Statoil May Seek Own Shale Gas Projects, Considers China
Statoil ASA may take the lead on shale gas projects and is considering investments in China to tap demand in the world’s fastest growing major economy, Chief Executive Officer Helge Lund said.
Norway’s largest oil and gas company in 2008 bought a stake in U.S. gas shale areas from Chesapeake Energy Corp., which it added to this year, and it now has people working with the U.S. company to gain knowledge of how to extract the fuel. Resources are also in place in China for a potential expansion there, Lund said today in an interview in Stavanger, Norway.
“Over time, we would also like to be operator on that type of resource,” Lund said. “It’s important to underline that Statoil is not a financial actor but an industrial actor.”
Producers such as Statoil, which operates 80 percent of Norway’s petroleum production, and BP Plc are tapping unconventional fuel sources to stem a decline from fields in the North Sea and other maturing areas. Statoil is seeking to boost its reserve-replacement ratio, which hasn’t been above 100 percent since 2005. It rose to 73 percent last year from 34 percent in 2008, helped by the shale acquisitions.
Statoil in March added 59,000 net acres to the 600,000 acres it bought through an agreement which gives it the right to its share of leasehold that Chesapeake continues to buy at the Marcellus Shale formation in Pennsylvania, West Virginia and New York. The Stavanger-based company last year made a joint application for exploration rights of shale in South Africa’s Karoo Basin with Chesapeake and Sasol Ltd.
To extract gas from shale, companies inject water, sand and chemicals underground to break up rock and allow gas to flow.
Lund said Statoil chose a joint venture with a company such as Chesapeake rather than an outright acquisition to gain technical know-how. The company is looking at shale gas globally and said China “could be an interesting place over time.”
“There are a lot of things that need to be in place: the resources need to be there, the fiscal framework has to be attractive, you need infrastructure and not too densely populated,” he said. “It’s early days for China, but it’s correct that a lot of the requirements are in place there.”
China, the world’s largest polluting nation, wants to triple the use of gas to about 10 percent of energy consumption by 2020 to cut oil and coal, which produce more carbon-dioxide. The world’s fastest growing major economy holds about 30 trillion cubic meters of shale gas resources, China National Petroleum Corp. said in its online newsletter Aug. 23.
Statoil would also be interested in becoming operator in the Gulf of Mexico, where it is the fourth-biggest leaseholder, Lund said. It’s now operator on two exploration wells.
“We’re one of the biggest offshore operators in the world and we believe we have the competency,” he said. “The primary route for that is to be operator during the exploration phase and then to develop the field. But other opportunities could also come up which we will look at.”
The executive also said that the company was not averse to selling assets offshore Norway.
“Some complain that Statoil isn’t willing to sell assets, but we’re of the simple opinion that if someone can offer more than what the asset is worth for us, then we’re willing to make a deal,” Lund said. “We’re open, but we don’t give away anything for free.”