Exxon Mobil gasses up

December 14, 2009

Talk about throwing your weight around. Exxon’s $30 billion all-stock bid for XTO Energy puts a pretty solid stamp on the natural gas space. It also puts Exxon in a better position to capitalize on energy generation, rather than just heating houses and keeping SUV’s guzzlin’.

The world’s largest publicly traded company lit a fuse that has long tantalized M&A markets. The whole natural gas sector jumped on the news, as expectations grew that an elephantine stampede from big oil was underway. Among the gas names that went bang: Chesapeake Energy jumped 7 percent, Devon Energy Corp rose 5.3 percent, and Canada’s EnCana rose as much as 8.7 percent.

U.S. natural gas prices have been under pressure with inventories of the fuel not far from record high levels. But with the winter winds of change blowing through the world’s increasingly environmentally aware corridors of power, as well as the always heat-hungry U.S. Northeast getting deeper into the snow season, the market for natural gas plays may well have started to look overripe.

Strategically, natural gas provides Exxon with a handy back-door entry into both power generation and renewable energy markets. Wind, solar and other New Age power plays are not consistent enough sources of electricity on their own. They need a backup. That’s where natural gas comes in. It’s an ideal back-up plan, being quicker to fire up than coal or nuclear power, in the case that the wind stops blowing or the sun refuses to shine.

One comment so far | RSS Comments RSS

Natural gas would be a great fuel for 18 wheeler big rigs that are to heavy to run on any form of electric power. Some small trucks might also benefit if we can build up a Natural gas station network.

For most people the electric car is still the best idea.

The last thing I want to see is more natural gas power plants because that’s actually a waste of the fuel and a short sighted use since we should only be building Wind, solar, and nuclear power plants from now on. Even if you don’t believe in global warming natural gas wont last forever and it has more uses in the laboratory than as a fuel. However, you can convert natural gas into hydrogen (the hydro in hydrocarbon is hydrogen) and hydrogen could be used as a pollution free fuel. This could be the spark the fuel cell industry needs.

Posted by TheSanDiego | Report as abusive

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