Green Sheet

The AMAZING Corporate Anthem Of Russian Gas Giant Gazprom

Joe Weisenthal — Tue, 05 Jan 2010 17:27:00 -0500

Update: A commenter reminds us we've posted this before, but you know what, we don't mind. If we had forgotten about it, then surely several readers have, too, and it's just that good.

Original post: Russian gas giant Gazprom has an amazing corporate anthem which starts with the lyrics "Don't bother trying, you'll never find a surer friend than Gazprom." It's not new, but it never gets old, and you will enjoy watching it immensely.

Join the conversation about this story »

See Also:

Peak Oil Believers Wonder Why Every Government Ignores Them, Conclude It's Due To A Giant Cover Up

Vincent Fernando — Tue, 05 Jan 2010 16:45:00 -0500

The Oil Drum hosts a research piece that wonders why peak oil isn't even discussed or worried about by energy experts in governments all around the world.

We'd add that peak oil isn't really discussed by most energy companies around the world either when they host analyst calls or talk about their strategy.

At least nowhere near the degree that peak oil disaster scenario believers do.

Yet, interestingly, rather than confront their own assumption that peak oil is the global disaster they make it to be, this article at The Oil Drum ignores this and concludes that non-believers around the world are either A) suffering from psychological 'cognitive biases' or B) in it together in a giant global cover up (combining many enemy governments at odds with each other, plus competing corporations we might add).

It seems the peak oil disaster boat is sinking. You be the judge, emphasis added:

The Oil Drum: Anyone aware of peak oil has had to wonder (at least briefly) why the world's governments seem to be ignoring the issue.

...

“The growing popular debate on ‘peak oil’ has had relatively little influence on conventional policy discourse. For example, the UK government rarely mentions the issue in official publications and …..'does not feel the need to hold contingency plans specifically for the eventuality of crude oil supplies peaking between now and 2020'.”3 The report notes that “the UK is one of many countries that are failing to give serious consideration to this risk.”

...

Nate Hagens has argued here “that despite facts, we exhibit certain cognitive biases that prevent us from acting on complex or frightening subjects outside of our day to day realities.”9 This category would include the notion of “cognitive dissonance” and other psychological factors that save us the trouble of facing difficult facts or “truths”, including that of our own mortality. The sheer difficulty of believing, or grasping, as consequential a figure as Hubbert's Peak, is well supported by anecdotal evidence among peak oilers who commonly report a “glazed-over” response to their efforts

...

What if the silence on peak oil is not a betrayal of national interests, but a policy choice informed by national interests? What if, with Mike Ruppert, we accept that there are “conspiracy facts”, and that the silence on peak oil is one of them?

“Most people have... a serious misconception: That misconception is a belief that there is an urgent need to somehow make key decision makers and leaders of American and global life aware of the immediate problems of Peak Oil and Natural Gas. Nothing could be more off base. The world's key decision makers have been aware of and planning for this crisis for years.”

Read the full article at the Oil Drum and tell us if we're wrong >>

Join the conversation about this story »

See Also:

How The Housing Bubble Destroyed Our Future

John Carney — Tue, 05 Jan 2010 16:33:00 -0500

Let’s face it.

We are in something of an innovation rut.

We’ve been hearing about the promises of everything from mapping the human genome to nanotechnology to clean-green tech for the better part of a decade, without seeing very much by way of results.

The venture capital community seems torn between the feeling that there are not enough truly innovative ideas to fund and the idea that there aren’t enough funds available for innovative ideas. In a sense both are probably true since hard to come by funding discourages innovation.

Even some of the hottest ideas in the last couple of years seem like retreads. Or, at best, old ideas that have been improved. From Dodgeball to Foursquare, from Friendster to Facebook: these aren’t so much innovations as improvements on existing models.

What’s gone wrong? Much of the lack of innovation can probably be blamed on the malinvestment that resulted from the housing boom. It’s not just that too much funding got directed into housing—too much human capital got directed into housing and finance during the boom.

This is all too obvious on Wall Street these days. Most financial firms, stung by the tech bust and investor fears of tech companies, shrank their operations in this sector while pouring talent and funds into housing related sectors. Many of the big names who might have mentored the next generation of tech oriented financial professionals were driven out by legal troubles stemming from the dot com bust or by the fact that their firm’s just weren’t interested in keeping them around.

The result is that most financial firms lack the in-house expertise to invest in innovative business ventures on any meaningful scale. The credit departments don’t know how to evaluate loans to these companies, the special executions groups don’t know how to make private equity investments, investment bankers stink at pitching acquisitions, and the capital markets desks do not know how to take companies public.

