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Shale Gas & Oil Boost from Foreign Companies

by Kenneth E. DuBose on August 5, 2011

BG, CNOOC, KNOC, Mitsui, Statoil, and more. The list goes on when you consider the number of foreign companies that have joined the ranks of American Independents to partner in developing U.S. shale gas reserves. U.S. oil companies spent the better part of the last 10 years acquiring acreage across much of North America with grand plans of U.S. energy production growth. The greatest constraint to that growth turned out to be the number of dollars needed to drill oil & gas wells. The boom was hindered by the capital constraints of lower prices and a tough credit market during the recession. That prompted companies to explore joint venture (JV) agreements or partnerships with foreign companies that have cash to spend.

Even the big guys, Exxon Mobil, Chevron, and Shell, that were already here are investing more in the U.S. after a series of acquisitions. The bonus for mineral owners is your wells are getting drilled faster and that ultimately means more royalty dollars sooner than later. Without the foreign investment, we wouldn’t be developing shale gas or shale oil at the pace we are today.

Until recently, the nascent U.S. shale gas industry faced a major constraint on its growth, one that was bigger than environmental risk, more vexing than technology, and more challenging than the scrum for new acreage: capital.

After some $40 billion of foreign investment in the sector in the last two years, including BHP Billiton’s record $15.1 billion plunge last month, that limitation is no longer a factor, analysts say. And as a result, production may grow even faster than previously expected, putting an ever firmer cap on prices.

Capital-rich companies from ExxonMobil to Royal Dutch Shell have picked up the pace partnering with or acquiring smaller shale producers or parcels of land to gain access to reserves and technology to release them.

Read the full news release at Reuters.com

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