Chevron Expands in Marcellus Shale

Chevron staked a claim in shale. Marcellus shale--one of the most prolific gas resources of the northeastern U.S.--became the target of Chevron's future in gas.

Investment in America's future

Chevron just finished acquiring Atlas Energy, a gas producer, and expanded its development rights in Marcellus shale by 228,000 acres. The deal cost Chevron $1.6 billion, although the exact amount wasn't disclosed.

When you read the good news from the rocks and the huge energy resource they represent, it's hard to know why developing them meets with such resistance. Our country claims a desire for energy independence yet makes it nearly impossible to use our own resources. So, here's Chevron stepping up to serve the American desire for energy from home.

And what does Chevron get in return? Public resistance and business risk.

Taking a chance

Chevron takes huge risk in the Marcellus venture in terms of the NIMBY effect. Not-in-my-back-yard prevails when gas is removed from Pennsylvania rocks. Both environmentalists and regular people don't want such gas drilling or development operations nearby.

Also, Chevron took a hit in terms of market risk. Natural gas prices in the global market plummeted upon the Chevron announcement. The prospect of more gas in supply--make that future supply--sent gas prices south. So, before it gets a whiff of gas out of the ground, Chevron has suffered a business loss already.

On top of all that risk to be borne, government agencies are set to step in to require fracking chemicals composition disclosure. These are the proprietary mixtures used to extract the gas from its rocky bounds. When forced to disclose the materials that make extraction possible, companies lose their proprietary advantage. Disclosure only opens up the field to more players, thereby having the opposite effect of the one intended.

Welcome, not woe

Instead of raising the neck hairs of NIMBY neighbors and overreaching agencies, Chevron's expansions in Marcellus shale gas should represent movement toward that energy independence we all desire.

It's time to welcome energy opportunism, not resist it.

Sources: embedded in the text.