Unconventional Exxon

The Unflappable Oil Giant Changes Tack

Exxon recently announced its acquisition of XTO Energy Inc. XTO is one of the leaders in the business of extracting gas from shale and other dense geological formations—a technique that has caused a jump in America’s output of gas and seems likely to boost production elsewhere.

Exxon had been gradually building up its reserves of such “unconventional” gas. But in recent years leases in America had become very expensive, and Exxon had turned elsewhere instead.  By buying XTO, Exxon aligns its fate more closely with the price of natural gas, rather than oil.

Exxon’s Chief Executive Rex Tillerson obviously expects the price of gas to rise. It is the least polluting of the fossil fuels, which means it should be in demand if the world adopts tighter constraints on greenhouse gases. And as the past few years have shown, Exxon likes to play a long game.

Source: The Economist