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America’s Energy Coast Leadership Forum The Woodlands, Texas July 24, 2008

America’s Energy Coast Leadership Forum The Woodlands, Texas July 24, 2008. America's Energy Coast: Critical to U.S. Energy Security Commissioner Victor G. Carrillo Railroad Commission of Texas. Texas Railroad Commission Established: 1891 3 statewide elected officials

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America’s Energy Coast Leadership Forum The Woodlands, Texas July 24, 2008

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  1. America’s Energy Coast Leadership Forum The Woodlands, Texas July 24, 2008 America's Energy Coast: Critical to U.S. Energy Security Commissioner Victor G. Carrillo Railroad Commission of Texas

  2. Texas Railroad Commission • Established: 1891 • 3 statewide elected officials • No rail issues since 2005 • Regulate: • oil & gas • pipelines • surface mining • natural gas utilities • “TX Energy Commission”

  3. U.S. Congressman Joe Barton Energy & Commerce Committee Principal author, EPACT 2005 “There is no greater issue facing our world over the next century than energy.”

  4. James Carville Democratic political pundit “Energy independence is the No. 1 national security issue … No matter how we ask the question, that’s what comes up.”

  5. U.S. oil imports > 60%! Oil TOPS $145/barrel!

  6. OPEC Oil Export Revenues(2001- 2008) $1.18 T (est.) Billions $$

  7. 2007 U.S. Natural Gas Imports Source: U.S. Energy Information Administration.

  8. A Comprehensive View to 2030 of Global Oil & Natural Gas National Petroleum Council July 18, 2007 “There is no single, easy solution to the global challenges ahead. Given the massive scale of the global energy system and the long lead-times necessary to make material changes, actions must be initiated now and sustained over the long term.”

  9. To Meet Future Energy Challenges, the U.S. MUST: • Moderate decline of conventional domestic oil & gas production 2) Increase access for development of new resources • 3) Expand and diversify production from: • Unconventional oil & natural gas • Clean coal • Nuclear • Renewables (wind, solar, biomass)

  10. Active Gulf of Mexico Leases

  11. U.S. Crude Oil Resources (Est. Undiscovered Technically Recoverable)

  12. Currently Inaccessible Natural Gas Resources

  13. Outer Continental Shelf Policy Committee (Chair, Commissioner Victor Carrillo, Texas) Advise Interior Secretary Kempthorne on leasing, exploration, development, & protection of OCS resources • Increase OCS Access • Expand/Enhance Refinery Capacity • Permit Exploration in ANWR • Develop Oil Shale

  14. President Bush Lifts Executive Ban on Offshore Drilling (July 14, 2008) • Issued Memorandum to Interior Secretary • Removes Executive Restriction to OCS Drilling • (in place since 1992) • Congressional Moratoria still in place • (Began in 1981 with offshore California) • COINCIDENCE? • Crude oil price drops $16 (11%) in one week!

  15. Deepwater Offshore Gulf: L. Tertiary Potential Recoverable Reserves for L. Tertiary Trend: 5 – 15 billion barrels

  16. UltraDeep Offshore Gulf Potential: • Chevron/Devon/Statoil Jack-2 Well • 270 miles SW of New Orleans • 7,000’ water depth (drilling technology) • Subsalt (seismic imaging technology) • 28,175’ TD (production technology) • 6,000 b/d light, sweet crude Potential Recoverable Reserves for L. Tertiary Trend: 5 – 15 billion barrels

  17. GOM: America’s Energy Coast 2007 Production Stats • ~4,000 Platforms • 25% of U.S. Oil Production (465 mmbo) • 14% of U.S. Gas Production (2.8 Tcf ) • TX: 33% of U.S. Gas Production (6.7 Tcf) • LA: 7% of U.S. Gas Production (1.33 Tcf) • Fed OCS + TX/LA/MS/AL = 55% U.S. Gas!

  18. 2007 U.S. Natural Gas ProductionTotal: 20.15 Tcf America’s Energy Coast: 55%!

