with the pacific partnership in its finality of course. this is limiting a little bit the possibilities for the administration to fully focus on ttip. with business we really want an ambitious agreement because we did have a few agreements, that could've been done years ago but that's not what we are aiming at. we trade billions every day but we will get this broad agreement. tariffs are still done, but also look at access to our markets when it comes to the public procurement, when it comes to rules and regulatory. we talked about energy. it's a very ambitious agreement that we have sort of in our preparatory work, so we hope and we trust and we think of both sides come it will not be easy. hasn't been easy when we did a

long time ago but we can deliver and make really the biggest free trade agreement ever. >> that question of timing is -- >> because you have an election coming up. >> a little something happening in 2016, i think, remembering when the political rhetoric, the euphoria. remember that one tank of gas we're going to get ttip? it's going to be a previous because we're going to be on this one tank for a while. and the concern is tpa, tpp and take enormous amount of political energy here that in 2016, election years are not the best time for big steps to be taken. and i sort asked a similar question to ambassador solomon last week saying it feels to me we sort of solve -- so old it. no, no. this is the boring bit. this would get quiet and focused

that you don't see. ok, its board. -- it is boring. it feels external link that is losing all of it of its energy -- it feels externally that it is losing a lot of its energy and this is what a lot of the groups who don't want this deal to be successful. imagine the toxicity in europe today. that's what feels like is taking hold. i worry that we're going to get into 2016 and this is going to look like 2017. the u.s. has never won and won the recession started and completed a trade negotiation ever. >> well, famous british philosopher, optimism is a duty. that's my motto. we will try. elections are of course to be welcome. they complicate the timetable for i have done. -- i have time. i will be here in 2019 unless there's a revolution. [laughter] but with plenty of elections in european union.

there's 28 countries and regional elections, local elections. a big one that we all very know very well in united kingdom. and then next year we will be busy, yes. but hopefully that's what we're aiming at intensifying the debate. some of the really political issues can be solved now and leaving the boring technical things when the debate becomes an intense and maybe we will see. >> it's going to be challenging. let me turn again, a bit back on the question of ambition. the one ambition to negotiators have had is great energy chapter and that has not been, my words, something that's been very attractive to the u.s. side. do you feel you're getting some traction in getting the energy natural resources question out there? or quite frankly this is something the americans are simply not interested in exploring? >> this is a difficult issue. you are aware of that. but i think since we sort to

write our articles, common agenda, the paper of the high level working group we set out our joint admissions, since been quite a lot of things have happened. from our side, with some countries in the european union almost 1% depend on energy imports from russia. -- almost 100% the on energy imports from russia. we need to diversify this. this is something that the u.s. support and courage of course. -- and encouraging to do, of course. in order to do that we need to import from other sources. the u.s. to be one such. i think it has a very important strategic dimension as well. we have not really gone into that chapter to negotiate yet, but by that i think there's a mutual understanding that it is important, then we will see how the actual negotiations go. i'm aware of the sensitive issue but it's very important for us. >> one final question, i think you've been warmed up to get ready for tough questions from our audience.

we certainly know turkish government has expressed some concern. the eu is updating and reflecting i think the customs union and integrating that. norway, iceland and other non-eu partners, mexico of course. help us understand your approach to third parties concerned. >> all these countries, special of course turkey with on we have a customs union since many, many

years ago and in iceland and norway who are not members of the european union but who are part of the free trade area of an good partners in many other ways so they of course are following this with great interest. we keep them informed about what we are doing socome in the loop and if expressed the willingness to be able to login to the agreement once it's done. i think that's a good idea. if we can achieve an ambitious ttip and other countries that are neighborhood, and others would want to log into that. i think that's q & a a good idea and we should keep that prospect open for them. but, of course, -- [inaudible] >> perfect, wonderful. it's time to welcome our audience into the discussion. we have some microphones around to give you could raise your hand to identify yourself, affiliation. we would like to keep, to very short. your questions very focused. some going to start in the far back corner. i stand back there. we've get to a microphone to come right there. sometimes the very loud into the microphone so don't be afraid to speak loudly. >> thank you. commissioner graham usage were working on several ideas. can you give us any hints what those might be?

and will you can to free trade agreement been reworked to include some of the new ideas before it is ratified? >> we share those ideas with european parliament at the trade ministers next week and i will be sure to share them with the press as well. >> so we will get next week. this week. this monday. >> wonderful. we have three questions right here in the middle if we can have a microphone here. excellent. yes, thank you. >> thank you. the coalition of services industry. thank you, commissioner malmstrom, for your remarks today and your leadership for freer trade. at the beginning of the comments you talked about the broader agenda in trade negotiations that different subjects that has become part of trade negotiations. i don't think you mentioned currency manipulation and i would be interested in your views on whether you think it's appropriate to include currency

manipulation discipline in a trade agreement? thank you. >> i think that depends. probably -- you know more about this is a discussion be discussed with the tpp discussions. is not part of our ttip negotiations. so i think it depends on, on your partners. >> we will have a question right up front, please. >> dave thomas with inside u.s. trade. the eu has made clear that government procurement is a strong commercial interests for the eu in the ttip, but the u.s. seems to have refused to offer really anything significant on it. i was just wondering how long can this scenario i guess continue? how many more concessions can the eu offer the u.s. until i just enough is enough?

>> well, we just finished the night negotiation round last weekend in new york. we have one more plan for july and that's what we think is needed to have everything on the table, all the technical issues and then hopefully we can go into more political part of the negotiations. public procurement is very important on the european side. it has been good for our economy and for our consumers, and we will of course be seeking greater access to the american market. there are no sort of ultimatums or deadlines. we will be discussing this with our american partners as well, and we have not set out specific date or timetable to do that. but this is a very big interest on the european southern i don't think we conclude that i can conclude an agreement if we don't make progress on that. automatic. >> if i do think we could conclude an agreement, i would do something else.

-- if i didn't we could conclude an agreement i would not be sitting here. i would do something else will stop the -- something else. >> optimism is a duty, absolutely. right there, please. >> hello. melinda st. louis from public citizen. you mentioned your efforts to increase transparency for more public trust, and so i was wondering if in your conversations with ustr froman a few encouraging u.s. to follow your lead in terms of publishing textual proposals? and if the u.s. would be great -- would agree if you would also agree to publish composite tax at regular intervals so the public can be following the negotiations that have a sense of what is being negotiated and what is something is not being negotiated, as you mentioned? >> that's a great question. there will be in some ways more transparency on european second potential on the american side. >> well, of course we're discussing this and what is

happening, the eu internal debate i think our american partners follow that quite closely so there are no secrets, no sort of dark moves here. we have decided to publish rtu text, basically all of them. not all of them. the are some very sensitive issues such as tariffs that you cannot put them online while you're negotiating but all our legal proposals, all our position papers, all the reference to the different reports of also summary of each negotiation round has been published online for you and others who seek. we also the broad engagement with european parliament and different stakeholders group we are we report after each negotiation round. we will continue to do so as we develop coming positions in the eu. of course, we cannot publish american documents. that's for you and your constituents decide how to do that. i think as we start to go more

into delivering results, because of course everything is a link taking boxes from everything but as we start to deliver more i think you'll it will be desirable if we could communicate about together come and we need to find a way to do that. >> thank you. we will now go here. >> thank you. i'm tom with the foreign policy discussion group. it's interesting that you haven't yet mentioned agriculture, and yet we know that relations between the u.s. and europe, agricultural issues had been going on seemingly forever. would you discuss some of the agricultural issue roadblocks you were dealing with? >> that's a seminar in and of itself. >> but very briefly, yes, of course agriculture is always a big part of negotiations like this. they are sensitive issues that i know they are here in the u.s.

