Encana, one of the three partners in the KM LNG (Kitimat LNG project) will hold a conference call for executives and a simultaneous webcast, Tuesday, Oct. 4 at 9 a.m. MT, 8 a.m. PT to update on its Horn River shale gas development and also Encana’s view of the Kitimat project. Encana’s partners are Apache Corp. and EOG.
Encana Corporation (TSX, NYSE: ECA) will hold a conference call and
webcast for the investment community highlighting its Horn River
resource play on Tuesday, October 4, 2011 at 9:00 a.m. MT (11:00 a.m.
ET). The presentation will be hosted by members of Encana’s senior
management team and will include information detailing the company’s
strategy, resource play hub development model and operations in the Horn
River play, as well information on the Kitimat LNG project. A live webcast of the conference call will also be available via Encana’s website, www.encana.com, under Investors/Presentations & events, or directly at the following
The Calgary Herald is speculating that Encana may be either selling some assets or announce that it has found development partners. For those in the know in the Alberta oil patch the sudden announcement has people in Calgary wondering what the announcement will be.
The Herald also quotes one analyst as wondering what is holding up the Kitimat LNG project.
Phil Skolnick of Canaccord Genuity said he’s hoping for “some clarity” on where the company is at in the joint venture process, as well as what’s preventing Kitimat LNG from moving full-steam ahead.
“What are the essential bottlenecks?” Skolnick wondered
Editor’s note:
With all the activity around town it’s certainly a surprise to hear the Kitimat project isn’t going “full steam ahead.” As far as Northwest Energy News is concerned if there were bottlenecks on the project at this end, the ever vigilant Kitimat rumour mill which has been churning another possible LNG project for more than a week now, would certainly have heard about it. Perhaps it is simply all the unusually stormy weather we’ve been having all summer has slowed things down.
Ecana, one of the partners in the KM LNG (Kitimat LNG) is optimistic about prospects for liquified natural gas exports from the west coast of British Columbia, Canadian Press reports from a conference in Calgary.
Encana Corp. foresees a “renaissance” in natural gas prices once
terminals begin to pop up along the West Coast to export the fuel to
energy-hungry Asian markets, but others addressing an energy conference
on Tuesday weren’t quite so enthusiastic.
“We think that the prices are going to stay robust in Asia.
You look today in Japan, it’s still US$13 (per 1,000 cubic feet) over
there,” Mike Graham, who heads up Encana’s Canadian division, told the
Peters & Co. event….
John Langille, vice-chairman of Canadian Natural Resources Ltd. said he’s not quite so gung-ho….
:Canadian Natural has a large land position in northeastern B.C.’s shales, but has been focusing most of its attention on developing oil- properties in Western Canada and abroad. It has signalled no interest so far in jumping aboard the LNG bandwagon, though Langille said eventually the gas will have to find its way out of North America.
“And that will happen, but it’s a five-year scenario before that happens,” he said.
Natural gas–often touted as an abundant, comparatively clean source of domestic energy–has come under intensifying public scrutiny in recent months, with U.S. federal regulators and reporters challenging some of the industry’s rosy business projections.
Natural gas production has grown steadily in the United States since 2006, reaching new highs this year. But who are the leaders in this burgeoning field?
More than 14,000 oil-and-gas companies, many of them small businesses, were active in the United States in 2009, according to the Energy Information Administration. But multinational giants like Exxon Mobil and BP now produce much of the nation’s gas. The 10 biggest drillers account for one-third of all production, data from the Natural Gas Supply Association and the EIA show. The 40 largest producers pump more than half of all domestic natural gas.
We’ve compiled a list of the top 10 drillers in the country, ranked by their daily natural gas production, and pulled together some key facts about their operations. Though there are other ways to measure these companies–revenue, market capitalization, reserves–industry experts say production numbers give the best snapshot of today’s landscape and also separate drillers’ gas operations from oil.
The list features both “integrated” oil-and-gas giants, such as Exxon Mobil, which refines and sells gasoline around the world, and “independents,” such as Chesapeake Energy, which are primarily in oil and gas exploration and production. Though industry P.R. initiatives often emphasize independent mom-and-pop drillers [4], most of the companies on our list are Fortune 500 corporations.
Much of the growth in gas production has come from drilling into shale formations, which provided 23 percent of the nation’s gas in 2010, according to the EIA. Our list shows how integrated behemoths have expanded into this area as production has become proven, sometimes by swallowing up independents that led the way. Last year, Exxon (No. 8 in 2009) bought XTO (No. 2 in 2009) [5] to catapult to the top of the list. Also last year, Chevron (No. 9) bought Atlas Energy [6] (No. 50 in 2009 and an early entrant into Pennsylvania’s Marcellus Shale).
