Aubrey McClendon, chief executive of US-based energy company Chesapeake Energy, said his company’s plans to invest $1bn in corporate venturing would create more than one million jobs – a laudable aim and one that has helped it win the Global Corporate Venturing Fundraising of the Year award.
The gas producing company said in July it was setting up Chesapeake NG Ventures to invest the money over the next 10 years in an effort to stimulate natural gas demand.
Chesapeake said to do so it would redirect about 1% to 2% of its forecast annual drilling budget away from stimulating gas supply to boosting demand through venture investment.
The fund would help increase production of US oil and natural gas liquids, support compressed natural gas and liquefiednatural gas fuelling stations and aid deployment of processes converting natural gas into an easily transportable and clean fuel.
Chesapeake kicked off its corporate venturing fund, led by Kent Wilkinson, its vice-president of natural gas ventures who collected the Global Corporate Venturing fundraising of the year award, by investing more than $300m in two companies, venture-backed Sundrop Fuels, which converts materials into gasoline, and Clean Energy Fuels, a Nasdaq-listed provider of natural gas for transport that subsequently gained extra backing Singapore’s sovereign wealth fund Temasek and private equity firm RRJ Capital.
Chesapeake invested $155m to take a 50% stake in Sundrop. Sundrop has also received a $20m investment from US venture capital (VC) firmOak Investment Partners, alongside Chesapeake’s money.
In 2008, Sundrop also received $20m from Oak and VC peer Kleiner Perkins Caufield& Byers, two years before raising the same amount in its series B round. Its seed investment came from fund manager Amp Capital.
In February, Chesapeake’s corporate venturing unit followed up with a $10m investment to incubate an idea in collaboration with US-based industrial conglomerate 3M to design, manufacture and market compressed natural gas tanks for transport.
The investment made by Chesapeake was intended to help the market development of the 3M-designed tanks and Chesapeake has committed to use the tanks for its corporate fleet conversion to compressed natural gas.
In a wide-ranging YouTube interview when the NG Ventures unit was launched, McClendon said his company’s plans could be transformative for the US economy by creating more than a million US jobs in a few years and would weaken the power of the Organisation of the Petroleum Exporting Countries (Opec) by reducing US reliance on oil as a trans-portation fuel.
McClendon, who has subsequently and separately come under corporate governance pressure by shareholders over his interests in commodity investments, said: "You can re-establish America as being independent of foreign oil, which would be tremendously benefcial for our economy. You can lower that 9.2% unemployment rate, and get this economy moving again, and save people $2 a gallon on their fuel. That is my hope, that is my dream and I think it will be a reality in the future."
Privately, Opec members are relatively sanguine about the immediate threat. One member producing both oil and gas said it was "great" that Chesapeake was creating the fund but "shale oil and natural gas still have [some] way to go in terms of technology both in production and application. The notion of it competing with Opec on oil is not an immediate concern, that is not for the next 10 years at least."
Chesapeake’s fund, therefore, has laudable aims and is of a scale potentially to impact the strategic direction and importance of a gas industry where the wellhead price has halved over the past seven years.
Shortlist:
Chesapeake – $1bn in energy/clean-tech
ZTE Innovative Fund – China fund
BMW iVentures – crossing vehicles and electronics
Evonik – €100m in industrials
ST New Ventures – launch of a well-designed international programme