A new renaissance had come into place at the time of my first job in the industry. Several thousand barrels of water on each trip and was used trip was used. 50some years ago. The power of propaganda is not be dismissed. One not terribly honest image, a guy in colorado lighting is faucet on fire, could put this multitrillion dollar industry out of business. Or practically out of business. That is a very graphic attack on natural gas occurring in south the kidnadakota, the have a flame burning. I said, you waste a lot of gas out there. They said, we have wasted gas for hundreds of years. That is natural. It comes out of a natural formation there with the water. There is no oil in the area of south dakota at all. 47 places in United States called Burning Springs because the of naturally occurring methane in the water. In pennsylvania, the first case they had of water catching on fire was in 1670. It is been happening for a while. They have had documented cases in colorado of wells catching. Ire since the 20s this has caused a panic nonetheless. It does become a celebrity cause to talk about how fracking is going to mess up all the drinking water, all of our sins are going to catch on fire. It is amazing to me sinks are going to catch on fire. It is amazing to me how much money they have to put towards this propaganda. They have enough money to advertise. I do not think we ever had an exxon ad in the national review. Promised land, the primary backers was uae. Why would they want to do that . [laughter] protecting what they have. Did not want to see the technology that we have here come see them over there. A lot of people do not realize this huge trade deficit we have. Half of it historical has been energy products, mostly oil. If you get to the point where you are a selfsufficient producer i am glad you said north American Energy independent. I always disliked the idea of this National Energy independence. If you become energy self sufficient, you eliminate half the trade deficit. This really changes the balance of payments and the overall shape and direction of the economy. Could you speak to that . I for started talking about it two years ago. I first started talking about it two years ago. I started talking about what was possible with oil. I was a lone wolf in the woods at the time. Since then, the bandwagon has loaded up. A lot of other people are saying, yes, it could happen, and it to be very important for america. Particularly as it translates from energy to the general economy. There are more pillars out there, housing, manufacturing they depend on recovery. The one that does not is energy, because the International Demand is already there. It has been created by china, india. All around the world. The weakened cash in on that. Would not have to wait on it. We can cash in on that. We do not have to wait on it. We need to keep doing what were doing. It is going to mean a tremendous amount of jobs. We have seen that all through the midwest. North dakota is certainly a huge example of it. They say now there is to and unemployed 2 unemployed there. We cannot find those folks. [laughter] were seeing that growth for oklahoma, texas, kansas, other places. And now pennsylvania. It goes on and on. And also, manufacturing. Were seeing a lot of manufacturing come back to the u. S. It makes all the plastics, all those types of things. That is a huge industry. All that type of manufacturing one in eight people work in that industry are somehow related to it. It can be a big economic driver for america. One of the things about manufactured that is misunderstood, is everyone talks about manufacturing as if it is a rush to lowwage countries. T is not cure germany manufacturers lots of stuff, including high end, useful things. Germans are not corporate theyre not working for four dollars a day. The have certain industrial capacities they have certain industrial capacities. One of the things i thought was really striking about that as a have traveled around these sites is that it creates a two. Distinct types of jobs. The white collar jobs, because your engineers and investors and business managers. It also creates a lot of blue collar jobs for skilled and semi skilled labor. There is a Ripple Effect in these communities. I was in williamsport. There was a restaurant there that have added Something Like 40 employees and bought a big mobile kitchen so they could take it out to where the gas fields were so the people who were drilling would not have to stop. One of the diners there had a wonderful sign that said, no blood on the floor, and no cash in the drawer mud on the floor, no cash in the drawer. [laughter] you cannot rent an apartment in midland, texas because theyre so many people moving there. College graduate types, were going to be engineers, there was never really a recession for them. The kind of crisis we have in the economy is not really so much for highly skilled, highly educated people who are mobile and work and a Global Environment and a large market. It is for the non collegebound people who used to go into factory jobs, bluecollar jobs that have been disappearing because of global labor competition. This brings back something on both sides. I talked to young people lot. Mentoring them was real important. Our industry changed a lot. It used to be joe roughneck out there on the raid. Rig. Today it is so highly technical. We see so many people out there. Use the computers up on our raised floor. Use the computers up on our you see computers up on our rig floor. There are guys following what we are doing, making real time decisions. It is a different world today than it was before. An incredibly dirty business. Nerdy business. It has become that. We had an odd editorial meeting about two years ago in which someone came in and was talking to us about the need for investments in wind power and also in mandating the use of gas. Multiple choice question for you. Is he a fool, or a villain . [laughter] i think he learned a lesson or two with the wind whenever but ordered all these generators. Inkatha when everybody ordered all these generators. When natural gas gets over 6, when it is very economic. But then gas falls to 2. 