RIL puts $1.35 bn in new shale stake
Mukesh Ambani’s bets on shale gas, an emerging energy alternative based on new technology that unlocks the energy source trapped in depths, is getting stronger, with $3 billion (more than Rs. 15,000 crore) committed already, reports HT.business Updated: Jun 23, 2010 02:29 IST
Mukesh Ambani’s bets on shale gas, an emerging energy alternative based on new technology that unlocks the energy source trapped in depths, is getting stronger, with $3 billion (more than Rs. 15,000 crore) committed already.
1.Shale gas or the gas trapped in rocks is the most promising new energy resource across the globe.
2.Unlike the capital- and risk-intensive conventional ways of oil and gas exploration, shale gas represents a low-level risk.
3.Shale gas is likely to overtake both conventional gas as well as liquid fuels as a source of energy within the next decade.
4. India is estimated to be one of the biggest holders of shale gas, but no progress has been made in extracting it.
5. 8 Large shale deposits are located in the Gangetic plain, Assam, Rajasthan and along India’s extensive coastline.
Strengthening its presence in the US shale gas industry, his Reliance Industries Ltd (RIL) was on Tuesday close to announcing a $1.35 billion deal for a 40 to 45 per cent stake in the Eagle Ford shale gas field controlled by Pioneer Natural Resources in South Texas.
This is the second acquisition in shale gas assets by RIL in the United States in less than three months.
Industry sources said while Reliance was represented by Barclays and UBS in its deal with Pioneer, the latter was advised by Bank of America Merrill Lynch.
While RIL’s spokespersons officially refused comments, sources close to the company confirmed the development on which a formal announcement is expected anytime.
Flush with revenues from its KG-D6 (Krishna Godavari basin) gas field off the Bay of Bengal coast in Andhra Pradesh, RIL, sitting on cash reserves of close to Rs 22,000 crore has been on the lookout of acquisitions in the US.
In April this year, Reliance took the first step by entering into a partnership with Atlas Energy to acquire a 40 per cent interest in Atlas Energy Inc's 3,00,000 acres shale gas property in the US for $1.7 billion.
Atlas’ Marcellus shale gas project spans West Virginia, Pennsylvania and New York. In contrast, Pioneer has about 3,10,000 acres in the Eagle Ford Shale play in South Texas.
Outlining a long-term expansion programme, the RIL chairman and managing director had last week announced at his company’s annual general meeting of shareholders that RIL will continue to pursue joint development opportunities to build a substantial upstream business in North America.
Shale gas extraction involves tapping natural gas trapped between layers of shale rock, similar to the extraction of gas from between coal seams in India.
Compared to India, however, the unconventional gas sector in the US is more developed and shale gas business in the US has emerged as a strong contributor to its overall gas supplies in the last five years.
RIL is now a diversified, vertically integrated player whose interests cover oil and gas exploration, petrochemicals and refining. An impending expansion in distribution and generation of power will widen the focus on energy.