The major oil companies increasingly are betting their futures on natural gas, with older oil fields producing less crude, and newer ones either hard to reach or controlled by unfriendly nations.
They are focusing more than ever on natural gas because it burns cleaner than oil and is gaining traction as a fuel for transportation. The latest move came Tuesday, when Chevron made a $4.3 billion deal to buy up natural gas fields in the Northeast.
Earlier this year, Exxon Mobil bought XTO Energy to become America's largest producer of natural gas. And Royal Dutch Shell expects natural gas to make up half its total global production in two years.
"If you look at most of the big developments now, they're not about oil, it's gas," said Oppenheimer & Co. analyst Fadel Gheit.
The world will continue to run on crude oil for years to come, but even with new discoveries, oil production is expected to flatten out during the next few decades, according to the latest estimates from the International Energy Association.
Far down the road, Gheit believes, Exxon and Shell will lead the energy industry into a new era where oil companies devote most of their efforts to producing natural gas. The Energy Information Administration expects worldwide natural gas production to increase 46 percent from 2007 to 2035, compared with a 30 percent increase in world production of crude and natural gas liquids.
Gas is becoming more attractive to the oil companies because it's more accessible. While OPEC controls most of the world's oil reserves, it controls less than half of the natural gas reserves.
In the United States and Europe, natural gas is primarily used to heat homes. About three in five American homes use it for heat.
And more and more power plants are using it to generate power. Natural gas is used to generate 23 percent of electricity in the U.S., up from 16 percent a decade ago.
If the country focuses more on reducing greenhouse gas emissions in years to come, the trend should accelerate. Natural gas emits less carbon dioxide than other fossil fuels.
