At the recent triennial World Energy Congress in Montreal, experts from executive suites to R&D labs across the globe took the podium, addressing lingering and new issues confronting the nations' energy security—and hydrocarbon providers' ability to economically produce and deliver supply.

Topics ranged from developing-country demand to energy trading, clean-energy systems, nuclear power to food stock for transportation fuel. Speakers ranged from Saudi Aramco and ExxonMobil to the United Nations and the World Trade Organization.

Fatih Birol, chief economist for the International Energy Agency, says the world's energy landscape will be shaped in the near term by the pace and pattern of economic recovery, gas markets, climate change action or inaction, a growing desensitivity of oil price to supply and demand fundamentals, China's energy demand, and changing public policy.

Oil and Gas Investor surveyed leading U.S. energy-industry executives for their views of potential hot topics in 2011 and beyond—both game-changing positive and negative circumstances as well as net-neutral events.

Most often cited? U.S. natural gas—price, drilling and completions regulation, deliverability, demand. Also making their lists: the economy, the Obama administration, capital access, oil pricing and industry consolidation. In all, 12 hopes, fears and worries for 2011 and beyond were named. Here is their outlook for the year.

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1. The DOI

Expect the Obama administration in this and the coming year to use regulatory power to exert energy-related policy, in lieu of legislative or judicial support, says Bruce Vincent, president of Swift Energy Co. Vincent is also chairman of the Independent Petroleum Association of America, on the board of the Natural Gas Council and a member of the National Petroleum Council, which advises the U.S. energy secretary. "You're seeing this already," he says.

Devon Energy Corp. executive chairman Larry Nichols says energy-resource policy in Canada is substantially less risky than in the U.S.

Larry Nichols, executive chairman of Devon Energy Corp., agrees. He says the results from elections on November 2, which gave Republicans a majority in the House and narrowed the party's minority position in the Senate, don't mean industry and American consumers are safe through the balance of Obama's term from unthoughtful energy measures.

Nichols speaks from the vantage point of also being chairman for the past two years of the American Petroleum Institute and is a former chairman of the American Exploration & Production Council. Devon recently divested all of its non-North American holdings, except for a pending sale of its Brazilian portfolio. In Alberta, it operates an in situ oil-sands development, Jackfish.

Energy-resource policy in Canada currently is substantially less risky than in the U.S., he says. "There is a lot more certainty there in governmental policy. The Canadian government supports oil-sands development and realizes that it is a major resource."

There are, of course, environmental critics of energy development in Canada, particularly of oil sands that are mined instead of those that are produced via the SAGD or steam-assisted, gravity drainage process used at Jackfish.

But there is greater environmental criticism of energy development in the U.S., he says. "Some environmentalists in the U.S. are even trying to stop the import of oil from oil sands in Canada, which makes no sense at all.

"In the world we live in, we should worry more about importing oil from politically risky countries, rather than from a politically safe country like Canada."

Vincent says Obama's use of the executive branch to enforce his own view of energy development is most apparent in the Gulf of Mexico.

Bruce Vincent, president of Swift Energy Co. and IPAA chairman says Obama will use regulatory power to exert energy-related policy.

And, it has been proven by the example of a Utah lease sale, after which the Department of Interior did not issue 77 leases that were won in 2008, he says. A judge ruled in September that, although the suit was filed too late, the plaintiffs were right: the DOI did not have the authority to cancel the leases.

"It's a perfect example of the administration acting over and above its authority. The administration will occasionally talk about natural gas and that it needs to be a part of the energy solution but, if you look at its policies, it hasn't promoted American oil and gas development."

In the Gulf of Mexico, the DOI is scuttling permit issuance. Vincent calls it a "permit-torium" or "Obama-torium."

"There's no clear path for people to understand what they need to do to get a permit. The DOI is creating a lot of uncertainty, and this makes it extremely difficult or impossible for companies to plan projects and raise capital. I don't expect activity in the Gulf to return to pre-April 2010 levels in the next two years."

There is some good news, however; in the legislative branch, the energy industry has won favor in the new House. Leaders of the new Republican majority have a more than 90% average record of voting for energy development, while the Democratic leadership of the past two years averages 17% support, he says.

Swift's operations are onshore or in state waters. Where it holds some leases on federal lands, the DOI has been slow to act under Obama, Vincent says.

2. The EPA

Many in the industry voice concern about the regulatory pressures coming from the Environmental Protection Agency. "The EPA will implement the administration's idea of what is needed for climate change—whether it has the authority to do it or not. Yes, you can take them to court and, five or eight years from now, find out they didn't have the authority, but they will have already done it," says Vincent.

