Less crude

5 August 2010 By Christopher Swann

Oil companies are becoming less liquid but not in a financial sense. The industry is drifting towards gas, with the fuel now so plentiful. The natural gas glut should spell lower returns for shareholders and hand an advantage to the oiliest majors, especially Occidental.

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Major U.S. oil companies are deriving an increasing share of their output from natural gas, as oil becomes harder to access.

Oil output is down 5 percent from 2005 at Exxon Mobil while its share of output from gas has risen from 37 percent in 2005 to a projected 44 percent in 2010. At ConocoPhillips gas output has increased from 32 percent in 2002 to 43 percent last year. At Chevron, gas production is forecast to climb to 41 percent out output by 2017, up from just 31 percent last year.

The U.S. Department of Energy is expecting conventional oil output to rise by an average of 0.7 percent a year up to 2035. It is forecasting gas output to rise at twice this pace.

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