they are very sensitive and our countries as well. we are looking at ttip as a basis, across the board. but there are obviously here in the u.s. and in the eu some sensitivities that will have to be excluded, and that's for the and again. -- and again. we think it's interesting that for us to increase the marketing american market and i know that for the americans, producers and some of the areas, they want to increase access to our markets. i think on many of these issues we have mutual interest or compatible interest so that will not be a problem. there will be a few sensitive products that we will be discussing. for us and for you we have some laws that cannot be changed, but from the european perspective are very important when it comes, for instance, hormone beef is not about in european

-- is not allowed in european legislation to give other issues that are forbidden in your legislation. we cannot change our respective legislation and that has been clear from the outset but we will try to find ways to open up as much as possible in agriculture. they are always sensitive, all negotiations, even with big partners such as the wto as well. so i don't know if i should develop more on this but -- >> if i can try to find them if i can toss out love it because he is a week a decision on gmos not letting the member states decide, ambassador froman was clear that was not necessarily where the u.s. was wanting to be more open. i think we have seen a proliferation of geographic indicators. and again how do you manage, again in the early days, just finished a ninth round, but these are pretty big obstacles. how did you manage through those -- through those?

>> speak with us or with geographical indication. this is one of the priorities. we have thousands of them protected internally. indicated aggregate we managed to agree on 154 of them, i think it. so this is something that is the important on the part of many of our member states. certain parts of our negotiations maybe. i know the youth counselor totally different tradition so this'll be a difficult issue but i'm sure we can solve that as well. on gmos, at the same time as we adopted sort of procedure, or we didn't, we propose to do not what has to be endorsed by member states and in parliament. we also gave permission for 19 gmos that has been cleared. we have assigned to the agency so those 19 were put there. which have been the u.s. demand for quite some time. the new procedure is compatible with the wto and intro markets.

-- the internal market. so i'm quite confident that this impact would not change anything in any of the practical applications. >> fantastic. all right. we have a question over here. >> thank you, heather. my name is sean donnelly from u.s. council of international business. commissioner, thank you for your remarks today and for your strong leadership. for my organization and i think for business in general the strong investor state dispute education are essential in the ttip. and while you can speak out very strongly, i don't see many of your fellow commissioners or european political leaders doing that. they seem to be hanging back a little bit. at a time we see president obama frankly speaking out very strongly and confronting members of his own party on trade and investor state dispute settlement. so my question is why aren't more european leaders out there

now strongly trying to explain the benefits that ttip and particularly of investment? thanks. >> well, i think that is gradually changing come as heather said in the beginning, this is something that has been part of the eu bilateral agreements for many, many years. and then a few years ago it started to become a bit toxic and people start to look at them, maybe they need to be reformed a little bit. i've taken all my fellow commissioners to a crash course in isds. and everything now and they're preparing pashtun ethnic went out into question because they do, because this is the most well-known acronym in europe. which is a bit strange but true. so they know, i know the deal. also with the trade ministers who have asked us in the mandate to put in isds, so we are negotiating based on a mandate that we did before negotiations towards.

the hacker trade promotion so that this sort of after. it is in our mandate. some member states are increasingly becoming active on this. some could be more come absolutely. i keep telling them you have to be out of their in debate as the but sometimes this is a difficult issue in the national parliament so that are defined away. -- they are trying to find a way. that is trying to find ways to reform them, to have the more updated version that is more transparent. that is clear, that is based on the limitations when it can be used and under what conditions so on. -- and so on. so i hope that once we make a proposal which, of course, have been discussed for months, but also working to encouraged to get out there. >> commissioner, if i could tag on one quick question.

you served in the previous commission that they don't have super commissioners. you now serve any commission where there is a bundling of super commissioners. has it changed your work? i just wonder if there were any structural differences and now? >> well, my mandate on trade is of course very specific. but it has changed it into the but the we don't call them super commissioners. we call them the vice president's. >> right, they don't have a tape. -- a cape. >> precisely. but it's actually a good thing because as in many governments and i served in the swedish government as welcome between the department and the ministers and there's always a very thick wall. and nothing to did come no policy every is within those walls. a different other of the ministers, commissioners in order to get there. and this is what we are doing with the commission. i worked very much with the vice president on the super commissioner of economy, vice

president, former prime minister of finland, to coordinate the economic part of what we are doing to of course trade is a very important economic part of our economic recovery into european union and for our future to but i also work with high representatives, and the team who works with development, with foreign policy, with neighborhood and enlargement with human to assist to get the -- with humanitarian assistance to get to the political part of trade because trade ended up it is collected, trade of course is a very important foreign policy tool. wewe sit together and go through our priorities to make sure we know what we are doing and fit into a different agenda. it's a more modern way of working. >> thank you so much. we have a question writer down -- right here down in front. another word you haven't mentioned is google.

president obama labeled the efforts by the competition office at the commission as a form of protectionism. are the efforts of the competition office colliding with your efforts in terms of undermining trade, particularly when you think that no less than a martin shultz who was here three years ago trying to launch ttip is now on the anti-google bandwagon.

>> what the commission was responsible for competition is doing on google and on gazprom and on many others is is to look at what the congress of different kinds are abusing their position. nothing to do with ttip and hes committee chair a couple of weeks ago and presented what she's doing in the question so she has been asking excellent. so this has kept under her services, very clearly away from our negotiations in ttip. >> we have a question in the back. [inaudible] i am from kenya. you talked about africa looking at the 27th of you you've signed with. what are you looking at in terms of transparency, corruption, human rights and -- [inaudible] what makes you agree with them that this is a country that is better and we do better importing and in business? so what are you -- [inaudible] what are you working with in africa? thank you. >> we are working in africa with groups of countries, regional groups.

so we've regional agreements. there's one in the western africa, one in eastern africa and so on. they are regional agreements where we give increased access to european markets, but also in these agreements were talking about sustainable development. there's also provision for aid for trade to make sure we can help moving out to the infrastructure to be able to deal with trade. there is always discussions on good governance and labor rights and so on. so that is a much included in the dialogue we have with those countries, and we're hoping that these agreements can be signed very soon. they still haven't agreed but not ratified yet. so this is a process that is

ongoing and we will seek to deepen those and to engage to make sure, the wto side where we hope that, especially in kenya where there will be the ministerial from wto ministers from all over the world will meet in kenya in the summer to try to agree on the doha round. not good that were some customers fees -- that could take away some customs fees that could benefit many countries in that area. we are hoping to facilitate on the ground to have the maximum benefit of the agreement will stop question -- maximum benefit

of the agreement. >> over here in the corner. >> last time we had the pleasure of talking to a swede in relationship to trade was many many years ago when there's a man who was very well known, but maybe in the historical records. you're as good as he is, that's great. [laughter] three questions for you, one, i assume all plans will be in deep kimshi if we do not get fast track passed. many of us think it would be a nice goal to get this before the change in administration in the united states. a quick follow-up on africa. ways and means has pointed out that there could be a problem between the u.s. and africa -- u.s. and the eu if the u.s. begins to get preferences in the african market. you chose a different path. two quick questions. one, will you have some

