(e.g. individuals, firms,

mutual funds, etc.)

Private Pension

Funds15%

Federal & StatePension Funds

12%

IRA

14%

Source: The Economic Impact of a Windfall Profits Tax For Savers and Shareholders, SONECON, November 2005


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Impact of windfall profits tax on the value of pensionImpact of windfall profits tax on the value of pension

& retirement accounts invested in oil& retirement accounts invested in oil(opportunity costs/account/participant ($)*/year)(opportunity costs/account/participant ($)*/year)

-$73

-$364

-$886

-$557

Public

Pension

Funds

Federal

GovernmentRetirement

State &

LocalRetirement

IRA

* Assuming oil price = $60 per barrel, inflation = 6.5%, total opportunity cost = $122 billion per year, of which pension funds

opportunity cost = $50 billion.

Source: SONECON, The Economic Impact of a Windfall Profits Tax for Savers and Shareholders, November 2005.


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Planning for tomorrowPlanning for tomorrows energys energy

needsneedsRefrain from imposing taxes thatRefrain from imposing taxes that

Will reduce investment in expanded oil andWill reduce investment in expanded oil andnatural gas production and refining expansionnatural gas production and refining expansion

Will ultimately harm consumers andWill ultimately harm consumers and

shareholdersshareholders


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Oil & GasCompanies

$98 billion

(73%)

OtherPrivate

FederalGovernment

FrontierHydrocarbons

EndUse

NonHydrocarbons

$32 billion

(23%)

$89 billion(66%)

$31 billion

(23%) $15 billion(11%)$5 billion

(4%)

By TechnologyBy Invest or

$135 Billion

U.S. Emerging Energy Investment in

North America, 2000-2005


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Leading emerging energy investments byLeading emerging energy investments by

U.S. firms (2000U.S. firms (2000--2005)2005)

Wind 4%LNG 7%

Tar Sands25%

Alternate FuelVehicles 19%

Gas-to-Liquids 30%

Other 15%

$41 billion

$34 billion$9 billion

$5.6 billion

$26 billion

$20 billion

Source: Compiled from 250+ Annual Company Reports for 2000-2005, and the U.S. Department of Energy, EIA

S


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Forecast of U.S. energy demand

Nuclear

Renewables

Coal26% Oil40%

7%Gas21%

7%

Oil

Nuclear

Coal

Renewables

Gas

23%

8%

40%

6%23%

(100 quads) (134 quads)

2004 Actual 2030 Outlook

34% Growth

(1.1%/yr.)

Source: EIA


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RefineriesRefineries

Industry operates in a global marketIndustry operates in a global market

There is spare global refining capacity, butThere is spare global refining capacity, butmismatch between types of crude & refinerymismatch between types of crude & refineryconfigurationsconfigurations

Most US product imports from Canada, EuropeMost US product imports from Canada, Europe& Virgin Islands& Virgin Islands

Response of global market to hurricanes showsResponse of global market to hurricanes shows

that markets workthat markets workAs global economies expand, there will beAs global economies expand, there will beincreased competition for importsincreased competition for imports


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0

10

20

NA

0

10

20

SA

0

10

20

AME

0

10

20

WE

0

10

20

Asia

0

10

20

EE

North America

South America

Western Europe

Africa/Middle East

Eastern Europe

Asia Pacific

Crude Distillation Capacity 1

Light Products Demand 2

Light Products Capacity 3World

0

45

90

TotalWorld

MBD

Source: 1 Oil & Gas Journal 2 IEA 3 ExxonMobil estimates

Worldwide refining capacityWorldwide refining capacity


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Number of refineries declines, but capacityNumber of refineries declines, but capacity

expands by 12 new 200,000 b/d refineriesexpands by 12 new 200,000 b/d refineries

0

50

100

150

200

250

300

1983 1986 1989 1992 1995 2000 2003 2006

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,00018,000

20,000

barrels per day

Number ofrefineries Capacity


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Refining capacity expansionRefining capacity expansion

1986 1989 1992 1995 2000 2003 2006 2009

0

2,0004,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Thousands of barrels

per day refined product

Sources: API for refining capacity expansion from announced company plans; and EIA, Annual Energy Outlook 2006.

