Leveraging the US Shale Experience
An article in the Financial Times discusses the hopes of foreign investors in replicating the US shale boom elsewhere.
In Shale Gas extraction: Investors aim to profit from US experience, FT contributor, Sheila McNulty writes how partnerships between small gas producers and foreign companies have led to billions of dollars in investments on drilling ventures.
Investments from companies ranging from Statoil of Norway, Reliance Industries of India to CNOOC of China, have enabled the small producers to keep drilling.
Foreign companies spent a record $21bn on acquisitions in the first half of 2010 to gain access to the US shale gas boom, according to a report by Wood Mackenzie, which says the trend will continue.
In exchange, the foreigners get to learn first-hand how to extract gas from the hard rock, potentially setting the stage for a repeat of the US’s shale boom elsewhere in the world.
“The longer-term prize is China, South Africa, India and Europe,’’ says Jeremy Michael, a managing director at Barclays Capital. “They do want it to spread, but there are challenges to overcome.”
Jose Valera, an energy partner at Mayer Brown, the law firm, says companies have long known there were fuel deposits in shale around the world, but it was not previously economic to produce.
“Geologists are dusting off old reports,’’ he says. “They’re starting to map out again where they think this rock may exist.’’
And as much as 20-25 per cent of China’s domestic production in five to 10 years could be from shale gas, says Sampat Prakash, US oil and gas consulting leader for Deloitte, the consultancy.