ExxonMobil Sees Gas in Cost, Technology Race
Supplying the growing demand for natural gas in the future will
be a foot race between the costs of producing it and the constantly
changing technology to market it. Marketers also have to leap two
important hurdles --- regulations and taxes --- before crossing the
finish line. Still, it's a race with a lot of winners, says Stuart
McGill should know. As president of ExxonMobil Gas Marketing,
the world's largest nongovernmental gas marketer, McGill oversees
gas and liquid natural gas sales in 25 countries. Speaking last
week at the GasTech 2000 conference in Houston, McGill said that
energy would be at the "heart of economic development" in the
future, with natural gas leading the way.
"Demand for natural gas is growing in all regions," he told the
international delegates. "Free markets demand flexibility, and
natural gas provides more flexibility than other fuels" in how it
is marketed and in the types of products available. However, McGill
noted that even though the future looks bright, "we have to find
enough" of it.
"It's a race between increasing costs and technology. So far,
technology has prevailed, and technology continues to be the future
of our industry," he said.
Because large field discoveries have steadily dropped since the
early 1960s, the discoveries of smaller fields are all the more
important, and the pace to develop them has to be maintained. But
there are obstacles not related to technology that also are
deterring growth. McGill said that taxes and regulation would be
the two "most important determinants" for the natural gas industry
in the future.
The "government take," he said, referring to taxes, "is a big
slice of the delivered price. Some attention to taxes is in order.
If the government sees natural gas as the future, it will have to
lighten the tax burden."
Regulations are playing more havoc with marketers today than
ever before because they are in a state of flux, said McGill.
"Whatever the deregulated market turns out to be, there should be
less regulation, not more," he said, referring to recent calls for
more guidelines. "The only good thing about the U.S. regulatory
market today is that it's better than it used to be. It's just not
a single one-size-fits-all system. It can't be."
Laying out several principles for regulation in the future,
McGill said that while rules are a "necessary evil," the government
has to "rely on markets and capitalism to protect the people." For
the meanwhile, the cost of bringing gas to market "likely will
Carolyn Davis, Houston
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