1. AAPG Distinguished Lecture SeriesPresents theJ. Ben Carsey Lecture Energy Trends of the Future Matthew J. Telfer Border to Border Exploration, LLC Austin, Texas

2. Three Themes Rapid Advances in Technology and Circumstances Getting Accurate Information Environment, Politics and Economics

3. Quadrillions of BTUs per Year – U.S.A. 2040 2005 100 100 Oil and Gas 50 50 Coal Hydro and Nuclear Wind, Solar, Biomass 0 2025 2020 2035 2005 2010 2015 2030 EIA 2010

4. Quadrillions of BTUs per Year – U.S.A. 2040 2005 100 100 Oil - Liquid Fuels – (Ethanol) and Natural Gas Oil and Gas 50 50 Coal Hydro and Nuclear ?? Wind, Solar, Biomass 0 2020 2035 2005 2010 2015 2030 2025 EIA 2010

5. AAPG Distinguished Lecture Series1984 “In the oil business, every ten years, half of what you know is obsolete” Bob Weimer CSM

6. Environment Economics

7. Free Market Supply and Demand Politics Cheap Commodities Lead to Inefficiency and Waste Cost Controls and Mandates Lessen Innovation and Motivation Cost vs. Benefit Republicans vs. Democrats Polarization and Extremism, A Race to see who can Handout the Most to Build Their Constituencies

8. Politics Where’s the Balance?

9. 2 CO World Emissions 29.7 Billion Tons/Year 2010 42.4 Billion Tons/Year 2035 7 Billion People on the Planet EIA 2010, National Geographic 2011

10. World Energy-Related Carbon Dioxide Emissions By Fuel Type 1990-2035 Billion Metric Tons Coal Liquid Fuels Natural Gas Source: EIA Energy-Related Carbon Dioxide Emissions May 2010

11. International Energy Agency IEA – Forward View World Energy Outlook 2010 • Kyoto Protocol – 1997, Copenhagen Accord – 2009 • Objective set: Limit change in Earth Temperature to 2 degrees Celsius = CO2 Concentration of 450 ppmv • Keeling Curve • 1960 2010 2011 2050 • 315 ppmv 385 391 450 ppmv • Current Policy Scenario – 1.4 % Energy Growth • New Policies Scenario – 1.2% Energy Growth (If present plans are implemented) • 450 Scenario - .7% Energy Growth • 450 Scenario would take: $18 Trillion between 2010-2035, “rate of technological transformation would be unprecedented“

12. What Will the Effects of CO2 be on Climate?How Long Will the Increase in CO2 Last?Need Answers – A Lot is at Stake

13. Sink 1 Sink 2 Sink 3 Sink 4 Sink 5 Wikipedia

14. CO2 Studies of Carbon Cycle from Pulsed Models Various Sinks Work at Different Rates, with Different Degrees of Effectiveness Higher Concentrations of Atmospheric CO2 are Dissolved into Ocean Surface Waters on the order of 200 to 2,000 years – BUT, Leave the Atmosphere with Elevated CO2 Levels. These are Drawn Down Further via Mixing with Deep Oceanic Waters and Dissolution of Minerals on Timescales of 3,000 to 10,000 Years. Paleocene-Eocene Climate Event: 150,000 years to Return to Pre-Event Levels Archer, et al 2009 Annual Review of Earth and Planetary Sciences

15. The Effects of CO2?Shifts in vegetative zones, Regional climate changes, Rise in sea levels, Stronger storms, Ocean acidification, Buffer to climatic changeHow Long Will the Increase in CO2 Last?Thousands of YearsWhat Can Be Done??? Or, Do We Have to Live With, and Adapt to Climate Change? 81,000,000 tons of CO2/day Perhaps 800,000 tons Removed by US Efforts

16. If the US Replaces 5 Quadrillion BTUs of Energy use with Renewables, out of 500 Quads used worldwide each year, 1% of worldwide output of is CO2 Reduced 81,000,000 tons of CO2/day Perhaps 800,000 tons Removed by US Efforts Is That a Solution?

17. 2012 – Drew Shindell, et al of NASA2007 - Mark Jacobson of Stanford Actual Global Warming – CO2 48%Soot 16%Methane 14%Halocarbons 9.7%Ozone 8.6%Nitrous Oxide 4.6%US efforts controlling CO2 less impactful on Global warming? Are Soot and Methane easier to contain?

18. Is the Agenda to Get Funding for Research? Is The Quest to Prevent Climate Change? Is the Agenda to Build Constituencies to Get Elected? Is the Agenda to Replace Oil Companies? Is the Agenda to Provide Abundant Energy Is the Agenda to Make Money?

19. Energy Sources Oil Natural Gas Natural Gas Liquids Coal Nuclear Hydropower Geothermal Biomass Wind Solar Renewable, But not CO2 Neutral Renewables

20. Electricity??? Electricity only transports power that was generated elsewhere Electricity is not Energy

21. Renewables Wind Solar Geothermal HydropowerBiomass/Ethanol**

22. Renewables Government-Backed 30 States have Enforceable Renewable Portfolio Standards (RPS) Producers Earn Renewable Energy Credits Sell to Energy Distribution Companies Paid for in the Rate Base or by Surcharges, and Federal Production Tax Credits - 1.1 – 2.2c/KwH American Jobs Creation Act (2004) - renewables Support Renewable Energy Act (2010) (DOE) Wikipedia, DOE website

23. Federal Government State Governments Municipal Governments Environmental Protection Agency Power to Promulgate Regulations and Enforce Them Based on Mandates and Authority Given to it by the Federal Government NOW – CO2 Economic Concerns Environmental Concerns Private Industry Rest of the World

