More money on unconventional gas

Schlumberger’s $11bn acquisition of Smith International is big news in the oilfield services sector, and Cyrus Sanati thinks it’s all about unconventional gas:

“There is I don’t think any doubt that long-term shale gas is going to be one of the big new energy sources both in the U.S. and overseas,” Andrew Gould, Schlumberger’s chief executive, said in a conference call with analysts on Monday. “Smith’s capacity to serve that market in North America is of great interest to me.”

Like Exxon’s purchase of XTO, I suspect that the real long-term value here is in exporting unconventional gas technology outside North America, where its potential has barely been tapped. And as a service provider, Schlumberger may be even better positioned than an oil major like Exxon, given the increasing clout of national oil companies, resource nationalism and the increasing difficulty of acquiring underlying resource rights in many countries.

Geothermal (or at least public handouts) attract big players

I haven't been too optimistic on geothermal power on this blog (here, here, here), but here at least is some marginally good news from the U.S. government's recent round of grants.

... what really caught our eye was how many big companies were looking for ways to participate. Oilfield service giants Baker Hughes and Schlumberger were given about $5 million each to develop drill bits, motors and other tools that can churn through rock at 300 degrees Celsius.

General Electric was awarded four grants for a combined $10.9 million to design various tools, fluids and pump parts to be used in different stages of turning hot water into electricity. Honeywell and Johnson Controls also got checks from Washington D.C.

I tend to believe that these types of large corporations are pretty hard-headed about how they spend money, making this a good sign. The realist in me points out that these are tiny amounts of money - easily small enough to be justified on PR grounds alone - and keep in mind these are grants, so no financial obligation (although there may be some associated R&D investment spend comitments)... so not worth reading too much into.