flexibility so you don't harm u.s. exports and, two, have you given any thought to a common origin rule perhaps being part of epa where -- excuse me, being part of ttip where the u.s. recognizes african inputs the same as export to the u.s. and vice versa so this wouldn't promote african participation in -- so this would promote african participation in the global supply chain. and the third very quick is on g.i.s some are concerned you're use r using the lisbon agreement to make some progress. perhaps that should be better left for the negotiation of the ttip in terms of this very controversial issue of geographical indications. thank you very much. >> thank you. that was a lot of questions. on tpa we are, of course following that process very closely, and i know it's an intense debate here. we have looked at what has been

proposed, different amendments but that's one of the reasons i wanted to be here in may as well to discuss with the team to get his sense of this and what will actually become the end vote. so it's very difficult for us to have a position on individual paragraphs or amendments in tpa. we need to get clarity what it means in practice. for instance, the ones you mentioned on africa. what we have been doing in africa for a long time, i think, is a good thing opening up our market for them and giving them access. that is to support their economy and their growth, and we don't think that is being done, you know, sort of to harm u.s. interests, it's to promote our interests and theirs, but i'll be happy to discuss in this morning with mike froman as well. and we hope that the tpa and tpp can be concluded quite soon because, as i said earlier, even if tpp -- ttip has a parallel negotiation track, of course, it cannot be concluded before congress and the senate has

agreed on the tpa. so that's why it's very important for us as well. on the wipo, this is a -- e.u. is not a member of wipo. there are nine e.u. countries who are members. there is a congress coming up. we are, of course, following that very closely. the u.s. is not part of it, so what's happening there is for the members to discuss. and our discussions on geographical indications needs to have a parallel track. we need to find a solution, a way forward that everybody's happy with. as i said, this is a difficult issue, but we are willing to look at this, and i'm sure it can be done. it has been done with others. >> fantastic. ok. we have a question right here in the front. >> good morning. i'm greg with the american cancer society cancer action network. the e.u. has a rather robust tobacco products directive, and we are

seeing trade disputes around world involving government regulation of tobacco to protect people from disease and death. can you say a little bit about how protection of public health particularly on issues like tobacco are factoring into your consideration of positions on isds? >> thank you for that question. i think that is an illustration of why isds has become conflictual as well, because people in europe have seen tobacco companies suing governments because of their willingness to protect the citizens from damages of smoking with plain packages and so on. and that's why we put already in the canadian agreement a provision that states have the right to regulate to protect the health or the safety of the citizens. and this cannot be put into question by a company. and we are strengthening that

language in the proposed reform of the system as well. so the case that is ongoing right now would probably not be successful, or would not be successful with the new terms that we have put up with isds. states have the right to regulate to protect their citizens in tobacco and in other areas. >> fantastic. question over there, please. microphone is coming your way. >> hi, commissioner. business newspaper. really glad to see you here because i was based in brussels last two years -- >> i follow you. [laughter] >> yes, i follow ttip from the u.s./european joint announcement. my question is in washington white house and congress use china as a subject to get

through all the blocks like tpa and tpp saying if u.s. doesn't set the high standards, china will. i want to ask you, commissioner, also use china as -- [inaudible] -- also uses china as a subject or an excuse for the european difficulties from member states of parliament, and do you think ttip is really about setting a high standard between transatlantic and exclude other nations, other emerging countries? thank you. >> well, it's not for me to comment on what politicians here in the u.s. have said about one thing or another. we think that ttip is a great possibility to create the largest free trade area between

the two biggest economies of the world for the moment, europe and the u.s. and we are convinced that setting standards there is a good thing. if we can set standards in a new generation of standards in different technologies, we have good people who put standards in -- regulators in europe, we have in the u.s. as well. if we can set some standards they have a good possibility to become global standards. but we are doing this for us and for our people because we are convinced it would be good for how economy. -- for our economy. but we're not doing it, you know, position to anybody else. -- in opposition to anyone else. of course, as i said in my introductory remarks, there's a spaghetti bowl of different bilateral agreements and, of course, they can be seen as all hostile towards each other, but that's the world we live in. everybody's making agreements. china's making a lot of agreements as well. we are engaged in a trade investment agreement with china from the european point of view, and we hope we can finish that

quite soon, and we also cooperate in other foras. so it is not directed toward someone else, but it's a good thing to do in itself. >> fantastic. why don't we take one more question. sir, you'll have the last question. >> thank you, ma'am. sam gillston with washington tariff and trade letter. one of the key elements of the talks is in regulatory convergence. you didn't get into that very much. can you give us an idea of the status of how well those are going, what are the big problems, and which areas do you see most likely to have something in this agreement actually come out? >> yes. this is an area where we have made good technical progress but, of course, it takes time. we have identified, like, eight, nine different sectors where we think there is scope to recognize each other's standards, in the car sector cosmetic, engineering, medical

devices, what else? well, there's a variety of sectors where we think that we could recognize each other's standards because, for instance, we do inspection of factories. they have to be done where you do pharmaceuticals. we do it in one way in the european union, you do it in a very similar way in the u.s. and they're both as safe and as good, and they produce the same results. but for a company that wants to export to one side or the another, you have to do it twice. that costs a lot of money. medical devices have to go through a formal operation system twice. car crash tests. if i want to sell a dress, i have to put it in -- [inaudible] in europe our way, and i have had it in the -- i have to do et in the american way as well. so very, very similar to protect -- to achieve the goals of

consumers, but we have to do it twice, and that costs a lot of money. so we can recognize each other standards in these sectors, i think that could be a very good thing especially for small companies who don't have the room to maneuver to pay for these extra fees. and if we can do it for future regulations because we have very good regulators on both sides to set future standards in electronic -- [inaudible] or nanotechnology or whatever, we could, we could perform one global standard that would have an effect for the rest of the world. and then that could, of course be a very good thing for business, and it could also facilitate for the rest of the world who want to export -- [inaudible] one standard instead of two. so this we have made good technical progress, but it's not done yet. so we have to go through sector by sector, case-by-case, and convince each other that our standards are good.

but this is work that we are taking on. we will announce results there later this fall. >> thank you so much. you addressed a very broad range of issues with good humor and great common sense. i think we will see more of you in washington and i think and after from it will get some record fire miles to -- ambassador from an will get some frequent flyer miles to and from brussels. i would like to sit through your isdns one-on-one class. we are grateful you spent your time with us. we wish you the best in your meetings with the commerce secretary and others. please join me in thanking commissioner mouse from. -- commissioner malmstrom.

[applause] [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] collect and a story on the hill today, president obama's nominee , greg mcgough to be the full-time i we administration chief. he the deputy chief since 2009 and has an acting chief since the former administrator left to become transportation secretary. president obama has been criticized for allowing a number of positions to remain vacant. all positions must be confirmed by the senate. today in washington, d.c. in

about 20 minutes, the atlantic council hosting a discussion on oil prices and their impact on fracking. also looking at shale boom in the u.s. and the potential fracking around the world. live coverage at 3:00 p.m. eastern here on c-span. and on c-span two, the senate dabbles in at :00 for general speeches, voting on the release of u.s. citizens in iran. and tomorrow, trade promotion authority. the house out today and back tomorrow to work on a measure banning abortion after 20 weeks. you can watch the house live here tomorrow on c-span. here are the festivals that we will be covering this spring on for tv. -- on book tv.