It's alarming. "Any time you have a group willing to act beyond its authority, although it may be overturned later, it is very troubling. More than any administration, what I've seen from this one is almost a disdain for the legislative process as well as states' rights, as we've seen in the hydraulic-fracturing debate."

Federal rules may be issued to require the disclosure of chemicals in frac fluids for wells drilled on federal lands. "They can't get it imposed across the U.S. from legislation, but they're going to impose it via fiat on federal lands," Vincent says.

Nichols says, "The whole political debate will probably shift from concern about what Congress does to concern that the Obama administration will simply use the regulatory arena to try to get through, particularly through the EPA, actions it could not get done through Congress."

Keith Rattie, chairman of QEP Resources Inc., fears the federal government will shift fracing regulation from the states to the EPA.

Keith Rattie, chairman of onshore U.S.-focused QEP Resources Inc. and integrated-gas company Questar Corp., also points to EPA involvement with fracture-stimulation rules as a particular source of concern. Rattie is also a past chairman of the Interstate Natural Gas Association of America.

"My fear is that the federal government will shift regulation of fracturing from the states to the EPA. Fracing is, of course, the technology behind booming U.S. natural gas supply," Rattie says.

The industry has fraced more than 1 million oil and gas wells during the past 60 years without affecting freshwater supply. "But, a few misinformed politicians, environmental groups with an anti-fossil-fuel agenda, and a gullible media have turned this non-issue into a major threat to U.S. gas supply," Rattie says.

The issue is on Alan Armstrong's list too. Armstrong succeeded Steve Malcolm as chief executive officer of Williams Cos. and its MLP, Williams Partners LP, on January 3, and previously led Williams' midstream business. He is also president of the Gas Processors Association and is on the board of the Natural Gas Supply Association.

Public hysteria about hydraulic fracturing is "something we, as a country, could get in our own way about," Armstrong says. "It is misinformation that is causing it. When you look at the chemicals we pour on our golf courses and roads, it's not even comparable to what we use and the amount we use in hydraulic fracturing, but there seems to be an intense spotlight on all drilling operations.

"We do have to be careful and be good stewards; there is no getting away from that. I'm not asking for lax controls, but for fair and accurate representation of the facts."

3. Taxation

Vincent adds that, besides EPA and DOI pressure, expect the industry to continue to be a target for greater taxation as Obama looks for increased federal revenue to deal with growing deficit spending.

Nichols says, "Our concern the past two years has been our federal government and it remains our federal government for the next two years by far."

The recession has been mismanaged, coupled with negative treatment of all U.S. industries that is counter-productive to stimulating the economy, he says. "So many policies, like healthcare, have adversely affected all business."

In Obama's first two years, his budget proposals would have taken 30% to 35% of the energy industry's cash flow out of circulation. "Of course, it went nowhere in Congress and is even less likely to go anywhere in this Congress. But taxes remain a concern. Any more taxes take away money we could use to drill oil and gas wells. It comes out of the drilling budget and then results in reduced employment."

Alan Armstrong, chief executive of Williams Cos., says the hydraulic-fracturing debate calls for fair and accurate representation of the facts.

Armstrong says a federal attempt to prop up non-hydrocarbon markets—such as via renewable-energy standards and subsidies of other energy resources—could get in the way of free-market job creation.

"There is great confidence within the natural gas industry that we have the ability to continue to lower the cost of extracting natural gas, but energy policy might get in the way—either on the demand side, such as due to subsidies, or on the supply side that might restrict our access to lands and our ability to build a manufacturing-play base."

Williams operates onshore and offshore the U.S., in Canada and in Argentina. "One of the keys to our efficiencies is to have clear and certain rules about our ability to go after the resources. You're not just drilling one well; you're drilling whole programs with multiple rigs and you set up patterns and infrastructure to do that.

"When the rules change midway through the process, it can really dampen any efficiency gains."

Jim Hackett, the chairman and CEO of Anadarko Petroleum Corp., shares these concerns. He says, "Our country's leaders must avoid over-regulation, additional taxes or a more challenging permitting environment. This will only derail any opportunity to move toward cleaner, affordable and more secure energy supply."

Jim Hackett, chairman and chief executive of Anadarko Petroleum Corp., says the lack of regulatory clarity affects all levels-local, state and international.

Hackett is also chairman of America's Natural Gas Alliance. He cites political uncertainty and a lack of regulatory clarity or over-regulation among the most significant challenges in the broader energy picture for 2011. "And, it applies at all levels—local, state, national and international.

