the energy sector. it allows for a third-party. the private sector is already the mexican electricity sector. now, you will physically -- parties to get in contact as providers with the consumers, what they call the qualified consumers. they would also allow for other companies to -- for the cfe 2 -- a national utility to outsource several of the things that were limited. they had to do it by themselves and now they would be able to -- the private sector would be able to finance and manage, operate

and expand the transmission in the infrastructure by means of the utility. a minor change, it is a major change. you see increasing efficiency of the operations and the possibility of relying on private parties. it basically gives you a notion of the speed, the pace at which the reform will move forward. reformly, constitutional was enacted in december of last year. started -- their first step was to request which areas, fields, or places with chuck were already working and had intention to do so. pemex did so. last march. then the government sent 21

initiatives to congress to change .21 different laws to change some new laws. in september the areas will be defined. what areas will they keep? that will be defined by the government, by the state, by the mexican state. 17, it isbe september already a mandate to the constitution. and then you will have other things moving, like the creation of the mexican energy forum. the very important thing is that thatonstitutional mandates the regulatory commission has to define, the rules of separation that will apply to the transportation and warehousing of fuels, that will have to be there. those will have to be there for january of next year.

this is one of the areas where there is a huge need for additional investments. pemex was not allowed to invest in the past in expanding its network of fuel pipelines and work housing facilities. i would say, it is almost an emergency that has to be done quickly with a lot of investment opportunities emerging for the private sector as part of that. other things, other important changes that will come along over the next few years. you can even see, december of 2025. contents then that the in the energy projects will have inreach 35%, which is -- mexico it was curious, pemex was

not a very much -- they did not have long-term relationships with a lot of suppliers because of the way that the procurement of mexican public-sector entities did not allow for pemex to establish a long-term relationship with suppliers and companies. now this five percent will be defined and enacted. gradually. and nine 2 reforms as. and now, in the very short-term the first priority is to basically address the gap that has increased speedily since 2008. since 2003.creasing there are many u.s. -- there are capacitylenecks in the

for mexico to import from the gradually, becoming a exporter. fromve been importing gas the u.s. for much of the time. the ambassador mentioned that before. but this is the most urgent thing that is going on, because the gas sector opened in 1992 and the first investments were in 1996, 1997. are the pipelines that are now under construction. this is where a lot of activities were already going on. you can see in the eastern part of mexico it is a big hype line , to the to the center

sea. billionmeters, $3.2 already under construction. very important. also, in the center and in the west they are missing all of these pipelines that you can see there in the map. upre are six more coming that will be announced over the next two weeks, let's say. really create the network of gas pipelines in mexico. really at is not network, it is a couple of branches importing gas from the u.s. and some from the south, bringing to the north where the economic activity and the industry is. the gas that mexico produces mostly in the southeastern part of the country.

now, this is a simple -- i will try to put it in as simply as possible. the opportunities that emerged with reform, in the horizontal access you can see the complexity of the projects, associated with the time it will take for these projects to materialize. you know, you can see that the things are happening. in the vertical axis you have the amount of investment from projects. for example, you can see what we were talking about. gas pipelines are already there. it is not a matter of the future. it is very expensive. it is by no means an inexpensive project. coal seam gas in mexico, there is none. it would be possible for private arteries to produce that, but

the day after the legislation, the secondary legislation is passed and is expected to happen within the next -- within this month. so, the day after that it immediately comes in for oil and gas production that will emerge. so, i will give you the list in a minute, but you can see that in the northeastern quadrant of the draft you can see obviously that 17 is up. it will take more time to see those things happening and it will require a lot of resources. the purpose of this graph is really seeing that what has been triggered with constitutional reform is a process. a process that will show up in some activities and some other activities, depending on their complexity and on the legal

reforms themselves. you can see 16 heavy oil exploration in shallow waters expensive.well, less it is assumed that it will be similar -- sooner. we did not put the year into those, but you could basically think that each of those panels corresponds to about one year. not exactly for a precise exercise, but you can see that in the south and southwestern panel you can see a lot of activities already. what do they mean? goals of this. so, you can see from gas pipelines that are open now you throughfuel stations 2017, still being discussed in

the congress because people think it is too far away. a lot of congressmen want to shorten that. it is quite clear they have reached agreement on that and would like to do it earlier than the regional proposal of the government. pipelines starting in 2015 of next year, you can see step-by-step when that will occur. it is probably easier to see here, you can see with some reformwhat is -- how the will evolve with general 2015 as a critical date. the storage and distribution terminals will open up the oil pipeline facilities with dry gas production in 2015 next year with the production of materials

in the new regime next year. so, you move along over time and as you can see, and january of 2018 the domestic marketing of hydrocarbons -- no one understands well by the government is proposing this be so far away, towards the end of its administration in 2018. so, this is being amended by the congress now to make it sooner rather than later. move to the left you can see shale gas production in 2017, shareholder production projects in 2017 with heavy oil shallow waters in 2017. it would be feasible as long as the government does not leave that. this is what ground zero looks like. and this is what they

requested from the government to keep in terms of exploration and production. you can see that in terms of the reserves what they keep in blue and what the state would be able to actually grant to certain parties in contracts with third parties, in the three-piece 29% of 17% and so on. it is more important if you see lower of thef the three of those above, in terms of perspective resources they keep only 31% or request 31%. we don't know if they can grant 31%. say that you want this, but you are not going to keep it. in perspective resources you

have 69% for the state that would be able to be contracted with private parties. in terms of the time, because of the type of field, there you can see the reserves. the person touch of the perspective resources of each of those. the most important are the most important ones, which are obviously in shallow waters. for theers are known equivalent. you can see that in terms of onshore, basically the perspective resources that will be available for the state to grant to private companies are of the known 82% reserves. so, stuck here, let's see how the conversation will go. thank you for your attention.

>> thank you very much. [applause] i neglected to mention in my introduction of pedro that about one year ago you left to join in newl -- head co. york. so, thank you. you very much. i will start out by doing something shocking, for someone who spent 14 years at mckinsey. that is i am not going to speak through slides nor present any slides. i apologize to my mckinsey educators who spent a lot of time teaching me how to draw slide. i am not going to use it. complete,us a very comprehensive overview. i would like to talk very quickly about a few points.

please, stop me if i am spending too much time. one, the energy reform to a large extent has been -- you know, public attention in mexico, even political attention has been focused on the emp part of the energy reform. it is entirely natural, it is the most politically contentious part of the reform. it is the part that really requires, more than any other, a thatw of the constitution has, still to this day, gets the juices flowing when you have political discussions and discussions between analysts. however, the energy reform is quite comprehensive.

it spans the entire energy sector. there is a very interesting symmetry between the attention --t has been spent on expert export and production and the complexity of reform. i don't want you to understand by that that the emp side -- cfp site is not complex and difficult, but the rest of the reform is enormously difficult and has a very large scope. so, when you think about domestic fuels, residential fuelslike lpg or consumer , like gasoline and diesel, you think about the midstream infrastructure, you think about residential power sales and distribution networks, all of those things are going to require a very significant overhaul.

