Underscoring the growing importance of natural gas projects, ChevronTexaco Corp. announced Wednesday the creation of a new company devoted to building up that business worldwide.
The move by the San Ramon, Calif.-based oil company comes amid a growing sense of urgency about natural gas in the United States.
Strong demand, tight supplies and difficult import logistics have pushed natural gas prices three times higher than year-ago levels.
On Wednesday, Federal Reserve Chairman Alan Greenspan told federal lawmakers that the disconnect between the country's demand for natural gas and the available supply is a "very serious" problem. Many industries and a growing number of U.S. energy plants rely on natural gas in their operations.
Although natural gas is relatively plentiful worldwide, it has to travel in liquefied form and then be converted back into a gas for use -- an expensive process that requires special facilities.
"There's no doubt in my mind that this is going to be one of the hot areas in the next few years for lots of these companies," said Phil Flynn, who trades oil and gas for Alaron Trading in Chicago.
"There's a potential that natural gas prices could double or triple over the next few years from where they are now.... That's why there is a mad rush into this," Flynn said.
The strong demand and high natural gas prices have triggered a flurry of activity around the world.
In March, Exxon Mobil Corp. started work on a large natural gas project in Qatar. San Diego-based Sempra Energy is pursuing a $600-million liquefied natural gas project in Baja California. And Sound Energy Solutions, a subsidiary of Mitsubishi Corp., won a key approval this week in its plan to build a $400-million liquefied natural gas facility in the Port of Long Beach.
ChevronTexaco Global Gas, as the new unit is called, will combine three existing businesses focused on natural gas, as well as the firm's shipping operation and pipeline system -- both of which expect to carry increasing loads of natural gas.
John D. Gass, 51, will become corporate vice president and lead the new company starting June 1. He has been managing director of Chevron's southern Africa business in Angola. James R. Blackwell, currently president of ChevronTexaco Pipeline Co., will take over the Angola post.
In 2002, just 28% of ChevronTexaco's production was natural gas, with the rest in the form of crude oil. Mark Gilman, managing director and oil analyst at First Albany Corp., said the company was less endowed in the natural gas department than rival firms.
"Their position relative to that of their peers is lagging in terms of the development, the number of projects and looking at market share," said Gilman, who owns shares of Chevron and has a "sell" rating on the stock.
Creating a new natural gas organization, Gilman added, "is necessary but not sufficient."
Chevron shares rose $1.03 to close at $67.70 on Wednesday on the New York Stock Exchange.