Cambridge Energy Research Associates: CERAWeek 2016 Daily Summary: Wednesday, 24 February

27 Apr 2016 IHS Markit Energy Expert

Wednesday of CERAWeek 2016 began with a set of concurrent Strategic Dialogue Breakfasts, which addressed infrastructure innovation; natural gas's expanding role in North America, the Middle East, North Africa, India, and Latin America; new entrants in the LNG markets; the crucial role of game-changing technologies for the oil and gas industry; and the increasing focus on the heating and cooling sector.

Catherine Robinson, IHS Senior Director, led Wednesday's Strategic Dialogue Breakfast session on "The Future of Heating and Cooling: Simple but Big Impact?" Joining her were Frank Amend, Head of Market Analysis and Strategy, RWE; Denise Kuehn, Director, Energy Efficiency Services, Austin Energy; Wim Groenendijk, Vice President, International Affairs and Regulation, Gasunie; and Carlo Germano, Senior Vice President, Innovation and Markets, Veolia Environment. The panel discussed developments in the sector, particularly the impact of new technologies that offer solutions for comfortable and reliable heating and cooling while lowering GHG emissions and keeping costs down. The panel focused on needed steps to reduce emissions in the sector and on the achievable synergies between the heat, power, and other sectors to reduce energy waste. They also discussed what a future utility would look like and how the heating and cooling sector will change in the future.

Gina McCarthy, Administrator of the US Environmental Protection Agency (EPA), gave the Wednesday Opening Plenary address. She emphasized that EPA is keeping its engine moving to implement the Clean Power Plan and continues to work with every stakeholder to provide a stable and secure environment for investment to be made and for a twenty-first century energy system to be built. EPA's ability to support states and to meet ambitious goals is not going way, she stated. She said that the energy market is shifting and renewable energy provides an opportunity for innovation, as does energy efficiency, which will keep demand for fossil fuels down and prices low. She touched on EPA's proposed rule to reduce methane emissions, which she said will be cost effective and protect continuous growth of the natural gas industry.

Michael Stoppard, Chief Strategy of Global Gas at IHS, chaired the Global Gas Plenary on Wednesday morning. The panel included Iain Conn, CEO of Centrica; Alexander Medvedev, Deputy Chairman of the Management Committee at Gazprom; Yuji Kakimi, President of JERA; and Meg Gentle, President of Marketing at Centrica. Each presenter offered a personal perspective on the future of gas around the world from the point of view of both consumers and producers. The discussion covered the impact of US LNG exports (which began on this day), global gas prices, and international gas trading hubs.

Daniel Yergin, Vice Chairman, IHS, interviewed Andrew Liveris, Chairman and CEO of the Dow Chemical Company, in the Wednesday morning CEO Plenary. They discussed the pending merger of Dow and DuPont and the commitment that Dow has made to use cheap, plentiful natural gas supplies in the United States to produce greater value to the US economy by expanding the domestic manufacturing base and adding more quality jobs. Mr. Liveris also stressed the importance of greater engagement between business and government, particularly with regard to the environment. He stressed the important role that natural gas should play in addressing climate change and other environmental imperatives.

Jim Lockhart, Director, North American Supply at IHS, chaired the Strategic Dialogue "North American Shale-Productivity Progress." Joining him were Greg Leveille, General Manager, Unconventional Reservoirs Technology Program, ConocoPhillips; Hans-Christian Freitag, Vice President, Integrated Technology, Baker Hughes; Mark Zoback, Benjamin M. Page Professor of Geophysics, Stanford University; and Stephen Beck, Senior Director, North American Supply, IHS. The discussion focused on what is driving productivity gains today. The panelists agreed that the technology improvements and the enormous size of the unconventional reservoirs are the main drivers behind the shale revolution. As the industry gets smarter in understanding the rock properties, there is a great deal of upside potential in recovery factors from these reservoirs.