the creation of that entire -- legal, regulatory, contractual framework is a massive work that is difficult to fathom. again, i am not a little thing the importance of the other side, but from an exit shoot in complexity, the non-emp side of the reform is pretty big. the other issue i would like to focus on, i think the ambassador mentioned it and i think that we all agree with him that the reform is going to happen. yes, it has been slipping by months or weeks. we were told that it would be ready at the end of last year and then it slipped into this year. then we were told it would be done in june, july. now it is the end of july, perhaps the first few days of

august. but it is going to happen. i don't think anyone has any doubts about that. the question is -- the amount of work that remains to be done in terms of once the legislation is passed. after that we have to get the regulatory framework in place with contracts in place. than justtantly getting these things done, there has got to be a continue on between the constitutional , the secondary legislation, the regulation, and the contracts. all of that has to hang together in a way that kind of makes sense. that idamental dilemma think the government and the regulators are going to find ,hemselves in trying to solve once the secondary legislation

is passed, because i think we are at the point where whatever is going to be in the secondary legislation is pretty much final. there is still some discussion. leave thethat if you secondary legislation open and you relied to a large extent on the regulation, which the government can pass without having to go to congress, you are putting a lot of weight on the authority of the individual civil servants. to take responsibility for decisions. it is going to be hard for them to kind of say -- i am just executing what the legislation has said. on the other hand, if you create a legislative structure that is excessively detailed, then you know you are not going to get it

right, because no one ever does. you will have to make revisions. so, you don't want to have to go to congress for that. so, there is a practicality differente you have -- you have tensions between different kinds of desirable outcomes. it is a difficult balance to find. to take -- ioing am not saying it is not going to be sorted out, but i think it will take weeks and months to get this just right. i know for a fact that even though we heard that all of those packages are ready, in fact they are not. becaused they are not, i think that they deserve a lot of attention. want to makent i is about operating challenges.

pemex, and i will focus on them because i spent 14 years there and it is what i know, so i apologize not -- for not talking as much or not at all about cmb, but pemex is a self-contained animal. operating, legal, regularity -- regulating discretion audi. operate, you know, the assets and make decisions to make whatever it needs to happen happen. let me give you an example. if you are producing offshore and have several assets producing different types of crude offshore with a pipeline system that is gathering the production and transporting it to short, whether you shut one pipeline down or you open up the valves on one particular field

more to compensate for another that has to go into scheduled maintenance, all of that can happen instantly if they make it happen instantly, to make the production meet 2.5 million barrels per day, which is what it is doing today. the problem is if you take those pipelines and you turn them into open access common carrier , now you have different producers, you know, that are connecting themselves to those pipelines, possibly, and pemex cannot decide overnight that they are going to shut a pipeline down because, you know, i need to do some unscheduled maintenance on it. all of a sudden that has production consequences on other players. take that example and multiply it across the entire system. pemex is going to have to

a monopolyfrom situation to a situation that is rule driven. not only because it will be competing, but because the authorities -- particularly the cre and cnh, the two regulatory bodies, are going to create a series of rules. you won't be able to have a system where these regulatory bodies are credible in front of private sector investors when they are able to enforce the for private sector investors. so, this is going to create a lot of issues. let me just show an example of issueright now we have an -- i have some numbers here that i can share as an example. , the has a plan this year operating plan, to boost 2.5

million barrels per day. so, along this production -- and these are public figures, i am not talking about secret figures of any kind. if you compare production with distribution, and the distribution remain -- means refining plus exports, you have differences of anywhere between 100 and 150,000 barrels per day. that is water. it is water that comes from the water in several areas of production. the month of may, that number has reached about 250,000 barrels per day. it is a net number of about 150. the difference is -- because

there is a significant amount of production that has not been able to be processed, either imageh separation or tank , it would have to be injected into the salt domes. crude -- the water is eventually going to be separated, etc.. but the water content is increasing. i have no idea whether this is a trend that is going to rise or stabilize, but 150,000 barrels of water per day declared as crude is a lot. apparently pemex is paying taxes on the 150,000 barrels per day want to docause they this in order to consider it crude oil production because they want to be able to report that it reaches two and a half million barrels per day. now, this is a number that

cannot continue like this. at some point the government will have to recognize that this is water and not crude and it will have to climb down from that number, which is as i said already there in the statistics, if you care to dig a little bit. this issue with statistics becomes absolutely crucial when you have to introduce private sector actors into the picture. for example, we know that there have been some issues where incentive-based service contracts, where some of the baselines originally given you know,n not to be, what they had been reported originally. in the future, whether you are talking about farm house, for if pemex goespsa,

ahead with someone's farmhouse and some of the baseline is proven not to be correct, then the private sector investor is going to litigate because, obviously, the original data was not correct. anyway, there is a big issue. all i want to say in this respect is that shifting from a state monopoly to a market solution is a very complex endeavor and the managerial transition, in addition to the regulatory transition, the transition is very difficult. remember, some of these issues the were mentioned, like tax issues, the budget issues, they have not changed. , thecularly importantly labor relationship between pam x and its union has not been changed. so, you know, i fail to see at this point -- or visualize how

this transition to a more efficient, market-driven company is going to happen. hows also asked to mention energy reform was visualized by the private sector. talk about one thing first, which is how it is visualized by the mexican public opinion. was also mentioned and i think the ambassador made a reference to it as well. one key issue is that i think in general the public is not very keen on the energy reform. it is not that it doesn't see the need to modernize pemex. the public is not stupid and they recognize that these companies need to improve. the key problem is that there is

and of of corruption corruption that whatever improvement is going to happen is not going to mean anything for me, the citizen. big issues that the government has. this is really important, because in my mind the test of the success of the reform is not whether it brings gazillions of dollars flowing into mexico. in flat -- in fact, i disagree with the government vision that this is the thing that is going to put the economy into a higher gear. but i think that the key issue is that your ability for reform, your ability means two things. first of all, credibility with

private sector investors over the long haul. secondly, legitimacy in the eyes of the mexican people. achieving that balance over a long. of time, that is what is really complicated. that is what is tough to achieve. is second part of the impact with private sector investors. and there are i think that you are going to see a wide variety of attitudes. deep watert offshore, companies are pretty comfortable in the sense that they don't have to deal with any of the insecurities onshore. they understand, more or less, the geology, it is not too distinctly different from some too distant from what they are already looking at on the other side of the border.

is i think the problem there the actual drafting, the details in the legislation. and the long-term potential that these companies see. there you would have i would guess, the regulation and contractural arrangements are suicidal, but i think that in unconventional's it is going to it will be complicated and it will depend very much on a company to company basis. to me the biggest danger there is that the regulatory -- it is an aggression law kind of problem. it is a situation where the good operators stay away and the not so good operators essentially

complexityregulatory and security complexity, the water issues, etc.. one of the big problems that you had in previous deregulation is the fact that we never really managed -- the mexican government never really managed to coordinate the federal, state, and local level. i could see a situation where, you know, you have your federal permit. you have earned your acreage. you show up with a drill rig and the state authorities or local authorities prevent you from drilling. that is a big issue that is going to have to be addressed at some point. there are some mechanisms to do to bet i think it has got addressed in greater detail. i think that the private sector -- there is a little bit -- and i will finish on this point --

there is a little bit of a disappointment and disconnect on the part of some people in the mexican government because they feel that they would have expected a bit more enthusiasm from the private sector, which is now in a wait-and-see attitude. the problem is that if you are the head of business development and exploration for these companies -- small, medium, or large, you have to propose to your executive committee or your board a project that is quantified and is risk-adjusted to the umpteenth level of detail . that level of detail today is not known. are people who think it will get done quickly. some people who think that it will take a much longer -- maybe two or three years to get there. some people who are going to be first off the starting line.

some people who are going to wait and see how it evolves. so, i think it is, you know, the timing is more or less the one that jesus described. i think that the actual implementation, details, and translation into investment isortunities and decisions still to be defined. thank you. [applause] >> signor morse? >> thank you very much. thank you for the kind invitation. i was asked to address the implications for global markets, what might the unfolding in mexico and in other parts of north america.

