Japan's Mitsubishi Corp intends to accelerate feasibility studies to export Canadian natural gas as LNG, following its latest agreement to take a 40% stake in Encana Corp's Cutbank Ridge natural gas play, the company said in a statement Monday.
Mitsubishi's announcement follows Encana's statement Friday that the two companies had agreed on the C$2.9 billion ($2.92 billion) deal for developing the Cutbank Ridge natural gas play in western Canada.
Under the deal, which is schedule to close by the end of February, Mitsubishi will pay C$1.45 billion as an upfront payment upon closing, and will also pay another C$1.45 billion over the coming five years that will be used to fund an incremental 30%, in addition to Mitsubishi's 40% of the Partnership capital investments, to develop the Cutbank Ridge asset in accordance with an agreed-upon development plan, Mitsubishi said.
Mitsubishi said the total estimated ultimate recoverable resources from Cutbank Ridge natural gas play are more than 35 trillion cubic feet (equivalent to approximately 720 million mt).
These reserves equate to approximately nine years of Japan's annual natural gas demand, Mitsubishi said.
The Cutbank Ridge partners plan to invest more than C$6 billion over the next five years to drill approximately 600 horizontal production wells to develop the asset, Mitsubishi said.
The asset is expected to have more than 50 years of production life and reach production of more than 3 Bcf/day (equivalent to approximately 22.5 million mt/year) during the coming decade, Mitsubishi added.
With its latest acquisition of additional natural gas resources, Mitsubishi will accelerate its ongoing feasibility studies to develop Canadian natural gas LNG for export as it expects to source natural gas produced from its asset portfolio as feedgas, Mitsubishi said.
Currently, Mitsubishi is separately undertaking natural gas development in the Cordova Embayment in British Columbia with the Canadian-based Penn West Exploration, Chubu Electric Power Co., Tokyo Gas Co., Osaka Gas, and state-owned Japan Oil, Gas and Metals National Corporation and Korea Gas Corporation.
PWE holds a 50% stake in the Cordova joint venture with Mitsubishi (30%), Kogas (5%), and Jogmec, Chubu Electric, Tokyo Gas and Osaka Gas with (3.75%) each.
