Exxon's move into natural gas points to energy self-reliance for the US
Monday, December 21, 2009 at 03:42PM Exxon Mobil Corporation's purchase of "unconventional" natural gas producer XTO of Texas for $31 billion is a strong indicator of where America's energy needs will be met in the future. The move is seen as an important development in the country's move to energy self-reliance and security, as well as in taking better care of the environment. Exxon's long-term business strategy in shifting from oil into gas is based on the belief that unconventional gas will play a critical long-term role in supplying the North American market. Exxon CEO Rex Tillerson sees demand for natural gas growing 50 percent by 2030, much of it used for power generation.
Dallas investor Boone Pickens has long advocated natural gas as an alternative to oil and has argued that the United States needs to reduce its dependence on foreign oil suppliers. The US currently imports over two-thirds of its 19 million barrels a day, much of it from OPEC countries and Canada. By contrast, the US is 98.5 percent self-reliant on natural gas from North America. Reserves of natural gas in the United States and Canada are estimated at 2,300 trillion cubic feet, 500 Tcf of that in shale gas reserves. This is enough gas to last the United States for more than a hundred years.
Natural gas is a fossil fuel and President Barack Obama included it along with coal and oil in his list of fuels to be phased out over time in favour of solar, wind and other alternative energy sources. However, natural gas has about half the carbon footprint of coal and a third that of oil, making it the least environmentally destructive of the fossil fuels. Its proponents, and they are many, see it as a bridge fuel, one that could see America through the transition years from oil to other forms of energy, a process that will take several decades at least.
In July, 2008, the House Select Committee on Energy Independence and Global Warming held a hearing into the role of natural gas as a solution to global warming. The chairman and CEO of Chesapeake Energy Corporation, Aubrey McClendon, testified that the US is on the way to "national bankruptcy and must change our ways."
The good news is it’s easy to change—we don’t need a new fuel, we don’t need new engine technology, we don’t need hundreds of billions of dollars. All you have to do is modify or replace today’s internal combustion engines that run on gasoline and diesel and replace them with an internal combustion engine that runs on natural gas. And that’s natural gas that costs less than half the price of gasoline, is more than two-thirds cleaner, and best of all, is produced right here at home in America, and we are proving to skeptics everyday that there is plenty of it.
According to McClendon, it would take just eight years to convert 10 percent of American cars to natural gas and increase the country's consumption by only 1 percent. With 3.4 percent of the world's known natural gas reserves, the US is the fifth largest source of the fuel.
Testifying at the same hearing, Denise Bode, president of the American Clean Skies Foundation (ACSF) said,
This is the age of natural gas. Frankly, no other energy source can do so much for America from fueling our vehicles to generating our electricity and do so as cleanly as American-produced natural gas . . . The fact is America has substantial natural gas to fuel its future beyond this century and at a price that is likely to remain less than half the price of oil and will provide significant environmental benefits as well.
Many questions remain regarding the future role of natural gas in the world economy, but the entry of a major player like Exxon indicates that the game is changing.
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