Don Hrap, President of the Americas of Conoco Phillips

good evening everybody my name is Bob Simon Schwartz I’m the president for the Montana world affairs council I see we’re competing tonight with a country-western concert over at the field house so I think that’s what it is just judging by the dress up so if somebody knows who’s playing tonight please let us know but they look quite busy over there so again I welcome everybody here this evening thank you for taking time to attend those of you who are not familiar with the world affairs council we’re a nonprofit nonpartisan entity that has been in existence for over ten years we have sponsored over 200 guest speakers along with our education initiatives which is the Montana WorldCat standing Montana world quest competition we started that six years ago with four high schools this past February we had over 60 schools competing from the state of Montana winning team goes on to national competition in Washington and Montana is always done extremely well which is a reflection of our teachers and our students in this state so the council welcomes you here tonight it’s my pleasure to introduce our speaker Don harp who is here from ConocoPhillips Don I think brought a little bit of sunshine wind and rain because I was a little worried about that we know this is a beautiful time of the year and with the smoke that we’ve all been enduring over the last month to have this break as a pleasure and to have him and his colleagues actually get to see how we look under the right circumstances it’s also enjoyable for us here in Montana so if we go through this again next summer we will purposely schedule you to come back knowing that you bring the good weather with you so there we go just a little background hunt on the force excuse me before assuming his present position Don was president of the lower 48 region and prior to that senior vice president of Western Canada gas with the company he joined ConocoPhillips in 2006 through the merger with Burlington resources serving as a senior vice president of operations for burlington canada earlier he was vice president for the North American division at Gulf Canada resources where he worked for 17 years he assumed his current role in 2009 leading the development operation and services related to the company’s exploration and production business in the lower 48 region of the US and Latin America Don currently serves as the chairman of the API upstream committee and is at-large director for the independent Petroleum Association of America mr. ARP graduated from the University of Manitoba with a Bachelor of Science and mechanical engineering in 1982 in 1995 he graduated from the University of Calgary with a master’s in business administration and the benefit those who have chosen to come out tonight is to have somebody of his background and expertise talk about an industry that is so critical to our everyday lives whether its geopolitical the social component our economy or just what we consume on a daily basis to have his insight and ability to articulate what is currently happening and some of the issues that will have to be confronting in the years to come is a real opportunity for you those who have come out tonight to be able to listen and also to share your questions so Don will speak roughly about 20 minutes maybe to a half hour but what we want this more than anything is to be a relationship with the audience in terms of your questions and I’ll be happy to be here to entertain those so no further ado God thank you great thank you very much appreciate you just have to move some papers here so I can get mine so first of all it’s great pleasure to be here Missoula and Montana is a place that I just rail off and it’s beautiful and I was told earlier today that we did luck out by coming after some of the smoke that that’s been here for a number of weeks and you know clear and crisp and beautiful weather and part the reason I love the region is I’m originally from Canada as you heard in my bio from Calgary and I was born in Calgary I went to school outside of Calgary and came back to Calgary to work and it’s been a fair amount of time Montana skiing and doing outdoors and traveling with my family and so it’s a place that I love coming back to and the other part about Montana is it feels close to home you know a lot of the kinds of things that are going on here very similar to what I’m used to back end in Calgary I currently live in Houston so it’s very different very different from the

lifestyle here very different in terms of the terrain you know there’s a lot of folks call it you know it’s it’s flat when you get down to Houston it is flat there are no Hills there’s nothing so it’s nice to get back to here part of the reason is that I’ve had the opportunity to come speak as ConocoPhillips has a significant presence in Montana we have presence in terms of our exploration production company and that’s the part of the business that I represent in in eastern Montana in the Williston Basin we have production in North Dakota we have production in Montana and we’re vesting in the Bakken trend and we’re investing in some long lead assets that are in the Cedar Creek anticline and in eastern Montana our sister company and so one of the things that both ConocoPhillips is it changed in May this year we split into an upstream company exploration production and then a downstream midstream business that’s the part where the refineries and the distributions and the gas stations are part of that and that sister company still has a refinery in Billings Montana so you know our predecessor companies have a long history here and it has a fairly strong presence one of the things I’m reminded you know when I do get a chance to travel is just how important energy is if you think about it everything we do we touch or we’re involved with is somehow impacted by energy whether it’s transportation the heating of our homes the driving of our vehicles the opportunity to be able to travel somewhere from plane to plane the tractors that are working on the farms the harvesting the trucks that haul everything to locations energy impacts us all and I think it’s something that that is important to all of us so one of the things that it does for me is is I’ve worked 30 years in the industry and I’m pretty excited about the kinds of things that are going on in the US right now and I’m going to come back to that and a little bit but one of the things that recently I was reminded of are a former CFO of ours I was talking to someone in government and my first thing I couldn’t find out who made the quote but I but they indicated that and I’ll just read it here in one way or another NGO relates to many of the major issues our country faces such as the economic recovery job creation balance of trade Foreign Relations climate protection and air and water quality and you think about that those are the kinds of issues that we talk about whenever we’re talking about energy and energy exploration production if you think about energy and oil gas business in the state of Montana a couple things that they kind of come to mind is that the old gas business here is responsible for somewhere in the order of 40 thousand jobs that’s about 6 percent of the total labor in Montana and it’s about 8 percent of the total labor in terms of labor income associated with the state and I think one of the things that’s been going on is with the investment in the Bakken in eastern Montana there’s been jobs been created that that other people in other parts of the United States haven’t seen it’s really something that’s related to what the subject of our discussion today is the energy Renaissance when I think about that the North American energy restaurants it’s something that if you start to read in the papers and you take a look around you see an awful lot of news about oil gas business that is growing in the United States and this is a shift it’s a significant shift and something that’s come along in the last little while and one of the best examples of that shift is the Bakken trend you got that further close to here and I’m sure you understand that as well as anyone else and I think the other thing that you see if you look at media newspapers print TV radio they’re talking about other trends in terms of increased oil gas investment and opportunities and you see those in a number of areas across the United States whether it’s in Texas in the Eagle fir’d the Marcellus in Pennsylvania the Permian Basin with some of the programs that are going on there but there’s a renaissance associated with the oil gas business that’s related to what we’re doing today and when I talk about Bakken in particular you know this is an interesting story North Dakota is now producing over 600,000 barrels a day of the law and is growing very quickly as a matter of fact North Dakota’s production has increased something like 50 percent in just the last few years and we take a look at that opportunity and you look at the investment opportunity that we see elsewhere in the world it’s significant now for us in the Williston Basin and in the Bakken we have about twenty five thousand barrels a day of production but we’re investing about six hundred million dollars a year there so that’s what we’re doing in 2012 that’s approximately the same investment we’re gonna make in 2013 and with that money we’re gonna drill about a hundred and fifty wells and when I take a look at our own opportunity on that side we see that the investment opportunity goes 10 to 20 years at that kind of investment it’s a long-term resource and it’s a long-term resource that I think we’ll see a lot of investment in now if I step back from Montana development and I take a look at a national trend so if I

