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BHP Billiton sees future in shale gas

BHP Billiton, the world's biggest mining company, backed the burgeoning shale gas industry as it unveiled plans to spend $4.5bn (£2.8bn) on its development next year.

BHP Billiton, the world's biggest mining company, backed the burgeoning shale gas industry as it unveiled plans to spend $4.5bn (£2.8bn) on its development next year.
BHP is betting that US gas prices, which are less than quarter of those paid by importers in the East, will rise as producers export natural gas in liquefied form. Credit: Photo: NEIL JOHNSON

Gas extracted from shale rock is forecast to contribute half of the US's supply of natural gas by 2020, it said.

"Shale gas is changing the landscape," said J. Michael Yeager, chief executive of BHP's petroleum division. "This is going to be a game changer around the world and for BHP Billiton not to be part of it would be irresponsible."

The miner entered the shale gas arena earlier this year by spending close to $17bn buying producer Petrohawk Energy and assets from Chesapeake Energy.

BHP is betting that US gas prices, which are less than quarter of those paid by importers in the East, will rise as producers export natural gas in liquefied form.

The plans represent a major vote of confidence in the future of shale gas, despite concerns about the potential environmental impact of the "fracking" method – hydraulic fracturing – used to extract natural gas from shale rock.

Worries intensified in the UK after Cuadrilla Resources, the only company to be fracking here, recently admitted it had probably caused two small earthquakes in Lancashire.

BHP acknowledged that areas of concern include "seismic activity" as well as protecting groundwater from contamination during fracking. BHP shares fell 28½ to £19.64½p