Reliance Industries will invest $1.7 billion in a project in U.S. for extracting gas from shale, a sedimentary rock, in joint venture with Atlas Energy Inc.
Atlas Energy said it has reached an agreement with Reliance for the project in Marcellus, which spans parts of Pennsylvania, West Virginia and New York and could hold enough natural gas to satisfy U.S. demand for a decade.
Shale gas is natural gas stored in organic rich rocks such as dark-coloured shale, inter-bedded with layers of shale siltstone and sandstone. It is considered an unconventional source as the gas may be attached to or “adsorbed” onto organic matter. The gas is contained in difficult-to-produce reservoirs that require special completion, stimulation and/or production techniques to achieve economic production.
Atlas said it has reached an agreement with Reliance wherein the Indian firm “will acquire a 40 per cent undivided interest in about 300,000 acres of undeveloped leasehold held by Atlas.”
“Reliance will pay approximately $340 million in cash upon closing and an additional $1.36 billion in the form of a drilling carry,” Atlas Energy said in a press statement.
In addition to funding its own 40 per cent of drilling obligations, Reliance has agreed to fund 75 per cent of Atlas’ respective portion of drilling and completion costs until the $1.36 billion drilling carry is fully utilized.