More Oil Companies May Join Shale Gas Business
It looks like Exxon and France's Total S.A. may have started a trend. Bloomberg reports that Royal Dutch Shell Plc and Devon Energy Corp. may buy U.S. shale gas producers or partner with them on related projects.
Shell's Plans
Onshore Asset Manager David Todd of Shell says that Shell is interested in Marcellus Shale. Shell has already cut 5000 positions since Peter Voser took over as CEO in mid-2009 and the company may have more layoffs. That may explain the company's interest in shale gas as an AP story reports, "New shale gas production is 'a big deal and necessary—globally,' Royal Dutch Shell CEO Peter Voser told World Economic Forum delegates in Davos, Switzerland. He said people underestimate its potential to reduce dependence on oil and coal." He also says that oil demand won't return in another Bloomberg story.
Another story in the Houston Chronicle indicates that Shell will continue to invest as much as $28 billion in 2010 in its oil and gas search. Not only is the company considering shale gas, but it also has an oil-sand venture in Canada and continuing projects in Qatar and Malaysia. Shell also signed an agreement with Cosan SA Industria and Comercio to merge sugar and ethanol assets in Brazil. This move allows Shell to invest in low-carbon, sustainable biofuels.
Devon's Plans
Oklahoma City's Devon Energy Corp. is working to sell up to $7.5 million in offshore and overseas assets (including Brazil) to lower debt and switch to shale gas production. The company had an opportunity to break into Marcellus shale, but opted out. It has said little else about the possibility of a merger or partnership.
Devon already has a natural gas well-head outside of Fort Worth that is one of two sites that the Texas Commission on Environmental Quality (TCEQ) found potentially dangerous levels of benzene as reported in the Fort Worth Business Press. It may be a case of human error in someone leaving the valve open. The good news is that TCEQ was concerned about only two out of 94 tested wells.
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