Billions of investment dollars are pouring into U.S. shale gas from international energy companies who want a piece of this unconventional and now global game-changer. Market interests from China and France show that there is still a high demand for fossil fuels and are willing to pony up the big bucks for drilling costs in order to expedite the product to market.
Though the drilling process is lucrative, it is expensive, so deep-pocketed partners like France’s Total and China’s Sinopec will help alleviate the financial demands for U.S. companies. Total, France’s largest oil company, set its eyes on Ohio’s Utica shale, gaining a $2.32 billion holding from Chesapeake Energy Corp. and Houston-based EnerVest Ltd. Total received 25 percent interest in this 619,000-acre joint venture, giving $700 million cash along with a promise to fund 60 percent (about $1.63 billion) of the group’s drilling costs in exchange. Oklahoma-based energy company Devon sealed the deal with China’s Sinopec International Petroleum Exploration & Production Corp.’s investment of $2.2 billion in Devon’s oil fields. When the deal closes, which is expected in 2012’s first quarter, Sinopec will hand over $900 million cash and take care of 70 percent (about 1.6 billion) of Devon’s drilling costs.
The fact that these companies are willing to invest astronomical amounts of capital into shale development credits the potential of America’s natural resources, the tools that bring product to completion, and its profitable international significance. Not only do these companies share the cost, but they are willing to share the risk. It is a homerun for all enterprises involved.