Natural gas will be an increasingly important product to Chevron Corp. and other energy companies, a top executive said Wednesday.
But George Kirkland, who will take over next year as the company's vice chairman, said it would take considerable investment -- even in the recession -- for firms to take advantage of natural gas' potential as a lower-emissions fuel.
"The fact is, natural gas has come of age," Kirkland said in a speech at the World Gas Conference in Buenos Aires. "What was once second prize to oil is now a premium commodity."
The International Energy Agency has said that natural gas constitutes 22% of the world's energy mix, and demand is growing. In his speech, Kirkland, who is currently Chevron's executive vice president of Global Upstream and Gas, said more than $5.5 trillion in investment would be needed over the next 20 years to meet that demand.
Kirkland's speech was a bit of a rally call to the fuel industry, said Phil Weiss, senior equity analyst for Argus Research's energy division.
"This is the direction the company is going and he's trying to highlight some of the things that are coming," Weiss said of Kirkland's speech. "But for this to be realized the way the industry was planning before the recession, everyone has to stay on track, so to speak, and that is a challenge in this environment."
With the recession sending oil and other commodity prices dramatically lower, long-term investments in fuels have looked uncertain, Weiss said.
"Personally, long term, I like natural gas," Weiss said. "It's the lowest producer of emissions, as far as hydrocarbons, and if the investments aren't made now, these companies will miss out in the future."
Kirkland hailed natural gas, particularly in its liquefied form, as the bridge to a lower carbon future.
"Without continued investment, natural gas will simply not be available to meet demand and drive economic growth," he said.
He praised the Gorgon Project, on Barrow Island in Australia, which will extract and distribute natural gas. He said it would have the capacity to power a city of more than 1 million people for 800 years.
Chevron owns half the project, and the other half is owned by Royal Dutch Shell and Exxon Mobil Corp. The project has created some controversy because the island is home to the threatened flatback turtle and 21 species of animals.
Kirkland said Chevron was betting big that the market for natural gas would grow immensely in the long term.
"I am confident that natural gas will redefine the world's energy equation in the 21st century," he said.
Shares of Chevron fell 5 cents Wednesday to $70.51.