Crude oil companies claim that natural gas is the fuel of the future
Potentially dangerous and more difficult to store oil, natural gas was recently seen as an alternative side of oil companies. Now, he dominated strategies for business development of many Western oil giants. Seven of the eight projects of the largest oil company in the world Exxon Mobil, which ended last year were related to natural gas. Two of its three projects planned for this year are also devoted to the blue fuel, writes The Economist. Europe’s largest oil company Royal Dutch Shell at the same time plans by 2013 about half of the extraction of energy raw materials accounted for by natural gas. Current high oil prices are still “reward” energy companies, but representatives of major sectors in the West are becoming increasingly oriented towards natural gas. The reasons are of various kinds – geological or political, but increasingly are also associated with difficulty in opening new fields. World oil production is expected to reach its peak within a few decades, if not soon. Accessible deposits that are easy and cheap for production, are becoming extinct, many of them (90%) are in the hands of state oil companies from the East. Common practice to block them access to Western oil companies operating in these deposits, which forced Western companies to extract oil from more expensive and inaccessible deposits.
Such deposits are in deep waters, that of BP in the Gulf of Mexico. Sometimes even the oil comes from unconventional sources such as tar sands of Canada. All this greatly increased interest in natural gas last year, sparking a series of large acquisitions. In March, Shell, together with PetroChina, the Australian company to buy natural gas Arrow Energy for 3.2 billion dollars. ConocoPhillips paid $ 5 billion for another Australian gas company – Origin Energy, at the end of 2008, Chevron plans to spend nearly $ 40 billion in 2010 to plant for liquefied natural gas off the coast of Australia and a dozen similar projects in the country. Almost all acquisitions and projects include a large western company as a leading shareholder. Shell announced in May it would pay 4.7 billion dollars for the company for gas extraction East Resources, which operates the largest deposit near the U.S. east coast. In December 2009 Exxon Mobil has proposed a $ 41 billion company XTO Energy, specialized in the production of gas. According to Ernst & Young deal, which was approved on June 25, will lead to a new wave of major acquisitions in the sector. Furthermore, the gas becomes more expensive compared to oil extraction. Over the past two years the cost of extracting oil out of the blue land have fallen by half. At the same time, the lack of accessible oil deposits make new mining projects more expensive. Kashagan oil field in the Caspian Sea, one of the largest discovered in recent decades, will become operational in 2012, or seven years later than planned. Cost is expected to entitlements involved exceed $ 100 billion. In the meantime the environmental disaster caused by the sunken oil rig of BP in the Gulf of Mexico could increase costs even more because of tighter regulation in the sector. At this stage, Qatar is the largest exporter of natural gas in the world, the country’s state-owned companies often collaborate with their Western competitors because of their accumulated experience. Cost of extraction of gas vary in large intervals, but overall investment in such projects is less exposed to the risks of volatility of commodity markets, unlike oil. This provides some degree of security companies that are oriented towards production of natural gas in the long term. Blue fuel prices are more predictable at this stage, while oil companies may not know whether a barrel of crude oil will sell for $ 150 after five years, or half. Oil projects look more expensive and risky because of its dependence on volatile oil futures market. At the same time provides natural gas growth in the long term and relatively stable returns. Moreover, environmental risks are assessed as minor. Advantage of blue fuel and also give estimates of its growing demand and expected changes in policy affecting the energy sector, resulting from global climate change. According to Exxon Mobil gas demand in 2030 will be 55% higher levels compared to the 2005 International Energy Agency forecast while oil consumption worldwide will grow by no more than 0.5% per year to the same in 2030. Electrification and industrialization in developing countries will create a need for new power plants and energy sources. If governments start to levy higher taxes on carbon emissions is not precluded much of the energy needs be met by natural gas. If a tonne of carbon dioxide is taxed from $ 30, natural gas, which is two times less polluting than coal, will become the preferred fuel for new plants. If the tax is doubled to 60 dollars, then blue fuel can compete with nuclear and wind energy, according to Exxon Mobil. So far, the efforts of governments in the world to reduce carbon dioxide emissions have stalled, but the biggest oil companies have already made their pledge for the future, which is heavily dependent on gas and less oil.
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