  19. 2007 U.S. Oil ProductionTotal: 1.86 BBO

  20. U.S. REFINERY OVERVIEW 150 U.S. Refineries 17.6 mmbopd capacity • TX: 26 -- 4.8 mmbopd • LA: 19 -- 3.0 mmbopd • MS: 3 -- 0.4 mmbopd • AL: 3 -- 0.1 mmbopd Gulf Coast: 51 with 8.2 mmbopd capacity = 47%

  21. TEXAS OVERVIEW “Mature” Producing Province: ~ 7,100 active operators Total Active Producing Wells: 144,973 oil 84,376 natural gas #1 producer of oil & natural gas in the U.S ~340 million barrels oil (2007) ~ 6.7 Tcf natural gas (2007) • Largest pipeline infrastructure in nation • 27% total U.S. refinery capacity • > 312,000 employed in sector (2006) • Oil & gas & petrochemicals = $160+ Billion • ~15% of gross state product (2006)

  22. Producing Gas Wells June 2008

  23. Texas Natural Gas Production 1972 Peak 20.2 Bcf/d 7.37 Tcf/yr * 2008 Production Annualized

  24. Natural Gas 2007 U.S. Consumption: 23 Tcf • U.S. much less dependent on natural gas imports • U.S. imports ~ 20% of natural gas • TX Produced 7.0 Tcf • 33% of U.S. domestic production • 30% of U.S. consumption • Without TX, U.S. would import ~50% nat. gas

  25. TX GAS PIPELINE OVERVIEW • RRC oversees operations of 138 intrastate pipelines • Largest pipeline infrastructure in nation • 140,000 miles of intrastate pipes (oil & gas) • 57,000 miles of natural gas pipelines in TX • 43,000 miles (75%) are Intrastate pipelines • Significant growth in capacity due to Barnett Shale & E. TX Bossier expansion ( >25% 2007 U.S. pipeline infrastructure growth)

  26. 1985: Last year RRC issued as many permits!

  27. Total Submitted Drilling Permits 3000 2800 2844 2600 2742 2649 2400 2453 FY-2007 2398 2200 2212 2000 2105 FY-2008 2029 1800 1956 1817 1600 1400 1200 1000 Jan Feb Mar April May * Up 29% in 2008 * Highest since 1985!

  28. Unconventional Resources • Technology Advisory Committee Advises Energy Secretary Bodman on technologies related to onshore unconventional natural gas & other petroleum resources • Unconventional shale gas • Barnett Shale • Technology driven • horizontal drilling • hydraulic fracturing • multi-well drills • 20+ counties • 185 operators • USGS: ~26 Tcf

  29. Perryman Study: • 100,000+jobs • $10+ billion annual output

  30. Barnett Shale Natural Gas Production (1997- March 2008) • 3.8 Tcf Since 2000! • 15% of total TX Gas Production BCF 1st Q

  31. Texas Wind Capacity July 2008: 5,519 MW 1995 = 0 MW Mid-2006 = 2,300 MW • TX PUC Approves Plan • (7/19/08) • New Transmission Lines • $5.9 billion investment • 18,456 MW in 5 years TX #1 in NATION!

  32. Up 59% in 2007!

  33. D I V E R S I F I C A T I O N TRADITIONAL ENERGY SOURCES Oil Gas Coal Nuclear RENEWABLE ENERGY SOURCES Wind Power Biomass Solar Energy Geothermal Fuel Cells LNG Clean Coal

  34. CONCLUDING THOUGHTS • Encourage responsible, sustainable development • Emphasize domestic oil & gas & infrastructure • Explore in OCS, ANWR, Rockies: “Our own backyard!” • Support technology advances to minimize • environmental footprint & impact • Encourage diversification: • Clean coal, nuclear, renewables (wind/solar/biomass) • This is NATIONAL IMPERATIVE! If we do this … • Oil & natural gas supply will stabilize & even grow • Price volatility may be attenuated • Domestic Energy Security will be enhanced

  35. Sustaining economic development & environmental stewardship are not mutually exclusive activities; They can & must move forward together The importance of linking energy, environment, and economic sustainability must be a regional voice with a collective national vision

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