PW: CERA WEEK 09 : “Doom and gloom”

As heads of the largest Oil & Gas, Power and Alternative energy companies gathered at the Galleria in Houston Texas last week the air was filled with cautious optimism and in many cases gloom and doom.

Generally speaking, the heads of energy companies were more optimistic while economist and consultants were not.

The CERA folks were well organized and very professional, as usual. Daniel Yergin, the Chairman of CERA is definitely in his element, well known by everyone and a skilled moderator. His questions were challenging, insightful and his manner non combative with the speakers or panelist.

CERA is an invitation only event and very selective. The object is to gather the best and most influential players currently involved in the energy industry. The conference is broken down into daily topics such as oil, gas (including LNG), Power and Alternatives. Nuclear was also discussed.

The opening day's featured speaker the Hon. Edward Markey, Congressman from Massachusetts, Chairman, House Energy and Commerce Subcommittee on Energy and Environment; House Select Committee on Energy Independence and Global Warming . Without giving to much detail at the conference the Democrat does support higher fuel efficiency for autos, opposes nuclear energy and is tough on oil and gas companies drilling in the USA. He will be instrumental in implementing President Obama's energy plan which will focus on alternate forms of energy and propose new laws affecting climate change.

Tuesday was Oil day and the keynote speeches were given by BP CEO Tony Hayward, Royal Dutch Shell CEO Jeroen Van der Veer and Ibrahim Al-Naimi, Saudi Arabia's Minister of Petroleum and Minerals Resources. The CEO'S stressed the need for continued investment by the industry in spite of the economic down turn. When the economic situation gets better demand for oil and gas will continue to grow and could double by 2050. The Saudi Minister's message was to maintain stability in oil and gas prices in the face of the global recession.

Wednesday was Gas day with a morning session dedicated to LNG which stressed the large capital investments and the long lead time required to develop a project. The keynote speaker for the day was Gerhard Schroeder former German Chancellor. While not attacking recent shortages of gas from Russia he did state the need for more cooperation between Russia and western buyers as they are dependent on each other.

Aubrey McClendon, Chairman and CEO of Chesapeake Energy was more optimistic in tone saying that the recession will end and demand for natural gas will grow and projects in shale will be viable. There are huge reserves of gas trapped in shale in the USA but expensive to develop. A similar line used by T. Boone Pickens but effective. The result of course would be to reduce United States dependence on foreign oil and gas.

Thursday and Friday were dedicated to Power and Alternative Energy. At lunch on Thursday the keynote speaker was Gerard Mestrallet CEO of GDF SUEZ and he did say the there is a future for nuclear power development and his company would be a part of that growth. Dinner that night should have been billed as the “doom and gloom” banquet as the panel of experts was quite pessimistic in varying degrees. Daniel Yergin was more optimistic. The consensus among the panelists was that “2009 is lost” and that recovery will not start till 2010 or 2011.

Friday, the last day, was still about power but also included alternatives. The talk was about smart grids and smart meters all of which will improve the efficiency of distributing electricity and for households, managing their electrical consumption better.

On alternatives there was a lot of talk around the future of carbon capture and coal to liquids.

As usual, the turnout at this year's CERA week was very good with participants from all over the world and excellent industry coverage. Let's hope that next year's meetings will be more upbeat and oil and gas prices at better level for producers while still economic for consumers.

Petroleumworld

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Petroleumworld News 02/27/09

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