Speech on "Views & Voices: Transform Today's Challenges Into Opportunities" GE Oil And Natural Gas Annual Meeting

Statement

Typically, when a man travels to Florence in the days immediately following his wedding, it's to celebrate his honeymoon.

Thankfully, my wife understands the unique demands of my job.

I would like to thank Lorenzo Simonelli and the entire GE team for putting this on.

It's really a pleasure to be here, among this impressive group of presenters and thought leaders, to talk about some of what has happened in our state of Colorado around oil and gas.

The perspectives shared here, from various disciplines and vantage points, will help us piece together a snapshot of where the energy industry is today… by some of the most thoughtful and informed people in the industry and the applications that this can have to the states, the provinces, the cantons and countries around the world… all the local approaches to regulation.

Ultimately, hopefully we carry this the next couple days… a vision of what tomorrow looks like.

We couldn't be happier that one of the GE Executives, former rock star who was the managing Director of the US Independence for GE Oil and Gas, has joined the board of the Colorado Oil and Gas Association.

I think that's exactly what that kind of local representation, that's exactly what we should be looking for.

Thanks in no small part to the efforts of Colorado Oil and Gas Association, COGA, Colorado is in many ways at the forefront of the current energy renaissance in the United States.

We really have one of the most diverse energy economies in the United States. We have been blessed with an abundance of almost all energy sources. A leader in natural gas and crude oil production.

We have also worked hard to make sure that we have a business friendly environment and to take advantage of the tremendous intellectual capital that we have. We have almost 30 federally funded laboratories in the state of Colorado.

Colorado's oil and gas industry is a vital part of our state's energy portfolio and a vital part of our economy. In 2014, the total economic, both direct and indirect, the total economic impact was just over $31 billion, supporting over 100,000 jobs, and creating more than $1.2 billion in revenue to the state. And this is all in a state with just a little bit more than 5 million people.

Now in Denver we're about one mile, or 1.6 kilometers above sea level. And certainly at that level, we have a great recognition of the importance of clean air; we don't fight so much of the battle between climate change and not climate change, we accept it, we recognize that we need to do everything we can to keep our air and our water as clean as possible.

But access to inexpensive energy is a public good as well. Along with education, it is the single most useful tool against poverty, to lift people out of poverty and

…with the value we place on preserving the quality of our air and our water, and the unparalleled landscapes that attracts so many people to Colorado.

We recognize that we need a balance. We need to make sure that we protect our environment and at the same time, with the extraction, the transportation, the processing, the refining of energy, that we have to keep that at as low of a cost as humanly possible.

One way we do this, we recognize that this balance can't just be created by government alone… We need to forge partnerships with both businesses and with non-profit associations, NGAs and other organizations, so that our state government forms and serves as a convener and as an effective facilitator and partner in advancing these shared goals for balanced energy future, both inexpensive and clean.

We think of this as the Golden Triangle of Government, the non-profits and business and I think that we have made some meaningful progress. Several things are needed as to create a shared vision of what you are trying to get to.

In Colorado, we started five years ago saying "Alright, we don't want unnecessary regulation, that creates additional costs and doesn't make the air any warmer or cleaner."

And the entire state government has now gone through 17,000 different regulations. I realize many of your countries don't have the proclivity for regulations that the United States has. Of those 17,000, we have now either reformed or eliminated over 8,000. In a number of cases, in eliminating those regulations we also looked at new ways, of better forms of regulation.

One of these was that we had air quality conditions over some of our large natural gas fields and we convened the non-profit community that fights in defense for the quality of air and water but also with our business community, something larger operators in Colorado, Anadarko and Noble, and we spent the first few meetings and I personally gave my guarantee that we would create as few regulations as possible, that they would be as inexpensive as possible but that we would get to a shared goal of reducing carbon emissions for the entire state. And this shared goal led to three or four months of non-profits and the industry both defining what the research and the scientific studies really said and then agreeing on certain measurable goals that we would attain and then as a team work together to try to get to them as inexpensively as possible.

In much the same way of reducing regulations, I think we have to diminish friction within the system wherever possible. By that I mean, use certain basics, one friction I think within the energy industry is the expense and in many cases the regulations against the easy transportation of energy, creating a broader, a larger market that is always going to be more efficient.

So the state of Colorado last year advocated loudly in support of what was called Jordan cove, which was a $7 billion liquefied natural gas export terminal in Oregon on the western coast. Our natural gas could be liquefied and easily transported to Asia, allows us to have a conduit to reach these new markets.

LNG globally produces this kind of friction and allows a more stable market. Although, in the last couple of years you wouldn't see that. And then lastly, making sure that the goals we set are supported by data.

I was a field geologist for a company called Buckhorn Petroleum back from 1981 to 1986; so I know a little something about boom and busts and data.

You know when the boom of the early "80s went bust I got laid off; actually, I was out of work for two years. Ultimately I had to innovate a new path for myself. I opened a brewpub, a restaurant that brews its own beer. I went from one liquid to dissolved gas to another. I certainly wouldn't be speaking to you today in this capacity if I had not lost my job as a geologist but I think it strikes home that that period during the bust, of the early "80s, was a period of market innovation. And we saw not just in where different geologists went but… to those engineers out there I realize you don't have quite the creative ambition that geologists have and perhaps it's not as easy for you to make that transition.

But within each of your companies, being committed to innovating and investing in research and development as much now as possible--and I know the resources are scarce--but this is where we can make such headway.

Recently, in Colorado, WPX Energy, which is a fully owned subsidiary of Exxon Mobile, recently developed 87 natural gas wells from 14 pads on the Western slope of Colorado.

The company made one centralized facility to frack all of these wells, rather than establishing operations on each pad.

And by moving fracking fluid through temporary pipelines, they eliminated approximately 12,000 truck trips that would have had to transport 145 million gallons of fracking fluid and produced water enough to fill almost 300 Olympic-sized swimming pools!

This was efficient, saved money but also reduced risks of any kind of environmental contamination. In addition, at small scale testing, new technology, on a smaller scale, that can combine… in one case in Colorado we have low-tech industrial boilers being paired with high-tech generators that produces gas, what had been waste gas, to generate electricity which is used on site.

Gas emissions are greatly reduced and the power was consumed onsite. These are the types of innovations that the future is made of and they should be accelerated in this time of price challenges.

Now you may not have heard this, but the US is now in an election year and you're gonna see a growing caustic environment and it's easy to become cynical.

But I think when we are able to work with our partners in the Golden Triangle and make sure that the business is side by side with non-profits and with government and focus on the local level. Whether it is the state or the province or the canton, make sure that we are able to cut red tape and enhance energy mobility and make sure that we create real goals with real data.

I think bringing those disparate interests together and facilitating the difficult conversations, we do prioritize progress over gridlock. We are able to create a framework for sustainable growth, not only of the oil and gas industry, but of all our energy industries and find those game changing innovations that move us forward.

I think that if we could focus on that local, state and provincial level, ultimately the federal governments will follow suit.

Thank you!

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