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ExxonMobil, Shell Chiefs: Natgas Opening Door to Opportunities

The historic shift of global energy markets toward increased use of natural gas will create opportunities for economic growth and environmental progress, ExxonMobil Corp. CEO Rex W. Tillerson said Tuesday at the 25th World Gas Conference in Malaysia. Separately, Royal Dutch Shell plc CEO Peter Voser told delegates that abundant unconventional gas reserves were quickly rebuilding the U.S. economy.

"Natural gas is quickly becoming a key enabler of economic growth and environmental progress around the world," Tillerson said. "We are living at a historic moment in the evolution of energy markets. How we respond will shape the quality of life for generations to come."

The need for gas resources is greatest "in regions like the Asia-Pacific, where energy demand is projected to grow by more than 50% over the next three decades," said the ExxonMobil chief. "Natural gas can help meet needs for electricity, chemicals, and plastics that increase quality of life while reducing environmental impacts."

Tillerson pointed to increased access to gas, made possible in part to industry advances in large-scale liquefied natural gas production (LNG) and transportation, as well as in unconventional resource development of shale gas, coalbed methane and tight sands.

"North America has been the proving ground for unconventional gas development and the results have been encouraging, confirming the enormous potential of this resource. The challenge now is to confirm the size of the global unconventional resource and to fully apply these breakthrough technologies to nations outside North America."

Future success in developing global gas "will depend not only on geologic conditions and technological innovations, but also on government policies, effective business partnerships and disciplined investments," Tillerson said. “Fortunately, as government and industry leaders consider the growing importance of natural gas and the need for its development, they can study and learn from the successes and shortcomings of the North American experience."

Policies needed to responsibly develop gas should hold the industry accountable to operational integrity and excellence "without stifling innovation and investment," said Tillerson.

Without pointing a finger at the lack of a U.S. energy policy, Tillerson told the audience that "when governments establish long-term, market-oriented policies, our industry will respond with the long-term planning, partnerships and projects that reshape the future for the better. With sound policies in place around the world, we can help nations and peoples achieve their economic, environmental, and energy security goals -- and as we do so, we can create opportunity and progress for all."

Shell, which is working on a joint venture to export LNG to Asia Pacific markets from Kitimat, British Columbia, likely will spend US$12 billion in the first phase of the project, Voser said (see related story). Shell, which will lead LNG Canada, launched the massive 12 million ton/year export project in May with partners Mitsubishi Corp., Korea Gas Corp. and PetroChina Co. Ltd.

Canadian regulatory issues are unclear as to when the export project could be in service, but "it is important that it comes onstream in a certain time frame in order to capture growth in certain Asian markets," Voser said.

The Shell chief also told delegates that said the company may begin drilling offshore Alaska in late July, earlier than planned, if there are no new court challenges. CFO Simon Henry had said in late April Shell was to begin drilling in Alaska's offshore by late September (see Daily GPI, April 30).

"We are very encouraged" by the progress in the Beaufort and Chukchi seas projects, Voser said. All of the required drilling permits are in hand and he told reporters that drilling likely would begin " in July and then later on in August and the early part of September."

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