fail to make partnership those who are fighting a global threat, which is isis. and now around 2012, good signals from governor of anbar to the former central government to prime minister, that isis are there in the western desert, you have to deal with them. who left isis to enter ramadi and other cities those who are controlling the security situation. so the central government and iraqi central security forces which control the security failed to deal with the entrance of control of isis over our provinces. the question we keep saying that iraqi security forces was not built on a proficient national model and this is the end. the many divisions have been defeated in mosul on a few hundred of isis.

isis presented itself as a protector of sunni putting in their mind this unjust dealing of the government. so at the beginning they are misleading sunni they will protect you. sunni started to discover that isis are threatening sunni more than anyone else. the displaced people are sunni and millions are killed by bombing, and infrastructure including hospitals, houses everything bombarded in the sunni provinces. the first direct threat of isis is on sunni and then all iraqis and it's a global threat rather than a local one. now talking about cleansing of sunni province from isis. why i highlighted this point because talking about sending sectarian forces whether militia

or anyone else will complicate the situation. we are encouraging everyone to keep the momentum of the people who are ready to fight isis in our province that is sunni isis fighting. so we don't need to lose that momentum to turn into sunni shiite fighting. which prove as i present at the beginning commit a very similar set of crimes like isis. militia involvement really complicated the situation. some of the militia bombarded houses killed people. slaughtered like isis. so we were very frank with our colleagues in iraq saying look, why you are sending our from the southern part. the sunnis can fight isis. your role is to recruit them officially and give them more weapons. other you send your guys to be

killed and at the same time some sectarian behavior took place that give adverse action against them all of us will lose because the battle will be -- from fight daish into a civil war. we are talking about thousands of people in anbar and mosul and other provinces thousands of them, they are coming to the camps of training. this will come on american side and government what they can do to accelerate the liberation of iraq from isis and report back the state. fighting isis is a dual pronged approach. the other side should be political. it means the government program that mr. haider al abadi commit himself in front of the parliament this is my

governmental program to be implemented with all other political partners that include reconciliation amnesty, sunni recruitment and training and all these things are really not new topics or not new requests or demands of sunni. with the property the government put a timetable but nothing is implemented yet. on the other side, the other threat is the militia. we talk about the men international global threat a iraq and the world is isis now. militia, tens of militia working illegally out of the state of security force. unless we reach a point of institutionization of security force, sunni shiite all these groups will find war lords who are fighting inside iraq.

let us assume after post-daish you will find -- no one accept. that while putting that in institutionalized security forces not to reach a bad result. some sectarian actions of militia including two days ago, they attacked one of the jails released some of the jails. they have been executed rather than killed in front of the jail. i said all these criminals, sectarian crimes will really not only -- it will prolong the life of isis. it will give them the justification they are protecting some groups and they are really not protect. and they commit identical types of crime, of crimes, i mean. utilizing militia on the short

term to fight isis is exactly like using -- to fight daish. is accepted to fight daish -- they are also a terrorist group. let us assume that isis divided into groups that fight each other. is it accept to -- no, we have to fight isis legally by legally constitutional institutional security forces that include all iraqis. on the short term all the resources should be focused on isis and defeating isis. it will complicate the situation and pull into civil war. and when i presentation this short video on the right side, one of the leaders of the militia is threatening a neighboring country we are coming to occupy you. on the other side he is putting the passport of egypt and jordan saying we are coming to occupy

you. so they want to occupy neighboring countries. that's why it's not only one threat in iraq. post-isis defeat. without having without institutionalization of security forces you will find everyone who is getting weapons who doesn't belong to the government will not be capable of controlling him. now some of the accomplish thats are outside totally the control of the central government. without the institutionalization of the government who to bring back the state of law, the result would be much more tragedy. institutionalization i talk about it. million of displaced people need to be compensated. i don't think the central

government capable to do it alone. the iraqi economy is not good. so, it is possible on the american side we'll talk about international compact or fund that can help people on the side of -- resolution needed. create federal region. when i mention that they declare a region on a -- region not send. participation not send. where should they go. the national guard is very important. by the way we agreed on the national guard with american side. but the draft has been changed and not passed the parliament yet. rebuilding iraq army, non

non sectarian force. it's a tragedy we should not see it. we have to rebuild restructure on a background. after u.s. withdrawal while iraq is fragile. both flit call and security situation and i already explained that. and targeted and intimidated outside the political process by using a politicized judicial system. and agreed above program agreed on by abadi. abadi was the head of financial committee in the parliament. and i think he is trying to but

trying is a story and the very bad situation need a lot of resources, the central government, the iraqis to stand united to fight the illegal actors. so militia under rule of law and the path to democratization undermined by militia and by isis, both of them. so now the addition i think we need to department a new insurgency model. when general petraeus model was in -- he created the model of awakening because the prisons of american at that time was huge. now the prison is different but still they are there. let us modify that model and that means creating a joint committee. american central government, local people.

whom else. to supervise the recruiting of sunnis and arming them rapidly without this bureaucracy. the joint committee would be responsible about supplying and overseeing training. a win/win situation for everybody. central government will not say that i'm not attended and nothing been coordinated with them. and local people who complain that the government didn't accept them or arm them would be in that committee. so that everyone would feel comfortable they would be quipped, recruited officially again to fight isis. now, after this as i mentioned very rapid. i hope i don't confuse you. i hope the answer will put you much more aware. we have the central government. we have the partners. local people what to do, corral

government what to do. and american as heading the international coalition fight isis what to do. let us start with the central government. on the political side, the program for the government including all these things need to be implemented and by the way i am talk about debaathification i mean. all these topics that you see a great upon. we're not talking about new conditions for agreement. all agreed upon the problems. all is the timetable on the implementation. on the security side, talking about isis or resources should be directed toward unifying all iraqis to fight isis, to defeat isis. with a full coordination. we are potential ally to united states of america in fighting isis but keeping in mind also attempt to dismantle and decommission the militia.

otherwise you see a very weak army, very weak government and very strong militia. no one will accept this country to be in a model. restructuring the iraqi army, i talk a lot about iraqi army how it was defeated in mosul. we don't need to see such divisions of iraqi government in front of a few criminals like isis. army iraqi types to fight isis to be the precursor to being included later on in the national guard, national guard, because at the end of the day it is the local people and the national guard who control the ground. in post-isis period. returning and compensating displaced people. because this is a very big problem now. millions of people outside their houses. on the american side supporting political form and reconciliation. they keep support but i mean to start with, despite all the marginalization of sunni we keep saying that the solution should be political in power sharing

division of power all these things just to squeeze terrorists at an angle. ensuring the formation of government agreement. the idea is to dig deep over there, timetable and implementation. assisting and rebuilding security forces on non sectarian implementation. 50,000 those soldiers. so minister of defense paid for them and they are really not in service. now only this point the 50,000 to be compensated by 50,000 good guys would restructure the iraqi army in a good way. we can defeat these forces like nineveh, we don't need to see that model. in order not to see the defeated iraqi forces. we have 50,000 and the number is increasing.

