Conoco’s Mulva Sees Gas Supplies Meeting Demand for Centuries

By Edward Klump

March 9 (Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, said the world has centuries of natural-gas supply that can provide a long-term energy solution if policy makers choose pragmatism over “the pipe dreams of the hydrocarbon deniers.”

“It is clear from the experts that carbon-based fuels, though in cleaner forms, must keep carrying the load,” Chief Executive Officer Jim Mulva said in prepared remarks for a speech he’s giving today at a conference in Houston hosted by IHS Cambridge Energy Research Associates. “Renewables just cannot ramp up fast enough to replace them.”

Gas can be used increasingly to meet energy needs, including as a backstop for intermittent power sources such as wind and solar generation, said Mulva, 63. Increased development of gas resources would create jobs, he said, and the fuel would reduce greenhouse-gas emissions. Advances in drilling unlocked new sources of the fuel, such as shale formations, making gas more abundant and less volatile in price, he said.

Tudor Pickering Holt & Co., a Houston investment bank, today lowered its 2010 price forecast for gas to $6.20 per thousand cubic feet from $7.50. The company cited, in part, a stronger-than-expected increase in gas drilling. Gas futures in New York have averaged about $5.28 per million British thermal units this year.

Mulva said the world has enough conventional gas reserves, at 6,500 trillion cubic feet, to meet current demand for 60 years. Undeveloped conventional gas deposits could extend the supply to a century, he said. Unconventional gas deposits, such as shale, expand the resource to more than 38,000 trillion cubic feet, he said.

Demand to Climb

“Hydrocarbon deniers” won’t support use of fossil fuels regardless of the consequences, Mulva said. The U.S. government needs coordinated policies on energy and climate change that encourage development of gas and other resources, he said.

Of the 2.4 billion acres of minerals properties that the government holds, only about 3 percent has been leased for energy development, Mulva said.

By 2050, the world’s population will rise 35 percent to 9.2 billion, Mulva said. “It will need more energy, not less, despite higher efficiency and conservation,” he said. “And tomorrow’s energy must remain affordable.”

By then, using all forms of energy will be long accepted, Mulva said. He said fleets of vehicles, buses, trucks and trains will use natural gas.

The petroleum industry will see advances in technology that appear “inconceivable” now, Mulva said. “We will drill wells with, who knows, perhaps laser beams.”

Mulva said he sees oil remaining a transportation fuel where alternatives aren’t practical, while it will be “essential” for petrochemicals and lubricants. Supplies will be from unconventional sources, such as Canadian oil sands and shale formations in Colorado, Utah and Wyoming, Mulva said.

Exxon Mobil Corp. and Chevron Corp. are the biggest U.S. oil companies.

Buck