Gasoline production

Refining capacity

Capacity expands by equivalent of 8 newrefineries over next few years


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Planning for tomorrowPlanning for tomorrows energy needss energy needs

Increase refinerIncrease refiners flexibility to facilitates flexibility to facilitate

expansionexpansionProvide timely response to waiver requests inProvide timely response to waiver requests in

emergenciesemergencies

Streamline existing permit processes toStreamline existing permit processes to

expedite capacity expansionsexpedite capacity expansions

Clarify environmental requirements toClarify environmental requirements tostreamline operationsstreamline operations


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What can government do?What can government do?

Rely on market forces to allocate productsRely on market forces to allocate products

Refrain from imposing new taxesIncrease refinersIncrease refiners flexibility to facilitateflexibility to facilitate

expansionexpansionReduce barriers to supplyReduce barriers to supply


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Cleaner Fuels Today andCleaner Fuels Today and

into the Futureinto the Future


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Fuels Timeline (Since 1990)Fuels Timeline (Since 1990)

19911991 Phase II Low volatility gasolinePhase II Low volatility gasoline

19921992 Winter Oxygenated gasolineWinter Oxygenated gasoline

19931993 Low Sulfur DieselLow Sulfur Diesel19931993 CARB DieselCARB Diesel

19951995 RFG Phase IRFG Phase I

19951995 CARB 2CARB 220002000 RFG Phase IIRFG Phase II

20042004 CARB 3CARB 3

20042004

0606

Low sulfur gasolineLow sulfur gasoline

20062006 RFSRFS

20062006 Removal of RFG Oxygenate MandateRemoval of RFG Oxygenate Mandate

20062006 Ultra Low Sulfur DieselUltra Low Sulfur DieselOnOn--RoadRoad


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Importance of dieselImportance of diesel

Gallons consumed annually: 46 billionGallons consumed annually: 46 billion

Transports:Transports:

70% of nation70% of nations goodss goods

$5.9 trillion worth of goods annually$5.9 trillion worth of goods annually

18 million tons of freight daily18 million tons of freight daily

14 million people daily14 million people daily


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ULSDULSD ---- OverviewOverview

Refiners began producing ULSDRefiners began producing ULSD15 ppm sulfur on15 ppm sulfur on

6/1/066/1/06

Refiners have invested over $8 billion to complyRefiners have invested over $8 billion to comply

EPA actions have reduced theEPA actions have reduced the probability ofprobability of

contamination at the outset of the programcontamination at the outset of the program

Annual emission reductions equivalent to removing theAnnual emission reductions equivalent to removing the

pollution from more than 90 percent of today's truckspollution from more than 90 percent of today's trucksand buses when fully implementedand buses when fully implemented


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Communications/OutreachCommunications/Outreach

Clean Diesel Fuel Alliance to facilitate ULSD introductionClean Diesel Fuel Alliance to facilitate ULSD introduction

Comprehensive information and technical coordinationComprehensive information and technical coordination23 members include:23 members include:

U.S. Department of EnergyU.S. Department of Energy

U.S. Environmental Protection AgencyU.S. Environmental Protection Agency

Engine, vehicle and component manufacturersEngine, vehicle and component manufacturers

All sectors of the petroleum industryAll sectors of the petroleum industry

Fuel consumers, such as truckers and AAAFuel consumers, such as truckers and AAA

VisitVisit www.cleanwww.clean--diesel.orgdiesel.org


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Highway, non-road diesel timelines

* 2006: Refinery June 1; Terminal September 1; Retail October 15

2006 2007 2008 2009 2010 2011 2012 2013 2014

Non-Road (NR)(Farm/construction)

