India wants to cash in on Appalacian gas

[pscot]

http://www.marketwatch.com/story/india-cashes-in-on-untapped-natural-gas-2010-04-09

On Friday, one of India's biggest conglomerates, Reliance Industries Ltd., plunked down $1.7 billion to stake a claim in the Marcellus Shale play. Marcellus is a vast underground sheet of shale stretching from New York's Finger Lakes through western Pennsylvania as far south as parts of Kentucky and Tennessee.

What makes Marcellus hot is that drillers have figured out how to run horizontally drilled wells through the shale strata and fracture it under high pressure, literally shattering the rock, to release the natural gas trapped inside. This wasn't possible a generation ago.

Reliance is the first Indian energy company to gain a foothold in the Marcellus Shale, buying exploration rights to 120,000 acres. But it's not the first foreign company in the region by a long shot. Norway's state oil company.

On the surface, all this overseas interest in North American natural gas is an odd twist on an old theme. Unlike crude oil, natural gas cannot be loaded onto tankers and shipped abroad. So when India's Reliance Industries makes a play for gas in North America, it's not looking to send much-needed energy to fuel further growth in India's booming economy. Rather, it's an Indian company injecting itself into an exploration boom in Pennsylvania in the hope of being a supplier of gas to utilities and industries along the East Coast. For American energy companies, this is a familiar role in overseas markets. But it's an unfamiliar site to see so many overseas operators on gas fields here at home.

Meanwhile, the buzz around the Marcellus Shale formation is turning small U.S. companies into real estate speculators. Mumbai-based Reliance Industries bought its Marcellus exploration acreage from Atlas Energy Inc. , an independent operator based in Mon Township, Pa., with a market cap of less than $3 billion.

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[malakai2]

1. This brings up tons of interesting questions

A lot of people where I live want all the energy development they can get, because they don't like depending on foreigners for anything. I wonder if any heads will explode when this comes to a drill rig near them.

Also, I wonder how some of these companies are to work with in regards to environmental issues.

Along those same lines, it seems like certain extractive industries in certain locations (coal in WV, for example) seem to play with hometown refs. How would that play if, using the WV example, it wasn't Massey that just killed 25 people but a Chinese mining consortium?

[pscot]

2. That last one could start

WWIII. On the other hand, what if a foreign firm decided to cooperate with the unions, emphasize safety, clean up their messes and in general behave like a good corporate citizen? Nah. That's not gonna happen.

[malakai2]

3. Good point

For example, the Scandinavian companies...they run their factories in China the way the Walmart market demands they be run and the way the Chinese government allows. Would that go over as well here, where the internet makes their home country practices easily researchable, or would workers here take some kind of perverse pride in asking for less and suffering through it?

[AlecBGreen]

4. .

"A lot of people where I live want all the energy development they can get, because they don't like depending on foreigners for anything. I wonder if any heads will explode when this comes to a drill rig near them."

The gas will be sourced in the US and sold to US customers. I doubt many people care who the supplier is, as long as the stove turns on and the heater blows warm air.

"I wonder how some of these companies are to work with in regards to environmental issues."

Any gas operation in America must abide by federal, state & local regulations.

...it seems like certain extractive industries in certain locations (coal in WV, for example) seem to play with hometown refs. How would that play if, using the WV example, it wasn't Massey that just killed 25 people but a Chinese mining consortium?

When people are killed by corporate greed, the rest of us are pissed. When they are killed by FOREIGNERS, we tend to get super pissed.

[malakai2]

5. ..

"A lot of people where I live want all the energy development they can get, because they don't like depending on foreigners for anything. I wonder if any heads will explode when this comes to a drill rig near them."

The gas will be sourced in the US and sold to US customers. I doubt many people care who the supplier is, as long as the stove turns on and the heater blows warm air.

Some people exhibit a logical disconnect when "our" resources are being extracted by "those" people, even if we're still using the resources here. That sort of mindset happens out here. A lot. I don't think the state really cares, but with a lot of landowners holding the split estate mineral rights as well as surface rights that could be an issue in securing leases. If it were an issue to that degree, it would also become a political issue within the state.

"I wonder how some of these companies are to work with in regards to environmental issues."

Any gas operation in America must abide by federal, state & local regulations.

"Must abide" does not necessarily mean "does abide." It also does not mean they abide willingly if they do choose to abide, or are honest and forthcoming or even self-reporting when violations do occur. Some companies are great to work with from a regulatory perspective, others are holy terrors. Great to work with would mean they do actually comply with the regs, they do self-report when things go wrong, they do give me a heads up when there's a problem coming my way. Holy terror would mean they don't comply, they hide or destroy evidence, and they deny knowledge of willful violations.

As it turns out, it's often easier to work directly with companies on prevention, mitigation, and self reporting than it is to get state governments to take any active role in doing the same. As far as my state is concerned, any well that isn't being drilled, any pipeline that isn't being installed, is lost economic opportunity that can never be recovered and therefore can't be allowed to be lost, never mind what the long term costs may be. As some oil reps have said to me, they love working in this state because it's like there are no rules. So like I said, I'm curious where these companies fall on the spectrum.

And I notice that last sentence there sounds a lot like the standard press release Marathon, Halliburton, etc. use when explaining accidents or deaths on their work sites. I'm not suggesting anything, it just sticks out.