Reliance Industries, India's largest private company owned by billionaire Mukesh Ambani, is strengthening its presence in the US shale gas sector as it is close to acquiring a stake in a field controlled by Pioneer Natural Resources by paying $1.35 billion, the Financial Times reported, citing people familiar with the matter. On BSE, shares of RIL went up by 0.09% or Rs 0.95 to touch Rs 1,066.20 at 1.25 pm today.
Reliance will buy a 45% stake in the Eagle Ford shale gas field in south Texas and the deal is expected to close today evening. In April, RIL agreed to pay $1.7 billion to Atlas Energy to form a joint venture and own a 40% stake in Atlas' Marcellus Shale operations in eastern United States. By entering into a partnership with Atlas Energy, Reliance has access to approximately 343,000 acres of undeveloped land with estimated gross resource in excess of 13 trillion cubic feet of gas.
When contacted by VCCircle, an RIL spokesperson declined to comment. Reliance was represented by Barclays and UBS, while Pioneer was advised by Bank of America Merrill Lynch, the Financial Times reported.
On RIL's 36th AGM held recently, chairman Mukesh Ambani had said, "Shale gas is the most promising development in the energy area in North America. It is likely to overtake both conventional gas as well as liquid fuels as a source of energy within the next decade." Shale gas development represents a low level of geological risk as the gas is trapped in rock across a wide geographical region in excess of tens of millions of acres. Reliance aspires to build a significant position in the shale gas business, he added.
According to a recent study by research firm IHS Cambridge Energy Research Associates (IHS CERA), shale gas accounts for 20% and could surpass 50% by 2030 in the US from just 1% of US output in 2000. Shale gas and other forms of unconventional natural gas would underpin a significant increase in US natural gas consumption—and could allow the electric power industry to almost double its use of natural gas, from 19 billion cubic feet (Bcf) per day at present to 35 Bcf per day by 2035, said the study. “The shale gale has shifted natural gas from a constrained resource to an abundant one with wide-ranging implications for the energy future in North America,” says IHS CERA Chief Energy Strategist David Hobbs.
According to Deepak Pareek of Angel Broking, the growing demand for shale gas in North America will boost RIL's plans to strengthen presence in shale gas. The lower cost for exploration will also be an advantage, he added.
Internationally, RIL shall be drilling the first exploration wells in its assets in Kurdistan in Northern Iraq and in East Timor. In Colombia, Yemen, and Oman, RIL shall continue its efforts through application of cutting edge technology to establish the presence of petroleum systems within its acreages, he had mentioned in the AGM.