Exxon Holds Its Ground

Nearly a year ago, Exxon Mobil made a multibillion dollar bet on its vision that natural gas will become a dominant fuel during the next few decades. Tuesday, Chevron made a similar, albeit smaller, wager on a domestic natural gas producer. As Chevron starts to sell its Atlas deal to shareholders, Exxon continues to have trouble convincing its investors it made the right move.

Still, Exxon isn't veering from its long-term strategy of bulking up on U.S. natural gas. In December, the oil company announced plans to buy XTO Energy Inc. of Fort Worth, Texas, making Exxon the largest gas producer in the U.S. This summer, it bought gas producer Ellora Energy Inc. of Boulder, Colo., for $695 million, and opened a terminal along the Gulf Coast to import natural gas from the Middle East.

All the while, the price of natural gas has been falling, and is off 21% since Exxon announced the $25 billion XTO deal. On Tuesday, natural gas futures contract for December settled up 12.2 cents at $4.210 a million British thermal units on the New York Mercantile Exchange. The commodity is trading at low prices after newly developed drilling techniques exploited tight shale gas rock formations during the past decade, creating a glut.

The XTO acquisition lifted Exxon's energy output by nearly 14%, but brought in only about $150 million in net earnings in the third quarter, the first in which Exxon reported financial data that included XTO. That is about 3% of what the company earned from the sale of oil and natural gas during that period......Read the entire article.


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ExxonMobil: A Big Bet on Natural Gas

Exxon Mobil is the biggest publicly traded company in the world, but its stock price has been lagging over the last year chiefly because a lot of people wonder why it’s making such a big bet on natural gas. Exxon Mobil spent $41 billion a year ago to acquire XTO Energy, doubling its natural gas reserves. And it is building up a massive liquefied natural gas capacity around the globe. Too bad for Exxon Mobil that a gas glut in the United States and elsewhere is causing gas prices to tank, and a boom in shale drilling promises moderate prices for years to come.

I caught up with William M. Colton, the company’s vice president for corporate strategic planning, late Friday afternoon and asked him about natural gas. I got an earful of passionate praise for the product that Exxon Mobil has staked so much on. There is no doubt about gas with this executive. “If there is any kind of major trend, we think it’s going to be a shift toward more natural gas,” he said. “Natural gas is available. It’s the most efficient way to generate massive power. It’s affordable. We already have gas infrastructure in place. From a CO2 emissions standpoint, it’s 60 percent cleaner than coal, and it’s all U.S. We have 100 years of supply.”

And for the world? “Natural gas will be the fastest growing fuel to supply the world’s growing demands into the future.” Okay, okay, natural gas is great then. But can it ever be profitable?
That’s where the discussion gets really interesting. Mr. Colton thinks policymakers are one day going to put a price on carbon dioxide emissions, a debatable point of view, perhaps, now that cap and trade legislation looks dead in Congress and some anti-tax Republicans appear poised for victory on Tuesday......Read the entire article.

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Gas Glut May Grow as XTO, Devon Wells Prove Prolific

The largest U.S. natural gas producers may be doing too well at the wellhead for their own good, pumping so much of the heating and power plant fuel that prices won’t soon recover from last year’s market collapse. XTO Energy Inc. and Devon Energy Corp., two of the five largest producers of U.S. gas, yesterday reported record output and smaller declines in earnings than analysts estimated. Anadarko Petroleum Corp., London based BP Plc and Chesapeake Energy Corp. previously reported second quarter output gains that helped them beat estimates.....Complete Story

The Father Of Shale Gas, An Interview With George Mitchell

Drawn by impressive initial production rates, unconventional shale natural gas plays have been developed at a fever pitch in recent years by independent exploration and production companies like Devon Energy, Goodrich Petroleum and XTO Energy. But it's costly. First they drill down several thousand feet and bank the bit horizontally through the shale. Then they send a 2 million to 4 million gallon mixture of water, sand and chemicals down to break open the rock and release the gas. George Mitchell and his engineers developed the techniques to exploit shale in the Barnett Shale formation in North Texas.....Complete Interview

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