Oilfield service firms could profit from China’s shale

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Chinese energy producers are courting foreign companies for their expertise in extracting natural gas from shale, in what may be larger reserves than what has been found in the U.S. China National Petroleum -- parent of PetroChina ( PTR , quote ) -- recently teamed up with Royal Dutch Shell ( RDS-A , quote ) to figure out ways to become better at teasing the gas from shale beds. Compared with Baker Hughes ( BHI , quote ), which can now get a shale well pumping in 16 days, the Chinese drillers took 11 months to bring their first test well online. At stake is about 1.2 trillion cubic feet of "technically recoverable" shale gas, according to the U.S. Energy Information Administration. That is 50% more than estimated U.S. reserves. Since Beijing has prohibited foreign companies from bidding directly for all that energy, some of the world's top E&P interests are offering technology and capital to woo Chinese partners. Chevron ( CVX , quote ) and BP ( BP , quote ) are talking to Sinopec ( SNP , quote ), while Statoil ( STO , quote ) is also looking for a piece of this action. And the deal flow has been known to go the other way. China's gigantic producer CNOOC ( CEO , quote ) bought stakes in two Chesapeake Energy ( CHK , quote ) onshore U.S. shale projects in the last year. While nobody expects China to start producing serious shale gas in the next decade, there will be winners and losers. BHI and other oilfield service companies are set to gain if they can get the right kind of access to Chinese producers.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

Referenced Stocks: BHI , BP , CEO , PTR , STO

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