Locomotive &

Marine (LM)

Highway

NR & LM

Small refineror w/credits

(& exceptions)

15 ppm (80%)* 15 ppm (100%)

500 ppm 15 ppm

500 ppm 15 ppm

5,000 ppm 500 ppm 15 ppm

Pi li P d t T t dPi li P d t T t d


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Pipeline Products TransportedPipeline Products Transported

Multiple products with wide variances in sulfur levels areMultiple products with wide variances in sulfur levels are

moved via pipelinemoved via pipeline

Heating OilHeating Oilup to 5000ppmup to 5000ppm

HSDHSDup to 5000ppmup to 5000ppm

Jet FuelJet Fuelup to 3000ppmup to 3000ppm

LSDLSDup to 500ppmup to 500ppm

ULSDULSDup to 15ppmup to 15ppm

GasolineGasolineup to 80ppmup to 80ppm

Keeping additional sulfur away from ULSD is a significantKeeping additional sulfur away from ULSD is a significant

challengechallenge

S i GC Mid


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Scenario: GC to MidwestScenario: GC to Midwest

Ex-Refinery: 7 ppmTo Explorer: + 1

Des Moines(15 ppm)

Out ofOut ofCompl iance ???Compl iance ???

8Houston: + 1

Greenville: + 1(10 ppm)

Tulsa: 11 ppm

To Magellan: +1Drumright(13 ppm)

El Dorado

(14 ppm)

Minneapolis(16 ppm)

9

Point s North

EPA Fl ibilit M *EPA Fl ibilit M *


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EPA Flexibility Measures*EPA Flexibility Measures*

EPA has given industry additional flexibilityEPA has given industry additional flexibility

1.1. Shifted the terminal and retail compliance date 45Shifted the terminal and retail compliance date 45

days laterdays later TerminalTerminalFrom July 15 to September 1From July 15 to September 1

RetailRetailFrom September 1 to October 15From September 1 to October 15

2.2. Increased the testing tolerance from 2 ppm sulfur toIncreased the testing tolerance from 2 ppm sulfur to3 ppm from June 1, 2006 until October 14, 20083 ppm from June 1, 2006 until October 14, 2008

These EPA actions have reduced theThese EPA actions have reduced the probability ofprobability of

contamination at the outset of the programcontamination at the outset of the program

* Flexibility measures do not apply to California ULSD* Flexibility measures do not apply to California ULSD


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ULSDULSD ---- ImplementationImplementation

Historically, the introduction of a new onHistorically, the introduction of a new on--highwayhighway

fuel has resulted in some temporary, localizedfuel has resulted in some temporary, localized

supply imbalancessupply imbalancesRefiners will produce diesel at sulfur levels of 5 to 12Refiners will produce diesel at sulfur levels of 5 to 12

ppmppm

During the early stages of the phaseDuring the early stages of the phase--in, a relativelyin, a relativelysmall number of 2007 model year and later vehiclessmall number of 2007 model year and later vehicles

requiring ULSD will be on the roadrequiring ULSD will be on the road

Localized areas farthest from the refining centers areLocalized areas farthest from the refining centers areof greatest risk of not having ULSD consistentlyof greatest risk of not having ULSD consistently

availableavailable

F l C t/P iF l C t/P i


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Fuel Cost/PriceFuel Cost/Price

Industry has made significant investments to complyIndustry has made significant investments to comply

with the ULSDwith the ULSD

No one can predict the pump price of ULSDNo one can predict the pump price of ULSDMany factors affect the consumer price of fuels,Many factors affect the consumer price of fuels,

including:including:

Crude oil price on the global marketCrude oil price on the global market Geopolitical eventsGeopolitical events

Supply and demandSupply and demand

For more information on fuel prices, visit the US EnergyFor more information on fuel prices, visit the US EnergyInformation Administration Web site atInformation Administration Web site at

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asphttp://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

Eth l O iEth l O i


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Ethanol OverviewEthanol Overview