while we wait for the conversation on fracking to begin, here are some details about the wildfire outlook for 2015 and fighting challenges on public and private man, from today's "washington journal." host: some parts of the country overnight -- we are looking at how your federal tax doctors -- -- tax dollars are spent by speaking with tom martin. he is ceo of the america's forest fire association. we'll talk about the federal efforts and suppressing and fighting fires across the west

and all over the country. what does the outlook for 2015 what have you heard so far? outlook for 2015, what have you heard so far? guest: the outlook is not very promising. we have already the stories about how little snowpack there is in the west, we have read about the droughts in california. all of that puts our forest fires at great risk for catastrophic fire. the modeling that the u.s. forest service does that is typically pretty good at protecting, is telling us we will have a tough year. host: let's look at some of the resources that the forest service and other agency spent last year. the total number of fires was about 63,000. the number of acres, 3.5 million. in the forest service and interior department cost together, one at a half billion dollars. when you look back in history, is that a lot comparatively? guest: it has been growing a

lot. that did not set a record last year but it was a rather modest year in 2014. over the last decade, the amount that has been put aside to fight fires has grown enormously. host: your organization is the american forest foundation. what is your principal mission? guest: we work with private land owners to protect america's forests. the biggest ownership chunk is family land owners. it is not these federal agencies. it is families, 22 million people that own about 270 million acres. host: our guest is here to talk about the 2014 fire season and the resources used in preventing and fighting those fires. we are setting aside the lines a little differently. eastern and central time zones

should be 202-748-8000. mountain and pacific should be 202-748-8001. we will look for your comments on twitter as well. back to the issue of private land owners, the largest chunk of forest in the country owned by private land owners. when there is a major forest fighter that may start -- a forest fire that may start in a national park but leaps into private territory, who takes care of that, who does that? guest: it is a joint response. america's forests are a checkerboard. you might have a federal agency that owns forest land with a state agency that owns forest land and individual owners interspersed in between. they will have folks working jointly with state and local

firefighters as well. they try to coordinate the response because of the checkerboard nature of the forest. host: is the private landover -- land owner ever liable? guest: it depends on the state law, what culpability they have good for the most part, these people's -- these people pay their taxes and are contributing toward fire prevention and fire suppression. host: to show you some of the comments of thomas tidwell a member of the forest service that testified in congress about the outcome in fires season -- fire season. >> we are predicting -- there is a 90% chance that we will not have enough money and will have to look at transferring funds. it is really past time and i know some of you are tired of listening to me talk about this but it is past time for us to

find a solution and be able to move on and stop this destructive practice of shutting down operations in the fall to be able to transfer money. i think that it is no question that when percent, this concept of 1% of our fires should be considered natural disasters. last year, the 10 largest fires most costly fires equaled over $320 million, which really tracks what we have been talking about. host: he is talking there about transferring funds. what is going on? guest: it is how we pay for fires on federal land. our fires on federal lands are dealt with by the department of interior or the forest service. congress appropriate some dollars to help fight those fires. most years, those dollars are insufficient to actually fight those fires. you want to protect people's lives and homes, if you can. the forest service or doi if

they have exhausted their appropriations authority, they borrow it from other programs to make sure that they can continue to fight the fires. sadly, since 2002, eight years they have had to borrow from other programs, stopping those programs in their tracks so that they can protect people's homes and lives as they should. we have got to reform that system. host: wall street journal opinion piece by kyle dickman agrees with you. he is a firefighter who fought fires in the west and wrote " congress can start by passing a bill already introduced that would increase the forest service's firefighting budget and require that for each dollar spent for fighting fires $.50 be saved for venting fires.

fire borrowing annually cuts into the management of forest fires." guest: i think the philosophy and approach makes a lot of sense. you take money out of these programs to prevent fires, to put out today's fire and all you are doing is ensuring that the buildup continues and it is more likely to have a catastrophic fire in the future. what happens now, you take it out of those things. this has an impact for a fire in california. you feel the impact in maine. were you are working with the federal government to reduce fire risk their they borrow the money, and it goes to california so it is a national problem. even if it is a single fire in a big state out west, it affects all of us. host: several calls waiting 202-748-8000 eastern and

central. we go first to reno, nevada with mark. caller: i was basically wondering why we were not investing more money in the prevention side of things. it seems that one of the challenges are the various governmental associations that on this land and i do not see strong cooperation between them. guest: refer to -- we started fire depression -- suppression and work very closely together. take a look at the forest service and the impact that this kind of budgeting has had 10 years ago, the fire budget was $600 million. by 2013, that became $1.6 billion so the increasing amount allocated to fire has enough

other programs. at one point, it was 13%. look at the early 1990's, 13% is now 50% of the fire service budget. their ability to respond has been decreased as they spend more and more on suppression and have fewer dollars left to treat landscapes to make sure that they were more resilient against fire. host: gabriel is in durham, north carolina. good morning. caller: good morning. i wanted to address one thing that i thought was really important. not all wire -- not all wildfires are caused as a result of human interaction but i really think that a huge issue to look at and consider is the massive amount of additional things and factors that must be considered when you look at the human population in these areas. it contributes to the fires themselves. there is whether constraints and other things but what things are

being done at this point to limit things like smoking or people's fire pits or certain things that they do within their area that would exacerbate a forest fire in the first place? guest: thankfully, smokey bear has been around since the 1950's and has been one of the most successful campaigns in dealing with fire issues. more importantly is we think about reducing fire risk. it is talking to land owners, whether they are public or private, about what they can do on their land to ensure that if we have a fire it is not a catastrophic one. it is not one that puts homes and lives at risk. one of our biggest issues frankly is the amount of people that want to live in a forest. it is beautiful, great views but it puts you at real risk to wildfire.

that has made fighting fires more expensive and more critical. we have got to your outweighs to ensure -- we have got to figure out ways to ensure that family land owners manage their land in such a way to reduce fire risk overall. i am happy to say there are some great efforts going on right now. we are working in oregon with the nature conservancy, talking to public and private land owners about what they can do on their land to reduce the risk of catastrophic fire. i think it is efforts like that that one sure that even if somebody does drop a cigarette by mistake or a fire gets away from folks, that we have the ability to have control of the fire, have the fire happened in a way that it does not do lasting damage. host: you mentioned the number of homes that are moving into areas that are more fire prone. the headline in the minnesota

host a billion-dollar wildfire season looms with new home sprouting in its path. guest: i do not know the exact amount of folks. one way is to take a look at private land owners. they often are in that space between urban and suburban areas and big federal forests. if you take a look at how risky is what they are facing, and you look at over one third of those folks who are at risk for cap as far -- catastrophic fire. in that mixed zone between urban and suburban areas and the backcountry, more and more risk to homes, families, and the health of the forest. host: here is philip in newport news virginia. caller: hey, tom martin. i just have a question. you said that there is 22

million people that own that 270 million acres. i'm trying to understand why we have to actually come out of pocket with our expenses when there is 22 million people that own those 270 million acres. i'm pretty sure they are part of the 1% or's. why are we coming out federally when we already have to pay for medicare and social security, etc.? that does not make any sense to me at all. i am pretty sure they can afford it. what do you think? guest: i think that is a great question. the good news is the federal government pays to fight fires on federal lands. the state and local folks respond locally so we are not paying as federal taxpayers, for fighting fires on private land. we are paying for fighting it on public land. sometimes, those public land fires jumped over onto private land. they start on a public land and

go there. i think all of us have a ship -- mistake in ensuring -- a stake in ensuring that if that happens we ought to step up and help prevent further damage. i think your point is well taken. the federal government should take care of itself. sadly, it is not doing that. it is under appropriating dollars and then when they find out it is not enough, they are taking from the programs that prevent huger fires. -- future fires. i think your point is well taken. host: they cut smokey the bear's budget? guest: no question. host: jodi says, just keep your matches in your pocket california. there is no water to put out the fires. guest: the bigger problem is the

lack of thinning that is going on in many landscapes. there are ways to ensure that when there is a fire it is not a catastrophic one, and a lot of that is removing excess fuel that happens to be in a fire zone. that is the kind of work that the forest service and other land managers public and private, both want to do on their land. unfortunately, the public land managers have a hard time doing it when the fire budget blows through its cap and the dollars come from these projects that would actually fit in the forest and reduce risk. host: bob in st. paul minnesota. caller: this is bob for minnesota. i finally achieved my dream as a retired zookeeper that actually never retired, and got an 80 acre spread north of the twin cities where people could come and see a living zoo, meaning no bars.