1. Exxon Mobil
The biggest natural gas producer is also the country’s biggest oil company and one of the most profitable corporations in the world. Exxon has operations in every continent but Antarctica. Its oil and gas operations range across several states, from Pennsylvania to Colorado, and it also has wells in the Gulf of Mexico and off the California coast.
With the purchase of XTO, Exxon produces nearly 50 percent more gas than its closest competitor. Earlier this year, Exxon began running ads touting natural gas as a safe [7], clean source of domestic energy. About two-thirds of the company’s domestic reserves are now in natural gas, with the rest in oil.
Average Daily Natural Gas Production: 3.9 billion cubic feet.
Revenue, 2010: $370 billion.
Reserves, 2010: 8.9 billion barrels of oil (2.3 billion in the U.S.), 2.1 billion barrels of bitumen (none in the U.S.), 681 million barrels of synthetic crude (none in the U.S.), 78.8 trillion cubic feet of natural gas (26.1 trillion in the U.S.).
Executive Compensation, 2010: Rex Tillerson, Exxon’s chairman and CEO since 2006, received almost $29 million in total compensation.
2. Chesapeake Energy
Chesapeake calls itself the most active driller in the country, with operations in 15 states, from the Rockies to Texas to Pennsylvania. The company is a good example of how “independent” doesn’t necessarily mean small. As of last year, the company owned an interest in 45,800 wells, of which 38,900 were primarily gas wells.
Chesapeake has built itself as a gas company, but it is increasingly looking for “liquids-rich plays,” according to its annual report. Gas wells generally produce oil and other hydrocarbon liquids as well in varying amounts, depending on the geologic formation. With oil prices high and gas prices low, many companies are seeking more wells that are oil- and liquids-rich, particularly in North Dakota, southern Texas and Pennsylvania.
Average Daily Natural Gas Production: 2.6 billion cubic feet.
Revenue, 2010: $9.4 billion.
Reserves, 2010: 14.3 trillion cubic feet of gas equivalent (10 percent of that is oil or other liquids, converted to the equivalent volume in gas).
Executive Compensation, 2010: Aubrey McClendon, the chairman and CEO, is also the company’s founder. He has the unusual option of purchasing a small stake in every well the company drills [8]. He received $21 million in total compensation.
3. Anadarko
Anadarko is one of the biggest independent oil and gas producers in the country, with exploration or production work in all major domestic drilling areas as well as in South America, Africa, Asia and New Zealand. The company was a minority owner in BP’s Macondo well, which exploded last year, killing 11 people and spilling more than 200 million gallons of oil into the Gulf of Mexico [9].
Worldwide, natural gas makes up just over half of Anadarko’s reserves, but 87 percent of the new wells it drilled in the United States last year were gas wells. Like many other companies, Anadarko is increasingly looking for oil- and liquids-rich production this year.
Average Daily Natural Gas Production: 2.4 billion cubic feet.
Revenue, 2010: $11 billion.
Reserves, 2010: 749 million barrels of oil and condensate (458 million in the U.S.), 320 million barrels of natural gas liquids (307 million in the U.S.), 8.1 trillion cubic feet of gas, all in the United States.
Executive Compensation, 2010: James Hackett, the chairman and CEO, received $24 million in total compensation.
4. Devon Energy
Devon is an independent driller primarily active in the United States and Canada. The company is in the process of divesting operations in Angola and Brazil, its only holdings outside of North America.
More than 90 percent of Devon’s U.S. reserves are in natural gas, with most of that lying in Texas’ Barnett Shale. Like its peers, however, Devon says that this year it will focus on drilling in areas rich with oil and other liquids.
Average Daily Natural Gas Production: 2 billion cubic feet.
Revenue, 2010: $9.9 billion.
Reserves, 2010: 681 million barrels of oil (148 million in the U.S.), 479 million barrels of natural gas liquids (449 million in the U.S.), 10.3 trillion cubic feet of gas (9 trillion in the U.S.).
Executive Compensation, 2010: J. Larry Nichols, the chairman, received almost $19 million in total compensation. John Richels, president and CEO, received almost $18 million.
5. BP
Fortune lists BP as the fourth-largest corporation in the world. The company drills in 29 countries and sells its products in 70. While BP is headquartered in London, 42 percent of the company’s assets are in the United States. BP reported a $3.7 billion loss last year after spending nearly $41 billion on cleaning up the Gulf oil spill and compensating those who were affected.
