Thank you and good morning. It's a pleasure to be here. It's not every day that I get to talk about energy policy and Department of Energy programs with not one, but two state and national organizations devoted to energy issues — the Energy Council and the IOGCC — and with energy ministers from two Canadian Provinces.

Our energy trade relationship with Canada and her provinces is long, enduring, and a valuable component of America's national energy policy. I'd like to add my welcome to the United States to Minister Richard Neufeld of British Columbia, and Minister Dan McFadyen of Nova Scotia.

As you know, the Department of Energy's relationships with the Energy Council and the IOGCC are also longstanding and productive.

I'm delighted to have this opportunity to talk with you about the need to ensure our energy security by taking maximum advantage of our domestic energy resources, and about some of the Department of Energy's programs designed to accomplish precisely that goal.

I'd like to begin today by taking a minute to sketch the reasons for the sense of urgency with which we view the need to provide what President Bush's National Energy Plan describes as a "dependable, affordable supply of environmentally sound natural gas for the future."

Our modern society and our growing economy have an insatiable appetite for energy. And over the years the energy sector has delivered. In fact, the men and women who bring us the coal, oil, natural gas, nuclear power and renewable energy we need every day have made it look easy.

Thanks to the hard work and ingenuity of the scientists, engineers, workers and entrepreneurs of the private energy sector, and to the foresight and hard work of people such as you and organizations such as yours, the required energy has always been there to sustain growth and increase prosperity.

Our job is to keep it that way in the face of new and increasing challenges.

The challenge is enormous, and it is best illustrated with a look at the Energy Information Administration's latest demand growth projections:

• Thanks to energy efficiency measures and to structural changes in our economy, the EIA anticipates a 1.5 percent average annual decline in energy intensity, or energy use as measured per dollar of Gross Domestic Product, for the period 2002 to 2025.

• Nevertheless, total energy consumption is expected to increase at an annual average rate of 1.5 percent, or about 40 percent over the next 20 years.

• During that period, petroleum demand is projected to grow to over 28 million barrels a day. That's an increase of 45 percent. And most of the oil we need will be imported. Imported oil meets about 54 percent of demand today; the EIA estimates that number will rise to 70 percent by 2025.

• Annual demand for natural gas is forecast to increase by 38 percent, to more than 31 trillion cubic feet in 2025. The National Petroleum Council, in its recent comprehensive report to Secretary Abraham on natural gas supply, estimates that conventional domestic natural gas resources will be able to meet only 75 percent of that demand. We will rely increasingly on imported liquefied natural gas and Arctic natural gas from Alaska and Canada to make up the difference.

• Coal demand is expected to increase by 47 percent.

• A 40 percent increase in total energy demand: 45 percent for oil, 38 percent for natural gas, 47 percent for coal...I'm beginning to sense a pattern.

• And here's one last statistic to remind us all of the importance of fossil fuels to American life: The United States relies on fossil fuels for about 85 percent of the energy it consumes, and forecasts indicate our reliance on these fuels could exceed 87 percent by the year 2025.

Ladies and gentlemen, that's a lot of energy — and that's just for the United States. Energy demand will grow as fast or faster worldwide over the next two decades.

To supply our needs here in the United States, we will have to make the most of renewable energy sources, and we will have to maintain and increase the contribution of nuclear power to our energy system. There are people in the private sector, at the Department of Energy, and elsewhere in government working hard to make sure we succeed at those things.

At the Office of Fossil Energy, where I work, our responsibility is to help the private sector to develop the technologies that will wring every available barrel of oil and every cubic foot of natural gas from our domestic reserves, and do it with the least possible impact on the environment.

We are also responsible for helping to develop cost-effective and environment-effective technologies that will allow our most abundant fossil energy resource, coal, to continue as the cornerstone fuel of our energy portfolio.

Coal generates fully half our nation's electricity today, and will generate as much or more in the decades to come.

We are also working to help realize the enormous potential of new energy sources such as hydrogen and methane hydrate.

I'd like to describe in general how our programs focus on meeting those goals by supporting the President's top initiatives for energy security, clean air, climate change, and coal research.

Under the President's $2 billion, 10-year commitment to the Clean Coal Research Initiative, our programs support the development of lower cost, more effective pollution control technologies for coal-based power generation to meet the goals of the President's Clear Skies Initiative.

Our natural gas research program also contributes to the Clear Skies goals by ensuring diversified future sources of clean-burning natural gas.

Under the President's Global Climate Change Initiative, our programs expand the technological options for reducing greenhouse gases, either by increasing power plant efficiencies or by capturing and isolating greenhouse gases from the atmosphere.

