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108 Korea-owned oil fields in U.S. shale gas mines

Posted November. 13, 2017 07:26,   

Updated November. 13, 2017 08:42


SK Plymouth, SK E&P America’s subsidiary, is currently producing 2,700 barrels of crude oil and gas a day in 108 oil fields across a 170-square-kilometer mine lot, the size of one fourth of Seoul City. Since the acquisition of the mine in 2014, SK has dug around 40 oil fields, among which only seven have been developed this year upon consideration of falling oil prices. “We are hoping that the oil price rises as a plunge in the oil price can lead to the disruption in production,” said Ken Edwards, the site manager of the company.

With the recent uptick in the oil price, shale gas development is showing signs of turning upward again. “Prices of facilities and materials needed to drill shale gas including trucks, water, and sand are on the rise,” said the company’s general manager surnamed Ahn. Shale gas is analyzed to have price competitiveness unless the oil price falls below 40 dollars per barrel.

Shale gas and shale oil, compared with other resources, can be more easily explored in the shorter period of time required for drilling of only 20 to 30 days. However, it costs around 10 times (3 million U.S. dollars) that of crude oil produced in the Middle East.

Thanks to the development of shale gas, the United States has turned into an exporting country from a net importing country of natural gas. According to the U.S. Energy Information Administration (EIA), the United States will become a net exporting country of natural gas next year for the first time in 60 years. Such a change in the country’s status is most marked in the Freeport LNG import terminal located along the Gulf of Mexico in Houston, Texas. When this reporter visited the terminal last Tuesday, three units of natural gas liquefaction facilities with the production capacity of 4.4 million tons were under construction. This terminal was originally planned to be used for the import of LNG, but was converted into an export base in 2008 with the shale gas boom in the country. Currently, there are the total of four LNG export bases in America.

“The United States will be able to make its dream of becoming energy independent come true with the export of shale gas,” said Michael Smith, the president of Freeport LNG Development. Freeport terminal is expected to add around four trillion to six trillion won to the economy while creating jobs for 4,000 people.

SK E&S, which secured its shares in an oil field in Oklahoma that has the amount of oil annually used in Korea (approximately 35 million tons) as its estimated reserves, has also established its bridgehead here. “Together with Japan’s Toshiba, we will acquire one liquefaction facility here and import 2.2 million tons of U.S.-produced LNG every year,” said Lim Shi-jong, the head of SK E&S Americas Inc.

Yong Park parky@donga.com