really come back to the theme of the North American energy Renaissance you really saw it first in natural gas significant investment in natural gas and significant growth in production in natural gas and if I take a look at a couple statistics US shale gas production is growing from virtually zero in 2000 to 30% of the total gas production today North America when you take a look at Canada and the United States and the opportunity for the the gas that we know about already today there’s a hundred year supply of natural gas that’s available that the current consumption rates we no longer need to think about importing liquefied natural gas liquefied natural gas is that supercooled liquid comes in on on tankers and not that long ago we were building as an industry import facilities on the coast of this nation to bring local high natural gas in and we don’t need to do that natural gas with the supply that we have is selling at bargain prices you take a look at the real price of natural gas today and it’s not a whole lot different than it was 10 15 or 20 years ago and I think that’s an opportunity that quite frankly is going to help the economy in a lot of ways when you take a look at that low price and you look at the security of the supply than natural gas you see the opportunity for manufacturing factories chemical industry and other investments that can go on in this nation and one of the key examples that I’m aware of is it looking at Houston there’s but 12 billion dollars worth of capital investment that that’s being looked at for investment in chemical plants and plants that will be fed by the natural gas industry now those were plants that not that long ago the only place they would probably built them around the world is the Middle East and right now with this security supply and the cost of natural gas it makes sense to be building them right here you take a look at the shale revolution and it’s occurring in not just one place but many places Ohio Pennsylvania you can see it happening in Louisiana you’ve got it in Texas Colorado and you got it growing in a number of places and if you look at a map so I was going to actually start off one of the things I’m an engineer by training so most my presentations have slides and graphs but I don’t have slides in grass today but if I showed a map you’d see shale plays around the United States probably about 20 main ones that are being invested in right now and they’re all over the place they’ve got a and some of them are large they extend over one state to as many as three states and it’s a great investment opportunity that we see in those areas one of the outcomes of that investment in natural gas and the ability to be able to get at it is that is that we are at all-time highs in terms of the reserves associated with natural gas that’s really the inventory how much we have out there and the production the record production for natural gas actually occurred in 2012 and that is not something that people were predicting all that long ago earlier in the decade just shortly after the tournament lynnium people were expecting that we were going to run short of natural gas in North America and that’s why we’re building those LNG and import terminals if you take a look at some of the statistics the Energy Information Administration now estimates that there’s close to 2200 trillion cubic feet of gas that’s available for the resource and that’s where you come back to that hundred year supply of natural gas which is really something significant and it’s significant enough and you think about it in terms of its supply for homes and factories the potential opportunity for the petrochemical industry transportation and a lot of other things we tend to refer to it in ConocoPhillips as nature’s gift it’s something that we didn’t see before now where does that come from what’s what’s the opportunity that’s really brought that together and from from my point of view when you take a look at it it’s almost like a modern industrial revolution we’ve had two technologies that really are the main attributes that have unlocked the opportunity within shale gas and now moving onto shale liquids and those two technologies came together about 10 years ago but they’re not new technologies they’ve been around for a very long time first one hydraulic fracturing and the second one horizontal drilling and if I take a look at those two and you know people know there’s a lot of controversy around hydraulic fracturing probably less so on on horizontal drilling but in the case of hydraulic fracturing this is not a new technology it’s something that the industry has been using since the 40s and a whole aspect of it is the idea that we’re able to pump water and sand and some chemicals down to the producing formation and break the rock a bit and the sand going into the cracks that actually allows more oil gas to flow into those wells there have been a million wells that have been hydraulically fracture rated in the US alone since the 1940s the big shift is that we’re using that along with what we have in horizontal drilling I’ll come back to that in a minute now I want to speak to a little bit to the the issues and the controversies are on hydraulic

fracturing when we build a well bore we drilled down to the producing formation and then we’ve learned how to turn the well 90 degrees and drill out on that lateral length and that’s how we get those horizontal wells and if we look at a real example out in the Bakken we’re drilling down 10,000 feet that’s the equivalent of 8 Empire State building’s we drilled down to that depth we put in steel we put in cement in most cases to buries in some cases three barriers between any aquifer water and the producing World War it’s an engineered system and I’d like to talk about it that it’s engineered with the same kind of context that you have when you engineer a bridge a building or an airplane it’s designed for the purpose of keeping the fracturing inside the wellbore and keep it the production inside the wellbore keeping everything else outside the wellbore the other key technology that’s occurred is horizontal drilling now we’ve been directionally drilling for quite some time as a matter of fact when you think about it the directional drilling started offshore and it started with the idea that you can aim the bit a little bit and angle off to it to a particular location the key piece that really changed is that we found out that we could turn the bit 90 degrees and we can steer it so that we know where it’s going and I like to talk about that almost an analogy of taking something down two miles turning it 90 degrees like a car in the road driving it remotely keeping it in its lane not crossing the white line and then driving out two miles and that’s what we do with horizontal drilling and it’s the combination of those two things that gives us the opportunity to bring that together and even though they’re old technologies it was the breakthrough in steering and horizontal drilling and then the combination of those two in the last ten years that’s really made its substantial change when I look at the industry as a whole the last really big boom in the Ola gas industry really significant was when the industry first went offshore in the Gulf of Mexico off the coast of Louisiana Texas and it did that in the 40s and it was the the evolution of being able to actually go off and in the end of the water and drill for oil and gas in the shallow waters that provided the energy for the post second world war two boom when you look at what’s going on today we have an evolution and a change that’s of the same magnitude take a look at some of the things here so I’ve given you some interest on on the natural gas they think about the possibilities of unconventional oil or liquids so the earlier work that we’ve done has been in those areas of natural gas and you’ve seen the natural gas produced increase in production now that same technology is being applied to reservoirs that provide oil and and liquids and those liquids can be used for fuel or as building blocks for the chemical business and that’s place like the Bakken one of the things that you’ve also seen a shift in is that more that investment is moving towards oil production with production and there’s about 1,400 rigs that are drilling all today that’s the highest level in decades most of the rig activity until not long ago was driven towards gas and now we really got 1,400 rigs drilling for oil and that’s compared to about 450 gas rigs at the moment we’re sitting record production and natural gas and investments move into oil when I take a look at the oil production it Peaks sometime in the early 70s in the United States around 73 and then it fell until just a few years ago and it fell in half the total production but in just the last two and a half three years it’s increased 15% and it’s increased largely in the last couple of years on these shale plays when you take a look at what the ARB eternity these are for place like the Bakken and the Ewell fur in Texas and some of the other plays that are out there there are people predicting that we can get back to the production levels that we had in the 70s in North America in the United States within the next eight years that’s really a seismic shift I mean at one time we’re thinking we’re running out of resources and today we’re finding that we’ve got an abundance of them now let’s consider the benefits associated with that strong production at home increases energy security now we’ve talked about this with a number of different people it’s not necessarily just the security of whether you have the supply but it’s really the security that comes from the fact that when you buy that oil and gas that money’s staying here rather than going somewhere else we live in a very large world in which oil and gas is a global commodity and it moves around and it will move where money is available so if you want to buy oil you can but I think with the opportunity of being able to produce it here at home it gives you a significant a significant advantage one of the key examples I’d also talk about in terms of the increased supply is the LNG and I touched on it earlier but not that long ago all the pundits all the experts were saying we needed to

