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Exxon Mobil buys into Marcellus shale

June 14, 2011
Weirton Daily Times

Developing Marcellus shale natural gas is becoming even more popular, as global oil and gas giant Exxon Mobil paid $1.7 billion for 317,000 shale acres last week.

This acquisition follows Exxon Mobil's $41 billion takeover of Houston-based XTO Energy and its Marcellus assets in December 2009, which allowed Exxon to become the largest producer of natural gas in the United States.

Another oil and gas titan, Chevron Corp., recently acquired 228,000 Marcellus acres. Royal Dutch Shell paid about $4.7 billion to acquire East Resources, a deal that allowed the company to claim some acreage in Wetzel and Tyler counties in West Virginia's Northern Panhandle. Shell also has announced plans to build an ethane cracker in Appalachia, with a site near Bayer Corp.'s New Martinsville facility as one possibility.

This means that at least three of the six largest oil companies in the world - excluding ConocoPhillips, BP and Total SA - have made significant investments in the Marcellus shale field, which some industry leaders believe may contain as much as 500 trillion cubic feet of natural gas.

According to the West Virginia Department of Environmental Protection, XTO - now a subsidiary of Exxon - has active Marcellus gas operations in the Mountain State, while the company also maintains substantial holdings in Western Pennsylvania.

"Our operations and leasehold in the Marcellus shale continue to show tremendous promise and will be an important part of our future," said Jeff Neu, public and government affairs adviser for XTO.

The $1.7 billion deal allowed Exxon to acquire Warrendale, Pa.-based Phillips Resources Inc. The proven reserves in the deal are 228 billion cubic feet of natural gas, with current production at 50 million cubic feet per day.

To date, Phillips has operated or participated in the drilling of more than 50 Marcellus shale wells, both vertical and horizontal. XTO will oversee the Phillips assets, while Neu said Exxon plans to keep Phillips' 200 employees.

"We take great pride in our long history of drilling and developing natural gas resources and are committed to working communities to demonstrate that our operations can be conducted safely and in an environmentally responsible manner," Neu added.

"We continue to pursue opportunities that strengthen Exxon Mobil's position in the production of cleaner burning natural gas in the U.S.," Neu said, noting natural gas projects continue to support the nation's economic and energy security.

Other natural gas companies are taking notice of the major producers entering the Marcellus market. John Pinkerton, chairman and chief executive officer of Range Resources Corp., said at the time of Exxon's takeover of XTO that he would not be surprised to see the major oil companies taking over the shale assets.

 
 

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