rebuilding iraqi army on a national background is mandatory. just one minute. i lost what to complete. assist to develop state of law to the country not mr. maliki who damaged the law, in fact. provide technical assistance for national guard. we don't need america to build partnership with militia or with isis. both are partnership and framework with america is with the state, with iraq. help the government with the displaced people and creating a fund to displaced people. the story of -- a lot of debate about arming sunni. i think the battle against isis is an international one. but isis is threatening everyone. everyone should participate in a that battle. sunni and iraq are the greatest potential ally in fighting isis.

think anyone can live in sunni provinces without sunnis. sunnis need assistance of united states and internationally in order to fight isis. they are on the ground now fighting isis. proven to work with the awakening movement as model. direct arming and direct financing from american side encouraged people to defeat al qaeda in 2006-'07. and let us assume that arming sunni may use it later to fight isis and later on against the government. why the sunni fight against the government if it is their own government and if they are participating, if there is a repower share why they fighting the government? the only way is to restore back state of law. and the central government -- the center of government cannot be a participator in with sunnis with the international community against isis. who is a partner of the central

government? so this is the situation. the real threat in iraq is militia and isis. it is difficult but not impossible. it is possible but it depends on all the partners. american side, central government side and the local people and the tribes. and thank you. [ applause ] >> good morning, everybody. thank you, ken, for that introduction. ken, you are an expert on iraq, but even more, you are a friend of iraq.

you may have my special thanks for that friendship. with iraq and our friendship. thank you for organizing this. forum. and i want to talk, i want to take this opportunity to thank the people of the united states, the pilots all american forces who support them president obama's administration, and the congress -- the united states congress for their vital assistance to our common fight against daish, as you say here, isil. i will have a chance to express my view on the iraq situation as an iraqi, as a sunni political leader, as one who was born in mosul, of many generations of

mosul fathers and mothers, end of the elected governor of the city of mosul. mosul is the largest, second largest city in iraq, nearly 2 million people. now occupied by illegal and murderous regime of daish. they are in mosul iraq's second largest city. iraq cannot be operating without mosul. it would be like the united states without chicago or without san francisco. there are a few points i want to leave with you. these points will mean success or failure for the liberation of mosul, and for the world's fight

against daish. success in the mosul pattern and just as important what comes after is crucial. these points, very important for fighting daish, our concrete steps to the world's national reconciliation in iraq. after 11 years of just talking about reconciliation, a but no actual steps taken, the sunni in iraq will no longer be interested in more talk. the sunni need to see actual and concrete steps.

i will only outline these points so we can have your questions and a good discussion. i'm talking about mosul as a model. but i think what i'm talking can be for all the sunni's areas. first, the people of mosul are the key to the reconciliation of mosul. the mosul people must be shown why liberation is better for them than the regime of daish. history shows that the people are the reason armies succeed or fail. in a city of nearly 2 million people soldiers no matter how many thousands or how well equipped or trained can do only so much. we need the people of mosul to rise up and to help the soldiers

to fight daish. when the people rise up against daish, i believe they will. but we must give them a vision for what their life would will be like after reconciliation of mosul. in addition to the support, they need during and immediately after liberation. before i tell you what i believe that the vision should be, i need to tell you the planning and work that is going on right now for the liberation of mosul. we have now to training camps. in these camps americans, canadian, and turkish. special forces are training thousands of mosul police and

volunteers. the combat skills and maneuvers they need to have to be in the fight for the liberation of mosul. one of these two camps is for mosul parties. the other is for the volunteers. who are organized in a military structure commanded by officers from previous army. the previous army officers want to fight isis. the volunteers are ready to be part of the national guard as soon as the law for this guard is enacted. but the volunteers are ready to fight as soon as they get weapons. by now we have thousands of

fighters who have graduated from these camps and are ready to fight. but they don't have weapons. they don't have the weapons they need for the fight, for the liberation of mosul from daish. since last january, now five months ago, we are still waiting for the promises of weapons that have been made by our government in baghdad. promises are nice but it's the weapons -- it's the weapons that our volunteers need, not the promises. the force which hold mosul after liberation must be trusted by the people of mosul. that means the force must be from mosul and its surrounding province, nineveh.

if these forces will be trusted by mosul community, the mosul people will be on the side of the liberation and daish cannot make a comeback into mosul. the liberation comes first, of course, but it's the period after the liberation that will be decisive. our people will be watching. will we bring humanitarian aid so people of mosul can survive? president obama last month pledged $200 million in humanitarian aid. with this humanitarian aid president obama promised be on hand in mosul immediately after

liberation or will it be tide up in baghdad's bureaucracy. in addition, the training camps, we have taken other steps for the liberation of mosul. we know that the liberation of mosul is not just a military fight. i organized a forum for sunni muslim scholars in cooperation with -- in egypt, of which spotlighted daish crimes in mosul. these muslim scholars are continuing their work against the ideology of daish in a committee established by that forum. i established a set of people inside mosul who would join the liberation force if needed. but they need to trust that force also. i have good working relations

with most of the arab tribes in the mosul area. these tribes will be critical in the liberation of mosul and i will say also that these tribes need also to trust the force. whatever we have done, we still need to give the people of mosul a different vision that they had from the previous government in baghdad. this leads me to the second point. the people of mosul want democracy to be restored soon to elections. the people of mosul should elect their own representative not have them imposed from outside. not by the government in baghdad, not by the extremist shia or sunni, and certainly not

by iranian supported groups of any kind. i personally welcome international observers to monitor this election. this election must be free and without any interference. you may ask what is our vision after liberation? this will bring me to my third and final point. we need autonomy as a part of a strong federal iraq. as the iraqi institution expressly spells out, i want to be clear. i want to keep iraq as a unified and federal country.

and to always follow the constitution of iraq. the articles under our constitution our 119, 120, 121 your these articles explain how the provinces in iraq become a region. we just want to undertake what our constitution expressly granted the people of a province the right to do. the autonomy must be in two states. first, geographical for nineveh province and second regional. remember these words of the iraq constitution when you hear anybody or anything from anybody

alleging that i want to split up iraq. i believe authority in iraq should be split up, but not iraq itself. we need to have a balance in power and authorities in iraq which will have a double effect. the dimensions of sunni, shia and kurds and also protect minorities such as yazidi, and other minority groups. i believe this autonomy will strengthen the unity of iraq. first geographically in nineveh

province. the geographic autonomy will be at least, will have at least three effects. this will give the sunni community its own autonomy when, with its own special constitution. this autonomy will protect minorities within nineveh province. and autonomy will protect from baghdad interfering with the rights of the people of nineveh province. we tried in the past to follow up the constitution steps, but, unfortunately, prime minister maliki blocked this proposition. the second stage i envisioned nineveh province will sit down.

we'll sit with the krg and other sunni provinces and about their own relation under the umbrella of the iraqi constitution. in conclusion, i want the people of mosul, first to involve in lab ration of their city. second to have a chance to choose their own representatives. third, to get chance to vote in the future according to the iraqi constitution. if people choose, the future will be bright. thank you for listening. i welcome your questions and look forward our our discussion. thank you.