Rafael McDonald, Director, Global Gas & LNG, IHS, chaired the "LNG Costs and Innovation" Strategic Dialogue. Joining him were Maurice Brand, Managing Director and CEO, Liquefied Natural Gas Ltd.; Patrick Mullen, Executive Vice President and Operating Group President of Engineering & Construction for CB&I; and Samuel Thomas, Chairman, CEO, and President, Chart Industries. The panelists agreed that although liquefaction costs have continuously been addressed by the LNG value chain, the issue is gaining more prominence now as LNG is being pressured to compete for market share against other depressed commodities. The participants identified train modularization; optimal site selection; working with focused EPC contractors; using for-purpose, simple designs; adopting innovations from other industries; rotating vendor equipment; and using proven technology as common ways to lower costs.

In other late morning Strategic Dialogues, presenters and delegates discussed the future of offshore E&P, Europe's gas supplies, Asia's gas markets, dealing with global methane emissions, a fresh look at the global LNG market, gas midstream and infrastructure financing, and energy and petrochemicals.

In Wednesday's luncheon keynote address, the Honorable Dr. Ernest Moniz, Secretary of the US Department of Energy, announced that the United States, Canada, and Mexico have launched the North American Cooperation on Energy Information (NACEI) website-a significant framework for sharing energy information beyond just the data. He also called this a historic day for the US energy industry, as the first LNG export cargo sails to Brazil. Secretary Moniz said that late last year 20 countries launched the Mission Innovation initiative, committing to double their investment in clean energy research and development from current levels over the next five years. He added that shale oil and shale gas have already made the United States an energy exporter and have had an impact on the global energy market.

Carlos Pascual, Senior Vice President, Global Energy, IHS, chaired the Ministerial Plenary Dialogue. Joining him were the Honorable Pedro Joaquín Coldwell, Secretary of Energy, Ministry of Energy of Mexico; the Honorable James (Jim) Gordon Carr, Minister of Natural Resources, Canada; the Honorable Josh Frydenberg, Minister for Resources, Energy & Northern Australia, Australia; and His Excellency Dr. Yuval Steinitz, Minister of National Infrastructure, Energy & Water Resources, Israel. The panel discussed the latest developments and challenges facing the gas industry and explored gas-related geopolitical relationships and energy security, developments in infrastructure globally, the role of innovation, and how these countries are bringing environmental policy practice and business incentives together.

Ed Kelly, Managing Director, Americas Gas & Power Consulting, IHS, moderated the Wednesday Midstream Plenary "Future of the Midstream." Joining him were Greg Armstrong, Chairman and CEO, Plains All American Pipeline; Jim Teague, CEO, Enterprise Products Partners; and Gregory Ebel, Chairman, President, and CEO, Spectra Energy Corporation. They discussed their respective companies' performance and operations, their views on the current state of the midstream sector, and their perspectives on future challenges. More specifically, the speakers provided insight into how the sector's capacity, construction of infrastructure, and demand from producers and consumers will impact the midstream sector in the near and long term.

Chris Holmes, Vice President of Global Gas & LNG for IHS, chaired the Wednesday afternoon Gas Markets Plenary "Gas Markets in a Volatile World." Joining him were Martin Houston, Founder of Parallax Energy; Klaus Schaefer, CEO of Uniper; and Rajeev Mathur, Managing Director of Mahanagar Gas Limited in India. The panel discussed the role of gas in today's volatile market from the perspective of both supplier and buyer. The panelists agreed that the LNG industry is on the brink of a new era, potentially breaking down regional walls and creating a truly global gas market.

Daniel Yergin led the Wednesday evening panel "The Future of Americas E&P Plenary." Joining him for this discussion were David Hager, President and CEO of Devon; Scott Sheffield, Chairman and CEO of Pioneer Natural Resources; Lorenzo Simonelli, President and CEO of GE Oil & Gas; and Ali Moshiri, President of Chevron Africa & Latin America Exploration & Production. The panel discussed the significant improvements in productivity and cost savings in the industry but stressed that a higher oil price is needed for growth. All of the panelists emphasized the importance of creativity and innovation to move the industry forward and protect it from another downturn like the current one.

Wednesday's agenda wrapped up with several informal Insight Dinners, each with a theme: women leaders in energy, the future of solar power, cyber security, the US Clean Power Plan, "smart" technologies, and US energy policy and politics.


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