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CEO of OKC-Based Devon Energy Addresses Natural Gas Concerns

Posted on: Thursday, 30 March 2006, 12:00 CST

By Jerry Shottenkirk

Devon Energy Chairman and Chief Executive Officer J. Larry Nichols and other natural gas and utility leaders addressed a crowd Tuesday at the National Press Club in Washington, D.C., and told of the concerns companies currently have regarding the production of natural gas.

What's happened over the past several months is unsustainable for residential consumers, for industrial consumers like Nucor, for the American farming and agricultural industry and for us, Nichols said. Why for us? Consumers cannot continue to pay high natural gas prices, making it an unsustainable business for the gas industry.

The natural gas officials are urging Congress to allow natural gas drilling on federal lands. They agreed there is no shortage of natural gas beneath the ground. But restrictions in certain areas are keeping companies from getting to large surpluses, Nichols and others said.

In the past five years, prices have increased more than 400 percent, which is far higher than crude oil or gasoline, Nichols said.

A survey by the Industrial Energy Consumers of America clearly indicates that industrial demand for natural gas was in fact destroyed in 2005 as a result of high prices, he said. A lot of good American jobs are also being destroyed. This is not news that we as producers want to hear.

More than 30 percent of land in the United States, including the offshore outer continental shelf, is controlled by the federal government, Nichols told the audience. Of that 30 percent, only 1.5 percent of onshore federal lands are under lease by energy producers or available for lease.

He said onshore lands have an estimated 622 trillion cubic feet of natural gas, and added to the restricted areas on both coasts and in the Gulf of Mexico, more than 1 quadrillion cubic feet of natural gas would be available to be tapped.

Nichols said the government would do a service by eliminating a backlog of over 5,000 pending permits and applications to drill on federal nonpark, nonwilderness lands.

He also noted that the Bureau of Land Management has recently increased the number of permits it has approved, but the backlog continues to grow.

That's because gas producers are seeking to produce more gas to meet the country's increased demand for it, he said. Consider this: The postal system has more workers in big cities where there is more mail. The BLM deserves the same treatment. Imagine a package sitting for six months due to a lack of staff.

Nichols was joined on the panel by Steve Wilson of CF Industries Holdings Inc., Daniel DiMicco of Nucor Corp., Laurence M. Downes of New Jersey Resources, and Jim Hackett of Anadarko Petroleum.

Source: Journal Record - Oklahoma City

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