after a few fires sort of threatened my 80 acres holy cow, i do not know what i will do because the fire department was quite a distance away and quite small. i'm sure they would try but i ended up chickening out, getting out of there and now i just go around and give programs for kids at schools. host: bob answers the question. is this mostly a west coast concern? guest: it is not a west coast concern. the 60,000 fires that happen are all over the country. for a guy like bob, my family owns 200 acres just over the border in wisconsin northeast of st. paul. so bob, i understand your risk. there are programs that can help folks manage their land to

reduce fire risk and meet other goals. there's a program called the american dream farm system -- tree farm system. 80,000 folks in america and 80,000 acres that give land owners information to be better stewards of the land. i would not wait for the fire to start to call the fire department. i would start thinking about it when things are good, thinking about what you can do in your forest now to reduce the impact of a fire, should it happen

there are those kinds of low intensity prescribed burns that really make a difference. unfortunately, when you have what happens in the forest service where the fire suppression budget takes away from other things, the majorities between state governments and local officials falls off the table as money is diverted to fight fires. host: hello there. caller: thank you for taking my call. i think we can agree that stewardship of the land is very important. also there's a lot of biodiversity out there that can

be used for fuel. we have seen corn being turned into ethanol. it's a pretty big lobby that made that happen. in the 1970's it was -- we have all of that out there. we could prevent the fires and sell the ethanol. i would like to know what you think about getting ethanol back on the list of acceptable fuels? the commissions are exactly the same. this is a big for-profit item. guest: clearly if we are going to treat these forests, it is a lot better for the taxpayer, if there is an item you take out. in new england, think of all those woodstoves out there. incredibly efficient.

this can provide would for that market. not only do you avoid using fossil fuels. so many use bunker oil and so many things to heat with. the carbon profile of using a renewable resource like trees to burn is so much more -- better, because you take the tree out the other trees grow faster, and you open up space. host: we have about 15 minutes with our guest. talking about the resources to fight fires. at join the conversation.

the recent piece in "rollcall" talks about fighting fires as a natural disaster. i want to quote from a congressman from arizona who agrees with you. [video clip] >> we should move 30% of those costs off budget because it creates additional priorities under the statutory caps, and we need to be realistic here about what we can do. we need to deal with the house as well and be realistic about what we can budget for and what we can't. there is a solution to be found on the issue. i think it involves >> ability but only after 100% of those

have been anticipated. host: so, are you looking at these bad wildfires to be treated like a hurricane or a tornado? guest: absolutely. it strikes me 99% of the fires -- let's take a 10-year average and put that in the forest service budget. but catastrophic ones like senator flake was referring to -- the catastrophic ones, 10 fires, $320 million, i think we can deal with that these same way we do as hurricanes tornadoes, and the likes. for whatever reason hurricanes are covered and fires or not. that does not make much sense to me. take the 70%. take that into consideration.

take the other 30%, put it into the disaster relief fund. use those dollars which are in budget. it is not an off budget expense. it does not increase overall spending. host: are those in fema's budget? guest: you never know what it is going to be in any given year. fema got an appreciation -- and appropriation last year. the rest of the money is not allocated yet because you do not know if there is going to be a hurricane or a tornado or an earthquake. what we do is we take 30% of the anticipated fire cost and allow the forest service for the biggest fires to take the money out of that these. you set a cap. you would not change forest service's strategy of fighting

fires. you would not create a new budget out of this thing. but you would say, you know what? fires are like earthquakes. let's treat them the same. host: from new mexico, we have chris. caller: good morning. i will try to articulate my point as best i can in a limited time. in new mexico -- we have been in a drought for some time. this year is not too bad. in our terrell county, just last year, i think the county commissioner took private landowners on to national forest land and did their job and i have followed the issue. it is not resolved yet because the lawyers got involved. the forest service for some reason prefers litigation over cooperation. there are people who decided to

use their own personal funds and time and resources to go in and do the proper thing, and to try to prevent a catastrophic fire -- they have taken this initiative with the help of the county commissioner. it is still in litigation. can you comment on that? guest: i can. i would say it is a better model that is out there. i agree very much on collaboration, looking at private and public land together as we make the landscape more resilient against catastrophic fire. i think that is the right way to think about things. but i think the right way to work it through is these lands belong to all of the -- all of us that means thinking through these things collaboratively. use the conversation groups, private landowners that think about how do we have a landscape forest here? that has all of the benefits we

want a clean water, a great wildlife habitat, without -- director morningstar: i wish you all a good afternoon and welcome to the atlantic council. i am dick morningstar, the founding director of the center. i am also glad to see the chairman of our divisor regroup -- advisory group and our moderator today, cynthia quarterman. so, we are 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 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, who david brought -- cynthia quarterman. cynthia most recently served -- this is always a tongue twister for me for some reason -- most recently served as the administrator as the u.s. department of transportation's pipeline and hazardous materials safety administration. and cynthia has been a key policymaker in energy development safety and transportation since the beginning of the clinton administration and we are pleased to have her knowledge and expertise here at the atlantic council. and today's expert panelists -- i think biographies were

available outside, right? yeah. so, you have the biographies. i will briefly introduce he panelists to include subash chandra, managing director and senior equity analyst at guggenheim partners. mr. chandra had the foresight to recognize fracking's huge potential early on and at one point advised 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. one in 7/8 out of two of them. and dr. terry engelder, who is a professor of geosciences at penn state and a geologist who originally estimated the potential gas reserves in pennsylvania, which first set off the shale boom. he has a whole host of

credentials that you can see and 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. he recently published a book specifically on this topic and it is 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 #acenergy. and so, helped me extend a warm welcome to cynthia and all of our panelists. cynthia will say a few words and then we will begin the panel discussion. thank you. [applause]

ms. quarterman: i 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 have lots of interesting conversation about what is happening with respect to fracking in the united states. these gentlemen also have an international perspective and we are going to push them to answer some of that. i am going to start right out with dr. ingold are -- dr. engelder, who is known at least in pennsylvania as the father of fracking because of his work, figuring out how much gas there was in the marcellus shale. dr. engelder was also in 2001 noted as one of the top thinkers in the foreign policy magazine on this issue.

why don't you tell us how you got into this, terry? dr. engelder: thank you cynthia. let me point out i am always embarrassed with this title, the father of fracking in pennsylvania. i have a written statement i would like to put forward as a disclaimer. before that, whenever making an appearance i always pass around a notebook in which i have the audience enter their name, all mama at her or affiliation. -- alma mater, or affiliation. i will just pass this down. this is the disclaimer. i will read it, although i dislike read text, but in this case it is so important i will disclaim it by reading. anyway -- it is flattering to have people think 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, of 40 years calm and aided in reserves calculations, for the world's largest unconventional field the appalachian basin in 2008. this research garnered international attention following a 2007 press release from range resources, the company responsible for pioneering the discovery wells in the marcellus shale. i asked their head of public affairs to write a statement concerning what i actually did and his statement was my work had a level of independent credibility that was lacking or understated at the time. bearing in mind this was late 2007, before the boom russell gold is going to talk about.

