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Speaking at the Fulbright & Jaworski L.L.P. annual energy roundtable held at the Fort Worth Club on October 20, 2010, Range’s President and Chief Operating Officer, Jeff Ventura, along with four other industry representatives, discussed the opportunities and challenges that lie ahead for the natural gas industry. The panel was moderated by nationally syndicated radio and television business analyst, David Johnson. Following the panel discussion, Jeff participated in an interview with Mr. Johnson for the CEO Spotlight radio program. (Click link to hear interview.)
Other panel participants included Bob Purgason, Chief Operating Officer of Chesapeake Midstream Partners; Dick Covington, Executive VP and COO of NGP Energy Capital Management and Managing Director of Natural Gas Partners Funds; Will Brackett, Managing Editor, Powell Barnett Shale Newsletter; and, Mark Wasem, Partner, Energy Fulbright & Jaworski.
Generally, the panel cited the small but vocal anti-drilling movement as a key challenge facing the industry today. Misleading information, such as perpetrated by the documentary film Gasland, has raised public concerns about the impact of drilling on air and water quality.
Range’s President and COO, Jeff Ventura, added, “There are a lot of misperceptions. People are seen on the Internet lighting their tap water, and the natural gas industry is thought to be the culprit. The truth is, natural gas seeps have been around for eons. Peggy Williams illustrates this in an article published in Oil and Gas Investor magazine about a year ago with an anecdote about George Washington. She said when he was camping near the Ohio and Allegheny rivers, an ember from his campfire dropped into a bubbling spring and the water burst into flames. In fact, it was the shallow oil and gas seeps in the region that led to the discovery of the underground resource.
Mark Wasem with Fulbright & Jaworski commented, “The end result of the intensive ‘anti’ campaign is an onslaught of new legislation and regulation intended to ensure safety and protect air and water. While well-intended, we hope that added regulations do not act as a severe impediment to the development of natural gas resources. It is clear that more regulations will be coming down the pike, but we are working to ensure that they are as reasonable as possible.
Another key challenge that panelists acknowledged was the current glut of natural gas on the market and the low price environment. The general consensus was that pricing is currently too low to be sustainable. While low commodity prices typically lead to reduced drilling and a rebalancing of the market, the recent influx of money from foreign investors has prolonged the price trough. According to Range’s Jeff Ventura, a total of $25 billion has been invested by foreign companies in American shale plays over the past several years.
Powell Newsletter’s Will Brackett, commented, “Natural gas is slowly capturing more of the electric generation market. At these prices, people are starting to scrap their plans for clean coal, wind and solar. At the beginning of the year, there were plans to build 18 new coal-fired electric generation plants in the U.S. But the plans are quickly changing. Fifteen of those plants have been abandoned, and now only three are in the works. We are also seeing fleets converting to CNG. In 2010, AT&T announced the conversion of 8,000 vehicles in its fleet to natural gas.
Fulbright & Jaworski’s Mark Wasem added, “Over the next 25 years, we expect that the world will need 50% more energy. That means we will need 50% more natural gas. Given the rich reserves of shale gas here in the U.S. and the potential to develop shale plays abroad, I believe we will see a global market developing for natural gas. The U.S. has built a number of LNG terminals here in the U.S., with the expectation of importing liquefied natural gas. Now we should look at retrofitting those terminals so that we can export our oversupply of natural gas.
Jeff Ventura responded, “As an American, I would hate to see us send our natural gas out of the country. We can use it to clean our air and reduce our dependence on foreign oil. In my opinion, exporting it would be a huge mistake.
When asked what would be different this time next year, Jeff ended the discussion on an optimistic note. “I believe the industry will be better perceived this time next year. With the upcoming elections, I believe we will see a swing more toward the center and that Washington will begin to recognize natural gas as part of the solution.