import LNG that’s going to have to come from the Middle East it’s going to might have to come from South America it has to come from a lot of places and people invested in importing facilities and today we have so much supply folks are talking about turning those import facilities into export facilities and I think in the next few years you’re going to see that liquefied natural gas is going to be exported off the United States well his prices have fallen significantly and that’s provided an opportunity for a low-cost energy that is an opportunity for the United States it’s some of the lowest cost energy and natural gas that we’ve seen in decades in real prices and it provides the opportunity and I’ve touched on it before but provides the opportunity for increased manufacturing you’ve seen announcements of steel plants being built in Pennsylvania announcements of other manufacturing facilities because the low cost energy an opportunity to bring manufacturing back to the United States then there’s the job creation associated with the oil gas business itself so not just the opportunity of what the security supply provides but but the jobs that are associated with our industry you take a look at natural gas it stains about 3 million US jobs and the own gas business’s total sustains 9 million jobs and with the opportunity for future investment there is growth opportunity in both of those areas and in with natural gas production there’s actually predicted to be about 8 percent growth in the states that are involved in investment between 2010 and 2015 and that’s five times the projected us average in terms of a job growth the other part is obviously with old gas production the United States provides revenues those revenues come in the form of royalties state and local income taxes severance taxes fees and it comes with the taxes that are paid by the people are associated with the work that’s going on and generating this revenue doesn’t create doesn’t need any other incentives doesn’t need any other changes and the return on that incentive comes back very quickly as a matter of fact when you take a look at royalty rates and lease bonuses it’s the second highest income for the federal government outside of the IRS the second most income comes from the old gas business across the United States the other part about the opportunity that we created with natural gas is natural gas has some environmental advantages as a hydrocarbon fuel it burns cleaner does have sulfur particulates doesn’t have compounds and and and nitrogen particulates it burns cleaner it doesn’t take as much landmass as other opportunities and it also doesn’t use as much water to produce electricity with natural gases it does in a typical coal plant and when you look at the cost of natural gas today it’s providing a significant opportunity the other thing is it’s already making a difference in terms of co2 emission levels there was a there was an article not that long ago on The Associated Press that talked about co2 levels in the US and with the switch that’s already been occurring with natural gas producing electricity those levels have reduced down to what we had in 1992 and that’s without any other change that’s going on just the switching to natural gas so we see an opportunity for natural gas to fill in to a lot of those areas now I also know in the state of Montana coal is a big part of the production here and it’s my belief and our belief is a company that all energy sources have their place in terms of what’s needed around the world and quite frankly I we don’t see coal being totally displaced but we do see an opportunity for gas in a number of areas and I think quite frankly with technologies advancing there’s probably the opportunity for coal to have some of the technological advances that we’ve seen and then the oil gas business that that provides it also as a better alternative now I think we’ve got a significant opportunity in front of us in the United States we have with the shale plays more energy than we knew that we had right here at home and it’s energy that we have the technology to be able to get and we have the know-how and one of the key advantages that the United States has versus looking for this oil and gas elsewhere around the world is that we also have the infrastructure to support it we have the pipelines we have the processing plants we have the drilling rigs and and capability we have the crews that are related to the hydraulic fracturing and I think that it gives us an advantage that we should take that we should not lose but it really is also important that we don’t lose sight of some significant policy issues I think government policy issues that we need to be able to support that and it’s really not a change from where we are today so let me talk about some of those first one we as a company and I personally believe that that government regulation is not a bad thing I think that clearly we want to be

able to produce a little gas in the safest most environmentally effective way for everyone that’s involved whether it’s our employees the contractors the communities were involved with the contractors whoever it is that’s responsible for it I think any prudent operator would feel that same way and as it relates to regulation we as a company work with local governments and the federal government on those pieces and I think that can be something that works out well for us second we need greater access to the resource all the growth that’s occurred in the shale place almost all the growth that’s occurred in the shale plays by a vast majority is on private lands it’s not on federal lands and at the moment there’s been a slowdown on access to federal lands and I’m not talking about federal lands that people want to keep protected from the oil and gas industry I’m talking about federal lands that already have a long gas activity on it so I think there’s an opportunity to be able to streamline the process of being able to access those opportunities third we think that there’s an opportunity to streamline permitting process if you take a look at what’s going on right now it’s pretty easy to delay projects almost indefinitely and we think that there should be a mechanism associated with that so that the good projects that are done right kingi I can gain their approval and one of the examples for us is the Keystone XL pipeline you take a look at pipelines across the United States there are hundreds of thousands of miles of oil and natural gas pipelines that are running around the United States and you look at the long term track record of pipe you can see that moving product by pipe is safer than a lot of the other mechanisms that we could do and we think that that’s one of the things that we could streamline in terms of approvals forth German should or should have realistic and predictable tax policies we just want to know what playing field we’re playing in and how that’s going to look the future and all we’re looking for as an industry as not to be treated differently than anyone else we think that if there’s a shift in tax policy it should apply to all not just one or two companies or a particular subset but mostly predictability and then fifth just stepping back to the regulations we want them to be reasonable smart and based in science and I think that’s reasonable and we’ve had the opportunity to be able to impact some things sometimes regulations look like they’re starting based on a particular track when we get in and have the opportunity to discuss what’s going on people can see that that good science should prevail and that regulations shouldn’t be based on fear or unsupported innuendo and last we think that one of the things is that the policies of the government should be field neutral when their field neutral the market will determine what the right opportunity is we’ve taken a look at natural gas has already a reduced co2 emissions and that’s been really a market shift it wasn’t dictated in terms of caps it was a market shift so I think with those things we have an opportunity to be able to continue the investment that’s made in North America and be able to develop those resources to their full potential so that we can realize the economic opportunities associated with it and really just kind of closing on my remarks because I’m looking forward to the discussion and I look at around the room and I’m seeing some faces that don’t agree with some of the things I’m saying and I see others that maybe not in their heads and and I’m looking to have a dialogue discussion the opportunity to be able to come and speak it lends me the opportunity to provide a point of view and then an opportunity to have some question as an answer but one of the things I do want to point to do you have an example one of the carts and the is it in the programs yeah so in the programs you’ll have a card there that’s associated with our website our natural gas and it’s called power and cooperation and I’d like you to take a look at that and have the opportunity go go and see what we have in that website some of the information I’ve talked about is there there’s an excellent demonstration of how a well is drilled and I invite you to take a look at that but just before we turn over to questions I think that that there’s an energy Renaissance that is an opportunity that’s going on across North America that is unprecedented and I don’t think that we should let that run away from us I think that we need to be able to do it prudently we need to be able to do it with an environmental consideration but I think there’s an opportunity for increased oil production along with the natural gas production that creates economic advantages and advantages for this nation for decades to come and I think it’s something that we need to be able to take advantage of and with that I’ll say thank you and I’ll stop and I’ll I’ll turn over to questions yeah does this mic Protection Agency from regulating fracking a process that involves injecting poisonous chemicals