Ethanol is here to stayEthanol is here to stay

It is an important portion of the nationIt is an important portion of the nationss

gasoline poolgasoline pool

Under the terms of the Energy Policy ActUnder the terms of the Energy Policy Act

of 2005 by 2012, at least 7.5 billion gallonsof 2005 by 2012, at least 7.5 billion gallons

of biofuels per year will be usedof biofuels per year will be used

U.S. Gasoline RequirementsJuly 14 2006


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NV CBG

7.2 RVP

7.0 RVP

7.8 RVP, MTBE-No Increase

7.8 RVP7.0 RVP, 30 ppm S

And Ethanol MandatesJuly 14, 2006

RFG North

RFG South

Oxygenated Fuels

CA CBG

RFG/CA CBG

AZ CBG

Oxy Fuels/7.8 RVP

Oxy Fuels/7.0 RVP Ethanol Mandate- MN and HI are only mandates currently in effect. Source:ExxonMobil/API

EE 85 Overview85 Overview


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EE--85 Overview85 Overview

Care should be taken not to overCare should be taken not to over--promisepromise

on Eon E--8585s capabilitiess capabilities

Issues: cost, poorer fuel economy, andIssues: cost, poorer fuel economy, and

shorter rangeshorter range

Technology breakthroughs are needed forTechnology breakthroughs are needed for

production of ethanol from waste biomassproduction of ethanol from waste biomass

Market should determine volumes andMarket should determine volumes and

locations for ethanol uselocations for ethanol use


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AmericaAmericas Energys Energy

Resources:Resources:

Their Place in a SecureTheir Place in a SecureEnergy FutureEnergy Future

Undiscovered Technically RecoverableUndiscovered Technically Recoverable


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Natural Gas ReservesNatural Gas Reserves

Atlantic offshoreAtlantic offshore

8787 TcfTcf

Gulf offshoreGulf offshore

232.5232.5 TcfTcf

Alaska onshoreAlaska onshore 69 Tcf69 TcfAlaska offshore 132Alaska offshore 132 TcfTcf

Pacific offshorePacific offshore

18.318.3 TcfTcf

Lower 48, onshoreLower 48, onshore167167 TcfTcf

656 Tcf is enough Natural gas to heat60 million homes for 160 years



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Crude Oil ReservesCrude Oil Reserves

Atlantic offshoreAtlantic offshore

3.8 Bbl3.8 Bbl

Gulf offshore/deepwaterGulf offshore/deepwater

44.9 Bbl44.9 Bbl

Alaska onshore 18 BblAlaska onshore 18 BblAlaska offshore 26.6 BblAlaska offshore 26.6 Bbl

Pacific offshorePacific offshore

10.5 Bbl10.5 Bbl

Lower 48, onshoreLower 48, onshore7 Bbl7 Bbl

112 Bbbl is enough oil to power over 60 million cars for 60 years

Key to Any Strategy:Key to Any Strategy:


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Key to Any Strategy:Key to Any Strategy:

Increase Access to Domestic SuppliesIncrease Access to Domestic Supplies

Hurricanes Katrina and Rita emphasizedHurricanes Katrina and Rita emphasizedimportance of geographic diversity of supplyimportance of geographic diversity of supplyUSGS and MMS estimate that federal landsUSGS and MMS estimate that federal landsand coastal waters contain:and coastal waters contain: 80 percent of the nation80 percent of the nations oils oil 60 percent of nation60 percent of nations natural gass natural gas

US OCS could replace Persian Gulf imports forUS OCS could replace Persian Gulf imports for

almost 60 yearsalmost 60 yearsANWR could replace Saudi imports for 25ANWR could replace Saudi imports for 25yearsyears

Technology for Safe Exploration andTechnology for Safe Exploration and


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gy pgy p

ProductionProduction

The Record in the GulfThe Record in the GulfFor Gulf of Mexico, the US Coast Guard stated:For Gulf of Mexico, the US Coast Guard stated:

From 1980 to 1999, 7.4 Bbl of oil produced in federalFrom 1980 to 1999, 7.4 Bbl of oil produced in federalwaterswaters

Less than 0.001Less than 0.001 percent spilledpercent spilled

Less than volume from natural seepsLess than volume from natural seeps

in Gulfin Gulf

After Hurricanes Katrina and Rita:After Hurricanes Katrina and Rita: BackBack--toto--back stormsback storms with 100 foot seas and 150+ knotwith 100 foot seas and 150+ knot

winds; much platform and pipeline damagewinds; much platform and pipeline damage

Safety valves, subsurface well control systemsSafety valves, subsurface well control systems workedworked

No evidence of any environmental damage or coastalNo evidence of any environmental damage or coastalimpacts from offshore facility sourcesimpacts from offshore facility sources



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ProductionProduction

The Record in AlaskaThe Record in Alaska

Steady improvements in drilling and productionSteady improvements in drilling and production

technology:technology: Horizontal drilling technologyHorizontal drilling technology

Multiple completions from same wellMultiple completions from same well

Multiple wells from one drill padMultiple wells from one drill pad

64 square miles from one 5 acre64 square miles from one 5 acre

padpadroughly the size of Washington DCroughly the size of Washington DC

Well Pad sizes reduced by over 80 percentWell Pad sizes reduced by over 80 percent

Healthy wildlife populations:Healthy wildlife populations: Alaska North Slope fields are summer breeding grounds for manyAlaska North Slope fields are summer breeding grounds for many

waterfowl specieswaterfowl species

Central Arctic caribou herd population up nearly 10XCentral Arctic caribou herd population up nearly 10X from 3,000 infrom 3,000 in19701970s to over 32,000 todays to over 32,000 today



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gy pProductionProduction

The Record ElsewhereThe Record ElsewhereOil and natural gas production coexist happilyOil and natural gas production coexist happily

with wildlife conservation:with wildlife conservation: Aransas Pass NWR (whooping crane)Aransas Pass NWR (whooping crane) Nature Conservancy Cypress Island Preserve,Nature Conservancy Cypress Island Preserve,

LouisianaLouisiana

Long Beach Harbor, CaliforniaLong Beach Harbor, California

Offshore platforms provide artificial reef habitatOffshore platforms provide artificial reef habitat

Natural Gas Trade MovementsNatural Gas Trade Movements


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Natural Gas Trade MovementsNatural Gas Trade Movements

In 2005 international natural gas trade grew by 6.4%

LNG trade is forecast to increase by a factor of 4 by 2020

U.S. LNG demand is met by countries like Trinidad; morediverse sources to be utilized in future

U.S. market is one of several competing for supply


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Natural Gas SupplyNatural Gas Supply


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pp ypp y

Unlike crude oil, primarily a NorthUnlike crude oil, primarily a NorthAmerican commodityAmerican commodity

82 percent produced domestically82 percent produced domestically15 percent imported from Canada15 percent imported from Canada

Abundant supplies beneathAbundant supplies beneath

nonnon--park federal lands.park federal lands.But lease restrictions a problemBut lease restrictions a problem

Imports an importantImports an importantsupply sourcesupply sourceCanadian imports via pipelineCanadian imports via pipeline

3 percent LNG imports3 percent LNG imports

Flat domestic production.Flat domestic production.