The company remains primarily an oil producer, with about 40 percent of its reserves in natural gas.
Average Daily Natural Gas Production: 1.9 billion cubic feet.
Revenue, 2010: $297 billion.
Reserves, 2010: 10.7 billion barrels of oil (2.9 billion in the U.S.), 42.7 trillion cubic feet of gas (13.7 trillion in the U.S.).
Executive Compensation, 2010: Chief Executive Robert Dudley received $1.7 million in total compensation.
6. Encana
Encana is one of the largest independent gas companies in the world, with operations mostly in the western United States and Canada, where it is based. The company has focused almost exclusively on gas.
Average Daily Natural Gas Production: 1.8 billion cubic feet.
Revenue, 2010: $8.9 billion.
Reserves, 2010: 93.3 million barrels of liquids (38.5 million in the U.S.), 13.8 trillion cubic feet of gas (7.5 trillion in the U.S.).
Executive Compensation, 2010: Randy Eresman, president and CEO, received $10 million in total compensation.
7. ConocoPhillips
ConocoPhillips is currently an integrated oil corporation, but it recently announced plans to split into two companies, one focused on refining, the other on production [10]. The company has listed acquiring more shale reserves in North America among its top strategic goals over the past couple of years and drills in several western states, as well as in Louisiana and Arkansas. It is exploring for shale gas in Poland and has operations in six continents.
Average Daily Natural Gas Production: 1.6 billion cubic feet.
Revenue, 2010: $198.7 billion
Reserves, 2010: 3.4 billion barrels of oil and natural gas liquids (1.9 billion in the U.S.), 1.2 billion barrels of bitumen (none in the U.S.), 21.7 trillion cubic feet of gas (10.5 trillion in the U.S.).
Executive Compensation, 2010: James Mulva, chairman and CEO, received almost $18 million in total compensation. John Carrig, who retired as president in March, received more than $14 million.
8. Southwestern Energy Co.
Southwestern is another independent driller that focuses exclusively on natural gas. The company has operations in Arkansas, Texas, Oklahoma and Pennsylvania, with most of its production coming from the Fayetteville Shale formation underlying parts of Arkansas.
Average Daily Natural Gas Production: 1.3 billion cubic feet.
Revenue, 2010: $2.6 billion.
Reserves, 2010: 1 million barrels of oil, 4.9 trillion cubic feet of gas.
Executive Compensation, 2010: Steven Mueller, president and CEO, received $5.7 million in total compensation.
9. Chevron
Chevron is the second-largest oil company in the country, and the third-biggest company overall in terms of revenue. It has been building its gas reserves recently, most notably with the purchase of Atlas Energy, an active shale gas driller. Still, more than 60 percent of the company’s worldwide reserves are in oil.
The majority of Chevron’s oil and gas production comes overseas. Domestically, Chevron operates in seven states, including Pennsylvania, Texas and California, and in the Gulf of Mexico.
Average Daily Natural Gas Production: 1.3 billion cubic feet.
Revenue, 2010: $198.2 billion.
Reserves, 2010: 6.5 billion barrels of oil and other liquids (1.3 billion in the U.S.), 24.3 trillion cubic feet of gas (2.5 trillion in the U.S.).
Executive Compensation, 2010: John Watson, chairman and CEO, received $16 million in total compensation.
10. Williams Energy
Williams is an independent producer focused largely on natural gas. It owns 13,900 miles of pipelines, which it says deliver 12 percent of the natural gas consumed in the United States. The company recently announced plans to separate its exploration and production activities from its other operations.
Williams has holdings in many of the major shale basins across the country, from Pennsylvania to North Dakota to Texas. The company also owns interests in several international companies.
Average Daily Natural Gas Production: 1.2 billion cubic feet.
Revenue, 2010: $9.6 billion.
Reserves, 2010: 4.3 trillion cubic feet equivalent (3 percent of that is oil or other liquids, converted to the equivalent volume in gas).
Executive Compensation, 2010: Alan Armstrong, president and CEO, received $2 million in total compensation.
Sources: The production numbers are from the Natural Gas Supply Association and reflect the average for the first half of 2011. Revenue figures are from the companies’ 2010 annual reports and reflect total revenue from all sources, not just gas production. Revenue may include sales and other income and may not be adjusted for taxes. Reserves numbers are from the companies’ annual reports. Bitumen and synthetic crude represent oil from Canadian tar sands or other unconventional reserves. The compensation information is from Forbes and Bloomberg Business Week.
