Acknowledging the possibility that a new oil and gas pricing environment could be in the offing, ConocoPhillips CEO Jim Mulva, nevertheless, is betting that current high prices probably are not sustainable. Mulva said the company has decided not to increase its current $6.2 billion a year exploration and production budget.

Speaking in New York City at the annual Sanford Bernstein Strategic Decisions Conference, Mulva said the lure of $40/bbl for crude oil and $6/Mcf natural gas was not enough to boost production.

“We believe we’re not passing by any significant investment opportunity that we should be funding,” Mulva said Wednesday. But he admitted that eventually the Houston-based major may need to take more political risks and invest in projects in unstable regions such as the Middle East and the former Soviet Union to expand reserves.

Mulva also stressed that ConocoPhillips has a philosophical aversion to hedging its forward production to lock in high prices. He said hedging correctly does not win points from investors, and not hedging correctly could hurt the company’s credibility.

ConocoPhillips also plans to expand its gas-to-liquids work, but Mulva said the company has to have the right proprietary technology in place along with strong commercial arrangements before it begins a multi-year program. Last month, the company signed a worldwide alliance agreement with Fluor Corp. to develop, design and construct new projects that use ConocoPhillips’ E-GAS technology.

Under the agreement, Fluor and ConocoPhillips will cooperate toward implementing integrated gasification facilities to produce a wide range of energy and chemical products. Financial details were not disclosed.

ConocoPhillips’ E-GAS Technology incorporates a gasification system design that can be applied with gas turbine and steam power generation in an advanced Integrated Gasification Combined Cycle configuration to produce electric power, as well as co-producing synthesis gas, hydrogen and steam in flexible combinations. E-GAS converts coal and other low-grade feedstocks, including petroleum coke, which may have a negative economic value, into a clean-synthesis gas containing hydrogen.

The Wabash River Coal Gasification Repowering Project in West Terre Haute, IN, has been demonstrating the technology on a commercial basis since 1995. The plant has gasified more than three million tons of coal and petroleum coke over the past eight years and can operate interchangeably on either fuel.

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