SPEAKERS
Abdallah Jum'ah President and CEO Saudi Arabian Oil Company	Daniel Yergin CERA Chairman (Chair)
Louis Carranza CERA Vice President, Strategic Development

CERAWeek 2008, “Quest for Security: Strategies for a New Energy Future,” opened with a warm welcome to old and new attendees, representing 55 countries, given by Lou Carranza, CERAWeek Cochair. He acknowledged his senior colleagues at CERA and the company’s extended family at IHS, and in particular James Rosenfield, CERA Senior Advisor, who has opened the previous 26 conferences, “often in dramatic fashion.” Mr. Carranza thanked Mr. Rosenfield for his leadership in building the conference into a weeklong, premier event, a testament, he said, to the power of positive thinking. Thinking big thoughts on the future of energy, he said, is the essence of CERAWeek.

Daniel Yergin, CERA Chairman, thanked the CERAWeek speakers and sponsor companies, including Alstrom, Lazard, and Saudi Aramco. He said that this year’s theme, energy security, has different meanings for different industry players around the world. More than ever before, the economy will be a major subject of this week’s events. Climate change, oil and gas supply, short- and long-term changes in demand, rising costs, the fuel mix for power generation, and the future of transportation also loom large. Technology and innovation will be key, he said, acknowledging the participation this year of the Massachusetts Institute of Technology. Dr. Yergin described the agenda for the week, noting that events will extend through Friday for an expanded examination of power issues.

In introducing the opening speaker, Abdallah Jum’ah, President, CEO, and Director of the Saudi Arabian Oil Company, Dr. Yergin noted that a lot has changed since Mr. Jum’ah’s speech at CERAWeek 2005. He praised Mr. Jum’ah’s long industry experience and commitment to international collaboration, security of supply, and education.

Mr. Jum’ah said that he was delighted to be contributing to the important discussion on the “shared quest for energy.” He cited energy as an essential driver of economic wealth and personal well-being, but also noted that the industry is buffeted by economic uncertainty, growing demand, stretched refining capacity, geopolitical events and speculation, and volatile world currencies.

To achieve energy security, conventional strategies, such as stockpiling oil and boosting the share of alternative fuels, are only part of the answer; a different perspective on the underlying issues of supply is also required. “As any Texas cowpuncher would say,” he noted, “the best way to clear brush is to remove it, root and branch”—that is, we should target the root causes of supply concerns. He said that if the primary causes of world conflict and tension were addressed, and stability and tranquility prevailed, supply concerns would be alleviated and the industry “could focus on geology instead of geopolitics.” He admitted that this would not be easy, but that progress on this front would be so significant in alleviating supply concerns that it deserves serious attention.

Earlier, at the World Energy Forum in Rome, Mr. Jum’ah argued that the “peak oil” discussion must consider the planet’s total endowment of liquid fuels—conventional and unconventional. Conventional resources alone amount to 13–16 trillion barrels—compared to only 1.1 trillion barrels already consumed over the history of the industry. Analyses of recoverable conventional and unconventional reserves range from 3 to 6 trillion barrels. Saudi Aramco believes 3 trillion is an ultraconservative estimate, and that unconventional development will depend on the degree of need and the development of a favorable environment for recovery. Mr. Jum’ah recommended improving recovery rates through new tools and technology and better reservoir management; enhanced knowledge of existing reservoirs; finding yet-undiscovered oil by applying cutting-edge technology to frontier areas; and tapping unconventional resources by overcoming technical, environmental, and economic obstacles. He also cited energy efficiency and conservation as key strategies in energy security, emphasizing that many issues lie beyond the control of the oil industry itself, and that cooperation among public and private players is essential. Alternatives will play a role, but we must have realistic expectations, he said, stating that fossil fuels will still constitute 82–87 percent of the fuel mix by 2030.

The downside is that reserves fall victim to well-intentioned but flawed or confusing energy policies calling for more rapid displacement of fossil fuels, and a significant portion may not be recovered as a result. Uncertainty also has a negative impact on investment. “The world cannot afford to leave massive quantities of hydrocarbons in the ground” while pursuing unrealistic goals for alternatives, he said. Saudi Aramco is investing heavily in upstream and downstream projects, including the Fort Arthur refinery in Texas, the largest in the United States. Environmental concerns must be addressed without compromising the world economy. Engagement with the growing Asian markets is essential in helping to meet demand and shape energy policy. Timely investment, cooperation, technology, and pragmatism are key in achieving long-term energy security. The Opening Address closed with Dr. Yergin asking Mr. Jum’ah questions on cost and workforce pressures, economic cycles, and carbon research.