Noting that domestic natural gas supplies are “critical” to national security, Anadarko Petroleum Corp. CEO John Seitz said the U.S. oil and gas industry stands in a position where it could increase supply if it were provided with “better access” to U.S. lands where E&Ps can explore.
Speaking before the Texas Independent Producers and Royalty Owners Association (TIPRO) in Houston, Seitz explained that “plentiful supplies of natural gas produced here in the U.S. are critical to America’s energy security. But that security is being challenged as demand growth continues to outpace supply.
“Unlike oil, where America is dependent on foreign imports, producers can increase domestic gas production to help close the widening gap between supply and demand, but to do so, they must have better access to areas within the U.S. where the greatest undiscovered gas resources are located,” Seitz said. “Anadarko has a full portfolio of prospects, and we’ve laid out a $2.3 billion worldwide capital program that should enable us to grow production this year. But we believe the domestic industry as a whole is short of low-risk drilling locations, and here’s why: Potentially vast resources of natural gas found on federal lands are off limits to exploration.”
As for a solution, Seitz said the energy industry needs better access, but also more “pragmatic” regulation of areas that are supposedly open for exploration but are too expensive to develop because of tight leasing restrictions and permitting delays. “Many projects in the West, for example, just aren’t economic if they encounter too many delays,” he said. “So in effect, delay is denial.”
Adding that Anadarko is ramping up activity and increasing supplies this year, Seitz said the company expects to operate an average of about 50 drilling rigs in North America in 2003 — compared with about 40 during 2002. He noted that Anadarko has more drilling rigs operating in the United States than any other company last week.
“This program should enable Anadarko to increase production to about 200 million barrels of oil equivalent and show a 7% growth in annual natural gas volumes over 2002,” he said. “The growth will come primarily from fields in the Gulf of Mexico, Western Canada, East and Central Texas, North Louisiana and Wyoming.
In the long-term, Seitz said improved efficiency and perhaps a wider choice of clean fuels could be the solution. “But for now, the best answer is to encourage greater natural gas exploration and development here at home,” Seitz said. The industry needs to pursue new frontier gas resources in challenging places like the Alaskan and Canadian Arctic. Anadarko has made multi-year investments to look for new sources of oil and gas. He added that the industry needs to be exploring offshore areas in federal waters that are currently under moratoria.
“These are extremely long-term prospects, granted, but our gas supply challenge isn’t just a short-term problem,” Seitz said. “We believe frontier gas can be developed economically, and we will find solutions to these challenges because it’s in our national interest to do so.
“As an industry, we can be part of the solution, and we can help provide this country with the energy security it seeks. All we need is a strong, dedicated domestic industry, enlightened national leadership, and new ways of thinking,” Seitz said.
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