Ninety-one percent of energy companies in the S&P 500 — tracked by the Energy Select Sector SPDR FundXLE

— are oil and gas businesses. But in the coming years, most of these firms will have to learn to do without the “oil” part. As consumption of the commodity is expected to decline, the meaning of “energy” will change on Wall Street, but its future form is still uncertain as the country’s energy conglomerates take different approaches to diversify beyond the pump.

Reading the tea leaves: Over the last four decades, natural gas has become America’s largest source of electricity — a trend that benefits many oil producers. What they’ve learned from extracting oil can be applied to natural gas — and in many cases, it already has. Companies often extract natural gas and send it via pipeline to electricity providers.. But ExxonMobilXOM

has a new clientele in mind — and to cater to them, it plans to produce the electricity itself.

• On Wednesday, the largest US oil and gas producer announced that it’s “well along” with plans to build a 1.5-gigawatt natural gas power plant specifically to power tech data centers.
• Since the plant won’t be connected to the grid, the corporation says it could begin operations within five years — faster than proposed nuclear or geothermal projects.

A Clean Gas Pitch

Exxon’s foray into the independent power producer (IPP) industry comes after a year of rocket ship returns for IPPs, with investors optimistic about the fast-growing demand for data center electricity. However, before the major oil producer can replicate the formula and build more commercial plants, it’ll need to win over tech firms, which have shown a desire for cleaner energy.

• In recent months, tech leaders like Amazon, Google, Meta, and Microsoft have signed expensive agreements to buy energy from new, unproven clean energy providers.
• While natural gas still produces more emissions, Exxon is pitching carbon capture technology to reduce its environmental impact, aiming to “capture and store over 90% of its carbon dioxide emissions.”

Sweeter than crude: Exxon’s push into electricity is just one of several initiatives — including a plastic recycling program and a lithium mine — to take the company’s comfortable lead in oil and turn it into a business that can outlast it. The utility provider, relishing in peak oil, plans to generate “$20B in earnings and $30B in cash flow” for investors while also directing a large share into “attractive long-term opportunities” through the end of the decade. Exxon hopes these various sweeteners will attract shareholders over other energy heavyweights with more blasé attitudes about what the future holds — firms analysts warn could go the way of the dinosaurs. Ironic, considering these companies pull fossil fuels out of the ground.