[ applause ] >> you guys are getting mic up, thank you, governor, thank you dr. rafe. those were both great presentations. you managed to cover my first four or five questions. that is a terrific thing. i want to spend the bulk of my time with you talking about in particular, governor, what you talk about the end, but also dr. rafe from what you talking about what this future iraqi political relationship might look like. but before do that i want to go back to point the point that dr. rafe raised in his terrific presentation. you made the point and governor feel free to disagree with this if you do but i have the sense that you agree with this and it's the impression that most of washington got. the problem is not haider al

abadi per se. prime minister abadi wants to do the right thing. that is the impression he left here in washington. he knows very much where iraq needs to go and wants to do it. the problem is not the what. the problem is with the how. and if that is something you agree with i would love to get your thoughts on how you believe that the united states might help them to actually achieve those goals. rafe, which are like to start? >> figured much begin to this is a very broad, very good question. look, ken, and ladies and gentlemen, talking about haider al abadi, a person who inherited a damaged political and security situation and he's a good guy. i agree with you. he's trying. he needs to be supported americans and sunni and shia. i agree with that. but until this moment the problem of the government is not

implemented according to the parliament. some of the stories like amnesty talks about six months now nothing took place. and if you come to all other points of the reconciliation, et cetera. yes, i agree we should help haider al abadi. america can help to rebuilt the iraqi security forces. because without building national city forces companies iraq would -- by isis another side and this is the question to the story of arming sunnis. whether arming sunnis will divide iraq the question is iraq united now. we want to bring back restore united iraq so when we receive sunni fighters to liberation from isis to bring back the unity of iraq. so helping him in dismantling

militias bringing back state of law, supporting him in very rapid acceleration and arming the fighters. according to our suggestion of this committee. because central government keep saying look, what if we push the weapons to the sunni fighters and they make -- the question sunni tried purchase the weapons on iraq defeated the iraqi army who give his thanks in mosul when defeet. this is not a justification. you cannot keep saying putting question mark on everything. you have to trust people are fighting isis. restructuring security forces, dismantling militias put all the resources of all iraqis supporting them in fight isis, supporting iraqis in the national guard. we agreed upon local forces on the ground in nineveh, in anbar and local. i the way, on the southern provinces also.

the public is national guard is not yet. these are the main problems americans can no. finally on the composition, americans can now work to support abadi. very difficult for government to cover all the huge number of displaced people. the story of international funds may help. >> governor? >> i believe in the unity of the stronger groups. i think it will not be -- i think iraqi will not be stronger if we strengthen one group and not the others. so what we need to do is strengthen the sunni group so they can fight isis. also they will return to balance the iraqi forces. and u.s. can do that. strengthen iraq -- the sunni group, the kurds and the legal share group within the iraqi constitution. >> let me follow that up with a specific question.

the process of reconciliation was something that you both talked about that prime minister abadi talks about. again, it is clear that every iraqi who knows anything about the real situation understands this is critical. does the u.s. have a role to play in fostering that process of reconciliation? again, we see people like you, people talking about the process of reconciliation. we don't really see it happening. is it happening behind the scenes? is there more can be done? should the u.s. be doing more? governor? >> i think there is a real wish for reconciliation in iraq especially when some of the shia groups get the authority they didn't want to lose it. so they want the reconciliation to keep their authority their power in their hand. and it cannot be a reconciliation like that. if we are talking within a real

reconciliation as i said, we need to strengthen the other groups to give them the freedom to choose their representatives so they will be in balance with the others. and that is what i'm talking about elections. we need elections, which are getting all the groups of the sunni not only me and dr. rafe, all the sunni group must be involved in that election. and so we will have all the sunni community inside the political process. >> governor, if i could just follow-up on that. don't you worry that if there were elections in iraq at this point in time that the zeashia militias would capture a huge number of seats? when do we do these elections? >> it will happen in the shia provinces. but we can also use or change the election law that if it get

in -- in one part not with a big list we can get the representative from each portion in iraq. >> dr. rafe? >> if the situation keep going, the control of militia it means the militia will draw all the political situation in all iraq. because they can get the weapons. that's why i'm talking about dismantlization. it's the point. partnership of sunni reconciliation it looks like for all iraqis is talking about as everybody is singing about. let us make a rapid assessment of that story. let us assess from 2010 until now. we had the erbil agreement.

and the prime minister and speaker and former minister of finance the reconciliation have been outside the political process and from anbar after 2000. so the story is not keep talking shouting. the story is to implement the degrees. otherwise you come to the draft i have. this is the draft of the program of the government and it's such an excellent one presented by mr. abadi to the parliament. the problem i highlighted in front of you is the timing. it talks about displaced people. talk about reconciliation, security forces should be totally iraqi national. no arms and weapons should be outside of the control of the government. the question is it implemented? the answer is no. >> is always in iraq, that is the issue.

there is no shortage of the right ideas. >> to answer as one who is looking for a solution. so these are the answer of a man who is just -- there is a -- in iraq come to extinguish it. >> thank you. let's move on a little bit. because i want to leave time for the questions from the audience as well. i'd now like to come to this great issue that is looming ahead of us. it's not immediate issue. the issue we have in front of us is the expulsion of daish and whether it's going to be anbar or mosul first. but is it the nature of the future iraqi state. and a future iraqi state in which all of its communities can feel comfortable. we invited you here because we were hoping that you could as

well as anyone give us a sense of how the sunni community is thinking about exact that set of problems. and i recognize that i can't ask you to speak for six or seven million sunnis but i've got ask someone to do that because i can't fit all six or seven million sunnis in this room nor would they come, nor could they get visas if we invited them. i'm going to ask you to be their surrogates. help us to get a sense of what you think that future iraqi state will look like. you spoke today. you have spoken in the past about the importance of december centralization of authority but nonetheless within a strong federal system. that sounds exactly right but of course the devil is in the details. help us understand the details. what kinds of powers are you thinking about that should be devolved from the central

government to the governor nats and the regions. i'll ask you to do the same after the governor. please start us off. >> maybe we can get the -- as a model. i think to now, there is no problems even between the ex-enemies now they become all friends. and they can solve their problems inside their autonomy. but maybe there is another problems with baghdad, with some of them. i think dividing the authorities inside a province like nineveh or like i would not say sunni region but maybe it would be happen, as the anbar or want. but any way i think we can solve our problems. we can get our security.

