This week, ExxonMobil followed the trail of other oil majors that have invested in independent U.S. natural gas producers, including BP, StatoilHydro and Eni, by beginning the acquisition process for XTO Energy.  The $41 billion deal provides ExxonMobil with 4,500 billion cubic feet of natural gas resources—mostly from unconventional sources, including shale rock, tight sands and coal bed methane.  The financial investment in technology required to effectively produce these resources is substantial, but important, for long term economic prosperity.

From a resource perspective, the United States has a growing demand for electricity.  In fact, consumption is forecast to rise 30 percent by 2035, and natural gas is likely to become an even more valuable source of generation.  (Natural gas has also been touted as a potential fuel in certain fleet vehicles, such as buses).

Two major themes underlie this line of thought:

• Technological:  Vehicles, the primary users of oil, continue to become more efficient in their use of gasoline and shift towards electricity for propulsion
• Environmental:  Interest in reducing carbon emissions (and perhaps ultimately a price on them) places natural gas at an advantage over coal as a scalable electricity generation source

From an economic perspective, the technical know-how that can be developed by our largest and most successful companies can be a major driver of U.S. economic growth over the long term.  Before new technologies rendered unconventional sources of natural gas viable U.S. supplies were estimated at just 30 years.  From a security perspective, these investments will help us reduce our dependence on oil and develop 100 years worth of domestic natural gas reserves.

The shift towards greater use of natural gas is by no means the only solution to our energy challenges, but it is one of several core pieces.  It must be complemented with, among others, an expanded role for emissions-free nuclear and renewable energy, continued technological innovation in transportation, higher levels of residential, commercial and industrial energy efficiency, and sound policymaking at all levels of government.

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