SPEAKER

Linda Cook Executive Director, Gas and Power Royal Dutch Shell plc

CERA Chairman Daniel Yergin thanked Lazard, the Global Financial Partner of CERAWeek 2008, and invited George Bilicic, Managing Director and Head of Global Power & Energy for Lazard Fréres & Co. LLC to give the luncheon toast. Mr. Bilicic praised CERA and the important role of CERAWeek in deciphering the increasingly diverse and complex energy industry.

Dr. Yergin later introduced Keynote Luncheon speaker Linda Cook, Executive Director of Gas and Power for Royal Dutch Shell plc. He noted that she had last spoken at CERAWeek in 2001, when the energy landscape looked quite different. Ms. Cook agreed with Dr. Yergin that much has indeed changed since her last CERAWeek appearance. She noted that this time we are in the midst of a US presidential race and that energy concerns are a frequent topic of presidential campaign speeches and debates. Heightened attention to energy worldwide, she said, has brought into focus “the energy challenge and three hard truths”: rising demand, security of supply, and environmental concerns.

Energy demand is accelerating owing to population and economic growth and increasing prosperity. China and India, for example, are increasing both affluence and energy intensity. Concurrently, mature oil basins and reservoirs are going into decline: “the supply of easy oil”—conventional sources—will not keep up with demand. Development of unconventional supply will come with higher costs and technical requirements. Increased energy use leads to increased carbon dioxide emissions “at a time when climate change looms large as a critical global issue.”

Ms. Cook outlined the ways to address these hard truths. “A broad portfolio of energy sources” would include not only more gas, oil, and renewables but also more coal and nuclear. Dramatically increased energy efficiency is also crucial: “A barrel of oil saved is in many ways much better than a new one discovered.” Governments need to implement greenhouse gas policy in a smart and globally coordinated way. We also need new technology development for such things as energy efficiency, improved recovery of oil and gas, and cleaner energy technologies. These challenges, she said, make this “the most exciting time to be in the energy business.”

Ms. Cook then looked at natural gas in context of the energy supply challenge. Gas demand will increase, owing both to overall rising demand and to preference for gas as a cleaner fuel. In the United States, for instance, growing demand will likely lead to a gap between production and demand of 15–20 billion cubic feet per day by 2025. This gap and around 75 percent of European demand by 2030 will have to be filled by imports. China and India are beginning to ramp up gas demand, and the Middle East has become a demand center. More countries, some that were until recently net gas exporters, have become net gas importers. Gas-to-liquids demand for transportation is also on the rise.

The gas industry is currently meeting demand. Shell, Ms. Cook noted, continues to build infrastructure and capacity in China, Nigeria, offshore Norway, offshore Russia, Wyoming, and Qatar. Meeting future demand will require access to prospective areas that are now closed to exploration, development of new technologies to get to gas, skilled people to replace a graying workforce, greater contractor capacity, control of skyrocketing costs, governments’ honoring stable fiscal terms, globally coordinated and effective carbon regulation, and increased energy efficiency.