American Drilling Techniques May Migrate Overseas

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"European energy giants cut deals with U.S. gas producers; drilling technology is the prize."

With one eye cast toward home, giant European energy companies are investing billions in U.S. natural gas and oil fields where huge, hard-to-get reserves have been unlocked with new drilling technology.

That technology is the prize in Europe, where gas production has declined and where an international utility dispute recently left people in more than a dozen European countries shivering in unheated homes.

Europe's natural gas supply is routed through Ukraine from Russia. Russia supplies about one-quarter of the EU's natural gas, with 80% of it shipped through Ukraine. A rift between the two nations left more than a dozen European countries with little or no gas for two weeks last month.

Declines in European gas production has potentially made the new techniques used in the U.S. even more pivotal.

At least three European oil and gas giants are developing or have bought interests in oil and gas shale projects in the U.S.ŚNorwegian oil company StatoilHydro, the U.S. unit of British oil company BP Plc and French company Total.

StatoilHydro and BP have agreed in recent months to pay billions of dollars for stakes in shale gas projects from the top U.S. producer of gas, Chesapeake Energy. Total has bought a 50% stake in a U.S. company exploring for oil shale in the Rocky Mountains.

"Given the magnitude of oil shale resources we believe that this project has an important long-term potential for global energy markets," Yves-Louis Darricarrere, Total's exploration and production president, said in announcing Total's deal with American Shale Oil.

Shale is a kind of layered, sedimentary rock that exists in formations throughout the world. In the U.S., gas production from shale dates back to the 1800s.

But the gas, tightly locked in rock formations, had been extraordinarily expensive to extract. That began to change about 15 years ago as producers developed new techniques, such as horizontal drilling, where the drill is turned in a right angle to bore into a gas reservoir horizontally.

Gas from shale now amounts to about 5% of total U.S. production, according to the Gas Technology Institute.

If the same technology works in Europe it could free up an enormous amount of energy, and potentially provide a buffer against cross-border disputes to the east.

If the race to duplicate drilling success in the U.S. is on, few companies are talking about it.

U.S. companies stand to expand through new markets in Europe if the new techniques work, and many experts believe that they will.

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