Credit: Shell is betting big on natural gas. Image source: Royal Dutch Shell plc.Royal Dutch Shell plc (NYSE: RDS-B) is one of a small and elite group of energy giants, competing with companies such as Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) . While this group is often, and correctly, thought of collectively as oil companies, Shell is pushing hard in a slightly different direction. So if you, as an investor, are wondering if Royal Dutch Shell can regain its mojo, you need to frame the answer in a slightly different way than you might have just a couple of years ago.
Shell is betting big on natural gas. Image source: Royal Dutch Shell plc.
This is no small wager, either. Take a look at the two bar charts comparing Shell with its closest peers. The one on the left shows that, at this point, Shell is by far the largest player in the global liquefied natural gas trade. No other company comes close. And the chart on the right shows that Shell has more exposure than any of its peers to natural gas, with the closest competitor being ExxonMobil. In fact, oil and gas are roughly 50/50 weightings at Shell.
Oil is important for Shell, as it is for all of the other oil majors. But natural gas is equally important, something that can't be said for its peers.
Some mojo in the tank
From this perspective, for Shell to regain some of its lost luster, its oil business will have to rebound. But that won't be enough for the company to really get its mojo back. For that to happen, natural gas demand will have to play out as Shell expects.
A bright future for natural gas? Image source: Royal Dutch Shell plc.
There are some positives to look forward to here, though. For example, in the preceding bar chart, the International Energy Agency (IEA), a global organization that tracks energy use, predicts that demand for oil will fall slightly between 2013 and 2030. Natural gas demand, on the other hand, is projected to increase, partly because natural gas is a cleaner alternative to coal and oil in many applications.
Royal Dutch Shell's BG investment, a double-down on natural gas, is clear evidence that the company is looking to be on the right side of that equation. And if the future that both Shell and the IEA envision comes to pass, then Shell will be flexing some major mojo that its peers, at this point, won't be able to match.+
How Shell will get its groove back
If you're wondering whether Royal Dutch Shell can rebound to pre-crash days, you'll want to make sure you watch both the oil and the natural gas sides of the business. Each will play a pivotal part. That said, it's natural gas that will probably be the big determinant of the company's future success. And at this point, the signs appear to point to a future of positive mojo.
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Reuben Brewer owns shares of ExxonMobil. The Motley Fool owns shares of ExxonMobil. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