50 and 3 to. Suddenly all those generators went begging. With the government also help, but have still been putting some up with the governments help, they have still been putting some up. Certainly it is a huge thing that should not be going forward. 90 billion a year, that is what you and peter to make, right . [laughter] a lot of people think that we need government policy to guide this stuff. To be fair to boone pickens, but he was arguing for was the federal mandate that commercial vehicles had to use gas and would provide subsidies to switch the engine over. That is not terribly different from what barack obama thinks about, with using solar batteries. Happy dreams and unicorns stre. Do we need guidance from the department of energy or any sort of federal policy . Can the market take care of it on its own . It ought to be decided in the marketplace. A lot of this takes a long time. Horizontal drilling took 20, 30 years. The time it takes to produce confirmations. It ought to be decided in the marketplace. Everybody converting over too cheap, natural gas for their cars . The fact is that it is not always going to be cheap. Once people start paying highway taxes like you do for gasoline, that is suddenly going to get more expensive. Already you cannot recover your cost of those conversions. Certainly do not need all us to pay for those conversions. The problem will be solved in the marketplace, particularly with what is available to us as a Resource Base today. And that is our own production. One other factor a lot of people miss, besides a Wealth Creation and all of those things, a big one is that the psychological benefit of us not being under the thumb of opec any longer. The American Public likes to be independent. We like to be free. Suddenly we can be free from what we have been under for 50 years. The psychological impact of that is huge. I have always thought the the impact of oil on american middle east policies was understated. There is an episode where he is looking at the equipment and the people and investment and he says, it costs a lot of money to steal oil. [laughter] i think youre right, theres a certain psychological advantage to it. Griffin were not for oil, no one would care about saudi if it were not for oil, no one would care about saudi arabia. Without oil, saudi arabia is yemen. Until two years ago, who knew where yemen was ordered . Was, or cared . [laughter] most of our imports come from canada and mexico theres a flip side to that. There is not really a Global Market forecasts of this point. Even the relatively cheap gas in north america, relatively expensive gas in europe. There are barriers to are exporting our production. Can you talk a little bit about the barriers to exports. You have to go through the permitting process. But we found no people or exporting it. We now found that people are exported. Dow chemical and others would say, we do not want you to do that. It might run are price up. Our price up. Them. Weeping for are there other barriers to exports . Clear a huge barrier is the need to be taken down. There were huge barriers the need to be taken down. For example, the jones act. You can ship a barrel from saudi arabia to hear across water for less than 2. You cannot load in houston and ship around to philadelphia for 2. It costs 6. 50 a barrel. It just costs everybody here a whole lot of money. We need those barriers to come down where we can normalize the price. We of had a 16, 17 difference between that [indiscernible] if the 16, when you convert that to what it is costing, 25¢ a gallon, it is a lot of money. And 5, that is almost a dime. Pretty soon, youre almost talking real money about what it costs on the coast. Why would you be shipping to philadelphia in the first place . [laughter] some of those refineries were in tough shape over the past two or three years. One or more shut down. Some of them changed hands. And certainly, they need supply. They need our supply. Now, most of the oil is moving by rail. It is not a bad way. I saw Warren Buffett last night. He loves it. That is fairly expensive way to ship, compared to transportation by pipe and also by barge. Certainly some of those restrictions ought to be lifted. Speaking of pipelines, i have a radical idea that we can build one to canada and connect some of our producers with our refineries down here. That seems to not be happening. There was a hitch. Who knows now. You will see what happens, if anything changes or not. Nolets hope there is endangered sand hills salamander up there. [laughter] we have not built a new refinery in i do not know how long california, last year, two refineries went out. The cost was an absolute nightmare. Prices went through the roof. If we had another big storm hit the east coast and knock out some refineries and distribution points, you could be looking at shortages. Why arent we building more stuff, more refineries . What is keeping that from happening . Federal permitting has been slow to come out for any new refineries. The house and a lot of addition to the courage refineries. There has been a lot of additions to the current refineries. If one of them has a problem, like chevron did with the fire, it puts the whole region and the crunch. In a crunch. That can certainly happen. There have been upgrades to existing refineries. That is not as big an issue as basically that the transportation, that is what is really hurting for. Moving it from producing areas to where you needed. After the storm, did not let them transport gas into new york because it did not meet the standard. I am sure someone in bpa has a good reason for it. I cannot imagine what it might be. Which brings me to run for political questions during a lot of people do not realize that gas drilling, fracking is regulated at the state level questions. , lot of people do not realize that gas drilling, fracking is regulated at the state level. The geology is different from place to place. You probably need different rules in the marcel shell in pennsylvania marcel shale in pennsylvania then you need and north dakota. The monster under the bed is the epa is going to come out and federalize this, which