US-based energy company Chesapeake Energy has laid out plans to invest more than $1bn from a newly-formed corporate venturing unit.
The company has set up Chesapeake NG Ventures to invest the sum over the next 10 years in an effort to foment natural gas demand.
Chesapeake said to do so it would redirect about 1% to 2% of its forecasted annual drilling budget away from stimulating gas supply to boosting demand through venture investment.
The company said it was looking to help gas and US energy products to compete more with external oil producers fronted by the Organization of Petroleum Exporting Countries (OPEC). Aubrey McClendon, Chesapeake’s chief executive, said: "We have analysed the US transportation sector during the past four years to determine how to create the best pathway to move our country away from dependence on OPEC oil and the resulting yearly transfer of more than $400bn of American wealth to foreign countries, many of them often unfriendly to US interests."
Chesapeake said it aims to increase production of US oil and natural gas liquids, support compressed natural gas and liquefied natural gas fueling stations and aid deployment of processes converting natural gas into an easily transportable and clean fuel.
Chesapeake said it would kick-off its new venture 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.
Chesapeake has invested $155m to take a 50% stake in Sundrop. Sundrop has also received a $20m investment from US venture capital (VC) firm Oak 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. This indicates the Chesapeake investment has taken it to about $215m in capital raised.
Chesapeake will also invest more than $150m over three years in convertible debt and the preferred stock of Clean Energy Fuels. The investments in both companies will be deployed over time.