into underground water where eventually it’s gonna steam out probably end up in water people are drinking and 2010 ConocoPhillips was fined one hundred and seventy five thousand dollars for violating between air act on the southern ute reservation kind of cofell’s along with other fossil fuel companies is planning to burn them out an amount of carbon distance oil coal and gas as well that if several times large enough to push us into catastrophic climate change does it bother you at all my question is doesn’t bother you at all confirm for a company that’s making money are telling people and well you asked a question that way I don’t know exactly how to answer it but let me let me try to talk about each part and you might have to remind me of the pieces so so the fine in southern ute in New Mexico is that when you’re talking about okay well that’s related to emissions around a compressor station that we actually found and we’ve reported to the EPA and and our company does believe in living within the regulations and the guidelines and we found that we fell outside of it inadvertently and we reported it to the EPA so self decloaked now when we violated we knew that we’d get fined for it and that’s really where that fine came from coming back to the hydraulic fracturing you know there is a lot of discussion and a lot of concern about the chemicals getting into the aquifer we in our scientists internally and people that I talk to externally take a look at and we don’t have any example in which hydraulic fracturing has caused any chemical or any produced fluid to get into the aquifer these wellbores are designed to keep those items apart and all the wells that we have they do that and I haven’t seen the other case and we we are going to continue to do that now in terms of the EPA we’ve actually worked with the EPA on regulation so what does that mean they come along and they say we’re thinking of this and we try to educate them as to okay here’s what that means here’s what that means we can’t change their mind on what they want to do but we try to engage in the discussion with with the EPA and as a matter of fact around hydraulic fracturing we’re actually cooperating with the EPA around information gathering on hydraulic fracturing you know they’re doing a study on that and we’re cooperating with those things so I I guess fundamentally and the deepness of my heart I don’t believe I’m working for a company that’s killing people and I believe that a lot of things that we’re putting in place around the protection of the groundwater with wellbores and other things and the work that we need to do go forward around their environment allows us to produce an oil gas effectively safely and protecting the environment climate change is a global consideration and I think we need to reduce co2 emissions but that’s not just an oil guy company issue co2 emissions come from consumption vehicles plants factories a bunch of other things it doesn’t come from the production by itself on our side the emissions that were associated with our business on the production side we work to reduce those co2 emissions we actually work to reduce those worldwide and we reduce or reduce those in terms of emissions coming off of any facility we have and then most importantly that we don’t allow methane to escape through fugitive emissions or other aspects so we work on that and pushing to allow more carbon beyond the shadow of it now question I don’t know whether it is beyond the shadow that dope but there is the consumption part I mean a lot of people they come into the oil and gas companies and say you should quit producing we got it we got a look at the consumption side and work on the reduction in emissions on that side that’s that’s that’s where the issue is and I think we can help and support that you’re the one and somebody is buying it and using it no not true not true that’s not that’s not a fact as a matter of fact I personally have worked with the EPA on developing standards because we believe that the operations we have can be an example for the industry and we’ve working with the EPA to develop standards on hydraulic fracturing so right now the EPA doesn’t have the authority to regulate fracking and water would you be in favor giving up that authority to regulate right neither the I prefer regulations at the state level but if we’re going to have appropriate and effective regulations along the guidelines that I said I think regulations can be a good thing no I won’t because I’m working on on the state regulations with all the states that were involved in and that’s where we think the regulation should be if we think it needs to be state specific that’s actually not true as well it is

maybe in some states but we’re elevate our activity to the highest standard of all the states that were involved in actually in our case we go beyond what’s available by the states in terms of the regulations I understand your concern I have three girls the two of them grade seven one in grade 11 and I have a family that expects to be here for generations to come and I want this to be a clean planet and I think that there is a coexistence with the oil gas business and achieving those other things and that’s the part I’m trying to put forward with the comments to your questions I think they’re great questions yes you talked about the like competition routine actually has a whole domestically is probably aware their ideas about exporting coal to China that would seem to me to be a temporary opportunity given if natural gas is winning here and export facilities were quite natural gas or baking compensation from North America do you think there’s a there’s a how much of an opportunity is there you think we’re cold to China give it give it the natural gas yeah I I don’t I really don’t know enough about what China wants to do in terms of its energy import we all know that China needs a lot of energy but I think that that China also has some opportunity around development of natural gas and other things in its own country the second question was sort of we talked about we the Renaissance and natural gas in North America is based on fracking and horizontal drilling the rebels who would’ve easily exported I mean in terms of the geology of the rest of the world and how much potential gal yeah so let me look yeah let me talk about that a little bit that the source rock that that is the shales that we’re sourcing this natural gas and oil is associated with all the key producing areas that already had oil in them what you see is that the opportunity from a rocks geological point of view that shale is available elsewhere in the world it’s available in a lot of other places in the world I think the one difference and I talked to it is that here in the United States we’ve got pipelines roads in infrastructure that’s around a lot of this production that allows the development some of the other parts of the world these shells are sitting in very remote areas but there is a lot more shale opportunity well beyond the United States and I just think it’ll be a little slower to develop because of the infrastructure issues yeah they given the advantage of natural gas over coal in terms of carbon emissions why wouldn’t you want a carbon tax you know from our point of view I just fundamentally believe in the free market system and and a carbon tax might work but I’ve seen the Associated activities around carbon tax or carbon balance get abused in a way that it doesn’t achieve the end game and what we really want is to make sure that we’re actually reducing emissions well they’re already going there because the lower natural gas price here in the United States we see that same opportunity elsewhere in the world too yeah I just don’t think that you can look the importantly polite and give the food that’s a fair comment I just think that a lot of it you know comes back to how’s that done and does it cost dislocation and are you really squeezing production from one place in the world did another place in the world and again not achieving your end game I think you have to think about that end game from a global point of view not just just not a single nation yeah I start a firestorm I see just curious if your company has involved in alternative energies and other you know energy sources of other things yeah yeah two very important energy sources I just curious solar when in transportation yeah yeah I think they’re great questions so we are an oil gas exploration production company and

