By Jason Womack

Of DOW JONES NEWSWIRES

HOUSTON(Dow Jones)--Energy executives, who were slow to recognize the potential of natural-gas supplies from shale rocks, are heralding these resources as playing a larger role in meeting energy demand.

Much of the first day of the IHS Cambridge Energy Research Associates conference in Houston, which was intended to discuss trends in oil development, was dominated by talk of these new gas supplies, underscoring a brighter outlook for global gas production.

Natural gas has "never matched oil in importance. But look at gas today--the world's third-leading energy source, with room to grow," Jim Mulva, chief executive of ConocoPhillips (COP), said during his keynote address to CERA Week attendees. Mulva spent the bulk of his speech discussing natural gas and the potential the fuel has to cut emissions, create jobs and provide a low-cost energy source to consumers.

Andy Inglis, head of Exploration and Production at BP PLC (BP, BP.LN, BP.U-T), said during a panel discussion that the industry underestimated the potential of these new supplies, noting that the rapid development of shales could represent "one of the largest shifts we will see in our careers."

Oil and gas companies, armed with innovative drilling and well-completion techniques, pioneered production from these rocks in places like the Barnett Shale in Texas, the Fayetteville Shale in Arkansas and the Haynesville Shale, which underlies parts of Louisiana and Texas. These rocks have led to a glut in gas supplies and helped drive down natural gas prices--which is good news for consumers who use the fuel in manufacturing and to heat their homes and businesses.

Now, major oil companies such as BP PLC (BP) and Exxon Mobil Corp. (XOM), which have been hard pressed to find new oil and gas supplies overseas, are charging into U.S. shale fields to boost reserves and develop the expertise to find similar resources abroad. Exxon Mobil, in a move widely viewed as the biggest endorsement of shale gas production, made a $31 billion, all-stock bid for Fort Worth, Texas-based XTO Energy Inc. (XTO), a leading producer of natural gas from so-called "unconventional" sources such as shale.

European oil major BP has also invested heavily in shale, striking deals with Chesapeake Energy Corp (CHK) for shale assets in Oklahoma and Arkansas. It also bought a stake in the Eagle Ford Shale, an emerging shale formation in South Texas.

However, the fuel has yet to receive widespread acceptance by lawmakers, creating some uncertainty about the future of natural-gas demand.

Mulva said that the U.S. government favors renewables and proposes taxing the natural-gas industry and tightening access to natural-gas reservoirs, which would stymie development.

"If you tax something, you get less of it. Less supply security, fewer jobs and lower reinvestment," Mulva said.

-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com

(Stephen Wisnefski and Angel Gonzalez contributed to this article.)