All of our research programs add to energy security by their emphasis on the development of clean technologies for our domestic energy resources, and on long-term alternatives to imported oil, such as hydrogen and methane hydrates, that I mentioned a moment ago.

The Clean Coal Power Initiative, or CCPI, is a key National Energy Policy component designed to address the reliability and affordability of our electricity supply, particularly from coal-based generation.

CCPI is a cooperative, cost-shared program between the government and industry to rapidly demonstrate emerging technologies in coal-based power generation and to accelerate their commercialization.

We are working with power generators, equipment manufacturers and coal producers to identify the most critical barriers to coal's use in the power sector. Together, we are working on technologies to accelerate the development and deployment of cost-effective coal technologies that meet environmental standards, while increasing the efficiency and reliability of coal power plants.

CCPI is especially significant because it directly supports the President's Clear Skies Initiative. The first CCPI projects included an array of new, cleaner and cheaper concepts for reducing sulfur dioxide, nitrogen oxides, and mercury — the three air pollutants targeted by the Clear Skies Initiative.

We have made significant progress over the past year on a new generation of environmentally clean technologies. The first round in the Clean Coal Power Initiative - the centerpiece of the President's clean coal commitment - attracted three dozen proposals for projects totaling more than $5 billion.

Early last year we announced the first winners of the competition; eight projects with a total value of more than $1.3 billion, more than one billion dollars of which will be provided by the private sector.

These projects are expected to help pioneer a new generation of innovative power plant technologies that could help meet the President's Clear Skies and climate change objectives.

We announced a competitive second round solicitation early this year. The competition is open to coal-based technologies capable of producing any combination of heat, fuels, chemicals, or other useful by-products in conjunction with electricity generation.

Another star of CCPI is FutureGen, our 10-year, $1 billion project to build the world's first zero-emissions hydrogen and electricity producing power plant.

FutureGen will establish the capability and feasibility of co-producing electricity and hydrogen from coal with essentially zero emissions, using carbon sequestration and gasification combined cycle technologies.

In order to assure the success of FutureGen, the President's Coal Research Initiative also includes supporting research programs focused on all the needed technologies: carbon sequestration, advanced turbines, fuel cells, coal-to-hydrogen conversion, gasifier related technologies, and others.

Several Clean Coal projects also help expand the menu of options for meeting the President's Climate Change Initiative goal of an 18 percent reduction in greenhouse gas intensity by 2012.

We'll meet that goal primarily by boosting the efficiencies of power plants, which will in turn reduce the amount of fuel consumed and the greenhouse gases produced.

Carbon management has become an increasingly important element of our coal research program. Carbon sequestration — the capture and permanent storage of carbon dioxide — has in fact become one of our highest research priorities.

One of the keys to our carbon sequestration program is a national network of regional partnerships, a Department of Energy initiative that is bringing together the federal government, state agencies, Indian Nations, Canadian provinces, universities, and private industry to begin determining the best methods for capturing and storing greenhouse gases in various areas of the United States and Canada.

Another aspect of the President's Clean Coal Research Initiative is the production of clean fuels from coal. Hydrogen has emerged as a major priority within the Administration and the Department of Energy as a clean fuel for tomorrow's advanced power technologies such as fuel cells for stationary power generation, and for future transportation systems.

We are working to develop lower-cost, high reliability fuel cell technologies for stationary or distributed generation applications. Fuel cells can contribute to both Clear Skies emission reductions and Climate Change goals by providing an ultra-high efficiency electricity generating component for tomorrow's power plants.

Distributed generation systems such as fuel cells can also contribute to the overall reliability of electricity supply and strengthen the security of our energy infrastructure.

The President's Clear Skies Initiative also underpins much of our natural gas research work, which is directed primarily at providing new tools and technologies that producers can use to diversify future supplies of gas.

We will be increasing our emphasis on research that can improve access to onshore public lands, especially in the natural gas-rich Rocky Mountain region. Developing innovative ways to find and produce natural gas with minimal environmental impact will be a critically important goal.

Natural gas storage will also become increasingly important as more and more power plants require reliable, year-round supplies of natural gas. To address this issue, we plan to initiate a nationwide, industry-led consortium that will examine ways to improve the reliability and efficiency of our nation's gas storage system and explore opportunities for siting LNG facilities.

Looking to our long-term energy future, the production of hydrogen and natural gas from methane hydrate could have major energy security implications.

Hydrates are natural gas-bearing, ice-like formations found in Alaska and offshore. U.S. Geological Survey estimates suggest that our gas hydrate resources could contain 200,000 trillion cubic feet or more of natural gas. That's 200,000 trillion cubic feet. Try to imagine the magnitude of that number. It's not easy.

