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The oil business may be hurting as a result of dropping prices, stock plummets, and anti-oil sentiment, but the natural gas industry is slowly gaining strength. Quickly becoming a major player in the natural gas game, one of the biggest petroleum companies in the world is trying to establish a dominant position in North America.
Royal Dutch Shell PLC is expanding their drilling territory exponentially, adding yet another 10,000 barrels of production to their portfolio with the purchase today of East Resources, Inc., for which they paid $4.7 billion cash. East Resources, Inc. owns the drilling rights for the Marcellus Shale, an area that covers a significant portion of the Northeastern United States. Shell, whose self-proclaimed “acreage building strategy” has them acquiring acreage around North America, also recently acquired a quarter of a million acres in South Texas.
The purchase of the acreage from East Resources, Inc. must first be approved by regulatory review. The Marcellus Shale’s 10,000 barrels of production are predominately in natural gas, and the purchase includes 650,000 net acres of access. In total this year, Shell has increased its drilling area by more than 1,000,000 net acres.
In a statement Peter Voser, Shell’s Chief Executive Officer, said, “We are enhancing our world-wide upstream portfolio for profitable growth, through exploration and focused acquisitions, and through divestment of non-core positions. These acreage additions form part of an on-going strategy, which also includes divestments, with an objective to grow and to upgrade the quality of Shell’s North America tight gas portfolio.”
The latest acquisition of East Resources Inc. provides Shell with a huge opportunity to expand North American operations. Voser explained, “East Resources’ management have built an excellent organization, with high quality assets in the Marcellus, which we are pleased to have as our centerpiece as we enter the premier shale gas play in the Northeast US. The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth, by deploying Shell’s technology and capabilities on a large scale.”
Europe is the new frontier for shale gas exploration. Excitement continues to build for shale gas as an alternative to Russian sources of energy. Multinationals including Exxon, ConocoPhillips, Chevron, Talisman, Total, BNK Petroleum, Royal Dutch Shell and others are staking their claim in Sweden, Poland, Germany, Austria, Ukraine and other European nations.
Shale Gas for Europe provides updates on developments for those interested in seeing if Poland’s Baltic Basin and other prospective European shale formations, will be the next Marcellus, Haynesville, Eagle Ford, etc.