prospective industry suggest the volume of technically recoverable gas distributed through several layers in the appalachian basin, including marsalis and the utica is comparable in size to the northfield, which is the world's largest conventional gas field. to me, uncle sam is the father of fracking, under the leadership of president jimmy carter, the department -- to me, uncle sam is the father of fracking. under the leadership of president jimmy carter, the energy administration started the egsp project. it provided funds to a number of scientists in government industry and academia for the explicit purpose of discovering how to tap the vast reserves of north american gas shale. bear in mind, carter was president in the 1970's, so this has been going on for a long time. i would suggest, cynthia, to you and others, a government

scientist who might be called the father of fracking is al yost of the international energy technology company. there are several industry folks who might also deserve this title, the father of fracking. this would include ken nulty of amoco, and then of course there is george mitchell, whose company mitchell energy was the first to do fracking in the 1990's and another who was the first to put a massive hydraulic fracture -- all of these are deserving. academic type include my colleague from stanford and engineer steve old itch of texas a&m.

while it is not fair to include me in the list of potential candidates, you did as me to explain myself is that right? ok. i was blessed by funds from uncle sam back in the 1970's. this was the same time george mitchell was experimenting with gas shale in ohio, using government funds. from the eastern gas shale's project. then later egsp funding the state of stress of gas shale in the appalachian basin. that was a great experiment in the 1980's. i was a small part of shell's venture, which was one of the first attempts of producing gas from the standard shale as we know it today.

i had graduate students -- this is very important. it was not the faculty members but the students. all of the students contributed significantly to our present understanding of gas and oil shale. we came to understand which natural fractures were driven by high-pressure gas. we came to understand the rate of fracture grows, the timing of fracture growth, the distribution of fracture 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. ms. quarterman: thank you. i stand corrected on that. i understand also this and involve the geologists as well in the olden days? dr. engelder: as a matter of fact, their word two or three names. interestingly enough, when the

new york state survey -- before it was called the survey -- decided to understand the mineral industries of new york state -- this would have been 1943. a geologist was responsible for that. he had just gotten married. i suppose his wife was looking for a honeymoon to go to europe, but rather, he said you are coming to me to map in western new york. now she was a good artist and on her honeymoon, she'd true pictures of these fractures and gas shales -- she drew pictures of these fractures and gas shales that remain seminal. a cornell graduate student follow this and that still remain some of the seminal work in understanding fractures and gas shales, that allow you guys to do whatever you do. ms. quarterman: thanks. mr. chandra, i understand -- how

did you get involved in fracking? mr. chandra: yes, my background is in securities and as we're talking at lunch, we coincided when the gulf shale was done. that is when i got in the industry, when the gulf of mexico shale was where the hot ipo's came from. that ended and one of the first companies i found thereafter was mitchell energy, as referenced by terry. we kind of got tired of the gamblers ruin and we saw some companies do very well and get bought out. some companies absolutely disappeared. when i saw a mitchell energy here was a non-short company growing sustainably every year

-- vertical, not horizontal -- so i was very excited about that. but it was also a curse in another way. after seeing george and his company in the very early stage of the horizontal application of fracking, they sort of implied to me this would not work outside of their agency. i was too young to realize every company says that. [laughter] mr. chandra: so, i went for some time going guys, this is just not going to work. and this cost me a couple of very, very good companies. and ideas along the way. 2005 as we were talking -- what was interesting the fayetteville shale, the barnett was supposed to have unique characteristics that could not be replicated. as it happened in fayetteville they drilled two wells and those could not be replicated. what was exciting and got me involved with terry, appalachia as a landmass was multitude

bigger than the fayetteville or the barnett, and today, for very different reasons, it has a very unique position in the u.s. as an exporter of gas and oil products, as a net exporter. it's a very exciting place to be. so, i went to the father of fracking -- ms. quarterman: he needs a new title. mr. chandra: i believe it was chesapeake energy that bought a new position there. but it was tectonic lead different. everything about it was different than the other planes. that is when i found terry and terry introduced me to a lot of work that i still cannot pronounce or understand. what was amazing, there was no book you could read. and the education now is very much real time.

the primer is so historical. there is so little i know, every passing day. yet, i feel that i know a lot since we had our chat. i met terry and terry really helped us. and terry with his pennsylvania experience, and also ohio and increasingly it will be west virginia. and the techniques they are using to exploit the rock are absolutely violent. you have wells that are capable of doing these astronomical rate in the gulf of mexico where things that could not happen are being experienced at a single well, per well in places like ohio, west virginia, and pennsylvania. ms. quarterman: you said the primer had not been written? a great introduction for mr. gold and his book. i understand this may be a

little bit personal for u.s. well. -- for you as well. for me it is great to be on the end of asking you questions. mr. gold: right. i will definitely get into personal in a minute. my story is an example of how it is better to be lucky than smart. i was at "the wall street journal" looking for a beat. i joined the energy team coming up or any particularly good reason other than i was in texas and wanted to stay there. they assigned me to the smallest companies. these were companies that very few investors were really interested in, because everybody knew there was not much boiling gas left in the united states. we were depleted and were importing. there was not that much money to be made. so let's give it to the new guy. so, i start meeting with companies and one of the

companies talks about the new drilling they are doing in around fort worth. i went to my first fracking job in 2003. we did not even call it a frack job back then. it was unconventional gas. i got in on it very early on, just listening to companies talk about how they found a new way to drill lots of wells and get lots of gas. for several years, that is what i did. i covered and wrote about the companies, and what i saw something very significant in the united states, and then one day, i got a call from my parents. my mother, specifically. they are philadelphians, but they have 100 acres in north-central pennsylvania. a place to get away on the weekend. she said to me, we got a strange call from a company called chesapeake. they want to inquire about leasing my land. that caught me by surprise. i should have known about this.

at the time there was a little drilling going on. but this was clear across a pennsylvania. so, i had to go back and start learning about why chesapeake was leasing so far across pennsylvania, and i did. and that really got me onto the second stage of learning about fracking, what was going on, and it really brought me into these questions of, should we be doing this? because that's the question my mother asked me. should we sign release? and how can you get the benefit of all of this oil and gas and minimize the risk and inconvenience the downsides to it? these are very important questions. i will posit that i do not think those questions happen answered in the united states yet. i think we are still grappling with it in texas and texas is about to pass a law looking at that very issue. who should be regulating it?

the states or the cities? that's important, because one of the questions i know we're going to get to is, why hasn't shale taken off outside the united states question mark its transformative in the united states and county, but outside the united states, it really has barely started. i think the answer is, as much as the united states has struggled with these questions we had one thing going for us. we had incentive. americans and the united states, we own our own mineral rights. when chesapeake wants to come in drill 100 acres of land, they will make an offer and they will make an offer that is sweet enough, hopefully, to overcome the inconvenience of having trucks driving all across your property for the next few months. outside the united states, that is not the case. as much as we are struggling in the united states with how to balance these questions, i think outside the united states is even more difficult because that

has not been fully addressed. by a large the governments of states only mineral rights. when you go into a community and say we want to drill wells here, you're not also bringing large checks as they do and the united states. these are the topics i wrote about in my book. i wrote about terry. i wrote about all these different people who created this technology and the questions we struggle with today. i see this as one of the most important questions we are addressing in the united states, clearly in energy, and i'll these questions we talk about and talk about our washington experts, we allow oil exports keystone xl, these are all questions set in motion by fracking and this and norma's production of oil and gas that comes from essentially an oil field technique that has been around and one day in the late

