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Wilmoth: Foreign partnerships benefit domestic energy companies

As oil and natural gas producers throughout the United States continue to perfect drilling techniques in shale and other tight rocks, government-owned oil companies from China and other parts of the world are buying larger stakes in the American plays to gain better knowledge or the process.
by Adam Wilmoth Published: March 1, 2013
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Chesapeake Energy Corp. this week said it will sell a stake of its northern Oklahoma acreage to China-owned Sinopec for $1 billion, continuing a growing trend of foreign government-owned oil companies partnering with American producers.

The strategy is good news for American producers.

Sinopec last year struck a $2.5 billion joint venture with Oklahoma City-based Devon Energy Corp. for development of the company's Mississippian and Niobrara shale plays.

Norwegian-owned Statoil in 2008 entered into a $3.4 billion joint venture with Chesapeake in Pennsylvania's Marcellus Shale. Two years later, Statoil began a similar $1.3 billion deal with Talisman Energy Inc. in the Eagle Ford shale in south Texas.

Since Chesapeake's announcement on Monday, I've heard comments from people who seem to misunderstand what's going on here.

The Chinese government did not buy Chesapeake or an Oklahoma oil field.

Under the terms of these joint ventures, the foreign companies — or any other financier — help pay for the drilling and development in exchange for a share of the profits.

The produced oil and natural gas will stay in the United States. Royalties will be paid to Oklahoma landowners. Production taxes will be paid to state and local coffers. Most of the rig hands and truck drivers and service crews and caterers and everyone else associated with the rig are from Oklahoma or surrounding areas.

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by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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