Nanotech Oil and Gas Consortium Gets Justice Department OK

WASHINGTON, DC, August 27, 2007 (ENS) - A proposal by a group of petroleum producing and oil field service companies and the University of Texas-Austin to engage in joint research and development of nanotechnology in the exploration and production of oil and gas will not be opposed by the Bush administration on anti-trust grounds.

The goal of the joint venture, called the Advanced Energy Consortium, AEC, is to develop nanosensors that can be injected into oil and gas well bores below the Earth's surface.

These nano-scale sensors, many times smaller than a human hair, would migrate out of the well bores and into the surrounding earth to collect data about the physical characteristics of hydrocarbon reservoirs. The data could enable the more efficient exploitation of oil and gas resources.

The U.S. Department of Justice announced its position Thursday in a business review letter from Thomas Barnett, assistant attorney general in charge of the Department's Antitrust Division, to counsel for the AEC in response to consortium's request for such a statement.

Barnett said the department "has no present intention to take antitrust enforcement action" but "reserves the right to bring an enforcement action in the future if the actual operation of the proposed conduct proves to be anticompetitive in purpose or effect."

AEC's current members are BP America Inc., ConocoPhillips Company, Marathon Oil Company, Occidental Oil and Gas Corporation, Shell International E & P Inc., Schlumberger Technology Corporation, and Halliburton Energy Services, Inc., with management provided by the University of Texas-Austin. Additional companies may join AEC with the approval of two-thirds of the existing members and the university.

The AEC's anticipated research effort will have an annual budget of about $7 million to fund research, which will be carried out by the university. The member companies will each contribute $1 million for each of the first three years of the research program and thereafter will provide funding as determined by the Board of Management made up of one representative of each member company.

The university will own all inventions resulting from the research. Each member that contributed to the development of any invention will receive a royalty-free, nonexclusive, irrevocable, worldwide perpetual license to use the invention for noncommercial internal purposes and will also have the independent right to make, use, and sell any patented inventions.

The university intends to license its rights to third parties on a royalty basis, subject to the approval of the AEC members.

Commercializing the results of the proposed research is beyond the scope of the venture, and the AEC itself will not license, produce, market or distribute anything.

All AEC members will retain the right to engage in independent research and development and to obtain intellectual property rights relating to such research.

In the Department's letter to AEC, Barnett stated that AEC "appears to be structured so that its proposed business conduct will not create any risks to competition."

Barnett wrote, "To the extent that the AEC engages in research efforts that would not be undertaken by individual firms, the joint venture may have the pro-competitive effect of promoting innovation."

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