1990's someone modified it slightly and changed the game. ms. quarterman: let me put it to you directly. the title of the panel is "can fracking survive?" the price of gas is $2.50. if you look back to july, prices were a lot different last year. even lower recently. under those circumstances, we have already seen rate counts going -- rig counts going down. notices of job losses. can fracking survive? and if so, which companies will be able to sell at the end? >> i can probably answer the last part first. the best rock. an enormous change is happening right now as we speak. i think the productivity of shale oil was a hugely

underestimated. three years ago, i remember clients asking, the same thing that happened to gas, which is fallen precipitously from a six dollar to $10 range. is that about to happen in the world of oil? there is no way to tell. we understand that the oil molecule is a lot bigger. terry can quantify it is a lot bigger than the gas molecule. what the world now understands the u.s. can grow at a rate of one million to 1.5 million barrels per day. they have made room for that. the irony is, if we were to express it this way -- ok, so the u.s. oil every last darrell -- barrel is profitable and sold at $90 one hundred dollars

each marginal barrel made a profit, which is just fantastic. so, well, demand must have just been great. you look at the numbers. demand was not 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 been decided, ultimately, looking at what was going on saying well, we are down at 32% market share. they can keep growing at this rate. this is not just a little bubble. so, what have they decided? last november -- we will not allow it. we are going to defend our market share. we had a report on it today, previewing the opec report. that is a seachange. we had an industry that immediately cap to gap did not displace. so when you have a business

where every item you sell marginally is profitable, what do you do? you hire people. you feed into that business. so, what we have built in a new environment where that one million, 1.5 million barrels will not be allowed so to speak, too much excess capacity. that exists in terms of land. a lot of land will basically be returned back to the leasehold or not to be drilled again. you have way too much in capital. you do not lever a business where your revenues are in flux as ours are, where the risks are where our czar. so it will come out of talent and services. these services you have already seen. what they do not want to do, the hard-won talent in these organizations with hugely

capable people -- they want to retain these people, but that is probably the next phase. we are about to enter a phase where that excess capacity is resized. and the new place of u.s. oil will not be 1.5 million barrels, 2 million barrels. it may be a fraction of it. my point of view is kind of backwards. it all depends on oil prices. no oil prices is a signal. it conveys its aintent to the producer. and the producer says, at $45 we are done. we will start back when we are closer to $70. we will probably not be near $70 or $75 anytime soon. that will then sustain growth of

above one million barrels. we have an analyst in the washington research group at guggenheim in d.c. she covers iran and the hot topics. iran is a hot topic, of course. who is going to cover those barrels next year? we will resize the entire sector. i did want to answer the last question first though. what it means to me is what we are already seeing as, it is like an earthquake center. you have the fringes, the french companies that are stressed, if not -- the french companies that are stressed, if not on the verge of bankruptcy. -- the fringe companies. there will be to do things. the price of oil and then it will be the differential. it will be the cost of getting that barrel to the end-user.

places that have been a huge success story -- it is suffering a horrible differential. people say, well, it's $70 oil you have to take 15% off the top for the cost of getting it to sale at $70. they are not getting $70. it was to be closer to the markets, closer to the refining centers. we have companies like newfield exploration and there was an acquisition this morning of one company wanting eagleford and buying another coming for that reason. ms. quarterman: great. russell, is the boom now bust? mr. gold: i don't think so. we have seen a huge number of drilling rigs decommissioned.

a lot of people laid off. but we have also seen production remaining fairly steady. we have not seen a huge drop-off in production. we will not grow this year. we will probably shrink a little. we were sticky coming down. one of the reasons is this is a really immature industry in the sense that it is just learning how to do this. if learning -- it is learning to make more wells for less money to drill more with fewer rigs. a lot of the shedding that is going on is just companies getting smarter. the era of rapid, relentless growth i think, is clearly over. there's no question in my mind about that. but i do not see any signal the production will drop off. in that sense, no, we are not

going through a bust. however, there are a number of companies -- wall street is very generous funding these companies. there are a lot of management teams that went out and bought -- i will be generous -- sub optimal rock. they just did not spend their money very well. 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 we've not seen more already. but the expectation is the second half of this year, they will have companies headed toward fire sales. however, the era of the u.s. as a major whaling gas producer, that -- oil and gas producer, that is not going away anytime soon. ms. quarterman: terry, i know that you have strong opinions. have they squashed the shell revolution in your view?

dr. engelder: absolutely not. the point that russell just made , there is oil of available at every incremental increase in the price of a barrel that is there and waiting for small incremental changes. i think the other point that russell made is the u.s. right now has oil and gas wells -- while they may have rapid early declines, the history is a long preeriod of production. so, the capital that was spent earlier on is betting on these long tails and the long tails of these wells will sustain this level of production from american wells, and these are unlike conventional wells, where

once a conventional well declines, it really goes off the books in terms of production. they have tight gas and tight oil wells will not show that particular characteristic. we have had some experience in the appalachian ace in -- basin where some of these wells were drilled for 40 years. and the fracking experience we have is now only 10 to 15 years in the united states. we looked at barnett to see how these were doing. right now a lot of these wells are being re-fractured and that appears to turn on more gas to extend the life of these wells. they last a long time. at a very low rate relative to the initial production. my bet is the tail will do very well.

ms. quarterman: so, subash, what is your view on whether fracking will take off anywhere outside of the united states given the price in the current environment? mr. chandra: they are trying. i think the view that there was only one barnett was true. there was only one barnett -- only one barnett only one fayetteville. all of these rocks have very unique characteristics that, i agree, we have only begun to understand. just on the prior question -- where i think of how our industry has changed, we have spent 130% of cash flow. that has been funded by wall street, if you want to call it that, but by investors. i think we're going to a cash flow neutral world. this is the first time since the shell revolution in the u.s.

where we will enforce cash flow neutral growth. i do think the shale sector in the u.s. has changed. in terms of what these companies are going to do that applies to these other countries they will put a lot more effort into understanding the rock that they have. one of the problems is this big data set has not existed until very, very recently. and there are so many parameters on the rock that are visible at a microscopic level that you have to make sure that you have the same variables at two levels, that they do not v ary one bit. we have seen wells within one square mile of each other in the very same rock. so, industry will spend a lot more time with the place that they have to understand why

these variances exist. before we take off internationally, i think we have taken this of you with -- this view with brute force -- if we put x-thousand pounds of water in let's put more. if it is 10 stages, let's do 40. it has all been about brute force. what this will force is more data-gathering, big data gathering, and what we will find is there will be things that work very well that explains the variances. before we make these mistakes -- i should not say mistakes. it is all part of the process. before we go internationally, we need to solve the brute force aspect. frankly i do not think they have the equipment. i think we really need to refine the science here and understand.