,et me first note that so far the unconventional revolution in the u.s. and canada has not been kind to mexico. it is not as though the u.s., intentionally or not, is following a good neighbor policy. it has been a pretty bad neighbor policy in terms of making the gulf of mexico market in the united states extremely competitive and less rewarding financially for the government there. a big, open, global system it could process crude undoubtedly and the net coming back would be higher, substantially, than is currently received on the u.s. gulf of mexico coast. i will talk about this as i go through the story there. the other thing i might note in terms of timing -- it is the only subject i plan to raise outside of the implications for

global markets -- timing is pretty exquisite in terms of the potential opening a mexico to foreign investment. if you are a big, international foreign oil company or even a more modest sized company looking for a place to invest where there are opportunities in thege-scale rewards united states, canada, russia, iraq, and iran. that does not leave much room. i think that given the light of companiespolitics, will find mexico, with all of the difficulties, the risk reward opportunities will likely be moving towards the acceptance of risk for potential reward just in terms of where else one can go. mexican supply is the third leg of the north american energy revolution. and we have to make assumptions on the debate

about where mexican output can go, using general increases in production on half of a million barrels per day by the time of the president's end of term -- that maybe one million barrels per day by 2025. a conservative number in terms of the resource base and what might be possible. just looking across the divide in eagle furred, where recoverable resources on the mexican side exceed those on the mexican side, it would not take much of this were the united states to get onto nonconventional production. obviously half of a million barrels per day let alone what might be happening on the conventional side. let's use these as working numbers. canadian production is likely to continue. the quasi-show number is based on caps. current production in canada is roughly 3.5 million barrels per day.

of readily project 5 million barrels per day adjusted for where the price of oil may be, but there will be an uplift ,s canadian oil reaches markets even if global prices falter. so, in addition to say the half a million or 700,000 barrels per day by 2020 from mexico, there is another 1.5 million from canada, on the u.s. supply our own view is that there is going to be around 4.3 million barrels per day more production by 2020 compared to the end of last year. 3.5 million of that is on short, 800,000 offshore with water. in addition to that, 2 million barrels per day of natural gas liquid. if you add those things up, we see u.s. production having risen to a total of over 12.5 million

torels per day, maybe close 19 million barrels per day, actually, if you add these things together in terms of increments, including liquid. ,o, this is a very robust probably fastest growing sustainable area of production growth in the world. it is north american. i have used these slides in this room before. the net balance of going side beforethe oil the end of the decade, if you take into account where oil demand is going, you see the oil and gas trade balance becoming net positive by 2020. i know a guy who talked about north american self-sufficiency a little bit, but the real issue is the atlantic

ace and. the atlantic basin is already a self-sufficient environment. that is the result of european refinery requirements and the growth of north american production, the growth of western hemisphere production in general. any growth from now on is going to make the atlantic ace and a surplus area. just look at the slide. demand balance in the atlantic basin means that there is a lot of crude oil coming into the atlantic basin that is kind of trapped there. i will talk about it very quickly, the crude deficit is really fading so fast that it is likely to, by the end of this year, and. the u.s. has pushed out almost completely imports from africa. are pushing out imports from

the middle east. the problem is -- not by enough. imports from the middle east are still well above 1,400,000 barrels per day. the end of we get to this year and have pipeline capacity to bring canadian crude to the gulf coast, the reliance on crude from outside the atlantic basin is going to fade substantially. we can talk about u.s. export restraints loosening to the degree that there is a loosening of those constraints, it will feed into a growing surplus in the basin. i have used part of this slide in this room before, indicating that in our own view under the current regime for exports the u.s. if not by the end of this year certainly by this time next year without a change in policy will be exporting over one million barrels per day of crude cruded will see canadian

coming into the u.s. through increased pipeline capacity in the mid continent the u.s., bringing crude to the gulf coast, where it will compete with crude oil from saudi arabia, kuwait, venezuela, ,olombia, mexico, and a rack which she's practically no crude oil imports. to the u.s.exports are falling even more than production is falling, there is in the u.s. golf refinery system to refine all the crude oil coming from mexico , but we are seeing a version of and in therope pacific basin, where, again, the pipeline at salinas cruise has been exporting and the u.s. west

coast is growing in numbers. the real place where exports are needed from america is asia, where the deficit is currently a day.21 million barrels there are probably 24 million barrels a day by the end of this decade, if not more. mexico is no exception, looking increasingly to asia and europe. one of the other places that one can find incremental north american crude in the pacific a but pipelineanada, politics there are very difficult and it looks as though we will see a significant amount from our word of moving east to pipe andtic basin by rail and south to the gulf of mexico by pipe and rail, not

taking advantage of the higher net effects in the pacific a sin . so, mexican crude may be the only north american crude to take advantage of that. the summary of what i would say by 2020, the three north american producers have a combined incremental growth of with the bulk of that , combined of the u.s. with new exports from a rack and .rom central asia it will become more crowded. already self-sufficient north and south atlantic a sins will become surplus of oil wanting to get out of this area toward other countries, the problem is worsened by the fact into the of the export western hemisphere, saudi

arabia, and kuwait are relatively sticky because they don't want to lose market share and rely on east asia, south asia for market growth in kuwait because they believe that exporting 330 thousand barrels per day to the u.s. gulf coast market, however non-remunerative it might the, helps them keep troops there. there is a sticky amount of oil that will be the basin, making it more difficult for the crude produced in both mexico achieve a kind of fair market value in a global market lace, even though canadian crude is likely to have the highest impact it might have, by exporting to the pacific it may not likely to be the -- may not be likely to be the case. liberalization of crude oil exports is going to make the atlantic race and market more crowded.

so, the challenge for mexico exacerbated by the growth of 500,000 per day by 2018. a minimum of one million by 2025 , it is rare to maximize value and optimize the maximization of looksof crude oil and it like that will not be easy. anyway, thank you for the opportunity to share this little addendum. >> thank you. [applause] well, thanks. thanks to all three of our speakers for a comprehensive overview of the reform. i think it has been a very sobering, realistic view of the challenges faced by the implementation that pedro outlined.

this view of how these might affect the global markets, the one thing i can say about ed -- i look at those numbers and i say it looks like it will be a challenge to get those into the market without causing downward pressure on price, but when you think about all of the uncertainties we are now facing, even though 2020 is still a ways iraq,ith uncertainty in iran, nigeria, etc., i am glad that we do have these potential new sources of supply, we are probably going to need them. know that we are getting tight on time, i want to go right q&a. please identify yourself, your affiliation, and keep your question as concise as possible. i would appreciate it.

