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Elizabeth Souder reports: "Exxon Mobil Corp. signed a deal with Russia's Rosneft that gives the Irving oil giant access to oil in the Arctic in exchange for teaching the Russians to use technology developed here in North Texas. The Rosneft deal also shows how Exxon can turn its $41 billion purchase of Fort Worth's XTO Energy into key a bargaining chip to get access to oil fields around the world. XTO developed technology to draw natural gas out of tight shale rock in North Texas (fracking), and has applied the technology to oil and gas elsewhere."

Floor hands connect sections of steel pipe at a natural gas well-site in Texas where hydraulic fracturing is used. (photo: Robert Nickelsberg/Getty Images)
Floor hands connect sections of steel pipe at a natural gas well-site in Texas where hydraulic fracturing is used. (photo: Robert Nickelsberg/Getty Images)



Exxon to Teach Russians to Frack in Exchange for Arctic Oil

By Elizabeth Souder, The Dallas Morning News

30 August 11

 

xxon Mobil Corp. signed a deal with Russia's Rosneft that gives the Irving oil giant access to oil in the Arctic in exchange for teaching the Russians to use technology developed here in North Texas.

The companies plan a $3.2 billion exploration program for the Kara Sea on the Arctic Ocean and the Black Sea, they said in a joint press release on Tuesday. Rosneft, Russia's state-owned oil company, will have the option to invest in Exxon drilling projects in the Gulf of Mexico and tight oil fields in Texas that require new technology to produce. The companies will also study developing tight oil resources in Siberia.

"Access to resources, it's the most important thing for Exxon, the No. 1 priority for Exxon," said Fadel Gheit, an analyst with Oppenheimer Holdings Inc.

Oil companies grow by expanding the resource base they will drill in the future. These days, growth has become more difficult as many oil-rich countries grapple with unstable governments, and other countries block drilling.

The Rosneft deal also shows how Exxon can turn its $41 billion purchase of Fort Worth's XTO Energy into key a bargaining chip to get access to oil fields around the world. XTO developed technology to draw natural gas out of tight shale rock in North Texas, and has applied the technology to oil and gas elsewhere.

"Now Exxon can tell analysts and investors I told you so," Gheit said. "When we bought XTO, it was not only for the immediate future. We were looking at how we could redeploy XTO experience and expertise under the Exxon umbrella."

The deal with Russia comes at a time when XTO's drilling practices are under fire in the U.S. Some states and towns have banned hydraulic fracturing, a process of drilling into tight rock, setting off explosives to crack the rock, then injecting water and chemicals into the well to allow natural gas and oil to flow out. Anti-drilling activists say the process pollutes water and air.

People in some other countries haven't had the same reaction to fracking. And while natural gas prices in the U.S. have been depressed since fracking became widespread and juiced supply, international natural gas prices are higher.

"They are here to get their education," Oppenheimer's Gheit said about Rosneft. "They are not interested in producing gas in the U.S. They are interested in producing gas in Russia."

Further, Russia cannot afford to let Western Europe get ahead in the fracking game.

"They are a one-horse economy," said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. "They need the dependence" on the oil industry.

The Exxon-Rosneft tie-up could generate as much as $500 billion in investment, Bloomberg News reported Russian President Vladamir Putin said.

The companies also said they will build an Arctic Research and Design Center for Offshore Development in St. Petersburg, develop safety and environmental protection systems, and organize employee exchanges.

"This venture comes as a result of many years of cooperation with Exxon Mobil and brings Rosneft into large scale world-class projects, turning the company into a global energy leader," said Rosneft president Eduard Khudainatov in a statement.

Exxon and Rosneft have been working together for years on their most challenging project, drilling off the coast of Sakhalin Island. Exxon chief executive Rex Tillerson lead the company's Russian operations, including the Rosneft project, before moving to the corner office in Irving.

Tillerson said Tuesday in a statement: "This agreement takes our relationship to a new level and will create substantial value for both companies."

 

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+10 # aine 2011-08-30 17:03
so this is a lose lose for humanity. why am i not surprised.
 
 
+7 # Kayjay 2011-08-30 17:23
It looks like our environment is "fracked" unless we get outta our cars etc.
 
 
+4 # Bill Clements 2011-08-30 21:58
Isn't it amazing and astounding that corporations can make these "business" arrangements with one another that are mutually beneficial (i.e., they each make lots of money), but will end up being an environmental disaster for the rest of humanity?

This is, if you don't mind my saying so, what is wrong with capitalism: it's amoral at best and in the case of oil companies like Exxon and Rosneft, one could easily argue that their actions are clearly immoral.

Why the hell should any corporation be able to get away with actions that are destructive and long-lasting? Actions that result in death and disease for humans and other sentient beings?
 
 
+4 # angelfish 2011-08-30 21:58
If the Russians have ANY brains, they should RUN not walk away from learning how to "Frack"! Is this how we destroy old foes? Teach them how to RUIN their Ecology? Way to go Exxon! MADNESS!
 
 
+2 # Bill Clements 2011-08-30 22:02
And BTW, isn't there credible evidence to suggest that the earthquake that occurred in Virginia may have actually been triggered, in large part, by fracking?

http://stuartbramhall.aegauthorblogs.com/2011/08/23/did-fracking-cause-the-virginia-earthquake/
 
 
+1 # firefly 2011-08-31 03:04
Oh goody, then the Russians can also experience more earthquakes, like DC did last week.
 
 
+2 # abby in N.H. 2011-08-31 03:20
We've got to stop burning shit to produce the energy we use, for our children's children and for our planet. She can't and won't take it anymore and neither should we.
 
 
+2 # Bourbaki 2011-08-31 05:05
With "Fracking" becoming a toxic label I notice this article has introduced the term "tight drilling".

Is the same as dropping "High Fructose Corn Syrup" for the "healthier" sounding corn sugar?

Words, cant live with'em, pass the beernuts.
 
 
+1 # Glen 2011-08-31 07:12
Never forget that oil is used for more than keeping the ole vehicles on the road. Look around your house or work place and recognize oil products. How much of the yearly oil production, I wonder, goes into manufacturing.

On the other hand, WE are never asked if WE agree with any corporate or government process or activity, including some of the most destructive activities the world has ever experienced, i.e., testing of an atomic bomb. Nobody asked residents of islands if they were willing to give up homes for those tests.

To my knowledge no community was consulted prior to companies arriving to begin the fracking process. Flack catchers were assigned to answer questions coming in by concerned citizens, and that was about it.

No doubt Russian citizens will not be consulted, either. All we have is complaining after the fact. Fracking is going on all over the U.S. and materials being hauled on the highways.
 
 
+1 # USA2012??? 2011-08-31 08:05
Sounds like a very bad "FRACKING" idea: after enough catastrophic events take place as a result of this procedure the practice will be outlawed. We could expedite the outlawing of FRACKING if we make it mandatory that "FRACKING" is allowable only after it's been done in the backyard of every Governor, Senator, Representative, and CEO of every corporation that stands to benefit from this reckless pursuit of natural gas.
 

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