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Technology Drives Prices, Drilling Lower

Technology Drives Prices, Drilling Lower

Certainly not BP's Browne, who offered a litany of E&ampP technology advances. "In real terms, oil prices today are more than 40% below where they stood a decade ago and comparable to levels last seen before the Yom Kippur War 25 years ago. The reason we're all still in business is that average finding, development and lifting costs have all fallen - on average by almost a third in real terms over the last decade."

Besides driving costs down, technology has driven E&ampP deeper, growing reserves along the way. "Over 30 billion barrels of discovered but undeveloped oil lie in deep water together with over 150 Tcf of gas. The best independent estimates say that at least as much again remains to be found in those areas."

On the demand side, worldwide environmental concerns will create a larger role for natural gas, said Lay. "Combined cycle technology for power generation - particularly with natural gas - is the cleanest fuel source available and accounts for 60% of total new installed capacity in the U.S. since 1991." Lay pointed out combined cycle gas plants cost less to build than coal, about $500 per kWh compared to a new coal plant, which costs $1,066 per kWh.

Before 2010, Lay said gas is expected to overtake coal to become the second most widely used fuel in the world behind oil. "Gas is abundant - at today's worldwide production rate of 77 Tcf/year, potential gas resources have a 200-year life and the potential is probably significantly understated.

"According to a recent Enron study, 44 countries have announced requirements for clean power plants from gas and renewables totaling 222,500 megawatts of new capacity over the 1997 to 2015 time frame."

Lay highlighted technological advances impacting every part of the energy industry. Automated electricity metering, for instance, introduced to the market last year, is more precise and improves load management ability. "These meters diagnose outages, bill with greater accuracy, protect against tampering and make it easier for customers to change suppliers. Lay said Enron introduced the first two-way automated electricity metering system last year.

"With technology, innovation and vision, our transition to a cleaner world will be seamless, our products and services will be greatly improved. we will protect the environment from millions of tons of harmful emissions. and consumers will save billions."

Joe Fisher, Houston

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