StatoilHydro to Invest $3.4 Billion in U.S. Gas Project

The deal will enable StatoilHydro to increase its overall reserves by some 2.5 to 3.0 billion barrels of oil equivalent.

Norwegian energy company StatoilHydro intends to invest about $3.4 billion in a shale gas project in the U.S., it said on Nov.11. StatoilHydro will acquire 32.5% of the Marcellus gas project in the Appalachian region, owned by Chesapeake Energy Corporation, for $1.25 billion.Chesapeake is the leading U.S. gas producer.

StatoilHydro, the second-largest gas distributor in Europe, will also pay $2.125 billion for drilling and completion of wells during the period 2009-2012.

The Marcellus zone, covering 2,818 square miles, contains shale gas, or gas that is trapped in rock and which is extracted by injecting water and sand, a costlier method that normal drilling.

The two groups estimated that the zone could support the drilling of 13,500 to 17,000 horizontal wells over the next 20 years with a continuous program using up to 50 drilling rigs. Each well is estimated to cost approximately $3.5 million..

The deal will enable StatoilHydro to increase its overall reserves by some 2.5 to 3.0 billion barrels of oil equivalent (boe).

StatoilHydro's share of Marcellus' production is expected to be at least 50,000 boe per day by 2012 and at least 200,000 boe per day after 2020.

Copyright Agence France-Presse, 2008

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