Japan buys stake in Pennsylvanian gas field

Anadarko Petroleum has agreed a $1.4 billion deal with Japanese trading and investment group Mitsui & Co to sell a minority stake in its Marcellus Shale natural gas project in Pennsylvania.  The deal announced yesterday will give Mitsui control of 32.5 percent of Anadarko's shale gas assets in the state, where most of the 250,000 square kilometre Marcellus deposit is located.  A rapidly developing natural gas field, Marcellus also reaches into New York and other states. Anadarko has 715,000 gross acres of the field.  Mitsui said it plans to spend another $3 billion to $4 billion on exploration and extraction, mostly within the next 10 years, making Marcellus one of its largest energy investments to date. It said it was counting on rising demand in the US for natural gas as an alternative to coal and oil.  It is thought that governments worldwide will use natural gas as a ÔÇÿbridgeÔÇÖ fuel until renewables can be developed to the point where they can meet a sufficient proportion of electricity demand.  Mitsui expects the Marcellus development to last 60 years and produce 360 million to 460 million cubic feet of gas a day at its peak.  The Japanese company has grown from its position as an import-export business to become an important investor in commodities and energy projects. It owns a Y250 billion ($2.7bn) interest in Russia's Sakhalin-2 liquefied natural gas project, its biggest such investment.  The companyÔÇÖs most profitable business division in the fiscal third quarter ended December was energy, which includes its LNG operations  Once considered too costly to exploit, shale has now become commercially viable thanks to innovative technologies such as horizontal drilling and new ways of fracturing rock.  But development of shale is still highly technical and expensive, which has prompted a rise in the number of US natural gas producers entering into joint ventures with overseas investors to help fund shale projects.  BP and BG Group of the UK, NorwayÔÇÖs Statoil and the Italian oil company Eni have all made investments in the US natural gas industry over the past year.  Projects such as Barnett Shale in Texas are attracting interest from foreign energy companies, with Statoil having formed a joint venture with the French energy company Total to carry out development there.  US shale gas output grew from less than one billion cubic feet a day in 1998 to about five billion cubic feet a day last year. In 2009, the US overtook Russia as the world's largest natural gas producer.  Natural gas is about 30 percent less carbon-intensive than oil and 50 percent less so than coalÔÇöthough it does still emit carbon. This makes it less attractive from an environmental viewpoint than renewables; however, it is also needed to back up wind and solar applications.  The Mitsui deal is expected to close on March 15.