Jonathan Gear, CERA President and Chief Operating Officer, welcomed guests and the CERAWeek Online audience to Gas Day. Daniel Yergin, CERA Chairman and Executive Vice President, IHS, introduced Gerhard Schröder, former Chancellor of Germany. In his Opening Address he emphasized the strategic importance to the global economy of reliable energy supplies and transmission, “a cornerstone of economic growth.” He discussed several strategic issues surrounding energy, including climate change, “a huge threat” with the potential to disrupt geopolitical stability; international cooperation in transportation and markets; and greater energy efficiency and use of renewables. He urged fossil fuel diversity in all aspects, using as many suppliers, transport routes, and energy sources as possible, with global cooperation fostering stability. “We must not allow energy to become the currency of power in international relations,” he said. The former Chancellor concluded with remarks on geopolitics, emphasizing the need for dialogues across borders and embracing global interdependency and an opportunity to stabilize relationships.

Michael Stoppard, CERA Managing Director, chaired Wednesday’s Global Gas Plenary, “Breaking with Convention.” Hamad Rashid Al Mohannadi, Managing Director (CEO), RasGas, urged his colleagues to take a long-term view on supply and stressed the alignment of producer and consumer interests. Aubrey McClendon, Chairman and Chief Executive Officer, Chesapeake Energy, said that “natural gas is abundant” and will be the dominant fuel in addressing environmental and security-of-supply concerns. Harold N. Kvisle, President and CEO, TransCanada, discussed the critical need for unconventional and LNG development and stressed the importance of location and large-scale infrastructure. Rune Bjørnson, Executive Vice President, Natural Gas, StatoilHydro, took a long-term view on LNG development.

CERA Vice President Gardner Walkup chaired a Critical Issues Forum on the potential of developing unconventional gas reserves outside North America. Charles Sheppard, Vice President of Unconventional Resources and Global Basins, Hess, said that highly liquid markets with large demand centers are the most likely to attract the investments necessary to develop the still unknown volumes of unconventional gas reserves. Christopher Hopkins, President of Data and Consulting Services at Schlumberger, highlighted key technological advancements, such as horizontal drilling and hydraulic fractures, that drove the growth of US shale gas. Jack Lewnard, Vice President and Chief Technology Officer, Gas Technology Institute, emphasized the importance of coordinated efforts among governments, universities, industry, and independent research organizations in addressing environmental issues and reducing costs. Leta Smith, CERA Director, said that the future is bright for unconventional gas development outside North America based on the potentially enormous resource base, but that large-scale developments like those in North America are at least a decade away.

CERA Director Pritesh Patel chaired a discussion on the current downturn in oil prices and the effect on capital costs, industry investment, personnel, and procurement. Luc J. Messier, Senior Vice President, Project Development and Procurement, ConocoPhillips; W.D (Dave) Bozeman, Vice President Project Support Office, Devon; Jack B. Hartung Jr., Manager, Project Assurance, Chevron; and Robert E. Estill, Vice President, Strategic Planning and Portfolio Management, Marathon Oil Corporation, agreed that the current downturn cycle is very different from past cycles. Project costs are unlikely to drop to levels that would support a $30 per barrel oil price. The upstream industry is highly consolidated, and most companies currently have significant backlogs, but as the recession deepens, contract renegotiation and price adjustment may occur. The panelists have not seen significant changes in outsourcing and company views on nontraditional suppliers. Standardized design is good for cost reduction, but its application is limited.

The topics of the day’s other Critical Issues Forums were LNG’s trading outlook, US carbon policy, Eurasian gas supply, and financing for new energy technologies.

