Rockies Rewarding Producers' Hard Work

In speeches marked with impressive statistics from Rocky Mountain producers and a handful of protesters objecting to one of Tuesday's luncheon speakers -- Interior Secretary Gale Norton -- the 13th Annual Rocky Mountain Natural Gas Strategy Conference took the high road last week, with speakers touting social and environmental responsibilities as the keys to sustainable shareholder profit in the future.

The Rockies, noted an array of both academic and industry experts, hold the promise of delivering almost as much natural gas as the Gulf of Mexico, but the production will not come without hard work. Largely downplaying any reference to President Bush or his proposed energy policy, most of the producers who spoke to standing-room-only crowds, instead focused on educating the American public, improving and explaining their environmental record and building infrastructure to prepare for more exploration and production down the road.

Keynote speaker Robert A. Malone, BP's regional president, said it was paramount that the American public understood what was happening in the energy industry. "You just can't believe some of the things you hear," he said of his traveling around the country. While there is interest, Malone said that there is a pressing need for the public to become more educated about energy.

"Ultimately, social problems around the world are dependent on the economic problems," he said, which are all tied to energy. Though the world "is not running out of oil and gas," Malone said that the "most prescient issue we face is cost... not just the monetary cost, but the price society will pay." The BP executive stressed that industry had to learn to provide energy with "a minimal environmental impact," noting that renewables were important, but that marketplace is still in its infancy.

"It will take a long time with an investment today for renewables to work," Malone said. "Oil and gas is where it's at" until then, and it's "abundantly clear that the U.S. has an insatiable appetite for energy."

Relating that he was at "ground zero" in Washington, D.C. recently to testify before Congress about President Bush's energy proposals, Malone said that it has "never been more imperative to have an energy policy than it is now." Most Americans don't believe the country is in a crisis, he said, but more important, even some of the elected leaders he spoke with seem to be uneducated about what the energy industry does, and what it will take to ensure supply meets demand.

In the future, Malone said gas-fired power generation, liquefied natural gas and gas-to-liquids appear to hold the most promise. With new technologies, he said regions would no longer be dependent on each other and would be able to rely on other types of energy supplies. The biggest challenge, however, will be in pipeline infrastructure.

"The challenges ahead are pipelines, transmission, highways...all need to be addressed and we need to be looking at infrastructure," Malone said. "Americans are not seeing the good things the industry is doing. Only 20% think the oil and gas industry is doing a good thing." More startling, he said, are recent surveys showing that the energy industry ranks lower in public esteem than the tobacco and managed care industries.

"Shareholder value and social value support each other," Malone noted. "These are not just challenges, but opportunities for us as well. It's absolutely critical that we strive to be better operators and better neighbors to continue to do our job."

Robert L. Cavnor, CFO of El Paso Production Co., also spoke during the keynote session, saying "the Rockies hold tremendous untapped potential," and are a "very important region to El Paso," especially since its merger with The Coastal Corp. in 2000. With a strong transportation infrastructure already in place in the Rockies, along with processing facilities and several power plants in place or proposed, Cavnor said he believed the "Rocky Mountains would play a key role in the growth of the U.S. economy."

The Rocky Mountain Basin doesn't give up gas easily, but when it does, it gives it up abundantly and "nicely rewards its most ardent suitors," said Fred C. Julander, conference chairman and CEO of Julander Energy Co., during the opening session. He said the Rockies "were the one region that responded" when the market called for more supply in the late 1990s, noting that seven new pipelines were announced in the past year, and predicting more would soon be on the way.

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