Reliance in talks for stake in Marcellus Shale

The Indian conglomerate Reliance is in talks to buy a stake in a US natural gas field, according to reports.  Reliance is nearing a deal to invest between $1 billion and $1.5 billion in the joint development of an area of Marcellus Shale, an inter-state natural gas field, with Atlas Energy. Moon Township, Pennsylvania-based Atlas controls about 584,000 acres in the Marcellus formation, and is thought to be seeking a partner on a 50-50 basis. Other parties, such as San Diego-based Sempra Energy, are also in negotiations for involvement in the deal, it has been reported. If a deal is agreed, it would mark the first Indian investment in Marcellus Shale, a gas field stretching from West Virginia to New York that has already attracted huge investment from many foreign firms, including those based in the UK, France, Japan and Canada. Gas locked in shale formations is expected to account for 50 percent of US supply by 2035, up from the current 20 percent and just one percent in 2000. Until recently, shale formations were considered too dense to produce commercial quantities of gas. Now, however, gas is extracted from shale via hydraulic fracturing, which forces chemically treated water into wells to break up rock, allowing the gas to flow. Advancements in fracturing techniques have led the industry to more than double its estimates of how much gas can be recovered in North America to 3,000 trillion cubic feet, which could meet US demand for the next 143 years. Exxon Mobil, the second-largest company in the world, made its biggest acquisition in 10 years last December when it paid $28.4 billion for the shale pioneer XTO Energy. Reliance, which is controlled by India's richest man, Mukesh Ambani, is said to be seeking foreign takeovers as it looks towards expansion outside of the Indian market, where 97 percent of its current assets are based. IndiaÔÇÖs largest company by market value, Reliance has raised about $2 billion selling shares since last September. It is thought that those funds have been earmarked for capital expenditure. Last month, the company bid $2 billion for a stake in Canadian oil producer Value Creation, but lost out to the UKÔÇÖs BP. It also failed in its recent $14.5 billion bid to buy the Netherlands-based chemicals group LyondellBasell, which has substantial operations in the US. Neither Reliance nor Atlas have yet made any comment on the Marcellus reports.