Kitimat LNG attracts second big Horn River producer, Apache Corp.
August 10, 2009 | by Lauren Krugel, Prince George Citizen
CALGARY - Kitimat LNG has attracted another major supplier for a liquefied natural gas export terminal it is planning to build on British Columbia's northern coastline.
The privately-held company said Monday it has signed a memorandum of understanding with Houston-based Apache Corp. (NYSE:APA), which could supply between 200 million and 300 million cubic feet of natural gas per day to the Kitimat facility.
The terminal has a planned capacity of 700 million cubic feet per day.
Apache, a joint-venture partner with EnCana Corp. (TSX:ECA) in northeastern B.C.'s promising Horn River Basin, has an option to buy an equity stake in the Kitimat project.
"We are very pleased to welcome an industry leader such as Apache to our growing team of exceptional project partners," said Kitimat president Rosemary Boulton.
At the terminal, natural gas would be condensed into a liquid in ultra-cold temperatures. It could then be loaded onto special tankers, and shipped around the world, making a once regional commodity a global one.
North America has been awash in natural gas supplies, thanks to emerging shale plays in British Columbia, Pennsylvania, Louisiana and Texas. Only recently have technological developments allowed producers to exploit those tough-to-access resources.
As LNG, those huge volumes could find a home in more lucrative overseas markets in Asia and Europe.
Recently released drilling results show Apache's individual horizontal wells in the Horn River Basin could recover 10 billion cubic feet of natural gas. Apache holds about 210,000 net acres in Horn River.
Last month, Kitimat LNG got the backing of its first natural gas producer, Houston-based EOG Resources (NYSE:EOG), which is also a big player in northeastern B.C.
Other Horn River producers include ExxonMobil Corp. (NYSE:XOM) and its Canadian arm Imperial Oil Ltd. (TSX:IMO), Canadian Natural Resources Ltd. (TSX:CNQ), Talisman Energy Inc. (TSX:TLM) and Nexen Inc. (TSX:NXY).
Companies such as Korea Gas Corp. and Spain's Gas Natural have already agreed to buy the LNG that will be produced from the Kitimat plant.
Kitimat LNG was originally conceived as an import terminal, but, recognizing a fundamental shift in the North American marketplace, decided late last year to reverse it.
So far, North American has been a receiver of LNG cargoes, with terminals dotting the U.S. Eastern Seaboard.
Irving Oil and Spain's Repsol YPF SA's Canaport regasification plant in St. John, N.B. - Canada's first LNG project - began receiving shipments form overseas in June.
Kitimat has received federal and provincial regulatory approval. Startup is expected to take place some time in the fourth quarter of 2013.