What’s more, there was so much money to be made in derivatives and credit—largely arising from the underlying housing boom—that many of the smartest people got drawn into these areas rather than tech innovation. Basically, we got lots of questionable financial innovation instead of technological, medical, or environmental innovation.

If all of this had worked out to make us fabulously wealthy, there might not be much to complain about. The tech, green and bio-tech communities would just sound like special interests complaining their favored projects weren’t capturing as much attention and wealth as the enthusiasts think is deserved.

But that’s not what happened. The dearth of technological innovation is largely attributable to government regulations and a loose money policy that led to massive malinvestment. Sectors of the economy unrelated to housing were deprived of needed capital and talent, while the great quicksand of the housing boom sucked down everything.

None of this is easily reversed. Economists point out that our economy is afflicted with what they call an “output gap”—a gap between the economic output we would be producing if growth was at normal levels and what the economy is actually producing. But this output gap isn’t only caused by “animal spirits” or temporary economic dislocations—it is the direct result of the prior “investment gap”—the gap between what we should have been investing our fortunes and time and what we actually invested in. In short, we can’t produce what we should be able to because we invested in the abilities to produce what we don’t need.

Is there a way out? Of course. The bursting of the housing bubble created a great opportunity to set the economy back on course. Unfortunately, our government engaged what amounted to Shock-and-Awe war against the liquidation of past errors, locking up even more capital in the errant bubble businesses. The greatest fortune of 2009 was made by a hedge fund manager who bet that all the old failures would rise again thanks to government support.

Another couple of years like 2009 will guarantee that we keep talent and funding out of technological innovation for another generation.

Join the conversation about this story »

See Also:

U.S. Car Ownership Takes Biggest Dive Since 1960

Graham Winfrey — Tue, 05 Jan 2010 14:16:00 -0500

Americans' car fleet dropped by a sizeable four million vehicles in 2009, the only large decline since the Department of Transportation began keeping records in 1960, The Globe and Mail reports.

Americans bought 10 million cars but sent 14 million to the scrap yard this year, bringing the total down to 246 million nation-wide.

Analysts have come up with an eclectic list of factors that could be responsible for the drop, from high gas prices and the expansion of municipal transit systems to the popularity of networking websites that make it easier for teenagers to socialize without leaving home.

Auto sales for the month of December, however, were expected to be the second best month of the year after August, when the "cash for clunkers" rebate program temporarily revived the auto industry.

The Earth Policy Institute, an environmental think tank based in Washington, on Wednesday will issue an analysis stating that the drop in 2009 is not a recession induced fluke, but the beginning of a long-term decline that will see the U.S. fleet drop by another 25 million by 2020.

Join the conversation about this story »

See Also:

GM China Sees Record Sales In 2009

Graham Winfrey — Tue, 05 Jan 2010 14:15:00 -0500

General Motors said Monday that it sold a record 1.83 million vehicles in China last year, a 66.9 percent jump over 2008, AFP reports.

GM also expressed optimism that 2010 will see even more sales. The company's market share was up 1.3 percentage points to an estimated 13.4 percent.

GM China Group president Kevin Wale noted that China, whose car sales surpassed the U.S.'s for the first time last January, would play a leading role in driving GM's overall sales.

According to the China Association of Automobile Manufacturers, the Asian giant's total auto sales for the first 11 months of 2009 reached 12.23 million units.

Shanghai GM, a joint venture with China's largest auto maker SAIC Motor Corp, saw sales rise 63.3 percent from the previous year to 727,620 units in 2009.

Back in November, the auto giant announced that it would begin paying back bailout funds before the end of 2009.

Join the conversation about this story »

See Also:

Will Chinese Electric Cars Dominate The Decade?

Graham Winfrey — Tue, 05 Jan 2010 11:15:00 -0500

China's BYD Auto has high hopes for its E6 all-electric car and F3DM plug-in hybrid sedan, both of which will be on display at the North American International Auto Show in Detroit next week, HybridCars.com reports.

Both vehicles, however, were also on display last year, and neither model shook up the automotive world like BYD had hoped they would. The massively hyped plug-in hybrid sold fewer than 100 units during its first eight months on the market, amid expectations of selling between 4,000-5,000 over the course of 2009.