The fantastic potential of this resource has spurred a new look at advanced technologies that might one day reliably and cost-effectively bring to market the natural gas locked away in methane hydrate.

Production from hydrates, if it can be proved technically and economically feasible, has the potential to shift the world energy balance away from the Middle East. In addition, a better understanding of hydrates could improve our knowledge of the science of greenhouse gases and offer future mechanisms for sequestering carbon dioxide.

The President's National Energy Policy highlights the importance to our future energy security of advances in enhanced oil and gas recovery and oil and gas exploration technology. Our research and development work in this area has traditionally been conducted through partnerships with public and private entities, and that partnership approach will continue, with a tightened focus on measurable results.

One example of this tighter focus is the use of CO2 injection to enhance the recovery of oil from existing fields.

As you know, CO2 injection is a proven enhanced oil recovery practice that prolongs the life of some mature fields. Unfortunately, the cost of CO2 has prevented operators from taking full advantage of it.

Our role will be to encourage greater use of this EOR process by finding economic ways to bring CO2 produced at fossil fuel power plants to the oil fields.

We also intend to refocus much of our Oil Technology program on a new Domestic Resource Conservation effort that will target partnerships with industry and universities to sustain access to marginal wells and reservoirs.

These aging fields account for 40 percent of our domestic production and contain billions of barrels of oil that might still be recovered with ever-improving technology.

I want to mention a typical and excellent example of this kind of work that we are conducting in cooperation with our long-time partner, the IOGCC, and California regulators and oil producers.

The project falls under our Preferred Upstream Management Practices, or "PUMP" program, which is designed to promote the quick and inexpensive application of improved technologies so that the number of abandoned wells can be reduced and the decline in U.S. oil production slowed or perhaps halted.

In California, gas flaring is prohibited, and electricity is expensive, a double whammy for the operators of marginal wells. But we and our partners saw an opportunity to turn a negative into a positive if the operators could take advantage of existing technologies to use what is now considered "waste" gas as fuel to generate electricity at the well site.

If successful, this project will return dividends by extending the economically productive life of oil wells and significantly increasing the amount of domestic oil recovery from existing wells.

We have also assigned a high priority to the development of "micro-hole" technology. We intend to integrate "smart" drilling systems, advanced imaging, and enhanced recovery technologies into a complete exploration and production system.

Micro-hole systems may offer one of our best opportunities for keeping marginal fields active because the smaller-diameter wells can significantly reduce exploration costs and make infill drilling between existing wells more affordable.

Using breakthrough technology like this to keep marginal fields in production preserves the opportunity to apply even more advanced innovations later on that could recover even larger quantities of oil that traditional methods leave behind.

The Department of Energy and other agencies are also carrying out the National Energy Plan's recommendations for strengthening and expanding the international energy trade relationships that are so important to our future.

I can't end a survey of our fossil fuel efforts without mentioning the work being done by the United States, Canada and Mexico through the North American Energy Working Group, formed in 2001 to advance the development of a true North American energy market that will deliver reliable, affordably energy to the people of all three countries.

With strong participation by all three nations, we currently have experts addressing energy efficiency, electricity, natural gas, energy data, science and technology and critical infrastructure protection issues.

The Working Group has issued several reports including an overview of North America's energy picture, and reports on energy efficiency and international electricity trade.

I'm looking forward to seeing the natural gas market vision for North America the working group expects to complete by the end of this year. The Group, incidentally, will hold its sixth full meeting in Miami this Monday.

In conclusion, I want to emphasize the size of the energy challenges that lie ahead for the United States. But even more important, I want to emphasize that we are up to the challenge, as we have always been.

Advances in technology made possible the vast and complex energy system that supports our growing economy and unprecedented standard of living.

And yet, despite our past success, some people are pessimistic about our chances of developing new technologies to meet the energy and environmental challenges we face.

You won't find any of those people at the Department of Energy - and I don't believe you'll find any at the Energy Council or the IOGCC, either.

Advanced technology is the Department of Energy's business, and surveying the programs now underway to meet our vision for dependable, reliable and environmentally sound energy for the future, it is difficult not to be optimistic about the future.

The people in this room are representative of the millions of individuals in thousands of private companies, scores of organizations, and all levels of government who are contributing their ingenuity and hard work to the task of reducing or eliminating the environmental concerns that preoccupy us today.

It's a privilege for me to work with you, and to play a part in the Administration's and the Department of Energy's efforts to secure our energy future.