* LNG plans could spark acquisitions, joint ventures
* Planned facilities need additional gas reserves
CALGARY, Alberta Feb 6 A handful of
liquefied natural gas export facilities proposed for Canada's
Pacific Coast could spark a round of acquisitions and new joint
ventures as the projects' backers look to secure sufficient
natural gas supplies to fill their facilities, an analyst said
Spurred by low North American natural gas prices and the
discovery of big new shale and other unconventional gas fields
in northern British Columbia, a number of companies are mulling
construction of LNG export facilities to tap Asian markets
willing to pay high prices for the fuel.
Canada's National Energy Board has already handed LNG-export
licenses to two planned liquefaction projects on the Pacific
Coast near Kitimat, British Columbia: Kitimat LNG, backed by
Apache Corp, Encana Corp and EOG Resources
; and to BC LNG, a privately held 13-member co-operative.
As well, Royal Dutch Shell Plc and partners Korea
Gas Corp, Mitsubishi Corp and China
National Petroleum Corp have bought land for a
potential LNG export terminal at Kitimat. Progress Energy
Resources Corp and Malaysian joint-venture partner
Petronas are carrying out a feasibility study for a
project of their own.
While interest is hot, some of the potential projects do not
have enough gas in the ground to support their export plans and
may look to acquire it, Andrew Potter, an analyst at CIBC World
Markets, said on a conference call. That could lead to a round
of acquisitions and joint venture deals as the backers look to
secure supplies for their multibillion-dollar projects.
"There is going to be more consolidation of upstream
resource as companies get more serious about LNG projects,"
Potter said. "The six to ten (billion cubic feet of natural gas)
per day of ... export plans for the Kitimat area that are on the
table right now require about 44 tcf (trillion cubic feet) to
100 tcf of resources to underpin those facilities."
Potter said that the projects led by Shell and Progress
would each need to have about 32 tcf of gas available to feed
their plants and now only own about 18 tcf of natural resources.
"What that implies is there is still going to be a huge
appetite for (joint ventures) and outright acquisitions," Potter
Potter said Encana would likely start the 2012 round of
joint venture and merger activity as it wraps up the search for
a partner for its Cutbank Ridge holdings in northeastern British
Columbia, while Progress could also find additional partners for
its extensive shale gas properties.
He also highlighted junior firm Painted Pony Petroleum Ltd
as a potential acquisition or joint-venture target
"given the fairly large resource base for such a small company."
Potter also said that the planned export terminals will
require new pipelines connecting them with the northeastern
shale gas fields. While the Apache-led Kitimat LNG is planning a
pipeline to serve its project, the analyst expects that
eventually one or two large pipelines will be built to serve the
"There is no logic at all to seeing three to five facilities
built with three to five independent pipelines," he said.