A major shift in America’s energy landscape is well under way as major oil companies have begun to forsake their bread and butter energy source, crude oil, and focus instead on the abundant opportunities for producing cleaner burning natural gas. According to the Associated Press:
The major oil companies are increasingly betting their futures on natural gas, with older oil fields producing less crude and newer ones either hard to reach or controlled by unfriendly nations.
The AP quotes Oppenheimer & Co. analyst Fadel Gheit, who says, “If you look at most of the big developments now, they’re not about oil, it’s gas.”
One of the reasons why is the abundance of natural gas in the U.S. Our country has more shale gas than Saudi Arabia has oil. Another reason the article points out is that much of the world’s oil is controlled by foreign governments, while natural gas is a much different story. It’s “more attractive to the oil companies because it’s more accessible. While OPEC controls most of the world’s oil reserves, it controls less than half of the natural gas reserves.”
The difficulties of dealing with cartels and state-owned oil companies is one of the many reasons that natural gas investments have jumped through the roof:
This year, Big Oil jumped in. Exxon bought XTO for more than $30 billion, immediately making it America’s largest natural gas producer. XTO so far has helped Exxon increase its natural gas production by 50 percent.
Then Shell agreed to buy East Resources Inc. for $4.7 billion, and China’s state-owned offshore oil and gas company, CNOOC Ltd., invested $2.16 billion in oil and gas fields owned by Chesapeake Energy.
One final aspect driving natural gas is the attractive options of using it as a transportation fuel.
Natural gas is used in small amounts for transportation in the U.S., mostly for city buses and garbage trucks. The oil industry is pressing Congress to add financial incentives for trucking and freight companies to convert their fleets.
Read more HERE.