This year, BYD will rely on a boost from the Chinese government, which last month announced incentives to help private consumers buy green cars. With the midsize F3DM plug-in hybrid priced at about $22,000 in China, and the five-seat electric E6 at $40,000, government rebates could be the game changer BYD needs, as the company's hot-selling compacts go for considerably less (about $14,500), but the specific amount of the coming incentives is still unknown.

BYD's goal is to dominate the global hybrid market by 2025.

Don't Miss: The 10 Smallest Cars In The World

Join the conversation about this story »

See Also:

What We Can Learn From Europe's $40 Billion Renewable Energy Super Grid

Graham Winfrey — Tue, 05 Jan 2010 11:12:00 -0500

Europe is making moves on its first electricity super-grid dedicated to renewable energy this month, as nine countries will draw up plans to link up a grid of powerful clean energy projects all around the North Sea, CleanTechnica reports.

The plan would connect Scottish off-shore wind turbines with German solar energy, Norwegian hydro power and wave power off the coast of Belgium and Denmark.

The Nine North Sea nations - Germany, France, Belgium, the Netherlands, Luxembourg, Denmark, Sweden, Norway and the UK - will eventually link the super grid to the equally large in scale Desertec grid, bringing solar power from Africa to Spain and Portugal.

The network of super efficient undersea transmission cables would cost about $43 billion.

The U.S. has enough wind potential to supply 25% of the entire country's needs in North Dakota alone, but no transmission lines to connect a statewide line of turbines that would balance out the power and send it to more populated areas. If the U.S. follows Europe's lead, we could harness enough off-shore wind potential along the Atlantic Seaboard to meet the electricity needs of a quarter of the U.S. population.

Join the conversation about this story »

See Also:

Our New Steel Duties On China Are Really A Tax On American Businesses

John Carney — Tue, 05 Jan 2010 10:23:00 -0500

The next wave of protectionism will not be labeled 'protectionism.' It will instead come in the guise of 'sanctions' for transgressions against the positions of the United States government when it comes to labor practices, environmental reforms, or free trade.

So we weren't surprised when the the U.S. International Trade Commission recently voted to impose duties on Chinese-made steel pipe in retaliations for domestic steel industry subsidies by the Chinese government. This is classic recession-era protectionism dressed up in the guise of promoting free trade.

One thing that's gone unremarked in this fight, however, is that it's not really a trade war between the US and China. Actually, the US and China steel makers are kind of allies in this fight. They're both special interests exploiting their own domestic political machinery to exact narrowly delivered government subsidies that are paid for by their countrymen.

It's a classic war of special interests against the public interest: the Chinese steel makers exploiting the Chinese people by expropriating tax money and the American steel makers exploiting America people by raising the costs for US businesses and, eventually, consumers.

Is it a good idea to raise the costs of American US businesses during a recession? You can probably answer that question for yourself.

Over at The American, Mark Perry rewrites a Reuters news story to accurately describe what the Trade Commission is really doing and why they are really doing it, first and foremosts, to Americans and not the Chinese:

A U.S. trade panel gave final approval on Wednesday to duties taxes ranging from 10 to 16 percent on cost-conscious firms in the U.S. who purchase low-priced Chinese-made steel pipe rather than high-price domestic pipe, in the biggest U.S. trade case to date against China American companies (and their shareholders, employees, and customers) who shop globally for their inputs and find the best value in China.

Read the rest of the the rewrite-->>

Join the conversation about this story »

Oil Above $81 For The First Time In 15 Months

Graham Winfrey — Tue, 05 Jan 2010 09:17:24 -0500

Freezing temperatures and signs of an improving economy drove oil to $81.51 a barrel Monday, the highest it's been since October 9, 2008, The New York Times reports.

Increased manufacturing activity and auto sales in December could help prices continue to rise, as traders anticipate a recovering economy.

The eighth consecutive trading day of higher prices was also attributed to a dispute between Russia and Belarus that could result in higher export taxes on oil sent to Belarus for European markets.

Heating oil futures also rose to the highest level in over a year, and gasoline was up 6 cents in the past week after a period of continued decline.

Most energy analysts still say it's too early to begin predicting any significant price increases for oil or gas, however, as oil has fluctuated between roughly $70 and $80 per barrel since July.

Read the whole thing here.

Join the conversation about this story »

See Also:

You Know Natural Gas Has Gone Big Time When Cramer is All Over It

Vincent Fernando — Tue, 05 Jan 2010 08:18:00 -0500

The profile of natural gas keeps rising. Cramer is all over the U.S. shale gas revolution in this latest video below. In particular, he interviews the CEO of Anadarko Petroleum (APC).