so, internationally, there are a lot of things. the incentives here existed. i think before it really takes off, those incentives have to exist elsewhere. a lot of the deals i think companies are getting to figure it out are just not very good. i do not think i see anything remotely paralleling what we had here. i think russia, in terms of shale oil, russia was bigger than we were. and venezuela -- and i'm sorry argentina. that is slightly below that. was algeria there -- yeah so, anyway, these were a few of the hotspots. i have not seen one project really take off. ms. quarterman: terry, talking a

little bit about geology outside of the united states, you have been traveling around the world talking about geology and marsalis -- marcella shale. do you know of any place where this could develop quickly? dr. engelder: no, i do not know a place where it could develop quickly. let me follow up on what subash said here. two drills could be drilled and perform 100% differently. this is where the science will come in. each well is fractured and stages. what that means is, if you have a lateral that is fractured by 1000 feet, each stage is only a couple of hundred, 300 feet. if there are 15 stages in one

well, only two or three or four stages are real money stages. a lot of these scientific breakthrough will be drilling the well and understanding where you put your money, what three or four stages are really critical. and that gets back to the question of where are the fractures question mark the fractures can vary from one vacation -- one location to the next. 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 the chinese gas shales are different from the marcellus. the chinese gas shales, some of

them are fluvial -- effluvial. both produce shale. both produce gas in the shale but the marine marcellus has proven that are then the shale -- better than the shale in china. there are different parameters. almost all of them have to be perfectly aligned for gas shales to work. some gas shales appeared to have too much water in the matrix to allow the kind of gas production they really like. so, that has been a bit of a disappointment. we have a suspicion that may be the shale under the paris basin,

which is different in age and depositional setting than the shale than me poland and ukraine -- and let the french have elected to take a path on the paris basin. and then we have a basin in england were the british government under cameron as realist of the local people are going to participate in this -- have realized the local -- if the local people are going to participate in this they have to realize this. this is younger than the mercel lus -- marcellus, older than the paris basin. all of these things need to be sorted out. it is true that the gas shales and the united states that seem to work are the large marine gas

shales. the barnett, the fayetteville, the marcellus, the eagleford the haynesville. each one of those armor rain shales and they seem to have the best set -- each one of those are marine shales and they seem to have the best set of characteristics. ms. quarterman: russell, we started not just talking about geology's but in terminal and other issues. can you expand on that? mr. gold: sure. let me go of something terry said about the paris basin. we do not really know. as we have not drilled many wells. one thing that struck me, the number of wells drilled in the united states is in order of magnitude different than wells drilled elsewhere. when we start talking about shales in poland and france -- the only way you can determine

whether the shales will produce oil and gas is to drill wells. it just does not been done outside the united states. it will take time to drill wells, to take core samples, to collect data. getting back to the environmental questions, china is said to have a large gas shale deposit. the problem was, one of their big deposits was in a very arid region. the other was in a part of the country with a population densities similar to new jersey. neither made a lot of sense to drill. on one hand you are trying to drill in a place that is dry and needs lots of water, lots of wicked -- liquid to drill the well and there's a lot of demand for that water.

then you go to a place with the population density and it was very difficult to drill there. we did not get all of the details you would in the united states, but there were a number of protests -- as rigs were set up, there were a lot of local protests saying what is going on and how are we going to be compensated for this? and that potentially slow the chinese growth of shale, even though arguably china would be an extraordinary beneficiary. they are importing in a norma's numbers and it's no secret they have large -- in enormous numbers and it's no sigrid they have large environmental problems. so, these are issues that we just have not resolved. the shale that seems to be moving the quickest internationally -- we mentioned

a couple of times, in argentina -- we just happened to be lucky that it is in a fairly remote area that has a history of mining and there is sufficient water there. once again, you happen to have found a place with the right conditions, beneficial conditions for going forward. those are few and far between. i will come back to this issue. what really made shale take off in the united states is the fact that you had companies and landmen going across pennsylvania and texas handing out large checks. $10,000, $25,000 an acre and by the way, you will get an eighth of the royalties on any gas that comes out of this. companies had to do that. i do not believe that there are any other countries, or if there are it is escaping me, that have private ownership of mineral

rights. what does the state do? there has not been a good answer for that. ms. quarterman: your book does a great job of talking about the positives and negatives of fracking. assuming another country decides to move forward with fracking beyond argentina, what are some of the lessons learned based on the experience in the united states? mr. gold: i think there has been several. first of all, one of the problems we have had is we will start drilling for oil and gas in an area and all of a sudden there will be disputes about how will this impact the quality of water, the quality of air? one of the lessons learned, and they are doing this to an extent in pennsylvania, measure the quality of water before you start drilling. measure the quality of air. then you develop a fairly large environmental database about the quality of water and air in the countryside, which is not a bad thing to have. better data, better

understanding, first and foremost. a lesson that certainly the federal government learned, it is very difficult to have one government agency that is both promoting the development of resource and attempting to regulate it as well. one of the things the government did after offshore, deepwater horizon, was split that into two groups. we have not seen the states do that very well. have one government body charged with, you know, leasing and getting interest and getting exxon and other companies to come in, and another one charged with protecting the quality of water. and a final point, well construction. well boring, integrity is very important. make sure you are building wells well and they are going to survive for 20, 30, 40, 50

years. because that is how -- we talk about fracking and the problems associated with fracking. most are associated with well integrity. if you can build a well right, if you can get the cementing and the steel right, you are not going to have those problems. ms. quarterman: terry, i know you wrote something very recently about the missteps in pennsylvania, in response to international bans on fracking in romania france, and other places. what other missteps -- dr. engelder: russell has mentioned a couple of them. in order of importance i think one of the failures of pennsylvania was to understand the industry, how important it was to measure the quality of water in individual wells. they misunderstood that that baseline chemistry had to be established in every well.

if you did it in one well in 10, that proof do not be good enough. in pennsylvania there are no standards for what are wells. and it is known that 10% of water wells would not pass epa standards. so as russell has mentioned, water well standards. also, well construction. these are drilled by one -- more than one company. a production stream passed down through several thousand feet. this is at the time that industry came, where we realized

the extent to which this 3000, 4000 foot interval was gas charged. other gas from other layers. that came into this open wellbore went up several thousand feet, went into groundwater. the other issues -- industry made, i think, a fundamental error in a law that is past known as the halliburton loophole in which the additives that were put into fracking were held in secret, and of course any time you keep it in secret, that creates public distrust. that was remedied very, very rapidly why a website -- by a website. early on in pennsylvania a lot of water was dropped down a

well, and we have known as geologist for the better part of half a century, if you put a certain amount of water down a well, that will create earthquakes. and yet, it is an error that has been repeated. incidentally in oklahoma, that is not a consequence of fracking. that is a production of oil with a very large water cut. it is being disposed off in massive amounts and we know that is going to cause earthquakes. another issue -- when industry arrived, industry arrived from places like west texas where there were very few people living and you did not have to build full wells. arriving in pennsylvania you had to manage these wells. the first holding tanks were nothing more than open pits in

the ground lined with plastic, which tended to leak. now industry is going to completely self-contained systems. another industry have it that created a lot of problems early on was the industry air drill. by air drilling the initial thousand feet, air drilling through the water table, that designed to put cuttings back up the bore hole where they could be recovered. but that pressure was leaking into the surrounding rock that had groundwater and that pushed a front of methane in front of it, pushed water toward people's water wells and created a number of issues. if you are the owner of a private well that has been reasonably clean for years, and suddenly it starts to bubble with methane, you are going to

raise cain. that is a list of the six mistakes industry made, all of which i think have been mitigated to a reasonable extent now. but those are the six that first caused an international uproar and it will take industry a long time to deal with that. ms. quarterman: do you have any lessons for investors in other countries? mr. chandra: yes, a number of the lessons highlighted in various media forms, one of the countries that would have a huge benefit right now, a best practice -- from construction to procurement to mitigating truck traffic and how to dispose of water wells and make sure you are not in any local faults and

things like that. there is so much. we have learned so much. right now the transportation is the typical problem. i think any ms. quarterman: can we talk geopolitical for one second? there was a lot of talk when the cranium crisis happened about potentially taking gas and liquefying it and sending it from exporting it throughout the u.s. there have been a lot of bills about crude and lng exports. is that really feasible or not? mr. gold: there is no reason technically you could not do that. you take began his chemical it