A joint venture led by Malaysia’s state-owned Petronas has tripled its estimates for natural gas reserves in northeastern British Columbia as the group ramps up efforts to export energy to Asia.
The North Montney Joint Venture (NMJV), led by Petronas’s Progress Energy Canada Ltd. unit, said Friday that its reserves have soared to 8.35 trillion cubic feet of natural gas, up from the previous estimate of 2.68 trillion. The new figure is based on an independent evaluation of proven and probable reserves on Dec. 31, 2013.
Progress chief executive officer Michael Culbert made the announcement as Petronas confirmed that it has signed a deal to add Indian Oil Corp. Ltd. as a new partner in NMJV. Indian Oil is also joining the Petronas-led Pacific NorthWest LNG project, which is seeking to export liquefied natural gas from the West Coast.
In a best-case scenario, NMJV could have 24.7 trillion cubic feet of additional gas reserves, with roughly two-thirds of land delineated by drilling so far. Natural gas produced by NMJV would be piped to Pacific NorthWest LNG’s planned export plant in northwestern British Columbia.
“In one short year, delineation drilling has established more than half of the 15 trillion cubic feet of proven and probable reserves inventory that we plan to have confirmed in order to supply the first 20 years of LNG exports from Pacific NorthWest LNG,” Mr. Culbert said in a statement.
In December, the National Energy Board approved Pacific NorthWest LNG’s 25-year export licence application. Industry observers, however, caution that Pacific NorthWest LNG and a dozen other B.C. projects have huge hurdles to clear and face stiff global competition to super-cool natural gas and convert it into liquid form for export by ship.
India’s state-run Indian Oil has agreed to buy 1.2 million tonnes a year of LNG for at least 20 years, or 10 per cent of initial annual output. After the deal closes, Petronas will have a 77-per-cent stake in Pacific NorthWest LNG, while Indian Oil and Japan Petroleum Exploration will each hold 10 per cent and Petroleum Brunei 3 per cent. Japex and Petroleum Brunei agreed last year to sign long-term contracts to buy LNG.
A new Asian investor is expected to be acquire a 15-per-cent stake by the end of March. Momentum is growing as new partners are enlisted, and a final investment decision is slated by the end of 2014, said Pacific NorthWest LNG president Greg Kist.
Progress and Pacific NorthWest LNG estimate that almost $36-billion will need to be spent in order to make the export plan a reality in late 2018. The massive budget includes $6.7-billion in pipeline projects, nearly $11-billion for an export plant at Lelu Island near Prince Rupert, Petronas’s $5.2-billion acquisition of Progress in 2012 and more than $2-billion annually from 2013 through 2018 on northeast B.C. natural gas development projects.