Leaders of the major oil and gas companies are gathering this week at the Oil & Money Conference in London, and one of the top executives is saying natural gas is here to stay. During the event Shell CEO Ben van Beurden mentioned that Shell expects that by 2035 global gas demand will grow annually by 2% -- twice the pace of worldwide energy demand -- thus fueling the need to continue producing and transporting the commodity around the world.
Big oil companies including Royal Dutch Shell (RDS.A) , BP (BP) and Total (TOT) are moving with growing urgency to develop cleaner energy sources, investing in solar and wind power, electric vehicle technology and even forestation.
Total holds a 25% stake in Clean Energy Fuels (CLNE) , a stock we recommended in a prior RealMoney column. BP expanded its solar business in the U.S., BP Lightsource, with the acquisition of power generation assets on the East Coast. Shell has begun to allocate up to $2 billion per year, out of a global budget of $30 billion, for electric power and alternative energy sources like wind and solar as it diversifies its approach through its Shell New Energy Division.
Global energy companies are betting that the demand for natural gas will increase rapidly over the next two decades, thus putting the economics and reliability of renewable energy sources through major tests.
While there has been a strong push for renewable energy and reduction in fossil fuel consumption around the world, cheap natural gas, at least in the U.S. and Canada, has opened the door to greater investment in natural gas-fired technology and vehicles. Shell being one of the large movers with its recent decision to invest in a large liquefied natural gas (LNG) facility in Western Canada.
On the consumer side, Clean Energy Fuels has pioneered the use of natural gas-fueled vehicles and is our top growth company. On the natural gas producing side, a company on our radar is Comstock Resources (CRK) , which recently did a deal with Dallas Cowboys' owner Jerry Jones. CRK is actively looking for acquisitions of smaller companies that don't have the resources to develop their acreage. CRK is a $1 billion market cap company operating in East Texas and Louisiana and is well-positioned to leverage the boom in liquefied natural gas exports.
CLNE and CRK are true takeover candidates given their early stage status, specialization and regional locations.