Shale gas boom transforming U.S. industry

BHP Billiton Ltd., the biggest mining company, said the shale boom in the U.S. will spur an industrial revival and transform the world’s largest economy.

“There are always opportunities for exports in the U.S. and Canada, but I think there’s a push and a growth of re- industrialization in the U.S. that will consume a lot of the energy in that country and give them a great opportunity to grow going forward, and we’re well positioned for that,” BHP Chief Financial Officer Graham Kerr said yesterday at the Bloomberg Australia Economic Summit.

In contrast, in Melbourne-based BHP’s homeland, Australia, companies from Chevron Corp. to ConocoPhillips are investing almost $200 billion on plants to export liquefied natural gas to Asia. Under outgoing Chief Executive Officer Marius Kloppers, BHP spent $20 billion in 2011 buying shale assets in the U.S. to tap a projected increase in demand for energy.

“The energy division is very important to BHP and perhaps it didn’t receive much investment in the previous years so they needed to underpin the growth story there,” Tom Price, a Sydney-based analyst at UBS AG, said yesterday in an interview at the economic summit. In terms of strategy, “they seem to have positioned themselves well,” he said.

U.S. crude-oil output in the fourth quarter this year will exceed imports for the first time since 1995, as fields in North Dakota and Texas put the nation on track to surpass a production record set a quarter-century ago, the U.S. Energy Information Administration said last month. Domestic gas output is forecast by Bloomberg New Energy Finance to increase 25% by 2020.

Beat Saudis

The U.S. will surpass Saudi Arabia in oil production in the next decade, making the world’s biggest user almost self-reliant, the International Energy Agency said last year.

“Traditionally they have been short energy” in the U.S., Kerr said. Now the shale opportunity is “hard not to be excited about. It’s transformational,” he said.

The U.S. shale-gas revolution, which has revitalized chemicals companies and prompted talk of domestic energy self- sufficiency, is attracting a wave of investment that may revive profits in the steel industry.

Austrian steelmaker Voestalpine AG last month chose Texas as the site for a new 550 million-euro ($721 million) factory, to benefit from cheap gas, while Nucor Corp., the most valuable U.S. steelmaker, plans to start up a $750 million Louisiana project in mid-2013.

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