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ConocoPhillips CEO Claims Shale Potential Ignored

Last Tuesday was slated to be all about oil at IHS Cambridge Energy Research Associates' (CERA) CERAWeek 2010 in Houston. But ConocoPhillips CEO Jim Mulva, who keynoted the afternoon session, was all about natural gas.

Mulva detailed the importance of North American natural gas before a standing room only crowd. Natural gas, he acknowledged, has "historically never matched the importance of oil." Referring to IHS CERA Chairman Daniel Yergin's The Prize: The Epic Quest for Oil, Money and Power, Mulva said, "If oil is the prize, then natural gas is the gift...an unexpected gift."

But the ConocoPhillips chief said the government has ignored the value of natural gas, and he voiced his disdain for the importance put on alternative fuels at the expense of hydrocarbons.

"We're told that renewable energy will quickly and easily replace hydrocarbons and cure all that ails us. But it's clear from the experts that hydrocarbons must keep carrying the load. Where will the energy come from? Fortunately, Mother Nature, ingenuity and technology have provided the answer." Natural gas, he said, offers a "real future, not the pipe dreams of hydrocarbon deniers."

Platitudes, he said, "are not Mcfs and Btus."

Natural gas "will remain the leading baseload for power generation and heating sources due to its cleanliness, abundance and reasonable cost," said Mulva. "When the wind dies and the skies are cloudy, natural gas will be there."

The fuel also is "becoming more national in scope," and "New York, Pennsylvania, Virginia and others," eventually will "join the other producing states like Texas."

The shale gas prospects available in North America today have been driven more quickly by technology than anyone would have guessed, he said. Unconventional gas is "now a key part of the resource base" in the United States and "the same success appears possible in Canada."

And because of rising gas supplies, price volatility has fallen, Mulva noted. In addition, nine liquefied natural gas facilities are now in place to serve additional needs.

However, the ConocoPhillips CEO said the United States lacks coordinated policies on energy and climate. "Regardless of who is in office, we need to be encouraging development" of all energy sources.

"Currently the United States strongly supports renewable energy. Unfortunately, it also proposes higher taxes on the natural gas industry...We haven't learned yet that if you tax something, you get less of it...less supply security, fewer jobs, less investment." ConocoPhillips supports "all forms" of energy development, but it has to be abundant and affordable, as natural gas is.

"Strategically we're in the oil and gas business," Mulva said, when asked whether ConocoPhillips may swing toward having more gas resources than oil resources. "When we drill a well, we don't say we want this to be oil or gas. We look for the opportunities that come our way. Domestically there's a great opportunity for natural gas. For oil, it's probably the deep waters of the Gulf of Mexico."

Whether the prospects for a gasline to Lower 48 states from Alaska is still viable, Mulva said it was "too soon to say...We know it's going to be high-priced gas. It will take 10 years to build...

"Who knows whether it will take place or not...but all of these things are very, very good news for the United States...we have abundant supplies."

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