Transcripts For CSPAN3 Politics And Public Policy Today 2016

CSPAN3 Politics And Public Policy Today April 18, 2016

Tuesday night for the new york state primary. Join us at 9 00 eastern. Taking you on the road for the white house on cspan, cspan radio and cspan. Org. President obama delivers his last speech at the end of the month and this coming weekend they take a look back at the previous dinner routines. Heres a poerth of what you will see. No one is prouder to put this birth certificate matter to rest than the donald. He can finally get back to focusing on the issues that matter like did we make the moon landing. What heal happened and where are big e and tupac. All kidding aside. We know your credentials and breath of experience. For example, just recently in an episode of Celebrity Apprentice at the steak house, the Mens Cooking Team did not impress d andy recognized that the problem was lack of leadership and you didnt blame lil john or meat loaf. You fired gary busey and these decisions would keep me up at night. See the speech saturday night at 10 00 eastern on cspan. The program also includes remarks by senior White House Correspondent and this years correspondents is saturday april 30th. They take you there live at 6 00 p. M. Eastern. Its one of the biggest social events in washington and its president obamas final one as president. It also features larry will more of the nightly show. The National Lieutenant Governors Association held the meeting to examine ways to advance federal state relations. This portion included key note remarks by the oil and gas Strategic Marketing director who outlined oil market trends. It has been a half hour. Good morning and i want to thank you. Nationally they were known they caused great pressure on the state budget. We love to fill up the personal cause with the low gas, but the low gas prices if challenging times in our state budget. Here is insight on the oil and gas Market Leader and you top the join us up here . Thank you and good morning. Its an honor to be with you today. Thank you for the time. My name is allister and based in london and i lead marketing for the oil and gas business. For those of you who dont know, we are a large part of general income that plays across the value chain providing services and development from the upstream through the downstream. About 39,000 people around the world and about 11,000 in the u. S. Big facilities in houston and boston and Oklahoma City and the west coast. This is clearly a big issue. Whats going on in the industry at the moment. This is where i live and breathe and i think about this every day. Just for a few minutes i wanted to share our thoughts on whats going on in the industry and hopefully give you ideas about what it might mean for your states and how collectively the industry policy makers can help to get through this in the best way. So the first thing to say and this goes without saying, no one really knows whats happening at the moment in terms of production. Its highly uncertain. Its very, very uncertain. So what i am not going to do is tell you what the oil price is going to be on december 31st. If we have learned anything over the past 18 months, people are bad at predicting that. So what i will try to do is share with you thoughts on what is driving the market. What it means for us and also what it means for you. In terms of tact and employment activity in your states and hopefully share the way we are thinking about this and give us inside about how the industry can move forward. People talked about the return to the 1980s and this crisis is caused by too much supply. That is what we believe. This is not a demanddriven crisis. There is too much fly on the market and that caused the prices to come down. The last time that happened was in 1985. After 1985, industry spending, industry activity stayed down for about a decade. If you look on the graph, you see the red line down at the bottom shows the current cycle with the peak oil price. We are way below all the price of cycles and 1985 in terms of where we are today. There signs of pt michelle will. They bounce back in the last few weeks. Up more than 50 from the low earlier in the year. Any normal environment you think is amazing. The low was so low. Bah the fact that this is a supplydriven issue means that we do not think this is going to come back rapidly. We dont think 100 oil is good planning assumption any time soon. We expect it to come back slowly. The general view i think most people share is that the oil market will start to come back to balance towards the end of this year and that will translate to activity and spending by producers next year. Clearly a lot of factors are at play. The supply and whats happening here in the u. S. And other parts of the world. There is demand. Snnlly demand is okay, but there concerns about whats happening in china and they may reduce noble demand. Particularly now that the ban has been lifted here. They are competing in the world market. And more financial play in whats happening at the moment than there was in the 1980s. If you look at the trait market which is financial rather than physical. All of which is to say i guess like you, i hope the market is going to start to come back this year. There lots of factors at play and we cant make any predictions. What can we do . What we need to do is give our business guidance and what they do. They have to make decisions about capacity and planning and how they deal with customers. You see on the graph, there is an enormous range of predictions about whats going to happen in terms of price. If you look out to 2019, estimates of the market commentators range from 60 up to about 100. That makes a huge difference in terms of whats going to happen with production. I dont know where thats going to be and when you are thinking about state budgets, you dont know either. What we are telling our business is think abouty is narios. And in particular, we are giving the two on the right hand side. We hope it will be a slow recovery. If the price stays down