>> hello. expert inonna wells, russian internet and a native texan. pikes down there, should private investors be concerned about cartel violence or the possible growth of political power in the cartels? thank you. expert.re a cartel >> yeah. i certainly am. -- thatink that the there are parts of mexico where withill have to contend these issues. some of the companies present their already are. i was told recently that controlled risk, which manages for the ratesisk along or onmexico

the same level as southern iraq, although that was before the situation that we have right now in iraq. so, i do think that there are some issues that these companies are facing. when you talk to some of the players they tell you -- you know, yemen? nigeria? with mexico. deal it is not that they disregard it iscurity issues, but that oil companies are a pretty hearty lot. some of them, but not all of them -- interestingly, if you are an operator in south or west texas and you are going to mexico for the first time ever, it is going to be a little bit of an issue and you will need to find cruise who are willing to go to mexico, which you might not. on the other hand let's say that

you are oxycontin or example, that has been a pretty rough place. are they going to feel comfortable there? comfortable, but do they think they can manage it? i think they can. there is another dimension where everyone focuses on the sick your the issue, but i think there are big issues in terms of security relations. this is a big issue that happened when we were talking about gas reform. pam amex has ways of dealing with this that are not necessarily open to the private sector. in areas, for example on the auth of mexico sure you have lot of community relations issues. i understand that there is one particular service contract that is operated where they have not in able to operate since the first day, you know?

they have not been able to go at all. those are issues that will have to be dealt with, no doubt. >> maybe we can take a couple of questions starting with these here? >> i would like to pick up on something that was said and ask the doctor -- i know it was a question based on his experience, given that you have an entrenched yurok chrissie that is used to doing things in a certain way and now the rules are changing, it takes away a lot of their authority, power, do youlity, but also how think that transition is going to go and how long will it take before you reset the mindsets of these people that have in used to running things for so long? what is the impact of that on the retention of these mid-level and senior level it decade it is in those institutions?

>> thank you. next question, then we will answer them both. >> hello. i was just wondering -- i did not hear much about environmental assessment impact. and i have noted in several jurisdictions that if you move one reform ahead, you also need all of the environmental approvals to be able to move several projects ahead. how do you see that working out together with the community approval and so on for several of the projects? >> you can answer the question? well, i think that it cannot be changed from within. i may be living proof of that, no. if it comes from outside, a

disease does the trick with these reforms. it puts pemex and competition in every aspect. from within pemex when he works for you. this way they are able to cope with competition and by doing so a lot more to partner the capacity to be a

.ood partner i think of the critical issue is , some of theemex most important players of effectiveness -- the guys in the fields, the supervisors, they accept the notion of eliminating what had been a very important discussion on the inflation reform of 208. it was then that those issues were eliminated.

206, there was a prohibition in the reopening of the sector. this was only eight years, six years ago. it is a completely different ballgame now. my perception is that this layer of executives except the fact that exclusivity has to go and compete with other companies. that, itry important thatere where the fact they did not take pemex out of the budget and the excessive of the treasury in many of the decisions creates a problem.

because some of those middle and high layers are completely unhappy with that. ok? we want to compete? let us compete. but do not put us in an unlevel playing field. if you really make an assessment and think that the big loser of the reform is pemex, biologically, one would say that within the mind of the government's strategic thinking they need to understand that they need pemex to be there company for quite some time. for the country and the secretary to keep moving ahead, the other thing is impossible to today torom day one with the monopoly being gone and everything else is being done by someone else. clear my mind that is not that they really get it.

they have to put a lot of attention to that so as not to become an impairment of the other. there are other aspects. taxes and other things, but i leave it here. answer, is the environmental protection regulations -- are they part of the secondary legislation? actually, the constitutional reform included the creation of on security and safety issues. in the energy industry it will become a new agency. i would say that the potential for safety has made a lot of strides over the last year.

see the records compared to those national oil companies, pemex does very well. the issue is environmental and the environmental has to do with -- i am not very concerned about current operations of pemex reacting to the environmental impact. as every company in the world has, they received the standards in which they operate currently and are relatively high standards. the questions have to do more with the issue of shale. there is all of this caution that this is really going on in the u.s. and in other corners of what was, permeating dealt with in mexico by the agency and by public opinion and by the government. i think that that is a critical issue. now, there is an important difference. that wasw the math

presented here, it is very interesting that some of the areas in which there was potential for shale operations in mexico are on the coast. that makes a big difference with regards to the issue of water. there are some that not just border with the u.s. in the supply area, but as you move seeher south, some of them a lot of water. it is a completely different thing. now, we will not pollute the water, the issue is what is needed to return water use in these explorations to the same conditions that they were taken from nature. will -- the good thing is that there are a lot of ways in which the problems have been made here in the u.s. with technologies and the no house -- know how of how to do that.

they sort of received the know-how with the investors interested in doing that. the downside of that is that of the time, there is contamination. are already starting an interesting debate about it. about thist talking thing. i am talking more about the other. >> ok. we have got three more questions. and then we have to wrap it up, because i know two of our speakers have tight travel schedules. over here. >> from georgetown university, there have been many comments

,bout the goals and benefits and we are somewhat familiar because there was a paper recently released about the lack about it would and onehe production, of the counselors said that the -- the second legislation about a model of production, and my personal is that the discussion , itt international crisis does not necessarily mean independence from markets.

with the iraq war, so in this they will try to attract and we came them. >> two more, and then we will finish. i am a student at penn state university. i was wondering if the panel could elaborate more on the about theucture production contracts. and also, what are the strategies relating to diversifying their international training and what role do they claim as investment. >> hi, good afternoon. i am doing an internship here, so i am going back to mexico,

and they have mentioned that there are a lot of questions about how they will give us the and it is about a 40% budget,or the mexican so i think as we bring new companies who are actually going that, some of this is going to drop, and to invest in mexico, i think they have to offer something effective. the question is whether these companies are going to pay, or this money?e is produceco is going to the money, or where does the money come from? >> maybe you can answer this.

>> let me start with this, and it is very important. similarelines are very to the international guidelines. there are like four variables , with a private parties license to explore some areas. but the bottom line of all of is that mexicons will have to have a competitive scheme.

it would be an absurdity in the context of reform. investment for the into the hydrocarbon sector. private investment instead. it would be a sum-zero game. you need to bring in the partners so that you can with what isnumber being constructed, and so on. they will have to be competitive at the end of the day.

other factors have to be considered. that is the basic. this depends a lot on if the sooner thans eager, , and if there are some , andrces in the short-term at the end, what they're going to take from the contracts. they will have to be internationally competitive.

things like this are bureaucratic. the bureaucracy. it should be done in a more systemic way. but the issue is the competitiveness. i hope i have responded to your question. >> i have a complementary take on that. i think one of the issues that the government faces is the thattion of the assets they want to put on the block , and let meencing just give you an example, speaking conceptually. deep water or offshore. it says it has found something.

it is uncertain how much, and reserves, and, well, you know, you have a 10 to 12-year span between discovery and first oil. you have productivity. you have, you know, some seismic data but not really a lot, so we are taking a lot of risks, and if you want to go into that, the auctioning of acreage that way, you are going to get, you know, very few players because there that areo many people up for deepwater, and then there is a very long life cycle to first oil. on the othert, hand -- and nobody knows with

the energy reform is going to look like. that is one of the issues. all of that remains to be tested. and so you are talking about very high risk stuff, and the practical applications. you say, i am going to go to shallow waters. block,ing to auction the productivity and is very high. there is a lot of hydrocarbon. oil, soere is already you have shallow waters, which are very easy to operate in. it is 150 feet. you have infrastructure, because the pipelines were designed to day, and a million a you are now at $2.5 million and it is relatively low risk

compared to deepwater, so the amount of money that people are willing to pay for that acreage, the enthusiasm that you're going to have for that acreage is a lot higher, so it does not only depend -- i mean, i agree with what we are saying, but it does depend on the marginal tax rate, etc.. how, and iends on know they get old sirs when thinking that the mexican government could auction the shallow waters offshore, because that is where they think they have a chance, but the question is, thinking about the development of the mexican oil sector, and you're thinking about attracting foreign investors, i would start with shallow waters, and then through the concept, you bring in people

