ConocoPhillips Promotes Gas But Relies Upon Oil
Conoco-Phillips and some of the other large energy companies are launching a campaign for natural gas to play a greater role in meeting U.S. energy needs. Houston-based Conoco is staking out a position on a major domestic energy issue, touting the country’s massive natural-gas resources as a job-creating, clean-burning energy source, while trying to address concerns about its impact on the environment. “No other energy source can match the ability of natural gas to deliver energy quickly, reliably, cleanly and affordably and thus drive economic growth and job creation,” the company says on its web-site.
Conoco, and other major gas producers, want the country to use more gas, but right now they want to produce less of it. “We are reducing our exposure through less capital investment towards natural gas in North America,” Jim Mulva, Conoco’s chief executive, said last week at an energy conference, as reported in the Wall Street Journal.
Cheap natural gas prices mean savings for consumers, but they don’t translate into profits for gas producers, who are struggling to break even with prices hovering around $4 per thousand cubic feet. Since peaking in 2008, the price of natural gas has declined by about 70%. The shift in spending is toward the more profitable petroleum developments. Analysts project that the current surplus supply will keep a lid on what historically have been volatile prices for natural gas.
Companies like Chesapeake Energy Corp. and EOG Resources Inc., which helped pioneer shale gas, are now increasing their spending on oil. The number of rigs drilling for oil has increased nearly 60%, while those rigs drilling for gas has declined 9%, according to data from oil-field-services firm Baker Hughes Inc.
Mr. Mulva of Conoco, in a July interview, called natural gas a “superior fuel” but said he didn’t expect prices to increase in the near future. “But I think longer term, we’re going to see it used more for power generation,” he said, predicting greater demand would lift prices between $5 and $7 per thousand cubic feet. (If gas is exported, this too will increase demand.)
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The discovery of large shale gas reserves in the U.S over the last few years should be a matter of great relief. We could actually be free of the need to import energy for some time to come! What is needed is a national policy to convert to USE IT. Instead of, for example, wasting over five hundred million tax dollars on a futile effort to promote a solar energy company with a product having a minimal market here, there should be a national effort to convert our motor vehicles to natural gas, a cheap and easy thing to do – far more sensible than making ethanol out of corn or building electric cars (which will require many more power plants to come online on our elecrtric grid).
The effort would include capital development of distribution infrastructure. It would be comparable to Roosevelt’s Rural Electrification program, or Eisenhower’s National Defense Highway System, commonly known as our interstate highway system. Instead, we are bound by a ideologically-driven technical and economic policy which is doomed to failure because of its naïveté.
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