Wednesday, October 13, 2010

Off the Shelf?

I was intrigued to read comments by Chesapeake Energy CEO Aubrey McClendon about Chinese energy company CNOOC's recent investment in Chesapeake's Eagle Ford Shale assets.  Disputing the assertion that the investment was at least partially driven by the desire of CNOOC to learn how to drill for shale gas effectively, McClendon said that horizontal drilling and hydraulic fracturing techniques are now "off the shelf technology" available to anyone.  He said the CNOOC investment was a strictly financial deal.

Really?  McClendon might be in the minority with that opinion.  While any number of contractors can drill and frac a well, there is a lot more art and science that goes into a successful shale well, and that is the part that is sold from behind the counter.  You need a special (expensive) prescription to have access to that intelligence.

I'm guessing that McClendon is playing down the notion that Chesapeake is engaging in technology transfer to a Chinese company and playing up the value of the company's Eagle Ford assets.  That's a nice sentiment, but I don't think many people will buy it.

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