, and you're going to have a lot of competition. you're going to have many, many more companies that are going to operate, and once you prove the , and sanding the rough edges, then you get a much infrastructure and regulatory infrastructure. you have proven the concept, and then you can move on to more complicated areas, so there is a big decision on the part -- i have no idea what they are going to decide. i am not really to the discussion, but they have to make the discussions and sequencing discussions. they have to make decisions based on sequencing, based on how much they are going to get jesus wasquest that

has an about, and that impact on the reform. >> it is a changing situation in changing the, policy goals about where mexico would sell oil. i think one question is about going to china or -- >> listen. i spent 12 years in international trade, and then i consulted with many companies worldwide on international trade issues. crude oil is cash, basically, ok? it is no problem. there is no problem with selling crude oil. only question is at what price you can sell it. and then that deals with efficiency. you're not going to get more than the market price.

and the second is whether you are maximizing, because you're going to the right market. that is all there is. the i think they have ,nternational trade capability both political and commercial, to market the crude oil wherever it fetches the most money. it is a question of what the mexican energy policy will give with freedom, with whatever sales strategy is needed to maximize the return. but i do not think there is any particular mystery in that. >> did your question get answered? >> [inaudible]

>> i do not think they are going a meet -- the government has 3 million barrels per day goal by the end of the administration. the number is at $2.5 million current production, as i mentioned, and plus you have the decline, and to make up for that, i just do not think they're going to be able to reach 3 million barrels per day. issue, there is another which is that one of the problems we have is that the government, i believe, from the very beginning -- it had all of these political constraints, and it had to make sure that the whole legislation was passed. they have been making a lot of commitments and promises about volumes in production, inclining prices, etc., and i just don't and ithose are tenable, do not think people believe them, and i think the government

can get in trouble, because it is going to have a hard time delivering. does that mean it invalidates the reform? i do not think it invalidates the reform. this is a very ambitious, complicated reform. it is going to take some years to get done and executed in a way that has never been done in mexico, and so it is normal that we're going to have humps in the road. are going to say, you lied to me. come on. >> exceeding expectations is part of selling the reform. pushing for the reform. that are toongs optimistic. and that hot -- happens also in mexico. in mexico and outside. so the question is managing the

expectations. very profound. for 70 years of discussion in have thehey actually bull running. bull,going to be a huge so let's not lose hope with the perspective of that. that is true. the expectations in the short-term. but it is a reality. one has to also be confident about the capacity of mexico. changes of 94, 96. at the end of the day, it did not work. that, thosee

institutions are there. implementing the changes by that. we have the capacity to respond to a very demanding -- a high suppliesor labor and and so on. mexico by itself? no. as a nafta member, you have the u.s. and canada. i am not concerned about the capacity of mexico in that capacity. 10, 9, 8, 5. it is there.

>> i have a problem there, and this is a discussion we may need butave at a later date, this is exactly the example we have to avoid. constitutional reform. we have regulatory reform. cre, and i think the reform failed, and the proof that the reform failed is that the economy has had gas supply alerts, and it has been impossible to build the infrastructure to supply mexico with gas, and that is the thing we have to avoid. we have to avoid a legal and doesatory environment that 95% of the work and then fall short the last five percent. and there is that risk.

i think it is going to work. i think it is going to be complicated, and i think there is a risk that we also fall short. , just like we did at the time of the gas reform. i hope it is not the case, but it is a complicated issue, and i think unless we are very, very aware that it may happen to us again, this is one of the risks. aware that it happened to us, and we are able to go what went wrong and avoid the same mistakes, i think then we have a better chance. but it is not that easy. it is not a piece of cake. >> ok. thank you all for a very realistic discussion. [applause] the ambassador for coming and joining us, and thank you all for joining us.

[captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute] >> if you missed any of this discussion, you can see it in its entirety in the c-span video library. long onto c-span.org. john boehner's recent announcement that they will not likely be working on immigration this year, we will ask you whether you feel president obama should use executive authority. almost 1100 of you have commented on our facebook page. judy says yes, and they have to do something in washington, and, clearly, the republicans will ot, and then ron said this -- we look forward to hearing what you have to say on this, and you can leave your comments on facebook.com/c-span.

the future of the palestine unity government and the peace process and the recent death of three kidnapped israeli teenagers, all topics to be discussed today at the wilson center, live coverage on c-span starting at 4:00 p.m. eastern, about 40 minutes from now. a preview of an upcoming nato summit with anders fog , an internet security. scientists who search for extraterrestrial intelligence say we still have a way to go, but it is active and ongoing. the house and technology committee held a hearing for the search of life in the universe. there is the chair and ranking member.

>> witnesses may be called to testify. that is the chance you take. >> the committee on science, space and technology will come to order and welcome to today's hearing, astrobiology and the search for life in the universe. a couple of preliminary announcements, one is i want to thank c-span for covering this hearing today. that shows the importance of the hearing in a lot of respects and i want to thank the students from herndon high school who are here as well. i understand you had a choice of hearings to attend. in fact, you could attend almost any hearing wanted to and you chose this one because you thought it was the most interesting. and actually, that is one of the purposes of today's hearing.

and that is to inspire students today to be the scientists of tomorrow. who knows, we may have some of those scientists in the audience right now who will be inspired by what they hear to study astrobiological or perhaps some of the other sciences as well. we appreciate your attendance. i will recognize myself for opening statement and ranking member as well. as we discover more planets around the stars in our own galaxy, it is natural to wonder if we may finally be on the brink of answering the question, are we alone in the universe? finding other life in the universe would be the most

significant discovery in human history. scientists estimate that there are 80 billion stars in the milky way galaxy. to date more than 1,700 nearby planets have been found by the earth space telescope. last month astronomers discovered the first earth-like planet orbiting its star at a distance where liquid water could be present, a condition thought essential to life. called kepler 186-f, it's only 10% larger than the earth and about 490 light-years away. the transiting exo-planet survey satellite which will launch in 2017 and james webb telescope launching in 2018 will help scientists discover more planets with potential bio signatures. the united states has pioneered the field of astrobiology and continues to lead the world in this type of research. the sample of professional papers published in "science" magazine between 1995 and 2013 illustrates the significant growth and growing popularity of the field of astrobiology. between 1995 and 2012, the number of papers published on

astrobiology increased ten times and the number of scientific reports that cited astrobiology increased 25 times. astrobiology is a serious subject studied by serious scientists around the world. reflecting this interest, next september the library of congress and nasa will hold a two-day astrobiology symposium on what societal impacts could be of finding microbal, complex or intelligent life in the universe, whether life exists on other planets in the universe continues to be a matter of debate among scientists. around the world a number of astronomers listen to naturally occurring radio frequencies. they try to filter out cosmic noise and human made interference to find anomalies that could be from civilizations elsewhere in the universe. the allen telescope, financed by

microsoft cofounder paul allen, and telescope in puerto rico are two well-known locations for conducting radio astronomy searches for life on the universe. recently they detected pulsed signals that last only a few milliseconds. these fast radio bursts as they're called have caused scientists to speculate as to their cause. some scientists have theorized they could be from stars colliding or extraterrestrial intelligent source. others search for light pulses instead of radio waves. researchers at the seti optical telescope, run by the harvard smithsonian center of physics and university of california-berkeley among others, use optical telescopes to try to detect nano second pulses or other naturally occurring phenomenon. i hope today's hearing will enable us to learn more about how research on astrobiology continues to expand this fascinating frontier. the unknown and unexplored areas of space spark human curiosity. americans and others around the world look up at the stars and

wonder if we are alone or is there life on other planets. that concludes my opening statement. ranking member, gentle woman from texas, miss johnson, is recognized for hers. >> thank you very much, mr. chairman, and good morning. in the interest of saving time, i forego making an opening statement instead i will simply want to welcome the doctors to this morning's hearing on the search for life, including intelligent life, in outer space. you both are distinguished researchers, and i know that you will have thoughtful testimony to present, and this afternoon we will determine whether we have researchers to continue this. so thank you. i yield back. >> thank you, miss johnson. i would like to introduce our witnesses at this point.