Editor’s Note: Encana, company number six in Pro Publica’s list, is a partner in the Kitimat LNG (KM LNG) project.
A $5.4 billion deal between Canadian exploration giant Encana, one of the partners in the KM LNG project, and PetroChina collapsed Tuesday, sending shocks through both the financial markets and the energy exploration and production sector.
International analysts are already saying that China may be pulling back in its strategy to get a foothold in key resource areas and perhaps the Canadian energy sector was too optimistic. Perhaps.
If the analysts are correct, that means that some of the grand plans to export natural gas, at least to China, may still go ahead, but won’t immediately turn British Columbia back into the fabled Golden Mountain that brought the labourers from China more than a century ago to build the railways. Nor does this mean a major threat, at this point, to plans to export gas through Kitimat as there are plenty of buyers in Japan, Taiwan, South Korea and Malaysia looking at northeast BC shale gas.
E&P executives across North America should also be nervous. While some speculate Canadian-resource nationalism has spread from potash to energy, there is little evidence of this, given other similar deals haven’t been blocked. The alternative explanation is that foreign buyers of North American gas assets may actually care about such quaint notions as return on investment.
That isn’t good news for an E&P sector that consistently lives beyond its means.
Although China has gained a reputation for buying up resources around the world at any cost, a string of recent failed deals suggests the country’s resources companies are starting to drive harder bargains and are becoming more selective. In April, China’s Minmetals withdrew a $6.5bn offer for Equinox, an Australian-Canadian copper miner, rather than raise its bid after a higher offer emerged from Barrick Gold.
Chinese oil companies have also recently walked away from, or missed out on, prized oil and gas assets in Brazil …
The failure of the Encana-PetroChina deal is a surprise to the industry because Chinese companies have recently been investing aggressively in shale gas assets to gain the expertise needed to develop China’s own reserves.
Reuters reported from Edmonton that it was Encana who walked away from the deal:
Encana, Canada’s No. 1 natural gas producer, said the two companies could not find common ground, despite a year of negotiations, and walked away from a deal that would have seen PetroChina take a one-half stake in Encana’s massive Cutbank Ridge field in northern British Columbia.
“We just reached the point where we determined we just couldn’t go forward” said Alan Boras, a spokesman for Encana.
The deal would have been the largest in a string of investments by Asian companies in North America’s prolific shale gas discoveries, while Encana investors were counting on the cash to shore up a balance sheet battered by more than two years of weak natural gas prices…
The CBC report had analysts disagreeing on Encana’s role:
John Stephenson, portfolio manager with First Asset Investment Management in Toronto, called the scuttled deal “a complete and utter failure.”
“I think they just couldn’t agree on anything and I think they were premature maybe in announcing this before they had an operating agreement in place,” he said….
But Lanny Pendill, an energy analyst with Edward Jones in St. Louis, commended Encana for its discipline….Its willingness to walk away from a deal after a year of work shows “if push comes to shove, they’re going to make the decision that’s in the best interest of Encana and Encana shareholders.
The Globe and Mail says Encana has plenty of assets in shale gas, especially the Horn River developments which were often mentioned as the main source for shale based natural gas that could be shipped through Kitimat:
With the PetroChina joint venture out of the picture, Encana still has lots of potential. For starters, back in April, the company said it was looking to start discussions on joint venture proposals for its Horn River and Greater Sierra assets. On the heels of Tuesday’s announcement, Encana said that the prospects for these projects are looking up, and raised its 2011 expected proceeds from them to between $1-billion and $2-billion, up from $500-million and $1-billion
Canada and Australia are rivals in the “new frontier” of liquified natural gas export sales to Asia, a panel of energy marketing executives told the National Energy Board Tuesday at hearings into the KM LNG in Kitimat.
The “marketing panel” testifying before the board included Kenny Patterson, Vice President LNG Marketing and Shipping for Apache Energy, Sean Bolks, Apache Director of Corporate Risk Management, Jamie Bowman, Vice President of Marketing for EOG and David Thorn,Vice President, Canadian marketing for Encana and two consultants.
Patterson told the NEB at more than one point during his testimony that Canada was the “new frontier” for liquified natural gas, and so was attracting a good deal of interest from countries across East Asia who need more natural gas supplies.
Patterson and the other executives on the panel refused to be specific on who the customers actually are, despite cross-examination from NEB counsel Parvez Khan and additional questions from the NEB presiding member Lynn Mercier.
