Asia buying into projected LNG boom

Here I was last week talking about three potential LNG plants and even before the paper hit the street a fourth possibility appeared with the $1 billion deal between Progress Energy, owner of shale properties in the North Montney, and Petronas, the Malaysian LNG giant.

Here I was last week talking about three potential LNG plants and even before the paper hit the street a fourth possibility appeared with the $1 billion deal between Progress Energy, owner of shale properties in the North Montney, and Petronas, the Malaysian LNG giant.

And part of that deal was to investigate options for LNG exports via a West Coast plant.

That said, there might be a question mark over whether that’s truly a fourth given that Shell, which we mentioned last week as number three in the queue, is a shareholder in two of Petronas’ three LNG export operations in Malaysia.

Then again Shell has its own natural gas properties in BC and Alberta.

Either way, the Progress-Petronas deal simply reinforces the fact that overseas interest in our natural gas has caught fire.

Of course the most spectacular deal was earlier this year when PetroChina paid $5.4 billion for 50 per cent of Encana’s Cutbank Ridge property.

But Mitsubishi and Korea Gas Corp also hold shale gas assets in BC and now Japanese companies Tokyo Gas, Osaka Gas, Chubu Electric and JOGMEC have all joined Mitsubishi in their Horn River shale joint venture with Penn West Energy.

And there is likely more to come. For example, Nexen is apparently looking for a partner to help it develop its BC properties and its CEO has said LNG knowledge would be a plus. (Interestingly, Nexen was represented at the KM LNG export licence hearings here last week.)

It’s a clever strategy, one which sees these potential Asian customers become their own suppliers, at least in part.

And their involvement could be expanded still further in the coming months.

Speaking to reporters at the Asia Oil and Gas Conference in Kuala Lumpur last week, Mate Parentich, Apache’s general manager of LNG marketing and shipping, said Asian utilities were  also interested in buying equity stakes in the Kitimat project.

That would mean in both the LNG plant and the proposed Pacific Trail Pipeline that would bring in the natural gas.

Watching all this unfold promises to be both fascinating and, in terms of Kitimat’s future, rewarding.

 

Malcolm Baxter