Reported by Staff

The North American natural gas business has its best days ahead, according to a survey of the industry taken by the consulting and accounting firm Deloitte.

Despite low natural gas prices, and the expectation of more layoffs and cost-cutting in 2010, 84 percent of the oil and gas executive surveyed are bullish on gas because of the surge in production from plentiful shale and coal bed methane formations.

This, combined with an expectation that climate change legislation will increase the demand for natural gas-fired power generation, said Gary Adams, vice chairman and leader of Deloitte’s oil and gas practice.

The survey released at Deloitte’s annual oil and gas conference this week outside Houston is the result of interviews the company conducted this fall with 200 oil and gas professionals with at least five years industry experience, college degrees and annual salaries of at least $100,000.

85 percent believe domestic natural gas production will increase in the next five years, and 90 percent believe climate change legislation will lead to higher gasoline and natural gas prices.

However, respondents also think further cost-cutting measures will be taken by the industry in the coming months. 75 percent say their companies are reducing operating expenses, and 56 percent say they’re cutting capital expenditures.

Three quarters of the executives believe revenues will increase next year. Specifically, 76 percent expect revenue growth at national oil companies and international oil companies, 67 percent expect growth at independent exploration and production companies, and 61 percent expect growth at supply and service companies.

Mergers Not a Trend

While some analysts have predicted a merger trend in the industry, that view isn’t shared by the majority of the individuals surveyed. 86 percent of the surveyed executives don’t see their companies going down that road.

“What we are seeing here is an underlying confidence in the sustainability of the oil and gas industry,” said Adams. “Oil and gas companies have survived severe volatility over the past decades, and despite the current recession, these companies have sophisticated, adaptable business models and believe they can post healthy revenues well into the future.”

Part of the Solution for a Cleaner Energy Future

Senior Deloitte consultant Joseph Stanislaw presented a white paper on Wednesday, saying the industry could benefit if oil, natural gas and coal are included in the country’s plans for a cleaner energy future.

“The principal goal of policymakers should be to establish a level playing field that makes it easier to identify the cleanest fuels producible at the lowest cost, while also reducing energy use through efficiency and other technologies,” Stanislaw said.

He calls for a “predictable price for carbon emissions” to help spur development of conservation and efficiency technology and practices, as well as efforts by the oil and gas industries to develop carbon-neutral technology