Petronas buys into B.C. shale

Natural gas exports to Asia look ever more likely as Malaysia’s national energy company puts up $1 billion for a half-share of Progress Energy’s Montney play

Michael McCullough 0

Yet another Asian national energy company has bought a stake in the shalefields of northeastern B.C. Malaysia’s Petronas announced June 2 it had a deal to acquire 50% working interest in Progress Energy Resources Corp.’s properties in the Montney region for $1.07 billion.

(Technically speaking, geologists will tell you that the Montney is not a shale formation but more of a soapstone. However the same multi-stage fracture stimulation process, commonly known as fracking, is used there to extract gas from solid rock.)

Petronas joins PetroChina, Korea Gas Co. and Japan’s Mitsubishi among major Asian gas distributors with join ventures in B.C. and increases the likelihood that the province’s massive shale discoveries will be exploited for the purpose of exporting liquefied natural gas to customers in Asia rather than simply sold into the North American grid, where prices remain depressed (see “China’s Shale Gas Gambit” in the March 28 issue).

In fact along with their exploration and production partnership, Progress and Petronas announced a second joint venture, this time split 20/80, to develop LNG export capacity in B.C. Further along this road is Kitimat LNG, controlled by Apache Corp. and EOG Resources, big American producers with shalefields in northeast B.C. More recently, Royal Dutch Shell has expressed an intent to build an LNG export terminal, possibly in Prince Rupert.

Considering the opposition to Enbridge’s proposed Northern Gateway oil pipeline to the Pacific, the gas export play is hardly certain. But the force of Asian money and resource demand now arrayed behind it is formidable.

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