Sunday, August 23, 2009

Foreign Oil Companies Investing in American Gas

It looks like the U.S.A. is the Saudi Arabia of natural gas. Or is it? Maybe the reason America seems to have so much more gas than anyone else is that we have developed our shale fields. Reserves only exist when you explore for them, and the more you explore, the potentially larger reserves can be. For example, Antarctica may have huge reserves or oil and gas, but there has been very little exploration so who knows for sure?

But I know exploration is happening in Europe. And European companies are teaming up with American independent gas producers.
A growing number of foreign energy companies eager to tap into America’s vast natural gas reserves is looking to invest in independent companies, while estimates of US supplies continue to increase.

BP and BG Group of the UK; StatoilHydro, the Norwegian energy company; and Eni, the Italian oil company, have all bought into the US gas industry in the past year to gain access to the US industry while tapping into the independent groups’ experience and technical expertise. (Sheila McNulty, FT.com, August 23, 2009) 

This is interesting, but I wonder if they are just buying joint-interest in some wells (and thus providing the financing the American companies can use, but leaving it up to the American companies to do all the work). Or are they in the field gaining experience? Will American companies do exploration in Europe?

One of the reasons this is interesting (and even urgent) is Europe's dependence on Russian natural gas. We have seen the problems with this. Furthermore, if it turns out that there is gas-bearing shale under Poland or Hungary or France, the pipeline infrastructure to get the gas to market already exists. (This is less the case in, say, Africa. And given the cost of producing shale gas, the lack of a well-developed infrastructure makes the hurdle rate that much higher.)

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