basically means the end. Youre exactly right. To graphically, geologically, there is a whole lot of reasons that it should be done at state level geographically, geologically, there is a new poll lot of reasons that it should be done at state level. Whole lot of reasons w hy it why it should be done at the state level. We need to continue state regulation. Do you think the Obama Administration will get more aggressive about this in the second term . We were fearful. Certainly there could be a lot of efficiency by allowing the state to regulate on federal lands. Understaffed, generally. The appellate little better in the last couple months, maybe because there was a limelight on how long it takes to have been a little better in the last couple months, maybe because there was a limelight on how long it takes. There is something amiss here. Would yo allowing the states o regulate on federal lands are more like the chances of seeing a dinosaur, or bigfoot . , one of the other. One or the other. It should happen, but duplication effort is tremendous there. What is washington what should washington be doing to encourage this . This is the big play of our time, anand economically. The equivalent to the Technology Boom in the 1990s. Is there anything the government can do besides stay the hell out of the way . Xm lot of things are happening right for america today. A lot of things are happening right for america today. There are several things i could be done to help that could be done to help. Rebuild the jones act. The act requiring the oil be transported under u. S. Flag ships . Yes. That is a union issue. Things like that. You dont think the longshoremen would take it well . I would not want to look forward to that. But it should happen. I saw the industry kind of turn a corner. You hear these ads on the radio, move to wherever and drive a water truck for this company or that company. Several years ago, the ads were, if you have a commercial drivers license, the company will hire you today. Now the ads are, if you can get a commercial drivers license, we will pay for you to get the commercial drivers license and put you on the payroll afterwards. Youve got guys driving crack r trucks making 75,000 75,000, 85,000 a year. Driving water trucks making 75,000, 85,000 a year. Do you have a feel for what kind of longterm impact this could make on the Employment Situation . When a lot of folks there in north dakota now come from far flung places, they have hitchhiked there to get there and everything else. As you talk about having a commercial license, they would rather train most folks anyway. You do not have to have a those companies will train you and make sure that you are safe a license. Those companies will train you and make sure that you are safe after your trade. They will do all those things. Trained. They will do all those things. Some of those companies were looking for 1000 drivers. It was a big problem. It has gotten better. You needed carpenters to need skilled people of all kinds to build infrastructure kamakur, restaurants. It was a big problem. Pennsylvania has had a situation with unemployment there. One interpretation of the election is that fracking cost mitt romney the presenthe presi. It really did make a significant difference in what turned out to be swing states. It did. And not think oklahoma was in place. I do not think oklahoma was in place. [laughter] our company has doubled the size of our Employment Base there. We are not huge employers yet. 750 people. That is double what we were three years ago. One of the environmental challenges, people worry about what you put down the wells in fracking, but it is mostly water and sand. The problem is what comes up. There is naturally occurring Radioactive Material down there. There is our sncc, barry m. Arsenic, barium. In the early days they would turn the water over to the municipal water authorities, who would water it down until they got down to the legal toxicity levels, and then dump it. The problem was, what do we do with all this waste water. They have decided, lets not a bit. They figured out ways to fill the water dum pit. They figured out ways to filter the water. That was something that had to come along with infrastructure. Transportation water and handling water is expensive. It is better to keep it and not have to dispose of it and use it over and over and over again. We have a lot of companies out there know, particularly in pennsylvania now, particularly in pennsylvania, 90 of the water they use is recycled. Over and over and over. You have got a medium there that what you are doing is carrying sand into these small fractures in the rocks. Natural fractures. There enhanced and propped open. That is basically all your doing with the water. It is just that medium to deliver that sand. I have seen two places where alternative energy works. One, there is a big refinery in the texas panhandle that has Something Like 100 Wind Turbines attached to it. When the wind is blowing it, it generates enough power to the wholergy to power refinery. I have seen wells that use solar power. We use solar power all weekend. But the sun is not always shining. The wind is not always blowing. You need a lot of gas before Wind Turbines. The mostactive for Wind Turbines. You almost need to double up. North dakota, we go through several months that you do not see the sun. One question. Who is your crew now . This is a policy conference, but my question is more technical. How do turn and 8 inch pipe r dond dyed it clear dick y you turn an 8inch pipe right . Amazing how you can do that. You do it in a 350 foot radius. The pipe will bend and still turn and all that. Is flexible to the point that you can do that. Turns around the bend. It is amazing. It is like one of those flexible straws . Yeah, but its big. Good question. Last question. Basically optimistic about the future of the Energy Renaissance . Do you think we will get through it without the epa messing it up . This aspiration has taken claim for the gameins we have me in energy. I think that we have a great optimistic case for the recovery of the economy. Based on energy. It is about a trillion dolla