China’s Purchase of U.S. Fracking Company will give it Advanced Technology

China’s Purchase of U.S. Fracking Company will give it Advanced Technology by John Daly, November 1, 2012, Oilprice
China’s Lanzhou Haimo Technologies Co. announced that its subsidiary Haimo Oil & Gas LLC will buy a 14.29-percent stake in Houston-based Carrizo Oil & Gas’s Niobrara shale oil and gas assets in Colorado for $27.5 million. Under the terms of the deal, Lanzhou Haimo Technologies Co. will acquire roughly 6,000 acres, or about 210 square miles, of territory located primarily in Colorado’s Weld and Adams counties in as well as associated infrastructure, including oil and gas wells, according to a statement filed to the Shanghai Stock Exchange. Carrizo, which holds approximately 60,000 acres in the Niobrara basin, currently produces 1,850 barrels per day (bpd).

So, what is Beijing’s covertly cunning policy in making such a purchase? To suck the Rockies’ hydrocarbon resources dry and ship them to China?

Federal law is extremely complex for exports of domestically produced U.S. hydrocarbon foreign sales, and the Niobrara basin, currently produces 1,850 bpd, is hardly likely to make a dent on Chinese energy use, much less the fact that there are currently no Colorado pipelines to the U.S. western coast that could allow its transfer.

So, why buy Haimo Oil & Gas LLC? Can you say “technology transfer?”

The U.S. is the world leader in producing natural gas and oil from hydraulic fracturing, or “fracking,” an environmentally contentious practice that is acquiring more and more domestic political opposition. And China has embraced fracking with a vengeance. According to China’s National Development and Reform Commission, the country’s top economic planner, China is aiming to produce 6.5 billion cubic meters of shale gas by 2015, as well as investing an estimated $63-98 billion to drill 20,000 shale gas wells by 2020.

After all, to paraphrase President Eisenhower’s Secretary of Defense, former General Motors president Charles Erwin Wilson, “what was good for the country was good for General Motors and vice versa” – only in this case, its Vice President Dick Cheney’s former firm Halliburton as well as Schlumberger doing “good” for the country, who, looking at their slumping bottom line, will no doubt shortly be seeking to assist China’s Lanzhou Haimo Technologies Co. in its new acquisition.

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