"The majority of the easier-to-reach resources have already been found and developed, so the resources of today and tomorrow are in tighter rock, deeper water or more remote undeveloped global locations."

Anadarko has announced a string of discoveries in deepwater and abroad, which is offsetting the slowdown on its deep Gulf assets.

4. Industry Consolidation

Many executives think low gas prices will result in industry consolidation this year, while majors continue to look to build scale in U.S. unconventional-gas plays and large independents seek growth. Says Scott Sheffield, chairman and CEO of Pioneer Natural Resources Co., which operates onshore the U.S. and in South Africa and Tunisia: "Natural gas prices have averaged about $4 during 2009-10, and I expect prices to continue at about that level in 2011. While some companies are trying to shift from a natural-gas base and are entering the few remaining oil plays, those that aren't able to make a significant shift will be under pressure to sell or merge."

Among majors' demonstrated interest in U.S. independents recently, he cites ExxonMobil Corp.'s 2010 purchase of XTO Energy Inc., a leading unconventional-resource E&P, as an indicator of what's to come.

Aubrey McClendon, chairman and CEO of Chesapeake Energy Corp., agrees. "Expect smaller shale companies to sell to majors and big independents this year as low gas prices and difficulty with HSE (health, safety and environmental) issues take their toll."

Aubrey McClendon, chairman and chief executive of Chesapeake Energy Corp., says smaller shale companies will sell to major and big independents this year.

Besides the ExxonMobil-XTO deal, Vincent points to Royal Dutch Shell's purchase of Marcellus- and Utica-focused East Resources Inc. last year. Large independents, even those with significant drilling inventories to satiate shareholders' demands for growth, will join in the M&A fray, he says—some as buyers; many as sellers.

"Companies have shown so much growth by leasing all this acreage. Now, probably the big leasing plays aren't there anymore."

Some large, independent names may vanish. "The majors aren't going to be satisfied with buying a $4-billion portfolio. They are going to want a $20- or $30-billion portfolio. They are going to want size and scope. While gas prices are low, it's a great opportunity to come in and buy gas if you have a long-term view and a balance sheet with staying power," he says.

Besides bids for onshore resources, transactions will surface in the Gulf too. McMoRan Exploration Co. was scheduled at press time to buy out partner Plains Exploration & Production Co. on the shelf for some $900 million in cash and stock. Energy XXI Ltd. planned at press time to buy ExxonMobil's shelf properties for $1 billion.

"They're saying, 'Okay. People want to leave the shelf. It's a great time to buy assets there. The valuations are low and I'm committed there, so I'm going to be buying.' It's good strategy, for both the buyer and the seller," Vincent says.

Scott Sheffield, chairman and chief executive of Pioneer Natural resources Co., says gas-heavy companies not able to make a significant shift to oil will be under pressure to sell or merge.

Sheffield adds that he expects continued, significant foreign investment in U.S. resources through joint ventures. "Several JVs have been announced since 2008 in the Lower 48, with large capital commitments, primarily from large European companies." The next round of JVs will be with partners from Asian countries and will be focused primarily on liquids-rich plays, he predicts.

Vincent says, "Some large independents will be ready to take their payday and move on, like XTO was, and others will say, 'If I'm going to keep growing, I can only do so much by leasing more acreage. I need to acquire someone else.' You're already seeing a proliferation of large private-equity-backed companies cashing out."

5. Global Financial Markets

The U.S. energy industry is advantaged by current market interest in hard assets, particularly portable ones as a type of currency in the face of a weak dollar and continuing economic turmoil outside the U.S., such as country debt failures in Europe.

Nichols says any oil and gas company that needs funding today for a solid project will find funding. "That is not something that I will worry about in 2011."

Steve Farris, chairman and CEO of Apache Corp., says, "You don't want assets to become overpriced, however. Everything is not always increasing in value."

Apache has also been an active consolidator, recently buying Permian- and Gulf-focused Mariner Energy Inc. for $4.3 billion in stock, cash and debt assumption; Devon's Gulf shelf assets for $1 billion; and assets in the Permian, Canada and Egypt from BP for $7 billion.

"What you have right now is a dollar that is under significant pressure," he says. "All currencies are under significant pressure. Silver is $27 an ounce. Is silver really worth that? Is gold really worth $1,400 an ounce? But hard minerals are a way to fight inflation or deflation over time."

Armstrong expects growing amounts of capital for energy development into 2011. And, as gas supply increases, yet more money will flow in. "We will probably see more contrarian investors that are looking at the long run and won't be thwarted by the near-term impact of gas prices."

