China-based Sinochem's $1.7 billion joint venture with Pioneer Natural Resources earlier this year illustrates an emerging trend of foreign investors playing an increasingly larger role in the U.S. shale industry.
Investment in shale plays in the United States totaled $133.7 billion into 73 deals between 2008 and 2012, according to data released by the U.S. Energy Information Administration. About 20 percent of those investments were joint ventures by foreign companies.
Foreign companies have entered into 21 joint ventures with U.S. acreage holders and operators since 2008, investing more than $26 billion in tight oil and shale gas plays, according to the EIA. The remaining deals were either part of an outright acquisition or were joint ventures among American companies.
Foreign investors involved in these joint ventures typically made an upfront cash payment with a commitment to cover some of the drilling costs, the EIA said. This, of course, provides financial support that the U.S. operators need. Meanwhile, the foreign investors gain some experience in horizontal drilling and hydraulic fracturing, technologies that could be applied in other parts of the world.
Global interest in U.S. natural gas exports also is growing. Nirupama Rao, India's ambassador to the U.S., urged the United States to approve natural gas exports in an op-ed piece published today in the Wall Street Journal. Other countries, including Japan, also have pushed the U.S. Energy Department to approve natural gas exports.