Japan’s Mitsui pays $1.4 billion to Anadarko for stake in Marcellus Shale gas venture

Anadarko, Mitsui agree to Marcellus Shale venture

HARRISBURG, Pa. — The production of natural gas from tightly compacted shale in the U.S. is attracting more capital from around the world.

Japanese conglomerate giant Mitsui & Co. said that it will take a $1.4 billion stake, or 32.5 percent, in Anadarko Petroleum Corp.’s assets in the Marcellus Shale gas field that stretches from Pennsylvania into New York.

Mitsui said Tuesday that it expects to invest up to $4 billion in a venture, which it hopes will produce as much as 460 million cubic feet of natural gas per day.

“This just validates that everybody around the world is interested in this play,” Anadarko CEO Jim Hackett said Tuesday on CNBC.

Last month, Chesapeake Energy Corp., based in Oklahoma City, and a subsidiary of France’s Total SA formed a $2.25 billion joint venture that gives Total access to the Barnett Shale natural gas field in north Texas.

Manuj Nikhanj, vice president of the Calgary-based investment research firm Ross Smith Energy Group, said the sheer size of the shale fields appeals to the world’s largest companies. Plus, international and foreign energy companies also can learn how to exploit shale and bring that knowledge to other basins around the world where development hasn’t started yet, Nikhanj said.

Geologists and energy companies have known about the gas trapped in shales for decades, but the cost to tap them was prohibitive until recently when new exploration techniques became available.

“The U.S. gas market has never seen such a sharp turnaround in expectations as happened with the emergence of shale gas,” said Richard Nehring, president of Nehring Associations in Colorado Springs, Colo., which provides information on oil and gas field production to the exploration industry. “It is a big thing and it is something that emerged very quickly. It upset a lot of investment apple carts.”

Mitsui invests in and owns companies in a range of industries around the world, including power plants, freight and textiles, as well as liquefied natural gas and natural gas exploration. It previously partnered with Anadarko in Mozambique and Indonesia.

Anadarko, based in Houston, has gas interests in more than 700,000 acres in northern Pennsylvania, and is the largest leaseholder in Pennsylvania’s state forests.

Anadarko expects to drill more than 4,500 wells in the coming years. To date, there are about 1,100 Marcellus Shale wells drilled in Pennsylvania. About half of them are producing, according the Marcellus Shale Coalition, an industry group.