ConocoPhillips launches nationwide campaign to boost natural gas

ConocoPhillips kicked off a nationwide campaign today to convince policy makers in the nation’s capital and consumers across the U.S. that expanded natural gas production can provide low-cost energy and high-paying jobs.

The company launched an informational website and has already begun running print advertising touting the benefits of natural gas. Digital and television advertising is planned beginning next month as part of the “Power in Cooperation” campaign.

ConocoPhillips CEO Jim Mulva kicked off the initiative with a midday speech before the Detroit Economic Club, highlighting natural gas as a balm for the nation’s ailing economy.

The move comes as ConocoPhillips, like other U.S. energy producers with big natural gas portfolios, struggles to deal with a relatively low price for the hydrocarbon. Natural gas futures closed Tuesday at $3.98 per million BTUs, but they have been low for years – creating a drag on companies with heavy investments in newly tapped and expanded North American shale plays.

ConocoPhillips is moving to pare its capital investment in North American natural gas fields, amid the low prices.

“The price of natural gas does not support continued drilling exclusively for natural gas, although we retain the acreage and the opportunity to drill and add to future supply in the coming years,” Mulva said in an interview with The Houston Chronicle.

Mulva said the sweet spot was about $5 per thousand cubic feet of natural gas.

“We’re very supportive of natural gas. We just have an oversupply at this point in time,” said Mulva, who is set to retire next year. “We’re bullish over the long term.”

Mulva said he expected demand and prices to pick up naturally as the U.S. economy recovers and as more power utilities switch to natural gas as a fuel source.

“As a result of that, we will see a somewhat better price than we see today,” Mulva predicted. “And as it starts to move toward $5 an MCF, we have an opportunity as a company and as an industry to add substantially to the supply, which will result in a very moderate cost for natural gas.”

Still, ConocoPhillips is hoping its new campaign can further prod natural gas demand growth. The advertising push marks a change for a company that has historically kept a low profile.

Companies such as Exxon Mobil and industry trade groups including America’s Natural Gas Alliance have launched similar initiatives. And other producers have lobbied Capitol Hill for policies that could give the hydrocarbon an advantage. But ConocoPhillips hasn’t been as outspoken — until now.

Mulva said it was important for his company to “speak up” about the value of natural gas.

“We think that’s good for our country, and we also think that’s good for our company,” he said.

The campaign aims to dispel some of the public fears about the drilling techniques being used to extract natural gas nationwide.

By combining horizontal drilling techniques with a process known as hydraulic fracturing, energy companies have been able to produce natural gas from tight shale rock formations and unlock what some analysts believe is a 100-year supply of the power source.

Conservationists worry about the heavy water demands of hydraulic fracturing, and environmentalists have warned that natural gas can escape from poorly sealed and cemented wells, tainting local groundwater supplies. Other concerns have been raised about the way oil and gas companies dispose of their hydraulic fracturing fluids and the water that is produced from natural gas wells.

“To address the public’s concerns, our industry must follow good practices,” Mulva told the audience in Detroit today. “And we must de-mystify fracturing.”

“We need to directly address the public’s perception on natural gas and hydraulic fracturing as companies and as an industry,” Mulva added. “We need to speak more directly to the public’s perceptions.”

He said the industry hasn’t done a great job in selling itself.

“We have work to do. We’re going to have to tell our story,” Mulva said. And, “that’s never been easy for us.”

A big challenge is overcoming natural gas’ history as a fossil fuel prone to boom-or-bust cycles and volatile prices.

Natural gas advocates have lobbied Capitol Hill for policies that could grow demand, including legislation that would create tax credits to encourage purchases of natural gas vehicles and the construction of refueling stations to support them.

Natural gas boosters also unsuccessfully championed climate change proposals to put a fee on carbon dioxide emissions released when hydrocarbons are burned. That would give power utilities an incentive to switch from coal, which on average produces half of the greenhouse gases when it is burned than natural gas.

Mulva stressed the environmental benefits of natural gas today. In addition to producing fewer carbon dioxide emissions, power plants fueled by natural gas use 60 percent less water than coal plants to generate the same amount of electricity, he said. And natural gas can be used to fill in the gaps of renewable energy, ramping up “when the wind doesn’t blow or the sun doesn’t shine.”

Mulva dismissed the idea that a “silver bullet” energy solution — one that is cleaner, cheaper and easier to use than fossil fuels — is waiting “just around the corner.”

“Natural gas comes closer to being that silver bullet than anything else does,” Mulva said.