that’s where most of our investment is we do monitor and understand and take a look at other investments in in the alternative energy but we’re not making big investments in those areas we have done some research in the past around things like bio algae and and things like that but again to be truthful from my total spend point of view it’s a relatively small amount of our portfolio what we do believe is that there is more opportunity around the use of natural gas and then as a motor fuel whether that’s as LNG liquefied natural gas or compressed natural gas we think that the opportunities coming for that to make a shift when you look at big tankers around the world that move LNG from place to place they already used the LNG either the powerless tankers and it’s a lot cleaner than burning diesel fuel we believe in some studies that we’ve done that LNG has the opportunity to replace diesel fuel and bunker in ships and the opportunity to replace in trains first and probably long-haul trucks and one of the things we are doing is we’re taking a look at investing in infrastructure to create LNG that could be used as ammo fuel so we are taking a look at that yes yes yeah there’s a lot cleaner that the main issue with diesel it’s easy to get easy to move around what we need to be able to do with the alternative is make it easy to get and easy to move around and if we do that I think it’ll also be economically advantageous from a shipping point of view but it also reduced co2 emissions alright yeah that’s a good point or I could repeat the questions if they help – there we go so who is right I appreciate you being – being here tonight you’re in a fascinating industry and since I read Daniel Yergin s book a few years ago called the prize about the history of oil and the internationalization of this incredibly unique cartel it’s fascinated me to the point where I’ve got a couple questions I wanted to ask I’m oh I’m a green builder here in Montana and I’ve been trying to not need you for a long time I appreciate the fact that oil and gas is there but I’m trying to not need you but the question I have is until we can get consumption under control and reduce our carbon footprint in terms of how much we produce we consume per capita in transportation and buildings the odd thing I sent is that the consumption of any resource is always inversely proportional to its cost so you’re in a situation now we have production driven consumption the more you produce the less it costs per unit and the cheaper it is so the more we buy so while I agree that the free market has all kinds of interesting signals it sends our and the world not just here I believe firmly that we do need to have a national energy policy that the government should say here’s a target 20 years from now and I think you might even appreciate that too if the target is there and the target is out there and we get perhaps so many BTUs per person per year for transportation or buildings or whatever and how that’s structured you know the carbon tax is certainly controversial and such but until we have an energy policy that helps us really become less dependent on all sources of fossil fuels non-renewables fossil fuels a hundred year window doesn’t really look like that long a period of time so then your generational thing about grandkids great-grandkids and all that stuff really starts this is an incredibly amazing gift these fossil fuels the efficiencies of combustion that we have in coal plants now is what 33 30 to 33 percent efficient that’s kind of pathetic and I suspect that natural gas while it’s a wonderful replacement for coal combustion and we’ve dropped our coal combustion I think nationally by what 15 16 percent in part because of natural gas but I think the fuel equivalent in natural gas is less than coal No well all hydrocarbon all energy has a fuel density so there’s a there’s a difference in field density but you can get as much energy as you need out of natural gas as you get out a call okay well my question is is how does your

company feel and I know this is a goofy thing because you’re into production so it’s an important thing for your investors and the world grows dependence on energy but how does your company feel about finding ways of reducing consumption if your net intake of profits and income doesn’t change you sell less of the material and make as much money is there a political positioning within ConocoPhillips that could say you know what maybe less can be better as long as it doesn’t radically affect your position as an economic corporation so there was a lot of discussion in there and then kind of a question end but if I come back to some of the discussion I mean you’re so implying that as we are able to find moral a gas we can make that less expensive and people who use more of that I think that you know at a high economic level sounds like it makes sense but it only makes sense to a certain point because it’s not ever going to be free and I think that natural gas which actually has opportunities in terms of better footprint from a hydrocarbon point of view than oil is at a much advantaged energy price compared to oil and I think it’s going to stay that way for a considerable period of time so there’s an opportunity within those hydrocarbons and then I think that we really need the technology breakthrough on on other aspects from a company point of view you know thinking about what the world does go forward we think about demand and supply issues and you know I think that oh they’re going to be a lot of countries they’re going to be working on energy efficiency and then there are a lot of growth countries that are just going to need energy because of their growth and when we take a look at that you know I don’t think there’s anything we can do by ourselves here that changes that world picture it really comes back to how does everyone want to live and how do they want to work and I think those are the opportunities that we’ve got to take a look at so from our company point of view know we haven’t given consideration to that as a you know like a governmental policy but I think I think your comment around supply demand is an interesting one and want to know nor should you have to I guess as a company but I guess what I’m looking at globally is increasing populations in the world India and China becoming more industrialized the insatiable ‘ti of energy consumption in the world will will continue you guys have done a remarkable job of squeezing every last cubic foot gasps out of you know rock that technology can allow it it’s amazing how much you’ve created this Renaissance of more of more so my question is can we get this production driven consumption thing more always means on the marketplace less because you have volumes but even though you may drop your consumption next or exclusion your exploration and production levels you’re in this international cartel where it really doesn’t make much difference those that the technologies are transnational so anybody can pick up on the technologies that can squeeze more out of the rock so you will continue to try to keep the levels of production up while the prices continue to go down and then consumption goes up it’s just an odd conundrum I’m trying to understand the economics of natural resource consumption well I think it’s a fair comment I’ve provided you know my response to it earlier I haven’t gotten any more to add but I think it is a fair comment around that but I but it’s it’s still not going to be free you know I think we need to look for ways to to improve on the emissions and look for other energy sources that can provide economic opportunity you know part of the issue is I mean let’s look at this sort of fundamentally if you put a hydrocarbon tax on all hydrocarbon who do you think pays for that consumer if the consumer is not ready to take on that cost are we going to get the effect that we want and I think that’s one of the things we have to have to look at so I believe that there is an opportunity to look at another things in reducing emissions but I don’t know how in the end any of those schemes don’t end up impacting consumers we’re going to go to some other questions but Jurgen chose Peter kazakian the end of energy obesity if you’ve read that book already or not may actually provide some of the insights and some of the very good questions that you’re asking so afterwards if you want that name and I’ll stick around so we’ve had some questions on this side too we’d like to get to yeah yeah excuse me so one of the things

that concerns me the most about what you are talking about is streamlining access to public lands and streamlining the permitting process which I assume happens through the EPA it happens through the BLM through the BLM okay so can you go into more detail about what aspects of of the process specifically that your company wants to streamline they they have a process to identify lands that could be made available for a lease and then you you have the opportunity to lease those lands and then there’s the permitting to be able to operate on those leases and at the moment that process is just very slow and they’re not making as much land available now maybe in the end that’s what they want to do it and the federal government gets to make that choice they’re just saying that there are some areas that that could still take investment where there already is oil and gas production and so it’s around the making the land available and then the permitting and and when I say streamliner we’re not talking about fundamental changes it’s just almost being able to move it a little a little bit quicker right now for us to drill a well on BLM land in New Mexico it takes planning of 12 to 18 months ahead of time to be able to get the permits in place on private lands that process is a lot shorter so one of the things about public lands is having the opportunity for public comment would these streamlining these processes would that still allow for a public comment and a dialogue with you know the public yeah in my point of view it still needs to maintain that those are public lands there needs to be a public dialogue but I think that you have ways you could do a public dialogue around say an activity or work that’s going to occur over a couple year period or a 12-month period and that way it makes it a little easier than trying to deal with it one-off but I’m not talking about doing away with the public comment on Lance I don’t think that’s right hey um I’m just curious what some longer-term impacts not so much of the consumption of these fuels but of actual removal from the ground and the processing I know you briefly mentioned how the your wells have a triple-layer concrete you know to keep the natural gas away from the aquifers mhm you know however you know it I just have very distinct memory of going on to Google Maps and actually looking up at lakes in northern Canada which have been discolored like this bright green from you know I don’t know whether is what cut what company you know manage or mismatch that Yelland that the extraction of those resources but you know that that’s really my main concern is 50 years 75 years a hundred years down the road what what the waters around these zones of extraction are going to be like whether they’re going to remain clean or whether this concrete is going to break down and you know what’s our maintenance and you know just the whole process of keeping the extraction please so dr. bill wellbore is an engineered system like a bridge or a building bridges and buildings need maintenance so they don’t fall down will board needs maintenance in terms of our company and all the companies that I’m aware of we have programs around wellbore maintenance and when a wellbore starts to get towards its end of life like a bridge you plug the wellbore and you get rid of any opportunity of the producing zone to it to interchange with the water aquifer and we do that all over the place so they do have a life just like a bridge or a building you’re engineered system it has an engineered life and you make sure that you monitor what’s going on in terms of the integrity and then if you think you have an issue you know in terms of its nearing its end of life then you abandon it and you move on to something else so it’s really a part of that maintenance and an ongoing program it’s not like we drill these wells on the ground just forget about them and never go back to them we maintain them and we watch them I mean they’re they’re part of our asset base and they’re part of our obligation Thanks right next door so you mentioned that you believe consumers are very much a part of a preventing climate change which is very true and you plan on drilling for oil and gas pretty much as long as you can you know feasibly as a business how do you propose that consumers begin to transition to a more sustainable source

