Increased Carbon

This illustration shows an example of a shale gas development with several well pad sites. Each well pad has six producing wells. Multiple horizontal wells per pad limit footprint and impact on the surface (Photo via Statoil).
This illustration shows an example of a shale gas development with several well pad sites. Each well pad has six producing wells. Multiple horizontal wells per pad limit footprint and impact on the surface (Photo via Statoil).

 

Korean gas companies are bracing themselves up in the American shale gas market.

According to industry sources, E1 is currently recording an equity yield rate of 7 percent to 8 percent in Cardinal Gas Services. E1 made its investment in the American shale gas company last year, when midstream investment in the U.S. offered an expected rate of return of 10 to 15 percent. However, E1’s profits were next to nothing for a while, due to a drop in oil prices. Things have changed this year though. With the oil prices rebounding and the productivity of shale gas development improving, E1 is expecting that its 80 billion won (US$72 million) investment will bring at least a 10 percent return at the end of this year. E1 is the subsidiary of E1 America in Huston, which purpose is equity investment in U.S. shale gas companies.

SK E&S is accelerating its Woodford Gas Field Development Project with Continental Resources. Harold Hamm, the CEO of the latter, visited SK E&S late last month to go over the details of the project. More projects led by the two are expected to follow, too.

Last year, SK E&S signed a contract to acquire 49.9 percent of the gas field shares at a price of US$360 million, and paid US$90 million in cash. The rest is scheduled to be paid in the form of development cost sharing by 2019, when production at the site gets on track. The estimated natural gas reserves of Woodford amount to approximately 76 million tons, and half of it is SK’s. Gas production starts in 2017, and the output is estimated to reach 2.4 million tons in 2019. For reference, Korea imported about 39 million tons of natural gas in 2013.

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