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Industry Chiefs See Growing Diversity of US Fuels

BP Group Chief Executive Bob Dudley speaks at the IHS CeraWEEK energy conference, Houston, March 6, 2013.

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Greg Flakus

March 08, 2013

HOUSTON — The boom in natural gas and oil production in the United States has changed the outlook for energy worldwide. This week in Houston, participants in the 32nd annual IHS CERAWeek conference — a gathering of global energy industry policymakers and financial leaders — talked of a world increasingly powered by what they call unconventional fuels: energy resources other than the petroleum pumped from deep underground deposits that have driven economic growth and development for the past century.

VIDEO | CLICK TO WATCH: At CERAWeek 2013

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VIDEO | CLICK TO WATCH: At CERAWeek 2013

Thanks to a big expansion of natural-gas production here in Texas and several other states, the U.S. energy forecast looks good. But the biggest energy user — transportation — still relies primarily on petroleum.

The Chairman and CEO of General Motors, Daniel Akerson, says providing customers with home natural gas fueling stations might help.

"If we thought it would sell the product and make a profit, sure we will do it," he said, cautioning, however, that it's unlikely to happen until the U.S. government backs creation of far more fueling stations nationwide.

"There may have to be some government incentive to the energy industry to have them build up the necessary infrastructure," he said. "We cannot control that part of the equation. But we also cannot manufacture without having some surety of infrastructure support."

Because cars and trucks using natural gas are so expensive, the American Petroleum Institute's Chief Economist John Felmy says any change has to start with large commercial vehicles.

"The higher cost for single-family vehicles are so much above what the price for conventional vehicles is that it is hard to recover the cost," said Felmy. "Now, for fleet operations and heavy duty trucks, I think there is an opportunity there."

Felmy also thinks it makes sense to promote the export of liquefied natural gas to provide producers with an incentive to expand.

"If you look at gas operations around the country right now, you are seeing still an enormous amount of exploratory drilling for gas, but the development drilling has not occurred because of the relatively low price," he said, explaining that such exports also would cut the U.S. trade deficit, create more jobs and yet have only a minor impact on the price consumers pay.

But this development is not just good for the United States. Businessmen like Mikhail Smirnov of Russia's Cryogenmash want to sell liquefied natural gas equipment to U.S. companies.

"We are excited about it because it dramatically increases the number of private gas sellers and private customers who will need the gas to be liquefied in small quantities," he said.

And energy officials from many countries are here to learn more about how they can expand their own production.

According to Arsenio Mabote, Chairman of Mozambique's National Petroleum Institute, expanded production, for many nations, is also about fighting poverty.

"By having energy resources — for instance you generate electricity and supply it to the population — that brings development," he said.

Experts say countries around the world are going to need energy from a variety of sources, including oil, gas, coal and renewables to meet demand in the coming decades.

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