we can get our suitable political life inside that province. in baghdad it will be the final relation. it need to be that there is no any event or any problems happen from this province to baghdad. but they can make their reconciliation between their people easy. maybe there are some problems with some parties or some groups of the shia who are in mosul. it is easier to solve the province and we can get the -- as the model. i believe that iraq will stay in their problems and quite until it become a real federal country

which will get its autonomies, the rights to arrange their problems inside the province. >> several follow-ups, but to dr. rafe first for his overview. >> the sensation of sunni, participation in the political province and everyone is an exile. awakening assassination. demonstration attacking them. calling for a region occupation. so all this givens them impression that sunni are not partner. they need solid confidence building. it need not only promises we have to go into an action plan in details how to restore the sunni to bring them back to the political. they are inside but no can trust. everyone is not trusting the other. but i mean all these things that

i taken by sunni on the constitutional legal back ground it ends with illegal nonconstitutional movements. on what sorts of authorities and what iraq would look like. everyone is talking about the constitution implementing the constitution, respecting the constitution. let me clarify that point. there is a regional authorities and a theired or mixed authorities between the two. respecting and implementing the constitution is a guarantee. >> let me ask the first follow up to start with you. i'll start with your views as well. as you are painfully in personally aware, one of the problems with the current federal system is we've had a corruption of the justice process and key sunni leaders present company included have

been targeted by the central government using that judicial system. how would you think about a future iraqi system that would prevent that from happening? how do we go about creating an iraq in which you and others can't be personally targeted by the system? >> this depends on iraqis. all iraqis, whether to select to live together, to give in united iraq, to respect this isolate of of -- authorities. you can help a lot. everything need to be restored. everything is damaged you have to restructure burned in iraq. so restoring iraq again it means you have to build again. on the corruption side, which is

in the security and nonsecurity institutions, the country is controlled by militia. money controlled militia and militia took money. that is why i said the challenge to restart back again the state. so the question is how serious are me an my colleagues to rebuild iraq. if only keep beating others or giving promises without imp pags will not move. >> governor comment anything on the judicial system? >> i think the corruption and the -- all that problems may be solved easier if we are new to the people not far away from the people. now with controlling everything from baghdad they have no interest or no concern what happen in mosul or in anbar what the people in anbar want. they want to form mosul and anbar and want to belong to them

not the follow the problems or the corruption in their city. that's what happened in mosul exactly before exactly and too much baghdad didn't care with that corruption and the people must belong to them so i think the authorities, as i said we can see if there's a problem between some of the kurdish leader and baghdad. there is not problems that they can not solve inside. >> thank you. governor, i want to shift to another specific aspect of a

future iraq, which you raised in your remarks in your first answer to me. you said that several times that the krg ought to be a model. that's actually very helpful. it's one that we can really get our hands around. that's something that we can understand but also very big statements. i want to ask about a couple of specific aspects of it starting with the military insecurity side. do you believe, as you've kind of implied that what iraq see sunni arabs are looking for in a situation in iraq where the military and security forces of the sunni provinces of the sunni regions are separate from the iraqi central army and under that vision do you think that sunnis would be willing to have iraqi central army units in the sunni provinces or would they have to be split?

and the army of the central government is more or less out of the krg? >> maybe i will have a difference between two securities. >> please. the security for the provinces must be managed with the security in the province. there is also another security which is the iraq security and that, of course we need that, the iraq army to evolve in it. so we don't like that we have the iraqi army in our provinces. we like to have the iraqi army but this iraqi army must not be involved in local security and must not be involved with the people inside the province. >> so perhaps more of a division

between the ministry of division forces versus foreign defenses? >> this clarifies the type of relationship between security forces local versus physical. in the year 2008 is only talking about the authority of the governor to call for a federal forces if there's a real threat in his province. so if the security sbags is good, it means that the local police or national guard is more than enough. otherwise, to send an a rm me, localized or exactly saying how to do it and the law is implemented now and for a prime minister to send a troop if he needs to. this is a way of connecting local versus federal. >> very helpful. let me dig down to another level of detail and ask about as we say here where the rubber meets

the road. money. do you believe that sunni arabs would envision in this future iraqi system one where the sunni provinces or regions would have their own budget separate from the federal budget or would there remain a part of the federal budgets? and again, going back to the krg model, where there's a separate budget that has an arrangement with baghdad? governor, please? >> i think the execution that very well and we need to get our budget according to the population over the province and the autonomy so we can follow the constitution. >> governor, if i can -- before i turn to rafe, having been governor nor of ninevah, are

there specific items handled by the federal government that you think would be better handled by the provinces, by the region thinking about a future iraq in which the sunnis felt more comfortable? >> i would give be a example of that. according to the constitution, it must get 11% of the iraqi budget but actually we don't get more than 1% and that's i think, one of the bigger problem in the province. >> also, being a former minister of finance, part of the budget has been paid directly to the provinces in the region. what's called regional development budget now even to

the province but called regional development budget, an investment budget. and part of the investment has been paid directly to the province and they put it -- listed it in the minister of planning so as a budget is part of the central government unified budget. if it has changed to the region it's also talking about the budget of the region which is different than budget of province. >> rafe to follow up with that your expectation that you would move to either a single sunni region or to multiple regions? >> i think all sunnis are talking now about regions on provencial ground so anbar. this is what happened in mosul.

i elected a commission as a regional province. >> let me ask you both one more question and then i'll open it up to the audience and i want to ask you what i think is a hard question but maybe it's an easy question to answer. what are the differences between krg is oil. the krg has oil and it's difficult -- it's very difficult but conceivable and we've seen it happen for baghdad to have negotiation with the krg over which way the revenue flows which way the oil flows. as all of you know there is not a lot at least at this moment, of oil in the sunni dominated provinces of iraq. how do you go to the shia-dominated provinces of iraq

and say to them we want you to continue to give us our share of the total budgets but we're going to be less -- you know what the reaction is going to be on the other side how are you going to convince them that this is worth doing? rafe, do you want to start? >> the constitution gives them the right to call for their own region and it includes the right to change any province for provincial region. so constitution also is talking about how it was between iraqis

so the wealth of kurdistan or south or north or west this is as it belongs to all iraqis. it is not a provincial wealth in order to say look, we are looking for independence and seeking for our own oil. the same thing is true in mosul and distribution of the wealth, the constitution says it should be distributed according to population number, not region or province. so according to population. your population is the same, whether it's akbeing a province or a region and so what was the problem? no problem. the idea is to respect the constitution. from more than one partner. >> governor? >> i think the same problem is happening now in the shia

provinces, not only with the sunni. and they think they must get more benefit. >> is it their own oil? but on the other side, that our provinces, even mosul or anbar, we have another benefit which make us united. and i believe that if we invest in our benefits they know there is a lot of benefits to be in iraq and to have a good relation with iraq, even if they have oil or living with it it's not enough for them to protect

themselves, to have the security, to have a good relation with the countries. so it benefits that we need each other. even in mosul and anbar. >> okay. i'd like to take some questions from our audience. i'm going to take a bunch of questions, maybe about six questions, and we'll put all of them to our speakers and give them the opportunity to respond collectively to all of them or which ever ones they'd like to speak to. i'm going to go around the room this way. i'll start with the lady over there. please keep your questions brief and please do keep them to questions. please. >> hi. >> and if you could identify yourselves to the speakers. >> thank you both. i'm kelly jones a refugee officer with homeland security. there's a lot of discussion by

dr. rafe of dismantling militias and both of you spoke about problems with the militias and if there were a vote people would be voting militias in and the ways in which the militias are currently connecting to the government and could you address how to address these problems when trying to dismantle militias in the future. tried to keep it brief. >> we'll go back to there. >> good morning. i'm jason campbell with the rand corporation. going back to prime minister al badi's program i wonder given that the political forces currently in baghdad seem to be successfully holding down their implementation, what will be the catalyst to see that there's more support for these programs

being implemented in the future. >> take one all the way in the back there. >> i want to know the situation for the yazidi and christian in iraq. mr. governor, he mentioned a little bit about. mr. rafe don't even talk about. i'd like to know if it's safe and secure in the future or we are gone from the region. thank you. >> right in front of you, marshall wherever that is. >> i'm a resident fellow with the atlantic council. my question is we're talking about militias as a homogeneous group but a big part of it is not pro-iranian. is there a way to cooperate with these groups and use them maybe to bypass the pro iran?

