The race for America’s natural gas riches grew more crowded on Monday with the announcement that France’s Total SA would spend US$2.25 billion to gain new access to deep fields in Texas.
Total’s deal with Chesapeake Energy Corp comes just three weeks after Exxon Mobil Corp said it would buy producer XTO Energy Inc, another prolific natural gas producer, in a US$31 billion all-stock deal.
Estimates of total US gas reserves have risen so rapidly in just two years that they have caught the eye of major integrated oil companies that until recently had left unconventional natural gas plays in the US to smaller players.
And Total, like Exxon, promised to take what it learns in the US to potential natural gas fields across the globe.
“It reaffirms, if there could be any doubt ... that the world is looking to the US to learn about gas shales,” Chesapeake chief executive officer Aubrey McClendon said in an interview.
Total, the world’s fifth-biggest oil and gas company, will acquire a 25 percent interest in Chesapeake’s Barnett shale assets in north Texas for US$800 million in cash. It will pay an additional US$1.45 billion to help fund 60 percent of Chesapeake’s share of drilling and completion expenses.
Chesapeake, based in Oklahoma City, is the second-biggest producer in the Barnett, which is the source of half of all production from tight rock formations known as shale being produced in the US, Chesapeake said. Because the technology to unlock gas from shale has developed so quickly, energy experts have raised estimates of how much fuel is available by 35 percent since 2007. Estimates peg US supplies as so large that they would last more than a century at current levels of consumption.
New supplies and looming climate legislation have already prompted some utilities to switch from coal-fired plants to natural gas turbines because they emit fewer greenhouse gases.
Total CEO Christophe de Margerie said in a statement that the deal would allow his company to expand its unconventional business worldwide.
It is Total’s second move in the past year into US shale operations. A year ago, it bought a 50 percent stake in American Shale Oil, a subsidiary of IDT Corp, which has rights to prospective shale oil development in western Colorado.
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