The Luncheon Keynote featured CERA experts. Russia is a “textbook illustration of decoupling not working” said Thane Gustafson, CERA Senior Director, Russian and Caspian Research. The economy’s “hidden weaknesses” have been revealed, leading to a decline in the ruble but cost relief for oil producers. Candida Scott, CERA Senior Director, Capital Costs Analysis Forum, said the oil industry’s “wait-and-see mentality” has paused investments. James A. Placke, CERA Senior Associate, Middle East Research, described evolving US policy shifts in Iraq, Iran, Afghanistan, and the Palestinian/Israeli conflict. Michael Stoppard, CERA Managing Director, Global Gas Group, discussed the global liquefied natural gas supply surge and the contribution of North American shale gas developments. James Burkhard, CERA Managing Director, Global Oil Group, noted the shift “from demand destruction to supply deferral,” with the risk that 6.5 million barrels per day of future oil supply growth could be deferred or cancelled. Oil prices are expected to stay below $50 in 2008, but could reach that level. Lawrence J. Makovich, CERA Vice President and Senior Advisor, Global Power Group, noted “a “troubling pullback” in capital expenditures. The next problem may be a demand surge, and “lots of scrambling for capacity” is likely in a recovery.

CERA Senior Director Robert Ineson chaired the Industry Plenary on “North American Gas: The New Realities,” which featured presentations by William Garner of Parker Whaling, Gregory Harper, Senior Vice President and Group President for CenterPoint Energy, Ron Hyden, Strategic Business Manager for Production Enhancement at Halliburton, and Mark Costello, Executive Vice President for URS Corporation. The speakers focused on the question, “How can investment go forward in this economic environment?” They agreed that technology is critical to industry success; that companies should begin now to plan for an economic recovery; that a recovery will be a surprise whenever it develops; and that companies should focus on fundamentals, base-load work, workforce retention, and a disciplined approach to risk management to withstand the current downturn.

Energy security issues dominated Wednesday’s European and Eurasian Industry Plenary session. A panel of experts, led by CERA Senior Associate Simon Blakey, explored the ramifications of the January 2009 Russia-Ukraine gas crisis on European gas markets. Didier Holleaux, Senior Vice President for Exploration and Production, GDF SUEZ, and Wingas Chairman Rainer Seele discussed their companies’ contributions to European gas security. Laszlo Varro, Strategy Director of Hungary’s MOL, offered a Central European perspective on gas transit and storage issues. CERA Global Gas Managing Director Shankari Srinivasan concluded the panel by suggesting that debates over European energy security may shift from being focused on security of supply to security of demand.

Michael Stoppard, CERA Managing Director, Global Gas Group, chaired a panel taking a long-term view on the challenges and opportunities facing the global LNG industry. Ahmed Al-Khulaifi, Chief Operating Officer, Qatargas Operating Company Ltd., described the significant current liquefaction build and Qatargas’s approach to the long-term character of the LNG industry. Patrick J. Blough, Vice-President, Gas Commercialization, Chevron Global Gas, detailed the future opportunities for LNG growth and the current issues the industry faces. Robin Baker, Head of Project and Reserve Based Financing, Societe General, painted a grim but cautiously optimistic picture of the potential for project financing and the requirements in the current capital market. John C. Harris, CERA Director, Global Gas Group, discussed five key questions facing the long-term LNG development and the hurdles on the road to a final investment decision.

CERA Chairman Daniel Yergin moderated a discussion on the convergence of food, biology, and energy. Alberto Weisser, Chief Executive Officer at Bunge said that Bunge focuses primarily on ethanol produced from sugarcane, due to its greater energy benefits and lesser greenhouse gas emissions. However, Mr. Weisser stated that “Biofuels are not the solution” and will never be a total substitute for oil. Juan Enriquez, Managing Director of Excel Medical Ventures and Cofounder of Synthetic Genomics Inc. believes that life sciences will be the biggest driver of the energy industry in the future. He stressed that fossil fuels come from plant material, and “all hydrocarbons are concentrated sunlight.” Mr. Enriquez pointed out that although advanced technology for energy may be slow develop, it will be relevant during the energy industry’s typical 20- to 30-year investment horizon.

At Wednesday’s dinner Daniel Yergin, CERA Chairman and Executive Vice President, IHS, convened a panel on the future with David Eyton, Group Head of Research and Technology, BP; Dan Reicher, Director for Climate Change and Energy Initiatives, Google Inc.; and Ernest J. Moniz, Director of the Energy Initiative, Massachusetts Institute of Technology. The panelists’ discussion ranged from the role of biosciences and information technology in energy to the heightened interest among today’s students in all forms of energy. Their analysis of innovation and the future of energy focused on the need for new policy and business models and on the potential and time frame over which to expect the emergence of transformational technologies.