Encana is acquiring a 30% stake in the planned Kitimat liquefied natural gas export terminal on BC’s coast, which will provide a gateway to the promising Asia-Pacific markets.
March 21, 2011
by PLANT STAFF
CALGARY: Encana Corp. is acquiring a 30% stake in the planned Kitimat liquefied natural gas (LNG) export terminal on Central BC’s coast, which will provide a gateway to the promising Asia-Pacific markets.
The Calgary-based natural gas developer is partnering with current owners Apache Corp., a US-based oil and gas exploration company with a subsidiary in Canada, and EOG Resources Canada Inc. in Calgary. It’s a subsidiary of Houston-based EOG Resources Inc., an independent (non-integrated) oil and natural gas company.
No financial details were provided.
Houston-based Apache will retain a 40% interest and continue to operate the project through Apache Canada Ltd. in Calgary, and EOG will retain a 30% interest.
“New and plentiful natural gas supplies and reserves have created a remarkable opportunity to expand our well-developed North American energy trade to other continents,” said Randy Eresman, Encana’s president CEO, in a release. “With Encana’s investment in this planned international trade facility, we are helping lead a continental push to deliver exports of abundant natural gas, for the first time from Canada, to overseas markets.“
Export volumes for the Kitimat LNG project are to be supplied by natural gas resources in BC’s Horn River Basin and Alberta’s Montney geological formation.
Encana said according to industry studies, recent BC discoveries indicate the province will have capacity to more than double current production of about 2.8 billion cubic feet per day (Bcf/d) to more than 7 Bcf/d in the next seven to 10 years.
The Kitimat LNG export development, about 650 kilometres north of Vancouver at Bish Cove near the Port of Kitimat, will have an initial natural gas capacity from the first of two potential phases of about 700 million cubic feet per day (MMcf/d), or about 5 million tonnes of LNG per year.
A new 36-in. diameter natural gas pipeline will be constructed for the project, running 463 kilometres from the Spectra Energy natural gas transmission system at Summit Lake, BC.
Encana said its interest in the development includes a capacity reserve of 30% in the facility and matching capacity on the proposed pipeline.
Front-end engineering and design is to be completed later this year, with construction potentially beginning in 2012, and exports flowing by 2015. Preliminary construction will be about $3 billion.
The demand for liquefied natural gas in Asia is enormous, more than doubling from about 18 to 19 bcf/d to 42 bcf/d by 2020said Ed Kallio, with Ziff Energy Group.
Most long-term LNG contracts in Asia track robust oil prices more closely than they do lacklustre North American gas prices, Kallio added.
“If you can take gas and sell it into an oil-referenced market, you’re getting a huge uplift on the price, on the value of your gas,” he said.
Files from the Canadian Press