Gastech hears warnings against complacency about gas

April 11, 2005
A warning against complacency greeted attendees of Gastech 2005 in Bilbao Mar. 14.

A warning against complacency greeted attendees of Gastech 2005 in Bilbao Mar. 14.

Even as the gas industry, and more particularly the LNG industry, seems to be riding the crest of a commercial wave with no end, BG Chairman Frank Chapman sounded warnings of trouble ahead from complacency, demand-destroying high prices, and changing geopolitical environments.

With new natural gas liquefaction plants, record-sized LNG tankers, and larger, more-efficient regasification terminals dominating industry’s news, it was a sobering message for the nearly 3,000 delegates.

Change, complacency

Chapman called attention to the “high and flattering prices we see” and spelled out several challenges in a “world of great change” with “challenges raising the bar of performance.”

He noted three propositions underlie his vision for the industry:

The first half of the century is the age of gas and, for the successful, the “size of the prize is absolutely huge.”

The “big winners” will be companies that are “focused, agile, and imaginative” in how they meet markets and supplies.

As an industry, “we need to sell our message about the benefits of natural gas” to the rest of the world if “our growth is not to be constricted by competing fuels and competing technologies.”

Other fuels

This trend, Chapman continued, sounds a “warning to our industry against becoming too complacent.”

The gas industry can “sit back” and assume that the annual US Energy Information Administration and International Energy Agency projections for gas growth will “just roll in” and that “we will all get some slice of the action,” Chapman said.

But that’s “dangerous” thinking, not only because growth forecasts are weakening but also because of the challenge to gas from a range of sources.

The challenges he cited are from competing fuels, from increasing political intervention, from the “massive scale of investment” the industry faces, and from a “changing dynamic within our industry.”

Chapman reminded delegates of the abundance of coal in the US, China, and India and of recent advances in technologies to make cleaner coal and in more efficient combined-cycle power generation.