Energy Sector Continues to Tilt Toward Domestic Shale Plays

Advances in fracturing chemicals have spurred an ongoing shift toward shale within the U.S. energy industry, according to Enersciences.

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Energy companies are divesting international assets and committing to domestic shale plays.

According to Oppenheimer analyst Fadel Gheit, much of the growth in domestic gas production "is coming from the Marcellus and liquids-rich plays such as the Eagle Ford, Permian, Woodford, Niobrara, and Utica."

(PRWEB) January 13, 2014

Advances in fracturing chemicals have spurred an ongoing shift toward shale within the U.S. energy industry. Fitch Ratings recently released a market analysis highlighting this trend. The firm examined several new developments in the sector that underscore the extent to which companies have become focused on shale plays in North America and are curtailing their activities abroad to free up capital for domestic investments.

According to Fitch, Marathon Oil is just one of the many companies planning to increase its domestic investments in the coming years. Marathon is reportedly planning to sell assets in the UK and Norway, while allocating 60 percent of its 2014 capital expenditures budget to the development of domestic resource plays. The ratings agency also noted that Apache and Oxy have moved to divest their assets in the Middle East and North Africa.

Fitch noted that although major integrated oil and gas companies have also been active in shale plays, it is independent energy companies experiencing the greatest lift as a result of the shale revolution. The impact on larger companies' overall results has been limited, due to the diversity and scale of their investments.

Shift Toward Shale Marked by Focus On Liquids

The movement toward shale plays has been shaped by the low price of natural gas. Demand may be increasing, but the growth of U.S. gas production has been prolific, and the rapid increase in supply has depressed the resource's value. As a result, companies have become more focused on oil production. However, they continue to recover large amounts of gas, due to the mixed composition of the reservoirs they are developing.

According to Oppenheimer analyst Fadel Gheit, much of the growth in domestic gas production "is coming from the Marcellus and liquids-rich plays such as the Eagle Ford, Permian, Woodford, Niobrara, and Utica."

PIRA Energy Group has supported this view, reporting that a "subset of companies active in the nation's most prolific shale play -- the Marcellus -- remain responsible for pushing US production to record highs."

Going forward, the industry is expected to maintain a high level of gas production, even as it continues to shift its focus toward oil-rich plays. Despite this positive outlook for natural gas production, energy companies cannot afford to become complacent. Gas is playing an increasingly important role in the U.S. economy, both as a source of electricity and as an input for chemical manufacturers and other domestic industries.

That is why R3 Sciences is pushing ahead with the development of flare gas recovery systems that can be used to economically convert small amounts of this "associated gas" into liquid form.

America Remains the Global Leader in Shale Development

In its note to investors, Fitch explained that the United States will remain the center of the shale revolution, because it offers fracturing opportunities that are "significantly more advanced" than those in other countries, where development is proceeding at a "much slower pace."

As oil and gas companies continue to search for production opportunities, they will need innovative drilling and fracturing solutions to tap into new reservoirs. Chem Rock Technologies and Rapid Drilling are committed to filling this need by developing fracturing chemicals and drilling fluids that reduce friction, resolve adverse geological conditions, and improve formation fracturing and production performance.


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