EnCana Corp’s Cutbank Ridge natural gas field. Photograph by: Handout
Source: The Vancouver Sun, February 17, 2012
Encana Corp. announced Friday it has reached an agreement with Mitsubishi Corp. to sell a 40 per cent stake in its Cutbank Ridge gas assets in northeastern British Columbia for $2.9 billion.
Mitsubishi’s investment in the Cutbank Ridge Partnership provides Encana with the needed investment to develop and deliver natural gas to markets, the two companies said at a news conference in Richmond.
Rising demand for natural gas in Japan after last year’s Fukushima nuclear disaster were cited by Mitsubishi vice-president Junichi Iseda as one of the factors in the Japanese conglomerate’s decision to invest in B.C.
Iseda told the news conference that Mitsubishi has a two-fold purpose in investing in Cutbank Ridge: to contribute to the development of natural gas resources in Canada and to help diversify Canada’s gas export market.
Friday’s announcement provides Mitsubishi with a stake in B.C.’s natural gas development as well as a proposal for a liquefied natural gas export terminal at Kitimat. Mitsubishi is one of Shell Canada’s partners in its plan to build an LNG plant at Kitimat. Further, Encana is one of three partners in the Kitimat LNG partnership. KLNG has begun some preliminary work at Kitimat and has already received a permit to export LNG.
“Mitsubishi Corp. continues to study the LNG exports from Western Canada,” Iseda said. “Today that study is still at the early stage, but we firmly believe that once our LNG plan evolves, it will generate significant benefits and opportunities to Canada in general and to the province of British Columbia in particular.”
Since the Fukushima disaster, the Japanese government has been encouraging businesses to invest in foreign natural gas by providing up to 50 per cent financial support to companies for new or exploration and development projects.
Encana executive vice-president Mike McAllister said Mitsubishi’s investment will give it a 40 per cent stake in 170,000 hectares of Encana’s undeveloped Montney natural gas lands within its larger Cutbank Ridge resource play.
Encana will retain a 60 per cent position and will be the managing partner, he said.
“This asset provides a major natural gas resource capable of delivering over the long-term a low-carbon energy supply,” McAllister said. “We expect the Cutbank Ridge partnership long-term growth plans to create significant jobs, investment and new economic opportunities for British Columbia,” he said.
Over the next 20 years, he expects the investment to create 10,000 jobs in B.C. and 4,000 jobs across Canada.
Encana has been seeking a partner in its Cutbank Ridge gas assets since its proposed $5.4 billion joint venture with PetroChina Co. fell apart last June.