Starting at 2:55:

Anadarko is an interesting play given that it offers both U.S. and international exposure, especially in Africa, both in oil and gas.
Long-term share price performance has been strong vs. the S&P500.
APC intelligently used its natural gas cash cow to get into oil big time.

At 5:10:

'Sometimes it's scarier to drill in America than Ghana'

The author owns shares in Chesapeake Energy (CHK), mentioned in this video.

Join the conversation about this story »

See Also:

How Rising Oil Prices Will Force U.S. Into A Post-Industrial Wasteland

James Kunstler — Mon, 04 Jan 2010 17:12:00 -0500

It's the first business day of the new year and oil is trading above $80 a barrel, which means the price has re-entered the danger zone where it can crush industrial economies.

This is a central element of the predicament we find ourselves in. The US economy is essentially a Happy Motoring economy.

During the whole nervous period since the collapse of Lehman Brothers, American gasoline consumption hardly went down at all, though so many other activities collapsed, from house-building to trucking. Yesterday, The Seattle Times published a story with the idiotic headline: Oil Touches $80 on US Economy, Demand Optimism. Apparently, they think high oil prices are "a good sign."

How much can a nation not get it? Would $100 oil ignite a new orgy of "consumer" spending and another round of investment in commercial real estate? Welcome to the Futility Economy.

Read the rest at James Kunstler's blog -->

Join the conversation about this story »

See Also:

FINRA Warns Investors: "Green" Is The New Breeding Ground For Scammers

Graham Winfrey — Mon, 04 Jan 2010 16:36:00 -0500

The Financial Industry Regulatory Authority, the largest independent regulator for all securities firms doing business in the United States, recently issued an alert for avoiding and dealing with green energy scams.

Fraudsters have reportedly been luring investors in green technology by promising outrageous returns.

FINRA.org: In one recently filed case, the Securities and Exchange Commission alleges that promoters of purported eco-friendly investment opportunities lured 300 investors into a $30 million Ponzi scheme, encouraging participants to finance such "green" initiatives of Mantria Corporation as a supposed "carbon negative" housing community in rural Tennessee and a "biochar" charcoal substitute made from organic waste. Investors were falsely promised returns ranging from 17 percent to "hundreds of percent" annually.

...

But, according the SEC’s complaint, Mantria did not generate any income from which such extraordinary returns could be paid.

How do you spot potential scams and distinguish frauds from legitimate investment opportunities? Rip off tip-offs include:

Unsolicited communication such as faxes, emails, text messages tweets, and strategically placed “opinions” in blogs and message boards, usually related to a very low-priced stock.
Seminars and webinars that use short-term incentives and bonuses, along with aggressive sales tactics, to encourage you to liquidate your current savings and go “all in” on a new investment initiative.
Price targets or predications of swift and exponential growth.
The use of facts from respected news sources to bolster claims of the size of the market for a new product or technology (“this is a billion dollar market…”).
Mention of associations with or actions by federal and international governments that bolster a company's product or service (“The President wants hydrogen to be part of the solution for Detroit…”).

Read the whole thing here.

Join the conversation about this story »

See Also:

Clean Coal Ain't That Clean

Graham Winfrey — Mon, 04 Jan 2010 15:25:00 -0500

The term "clean coal" has evolved into a bit of a misnomer, as reducing carbon dioxide emissions associated with the burning of coal looks to be a costly process requiring significant increases in fuel consumption.

Originally, “clean coal” signified a number of techniques to reduce the negative effects of burning coal. More recently, the term has changed to mean a process that greatly reduces carbon dioxide emissions.

This is where the phrase starts becoming contradictory.

OilPrice.com: It is estimated that 25-40% additional fuel will be required to process the coal in a more environmentally sound way. Because the technology requires new coal-powered plants specifically designed for carbon capture and sequestration, the cost of energy would be 20-50% higher than traditional coal-fired plants, depending on the sequestration method use

Continue reading here >

Join the conversation about this story »

See Also:

New Russian Oil Dispute With Belarus Puts European Supply In Jeopardy

Graham Winfrey — Mon, 04 Jan 2010 14:42:00 -0500

Russia and Belarus failed to renew thier crude oil agreement that expired on New Year’s Eve, increasing the likelyhood of yet another fuel shut-off during the dead of winter.

The disagreement pertains to export tarrifs on crude oil, similar to a dispute that went on for weeks last year between Russia and Ukraine over natural gas prices and transit fees.

This year, the crude oil pipeline under dispute is a crucial component of Siberian petroleum exports to Western Europe via the Druzhba pipeline system.

