PetroChina has bought a 20 per cent stake in Shell Canada’s Groundbirch shale-gas project in north eastern BC, leading to media reports that PetroChina is also investing in Shell’s planned Kitimat liquified natural gas export terminal in Kitimat.
The Groundbirch “play” in the northeastern BC shale gas fields produces 180 million cubic feet of gas a day form 250 wells.
A Hong Kong website, FinanceAsia, reported that PetroChina is paying $1 billion for the stake in the northeast BC shale gas operation.
China Daily confirmed the story, quoting Mao Zefeng, the Beijing-based spokesman of PetroChina, who declined to give the value of the transaction.
China Daily said Shell and PetroChina’s parent agreed in June to increase cooperation in energy exploration in China, estimated to hold the world’s largest reserves of shale gas. The semi-official newspaper says Petro China is looking to Canada to obtain drilling technology and expertise.
“It’s a continuation of our cooperation in China, and we can learn about shale-gas exploration and production by being a partner in the Canadian shale-gas project,” Mao said. “The project will also bring us good investment returns.”
Barron’s also reported that China is looking to get more experience shale gas, quoting Benchmark analyst Mark Gilman who told Dow Jones Newswires. “They are trying to learn about this business, on the basis of their belief that it will better position them to assess and develop similar resources within China,” he said. In fact, Shell and PetroChina are exploring for shale together in China, so the Canadian deal may be a “quid pro quo” gesture to Shell, he added.
Shell executives said at a meeting in London on Thursday that the company has invested $400 million in shale gas exploration in China, funding 15 wells with more in the future.
Last fall, Shell purchased the old Methanex site and the Methanex marine terminal in Kitimat.
The Globe and Mail says that PetroChina as well as Japan’s Mitsubishi and Korean Gas are stakeholders in the Shell Kitimat LNG project.
PetroChina’s had agreed with Encana, a partner in the KM LNG project to invest $5.4-billion in the company’s shale gas operations in British Columbia. That deal collapsed last fall after the two companies could not agree on finances.
PetroChina is also a heavy investor in the Alberta bitumen sands.
The deal between PetroChina and Shell came on the same day that National Energy Board approved the BC LNG project, the second one to be proposed for Kitimat. The first, approved in October, is the Kitimat LNG project owned by the KM LNG partnership.
It also comes a few days before Prime Minister Stephen Harper begins an official visit to China.