Until now, Royal Dutch Shell has had a limited stake in the United States’ emergence as an exporter of natural gas, with its only involvement being a 49% holding in a project to transform the Elba Island LNG terminal near Savannah, Georgia, into an export terminal. But Shell’s announcement this morning that it’s planning to acquire British gas producer BG Group for $69.7 billion in cash and stock will change that.
The deal will combine the two companies’ assets from Brazil to Australia and the North Sea to Louisiana. With the acquisition, Bloomberg reports, Shell is targeting $2.5 billion of pretax “synergies” a year across the globe from the deal, including staff cuts.
BG is currently producing gas in the Haynesville shale in Texas and in the Marcellus shale in Pennsylvania and West Virginia. The company also has plans to export LNG from the U.S. from a Lake Charles facility.
The combined entity will be the largest producer of LNG among international oil companies, Shell Chief Executive Officer Ben van Beurden says. Shell’s equity LNG capacity, at projects from Australia to Russia to Nigeria, was 25.6 million tons a year at the end of 2014, the CEO says. That’s set to rise 80% by 2018, including new production and BG’s assets.
BG’s trading portfolio will help Shell develop its business buying and selling the fuel, says Malcolm Johnson, a faculty member of The Oxford Princeton Programme who spent more than 30 years with Shell in gas and LNG. Read the full story.
Meanwhile, The Associated Press reports the acquisition—which, if approved by both companies’ shareholders, will be the largest of its kind for the industry in more than a decade—could signal a new wave of mega-mergers as the energy industry tries to adapt to lower prices. Read the full story.
