Commentary by Eric Wilder – I just returned from a trip to New Orleans and I am happy to report that the city is on its way to recovery.  When I worked in the Big Easy, many years ago, Shell was a big player in Louisiana.  They also had corporate headquarters in New Orleans at One Shell Plaza.

Shell left New Orleans years ago.  They also sold most of their interests in domestic oil and gas properties and moved mostly offshore or overseas.  The large sign painted on the wall at One Shell Plaza that I saw this past weekend proclaims that they are back in town.

Much of the reason for Shell’s return to the domestic scene is the continued high price of natural gas.  Increased demand and decreasing reserves are fueling the higher prices, but the discovery of a new reservoir is the real driving force behind the major’s return.

The Barnett Shale play in the Fort Worth Basin has demonstrated that there are large quantities of recoverable natural gas in thick shale sequences thought previously to be unproducible.  I remember Ed Smith of Schlumberger telling me more than two decades ago that if we could just find a way to get the oil and gas out of the Woodford Shale that we would have reserves to last us well into the next century.  Well, the next century is here and technology has found a way.

The Barnett Shale play is crowded, with little un-leased acreage available, but there are other plays available.  One such play is in Central Arkansas, and that is where Shell is presently focusing its efforts.  Recently, they announced that they now control more than 70,000 acres in the Fayetteville Shale play in Arkansas.

There are other massive shale plays beginning, the Caney and Woodford plays in Oklahoma, to name a couple.  Yes, Shell is back.  And like Ed Smith’s prediction, it bodes well for both New Orleans and the entire United States.

http://www.ericwilder.com   http://justeastofeden.blogharbor.com