EnCana acquires 30% stake in Kitimat LNG terminal
EnCana Corp. is acquiring a 30 per cent interest in a liquefied natural gas export terminal planned for northern B.C. as part of a strategy to boost access to Asian markets.
"New and plentiful natural gas supplies and reserves have created a remarkable opportunity to expand our well-developed energy trade to other continents," EnCana CEO Randy Eresman said in a release Friday.
The new liquefied natural gas (LNG) facility will be located in Kitimat, B.C. Once natural gas is converted into liquid form, it can be loaded into tankers and shipped overseas.
Natural gas prices have been depressed for several years as new technology has allowed huge volumes of gas to be extracted from previously-unproductive shale formations. Natural gas was trading at $4.14 US per million BTUs on Friday. Natural gas futures were above the $12 US level three years ago.
EnCana hopes that the new LNG terminal will allow it to profitably move the huge volumes of gas produced in northern B.C. to the Pacific Rim.
"We expect that this project will help advance North America's natural gas economy across the Pacific to markets where demand is growing and natural gas prices are more closely tied to oil prices," Eresman said.
The other partners in the Kitimat facility are the Canadian subsidiaries of U.S.-based Apache Corp. (which will have a 40 per cent stake) and EOG Resources, which will have the other 30 per cent.
The three partners are already in talks with potential customers in the Asia-Pacific region. But first, the multibillion-dollar project must undergo a review by the National Energy Board.
Encana shares closed Friday with a gain of 57 cents to $33.65 on the Toronto Stock Exchange.
With files from The Canadian Press