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Coming to America: Commercial and Legal Aspects of Foreign Investment in U.S. Oil and Gas Projects

W. James McAnelly III, Proceedings of 60th Annual Rocky Mountain Mineral Law Institute (2014)

Tremendous recent advancements in oil and natural gas extraction technology have created an unprecedented rise in energy production in the United States, and this increased opportunity for development has caught the attention of investors from around the world. Production of U.S. domestic crude tight oil, also known as shale oil, averaged 3.22 million barrels per day in the fourth quarter of 2013 and elevated overall crude oil production in the United States to an average of 7.84 million barrels per day, more than 10% of worldwide crude production.1 Domestic natural gas production from resource formations such as the Eagle Ford, Haynesville, and Marcellus Shale plays has also skyrocketed in the past decade, and the latest Annual Energy Outlook forecasts that overall U.S. natural gas production will increase by 56% through 2040.2 Foreign investors have taken particular interest in participating in horizontal drilling and hydraulic fracturing projects in these U.S. shale formations, hoping not only to make a dollar, but also to learn cutting edge technology from the pioneers of the process along the way. From 2008 through 2013, foreign investment in U.S. oil and gas projects topped $112 billion,3 and in the first quarter of 2014 alone, foreign buyers announced 12 deals with a cumulative deal value of $8.3 billion, representing 42% of overall oil and gas industry deal value during