Patterson said Apache couldn’t go into individual buyers, so Khan asked: “How many different buyers n a general sense?” to which Patterson replied that in Asia, the KM LNG partners, which include Apache, EOG and Encana, were general discussions with seven to eight major Asian LNG companies as well as other smaller players.
Asked for specifics by Bloomberg News, a Houston based Apache spokesman Bill Mintz then said that no binding contracts had yet been signed for the Kitimat project.
Khan asked about one Memorandum of Understanding signed with KM LNG. Again the panel refused to be specific. Bowman said the MOU had been signed with the previous partnership in KM LNG and while the MOU had not yet expired, it was subject to further negotiations.
Khan and Mercier were both aware that any agreements with potential buyers were “subject to regulatory approval,” which, of course, is the National Energy Board’s role, but again they were unable to drag any specifics out of the executives on the marketing panel.
The panel members told the NEB members that Korea and Taiwan are already well established LNG markets and China was beginning to be more aggressive as an LNG buyer. Japan, which was devastated by the earthquake in March and lost of a lot nuclear powered electrical generation capacity is now scrambling to catch up with its Asian neighbors. The executives told the NEB panel that both Indonesia and Malaysia will also become more important buyers for LNG in the Canadian market as their domestic demand grows.
Noting that Patterson is based in Perth, Australia, Mercier asked the executives about the recent announcement by Shell that it would build a floating LNG platform off Australia.
Panel members replied that the Asian markets want long term, secure sources of supply, with multi-billion dollar contracts for between 10 and 20 years. As stable, market-driven countries with ample supplies of natural gas, both Canada and Australia could fulfill those needs, panel members said. Companies operating in both countries would require those multi-billion, multi-year contracts to justify the investment in natural gas extraction and transportation.
Jamie Bowman, Vice President of Marketing for EOG listens as fellow panel members testify before the NEB. (Robin Rowland/Northwest Coast Energy News)
The Kitimat Rod and Gun Club Tuesday asked the National Energy Board to place special conditions on the Kitimat LNG project so as, in the words of Rod and Gun representative Mike Langegger, to preserve “the fish and wildlife values of the northwest,” from the “cumulative effects” of industry encroaching on the wilderness.
The board panel,which is considering the project’s application for a natural gas export licence, allowed Langegger to testify early in the proceedings, now expected to run at least until Thursday, because he has other commitments.
In response to a specific question from Lynn Mercier, presiding member of the board panel, Langegger asked that the NEB require the KM LNG partners, energy giants Apache, Encana and EOG, establish a joint committee with Kitimat residents, both First Nations and non-First Nations, to preserve the values of the wilderness around the liguified natural gas terminal.
He also asked that the energy companies create special funding “dedicated to fish, wildlife, and the environment…to maintain the fishing, hunting [and] recreational activities used by residents not just for now but for generations to come.”
The liquified natural gas terminal is proposed for Bish Cove, down Douglas Channel from Kitimat, an area that is currently still largely wilderness.
Langegger noted that crucial salmon breeding rivers flow into Bish Cove from the surrounding mountains. Bish Cove is also known as a habitat for deer and bears, both black bears and grizzlies.
He also asked that Kitimat residents continue to have access, as they do now, to the bush surrounding the proposed terminal “with no gates, no lockoffs.” Langegger complained to the board that Rio Tinto Alcan has, in recent years, restricted access to the Kitimat River estuary, near the aluminum plant, while once Kitimat residents had easy entry to the estuary.
Langegger said that Rod and Gun members and other Kitimat residents fear the cumulative effects of the destruction of the wilderness, and specifically that some of the past practices of the forest industry, which he said had a “huge detrimental effect,” could be compounded by the Kitimat LNG plant and other projects.
While not referring directly to the proposal, Langegger was bringing in the Enbridge Northern Gateway project, which is being considered in a separate National Energy Board proceeding.
Lanegger told the NEB panel that he hoped that “the new generation of industries coming [would] accept those values” of fishing, hunting and recreation.
Mike Langegger of the Kitimat Rod and Gun
club checks his notes while testifying before the NEB. (Robin Rowland/Northwest Coast Energy News)
The head of Apache Corp.’s (APA) Canadian business said Tuesday that work has begun on the company’s planned Kitimat liquefied natural gas export facility and that the first super-chilled natural gas could be shipped from there by late 2015.
Timothy Wall, Apache’s regional vice president for Canada, said during the Houston company’s annual investor meeting that he expects the project will receive gas export permits “by the end of the year.”