"What you have now is a dollar that is under significant pressure," says Steve Ferris, chairman and chief executive of Apache Corp.

Farris says that, while capital-market instability has advantaged the energy industry's access to capital and its valuation, it is not a favorable business environment overall. "Certainly Europe is going to have to get its house in order. It's almost a situation of redistribution of wealth there, when you're talking about how they are going to take care of this problem in some of these countries," he says.

"I don't think we're going to have a stable capital market until that is resolved."

Economic turmoil is also encouraging international oil companies to become active in some of the most surprising places. "It came up just the other day," Farris notes. In late November, CNOOC Ltd. and a partner announced plans to buy BP's interests in Argentina for $7 billion. "The NOCs (national oil companies)—whether it is the Koreans, Indians or Chinese—have an almost insatiable desire to control reserves around the world."

Vincent says that, in the U.S., a sluggish economy will further American voters' sentiment regarding the current White House. "November 2 was about the economy and jobs. The economy is a lot stronger than people give it credit for. But, if it's growing at 1% or 2%, it can never catch up on 9.5% unemployment. If you still have unemployment in the 9%-plus area in 2012, people are going to be incredibly frustrated."

6. Oil

Have no fear; higher oil prices are near. Among the commodities that are priced higher today due to equity- and debt-market trepidation and a weak dollar is oil. Sheffield predicts that oil prices will continue to increase toward $100 as European and North American economies begin to rebound, and as new oil supplies may not keep up with rising demand.

McClendon also expects growth in energy demand around the world to relentlessly drive crude higher. Like Sheffield, he expects a barrel to flirt with $100 in 2011. He adds, "Unconventional-oil projects will become the next big game-changer for the U.S. and, for the first time in our lifetimes, provide the pathway, along with CNG (compressed natural gas), for reduced oil imports."

Estimates are that the U.S. is the only country that grew its oil production in 2009, for the first time since 1991. Vincent says, "The industry will likely grow oil production for consecutive years with a focus on oil shales, tight sands or naturally fractured reservoirs. While the deepwater Gulf was a big contributor in 2009 to growth in production, new technology will unlock increased liquids production onshore and help mitigate imports."

Farris says, "If you look at China's need for energy, there is no doubt in my mind that the price of oil in the long term has to increase. You really don't have a near-term alternative."

Natural gas is an alternative, particularly as an electric-power and transportation fuel and where it is in abundant supply, such as the U.S., but meaningfully greater use is a ways off.

"Oil prices will likely remain high until the world can move toward a natural gas society, with more LNG projects and the discovery of more gas shales around the world," Sheffield says. "New liquids-rich shale and unconventional plays will likely be found here and abroad, adding some significant capacity to the system."

With natural gas' lower cost and more environmentally friendly carbon footprint, it will capture a larger portion of the world's energy demand, he says, and a global gas market will eventually emerge, probably within 10 years. "Crude oil and LNG prices will delink."

7. Exporting U.S. Gas

As countries turn to natural gas for a greater share of their energy mix, global gas trade with a market infrastructure like that of crude oil will eventually come about. And the matter of whether U.S. gas will participate in that global trade is at Washington's door currently, as Cheniere Energy Inc. has applied for permission to begin exporting up to 2 billion cubic feet of gas a day from the Gulf Coast.

It's a simple request—on its face—but it begs the question Washington has yet to answer: What to do with all this U.S. gas? Watch for stumbling policymakers.

Vincent says, "It will take Cheniere some time to work though the approval process, but, ultimately, I don't see how they cannot get that approved. How can you tell any industry you can't sell your product overseas because you need to save it for domestic use? Otherwise, start telling the American farmer he can't ship grain to Russia because we need to save it for the American consumer."

While arguments will be made to export indigenous U.S. gas supply, heated opposition will come from the domestic petrochemical industry. From that conversation, the matter of American jobs will come upon the table. "The petrochemical industry is loving this abundant gas supply, thus low prices, right now because of a low feedstock cost," Vincent says. A recent study by producer EOG Resources Inc. finds that prolific U.S. gas producers have reduced the annual cost of energy to the American manufacturing industry by about $50 billion through low gas prices. Ethane, used in the manufacture of polyethylene, or plastic, was trading at 55% of the Nymex price of West Texas Intermediate crude in early 2010; at press time, it had fallen to some 25%.

"The petrochemical industry can operate plants in the U.S. instead of building them overseas because they have such incredibly low feedstock costs here. It's our gift to America," Vincent says.

