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The North American fossil fuel sector is experiencing a wave of transactions linked to changes in the energy mix, with companies betting on the relative values ​​of oil, natural gas or clean electricity.

The changes come as electricity consumption increases in response to demand from sources such as electric vehicles and data centers. Greater use of electric vehicles could in turn lead to lower gasoline consumption in the coming years.

The most recent deal was the $18.8 billion sale of pipeline company Magellan Midstream Partners to rival Oneok this week.

Magellan’s pipes and storage tanks contain heavy oil, while Oneok’s facilities transport more natural gas. In arguing for the deal, Magellan management pointed to expert estimates that U.S. gasoline demand could fall by more than 50 percent by 2050 and said the company “could face long-term risks as a standalone company.”

An investor opposed to the deal, Energy Income Partners, pointed out that the position represents a reversal from management’s optimistic outlook as recently as 2022. Magellan has “completely reversed its view of the industry outlook,” EIP said in a securities filing.

But 55 percent of Magellan’s outstanding shareholders approved the deal on Thursday.

Energy companies like Magellan are rethinking their future amid efforts to decarbonize the economy. The International Energy Agency said this month that global demand for fossil fuels was likely to peak this decade. Many analysts believe that because of its role in generating electricity, gas could have a longer lifespan than oil, which is often used for transportation and emits more carbon dioxide when burned.

TC Energy, the Canadian company behind the abandoned plan to build the controversial Keystone XL crude oil pipeline, is in the process of spinning off its oil business to focus on dealing with natural gas. This split would leave TC “uniquely positioned to accommodate growth,” according to the statement. “Industrial and consumer demand for reliable, lower-carbon energy.”

Enbridge, another Canadian pipeline company, this month announced it would buy the natural gas distribution business of Dominion Energy, one of the largest U.S. utilities, for $14 billion, hailing a “unique opportunity” to secure “essential infrastructure.”

For Dominion, the deal is also a bet on the transition, allowing it to sharpen its focus on government-regulated electric utilities and free up capital to invest in renewable energy to meet growing electricity needs.

“They’re betting on different things,” said Raoul LeBlanc, an analyst at S&P Global. “The utilities are saying, well, we think renewables are going to work really well and…” . . We want to be front and center.”

LeBlanc added that “the oil people and the people who have been in the gas business say: Gas has a lot to offer and it is the fuel that will become important if the path to renewables doesn’t work.”

While leaky gas pipelines are responsible for emitting methane, a potent greenhouse gas that contributes to climate change, oil spills are more visible and insurance can be more expensive. Cleaning up a 500,000-gallon crude oil spill from TC Energy’s Keystone pipeline in Kansas cost about $480,000.

Executives and analysts say major investors are increasingly paying attention to environmental, social and governance (ESG) factors when deciding where to put their money. This has made it more difficult for fossil fuel companies, particularly oil, to obtain capital.

“Crude oil logistics deals have been more difficult than natural gas deals in part because of ESG reasons,” said Pete Bowden, global head of industrial, energy and infrastructure banking at Jefferies. “There seems to be a view on the buyer side that transporting oil is riskier because it is a heavier and dirtier product.”

The surge in deals in the so-called midstream energy infrastructure sector also reflects a waning appetite for building new pipelines after a construction boom at the height of the shale revolution. Legal battles from environmentalists and local landowners have made new projects less attractive.

“If you can’t build, you buy,” said Keith Fullenweider, president of the law firm Vinson & Elkins.

“There is definitely a feeling that new construction, permits, construction costs and interest rates are making new construction more difficult and less attractive,” he added. “And those are the conditions that typically encourage people to consider consolidation as an alternative.”

After the Magellan vote this week, Energy Income Partners expressed disappointment.

“In our experience, Magellan has been a company with excellent assets and historically excellent management,” said EIP, which held a 3 percent stake in the company. “We’re sorry things had to change.”

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