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Shell sees no problem in dealing with concerns over coal seam gas

The Australian

Shell sees no problem in dealing with concerns over coal seam gas

Cath Hart | Saturday July 19, 2008

FOREIGN investors appetite for investments in coal seam gas and Australian companies with exposure to the new energy product shows no signs of slowing.

Royal Dutch Shell’s global head of power and gas, Linda Cook yesterday said the super major was still looking for new CSG openings in Australia to add to its recently added stake in Arrow Energy.

“We’ve had that (CSG) on our radar for some years,” Ms Cook said during a visit to Australia.

“Our interest remains high in various types of new gas opportunities including tight gas as well as coal seam gas in a number of countries around the world.”

Last month, Shell became the third major to join Gladstone’s rapidly evolving LNG industry, striking a $776 million deal to buy into Arrow Energy’s resources, a deal that includes its existing sales contracts, and 10 per cent of its suite of prospects in India, Vietnam and China.

Ms Cook said Shell had finalised the deal with Arrow over other players in the domestic CSG market because of its asset appeal and knowledge base.

“Arrow had some interesting assets and some good expertise and would be an attractive partner for us internationally,” Ms Cook said.

That deal, alongside Santos’s $2.5 billion sale of CSG reserves to Malaysia’s Petronas and BG hostile takeover bid for Origin Energy, pushed a significant re-evaluation of stocks with CSG exposure.

Ms Cook said CSG was a resource that Shell was “excited (to) have a position not just in Australia but also in China”.

“With increased demand for energy, and the environmental benefits of natural gas, we should look for all sources of natural gas and CSG is one of those,” she said.

Despite widespread enthusiasm for CSG, Woodside boss Don Voelte dismissed it as a “lousy quality gas at liquefied form” and suggested that the Japanese market would not want it.

“I can’t comment on Don’s views on the whole matter but we have looked at it and we see no technical barriers to using CSG to supply an LNG plant and we think the concerns that customers have can be dealt with,” she said.

On Wednesday, Shell bolstered its position in Canada’s oil and gas industry with the pound stg. 2.9 billion ($5.9 billion) acquisition of Duvernay Oil, which has exposure to so-called “tight gas”, a form of natural gas that is difficult to extract and is found in less permeable rock structures than conventional gas.

http://www.theaustralian.news.com.au/story/0,25197,24041984-5005200,00.html

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