Angel Gonzalez, Dow Jones bureau chief, presents "Covering the Green Economy - The Future of Energy" in a Webinar hosted by the Donald W. Reynolds National Center for Business Journalism. For more information, please visit http://businessjournalism.org.

1. The future of energy in a greening economy

2. Energy is a big, profitable business.
Five of the largest 20 companies by market capitalization are
energy companies
Company Market Cap
No. 1 PetroChina $329 Billion
No.2 Exxon Mobil $316 Billion
No. 13 Petrobras $186 Billion
No. 18 BP $177 Billion (now halved)
No. 19 Royal Dutch Shell $176 Billion
Source: FT, May 2010

3.  World consumes 86 million barrels of oil a day
 The United States consumes nearly a quarter
of that amount, but demand has peaked
 China is rapidly catching up. At about 8
million barrels of oil a day, 2nd
-largest user
 Saudi Arabia, the world’s largest producer,
produces about the same amount China
consumes.

4.  Business boomed in the 2000s, as developing
countries, especially China, began buying
cars en masse
 High oil prices led to rising nationalism,
locking traditionally dominant Western
companies out of many available resources.
 Top company roster beginning to resemble
the new energy reality: China, Brazil, Russia,
in the lead.

5.  Western oil companies, seeing their onshore
fields decline, sought bigger game in
deepwater and in Canada’s tar sands.
 The price of oil, high despite the recession,
makes it affordable to drill in those areas.
 Drilling in those areas comes at a significant
environmental and financial cost.

6.  Canada’s tar sands are close to major
markets in the U.S. and China--- but they are
an eyesore. Plus, their carbon footprint
exceeds that of, say, Saudi oil.
 They’re awfully
expensive to exploit.

7.  The deepwater, since the 1990s, has been the
most promising area for growth. In 2020, 10% of
global oil production will come from deepwater,
double today’s rate.
 Brazil, West Africa, the U.S. Gulf of Mexico --
that’s where the last elephants are. Brazil alone
will account for half of future deepwater
production.
 Western majors like deepwater because they
get a lot of bang for their buck – and so far they
have few competitors in the area.
 Deepwater drilling seemed safe.

8.  April 20: an explosion aboard a Transocean
rig killed 11 and unleashed the worst marine
oil spill in history.

9.  Responders unprepared to handle
unprecedented scale, depth of spill
 Some say industry went ahead of its
capabilities
 A whole region – the Gulf Coast – came
grinding to a halt as 4 million barrels of crude
poured into the ocean.
 Heavy environmental impact in a fragile,
populated region

10.  Deepwater drilling, which made oil
production in the U.S. rise after a long
decline, had been at the center of U.S. energy
policy. Now there are doubts.
 The environmental impact in the region is still
unknown.
 Deepwater development is likely to slow
down in the U.S. as regulators overhaul their
review processes.

11.  Other deepwater basins -- offshore Brazil,
West Africa, eastern Canada – seem to be
nonchalantly moving ahead with
development.
 Petrobras, Brazil’s oil giant, raised $67 billion
in the world’s largest equity offering in
September and will use the money to tap its
offshore riches. It’s a sign that investors are
still betting big on deepwater’s future.

12.  BP is becoming a smaller company after having
shed assets to pay for billions in damages. Hefty
civil and criminal penalties likely to apply.
 Small companies face likely exile from Gulf.
 A drilling moratorium was lifted before its
expected expiration date, but industry thinks a
“de facto” moratorium remains in place.
 Big Oil companies are creating rapid-
deployment oil-spill-response teams to soothe
regulators’ concerns

13.  Natural Gas

14.  All majors – Exxon, Chevron, Shell -- are
betting big on natural gas. Exxon says it will
be the fastest-growing fuel until 2030, in a
carbon-constrained world.
 Abundance in North America helps fuel
fantasies of energy independence.
 Could help replace coal and clean up power-
related emissions.

15.  Natural gas is the cleanest-burning
hydrocarbon
 It was once impossible to ship, but now can be
traded between continents thanks to
liquefaction technology. As new deposits in
Qatar and Australia are developed and LNG
terminals built in Asia and the US, a global
market developed.
 Huge deposits found in North America –
locked in rock formations known as shales.

16.  The F-word: Fraccing. Critics say it consumes
too much water and poisons water and air.
 Many of the most productive shale
formations are near heavily populated areas:
the Marcellus Shale in Pennsylvania and the
Barnett Shale in North Texas.
 Oil spill likely to result in tighter regulation of
fraccing techniques.

17.  Some say the spill could help spur the
development of renewables.
 The U.S. economic and political crisis,
however, makes it unclear. Hopes for
sweeping climate -change legislation have
been dashed.

19.  Renewables are hard to scale.
 Mostly experimental and uneconomic at current
energy prices.
 Some traditional biofuels, such as corn and
sugar ethanol, have made large inroads. Others,
such as biodiesel, have stalled.
 Investment in renewables pales in comparison to
investment in traditional oil and gas. Exxon: $25
billion/yr. in oil and gas capital projects vs. $600
million in five years in algae.

20.  Cellulosic ethanol: made out of vegetable
waste, potentially inexhaustible – and
inedible – feedstock.
 Algae: reproduces quickly.
 Oil companies think ethanol and diesel from
these sources can seamlessly meld with
existing infrastructure.

21.  Biofuels are likely to compete with natural
gas to fuel the transportation sector.
 Biofuels, plus more efficient engines, could
help maximize the amount of crude we have
left. (Oil production, say experts, could top at
100 million barrels a day.)
 Natural gas could fire the power plants that
will propel electric vehicles.

22.  Oil spill-related: new regulation is likely to transform exploration
of both onshore and offshore fields in large parts of the U.S.
Expect the Bureau of Land Management and the Bureau of Ocean
Energy to be more vigilant.
 Emerging shale plays: frenzied activity in shale formations from
south Texas to North Dakota are transforming the landscape.
 Jobs: green lobbyists say clean tech could generate thousands of
jobs. Fossil-fuel lobbyists say traditional sources of fuel already
account for a significant part of the U.S. workforce. Closely
tracking job creation in these industries could help inform the
debate.
 Natural gas: the replacement of coal-fired plants by natural gas-
fired facilities is likely to occur in many locations. Problem is: what
if natural gas prices spike, as they once did, pinching customers?

23.  Energy Information Administration –
www.eia.gov
 Bureau of Ocean Energy Management ,
Regulation and Enforcement-
www.boemre.gov
 Federal Energy Regulatory Commission
www.ferc.gov

24.  Feel free to reach me at
 angel.gonzalez@dowjones.com
 713-547-9214