Exxon moves into Egypt; Shell exits Haynesville
Big Oil giants plot 2020 strategy
Big Oil companies made moves during a slow holiday week as Exxon Mobil secured a large position to explore offshore of Egypt and Royal Dutch Shell opted to exit the Haynesville shale in East Texas and Louisiana.
For Exxon Mobil, the Texas energy giant is building a larger natural gas presence in the Eastern Mediterranean, where it made a large natural gas discovery offshore of Cyprus just 10 months ago. Exxon also has discussed exploring offshore of Israel
Shell, meanwhile, is choosing to focus its money on more profitable shale plays that have crude oil, including West Texas’ booming Permian Basin, Canada and Argentina. Oil sells at higher prices than natural gas.
Club Eastern Med
Exxon said Monday it received leases to explore 1.7 million acres off the coast of Egypt, including 1.2 million acres in the North Marakia offshore block about five miles from Egypt’s northern coast in the Herodotus basin. The remaining 543,000 acres are in the North East El Amriya offshore block in the Nile Delta.
“These awards strengthen our exploration portfolio in the Eastern Mediterranean,” said Mike Cousins, Exxon’s senior vice president of exploration and new ventures. “We look forward to working with the government and deploying our proven expertise and advanced technology.”
Operations, including the acquisition of seismic data, are scheduled to begin next year. Exxon has worked in Egypt for more than 100 years with fuel sales and will now add upstream oil and gas exploration.
In February, Exxon Mobil made one of the largest natural gas discoveries of the last few years and the biggest in Cyprus’ history, according to the Cypriot government. Exxon Mobil said the field tapped by its Glaucus-1 exploration well could hold 5 trillion to 8 trillion cubic feet of gas.
The Eastern Mediterranean could become a major gas source of natural gas for Europe to help nations reduce their reliance on supplies from Russia, but the discovery lies near territorial waters claimed by Turkey, Syria, Lebanon, Israel and Egypt.
Turkey, in particular, disputes international boundaries with Cyprus.
Gassy Haynesville exit
For Shell, it is moving out of the Haynesville shale after selling its last package of acreage to a private Houston firm. The Haynesville primarily produces natural gas.
Houston-based Castleton Resources, which focuses on the Haynesville, will scoop up about 55,000 net acres from Shell. Those holdings are producing more than 100,000 cubic feet of natural gas per day. The companies did not disclose the sales price.
Shell previously sold most of its Haynesville position five years ago but still had some piecemeal acreage remaining.
“The divestment is part of Shell’s ongoing strategy to optimize its shale portfolio and direct capital toward developing our high-margin assets located in the Permian, as well as in Canada and Argentina,” a Shell spokesman said in a prepared statement.
The deal increases Castleton’s Haynesville holdings by about 40 percent. Castleton was founded three years ago when its backer, Castleton Commodities International, bought a sizable Haynesville position from Anadarko Petroleum.
Tokyo Gas acquired a 30 percent stake in Castleton Resources two years ago and, through a new injection of capital with this deal, Tokyo Gas’ ownership of Castleton will rise to 46 percent.
Tokyo Gas is interested in acquiring more shale gas for sale on global liquefied natural gas markets, including in Japan.