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Page added on August 1, 2010
Energy and Capital: Shale Gas Explosion
To say that shale gas will play a major role in meeting our world’s energy demand is an understatement.
Take a minute and think how far shale gas has grown in the last five years…
It wasn’t until the success of the Barnett shale that U.S. drillers took notice. Although drilling the Barnett formation picked up considerably in the late 1990s, it wasn’t until 2006 that drillers struck it big.
Two things changed the course of shale gas development in the U.S.
The first was the advancements made in horizontal drilling. The second is that changes were made to the Clean Water Act in the 2005 Energy Policy Act. This change exempted natural gas drillers from disclosing the chemicals used in hydraulic fracturing.
For now, let’s push that hot-button issue to the side. I’ll cover it at a later date, so feel free to vent your “fraccing” anger at that time.
The point is, shale gas development exploded. It’s the main reason that our domestic natural gas production shot through the roof in 2008.
The shale boom extended beyond natural gas, too. Oil plays like the Bakken formation in North Dakota became wildly successful for investors.
Piggybacking on the U.S. shale fortune, both China and India are also looking to tap shale resources.
Reliance Industries, India’s biggest company, has made three shale gas investments in 2010. Some of you might remember when Reliance picked up a 45% stake in Pioneer Resources’ Eagle Ford shale assets for a cool $1.13 billion…
Now, the company is making a move into the prospective Horn River Basin in British Columbia. This time, their sights are set on Quicksilver Resources. As you know, I believe the Horn River Basin to be one of the best-kept secrets in natural gas discoveries.
China is taking a cue from the same investment page.
However, their target is much closer to home. ExxonMobil is supposedly in talks to develop an unconventional gas field the Ordos basin, located in northern China.
Now I’ll admit that ExxonMobil hasn’t been on my good list; I wouldn’t normally trust ExxonMobil to have much success in China.
However, I think their chances are much better after acquiring XTO last December.
For now, I’m sticking with the proven winners in U.S. shale — and so should you.
One Comment on "Energy and Capital: Shale Gas Explosion"
LTJ on Mon, 2nd Aug 2010 12:10 pm
I believe that the changes to the 2005 Clean Water Act involved more than just an exemption from disclosure of fluid contents, but also exempted drillers from the regulations on fresh water contamination of underground sources. I’m all for the success of shale gas, and those who risk large amounts of money should have a chance at profit from that risk, but there should also be a basic decency and responsibility to either protect existing sources of drinking water, or to fairly compensate those who have had their water wells ruined by shale gas fracking operations in their area (and there are many such people around the country, both East and West). Of course, the part about fluid contents disclosure makes it very hard to legally prove exactly what happened to the drinking water – and I think there are some who may like it that way.