ExxonMobil’s natural-gas plunge makes sense globally and in Colorado

Analysts are calling ExxonMobil’s $31 billion acquisition of natural-gas giant XTO Energy a much safer bet than a similar leap made by energy conglomerate ConocoPhillips into natural-gas production when it purchased Burlington Resources for $36 billion in 2005.

Xto

ConocoPhillips bought when gas prices were soaring and production was booming, according to the Wall Street Journal. Now those prices have plummeted due to decreased demand associated with the global recession.

But natural gas is increasingly the darling of the hydrocarbon set because it burns 50-percent cleaner than coal and is viewed as a bridge fuel to renewable energy that will gain favor if Congress passes climate-change legislation.

Natural gas production has typically been dominated by smaller, independent operators, but ExxonMobil is no stranger to the natural gas industry in Colorado. The company is very active in Rio Blanco County in the northwest part of the state, and it also owns significant water rights in the Colorado River Basin.

ExxonMobil also chipped in $1 million to help defeat Amendment 58 in 2008, which would have removed a state property tax exemption granted the oil and gas industry in the 1970s and then created a pool of money benefiting higher education, renewable energy and wildlife habitat.

Industry analysts say ExxonMobil is also betting on new technology and hydraulic fracturing techniques that have made hard-to-access natural gas reserves much more accessible domestically and around the world. However, there is growing environmental pressure on federal and state officials to regulate those techniques and better protect groundwater supplies in the United States.

Got a tip? Freelance story pitch? Send us an e-mail. Follow The Colorado Independent on Twitter.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.