The New York Times: As is the case with natural gas pipelines in Ukraine, about 1.3 million barrels of oil per day shipped along the Belarussian spur of the Druzhba pipeline supply both the internal market in Belarus and the more lucrative markets in the European Union, like Germany and Poland.

On Sunday, Reuters cited two oil traders as saying that Russia had begun curbing supplies to the domestic market by cutting the flows to two refineries, Naftan and Mozyr. In Ukraine last January, that was a first step toward a more general shutdown.

Russian officials have emphasized that the export volumes will continue to flow, but have not commented on the report of a local shut-off in Belarus.

Read the whole thing here.

Join the conversation about this story »

See Also:

Shell Turns Its Back On Solar Customers

Graham Winfrey — Mon, 04 Jan 2010 14:30:00 -0500

Green energy companies and the World Bank have accused Shell Oil of refusing to honor solar equipment warranties, the Guardian reports.

A widespread breakdown of Shell's solar panels in Sri Lanka has local suppliers in danger of going out of business, but Shell is claiming that it's not responsible for replacing the 700 or so failed systems, as its Shell Solar Sri Lanka business had been transferred to a third-party, Environ Energy, "along with all liabilities."

Environ says that most of its former solar module manufacturing operation has also been sold to a new owner, Solar World.

Further complicating the matter is the claim by Environ that Solar World will not replace any modules without the appropriate warranty documents, which Environ alledges were destroyed by Shell prior to the transition to Solar World. Shell claims this is untrue.

Join the conversation about this story »

See Also:

Shell Owes Pension $6 Billion, Kills Solar And Wind Projects

Cleantech Takes A Bigger Slice Of VC Pie, Again

Graham Winfrey — Mon, 04 Jan 2010 11:45:00 -0500

Close to 20% of all dollars invested by VCs in 2009 went into clean technology, up from roughly 14.4% in 2008 and 10% in 2007, according to MidwestBusiness.com and a 2007 report.

Solar was the leading investment category in 2009, TriplePundit reports, with over 25 cents of every cleantech VC dollar being invested in a solar related technology, according to Greentech Media.

Deals from 2009 that point to a growing solar industry this year include the acquisition of Solel, a solar thermal power components vendor, by Siemens for $418 million, and MEMC's purchase of Sun Edison, a "solar Power Purchase Agreement pioneer" for $200 million.

Bill Roth, author of The Green Secret Sauce and founder of EARTH 2017, predicts that Solar prices will continue to decline while consumer demand will continue to grow, eventually creating "a future where solar power will be price competitive without subsidies." This trend leads Roth to believe that cleantech will be "a $10 trillion global annual revenue sustainable economy by 2017."

Other than solar, VC investments have branched out into 19 different cleantech investment categories. Batteries, for example, attracted $455 million in 2009, invested in 36 different companies.

Join the conversation about this story »

See Also:

Energy Giant Total Drops $800 Million On Chesapeake's American Shale Revolution (CHK)

Vincent Fernando — Mon, 04 Jan 2010 09:33:00 -0500

France's Total is diving into U.S. shale gas via a new joint venture with Chesapeake Energy (CHK). It's yet another vote of confidence in the future of U.S. natural gas, as if Exxon's XTO acquisition wasn't enough.

Chesapeake press release: Chesapeake Energy Corporation (NYSE:CHK) today announced the execution of an agreement for a $2.25 billion joint venture with Total E&P USA, Inc., a wholly-owned subsidiary of Total S.A. (NYSE:TOT, FP:FP) ("Total"), whereby Total will acquire a 25% interest in Chesapeake's upstream Barnett Shale assets. Total will pay $800 million in cash at closing and will pay an additional $1.45 billion by funding 60% of Chesapeake's share of drilling and completion expenditures until the $1.45 billion obligation has been funded, which Chesapeake expects to occur by year-end 2012. Closing of the transaction, which is subject to regulatory approval, is anticipated by the end of January 2010.

For investors, Chesapeake Energy provides an interesting way to go long U.S. natural gas for the long-term given they claim to have some of the lowest production costs around and are levered to the shale gas revolution. The shares also remain well below the $66 peak they hit in 2008.

Everyone should complete their own due diligence on any company. The author has exposure to Chesapeake Energy through a fund. UPDATE 9:48 AM -- The author has purchased Chesapeake (CHK) shares.

