Natural gas producers say they are here to stay

HOUSTON — Natural gas producers have faced low U.S. prices, intense Hollywood and media attention, and the challenges of setting up in infrastructure-starved regions.

But growing demand and production of natural gas show that the industry is here to stay, experts agreed at a Wednesday panel at the CERAWeek energy summit in Houston.

“Natural gas development has proved to be durable,” said Colin Parfitt, president of supply and trading for Chevron Corp. “Natural gas producers are fast learners and they are getting good at getting that gas to market.”

One of the reasons for the success of natural gas exploration has been the ability to control costs through technology improvements, Parfitt said. This is most clearly seen through the dramatic decline of rig counts: There are about 400 rigs currently operating, down from 1,200 in 2009, even though production has grown. It’s the result of the efficiency that pad drilling — clustering wells together using a single rig — has brought to the oil field.

The industry is continuing to push for ways to lower costs, McKay said, adding that “there is a lot of efficiency left to go.”

World’s best

Despite plummeting gas prices that have cut profits for producers in shale regions, North America remains home to the most spectacular resources, said Lamar McKay, chief executive officer for upstream for BP.

“It has the most advantaged rocks of anywhere in the world, when you talk about shale,” he said.

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These advantages continue to leave North American producers well-positioned to compete on the global natural gas market. They also benefit from some of the best natural resources and a regulatory and infrastructure environment to support production.

“There are other competitors out there in the global stage, including East Africa,” Parfitt said. “The difference is the maturity of the gas sector, and the state of their fiscal and regulatory regime.”

Building infrastructure

But the most tangible proof of the durability of natural gas in the U.S. is the tremendous amount of capital investment dollars flowing to build the needed pipelines, said Greg Ebel, the chief executive officer of Spectra.

Spectra has increased the amount of capital it plans to spend on infrastructure projects from $25 billion to $35 billion by the end of the decade, in response to the growing demand.

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