Earthquakes, water table contamination who cares; on with the fracking.....

Asian and European energy producers are spending billions of dollars to amass stakes in oil and natural-gas discoveries from Ohio to British Columbia even as earthquakes and tainted water threaten to stall the biggest drilling boom (BAKEHORZ) in at least two decades.

Total SA (FP), Europe’s third-largest oil company, and China Petrochemical Corp. (600028), that nation’s second-biggest crude producer, committed $7 billion to U.S. and Canadian shale rock formations during the past two weeks. The investments are aimed at tapping the expertise of smaller explorers including Devon Energy Corp. (DVN) and Chesapeake Energy Corp. (CHK) that pioneered techniques employed to crack previously impervious shale.


The potential rewards from shale regions such as the Utica and Marcellus formations in the eastern U.S. are too big for overseas explorers to ignore, said Mark Hanson, an analyst at Morningstar LLC in Chicago. A New Year’s Eve earthquake in Youngstown, Ohio, linked to a well used to store drilling wastewater prompted the state to halt operations at five such wells. Separately, the U.S. Environmental Protection Agency is studying whether intensive shale-drilling practices pose a danger to drinking water.

“These shale prospects are exploration frontiers and the big international players see them as a runway to growth,” Hanson said yesterday in a telephone interview. “They are acquiring stakes not only to learn how to drill these kind of formations in other parts of the world, but to understand how to get their arms around prospects of this size.”