The proposed Kitimat liquefied natural gas project in Canada got another boost when EnCana Corp. last month said it would acquire a 30 percent interest in the facility for an undisclosed price.
EnCana joins current owners EOG Resources Inc. and Apache Corp. in the project; it acquired an 11 percent interest from Apache and a 19 percent interest from Houston-based EOG’s Canadian subsidiary, EOG Resources Canada Inc.
The deal is expected to close in the second quarter of this year and will leave Apache subsidiary Apache Canada Ltd. with a 40 percent stake in the project. EOG and EnCana each would own 30 percent.
The proposed facility would be located some 400 miles north of Vancouver, B.C., at Bish Cove. It would initially have the capacity to move 700 million cubic feet per day of natural gas.
Kitimat, which would be Canada’s first LNG export project, is seen as critical to that nation’s development of its vast natural gas resources. Canadian gas exports to the U.S. have dried up in the face of the United States’ own gas surplus, so Canada is looking to Asian markets – particularly China – as a place to sell its gas.
EnCana spokesman Alan Boras said the Kitimat deal had been talked about for “several months.” The Kitimat project was discussed at length during a recent EUCI conference on natural gas markets, with representatives from BENTEK Energy, a natural gas research and analysis company; Mercator Energy, a Colorado-based gas developer; and Don McClure, an EnCana vice president, noting Kitimat’s importance to gas production in western Canada and the future of Canadian gas exports.
Calgary, Alberta-based EnCana has been active in finding markets for Canadian natural gas, signing deals with PetroChina and Kogas (Korea Gas Corp.) in the past year.
Kogas is the world’s top corporate buyer of LNG and is currently supplying LNG to Japanese utilities that were hit by the recent earthquake and tsunami.
EnCana has said that producers in British Columbia, which includes four major gas plays – the Montney, Horn River and Liard basins and the Cordova Embayment – should increase daily production from 2.8 billion cubic feet of gas to more than 7 billion cubic feet over the next 10 years.
EnCana’s stock price rose more than 11 percent after the Kitimat deal was announced.
Canadian natural gas got another boost last week with the announcement that Talisman Energy and Sasol Limited completed a deal for 50 percent of Talisman’s working interest in the Montney play.
South Africa-based Sasol is the world’s largest producer of motor fuels from coal and also is known for its gas-to-liquids technology.
Sasol and Calgary-based Talisman said they are planning a feasibility study for a possible GTL facility in western Canada. The companies said the facility could use gas from the jointly held lands for a 48,000-barrel-per-day project that could expand to 96,000 barrels per day.
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