>> recently prime minister al badi elected an operations command and what are the next steps that al badi could take to? >> right here in the front. >> there is a high level of turmoil and if i'm listening to the stories of two survivors, believe me, and one of your main concern had been i think the credibility action and word of baghdad and basically you're asking for a decent relation.

i want to ask you, has it become a more secular nature of democracy or more secular in nature of democracy and part two is what do you think or anticipate the people of iraq will start the democracy? thank you. >> a group of excellent questions. please feel free to address any and all of this. >> when i keep talking about dismantling militia iraqi law, and constitution at the beginning is talking about integration of militia. but this is talking about the previous militia before the fall down of the regime. so it would create a huge problem. that's why i'm talking about

dismantling, how to fight now is to open recruitment and iraqi army on a personal background, not groups. so not accept hundreds and thousands to come as a group headed by a leader because keep obeying their orders. so opening recruitment for thousands of shiite, not the militia persons. the same thing is true for the sunnis. we not accept groups to fight outside the institution -- the constitution or rule of law. so this is the dismantling versus accepting recruitment. for the program of mr. al badi he is working and trying to make a change and we have tried to help him keep promising without

implementation and come again to develop the country i don't need to -- i hope that the final picture presented would build a national nonsectarian and nonpartisan security forces is a big goal. it can be done and programming equipment, time is important because you cannot lose more time both on the militia side. the yazidi problem i am really sorry i didn't mention it simply because there's much more -- so i apologize on that point. because i'm sure that atheel would cover it because of the topics that we would cover we discussed. being sure that he would cover it make me not focus on it. on the militia side, there are

national and i cannot say there is national militia. i cannot say there are national iraqis. i agree with you. not all of the population is bad guys but definitely some of the bad criminal militias, so we are talking about dismantling those groups, the bad guys the criminal ones that committed the crimes. others can be accepted as part as national back on a personal level, not as groups because of thousands of people who belong to one of the clerics to be integrated and because at the end of the day we find an army and national guard filled with groups. its loyalty would not be to them. so yes we can get benefit to some of the shiite. atheel may comment but this brings me back to the story of sunni participation. if it's our share and the

government -- this is only one. we are talking about 1,200 something generals in iraq. .001 means you -- [ inaudible ] yes iraqi is to democracy but fragile and threatened yes it is a real solution and yes iraqs iraqs iraqs. the mobilization is just for people who follow and wish to fight they are just people from

the shia who fight and most of them is a good guys and they want to protect iraq and equipped equipped and trained from outside iraq and of course if you see that. and true that as soon as the struggle between this militia and the sunni provinces have stopped, even though this militia overcome or sunni area, all that stopped the problems will create between inside the

militia and shia provinces and that's the problem that they face and the struggle between that would be more than the struggle with the sunni after that. so we are not going with this. if we work outside the constitution outside the law, we are not going to step up iraq. we are going for more problems. of course now there's shia sunni problems but in the future it will be shia problems. i think when i'm talking about the constitution of ninevah, if we create an autonomy we right

a constitution and even though they are small minorities, when they are talking about iraq but they are big minorities in the yazidi would be more than ten person and they need to get their lives in the inside that constitution and we need to have negotiation with them from now how to hide that constitution and put their lives and other minorities so it will be in the step of creating the autonomy. [ inaudible ] is one person. i don't think that he's superman.

he didn't have office and didn't have his car. so how would he fight from daesh? talking about one person means nothing. we need to know what they would give them, what they would give him. because there is a division to be in his command to fight or not? so i didn't follow the [ inaudible ]. till now i can see all of the world create mosul is the real and actual steps was done within [ inaudible ] is there. between the government force,

there is more than 200 kill kilometers between tikrit and mosul. there is no army to reach mosul from that point. it's just about 20 kilometers away from mosul and we believe that it would be more than baghdad. i think the problem in the law of elections yes there's a democracy but what happened is they give the authority in that law to the big list not to the people. and from the beginning after 2003 so those people or those guys who are -- the authority from 2003 have the -- until now

we see that there is no representative to the people in the parliament. we know that there's a representative to the list. and, of course we can prevent some parties and accept the others. >> one last word, rafe? >> yes. very short. dismantling militia will definitely end in a national iraqi army to defeat extremism. insisting upon proliferation of militia will only result in iranian revolutionary guard model which i don't think is fit for iraq. thank you. >> well, obviously this is not going to be the last word on the subject. but i think that our speakers today have given you a tremendous start in understanding both the problems of iraq today and the potential solutions for iraq in the

future. please join me in thanking governor atheel al nujaifa and rafe al issawi. [ applause ] here's what's happening tonight on c-span 3. first, a discussion on natural gas production and fracking and then we hear from presidential candidates speak at the south carolina freedom summit over the weekend. and president obama continues his push for the senate debates trade legislation. >> with live coverage of the u.s. house and c-span, here on c-span 3 we compliment that coverage by showing you the most relevant congressional hearings

and then on weekends c-span 3 is the home to american history tv with programs that tell our nation's story, including six unique series. the civil's war 150 anniversary visiting battlefields and key events, american artifacts and touring historic sites to see what is revealed about america's past. history bookshelf and the presidency, looking at the policies and legacies and lectures in history and a new series featuring archival government films from the 1930s through the '70s. c-span 3 created by the cable tv industry funded by your local cable satellite provider "like" us on facebook and follow us on twitter. now a discussion on u.s. natural gas production and hydraulic fracturing known as fracking. hosted by the atlantic council,

this is about an hour and 20 minutes. well, i think we can start. i wish you all a good afternoon and welcome to the global energy center at the atlantic council. i'm dick morningstar, the founding director of the center. also, i'm glad to see her david goldwin, chairman of our advisory group and brought us our moderator here today, cynthia quarterman. so we're very pleased to see you all here today. and today's discussion will

focus on how energy prices, politics geology and environmental concerns have affected and will continue to affect fracking in the united states and the potential for fracking to succeed in other places, like europe, mexico argentina, china and other places. we do have an outstanding panel of experts today to discuss these important issues. the discussion will be moderated by one of our own very distinguished senior fellows who, again david brought us. cynthia quarterman. cynthia most recently served -- this is always a tongue twister for me for some reason -- most recently served as the administrator of the u.s. department of transportation's pipeline and hazardous materials administration. she's been in energy development

safety and transportation since the beginning of the clinton administration and we're pleased to have her knowledge and expertise here at the atlantic council. and today's expert panelists if you picked up the biographies available outside, right? yeah. so i'll briefly introduce our panelists who included subash chandra from guggenheim partners. he recognized fracking's huge potential early on and involved 90% of the companies involved in the industry. i guess i could ask how many companies were involved in the industry at that time but i won't. >> all two. >> all two of them or one in seven out of two of them. and dr. terry engelder