US Production

81%

Canada

16%LNG

3%

U.S. Natural Gas Pipeline SystemU.S. Natural Gas Pipeline System


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Note importance of Gulf Coast infrastructure

Government PoliciesGovernment Policies


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Government PoliciesGovernment Policies

Limit Gas SupplyLimit Gas SupplyLease moratoria on Atlantic OCS, Pacific OCSLease moratoria on Atlantic OCS, Pacific OCS andandEastern GulfEastern Gulf Block access to 70+Block access to 70+TcfTcfnatural gas resourcesnatural gas resources

Lease restrictions in Rocky Mountain West,Lease restrictions in Rocky Mountain West,

affect 36 percent of public landsaffect 36 percent of public lands andand limit access to 15limit access to 15TcfTcfadditionaladditionalnatural gasnatural gas

Many resource management plans for public landsMany resource management plans for public lands

are outdatedare outdated limiting US BLM ability to lease these landslimiting US BLM ability to lease these lands

Permit delays and backlogs commonPermit delays and backlogs common

Natural Gas Has Many UsesNatural Gas Has Many Uses


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yy

Natural GasNatural Gas

Meets 23% of USMeets 23% of US

energy requirementsenergy requirements

Heats 57% of USHeats 57% of US

householdshouseholds

Accounts for over 90%Accounts for over 90%

of new electricityof new electricity

capacitycapacity

Is the source or rawIs the source or raw

material for hundredsmaterial for hundreds

of productsof products

US Demand for Natural Gas IsUS Demand for Natural Gas Is


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GrowingGrowingAmerica's fastestAmerica's fastest--growing energy sourcegrowing energy source Driven by natural gasDriven by natural gas usersusers, not the oil industry!, not the oil industry!

Americans usedAmericans used 21.9 trillion21.9 trillioncubic feet in 2005cubic feet in 2005

Capacity of natural gasCapacity of natural gas--fired generation hasfired generation has

tripled since 1999tripled since 1999Electric power sector useElectric power sector use grew by more than 50grew by more than 50percentpercentfrom 1996from 199620052005

Demand is forecast to increase by about 22Demand is forecast to increase by about 22percent by 2030percent by 2030

IncludesIncludes 62 percent increase in use for electric62 percent increase in use for electric

powerpowerabove present levelsabove present levels

Factors in Cost of Natural GasFactors in Cost of Natural Gas


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Cost of gasCost of gas

Market priceMarket price

Transmission costsTransmission costs

Moving gas by pipeline from source to customerMoving gas by pipeline from source to customerss

local arealocal area

Distribution costsDistribution costs

Bringing gas from within local area to customerBringing gas from within local area to customerss

home, business or facilityhome, business or facility

The Natural Gas Distribution System


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TRANSMISSIONLINESGATHERING LINES

PROCESSINGPROCESSINGPLANTPLANT

LARGELARGE--VOLUMEVOLUME

CUSTOMERCUSTOMER

RESIDENTIAL CUSTOMERS

DISTRIBUTION MAINS

LNG PLANTLNG PLANTOr propane/air plantOr propane/air plant

UNDERGROUNDUNDERGROUNDSTORAGESTORAGE

CITY GATECITY GATERegulators/motorsRegulators/motors

PRODUCING WELLSPRODUCING WELLS

REGULATOR /METER

COMPRESSION

STATION

COMMERCIALCOMMERCIAL

CUSTOMERCUSTOMER

Natural Gas Policy Conflict:Natural Gas Policy Conflict:


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Use Encouraged But Supplies RestrictedUse Encouraged But Supplies Restricted

Government policies &NIMBYism restrict accessto supply/ development ofinfrastructure needed for

imports.

Demand is outpacingsupply, BUT

RESULT:

Upward Pressure on

Prices

Daily Natural Gas Futures Prices

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

1/3

1/17

1/31

2/14

2/28

3/14

3/28

4/11

4/25

5/9

5/23

6/6

6/20

7/4

7/18

8/1

8/15

8/29

9/12

9/26

10/10

10/24

11/7

11/21

12/5

12/19

DollarsperMMBtu

2003 2004 2005 2006

RECORD PRICE of $15.378 per MMBtu

on December 13, 2005

REMEDY:

Diversification ofSupply

Natural Gas ResourcesNatural Gas Resources


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in The Rocky Mountain Westin The Rocky Mountain WestA significant national energy resourceA significant national energy resource

Federal lands contain aboutFederal lands contain about 60 percent60 percent of theof thenation's estimated undiscovered natural gas.nation's estimated undiscovered natural gas.

