Two multi-billion dollar deals in the news this weekend provide additional evidence of how advances in drilling technology have unlocked vast new energy resources and are reshaping the energy industry. Norwegian oil company Statoil is paying about $4.4 billion for Brigham Exploration, getting “a stronger foothold in unconventional resources” according to the Wall Street Journal. The Brigham deal will gain Statoil a significant footprint in the Williston Basin, a so-called “tight oil” formation that includes the wildly productive Bakken Formation in North Dakota and Montana. Statoil had previously invested in the Eagle Ford Shale in Texas, another unconventional oil and gas resource that has been a source of new reserves.

WSJ graphic shows the pipeline footprints of Kinder Morgan and El Paso Corp.

WSJ graphic shows the pipeline footprints of Kinder Morgan and El Paso Corp.

Separately, pipeline company Kinder Morgan has offered to buy El Paso Corporation for $21.1 billion (and assuming 17 million in debt, raising the cost of the deal to $38 billion). The WSJ says Kinder Morgan is “making a big bet that natural gas blasted from shale rocks around the country will become a huge force in America’s energy future.”

Brett Clanton and Purva Patel offer a similar assessment in the Houston Chronicle:

Kinder Morgan on Sunday made a huge bet in the future of natural gas, with word it will buy El Paso Corp. for $21.1 billion in a deal that will make it the largest operator of natural gas pipelines in the country, as well as the fourth-largest energy company in North America.

The cash-and-stock deal combines two of Houston’s biggest companies into a single industry titan, with …  access to virtually every natural gas field and consuming market in the country.

It comes as pipeline companies are repositioning themselves amid a recent surge in U.S. natural gas and crude oil production from shales and other so-called unconventional formations from Texas to North Dakota, and it finds another major energy company signaling its belief that the trend is more than hype.

At $21.1 billion, that’s a mighty expensive signal.

Admittedly, there is a lot of hype. Some people believe the large resource and reserve additions are almost all hype. Others – and I put myself in this category – believe there is a lot of new very real access to and production from reserves that could not have been legitimately booked as resources five or ten years ago. The trend is more than hype.