of energy if you want the government to be fuel neutral and you plan to continue to produce non renewable energies I come back consumers need to start to make choices if if people want to continue to live in a certain lifestyle that lifestyle uses energy in a certain way and I don’t think that changes fundamentally so I think it does come back to thinking about holistic systems that we need to take into account so in some areas we may need to be looking at things like more public transit using less energy reducing emissions and other areas I think those are all things we should be doing the issues around how how efficient vehicles have become in the last 20 years and the standards that are trying to be said for efficiencies of vehicles for the next 20 years those are all things that will have impacts so I I really do think it comes back to people thinking about what they want to do and make that change almost every Town Hall I go to if people aren’t talking about emissions and the potential issues around that they’re talking about and complaining about the price of gas and diesel and if they’re already complaining about the price of gas that diesel in the current world it just tells me that there isn’t an appetite for an increased cost for a lot of those consumers yeah I mean I completely agree with you that in the modern day there’s plenty of things that any number of us could be doing to reduce our current use of oil and gas but do you have an idea for a long term future for a transition to a completely new source of energy that’s more sustainable I think at the moment we need a technology breakthrough for a complete new source of energy I mean I when I did my a theses in engineering in my undergrad I actually did it on hydrogen fuel because I like the aspect of hydrogen fuel burning and creating nothing more than water pure hydrogen but even today this is 30 years after I did my undergrad there is not an economical way yet to produce just pure hydrogen to use as a fuel and I think those are the kinds of things that that will be technology breakthroughs that we need to be taking a look at it is going to take a big shift thank you yeah a lot of those questions over here about the efficiency I remember being a kid and watching my mother and my grandmother shovel coal and the coal truck coming to her house and I don’t really want to be a senior citizen 75 80 years old shoveling coal or you know like we used to see coal burning trains but the question that I have like in eastern Montana North Dakota these tent these boom towns the infrastructure and you know of these cities towns are becoming are having difficulty supporting all the trucks all the people coming through and they’re in the police and fire and everything else because you have a lot of itinerant people coming in from all over the country do does your company or some of these other oil gas exploration companies have have a moral obligation to help out some of these small towns and cities solve those issues because in 10 or 20 years supposedly they’ll be ghost towns again well yeah that’s part of difference in belief but but oh yeah but I mean but there’s but they’re growing so rapidly and fair enough you know and let me go holes and everything else I’m taking away from crime just even schools yeah no let me come in first of all I think that’s a real issue and it’s not only happening in the Bakken it’s also happening in Texas in the Alford where anywhere where you have a real large resource base and increase in activity and even though that’s in Texas it’s in an era that’s quite remote and quite quite rural and for our own company we do think about the impact of that so if I talk about the Bakken specifically we purposely as a company have not ramped up our activity in the Bakken as as much as some other companies largely because we didn’t feel it was sustainable to operate at that level we couldn’t put people there we couldn’t hire people safely and we couldn’t implement it so we’re actually stepping into that in a way that we think is sustainable now long term I think that that working with local communities I think we do have some obligation to to help the organizations and the area’s work through these things but if you think about growth and and boom towns everywhere across North America in the last 200 years if it was mills that were built or new factories and industries the aspect of people moving to where jobs are and growth as part of who we are and I think that’s one of the things that we’re seeing and unfortunately early in that growth curve is hard but as you take a look at the resource we think are there

in the Bakken it’s going to be there for a considerable period of time and people are going to be drilling for I think a couple of decades at least and so when you think about that there’ll be the opportunity for communities to be able to catch up to a sustained level of activity and population so I think that in the areas we’re trying to help you know roads in South Texas is one of the big issues I understand and block in that that’s an issue we repair roads you know help with the counties with that so look we take a look at those things we don’t go it into building housing directly but we have provided some housing for our own folks I didn’t mean quite just building housing but but what about you know the locals are paying the taxes and you have all these influx of people so how do they hire how do they create a tax base to hire police fire departments builder build their own roads schools because some people do come with families although you hear about man camps quite a bit yeah so in a state of North Dakota if you take a look at the money in the North to is making on on the Bakken they’re making billions of dollars of tax revenue I think that part of this solution is the the tax revenue that the state has has to be used appropriately in the areas where it’s needed and those are some of the things that I think companies can also help with in terms of of advocating how that money is spent and so I think that there is part of the solution can be there already within the current tax structure in tax system that’s in place just has to be spent in the right place it’s just that Montana’s had this boom bust cycle and forever and you know that seems to be one of the major concerns about future well we read about it we’re not we’re not in eastern Montana here there was a schoolteacher that had been kidnapped and murdered and a couple of itinerants and you know that’s there’s a Chinese saying that you open up the door and a few flies will come in well sometimes you don’t want some of those flies and I’m just wondering you know do any of the companies actually try to work with the local communities so in terms of people we want working for us we don’t want people that have background of drugs we don’t want people that are drinking on the jobs you know so we try to hire safe workforce and that safe workforce in terms of not only our people but all contractors so we try in terms of the people we have associated with our company ensure that their folks we want to live next to so that’s one part that we can do and then I think the other part is working with communities around the things I just talked about how do you sustain a long term growth you were talking about you know money needed for police force and everything else that’s partly the tax thing and I and I think that we are in a cycle that’s not the boom bus that we saw in the past one of the differences between where we are now and where we were with previous boom bust is we did we weren’t dealing with horizontal wells and hydraulic fracturing and the way that that unlocks oil and gas they were conventional Wells and the Bakken and the ol plays that are like that you needed a fairly high oil price to be able to support drilling for those with vertical wells and the economics have changed thank you thank you yeah but when you’re in the middle of a row that’s hard to do so I have two questions one’s kind of a softball question one is it more serious one since you’re Canadian is there gonna be an NHL season this year no I don’t think there is okay and my second question is you are talking about engineering in the technology we have to be able to do these things but you know looking back at at history there littered with examples of engineering being fantastic and terrific but the human element isn’t considered and things like the Titanic and the recent oil spill in the Gulf what kind of responsibilities does your company assume if things don’t go as planned as engineered and accounting for that human error and what sort of responsibilities do you have I mean we’re faced in Montana with the sort of outgrowth of a lot of the mining around here and what it’s done environmentally in this area and I would just wondered what the long term commitment of a company like ConocoPhillips is to those areas yeah so ConocoPhillips takes the long-term view on all its assets including the obligation of battening them when we’re finished with production that’s you know so that’s one part and as far as the safety thing as a company has a set of values called the spirit values and it’s one of the reasons I joined ConocoPhillips because I saw people that I liked I saw people that were technically smart and trying to do the right things and they have a set of spirit values so spirit is just letters of the words safety people integrity responsibility innovation and teamwork and the the people integrity and safety

