This has been a busy week for US natural gas. It started off with the US signing an agreement to help India exploit its shale gas resources during President Barack Obama’s visit to that country. The agreement mirrored one the US had signed with China some time back to also help that country make the most of its shale.
These are both striking agreements because they demonstrate that other countries see tremendous potential in natural gas. And yet the US government has failed to appreciate the expertise and experience that launched the global shale gas scramble is in its own backyard. The US gas boom has generated so much capacity in America that prices have collapsed.
In a way, Chevron’s $4.3bn deal for Atlas Energy – giving it a foothold in the Marcellus shale gas field – was not particularly surprising. After Exxon and Shell made similar moves to take advantage of the US shale boom, Chevron was simply playing catch up.
But two things about the deal have raised eyebrows: the company’s previous resistance to such a strategy and the persistently low price of gas.
After Exxon and Shell, Chevron has become the latest oil major to jump on the Marcellus shale bandwagon.
Its $4.3bn deal to buy Atlas Energy will give it access to 9,000bn cubic feet of natural gas and 486,000 acres of Marcellus shale.
George Kirkland, Chevron’s vice chairman, said:
The Atlas Energy assets further advance Chevron’s global shale gas position, complementing the company’s recent entrance into shale gas opportunities in Poland, Romania and Canada
The energy industry continues to pore over the shake-up to BP’s safety division, which was announced yesterday, just two days before Bob Dudley takes over as chief executive.
Several, including our energy editor Sylvia Pfeifer, point out Dudley’s focus on safety is hardly revolutionary – Tony Hayward made very similar noises when he took over. Over at Fuel Fix, however, they point to a happier precedent – Exxon’s largely successful attempts to improve its record following the Exxon-Valdez accident.
ExxonMobil said earlier this week it was giving up its attempt to get a stake in the Jubilee field that has been touted as a game-changer for Ghana. The share purchase agreement with Kosmos Energy had emerged last October, but it was met with fierce opposition by the Ghanaian government, which had been left out of the $4bn venture.
The US’ biggest oil company declined to explain its decision to terminate the share purchase agreement, noting Exxon does not discuss the details of commercial agreements.
But the reasons for Exxon’s withdraw are clear. Ghana’s interference in attempts to close the deal smack of the interventionist policies of oil-rich countries such as Venezuela. And Exxon has always been one to insist it plays by the rules or does not play at all. It is a policy that has cost the company access to key areas and money in the ground, when nationalization or some other change in policy leads to new rules.