Reliance Industries Ltd (RIL) is in talks with US-based oil and gas explorer Pioneer Natural Resources for forming a joint venture for developing the latter's Eagle Ford gas shale acreage in Texas.

RIL, which is seeking to create a brand for retailing gas in the US market after forming a joint venture for the highly prospective Marcellus Shale with Pennsylvania-based Atlas Energy, is looking to tie up a similar deal with Texas-based Pioneer Natural Resources for its Eagle Ford Shale in South Texas.

Pioneer holds 310,000 acre in Eagle Ford Shale with a gross resource potential of more than 11 trillion cubic feet equivalent.

The company has now drilled five highly-productive wells across its acreage at Eagle Ford Shale and has the development potential for 1,750 identified added locations in the acreage.

After drilling another highly productive well in the Eagle Ford Shale acreage early last month, Scott Sheffield, chairman and CEO had said that in order to further accelerate Eagle Ford Shale development, Pioneer was actively pursuing a joint venture, with an announcement expected by the end of the second quarter of 2010.

Although he did not name the company then, Reuters reported yesterday, citing two sources familiar with the matter that RIL is in talks with Pioneer to buy a stake in its shale gas assets.

Citing a source, Reuters, said that so far, neither the purchase value nor the size of the stake in a potential deal with Pioneer had been finalised.

Pioneer, a Fortune 500 company, is the largest operator in the Spraberry oil field in West Texas and the gas-rich Raton basin in Southeastern Colorado.

The company is one of the largest operators in the Hugoton gas field in Kansas and the West Panhandle gas field in the Texas Panhandle and has been the most active driller for several years in the South Texas Pawnee and Edwards Reef plays.

More than 90 per cent of its proven reserves and production are in low-risk, predictable basins in the US.

While the existence of gas in shale has been known for decades, the technology to extract natural gas from shale became available only recently.

Shale gas, which has huge potential as an unconventional gas source is expected to contribute over 20 per cent of overall gas production of the US over the next decade. Further development of shale gas is also expected globally.

Earlier in April, Reliance Industries had said that it would invest $1.7 billion in a joint venture with Atlas Energy, under which the Mumbai-based energy giant will acquire an interest in Atlas Energy's Marcellus Shale position equal to 120,000 net acres. (See: Reliance to invest $1.7 billion in JV with Atlas Energy)

A few weeks after tying up their joint venture, both companies agreed to expand their tie up by saying that they would acquire Marcellus Shale's "highly prospective" 42,344 acres in Fayette, Washington, Indiana, Westmoreland, Armstrong and Clarion Counties of Pennsylvania for an average purchase price of $4,532 per acre.

RIL plans to brand and sell gas to retail consumers in the US, which is dominated by global majors such as Exxon Mobil and BP who have spent decades building a network and pipelines. (See: Reliance to retail Marcellus Shale gas in US: report) 

The company, controlled by billionaire Mukesh Ambani, will use the Atlas partnership to initially supply gas to consumers in New York and Virginia.

The largest listed Indian company owns the world's single biggest refining complex in Gujarat and exports the bulk of its petroleum products to the US. It began pumping natural gas from a large field off India's east coast last year.

But it is now looking at increasing revenues from its offshore assets in coming years and aims to invest heavily in markets abroad.