professor of geosciences at penn state and originally estimated the potential gas reserves in pennsylvania which first set off the shale boom and he's taught at texas a&m and has a whole host of credentials that you can see in his biography. and finally, we have russell gold who is a senior energy reporter at "the wall street journal" who has been reporting on fracking since day one. mr. gold recently published a book specifically on this topic and it's titled "the boom: how fracking ignited the american energy revolution and changed the world." and for the audience and those watching the live webcast, you may also contribute to the conversation on twitter by

utilizing the #acenergy. and so let me -- i will extend a warm welcome to cynthia and our panelists and cynthia will say a few words and then we will begin the panel discussion. thank you. [ applause ] i just want to say thank you for being here this afternoon. i think this will be an interesting panel. we just came from lunch where we had lots of interesting conversation about what is happening with respect to fracking in the united states and these gentlemen also have an international perspective and we're going to push them to answer some of that and i'm going to start right out with dr. engelder who is known as the father of fracking because of his work figuring out how

much gas there was in the marcella shale. he was noted as one of the top 100 thinkers in the foreign magazine on this issue. >> first of all, let me indicate that i'm always embarrassed with this title father of fracking in pennsylvania and i have a written statement that i'd like to put forth as a disclaimer. but before that, whenever making an appearance, i always pass around a notebook in which i have the audience enter their name al a mater and company and affiliation. i'm going to hand this down to this gentleman. go ahead and pass this around the room during this period of time if you would. all right. this is the disclaimer. and i will read it, although i

dislike red text but in this case this is so important that i'll disclaim it by reading. it is flattering to have people think that i might be the father of fracking. but it is a title that i don't deserve. in reality, i am a very small gear in a very large motor. the motor that supplies energy to the human economy. my research on shale gas over nearly 40 years culminated in reserves calculations for the world's largest unconventional field, the appalachian basin in 2008. this research garnered international attention following a december 2007 press release from range resources the company responsible for pioneering and discovering wells in the mar sell list. at one point i asked range resources to actually write a statement to explain what it was

that i actually did and his statement was, my worked aed a level of independent credibility that was lacking or understated at the time. bear in mind that this is late 2007 before the boom that russell gold is going to talk about. for perspective, they suggested that the volume of recoverable gas distributed through several layers in the appalachian basin, including the mar sell list and utica is comparable to the world's largest conventional gas field. to me, uncle sam is the father of fracking under the leadership of president jimmy carter, they initiated the project known as eg -- eastern gas project, egsp. egsp provided funds to any of a number of scientists in

government industry and academia for the purpose of tapping the vast reserves of north american gas shale. carter was president in the 1970s so i would suggest to you who might be the father of fracking is al yost of the technology laboratory and he was responsible for drilling the first horizontal lines. this would include aamaco, the early fracture experiments in colorado and then there is george mitchell and this was

done in the 1990s and then bill of range resources who put a massive hydraulic fracture on the market. all of these people are deserving. academic types include mark zoback and steve of texas a & m. while it's not fair to include me in the list of potential candidates for that title, you asked me to explain myself. is that right? >> yes. >> okay. so i was blessed with funds from uncle sam to do some of the early work on gas shales back in the 1970s. this was the same time that george mitchell was experimenting with gas shale in ohio. again, using government funds. from the eastern gas shales project. then later egsp funding went to me to try to understand the state of stress in gas shales in the appalachian basin. that was a great experiment in

the 1980s. i was a small part of shell's venture in gas shales, the first attempts at producing gas from a standard gas shale as we know it today. at penn state, i had an amazing group of graduate students -- and this is very important. not the faculty members but the students that are associated with the factulty member. they all contributed to our understanding of gas and oil and shale. we came to understand which natural fractures were driven by high-pressured gas we came to understand the rate of fractured growth, the timing of fractured growth and the distribution of fractured growth. all of these are important elements that make commercial gas production possible. and finally, and most importantly, none of these are the discoveries of one person. >> thank you. i stand corrected on that. did i understand there was also

a woman involved? a geologist as well back in the olden days? >> well, as a matter of fact, there were two or three interestingly enough when the new york state sur fay -- before it was called a survey decided to understand the mineral james hull, the geologist responsible for that, had he just gotten married and i suppose his wife was looking for a honeymoon to go over to europe but rather he said, you're coming with me to map in western new york. now, she was an artist and on her honeymoon it was mapped by a cornell graduate student in 1912

and that's still remaining some of the work in understanding fractures and gas shales that allow you guys to do whatever you do. >> thanks. >> mr. chandra how did you get involved in fracking? >> i guess my background is trying to find securities and that's when i got in the industry is when the gulf of mexico shelf is where the hot ipos came from. so that ended. and one of the first companies i found thereafter was mitchell energy as referenced by terry. so it was immediately impressed

that we saw some companies do very well, get bought out, and some companies absolutely disappear. so when i saw mitchell energy, he was an onshore company growing sustainably every year on vertical fracs at that time. i was very excited by that. but it was also a curse in another way because after seeing george and his company at a very, i guess, right before the takeout but a very late stage of the horizontal application of fracking, they sort of implied to me this would not work. i was too young to realize that every company says that. >> right. >> so i went for quite some time going, wow okay, guys, this stuff out here outside of wise and denton county, it's for the going to work. that cost me a couple of very, very good companies and ideas along the way. but i came around finally and in 2005 fayetteville, what was

interesting about the barnett shale was supposed to have unique characteristics that could not be replicated and as it so happened in fayetteville they drove two wells and stock went up and that could not be replicated. what got me in touch with terry, appalaicha as a land mass was multitudes bigger than the fayetteville or the barnett and today for very different reasons it has a very unique place in the u.s. as an exporter of gas, as an exporter product. and it's a very exciting place to be. so, anyway, i went to the father of fracking, you know -- >> you need a new title? >> -- to understand the basin at the time it was chesapeake energy who bought a company and had a big position there but it was different. everything about it was different than the other place. so that's how i found terry and

terry introduced me to a lot of words that i still can't pronounce and concepts i didn't understand. but what was amazing about this whole shale experience is that there was no book could you read. and the education even now is very much realtime and you know, a long the way clients would ask why didn't you write a primer? it's so historical. there's so little i know. every passing day i know so little and yet i feel like i know a lot since we had our chat. that's how i met terry and terry really helped us and since then it's been ohio and ves west virginia and iraq is getting more powerful and far more productive and the techniques are absolutely violent, where you have wells capable of doing these astro mom mcrates in the gulf of mexico were things that couldn't happen and are now

being experienced in a single well per well in places like ohio, west virginia, and pennsylvania. >> for me it's great to be on the end of asking you questions rather than answering them. tell us how you got into this. >> i will get into the personal in a minute but my story is a classic example of how it's better to be lucky than smart because when i was starting off at "the wall street journal," i was looking around and i joined the energy team not for any particular good reason, other than the fact that i was in texas and wanted to stay there. so they assigned me to the smallest companies, mostly doing u.s. domestic oil expiration. and these were companies, frankly, that very few people --