about 50. What would they do . In every scenario we are asking them to focus on the things we can control. Ge is a big company. But we dont control the oil price. No point in worrying about what the price will be. We can focus on the things we can control. If you hear them talk about this, you hear my ceo talk about this. The constant mantra. The things we can control in serving our customers to get through this. They are suffering at the moment. If we can help them to get through, they will remember that and its good for the industry as a whole. Its good for us. Now, with that said, we have a view on whats going to happen. In the near term, this is what we think is going to happen in 2016. Its not a pretty picture. Particularly for those of you who have a lot of onshore and nonconventional activity. We are expecting spending in the upstream to be down 30, 40, 50 . Thats on top of similar reductions last year. By the end of this year, spending could be down three quarters from what it was in 2014. Thats an enormous reduction in some places. In terms of production, again a wide range of estimates, but the production as a whole could be down a Million Barrels a day. Thats a good thing in terms of returning to balance. Not good if you think about the royalties, but thats a good thing. The most important thing i think i said at the moment is that our customers, the operators, many are not making decisions based on break evens and they are making decisions based on cash and preserving cash and preserving their credit readyings. That is how they are behaving and they will make divisions about relations and whether to complete them based on can we keep the Company Going . Can we maintain the ratings and avoid bridging our debts so that we can come through to the other side. To be looking at the rest of the world, it doesnt help you guys quite so much. Its not as bad. Its down everywhere. Middle east is the one place where they may be growing this year. Then offshore it is also down, particularly in the gulf of mexico. For lightly different reasons. They started when the oil price was well over 100. The industry has been getting so expensive. To give you an example, every year we have a lot of customers come to talk to us in florence, italy where we have a big facility. Last year one of the Senior Executives put up a chart that showed two very similar facilities from i think from the gulf and maybe from the north sea. He said we built this in 2000 and we built this in 2013 and they do the same thing. The one in 2013 costs 2. 5 times as much. Now, some of that is general inflation and some is the price of steel. Some is what i call good regulation, safety, environmental concerns. Some of it is either bad regulation or internally generated gold plating by the companies themselves. Not mandated by the tell us makers that has just increased the cost. The great example that someone gave me was you decide that you want a covered walkway from the mot ul and in the past its a walkway and people put on their jackets. You cover it. Then you have to provide heating and air conditioning and you have to increase the power and the weight on the gas turbines hopefully from ge. You increased the weight even more. You added thousands of tons of steel and more power capacity. Thats expensive. You think we have to manage that. Thats the shortterm. The back to fundamental economics. But thats what theyre doing. You know, i was at some of you may have been there, the Oil Ministers of saudi arabia said clearly, let the market decide. Now, if you look at where north American Resources sit on the coast, on lefthand side, we have a view of the cost curve of production in 2020. Existing resources were actually pretty well placed. So theres a wide range, but if you look across the ranges, you say, well, onshore, unconventionals, u. S. , canada, break even in the 30, 40 range on average today. Some are lower, some are higher, and thats okay. That competes pretty well against the rest of the world. Its not too bad, versus even the middle east. Current gulf of mexico deep water breaks even between 20, 50 a barrel. Thats pretty good. Thats actually better than many other places around the world. Speaking as a brit, the north sea has huge challenges at the moment because its much, much higher for them. The problem for north america comes when you look out and say what and about new production . Unconventionals where the decline rates have so great year in year. If you look out to new fields that are forecast to be producing in 2020, you see those breakevens go up, unconventionals 40 to 80. For the gulf, 35, 75 a barrel. If we are in a world of 60 oil in 2020, a lot of those developments have problems. So as an industry, we need to think about how to bring those down. Now, a lot of the focus, and in recent years, its been about getting pricing out of the supply chain, increasing productivity. In the onshore price, total cost to develop barrels has come down 20 , maybe 30 . Its theres a little bit more to go. Offshore has been a similar journey, its slower because the projects are bigger. How do we keep that going . Its something the whole Industry Needs to focus on. We need to focus on it, customers need to focus on it, you know, and there are roles that your organizations can play in terms of thinking of regulation, taxation to optimize the benefit for the state as a whole, which is partly taxation but also the employment and activity that goes with it. Now, lastly, looking out, a pretty gloomy picture. But why do we still like this . The answer is that, you know, we at ge like the industry because we think, for all of the shortterm uncertainty, one, its not a surprise to us, cyclical industry. Weve all known than cycles go down and then they come back. But more importantly, this is driven by the worlds need for energy. Its a global market. Around the world people continue to get richer, they move to cities, they need more energy. You have to supply that from somewhere. If you look at, you know, the big source of Production Growth in