BEYOND THE HORIZON Broadening the corporate mission

There are scholars who say the most elegant expression of man's hierarchy of needs is the passage in the Bible known as "The Lord's Prayer". The phrase, "...give us this day our daily bread..." is read as give us an economic system that will provide for our basic needs.

Man's basic needs are commonly thought of as food, clothing, shelter, and energy. Oil and natural gas dominate as the primary sources of global energy.

Oil is a fungible commodity and, for developing nations, becomes a primary source of hard currency. With the collapse of the Berlin Wall, the commercialization of indigenous natural gas reserves has become more closely associated with internal economic growth and rising living standards.

Rather than flare associated gas production, or pass over natural gas reserves, national governments are generating electricity, manufacturing fertilizer, expanding petrochemical complexes, and installing cogeneration facilities in commercial real estate developments. They are even developing natural gas distribution systems and evolving underground storage facilities to optimize the entire development/ consumption/ commercialization process.

With the price of oil essentially capped at $3.00 per MMBtus for the foreseeable future (or lose market share), the profitability in natural gas development will be associated with the capture of these "value-added" constructive economic development opportunities.

Don't do as I do

The World Bank has begun a campaign to focus national governments on the "value-added" economic potential through commercialization of natural gas. The US's secretary of commerce has been traversing the globe (arm in arm with utility executives) singing the praises of power generation using natural gas fired turbines.

But, the US government's history of the past 45 years has been an object lesson in how government controls undermine sound and constructive economic development opportunities.

In 1954, the US Supreme Court ruled that the US Federal Power Commission could control the price of natural gas at the wellhead. Twenty years later, a shortfall in natural gas deliverability capacity was one factor in allowing the oil exporting nations to quadruple oil prices virtually overnight. Then, Congressional banning of the use of natural gas as a boiler fuel resulted in electric power company "rate shock" that is still being paid for by the US consumer.

Commercialization of gas

The natural gas industry in the US is a relatively young industry, having largely developed following the end of World War II. And, despite the interference of the US government in free market economics, no other national or international industry sector can match the US exploration and production industry and service company sectors reservoir-to-burner-tip commercialization experience across such a broad geographic expanse.

Building on the core competence of reservoir engineering and physics, exploration, production, and service companies have perfected the design and implementation of underground storage of natural gas.

Gas storage is the critical factor in the commercialization of large-scale, cross-country natural gas projects. Storage capacity and calculus, in fact, determine the value-added economics of the commercialization of natural gas reserves everywhere on the globe. The storage sector may be the only market sector where US firms hold a clear technology lead in the commercialization of natural gas around the globe.

First, do business

The integrated international oil and gas company has been characterized as an exploiter of natural resources, with a social development policy borrowed directly from Attila the Hun.

The commercialization of natural gas is creating a second chance for the exploration and production sector, integrated and independent. It is a chance to demonstrate the social responsibility of raising living standards with sound, constructive, integrated, and value added economic projects that add substantially to the corporate bottom line.

The US has proven that with a free market providing for man's basic needs and raising living standards, it is possible to reduce racial, religious, and territorial tensions.

The 21st Century is a century of natural gas. And, with this opportunity, comes the chance to broaden the exploration and production corporate mission to first do business, and then, do good.

P. R. (Bob) Sprehe
Draxco International

This page reflects viewpoints on the political, economic, cultural, technological, and environmental issues that will shape the future of our industry.Offshore Magazine invites you to share your thoughts. Send your manuscript to Beyond the Horizon, Offshore Magazine, Box 1941, Houston, TX 77251 USA. Manuscripts will not be returned.

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