boston was an exception -- that investors were interested in. we had depleted the rock and we were imported. there wasn't that much money to be made. let's give it to the new guy. as the new guy, i go off and start meeting with companies and one of the companies wants to talk to me about this new drilling that they are doing in ft. worth in the barnett shale. so i went to my first frac job in 2003. we didn't even call it a frac job back then. people talked about unconventional gas. so really i got in on it very early on and for several years, 2003 2004 2005 and 2006, i wrote about something that i saw very significant in the united states and then one day i got a call from my parents, my mother

specifically, and they own 100 acres up in northwestern pennsylvania, a place to get away for the weekend. she said to me we got this strange call from chesapeake and they want to inquire about our land. at the time, there was drilling going on in the pittsburgh area but this was hundreds of miles away clearly -- clear across pennsylvania. and so really i had to go back and start learning about why chesapeake was leasing all the way so far across pennsylvania and i did and that really got me onto the second stage of learning about fracking and what was going on and it really brought me into these questions of, should we be doing this? because that's really the question my mother asked me. should we sign a lease? should we allow this company to drill on this property that we own? and how can you get the benefits of all of this oil and gas in the country in the united states and minimize the risk and

inscreens and the downsides to it. those are very important questions and i will pause and say i don't think those questions have been answered in the united states yet. i think we're still grappling with them. i'm based in texas and who actually should be regulating it? the state or the cities? we're still negotiating these questions and i think it's important because one of the questions that we're going to get to is why hasn't shale taken off outside of the united states? it's been transformative in the united states and canada. but outside of the united states, it's really barely started and i think one of the answers is, because as much as the united states has struggled with these questions we had one thing going for us. we had incentive. americans in the united states we own our own mineral rights and so when chesapeake wants to drill on 100 acres of land, they are going to make an offer and they are going to make an offer that is sweet enough hopefully

to overcome the inconvenience of having trucks driving across your property for the next few months. outside of the united states, that's not the case and as much as we're struggling in the united states with how to balance these questions, i think outside the united states it's even more difficult because that incentive question hasn't been fully addressed. so when you say you want to drill wells here you're not bringing large checks as they do in the united states. so i wrote all about this in my book and about al yost and terry and all of the different people who created this technology and all of the questions that we're struggling with today. clearly in energy and all of these questions which we talked about and is talked about, should we allow gas exports, oil

exports, keystone xl they are all questions that have been set in motion by fracking and this enormous new production of oil and gas. and it's been around for several years and then modified it and completely changed the country's landscape. >> can fracking survive? i think the end of last week we saw the price of oil at about $59.50, price of gas a little over $2.5 and if you look back to july, prices were a lot different last year. they have been even lower recently. under those circumstances we've already seen the counts going down notices of job losses and, if so what kind of companies would be the ones to salvage

themselves at the end. >> i would answer the last part first i think an enormous change is happening right now as we speak. and it has fallen to what has not stopped 4 sustainably is that going to happen in the world of oil? we really had no way to tell. we understand that the oil molecule is a lot bigger. terry can quantify it exactly. it was a lot bigger than a gas molecule. it's a different beast and far more problematic. the world now understands that the u.s. can grow and a size to grow at a rate of million to million and a half barrels. they have made room for that

barrel. the irony of this is that you know, if we were to express it this way, okay, so the u.s. oil every last barrel has cleared profitably, no matter what the cost was and each barrel marginal barrel made a profit, which is fantastic, right? so if you told someone, a layman, so to speak said, wow, demand just must have been great and you look at the numbers, demand wasn't good at all. what happened was the global forces allowed u.s. oil to have a place in the world at a rate of growth that they decided, wow, we're down to 32% market share. they can keep growing at this rate. this is not just a little bubble that pops. so what did they decide last november, we won't allow it. we are going to defend our market share.

i think there was a good review on it. that is a sea change. we have an industry and the gas did deflate and immediately transferred those dollars into oil thinking that they can grow forever. so what do you do? you lever that business up. you hire lots of people and leverage it up. you feed leverage into that business. we now have built in a new environment, where it's not you a lowed so to speak it's too much excess capacity. in terms of land a lot of land will basically be returned back to the lease holder not to be jilted again and way too much in capital. you don't lever a business where

your revenue is as influx as we are. talent and services. so you're already seeing that and what they don't want to do is within the organizations, it's hugely capable of enormous amounts of experience and you can't get it back. that's probably the next stage. so what we're about to enter is a phase where all of that excess capacity is resized to the new place for u.s. oil. and that new place for u.s. oil is not a million, million and a half or two million barrels, we're still trying to grapple with it. my point of view is backwards and depends on the oil price. the oil price is the nerve signal. it is a signal where all of these forces come to bear and conveys its intent through the producer and really frankly $65, we're done but we'll start back

at, say, something closer to 70 which tells me we're probably not going to be above 70, 75 or see the 90s or 100s anytime soon. it renews an environment where every last barrel is profitable. we wonder we have an analyst here with the washington research group here in washington, d.c., she covered the iran topic and so on. of course, iran is a hot topic. who is going to make space for those barrels next year? it seems like the odds of a deal are pretty good and so we're going to resize this entire sector. so i did want to answer the last question first because i always forget the last question. but what it means to me is that what we're already seeing is that it's like this -- it's like an earthquake center. you have the core and then the fringe companies are already under huge stress and if not under the bankruptcy et cetera.

that core is shrinking. who is in the core is the best rock and i think it plays that. frankly, it's going to be two things. it's going to be the price of oil conveying that and then the differential. it's going to be the cost of getting the barrel to the end user that also conveys places like the two assets of it. when people say it's $70 oil, you have to take 15% off the top for the cost of getting it to a sales of 70. so they are not getting 70. so i think we want to be close to the end user market as close to the refining centers. it's going to be this exciting new play in oklahoma. so it's going to be exposed to that. we have companies like acquisition this morning of one company wanting the exposure and

buying another company for that reason. >> great. >> okay. russell, is the boom now a bust? >> i don't think so. we have clearly seen as you put it a huge number of drilling rigs laid down decommission. we've seen a lot of people laid off but we've also seen production remaining fairly covered and we run up to 9 million barrels a day and we're going to sort of be sticky coming down. this is a really immature industry in the sense that it's just learning how to do this and learn how to make bigger wells for less money, to get more oil and gas out for less money, to drill more wells longer wells with fewer rigs. a lot of the shedding going on

is companies just getting smarter. the era of rapid relentless growth i think it's over. there's no question in my mind about that. but i also don't see any signals that that production is going to drop off. so in that sense no. we're not going through a bust. however, there are a number of companies. wall street is fairly generous and a lot of management teams bought a lot of -- well i'll be generous. suboptimal rock. they just did not spend their money very well. and those companies will be bust. they will not be able to survive. so we are going to see a lot of that. i'm actually surprised that we haven't seen more already however, the era of the u.s. as a major oil and gas producer which, in my mind, the boom is

