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Energy giants opening natural gas spigots, fueling profit rise

24 July 2018
Economics&Markets
energynomics

The world’s largest oil companies are pumping more natural gas than ever before, helping to spur a rise in profits while sating rising global demand for fuels that can mitigate global greenhouse gas emissions.

This marks a shift over the past decade for an industry that once focused predominantly on crude oil, with gas in most cases an after-thought. Now, the rise of gas-powered electric generation, surging production from U.S shale fields and the burgeoning liquefied natural gas (LNG) industry that makes shipping the fuel possible, have conspired to create a boom.

BP Plc, Exxon Mobil Corp, Royal Dutch Shell Plc, Total SA and Chevron Corp have collectively increased natural gas output 15 percent in the past decade thanks to better technology and lower costs, according to data from Wood Mackenzie energy consultancy.

Analysts expect all to post double-digit increases in second-quarter profit in coming days, according to Thomson Reuters.

“LNG is the growth commodity for these companies,” said Brian Youngberg, an energy industry analyst with Edward Jones, who expects the global LNG industry to grow at least 4 percent annually for the next five years.

At Total, gas is actually 61 percent of output, up from 47 percent as recently as 10 years ago, according to WoodMac.

Total is expected by analysts to post a 44 percent jump in second-quarter profit on Thursday to $3.56 billion, according to Thomson Reuters.

Even as gas production has risen, so too have reserves of natural gas. International energy companies saw gas reserves jump 16 percent last year to 35.33 billion cubic feet, according to a study by the EY consultancy.

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