Experts dissected the big picture at the big show last month in Houston, the 20th annual oil conference of Cambridge Energy Research Associates. Long-term global oil and gas trends for supply, demand and price dominated as nearly 900 executives, a third of those from abroad, met to discuss leadership and restoring confidence in corporations. Much of the talk centered on the implications of rising Russian oil production and world LNG trade, offset by declining oil and gas supplies in North America and the U.K. Overhanging all this was the specter of war in Iraq, and Venezuela's temporarily disrupted, but oh so necessary, oil production. The energy world is on the cusp of big changes, the speakers agreed. Strategic supplies are shifting from known to unknown basins. Costs are rising. Flows of oil, natural gas and liquefied natural gas are forging new alliances and dependencies. Gas is no longer a localized or even a regional commodity, but one with geopolitical implications to be learned. "Gas is becoming a global commodity," said Simon Blakey, CERA senior director. "In the 1970s we found ourselves no longer self-sufficient in oil, so we began sucking huge quantities of it from abroad, and the price rose...The world gas industry is seeing the same signs. The Lower 48 is no longer self-sufficient. Asian and European gas executives have had to deal with international business and geopolitical issues, but the U.S. industry has not, until now." It will have to balance business issues versus geopolitical challenges in the countries from whence our gas and LNG supplies will come. Existing North American supply basins cannot meet the demand challenge ahead, agreed Hal Kvisle, president and CEO of TransCanada PipeLines Ltd. "What up to now has been a continental market will change. LNG will certainly be required, and we see significant volumes coming from Europe and elsewhere. Those volumes will compete with Alaska and Mackenzie Delta gas projects, more than those two will compete against each other." The American Gas Association says that as much as 9 trillion cubic feet of the increase in projected demand will have to come from Alaska and LNG sources. Indeed, two years ago, LNG was an interesting sidelight topic at CERAWeek, but this year it was a large part of the conversation. The new risk? 'The North Atlantic Basin and the Asia-Pacific markets will intersect in the Middle East," said Phillipe Van Marcke, former president of Tractebel. Asia is starting to import more gas, and will thus compete with Europe for Russian, Caspian, African and Middle Eastern gas. Iran and Saudi Arabia will become major gas producers, with Iranian export capacity set to exceed that of Canada by 2020. "We are looking at a new geography of world energy, one requiring massive investments in new oil and gas infrastructure," said Walter van de Vijver, Shell Exploration and Production CEO. "Annual investments in oil will need to double over the next 20 years...in gas, annual investments will need to triple." Thus we find it ironic that more E&P companies appear to have de-emphasized production growth targets in favor of improving their financial returns. (Perhaps because they cannot, in fact, grow production consistently without making a merger or acquisition?) During CERAWeek, BP indicated where it comes down on the growth-versus-returns debate. The company's hydrocarbon output grew only 2.9% last year, and BP thrice reduced its production growth goals, which caused its stock to fall. No wonder BP felt keen to jump on a massive Russian opportunity that will greatly increase its production, by buying TNK (Tyumen Oil Co.). But for an individual company to increase its production is irrelevant, when it comes at the expense of production declining elsewhere. What about achieving incremental production for the world? That task is enormous, noted ExxonMobil chairman and CEO Lee Raymond in his opening address. "Net oil imports into the U.S. and Europe may grow by 3 million barrels a day over the next couple of decades. Those significant increases are dwarfed by an expected increase in Asia's net imports of about 15 million barrels per day. Industry may need to add 80 million oil equivalent barrels per day over the next decade to meet projected demand-an amount equivalent to two-thirds of today's production." Diversity of supply-of oil and gas-will be more important than ever. So will applying new, more efficient technologies to wring the maximum out of a reservoir for the least cost. And so will new alliances, between companies and countries. Said Gwyn Morgan, CEO of EnCana Corp.: "In North America there is more buying than drilling, and frankly that leads to less supply. And a lot of what you buy is tired and expensive. "Independents don't have refining and marketing to balance the E&P cycle, so they must explore and develop and show strong internal growth all the time instead. It's up to them to supply new ideas as the super-majors leave all the traditional basins in the OECD." Gentlemen, start your engines.