LONDON – Royal Dutch Shell PLC bet heavily on natural gas as the energy source of the future when it bought the BG Group for $ 54 billion. Five years later, it seems that the gas age will not last long.
Falling prices for wind and solar energy, along with new green government and business targets, are accelerating the shift to cleaner energy and leaving natural gas – long seen by energy companies as a bridge between fuels fossils and renewables – in trouble. The fuel is also under increasing scrutiny for methane spills, prompting some potential customers to stop using the gas and move on to low-carbon alternatives.
This is a risk for Shell and rivals like Exxon Mobil Corp. and Total SE, which also invest in gas, since gas projects usually cost billions of dollars in cash and take decades to recover that investment.
Last month, Shell halved its forecast for growth in global gas demand to 1% per year, and said demand for fuel could peak in 2030.
Although burning gas emits less greenhouse gases than coal, environmental gains are lost if methane, the main component of natural gas, is spilled. Methane is more potent than carbon dioxide in contributing to climate change and has become a target for environmentalists.