all relate to the fact that we work very hard around our safety and process systems of all of our production interests to try to take into account the human factor in the human element and it’s actually a branch science called process safety management whether it’s in a large processing facility or even on a well and we’re working to integrate those kinds of tools and capabilities we take responsibility for things that are happening on our locations that are due to us and our actions and what if that’s inadvertent error which we try to eliminate we take responsibility for those things which one was the hard ball to you and Rochelle question right yeah I had a question about with all this activity in and around Montana obviously you’re spending a lot of money on developing the resource are you also putting investments like in the Billings refinery or have other downstream production facilities planned for Montana production offices or what sort of longer-term investments are you looking at for the state yeah so for us part of us talking about ConocoPhillips used to be the company that had the exploration production and all the refining business and we’re now split whenever foundry in Billings belongs to our sister company called Phillips 66 and I I don’t know what the long-term investment opportunity I know they just finished doing a big upgrade there not that long ago to be able to process crude see in the area as far the EMP business we have a considerable mineral position in the state of Montana about five million acres that’s part of the heritage companies of the Great Northern Railway in the burthen northern Burlington Northern Railway and so we see that their future investment opportunities we’re going to be here for the long-term we have our production offices in Baker Sydney and Billings and that’s where our EMP staff is located in Montana I just had a question about ConocoPhillips decision not to invest heavily more heavily in renewables I just I feel like you’ve mentioned a lot of the political difficulties around fossil fuels and also you know you have developed amazing new technologies to really get at the last drops both of up in Canada down here in the shale but I think you mentioned you know 1020 a hundred years at most and you know I won’t be here and you won’t be here but but hopefully I’m sure in your opinion Conoco will and I’m curious if you if you ever think about wanting to invest more in progressive fuels that you know 100 200 300 years out are still going to be an essential part of a worldwide energy market or if you’re afraid they’re like a lot of past industries that we no longer see thriving you guys might miss out on the boat as you’re so committed to the course that you’ve been steering all these years and if that’s a concern it sounds like it could be a business case 100 years from now I think one of the things is is we know what we’re what we’re about in terms of being an exploration production company and we don’t have an expertise and alternative energy now it’s not like we’re ignoring it we’re kind of watching that we we have made some investments in small startups so the growth of micro growth companies people who have technology that are looking at various things and we will help fund those because we believe other people will be the ones that will probably bring that to bear now that may change in the future but at the moment that’s the approach that we’re taking on alternative fuels I think that we’re talking about a very long term horizon and as a company and our duty will be to try to take a look at when’s the right time to be starting to make larger investments in in those other areas but it isn’t at the moment I see you again I see you but I’m Chinese so I’m the enough fly with sneaking to Montana dude looking for some of rotten flesh just joking but actually I have a question because there’s a sensation among some of the economists of the economics of development so such a like such like some of my professor saying that Washington DC they believe that a industry like energy in energy actually the technological breakthrough is discouraged because there’s so many big

big established and big established firms there and that they don’t want to actually develop alternative form of energy on one hand at the big established firms they don’t want to do the Rd researcher in such area themselves because the technology operate through may challenge their core basics and in the fossil fuel usage and on the other hand a smaller innovative firms who have some advantage in competitive and competitive technology alternative energy they cannot compete away the big firms in capital investment also it cannot compete with main market share and more like most likely there will be taken over by the big firms and their technology will be killed so how do commend out this kind of theory well first of all I mean that question was full of a sense of a conspiracy that all gas companies don’t want to see alternative energy and we don’t sit in meeting rooms talking about how to stop alternative energy we talk about investing in all gas because that’s what we do and that’s what we know I think that a breakthrough in technology when it comes even if it got bought by another energy firm it be so that they could take that alternative energy and make it available for people really the opportunity in the in the market is to find ways to provide energy that’s cost effective for everyone whether that’s an alternative energy or hydrocarbon energy and and I don’t think that anyone trying to quash that innovation but we we know what our expertise is and I think there will be other people that will provide the opportunity on some of those alternative energies like even the work that we did in in the algae as a potential diesel that was really a consortium with some schools and some other scientists because there are other people that are actually the expertise in those areas so I think that’s the way that we need to take a look at some of those aspects well we’re not trying to quash anything okay thank you Thanks how’re we doing on time additional questions just one more question sure um I’m a small businessman who pays taxes in the citizen but I’ve always been amazed at how oil companies right now we’re sitting on more cash than just about any corporate entity in the world and Congress continues our Congress continues to give oil depletion allowances and exploration credits can you explain that to me and how and why oil companies think they can continue to get incentives from the American taxpayer – I’m not against profits I’d like to have one one day myself but it seems like it’s beyond the pale now and perhaps you can better understand and explain to us how first of all Congress is doing this and secondly why your industry continues to need these incentives or advantages that smaller businesses don’t get well I think around the things that people talk about is and often words use subsidies for the oil gas industries they’re just all part of the tax code that goes to all kinds of companies not just oil and gas companies and the tax changes that I’m aware of have been the kinds of tax changes where they just wanted to aim at oil gas companies but not make that same tax change for other manufacturing other other aspects all we really want in the end of the day is a relative fair treatment on taxation so if there’s a change in taxation we as a corporate citizen and as a company the United States will go along with that we just think that’s singling out a single industry it’s not the appropriate way to deal with any tax issue though he’s talking about the OL he’s talking about the pollution allowances and things like that but the kinds of things that are being talked about that are being referred to as incentives to the industry are tax deductions and are part of the tax code and they are tax deductions available to other manufacturing and other industries and we’re just saying don’t single us out if there’s something you want to change then change that fairly across-the-board don’t know there’s companies called Apple Microsoft and Intel and Google that are also sitting on I can name quite a few more billions and billions of dollars of cash right now – it’s just interesting from a perspective of

