exxon bets on growing gas demand

Dec. 14 (Bloomberg) -- Its a long article so here's just a couple of extracts:

"Exxon Mobil Corp., the biggest U.S. oil company, agreed to buy XTO Energy Inc. for $31 billion in a bet that U.S. emissions restrictions will spur increased demand for natural gas."

“This says that corporate M&A is alive and well in the exploration and production sector,” said Curtis Trimble, an analyst at Natixis Bleichroeder Inc. in Houston. “It also says that Exxon isn’t shy about stepping up their exposure to the natural-gas market. Almost certainly, we will see some more follow-the-leader type transactions.”

Exxon, which also will assume $10 billion in debt, will get the largest producer of U.S. natural gas. Demand for the fuel will grow as U.S. carbon legislation prompts power producers to switch from coal, Kenneth Cohen, Exxon’s vice president for government affairs, said in a Dec. 7 interview. "

The article also says that good sized reserves are becoming hard to come by. XTO Energy has "unconventional gas reserves" which are reserves in Shale beds in Texas.

So .. Exxon sees BIG growth in gas use in a low-carbon future with a switch to gas fired power generation from coal. Some similarities to the majors all moving into the Australian CSG sector I reckon. Expect more of this sort of "consolidation" in the energy sector I reckon.

H