Canadian natural gas exports to Asia and possibly Europe received a major endorsement from Apache Corp. with the Houston natural gas producer buying majority control of a planned $3-billion facility to ship gas out of northwestern British Columbia.
It would be the first time Canadian gas would be used for anything but domestic consumption or export to the United States, a strategy buoyed by prospects of ample supplies from new sources such as shale gas in northeastern B.C.'s Horn River, where Apache is a partner with Calgary's EnCana Corp.
Apache foresees a North American market awash in natural gas, with new supplies easily able to fulfill continental demand. The forecast came yesterday after it announced the deal to take the majority position in Kitimat LNG Inc.'s planned export facility.
"It opens up additional markets," Apache Canada president Tim Wall said on a conference call. "You're not captive to the States."
The Kitimat terminal, in Bish Cove, could move as much as 700 million cubic feet a day of natural gas, about 20 per cent of B.C.'s current production. EnCana has said the Horn River land it controls with Apache likely could produce several billion cubic feet of gas a day eventually.
A decision whether to build the export terminal is set for 2011, with a potential opening scheduled for 2014. About two-thirds of the supply and sale of the facility's gas is preliminarily in place.
Apache, without disclosing terms, has purchased a 51-per-cent stake in the terminal from Kitimat's parent, privately held developer Galveston LNG Inc. of Calgary, and took the same share of the export capacity. The deal follows a preliminary supply agreement last year.
EOG Resources of Houston, a Horn River player, previously had also tentatively signed on for about a 20-per-cent share of the export capacity.
Two potential buyers have signed memorandums of understanding with Kitimat LNG. Korea Gas Corp., the world's largest importer, would take 40 per cent of the product and Gas Natural, which operates in Spain and Latin America, would take 30 per cent.
David Ebner