was all about that's not going away anytime soon. >> terry, i know you have strong opinions about opec. have they squashed the shale revolution, in your view? >> absolutely not. the point that russell just made, the most important point is that there is oil available at every incremental increase in oil that is there and waiting for small incremental changes. i think that the other point that russell made, which is that the u.s. right now has a fleet of oil and gas wells. why they may have very early rapid declines, the later history of these oil wells is a long period of production. this is particularly true of gas wells, also. and so in a sense, then, the

capital spent early on is betting on these long tails of these wells and they will sustain this level of production of these wells and they are unlike conventional wells where once it declines, it really goes off the books in terms of production and these tight gas and oil wells won't show that particular characteristic. at least not as rapidly. and we've had some experience in the appalachian basin where some of these wells will continue for as much as 40 years. and the big slick water fracking experience that we've had, of course, is now only 10 to 15 years old in the united states and we looked at the barnett to see how these wells are doing and particularly the tails of these wells and right now, a lot of these wells are being refractured and that particularly appears to turn on

more gas to extend the life of these wells and so they last a long time. at a very low rate relative to the initial production. to the initial production. called betting the tail. my bet is the tail will do very well. >> sebastian, you mentioned a little bit what's happening in the rest of the world. what's your view on whether fracking will take off any place else outside the united states given the price and the current environment? >> they're trying. i think that view that there was only one barnett was true and that there was only one barnett, there was only one fayetteville only one march sell is. all of these rocks have distinctive characteristics that i agree we have barely begun to understand. i think as an aside, two things, one is just on the prior question where i think of how our industry has changed is that

we have spent 130% of cash flows, and that's been fully funded by wall street if you just want to call it that but by investors. i think we are going to a cash flow neutral world. this is the first time since the shale revolution occurred that we have spent cash flow. in that respect i think the shale sector in the u.s. changed us sizably. in terms of now what the companies will do that applies to other countries is they're going to put a lot more effort into understanding the rock that they have and i think one of the problems is that this big data set hasn't really existed up until very very recently, and there's so many little parameters on the rock that are more visible at a microscopic level that you have to collect that data, then you have to make sure the science is good, that you have the same variables in

two well bores that they don't vary one bit, and then understand why they vary in performance. we have seen wells that are within one square mile of each other in the very same rock in terms of performance be 100% apart, right so industry is going to spend a lot more time with the plays that they have to understand why those variances exist. so before we take off internationally i think we've taken this view that brute force works. for instance if we put x thousand gallons of water in, let's put more. if we put x thousand pounds of sand per stage let's put more sand. if it is ten stages, why not do 40. it has all been about brute force. what this is going to force is big data gathering what we are going to find is there are intervals that work a lot bertha explain the variance in two well bores almost completely, so before we make the same mistakes, i shouldn't say

mistakes, this is all part of the process, before we go internationally and start with brute force aspect of it, because frankly i don't think they have the equipment, we don't have the equipment to put in this many gallons of water at this pump rate, et cetera et cetera, i think we need to refine the science and understand. so internationally there's a lot of things like russell is talking about incentives here existed. i think before it really takes off, those incentives have to exist elsewhere. a lot of the deals that companies are getting to figure it out aren't very good and will take too much time. so i don't think i see anything remotely parallel in what we have here. russia becomes a shale oil russia was bigger than we were, the only country bigger than we were. close to us was venezuela, i'm sorry, argentina. venezuela was slightly below

that and algeria? these were a few of the so-called hot spots. i have not seen one single project really take off. >> terry. talk a little about geology here outside of the united states. i know you have been traveling around the world talking about marcellus and the geology, have you studied any of these sites and know where things could develop quickly? >> yes, i have, and the answer is no i don't know of any place that will develop quickly. let me explain a couple of things by following up. he mentioned two wells can be drilled parallel, offset by a thousand feet and behave 100% differently. we also know, and this is where

the real science will come in each well is fractured in stages. what that means is if you have a lateral 5,000 feet, each individual stage is only a couple hundred to 300 feet. and the industry knows if there are 15 stages in one well only two or three or four of the stages are money stages. so the real scientific breakthrough that will happen on a lot of this is drilling a well and understanding where you put your money, what three or four stages are critical. that more or less gets back to the question of where are the fractures because the fractures can vary a great deal from one location to the next even in the length of 500 foot, 5,000 foot well. to answer your question cynthia, there are a lot of parameters that really matter and make a big difference. for example, china early on was believed to have a fairly decent

resource in gas shales but chinese gas shales are different from marcellus for one of two reasons. marcellus was deposited on inland sea saltwater. and the chinese shale some are deposited on the land surface in river channels or not yet below sea level. both produce shale and organic matter in the shale, yet these seem to make a big difference. marine marcellus has proven to be better than fluvial gas shales of china. we know there are other parameters in the rock. sue bish mentioned there are as many as a half dozen different parameters. all of them have to be perfectly aligned for gas shales to work. and if you have one for

example, the polish gas shales appear to have too much water in the matrix to allow the kind of gas production that they like. that's been a bit of a disappointment. we have a suspicion that maybe the shale under the paris basin, which is different in age and depositional setting than shales in poland through ukraine, yet the french have elected to take a pass on the paris basin. then we have the midland basin in england where i think the british government under cameron has realized that if the local people are going to participate in this, they're going to have to be rewarded in some way for their nuisance. now, that basin consists of a lot of coal age rocks, coal in the united states was deposited somewhere in the order of 250 million years ago, younger than the marcellus, older than say

the paris basin. and they have a completely different set of parameters and all these things need to be sorted out. it is true however, that the biggest gas shales that really seem to work in the united states are these large basin marine gas shales, and this includes the barnett, fayetteville marcellus for example, younger in age is the eagleford and haynesville. each of those are marine shales and they seem to have the best set of characteristics for all of this. marine shale that comes close to mimicking some of the properties that really work in the united states. >> russell we started talking about not just the geology of the other countries but some of the environmental and other issues. can you expound on that. >> sure. i wanted to quickly follow up on something that terry said about the paris basin and we don't

really know because we haven't drilled that many wells into these places. one of the things that when i first learned struck me is the number of wells drilled in the united states is in order of magnitude different than wells drilled elsewhere so we talk about shales in poland and france, they're just -- the only way you can determine whether the shales will produce oil and gas is to drill wells into them drill a number of wells and take samples. that just hasn't been done outside the united states. it will take time to drill samples and collect data. once again, getting back to the environmental question china was said to have a large gas shale deposits. the problem was is that one of their good deposits was in a very arid region to the north. the other in a part of the country which had a population density similar to new jersey.

neither place made really from -- didn't make a lot of sense to drill. on the one hand, drying to drill in a place that's dry and you need a lot of water and liquid to frack the well, and there's a lot of competing demands for that water. then you go to another place like shesh won with that population density it was difficult to drill there. we didn't get all of the details you did in the united states. there were a number of protests over as trucks came in as rigs and things were set up, there were a lot of local protesters saying what is going on. what's the impact going to be, how are we going to be compensated for this. and that essentially slowed the chinese growth of shale, even though arguably china would be an extraordinary beneficiary of more domestically produced gas. they're report tg in enormous