publicly you don’t hear that discussed because the oil industry tends to be the entity that gets exactly your point so just just to bring a little balance there’s a lot of entities right now sitting on tremendous sums of cash please from what I understand you’re you’re in charge of North America as well as Latin America and South America so I was wondering what similarities and differences or how easy is it to run ConocoPhillips in north america as compared to some of the Latin American countries or you find it easier to do it in the south or in the north or less regulation or more I was just wondering if you could speak about the southern half of it yeah yeah the biggest thing about North America is there’s a set of rules we all understand and can engage in we know how go about producing oil gas we know what royalties were gonna pay we know what taxes we’re gonna pay and those are things that are fairly predictable and fairly stable they may change but they’re fairly predictable and fairly stable in other parts of the world and our experience in Latin marry has been the same is that there’s a greater uncertainty for that investment then certainty could come at one day they’re charging you one tax rate they charge you another or that they say production belongs to you and you’ve invested all your money and now they say it doesn’t belong to you so there’s risks associated mister a higher risk and higher uncertainty with a large part of the world that has been our experience in some of the Latin American countries here it’s stable it’s predictable you might just comment about the two proposed pipelines the one running north and south versus the one running east and west to the coast and through the pristine areas and just how you might look at that which pipeline – you’re referring to the ones that would go it would take the oil from Canada down south to Texas hey start Excel pipeline yeah versus if they were to run one say – PC right yeah well the pipeline that’s been proposed to be seized not you know as far along as the one at Keystone XL which brings crude down to the Gulf Coast we as a company support that pipeline I think that pipeline should get its approval to be able to bring that crude down the refineries in the Gulf Coast those Gulf Coast refineries are now bringing in all from elsewhere in the world they’re exporting in processing and there’s an opportunity to their brain crude that’s already here in North America tools refineries so we support that pipeline it probably makes better sense to do that and then to build a pipeline West but if Excel doesn’t get built I think the alternative for that Canadian production is that a pipeline does get build West and then that crude moves offshore to another market somewhere hello so I don’t really know about ConocoPhillips but I’m from Wyoming and in pavilion um major leak there with the fracking and um yeah people down there they can light their tap water on fire and this has been going on for a couple years now and in canna hasn’t really taken initiative on that take in know the blame so I was just wondering and but just now they’re kind of getting working with EPA I guess to help out the community and shipping water there so if this happened to ConocoPhillips so what would you do to help out the community well it is kind of two things there one is about the facts of pavilion which I don’t have all the facts on pavilion I do know that there’s been very mixed signals around what’s really gone on there but I come back to the question around accountability if we did something and we knew that it caused something that was wrong we’d make it right that’s the only way that you can have a social conscious and a social responsibility the thing that we look for though is that we don’t want to be in a case where someone claims something is true and it not to be the case and in pavilion there’s been mixed messages and again I don’t know the specifics but mixed messages even for me in the industry in terms of what I’ve heard as to what really caused the issues there what I do know is that a large number of other areas in which people claim that there’s gas in their water that is not coming from oil gas production gas natural gas occurs naturally in water and large parts of the United States and it’s there before oil and gas production started and it comes from a different source pavilion I can’t speak to but I did

answer your question if it was something we did and it was wrong and it caused an issue we fix it and then also just touching a little bit on the public lands I worked with the BLM for quite a or just a summer a couple years back and definitely like taking into consideration sage-grouse and their disturbances so I just this isn’t a question just like a comment that we need to be careful about sage-grouse – yeah let me make a comment on your comment so we worked with the Department of Interior and the BLM around the sand dune lizard in Texas and New Mexico so it’s a similar issue to the sage-grouse lizard it’s a habitat issue around a species that that may be in danger and in that case ConocoPhillips had a I think it was a hundred and twenty thousand hundred and sixty thousand acres in the region in which we actually took those lands that work BLM lands committed to the Department of Interior that we would abide by a means to be able to protect acreage and preserve acreage as well as rehabilitated acreage for the sand dune lizard to find a way that industry could save a species and also go ahead and still have some activity in that area and in terms of the position we took other companies then followed our position I think what you’re going to see around a number of these areas is that cooperation between oil gas companies and the government and the regulatory bodies are going to provide solutions that meet all of our interests and still protect the habitat rather than just just you know coming across an issue and the sage-grouse is the next conversation we’re having it was the next one in line thank you I’d like to thank the World Affairs Council as well as your organization for bringing you to Missoula for Purdue an opportunity for us to discuss these issues these issues with us because Montana does have a strong history of rape and pillage of our land and leaving this state and the citizens with massive cleanup efforts which cost not only these the companies when they’re charged with the responsibility but the people of this good state for accountability so in also going back to your comment about how it does no and any good for misinformation to be spread about fracking or the you know the effects of this kind of investment in our state it does no one any good for there to be disinformation and unfortunately our state has had a history long history of some disinformation so we are very very alert to finding out what will be the long-term consequences for our state just the other question I have given the recent Supreme Court ruling on citizens united in 2010 will we have an opportunity to look on your company’s website to see exactly to which packs you’re given to which trade associations you’re given you’re giving money to to which candidates your elected officials that your company is giving to the the difficulty I have with the idea that corporations have as much right as I do as an individual of free speech is that they can come and they they know exactly who I am but oftentimes we are not a privy to to those who are funding some of the political discourse that’s happening right now so what is your corporate position on accountability transparency and funding of political can so I have to admit I can’t answer that question it’s probably just not an area that I’m familiar with so I’d have to become familiar with that and so unfortunately I’ve got and part of that’s because I’m a Canadian I can’t donate money to a PAC one way or another I can’t influence and I can’t vote I do know that that any time I go to Washington even if I go for a meeting that they request me to show up I have to declare that you know with all the laws and everything else and so you know we abide by the by the laws that are out there but in terms of that particular issue I’d have to find out for you I’m sorry okay we have time for one more question thank you very much

and so I’ve heard you say several times now that it’s okay for ConocoPhillips to sell carbon fuel to people because they’re willing to buy it and I’m just wondering how far you would take that logic because if you don’t take it just all step further you could say it’s okay for people to sell heroin as long as someone’s willing to buy it I think most of us would strongly disagree that that’s so okay and I’m wondering why it’s different for the oil industry when you’re dealing with activity that puts the environment of risk puts people’s health and lives at risk and is again contributing to climate change I actually don’t see that too is a fair comparison heroin is illegal has been illegal and has always been illegal and there is a de mis supply-demand issue with Harriman but it’s about the fact that it’s illegal we’re supplying something that’s not illegal and it is available in the market and I you know I think that that when you want to change something you can’t change it by one company you have to look at the global impact of those things so I just come back to those statements I understand your concern I actually applaud the fact that you’re passionate around the environment I can hear it in the way that you ask the questions but I think you need to think about where can you put that passion to make the biggest impact and it’s not one company at a time about whether we produce a lot of gas it’s about how we live as a society as a whole it sounds like a cop-out to me but thank you for attacking to address the question it might but appreciate the question well as always Don thank you so very much for your time and I think the real benefit of this is that the fact that we can come here tonight Don has taken his time to come here to have the type of dialogue whether we agree or disagree this is the point of what the council’s objectives are and I appreciate everybody in the respect that we’ve shown our guests here today and we will continue to do this because this is ultimately where the value lies and that is having conversation asking questions and holding each other accountable on both sides of the equation so mr. harp I thank you on behalf of the council so very much and your colleagues who have taken the time to come from use to the Washington so a nice round of applause for mr. harp