Natural gas prices should rebound to “reasonable” levels of $6-7/MMBtu long term, which makes the abundant fossil fuel more attractive to develop than renewable resources, ConocoPhillips CEO Jim Mulva said Monday.
“Gas should be very attractive compared to other sources, particularly renewables that require subsidies,” Mulva said. “We expect less price volatility than in the past.”
Mulva was a keynote speaker on the first day of Rice University’s Baker Institute Energy Forum in Houston.
Opponents of fossil fuels are supporting policies that jeopardize thousands of jobs, said the ConocoPhillips chief. Those opposed to abundant domestic supplies of energy, who he called “job deniers,” ignore the nine million-plus jobs in the United States supported by the oil and gas industry.
“Every job opening at ConocoPhillips attracts from dozens to hundreds of applicants,” he said. “These job seekers know that oil and gas are here to stay, that they provide good jobs. So yes, bring on the green jobs, but in doing so, don’t destroy the real jobs of today.”
Prematurely replacing fossil fuels with more expensive renewable alternatives would put the United States at a competitive disadvantage worldwide, Mulva added. Besides, he said, U.S. shale formations have pushed domestic gas supplies to more than 2,000 Tcf, enough heating and power plant fuel to last a century or longer.
Repeating what he said earlier this year about gas, Mulva called shale gas a game-changer that would spur economic recovery and job growth. The CEO cited a report by the Massachusetts Institute of Technology, which found that 60% of U.S. shale gas could be developed for less than $6/Mcf. At that price, $4 gas isn’t sustainable, he said.
No energy source matches gas in its ability to “deliver more energy, quickly and efficiently and thus drive economic growth,” Mulva told the audience. “Not coal, which is limited by railroad transportation capacity and emission concerns, and not the renewables sources” that require “heavy capital investment, taxpayer subsidies, new infrastructure and backup power supplies.”
The United States needs a “balanced” energy policy that favors gas investments, said the CEO. However, if more taxes are levied on the energy industry, as some in Congress have proposed, it would hinder domestic development.
“Let’s not leave U.S. energy policy blowing in the wind,” Mulva said.
ConocoPhillips recently shut in some of its U.S. and Canadian production.
“We’ve had a small amount of production that we’ve shut in because we feel it’s not that economic to produce…and so we’d rather keep it in the ground for when we can produce it at a later date.” The company did not disclose the locations or the amounts of gas that is shut in.
However, drilling activity is ramping up in the Bakken Shale, which is oil-heavy, and in the Eagle Ford Shale, which has a high natural gas liquids content.
In related news the company expects to receive close to $6 billion from selling some of its stake in Russia’s LUKOIL, and it plans to use the proceeds to repurchase ConocoPhillips stock, Mulva said. ConocoPhillips still would own more than 6% of LUKOIL once the sale is complete.
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