our first witness, dr. seth shostak, senior astronomer at the seti institute in mountain view, california. he held his position since 2001. the doctor has spent much of his career conducting radio astronomy research on galaxies. dr. shostak has written more than 400 published magazine and web articles on various topics of astronomy, technology, film and television and also edited and contributed to nearly a dozen scientific and popular astronomy books. he's authored four books including "sharing the universe: perspectives on extraterrestrial life" and "confessions of an alien hunter: a scientist's search for extraterrestrial intelligence." you can hear him each week as host of one-hour radio program entitled "big picture signs." dr. shostak received bachelor of physics from princeton and ph.d. in astrophysics from the california institute of

technology. our second witness, dr. dan wertheimer, worked at the space sciences laboratory at uc-berkeley since 1983. he's currently the director of several of the lab's centers including the seti center and including the center for astronomy signal processing and electronics research. additionally mr. wertheimer serves as chief scientist for the labs seti at home program and associate director of berkeley wireless research center. mr. wertheimer co-authored seti 2020 and editor of bio astronomy, molecules, microbes and extraterrestrial life and astronomical and biochemical origins and the search for life in the universe. his research is featured in many broadcast stories such as abc and cbs and many major newspapers and magazines. his work has also reached a younger audience through "scholastic weekly," a science magazine for kids. mr. wertheimer received his bachelor's and master's in physics and astronomy from san francisco state university. i will recognize to start us off

today dr. shostak, and then we will go to mr. wertheimer. >> thank you, congressman for the opportunity to be here. i will just give you a few big-picture thoughts on thoughts for search for life and in particular intelligent life, that can uphold its side of the conversation as opposed microbial sort of life. this is obviously a subject of great interest to many people. let me back up and say when you read in the paper about discovery of new planet or i something, water on mars, you're looking at one of three horses in a race to be the first to in a find some extraterrestrial biology. the first horse is simply to you find it nearby. are a that's where the big money is. rovers on mars, moons of the you outer solar system. at least a half a dozen other a worlds that's might have life in

you our solar system. chances of finding it i think are good. if that happens, it will happen in the next 20 years, depending on the financing. second horse in that race is to build very large instruments that can sniff, if you will, the atmosphere around planets of other stars and find oxygen or methane, which as you know produced by cows and pigs and things like that but biological in any case. so you can find pigs in space, i suppose. that is again a project, depending on funding that could yield results in the next two decades. the third horse in that race is seti, search for extraterrestrial intelligence, and that idea if you have seen the movie "contact" you know what the idea is, eavesdrop on signals that are deliberately or accidentally leaked off somebody else's world. that makes sense because in fact even we, only 100 years after marconian and invention of practical radio, we have technology that would allow us to send bits of information across light-years of distance to reputed extraterrestrials. let me tell you why i think they're out there, by the way. it's unproven whether there's

any life off earth. that's the situation today. you heard me say twice now that i think that situation will change within everyone's lifetime in this room. and the reason is we're the universe is very fecund with habitats for life. congressman smith mentioned the number of stars in our galaxy. with respect that number is larger. it's something like 200 to 400 billion stars. but we now know at least 70% of them have planets. recent results from nasa's kepler telescope, an astoundingly successful instrument, suggests one in five stars may have planets that are cousins of the earth. what that means is in our own galaxy, tens of billions of other planets that are the kind you might want to build condos on and live. all right? tens of billions. if that is inadequate for your requirement, let me point out there are 150 billion other galaxies we can see with our telescopes, even with similar complement of earth-like world. what that means is the numbers are so astounding if this is the

only planet in which not only life but intelligent life arisen, we are extraordinarily exceptional. it's like buying trillions of lottery tickets none a winner. that would be very unusual. although everyone likes to think they're special, and i'm sure you all are, maybe we're not that special. certainly the history of astronomy shows every time we thought we were special we were wrong. what is done so far? various kinds of radio searches. i won't detail technology. we looked at parts of the -- much of the sky as fairly low sensitivity over a limited range of radio wavelength. radio sections of the band. we have looked in particular directions at a few thousand star systems. in other words, we have just begun the search. the fact we haven't found anything means nothing. it's like looking for mega phone in africa and giving up after you only examined one city block. and the reason the search has been so cramped, so contradicted so far is simply, to be honest, the fact there's no funding for this. it's all privately funded.

the total number of people in the world that do seti for a living is fewer than number of people in any row in the audience here behind me. that's the world total for this endeavor. when are we going to find them? you have already heard me suggest that may happen rather quickly. let me point out two other things, one, this is very interesting to the public because they have seen extraterrestrials on television and in the movie all the lives. ok? that also give it's a giggle factor. very easy make fun of it. very easy make fun of ferdinand magellan's idea to sail around the earth or captain cook, pacific,e south exploration, that's what this is. consequences are always -- shall we say celebratory, there's life, intelligent life that calibrate our position in the universe. as congressman smith said probably be greatest discovery humankind could ever make and what's important is this is the first generation that has both the knowledge and technology to

do that. >> thank you for the opportunity to talk about this question. can you guys show the slides? i want to walk you through some of the seti experiments we and other people are doing. as seth mentioned this nasa kepler mission from that we learned there are a trillion planets in our milky way galaxy, lots of places for life and we learned a lot of these planets are what we call goldilocks planets, right distance where it's not too hot or cold. it's not too hot or cold. rocky planets, some have liquid water. there could be life out there. how are we getting in touch? one of the ideas is earthlings are sending off radio,

television signals in space for the last 75 years. the early shows like "i love lucy," 10,000 stars. nearby stars have seen "the simpsons." turn that around and if we're broadcasting maybe other civilizations are sending signals in our direction even leaking signals the way we unintentionally send signals or maybe deliberate signal. they could be sending laser signals and there are a number of projects looking for laser signals. this is a project at harvard university of very clever project. this is a project at link observatory. also a project at the -- in hawaii at the telescope, looking for laser signals. people are also looking for radio signals. our group uses the world's largest radio antenna, we call it radio telescope. this is in puerto rico and it's 1,000 feet in diameter. it holds 10 billion bowls of corn flakes. we haven't actually tried that. [laughter] it's operated by national science foundation and most astronomers would be lucky to use this telescope a day or two a year. we figured out a way to use the telescope at the same time other scientists are using it to

actually collect data all year around and we're checking data all year around as i talk to you. that is a problem. even though we get the world's largest telescope all year around it creates enormous amount of data. to analyze that data we asked volunteers for help. you can help us by running a program on your home computer or laptop or desktop computer. you install a program called seti at home. it's a screensaver program. the way we take the data from the world's largest telescope and break it up into little pieces, everybody gets a different piece of the sky to analyze and install this program and it pops up when you go out for a cup of coffee and computer goes through data looking for all of the different frequencies and data types. this is what it looks like when it's running on your computer at home. it takes a few days to analyze data looking for interesting signals. when finds interesting signals,

it sends them back to berkeley and then a new chunk of data, part of the sky to work on f you're the lucky one that finds that faint murmur from distant civilization, you might get the nobel prize but there's a catch. nobel prize, you have to maybe share with a lot of people. there are millions of people who downloaded the seti at home screensaver. they are split over 200 countries. together volunteers have formed one of the most powerful super computers on the planet enabled most sensitive search for extraterrestrial signals that anybody's done so we're grateful for the volunteers. now we made that more general so you can participate in not just seti with your home computer but you can participate in a lot of projects. climate prediction projects, gravity weight project, protein folding, look for malaria drugs, h.i.v. drugs, cancer drugs and you can allocate how you want your spare computing cycles to be used on your home computers. one of the new projects we're working on is pan chromatic seti and we're asking observatories around the world to look at a lot of different wavelength

bands, a lot of different frequencies, targeting the nearest stars and trying to cover all of the different bands that come through the earth's atmosphere. radio frequencies and infrared frequencies and wavelengths and also obstacle frequencies, laser signals and this will be extremely comprehensive search because we've got eight different telescopes we're using. and looking at all of these different bands but only targeting nearby stars. another project we're just launching this year is called interplanetary eavesdropping. the idea of this project is there may be signals going back and forth between two planets in a distant solar system. for instance maybe eventually we will have machines or people on mars went will have radio communication or laser communication on our two planets.