24. Federal Government $$$ $$$ State Governments Municipal Governments Environmental Protection Agency Power to Promulgate Laws Based on Mandates and Authority Given to it by the Federal Government Department of Energy Economic Concerns Environmental Concerns Los Alamos, Bell Lab-style R&D Private Industry Rest of the World

25. $$$ Federal Government State Governments Municipal Governments Environmental Protection Agency Power to Promulgate Laws Based on Mandates and Authority Given to it by the Federal Government Department of Energy Economic Concerns Environmental Concerns, including Global Warming JOBS Private Industry Taxes Rest of the World

26. Wind AbundantSupply, Requires Significant Infrastructure, Including Redundancy Currently 1.9% of Electric Supply Government Mandates, Subsidies - Federal Production, Investment Tax Credits; Interest Free Financing (via Energy Bonds to Gov. Entities) and Loan Guarantees (Farmers, Ranchers and Rural Businesses)

27. Source: EIA Wind Turbine Locations – Wind Power and Renewable Portfolio Supply Demand

28. Solar Abundant Supply Applications: Thermal and Direct to Electric Lower Prices from Chinese Manufacturers Competitive Weakness Against Cheap Energy - Low Oil Price is Bad for Solar Government Mandates, Subsidies 3 Recent Bankruptcies = Culling High Cost Makers Solyndra, Evergreen and Spectrawatt

29. GeoThermal Better Plants at Existing Sites

30. Hydroelectric Best Sites in U.S. have been Developed More Foreign Sites Will Be Developed

31. Source: IEA Annual Energy Outlook 2011

32. Effect of Renewables By 2035, Only 5 to 10% of all of CO2 Input from U.S. has Been Diminished Is That a Solution to the Problem of CO2?

33. Biomass Corn to Ethanol Cellulose to Ethanol Wood Products Used in Electric CoGen* * Not CO2 Neutral, Based on Long Atmospheric Residence Times

34. Federal EPA Clean Air Act, 1970, as amended - RFG reformulated gasoline - RVP Reid Vapor Pressure (Summer) - Winter Oxygenated Fuel (CO control) Energy Independence and Security Act 2007 - EISA - Fuel Pathways to Provide “Appropriate Greenhouse Gas Reductions” - RFS 1 7.5 B Gallons by 2005 - RFS 2 36 B Gallons by 2022 (21 B Gallons non-corn starch) - Expanded to include Diesel 2009 - Application by GrowthEnergyto increase E10 to E15 Granted October 2010 for model years 2001 and younger Allows a Significant Expansion of Ethanol for Motor Fuel

35. Ethanol Explosive Growth Industry Located in Rural America 600,000 BEPD

36. Renewable Fuels Association • 10% of Current Gasoline Market • Gearing up to Export Ethanol • 70,000 Direct Jobs • Worldwide Asset Base is Rich and Complex • RFS – Renewable Fuel Standards • - Mandates by 2022 21 B Gallons of the 36 B Gallons of Renewable Fuels use be from non-corn starch Feedstocks • Grasses, Woody Biomass, Garbage and Algae • Volumetric Ethanol Excise Tax Credit (VEETC) • - .45c/Gallon – 1 Year Extension 2011 = $6 B • Agriculture Subsidies Counted? • Tariffs on Brazilian Ethanol - .54c/Gallon • 2.3 Units of LIQUID Energy per 1 Unit Energy Input Renewable Fuel Association Website

37. GrowthEnergy – Driver Behind Ethanol • Goal: Replace 90% of US Gasoline Usage with Ethanol • Ethanol Boost Direct Engine (EBDE) • “Live Green, Go Yellow” • Well Organized, Politically Savvy • Spokesman: General Wesley Clark • USDA, Energy Department, Navy - $510 MM Drop-in Aviation and Marine Biofuels • White House Rural Council GrowthEnergy.Org 2011

38. Ethanol = Liquid Energy 20 years Source: GrowthEnergy.org

39. Coal (US) 6 Trillion Tons in Place Recoverable US Reserves – 260 B Tons 222 Years Supply at Present Rate DOE, US Mining Association

40. American Coal Foundation Website

41. US – 260 BnsTons - 222 Years at Current Production Levels

42. A Critical Resource

43. Nuclear Siting Plants is Critical Fukushima Earthquake and Tsunami Refocused on Risk of Natural Disasters: Earthquakes, Hurricanes, Tornados, Terrorism Also, Radioactive Waste Products = No Significant Additions

44. Net Manufacturing Employment 1994-2007 -3,654,000 - Wikipedia Nafta Recessions

45. Energy Sources for Electrical Production Nat. Gas Petroleum Wind Nuclear Nat. Gas Coal Hydro Rural Electrification Trends of the Past give us Perspective for the Future

46. Source: NaturalGas.Org

47. Our Products Oil Natural Gas Natural Gas Liquids

48. Oil Production Stream Gas Condensate Well Refinery Gasoline, Petrochemicals Gas Pipeline Quality Gas - Methane Processing Plant Pipeline Burnertip Fractionation Plant Natural Gas Liquids Ethane Butane Propane Pentane Dew Point Porous Rock Formation

49. Oil 99% of all Transportation Runs on Oil Liquid Energy

50. Oil Petrochemicals Detergents, Fertilizers, Medicine, Paints, Synthetic Fibers, Rubber, Asphalt, Lubricants, Roofing Compounds, Tars, Creosotes, High Viscosity Liquids…………………………………………………….