There are 209There are 209 TcfTcf of technically recoverableof technically recoverable

natural gas in the Rockies alonenatural gas in the Rockies alone -- enough toenough topower more thanpower more than 50 million homes for 60 years50 million homes for 60 years..

The Rockies' share of the lowerThe Rockies' share of the lower--48 production48 production

will grow from 23 percent in 2003 to 28 percentwill grow from 23 percent in 2003 to 28 percentin 2030.in 2030.



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in The Gulf of Mexicoin The Gulf of MexicoIn 2004 (the latest year for statistics) the overIn 2004 (the latest year for statistics) the over 40004000platforms in the Gulf OCSplatforms in the Gulf OCS produced 27% of US crude oilproduced 27% of US crude oil

andand

21% of US natural gas21% of US natural gas

.

.

Central and Western Gulf of Mexico OCS annuallyCentral and Western Gulf of Mexico OCS annuallyproduces 4.4produces 4.4 TcfTcf of natural gasof natural gas..

ThatThats enough natural gas to meet more thans enough natural gas to meet more than 70% of US70% of US

electric power sectorelectric power sectors needss needs38% of Gulf OCS gas now produced from deep water38% of Gulf OCS gas now produced from deep waterleasesleases..

BUT according to MMS,BUT according to MMS, 8080TcfTcfof OCS natural gas isof OCS natural gas isunavailableunavailabledue to moratoriadue to moratoria

2525 TcfTcf in prospective Eastern Gulf (off Florida)in prospective Eastern Gulf (off Florida)



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in Alaskain Alaska

Since oil production began on AlaskaSince oil production began on Alaskas Norths North

Slope natural gas has been used to provideSlope natural gas has been used to providepower andpower and reservoir drivereservoir drive..

Alaska North SlopeAlaska North Slope fields holdfields hold 3333--4545 TcfTcf ofof

discovereddiscoveredgas needing a pipeline to Lower 48gas needing a pipeline to Lower 48markets.markets.

National Petroleum Council estimates AlaskaNational Petroleum Council estimates Alaska

may containmay contain undiscoveredundiscoveredreservesreserves as much asas much as5X5X North Slope reserves.North Slope reserves.

What Is the Cost of Doing Nothing?What Is the Cost of Doing Nothing?


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If we expect demand to soar, as every trend suggestsIf we expect demand to soar, as every trend suggests and if weand if we

are finding ourselves increasingly unable to meet that demandare finding ourselves increasingly unable to meet that demand

then how are we going to spare consumers from pricethen how are we going to spare consumers from price

shocks? How are we going to continue to power our growingshocks? How are we going to continue to power our growing

economy? How are we going to generate the electricity to keepeconomy? How are we going to generate the electricity to keep

the lights on in our factories, our homes, and our schools?the lights on in our factories, our homes, and our schools?

-- Energy Secretary SamuelEnergy Secretary Samuel BodmanBodman

Toward a Secure Energy FutureToward a Secure Energy Future


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We are part of an interdependent global marketplaceWe are part of an interdependent global marketplace

Consumers are best served by multiple sources ofConsumers are best served by multiple sources ofsupply from the US and around the worldsupply from the US and around the world

RenewablesRenewables, energy efficiency, conservation, domestic, energy efficiency, conservation, domesticproductionproduction

TheyTheyre all part of the solutionre all part of the solution

What we can conserve, and what we can produce here,What we can conserve, and what we can produce here,we donwe dont have to importt have to import

What can government do?What can government do?


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gg

Rely on market forces to allocate productsRely on market forces to allocate products

Refrain from imposing new taxesRefrain from imposing new taxesIncrease refinersIncrease refiners flexibility to facilitateflexibility to facilitate

expansionexpansionReduce barriers to supplyReduce barriers to supply

API Understanding Todays Energy Needs

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