Armstrong notes that more than 80% of petrochemicals manufactured in the U.S. use natural gas, while about 60% of olefins produced in the world are made from oil. "When you look at the cost advantage natural gas has over oil, you start to craft a picture of how advantaged the U.S. is because of low-cost gas."

This is rarely noted or acknowledged by policy- and lawmakers, he adds. "There is a great opportunity for us to continue to exploit our gas resources that we have here and to continue to price our petrochemical products well under the international markets."

Vincent expects the administration to stall on the gas-export matter as well as on the natural-gas topic in general. Yet, it will be controversial, he says, as it brings with it geopolitical implications now that non-U.S. companies are increasing their ownership of U.S. gas resources, and will want to monetize it to their fullest potential.

Vincent says, "You would have a lot of implications, if the government wanted to prevent any industry from allowing it to sell its goods and services in the global marketplace. I hope they never go down that path, but I do think there are people who want to. What will happen—and just like you're seeing offshore—is the administration can slow-play things in such a way that there's virtually nothing you can do about it."

8. Gas Prices

McClendon expects the price of U.S. gas will start to improve in 2011 for 2012 and beyond as industrial gas demand rises, market share is taken from coal, and LNG exports and gas-to-liquids technologies begin to become more apparent by 2015.

"Plus, the price will improve upon gas drilling falling by 200-plus rigs in the U.S., if prices stay below $5," he adds.

Meanwhile, what to do with all this gas? Monetize it in global markets? Hoard it for use at home? Farris says, "We shouldn't have to face that question."

A worker is dwarfed by the size of the letter "N" on the tanker's side/ The Cheniere facility's total send-out capacity is 4 billion cubic feet per day and it can store 16.8 billion.

Generally, U.S. gas-industry leaders would like to see greater use of it in electric-power generation and as a transportation fuel. Farris drives a CNG pickup in Houston. Apache itself has built seven CNG fueling stations for its field-truck fleet in the U.S. and in Egypt, and plans another seven this year.

In Argentina, where it operates as well, 26% of all vehicles in the country are CNG-fueled. "We haven't moved the needle here and the rest of the world is moving the needle. Argentina is already using CNG in a big way," he says.

"I hear talk about the cost of infrastructure. Well, everything costs money. If we're going to continue to grow our energy supply, it's going to take more pipelines, ports, everything. Why not put some of that money into CNG infrastructure?"

Armstrong says the U.S. is in a unique position to rapidly increase its use of natural gas. "We have extraction, processing and transmission infrastructure—and markets. If you were to look at trying to create that in countries that are emerging, it is very difficult to replicate what we have here in any kind of timeframe most investors are interested in," he says.

Hackett notes that Anadarko is also replacing field vehicles with CNG-powered ones, and that AT&T, FedEx and many other companies are as well. Also encouraging, he says, is legislation like the Colorado Clean Air-Clean Jobs Act, which was enacted last year. The law will result in fewer coal-fired power plants—which will have to undergo expensive clean-air upgrades—and more power derived from natural gas or other, lower-carbon-footprint sources.

"This is a model that can be applied in other states with significant environmental and economic benefits," Hackett says.

McClendon, who founded the American Clean Skies Foundation and was an impetus in the formation of America's Natural Gas Alliance, hopes the new Congress will be bipartisan in promoting natural gas. "Hopefully, this will be in the form of CNG for cars and LNG for trucks—or, any way." Armstrong says incentives and subsidies are not needed for natural gas to rise to the top. Instead, some deregulation would help. For example, a great deal of the cost of converting a vehicle to CNG or LNG is largely due to emissions rules. "It's really more about staying out of our way than it is about bringing subsidies into it."

Rattie notes that Washington's interference with energy markets has brought more pain than gain. In the past, he says, "the industry has been given a windfall-profits tax; subsidies for synfuels, wind, solar and other uneconomic supply; heavy subsidies and mandates for corn-based ethanol; and the Waxman-Markey 'climate' bill.

"Perhaps the most egregious example of legislation touted as energy policy," he adds, "was the Fuel Use Act of 1978." It banned the use of natural gas in power plants, and resulted in construction of a quarter of the current U.S. coal-fired generating capacity.

"We've asked politicians to 'do something' about America's dependence on imported oil for transportation more recently and what did we get? Ethanol subsidies and mandates and, now, the Chevy Volt." Yet, he says, the future for U.S. natural gas has never looked brighter. "Booming natural gas supply may be the closest thing America has to a 'silver bullet' for energy and the environment in the 21st century."