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Vol. 15, No. 33 Week of August 15, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Edging toward Kitimat LNG

EOG Resources, in partnership with Apache, is engaged in a “methodical,” step-by-step progression toward what would be Canada’s first LNG export scheme.

Mark Papa, chief executive officer of the Houston-based independent, said the joint venture is now probably at step two in what is likely a 10-step project to develop the Kitimat LNG proposal.

“I’d say all the elements are there to make this project come together, but we have to realize that what we’re taking on is pretty big in scope, but the prize is also very big.”

Papa said the key is securing an oil-indexed LNG contract and, towards that end, preliminary discussions are under way with potential off takers.

Apache operator

Apache is operator of the project and EOG came onboard by acquiring the shares of Galveston LNG, a privately owned Calgary company whose subsidiary Kitimat LNG was helping develop the export facility, using the deepwater port at Kitimat in northern British Columbia as its springboard to Asia or other regions.

Papa said one option is to bring a possible off-taker into EOG’s Horn River shale gas acreage in northeastern British Columbia, where the company is completing an 11-well winter drilling program and expects to have flow results later this year.

He said that would be one way to obtain some net funding for the LNG plant.

EOG said it plans to sell certain non-core North American producing natural gas assets along with acreage in both gas and gas liquids — including properties in Alberta and Saskatchewan — using the proceeds to drill and develop EOG’s suite of horizontal oil drilling opportunities.

In Canada, net second-quarter production fell to 204 million cubic feet per day of natural gas, down about 9.3 percent from a year earlier, while crude oil and condensate volumes rose to 6,600 barrels per day from, 2,900 bpd. Gas liquids fell to 900 bpd from 1,000 bpd.

—Gary Park



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