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Exxon sees gas potential in XTO deal
An ExxonMobil sign
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Kai Ryssdal: We'll get to our coverage of the UN climate conference in just a bit. But there was merger news today that plays directly into the debate over what to do about global warming. The country's largest oil company made a big bet on natural gas today. ExxonMobil is going to spend $41 billion for XTO Energy. It's a big player in the ever-expanding market for natural gas. This is one of the biggest corporate takeovers of the year.
And Sarah Gardner reports from the Marketplace Sustainability Desk, it is also a sign of a shift away from oil and coal.
SARAH GARDNER: This is Exxon's biggest corporate deal since it merged with Mobil in 1999. XTO owns natural gas fields all over the United States. They tap what's known as "unconventional" gas reserves, including gas in beds of shale rock.
Raoul LeBlanc at PFC Energy says that business is booming in the U.S. right now.
RAOUL LEBLANC: The companies that have been pursuing unconventional gas have been posting growth rates that make all the super majors green with envy.
Super majors like Exxon, whose oil reserves and production growth have been shrinking. XTO, on the other hand, boosted production 23 percent last quarter. New technology now allows companies to tap into vast U.S. natural gas reserves that were once inaccessible.
Energy expert Phillip Verlager says Exxon sees huge potential for natural gas here, especially since it burns cleaner than other fossil fuels.
PHILLIP VERLAGER: Exxon clearly sees an advantage for natural gas over oil and coal given the current environment to limit emissions. Whether we pass a bill through Congress or whether EPA limits emissions, it is going to be more expensive to burn other fossil fuels, and this will give Exxon an advantage.
Verlager says Exxon also sees one other advantage in this deal.
VERLAGER: Owning resources in the United States is a much safer bet.
Compared to say, Iraq, where this past weekend Exxon declined to bid in the latest auction of Iraqi oil licenses.
I'm Sarah Gardner for Marketplace.
George B, who decline to reveal your full name, from oil country, thank you for the documentation from Wikipedia, the recognized source of scientific truth. I really do have a lot more than a clue, and this is not the forum to debate you at great length, but judging from past behavior of energy companies, I for one have little faith in their assurances that they can extract these resources safely. Don't I remember something about the despoliation of Alberta for oil shale? Try reading this account of the effects of "hydraulic fracturing": http://www.nytimes.com/2009/12/08/business/energy-environment/08fracking..., or is this eastern liberal propaganda?. We in New York State are undertaking a vigorous examination of this questionable technology before we risk polluting New York City's watershed for the sake of a few bucks. It all belies the biggest question: why is Exxon planning to burn more fossil fuels when doing so is the source of our current mess, when they could be enlightened and promote alternative energies? Could it be for short-term "shareholder value?"
One other aspect of this that you didn't mention, and should have: apparently natural gas extraction permits are available here in the U.S., but based on the news stories I've read over the past year or so, if Exxon developed a way to extract *oil* as cheaply and cleanly as natural gas, it most likely wouldn't be able to get a permit. If you can't get a permit to drill in the U.S., and where you *can* get a permit is in a war zone with an uncertain political future and a history of corrupt governments, the sensible thing to do is to start drilling something else.
Richard, you really don't have a clue. Natural gas powered turbine generators are essential backup power for wind power. They get paired together. Regarding the drilling process itself, it's noisy while the well is being drilled and completed and heavy trucks can tear up rural roads, but the gas wells themselves are mostly just fairly benign pipes in the ground. Shale gas is "unconventional" in that it's trapped diffusely in source rock vs. conventional gas trapped in more concentrated pockets. While you bitch and moan in NYC, people in Texas and many other fly-over states are working hard to keep the lights on.
It is entirely appropriate to note the juxtaposition of the world's nations struggling in Copenhagen to find some way to preserve our fragile environment with Exxon/Mobil arrogantly flaunting at the same moment their intention to go ahead full bore encouraging further exploitation of the same fossil fuels whose reckless consumption has brought us to this pass. Moreover, how many natural environments will be despoiled, how many animal habitats ruined, how many watersheds polluted as Exxon maximizes shareholder value using "unconventional" means to extract the last few BTUs of energy from these carbon-based fuels that are compromising the future of our planet? Where is Exxon's commitment to alternative-energy sources that will free us from this grimy bondage?