put it the other way, a distant civilization may have colonized a planet and there may be radio signals going back and forth between those two planets. now with the kepler spacecraft, we know exactly planets in distant solar system are lined up with earth so we can schedule our observations and target that and see if we can intercept those signals going back and forth between two distant planets. we are using green bang telescope in west virginia to do that experiment. while swept found e.t.'s so far but we made a lot of interesting discoveries. we discovered a planet made out of solid diamond. first maps of the black hole center of galaxy. they are used in all kinds of things, brain research that could eventually control prosthetic arms. but we haven't found et yet. we're just getting in the game. we only had radio 100 years. it's like looking for a needle in a haystack but i'm optimistic in the long run. the reason i'm optimistic in the long run is seti is limited by competing technology, which is growing exponentially, limited

by telescope technology. china's building a huge telescope bigger than arecibo and australians and south african and europeans working on a huge telescope made out of thousands of dishes combined to make a giant telescope. i think i will stop there. i have a couple potentials i can read you from the volunteers but i'm out of time. thank you very much. >> thank you, mr. wertheimer. thank you both for your excellent testimony and actually you have anticipated my questions a little bit but would i still like to go forth with them and let me address the first question to both of you. starting with dr. shostak and it is this, a two-part question -- what do you think -- i can anticipate your answer a little bit on the basis of your statement -- but what do you think is the possibility of microbial life being found in the universe or intelligent life being found in the universe? so the first question goes to the possibility. second question would be what do you think is the likelihood of finding either microbial life or intelligent life in the universe. two different kinds of questions. dr. shostak? >> well, the probability of life, of course, it's hard to

estimate because what we do know now and something we didn't know even 10, 20 years ago we did not know were there habitats that could support life? what astronomy has proven they're made out of the same stuff, distant galaxies same 92 elements on the wall in your ninth grade classroom. so this means if you have taken chemistry in school, you don't have to take it again if you move to another galaxy. it's all the same everywhere. we know building blocks are there. we know there will be plenty of planets where you have liquid water and atmosphere, the conditions you have in hyattsville, for example. so life could arrive on any of these places we also know life began on earth very, very quickly. it's only a sample of one so not entirely convincing but it does suggest it wasn't very difficult for life to get a foothold on

this planet so maybe elsewhere. so life i think is maybe not so hard to get started. that's sort of the general impression among scientists. what they believe is not so important is finding it's important. the second part of your question, what about intelligent life? that's a lot harder, right. the earth has had life we know for at least 3 1/2 billion, probably 4 billion years, almost since the beginning. this place has been carpeted with life. and almost all of that time required microscope to see it. it was all microbial. only in the last 500 million years did multicellular life, you know the whole story. that opens up the question, well, if i give you a million worlds with life, what fraction of them will ever cook up something as clever as you all? the answer to that is we don't know the answer to that. however, there are indirect suggestions that it will happen, given enough time, simply because we're not the only species that's gotten clever in the past 50 million years. if you have dogs and cats at home, they're cleverer than dinosaurs. intelligence does pay off 0.

>> thank you, doctor. you mad a point i might emphasize and that is what 20 years ago we had not detected a single planet outside our solar system and now we're up to close to 2,000 so it's almost exponential growth in astrobiological research. mr. wertheimer? >> i suspect the universe is teaming with microbial life. it would be bizarre if we're alone. but i don't know that for sure. the intelligence is going to be rarer but because there are a trillion planets, i believe it is going to happen often. it's happened several times on this planet and it's likely to arise elsewhere. >> as you would put it at 100% then? >> 99%. >> 99.999%, strung on out. ok, good. next question, mr. wertheimer, let me follow up with you, and by the way as far as seti at home screensaver goes, that would be something here for students here to take advantage

of as well as members, i tried to adapt that to my laptop in my office several years ago and was not able to. so maybe we will talk some more. maybe the government needs to change its policy. i'm not sure which. let me ask you, what is the advantages and disadvantages of radio seti versus optical seti? >> there are a lot of pros and cons. lasers are good for point-to-point communication and and lots of bits per second, lots of data. i think the best strategy is a multiple strategy. we should be looking for all kinds of different signals and not put all of our money in one basket. it's hard to predict what other civilizations are doing. if you asked me 100 years ago what to look for, would i have said smoke signals. so we try to launch a new seti project and new idea every year. >> ok, and dr. shostak, anything to add to the advantages or disadvantage of radio versus optical seti? >> i should point out they're both sort of different colors of the same thing. in fact, literally different colors. they're both electromagnetic means of communication and we

use both in our telecommunications here on earth. i suspect aliens will as well. just about every week i get an e-mail from somebody who says you guys are looking for radio signals, that's so old school. extraterrestrials, assuming they're out there, will use something more sophisticated. i'm not sure what that is. that depends on physics we don't know. one shouldn't discount a technology simply because it's been around a while. we use the wheel every day. that's a pretty old technology. i suspect we will continue to use the wheel for a long time. >> thank you both for your answer to my questions. and the ranking member, miss johnson, is recognized for her questions. >> thank you very much. i'm trying very hard to ask something that sounds sensible. [laughter] so what is the status of the extraterrestrial intelligence and research now? >> i think we're just getting in the game. we're learning how to do this and i think we would be lucky to find, even though i'm optimistic about life and intelligent life in the universe and it's likely there's a whole galactic internet out there, i think we

would be lucky to find them now but i'm optimistic in the long run. >> congressman johnson, i might point out contrary to popular impression, this experiment isn't the same from day to day. people think you're sitting around with earphones listening for cosmic static. and, of course, it's not. a lot of listening is done by computers. but at this point much of the experiment depends on digital technology computers, if you will. and there's something called more's law, whatever you can buy today for a dollar you can buy twice as much for a dollar two years from now. it's very rapid growth in the capabilities there. so in fact the search is speeding up and it's actually speeding up exponentially. a very heavily overused word, "exponentially," but in fact it applies. >> tell me this, i know that the improvement of technology or --

are important and some of the old technologies and techniques are also still in play. how do you predict your advancement based on what you have available to you for research tools? >> i will just say something i'm sure dan has much add to this. in terms of what we can do in the near future, foreseeable future, what you really i think need to do if you want to have a decent chance of success, and remind you this has to remain speculative. this is like asking christopher columbus two weeks out, have you found any new continents lately?

