* Company studying possible LNG export plant
* Looking to tap Asian markets for shale gas
* One of a number of companies that may develop LNG plants
* May be LNG option for Arctic gas reserves
* Shares edge lower
By Scott Haggett
CALGARY, Alberta, May 2 Imperial Oil Ltd
is considering joining a growing number of companies
planning liquefied natural gas plants on Canada's West Coast as
a way to boost returns on vast reserves of natural gas in
British Columbia and Alberta, its chief executive said on
Imperial CEO Bruce March told reporters after the company's
annual meeting that planning for such a development is still in
the "very early days" but that a plant could take gas from the
Horn River shale-gas field it is developing along with its
majority owner, Exxon Mobil Corp, as well as other
fields, and send it to high-paying Asian markets.
"The good thing we look at, in terms of LNG from Western
Canada, is there appears to be huge and substantial growth
opportunities for gas demands in Asia," March said. "That's the
most promising sign. That combination, with the near-term
outlook for gas ... makes this an opportunity that a lot of
companies are looking at, including ours."
Northeastern British Columbia contains massive reserves of
natural gas trapped in shale, with fields like the Horn River
and the Montney containing hundreds of trillions of cubic feet
of the fuel.
However, Western Canadian producers are being pushed out of
their traditional American markets by low-cost U.S. shale-gas
supplies. That has prompted a number of companies to look for
overseas buyers for the fuel.
Canadian regulators have already awarded LNG export licenses
to two proposed LNG producers; Kitimat LNG, owned by
gas-producers Apache Corp, Encana Corp and EOG
Resources Inc, and BC LNG, backed by a cooperative of
gas producers as well as B.C.'s Haisla First Nation.
Other companies, including Royal Dutch Shell Plc,
and Malaysia's Petroliam Nasional Bhd (Petronas) are
also in the early stages of planning their own liquefaction
March said that building an LNG facility would require
intensive drilling on its Horn River lands to feed the plant.
That could be a disadvantage, given that other LNG producers in
Qatar, Australia and elsewhere can tap big reserves with fewer
wells than shale-gas developments require.
"This is a much different development with shale gas as your
gas source than any of the LNG developments that are built in
the world today," he said. "The amount of commitment and the
amount of spending required to support this for a 40-year life
is significant ... This is a commitment to sustained drilling
activities that practically never stop."
ARCTIC LNG OPTION
March also said that gas reserves in Canada's far north may
be suitable for LNG development with economics for the
long-delayed Mackenzie Valley gas pipeline to southern markets
Imperial and its partners in the C$16.2 billion Mackenzie
Gas Project, which would tap gas reserves in the Mackenzie
River's Arctic delta, have struggled to find a way to find a way
to build the line since gas prices collapsed.
The Mackenzie pipeline project won regulatory approval in
2011 following a seven-year review, but Imperial and the line's
other backers; Royal Dutch Shell, Exxon Mobil, ConocoPhillips
and the Aboriginal Pipeline Group, have not given a
corporate green light to it as North American gas prices
languish near 10-year lows.
Talks with the federal government aimed at getting financial
support for the project have stalled, March said.
Liquefying the Mackenzie gas could get those reserves to
market, but March offered few details on the company's plans,
saying only that it was unlikely to build an export facility in
the remote region.
"Mackenzie could play in a world-scale LNG development but
it's too early for us to comment on that today," March said.
Imperial shares fell 4 Canadian cents to C$45.93 on
Wednesday on the Toronto Stock Exchange.