Exxon's enormous bet on natural gas

A Globe and Mail article says that Exxon "is making an enormous bet on a commodity most had counted out". The Exxon/XTO deal "serves as a major validation of a strategy pursued by smaller companies who have bet that gas reserves trapped in dense rock will profitably underpin the North American energy sector for decades to come." This could include companies like Canadian Spirit Resources Inc.

The article further states that "the Exxon purchase has already raised the value of nearly a dozen compnies with major shale gas holdings, including Encana and Talisman Energy, whose profile could now be elevated in the eyes of other global energy superpowers."

"You couldn't have a more credible enterprise sanctifying the unconventional industry in North America," said Martin Molyneaux of FirstEnergy Capital Corp. "It pretty much revalues the whole industry up and down the value chain both in Canada and the United States."

Exxon CEO Rex Tillerson said the acquisition is meant to "complement its foreign unconventional gas assets, including its participation in the Montney and Horn River shale plays in northeastern British Columbia." Exxon is forecasting natural gas demand to significantly outpace demand for both oil and coal over the next two decades. He says that natural gas is increasingly the fuel of choice for power providers becuase it emits less greenhouse gas pollution than coal.