Petronas has put a massive package of oil and gas assets in Alberta on the sales block but it has no intention of abandoning the country despite the recent cancellation of its plan to build a West Coast LNG terminal, a spokeswoman says.
According to a posting on the BMO Capital Markets website, the Malaysian state-owned energy company’s subsidiary, Calgary-based Progress Energy Canada Ltd., has hired the bank to sell oil and gas drilling rights, wells, pipelines and three gas processing plants mainly located in northwestern Alberta.
“Definitely, I can say from the outset that withdrawing from Canada is not what is happening,” said Progress spokeswoman Eryn Rizzoli on Wednesday.
“The potential sale of our Deep Basin assets, which represents a small portion of Progress Energy’s resource base, would allow us to focus on our North Montney (B.C.) development, which represents significant growth opportunities in Canada,” she added in a followup email.
Petronas bought Progress Energy in 2012 and has been one of the most active drillers in northeastern B.C. in recent years as it establishes natural gas production to feed its proposed Pacific NorthWest LNG export terminal near Port Edward, B.C.
In July, however, it cancelled the project due to poor world market prospects for its liquefied natural gas.
According to a mid-year update posted on the Petronas website in August, Progress was producing 540 million cubic feet of natural gas per day or the equivalent of about 90,000 barrels of oil per day in the first half of 2017, bringing in revenue of C$261 million.
“Despite the decision not to proceed with the PNW LNG project, Petronas remains committed to monetize the natural gas resources in the North Montney area in Canada,” the report says.
“At 22.3 trillion cubic feet of proven resources, Canada holds the second-largest gas resources in Petronas’ portfolio after Malaysia.”
The BMO posting notes the assets for sale are prospective for Dunvegan, Cardium, Cadotte, Spirit River Group and Bluesky underground formations, not the Montney.
The assets for sale include a 63 per cent average working interest in drilling rights on 400,000 gross acres or 160,000 hectares in Alberta which currently produce about 5,500 barrels of oil equivalent per day, about 55 per cent of which is natural gas and 45 per cent is oil.
The lands being sold by Progress would likely be considered non-core assets in that they are too oil-weighted and too far away from the West Coast to be part of an LNG export strategy, said oil and gas analyst Patrick O’Rourke of AltaCorp Capital.
AltaCorp doesn’t cover Progress but tracks its drilling activity and O’Rourke said that has been in decline recently.