Wednesday, June 17, 2009

Chesapeake-StatoilHydro Go International

In a minimally reported bit from the Chesapeake Energy annual meeting, CEO Aubrey McClendon mentioned that Chesapeake and StatoilHydro of Norway (CHK's partner in the Marcellus Shale) have struck a joint venture agreement to search for shale gas internationally. No other details were given.

It was hard to find reporting on this (current article, older article with background info), but I think this is a big deal. To me it represents a sea change in the energy world. Shale gas is nearly everywhere on the planet. The difficulty has always been getting to it in a cost effective manner with existing technology. Chesapeake is one of several U.S. independent gas-focused companies that has developed technology to access this stuff in a relatively affordable manner. It's not big oil advancing the ball, it's U.S. independents.

With the basic knowledge that shale gas is located all over the world and not just in the Middle East and Russia I will venture to say that natural gas can put nearly every country in the world on the path towards energy independence. I cannot over-emphasize the importance of this realization.

I think you are going to see the big boys all over the world beating a path to Oklahoma, Texas, Louisiana, Arkansas and Pennsylvania to learn about horizontal drilling for shale gas and other "unconventional" techniques. It is a readily exportable technology and a potential growth industry on its own.

I see no better way to free the world from the despotic clutches of OPEC and the zany leaders of oil rich countries than by democratizing shale gas. Gas has always been an unloved stepchild to oil, burned as an unwanted byproduct and its prices tightly controlled by governments all over the world. But to rip off the famous line, "give a man a tank of gas and he will drive for a day, teach a man to extract his own natural gas and he will achieve true independence." Or something like that. I know I'm being a little dramatic, but I really think natural gas is the future.

[6/23/09 - Update: Here is the exact statement by Chesapeake CEO Aubrey McClendon from the company's annual shareholder's meeting:

"In addition, on all of these plays going forward we have the opportunity for our partners to carry us in some additional leasehold acquisitions. And also, I think, we have upgraded the company reputationally. We've never had a partnership with a major company like today we have with BP, and also with Statoil. I'd like to mention that Statoil and Chesapeake today have the first worldwide joint venture on a 50/50 basis that is scheduled to look for new shale gas reserves around the world.

"We think that they have the commercial skills to operate -- to put us in various countries around the world. And, we think we have the technological skills -- the petro-physical skills, to look for shales around the world. And I think this is one of the most encouraging things in the world today."]

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