Welcome to the USAEE Blog

SPR debate (Pro and Con) from Business Week with comments from readers
 
http://www.businessweek.com/debateroom/archives/2008/01/roll_out_the_oi.html

The technologies and economics of energy industries and associated environmental externalities are complex.  Many issues have multiple angles; trade-offs are common.  Technically and economically accurate reporting that captures these important factors finds little, if any, coverage in the general media; industry publications on the other hand are not read by the public.  High schools and universities also fail to provide accurate education on energy and environment.  In short, there is a communication problem between the energy sector and the public, which in turn impacts the policy making process.  The panelists addressed the issues associated with energy reporting and education.

The recurring theme of a lack of skilled labor and consequent higher recruitment costs was echoed by each of the four speakers in the Human Capital dual plenary session.  Jim Hertlein of Boyden outlined how the need to replace 2.5% of the energy industry workforce (on average) could result in increased employee recruitment and retention costs of $2.3 trillion over the next ten years.  Monte King of Shell Oil Company emphasized the need for broad-based industry collaboration with respect to workforce education and training, to ensure that growth is not constrained by a talent shortage.  At the same, Mr. King acknowledged that competition will be keen between companies for individual employee candidates.  Chris Ross of CRA International identified the most pressing human capital issue as a leadership challenge.  Mr. Ross cited the success of post-merger Valero, whose CEO explicitly did not lay off half the workforce, but rather used the full employee complement to drive forward cost reductions across the organization.  As a result, Valero is today better-positioned people-wise than its competitors for future capacity expansions.  Al Escher of Schlumberger provided a succinct summary of the situation when he said that the human capital challenge will only be met when large numbers of highly qualified people choose to spend a majority of their career in the energy industry.

In the typical Houston culture, the industry breakfast meeting was held bright and early at 7 AM.  Contrary to belief of many, the Ballroom C of Hilton was almost packed.  Appears many wanted to hear from industry experts about where we are and were are we headed.
The session was moderated by David Knapp, Senior Editor, Energy Intelligence Group, who had two expert speakers lined up for the session.  The first speaker was Neelesh Nerukar, Economist from BP and the other was Dean Foreman, Sr. Economist Coporate Planning from ExxonMobil.  Neelesh talked primarily on what we did and how did we get to where we are right now.  It appeared like a relay race, where Dean took off from where Neelsh left and provided ExxonMobil view on how we will be in next 23 or so years - until 2030.  David also invited Adam Sieminski to provide his perspective on the discussions after the presentations. 

"Supply and Access" plenary session started on time at 8:45 AM on Monday, Sept. 17.  The session was moderated by Andrew Slaughter, Senior North American Energy Advisor at Shell E&P Co.  Don Knapp of Williams Gas Pipeline could not attend the session. 
The session started with Rod Nelson of Schlumberger who provided insight into a recently completed National Petroleum Council (NPC) study on Global Oil and Gas supply.  This NPC study titled " A Comprehensive View to 2030 of Global Oil and Natural Gas" was a 1-year effort by many in industry, academia and government.  This was a data driven rich analysis with many international governments including the Canadian as well as the Australian government participation.  The results of the study were announced on July 18 with the study to be available on NPC website by end of Sept. 2007.  Rod was the Technology Analysis Lead for the study - one of around 120 technology assessment analysts involved in the study.

 
There were three presentations in this session. Krishna Rao, Managing Director of Citigroup Energy discussed the fundamentals of hedging – products available and the use of risk-management strategies to mitigate the effects of rising energy costs. He illustrated his remarks with hypothetical case studies. A very educational presentation for those of us who are not well-versed in the basics of energy trading, although I suspect many in the audience were already well-grounded in these fundamentals.
 

The Luncheon started with recognition of key planners of the USAEE Houston Conference and the presentation of the Outstanding Contributions to the IAEE Award to David Williams Sr. and David Williams Jr, who reviewed the evolution of the organization since 1991.
 
Keynote speaker Branko Terzic, Global Regulatory Policy Leader, Deloitte Services LP, offered key issues for gas and power regulations in his speech titled "Energy & Consumers:  Lessons for the 21st Century." His comments were based on text found at:

Hon. Brendan Bell, Minister of Industry, Tourism & Investment, Government of the Northwest Territories, Canada.    Arctic gas offers three principal advantages:  lower energy costs, safe & reliable energy supply, and reduced greenhouse gas emissions.  There are around 100 TCF of gas resources in the Beaufort Sea area, some of this in the Beaufort Delta but much of it in the Sea itself.  According to an analysis by Energy & Environmental Analysis done for the Territories, a pipeline project to bring this gas to markets in Canada and the United States will yield $338 billion in wealth gain between 2014 and 2025, and a reduction of 283 million tons of CO2.  From a governmental perspective, three things are necessary to make this project happen;  rules for open access to the pipeline, clear timeframes for regulatory review, and a joint US-Canada task force on northern pipelines to coordinate regulatory activity.  

During this highly attended session we heard views on LNG that ranged from long term natural gas forecasts and natural gas flows (Hill Huntington), issues regarding LNG regasification infrastructure that are now moving from a siting focus to a operational optimization focus (Jacob Dweck) and the impact of LNG imports to the US on infrastructure development so it can reach final consumers (Kyle Sawyer).Each one of the presenters, made singular remarks that I personally took note:

1. Increasing long term correlation between natural gas and oil prices (not short term).  The possible increasing importance of GTL could add forces of correlation (though not at the historical heat content ratio but at a much higher ratio).