recent years, opec, deep water, and north american shale, you can get to meet demand after 2020 from two of those three, just about, if you make some assumptions about china slowing down. Theres no way you can meet that demand in 2025. You will not get there our view is to get to 2025, the amount of oil and gas the world will need, you need all of those things. As an industry we have to work out a way of making them happen. So, thats why we still like. Thats why were still investing in the industry as ge. We particularly like gas as well. We believe that gas is a major fuel of the future, gas demand is growing twice as fast as oil, and lng is growing another two, three times on top of that. The u. S. Has become an lng exporter. That is going to be a huge driver of future energy consumption. So, what does that mean . Red lights flashing, which fits at the end of the slide. So, just to final thoughts, innovation and productivity are critical here for all of us. I invite you to think about the role we can play. We like to a partner to our customers but to regulators, states in thinking about that. We need to get costs down, because low costs resources will win. But that does not mean abandoning a focus on safety and the environment. We have to keep the license to operate. You know, theres lots of noise about the oil and goose industry at the moment. We must keep a license to operate. We cant relax that focus. But nor can we plan on the basis of a rapid return of 100 a barrel of oil. Were confident this industry has a lot of legs and for many of your states will continue to be a major driver of employment activity and taxation. Thank you very much. [ applause ] we are all hoping wed here its going to be 100 next year. Any questions . Thats a first. Well, weve got a great mixture of oil and seafood in louisiana, so we balance it well. Of course, with the oil spill, we balanced it too well. Id like to keep it separate. But i have a Great Respect for the balance between energy and the environment. So im pleased to introduce General Electric paul due set to present National Water Energy Environment stewardship. Its always fun to be around the louisiana governor because theyre the only person that can pronounce my name right. I am, again, honored to be here as always. This is an annual award for us. I believe this is the sixth year that by the way, thank you to the Lieutenant Governors Resolution Committee yesterday for recommending at least the renewal of this partnership between General Electric it lieutenant Governors Association. As alley staistairs alluded to, award is designed to try to capture in some innances an individual policy initiative or a particular piece of work. And in other cases a more career oriented commitment towards the energy and the environmental balance. All right . Its clear, i think, from what ali did stair said and the things that Lieutenant Governor alluded to, that energys really important. While we all love cheap energy, you know, there are jobs and other consequences that are associated with that cheap energy. But were concerned about the environment and how far you go along the continuum thinking about the environment does not negate the reality that there is a balance point. There is a place for Getting Energy right. And so this award is designed to reach out and try to highlight examples of in this particular case, work in natural gase that has helped get that balance right from rely from state revenue perspective. So we take nominations from almost anyone who is willing to nominate a Lieutenant Governor to receive the award, and we go through evaluation, in this particular instance, recognizing Lieutenant Governor who has seen both the energy and the environmental benefits that devolve to their particular state in using natural gas as a transportation fuel. Recognizing and trying to promote and encourage the use of that natural gas for state fleets, state vehicles, state equipment, to capture both the economic benefits, the jobs benefits that flow from the production of natural gas and then also the virenvironmental benefits from using natural gas rather than alternative fuel. Im pleased and honored to present this award this year to the Lieutenant Governor from the state of texas, dan patrick. I will be very brief, because lunch is around the corner. Our initiative, and a campaigned on this in 2014, to begin converting our government fleets to natural gas vehicles. T. Boone pickens, many know that name, famous oilman, has been trying to push washington on the same issue. One of the things he taught me was, dont focus on consumer vehicles. The consumer vehicles are a long time down the line. But as more companies, like u. P. S. Is changing to natural gas vehicles for their trucks, more companies and Government Entities eventually move to natural gas for fleets and vehicles, eventually consumers follow as they drive those vehicles at work. We have 31 senators, 20 republicans, 11 democrats, and as Lieutenant Governor i assign bill numbers. The top 20 bills are reserved for my priority. I assigned this as bill number 12. And asked a democrat from san antonio to carry the bill. Who had compae to a natural gas summit i saw in the audience a year before i was elected. He wanted to carry the bill. Its and a bipartisan effort. All of the states, 28,000 vehicles, not counting Law Enforcement vehicles, 28,000 vehicles that through attrition over a decade we could replace 75 of the vehicles. It would have saved taxpayers millions. It would clean our air. And it would have created jobs. When i decided to push this legislation, i immediately went to the oil industry, and went out to midland, texas, met with the oil industry to make sure producers and drillers were on board. Not everyone was on board but id say 90 of the people were on board from the oil industry. The refineries were not in favor, honestly, you have resistance from them. At the end of the day, the bill passed out in the senate 283, you may know paul, i forget. After

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