December 14, 2010 / 7:36 PM / 9 years ago

Encana says eyes supplying U.S. natgas for export

* Encana interested in exporting natgas as LNG from U.S.

* Encana in favor of Cheniere’s LNG export plans

* Company might supply gas to project going forward

By Edward McAllister

NEW YORK, Dec 14 (Reuters) - Encana Corp ECA.TO, Canada’s biggest natural gas producer, said it is interested in marketing gas produced in the United States for shipment overseas as domestic production increases.

Encana, which has interests in shale gas formations across the United States, on Monday came out in support of Cheniere Energy’s (LNG.A) plan to cool U.S. gas and ship it to markets across the world as liquefied natural gas (LNG).

“With specific reference to (Cheniere’s) application, Encana is interested in exploring LNG export market possibilities as one of many market options for its North American production,” Encana’s chief executive officer Randy Eresman said in a letter to the Department of Energy.

Cheniere is currently seeking DOE approval to export LNG from Sabine Pass in Louisiana to all countries — members of the World Trade Organization or not — that have LNG import capacity. Currently, the company only has approval to export to countries with which the United States has a free trade agreement, which is restrictive for LNG exports.

“Allowing (Cheniere) to open the door to new markets in the form of LNG will have a salutary effect on U.S. development efforts,” Encana’s letter said.

A period inviting industry comment on the project, part of the DOE’s decision-making process, closed on Monday. According to the DOE website, no objections were made to Cheniere’s project, with Encana the only gas producer to come out in favor . However, postings of comments via mail could be delayed a few days, said a source at the Department for Energy who oversees the process.

Encana is not in talks to supply gas to Cheniere’s project, a company spokesman said on Tuesday, but is watching to see if it gets all the necessary approvals to go ahead with construction.

“We would potentially speak to them going forward, that would be a logical conclusion. If they are successful, it is something we would certainly consider,” the spokesman said.

Cheniere’s project, which could export up to 16 million tonnes per year of LNG, is one of three proposed LNG export plans in North America as increased production from shale gas and tepid demand push U.S. inventories to record highs. The Federal Energy Regulatory Commission (FERC) is currently considering Cheniere’s project.

The Encana spokesman said that the company is in favor of all three proposed export plants, including the Kitimat project in West Canada and the Freeport-Macquarie one in Texas. (Editing by Marguerita Choy)

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