ConocoPhillips's Mulva: Natural gas a 'job-creation machine'

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Sept. 27 -- Growing natural gas consumption can help drive US economic recovery and job creation, ConocoPhillips Chairman and Chief Executive Officer James Mulva said Sept. 27 at Rice University’s Baker Institute for Public Policy.

“Natural gas in an overlooked job-creation machine,” Mulva said. “Let’s crank it up and step on the accelerator.” He spoke during a 2-day Baker Institute conference at which numerous papers were released that analyze the market consequences of carbon management policies worldwide.

Calling for a “balanced energy policy,” Mulva called upon US lawmakers to develop a comprehensive energy policy “that allows all sources to compete on the basis of abundance, cost, efficiency, and environmental merit.” He said, “We don’t have that today…. Current policies stack the deck in favor of coal and renewable sources.”

Energy from renewable sources cannot be provided fast enough to instantly replace the energy currently provided by fossil fuels, he said.

The oil and gas industry currently supports 9.2 million US jobs, Mulva said, and he acknowledged that all energy sources will be needed in the future. “So yes, bring on the green jobs. But in doing so, don’t destroy the real jobs that we have today in the oil and gas industry.”

He recommended state and US lawmakers carefully examine renewable electricity standards, noting that some states require utilities to use renewable sources for part of their power supply. “Washington is considering a national standard,” Mulva said. “Unfortunately, renewable sources are quite expensive.”

The Baker Institute supports research and development to lower the cost of renewable energy, Mulva said, adding he agrees with that approach but he resists energy policy that mandates the use of renewable energy.

“Ideally, a balanced policy would create an attractive investment climate for gas,” Mulva said. “But oil and gas is a heavily taxed industry through income taxes, lease bonus payments, royalties, and severance taxes. And, the administration has targeted us for new taxes.”

Ideally, US energy policy would enable the market to determine the best use of gas, he said. “For example, to reduce greenhouse gas emissions, many in Washington support the use of compressed natural gas in vehicles. But gas could do more good in the industrial and power sectors. We believe we could get larger reductions in the future from using plug-in hybrid-electric and all-electric vehicles. The electricity would come from gas-fired generating plants.”

Tradeoffs seen
In an executive summary of numerous reports issued on Sept. 27, the Baker Institute said that “business-as-usual, market-related trends might propel the United States toward greater oil and natural gas self-sufficiency over the next 20 years."

Currently, the US vehicle fleet involves 250 million oil-fueled vehicles, the studies said. Recently adopted improvements in car fuel efficiency standards are expected to cut US oil use by 3 million b/d by 2050, and proposals to replace 30% of the vehicle fleet with electric vehicles by 2050 could cut oil usage by another 2.5 million b/d, the studies said.

Under this electric car scenario, US GHG emissions would be cut by 7.4% by 2050 because more electric cars would encourage more coal-fired electricity generation unless there also was a mandated carbon cap system, the executive summary said.

Baker Institute researchers also said putting a price on carbon dioxide, imposed by either a carbon tax or a cap-and-trade system, could increase electricity costs and, in the short term, mean a greater reliance on oil imports if the development of US oil resources were to become less cost competitive.

“Analysis of the impact on US energy markets of a cap-and-trade system indicates that the price of carbon could be highly unpredictable, depending on rules for offset programs or availability of carbon capture and sequestration technology,” the executive summary said. “All cap-and-trade scenarios ultimately lead to higher US electricity prices; the more binding the policies, the more burdensome is the electricity bill for the policy.”

Contact Paula Dittrick at paulad@ogjonline.com.

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