and his answer would be, "there was onlywater around the ship, and yesterday water around the ship, and tomorrow it will be aquaeous in the vicinity of the ship, but -- so he can't predict when anything interesting is going to happen, nor can we. but if you look at what you are call euphemistically estimates, guesses, to what fraction of stars have somebody you might be able to pick up it sounds like you have to look at a few million star systems to have a reasonable chance of success. we can't do that today. we have not done that today. we have done less than 1% of that as of today. but given the predictable advancements in technology to look at a few million star systems is something that can be done within two dozen years given the funding to do it. >> yes. >> captured it well. >> now, when we find the other life on planets, what do you speculate we will find and what is the potential value? >> i think it's profound either way. this is not an expensive thing. in order of a million dollars a year we are funded by national

science foundation, nasa, templeton foundation, some private donations. the reason i think it's profound either way. if we discover we are alone, we better take really good care of life on this planet. it's very precious. and the other thing that's profound too if we find we're part of a galactic community and get on the galactic internet and learn all of their poetry, music, literature, science, we can learn a lot. >> and i will just add briefly, nobody know what we will learn. if we can decode this signal, this is like being confronted with a hieroglyphics, you might be able to figure them out. turns out hieroglyphics were written by humans so it made it easier, and rosetta stone and whatever. so we may not ever figure it out. if you could, you will be listening to data being sent by societies that far in advance of us because we're hearing them, not the other way around. so there are they are more

advanced and may they teach you important stuff. imagine the incas find a barrel washed up on the shore maybe from europe filled with books. if they could ever figure out the books, they would learn a lot of interesting stuff. i don't know we will ever figure out the books. but even if we don't, the important point has been made and that is we have calibrated our place not in the physical universe, we have sort of done that, but calibrated our place in the biological and even more, intellectual university. i think that's maybe good for our souls to know how we fit in. >> thank you very much. my time has expired. >> thank you, miss johnson. the gentleman from ohio, mr. johnson, is recognized for his question. >> thank you, mr. chairman. gentlemen, for both of you, how has the recent discovery of over 1,700 planets by the kepler space telescope, how has that impacted seti research? >> if you asked astronomers 20 years ago are there planets growing on other stars, we would say we think so but we don't know. that all changed now and a lot

is due to the nasa kepler mission. and if you extrapolate on the planets, which are a few thousand planets they discovered, extrapolate on that, there are a trillion planets in the milky way galaxy, and that's about three or four times planets than there are stars. a lot of places for life. >> i think it's also affected the experiments in the sense that in the past with we point the telescopes in the direction of certain kinds of stars, certain masses of stars, brightness of stars. those stars were the ones we thought these might have earth-like planet but we didn't know. we now know two things, one as stan mentioned, majority have planets. can you look at a random star and feel confident it has a planet. more than we are getting some information from kepler what fraction have planets that are sort of like the earth. that fraction is not 1 in a million or 1 in 1,000 or not 1 in 100. it may be 1 in 5. so you look at 50 star systems

and you get 10 earth-like planets. in some sense it made the search much more straightforward. we look at all of the nearby stars we can. >> ok. well, dr. shostak, would you please provide some examples of the technical contributions seti has made to astronomy and other fields? for example, how has seti research benefited other areas of science? >> well, i think that its benefit less so in terms of discovery. we haven't found e.t. if we had, we wouldn't be having this hearing. to my surprise i will say seti has not turned up astrophysical phenomenon were unexpected as well. ok? that's surprising. normally the history, precedent in astronomy is every time you build an instrument that exams a different, if you will, parameter in the phase-space of the universe you find something new. so that's instructive that it hasn't. the kind of technology that has been developed is certainly of interest to other fields in astronomy. but i think the real value of

seti is not so much in terms of what it does to astronomy but what it does in terms of the other efforts being made to find life in space. nasa has a big effort. the rovers on mars, yes, they're there to find hydrology, history of water on mars, but why are you interested in the history of the water on mars? you're interested because want to know were there martians, microbial most likely. or are there still martians? that's what interests people the most. and seti was also, if you will, a punch line to this story that nasa had about finding, you know, traces of water on mars or burrowing through the ice on europa and sell it as some of the moons in the outer solar system where there may be vast quantities of liquid water. that sort of thing. seti said, ok, we may find life but what about intelligent life? that would be more interesting and that's what missing in fact from the nasa program today. >> ok. you made a comment just a few minutes ago that kind of caught

my attention. let me make sure i got it right. you said that if we hear from intelligent life out there somewhere that they must be more advanced than us because we're hearing from them and not the other way around. how can you draw that conclusion? maybe they had been hearing from us for a long time and just don't like what we have to say. [laughter] >> i think it's entirely possible that we're on -- in their catalog. they have seen oxygen in our atmosphere and they know we're out here. i think that life in the universe is going to be a lot of different stages. some of it will be microbial. some trees, more sophisticated. the earth is 5 billion years old, some stars 10 billion years old. so there could be a lot of advanced civilizations as well. just point out, you're not going to hear from any less advanced society because they're not

building radio transmitters. >> for sure. i would say at least equal to, perhaps more advanced. but maybe they got their caller i.d. block turned on or something. >> it could be. i wouldn't speculate on alien sociology and whether they like our television or not. i don't know about that. but chances if they are at least at our level that they're within 100 or 1,000 or 10,000 years of our level is simply on statistical grounds highly uncertain. if you hear from somebody -- >> one final quick question for both of you, how would you define successful seti research? i mean, i know that's kind of a nebulous question but -- how would you define successful? >> if you found a signal and that could be corroborated. if you just find it once and can't find it again, it's not science. so if you find a signal that's moving across the sky the way the stars do because of the rotation of the earth, it's narrow band signal. it is not made by nature. it's made by a transmitter. that's success. >> all right. >> i think the most likely scenario is finding some sort of

artifact of their technology or radar signal or navigational beacon or something that won't contain a lot of information but we know we're not alone. >> ok, thank you, mr. chairman, i yield back. >> the gentleman from organ -- gentlewoman for oregon, she would yield to me for just a few seconds. we're relatively junior gallic see, there might be -- galaxy, it might be interesting to find out what happens in a 2 billion year headstart, we may not even recognize them as intelligent beings.

you are against him for questioning. thus -- >> thank you for being here. i noticed in your testimony that you said that there are 24 seti scientist on the planet. i cannot think when we have had a larger percentage of experts on our panel. thank you both for being here. >> thank you, mr. chairman. thank you for being here. i noticed, mr. wertheimer, that you said -- i can't think of a time and we have had a larger percentage of experts on our panel. thank you both so much for being here. i really am intrigued by your testimony on the public's interest, and how the idea of life in space is an idea that everyone grasps. it is an ideal hook for interesting young people in science. theink that is evidenced by today.mmittee room one of the statements that resonated with me is that it would be a cramped mind indeed

that would not wonder if there's anyone out there. you said that extraterrestrials are the unknown tribe over the hill. in any case, someone we would like to know more about. i recollect a similar hearing last year when one of my colleagues said, the interesting question is, what do we do when we find life on another planet? so can you talk, both of you, about what is the plan is? do we announce it to the world? do we research more to determine if these are friendly or collaborative? what do you do when we make the discovery, assuming it is going to happen? >> that is a question of great interest to the public and great importance. >> good afternoon. it is enormously impressive to

me. a high level kralev. congratulations. we think extremely well of you that you are here. to me, someone who watched the middle east carefully erring for 17 years in congress and who made 25 trips to the region during that time, there is reason to worry that we could be on the cusp of a third intifada. that is something we will explore. hopefully, call more heads will prevail, but it did for cap we are watching hourly between the israelis and the palestinians is extremely worrisome. i have heard conversation on some of the talk shows today about the need for special envoys.