Japan's Sumitomo Corp. and the U.S.-based Gas Technology Institute (GTI) have formed an alliance intended to help Japanese companies participate in unconventional gas-related businesses.

For instance, the downhole equipment and related drilling services market is said to be worth more than 40 trillion yen ($399.8 billion), and to consist of more than 25,000 companies. The alliance will provide Japanese companies with the technology and evaluation techniques that GTI has acquired over the years.

Sumitomo wants to support Japanese companies' efforts to expand into U.S. and global energy industry markets. Ron Snedic, GTI vice president of corporate development, told NGI's Shale Daily that he and other staff were in Japan meeting with Sumitomo and about a dozen other Japanese companies during early October.

"It appears that the companies that we've talked to, for the most part, want a place in the energy chain...They're looking at the entire energy chain and how they can play a role..." he said. "The Sumitomo folks have gotten to know us quite well, but the other connections...It seems like you have to have a couple meetings before they'll really talk to you about what they want to accomplish."

GTI research initiatives address issues impacting the gas and energy markets across the industry's value chain: supply, delivery and end use.

Unconventional energy is a core strategic business area for Sumitomo. It was the first Asian company to acquire shale gas reserves when it struck a development agreement with Carrizo Oil & Gas Inc. in the Barnett Shale (see Daily GPI, Dec. 18, 2009). In 2010 Sumitomo acquired another project with Rex Energy Corp. in the Marcellus Shale (see Daily GPI, Sept. 1, 2010). And in 2012 it entered into an agreement with Devon Energy Corp. to develop the tight oil shale in the Permian Basin (see Shale Daily, Aug. 2, 2012).

Sumitomo is also advancing the Cove Point LNG export project with Dominion, with the aim to export liquefied U.S. gas to non-free trade agreement countries such as Japan (see Daily GPI, Sept. 19). Sumitomo said it aims to increase its presence in the energy industry in its other related businesses in metals, transportation and construction systems, and infrastructure.

Snedic said Sumitomo, a large trading company, has many portfolio companies that are interested in energy opportunities, and it does business with many others with similar interests in what is going on in the U.S. shale patch.

"Of course, in Japan they're very eager to get as much shale gas as we would export to them...There's just a lot of interest across the entire chain from exploration and production [E&P] all the way through how to liquefy and transport it back to Japan.

"On the technology side...anything that we're doing here, small scale liquefaction, things of that nature are of interest to them. They don't have domestic resources, so they're not interested in trying to take E&P resources back to Japan. I don't see that. They are interested in more of that midstream and different tools that we have here.

"They're looking at our country as a place where they want to invest more money. I take it as a positive thing for the U.S."