Many oil companies have taken positions in natural gas over the past several months, seeking to take advantage of large new plays such as the Marcellus Shale in the U.S. Northeast and the Niobrara in the Denver-Julesburg Basin in Colorado and Wyoming.
That doesn’t mean there’s an exodus from oil to gas. Exxon Mobil’s chief executive Rex Tillerson made that clear recently at the company’s annual meeting of industry analysts in New York.
“There is no bias for us one way or the other,” Tillerson said. “At the end of the day, what you put in your bank account are dollars. You don’t put oil or gas molecules in the bank account.”
Rising oil prices have increased calls for more domestic oil production in the United States in an effort to bring down higher gasoline prices, seen as a threat to the economic recovery, and reduce dependence on foreign oil. Higher prices for oil also are seen as an opportunity for companies who continue to see depressed prices for natural gas and are reconsidering their investments there.
Chesapeake Energy and Denbury Resources already have sold off some natural gas assets to invest more in oil.
Tillerson, in his remarks to analysts, acknowledges his company benefits from rising oil prices. Exxon made profits of $30.5 billion in 2010. The CEO said oil demand is rising in Asia, an area of rapid economic development.
The company expects worldwide transportation demand – and the subsequent need for oil refined into gasoline – to rise 40 percent in those emerging economies over the next several years.
Tillerson said 80 percent of Exxon’s new production in the next five years likely will be oil from Canada (the largest oil exporter to the U.S.), Iraq, Kazakhstan and Russia. Its Canadian oil sands venture is one of 11 major project start-ups planned over the next three years.
Still, Exxon Mobil continues to divide its resource base equally between oil and natural gas, even as it plans more oil production. The Irving, Texas-based company upped its gas holdings in 2010 when it purchased Fort Worth, Texas-based XTO Energy Inc.
Tillerson said Exxon’s gas production jumped 13 percent last year, with more than half the increase attributed to the acquisition of XTO.
Exxon’s purchase of XTO positioned it as the nation’s largest natural gas producer. The company says it produces shale oil and gas across 6 million acres, with its largest gas holding nearly 250,000 acres in the Barnett Shale in Texas.
The company in its forecasts has said it expects gas-fired power generation to increase by 200 percent over the next 20 years, as coal-fired power is retired and replaced by natural gas.
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