Join the conversation about this story »

See Also:

Even Without Cash For Clunkers, Americans Keep Bingeing On Cars

Vincent Fernando — Mon, 04 Jan 2010 06:56:12 -0500

Even without cash for clunkers, American auto sales have remained remarkably strong. While automakers' December sales data comes out on Tuesday, it already looks like it was a great month.

WSJ: "We are seeing an increase across the board," said Michelle Krebs, a senior analyst at Edmunds.com, a car-buying Web site. She cited higher-than-expected gains at BMW AG, Ford Motor Co., Honda Motor Co., Toyota Motor Co.'s Lexus, and General Motor Co.'s soon-to-be-shuttered Saturn and Pontiac brands.

...

Many industry analysts now expect the seasonally adjusted annualized selling rate in December to be more than 11 million cars and trucks. Such a figure would mark the second-best month of 2009 after August, which received a major jolt from the "cash for clunkers" government rebate program.

Read more at the WSJ -- >

Join the conversation about this story »

See Also:

Michael Pettis: China Has No Idea How Vulnerable It Is To A Trade War

Joe Weisenthal — Mon, 04 Jan 2010 06:13:00 -0500

A trade war is one of those calamities that people always see lurking right around the corner.

No doubt it's going to be one of the big fears for 2010 (just as it was in 2009, 2008, 2007, etc.) It's kind of like wild inflation in that respect.

Generally though, the world continues to move towards freer trade, despite little skirmishes that never amount to a full-blown war.

But with China rushing headlong into recovery, and with the Western world faltering, there's a new case to be made for the outbreak of protectionism.

Michael Pettis, a Peking University professor and author of the excellent China Financial Markets blog, sees it coming this year, and believes China is totally unprepared for what's about to come.

I am no expert on the subject of criminal law or the environment, and so have little to add beyond all that has already been said, but the huge amount of angry criticism China has received on the very visible subjects of the Copenhagen meeting and the execution of a British subject caught smuggling drugs will make it easier for tariffs and restrictions aimed at China to generate popular approval in Europe, North America and the developing world, especially since protectionists can easily add a “moral dimension” to their arguments.

I am not sure Chinese policymakers fully understand how vulnerable China is to trade war. This is perhaps because the “success” of the stimulus package has convinced them that they are less vulnerable to external demand than they originally thought. But this would be a serious misreading. The stimulus package has postponed the effect of declining net foreign demand on Chinese unemployment, but has actually increased its vulnerability by increasing the future gap between what China produces and what it consumes. China needs foreign demand to keep absorbing its excess capacity for several more years while it engineers the difficult transition to domestic consumption-led growth, but I don’t see either China taking the necessary steps to force the transition or foreigners looking very eager to help China through the process.

This sabotage of Copenhagen as a crucial turning point is an interesting one. The conclusion some are coming to is that the summit -- regardless of how symbolic it was -- represents China's willingness to take big-time international criticism, whereas previously they had a reputation for always seeking to save face.

If public criticism no longer means very much to the Chinese government, then harsher measures, like various protectionism measures, will have to do.

Read the rest of Pettis's post here -- >

Join the conversation about this story »

See Also:

Natural Gas Companies Fleeing Back To Oil After Exxon Dives Into Their Turf

Vincent Fernando — Sat, 02 Jan 2010 11:25:00 -0500

Even while Exxon (XOM) makes a major shift towards natural gas in the U.S., via it's recently announced acquisition of XTO Energy (XTO), smaller natural gas-focused companies are heading in the opposite direction. They see better returns on oil in the near-term, so are expanding their oil activities instead of gas.

Why the apparent disconnect in natural gas outlook between these players and Exxon? Many smaller companies believe natural gas will deliver lower returns on their investment than oil for quite some time yet. They can't sit around waiting for a long-term pay back in the same way that Exxon, with its vast size, can. Perhaps they're even a bit terrified about the fact that Exxon is making a major push into their space as well.

WSJ: But it isn't as easy for smaller companies like EOG Resources Inc., one of the largest independent drillers. At EOG, gas accounts for about two-thirds of its North American production. Oil accounts for a third. Chief Executive Mark Papa said he expects a 50-50 split by 2011.

"The concept is that we are evolving EOG from a heavily weighted gas company into a more balanced company," he said. "We are bullish on oil short term and long term." In 2010, the Houston company expects to allocate 60% of its capital expenditure to oil-focused projects.

Questar Corp., which was exclusively focused on producing gas, is now putting 20% of its development capital into oil-rich projects, said Charles Stanley, chief operating officer of the Salt Lake City firm. The exploration would "enable us to receive oil prices and significantly enhance returns," he said.