Chevron buying stake in Canadian LNG, pipeline projects

A unit of Chevron Corp. is buying a 50 percent stake in liquefied natural gas and pipeline projects in Canada and obtaining rights related to gas fields in a deal that involves Houston-based exploration and production firms Apache Corp. and EOG Resources Inc.

The move comes as major liquefied natural gas projects are picking up steam around the world. Anadarko Petroleum, Cheniere Energy and Noble Energy are among the local firms involved in big LNG projects.

Meanwhile, early site work is under way on the Kitimat LNG facility that is being built at Bish Cove in northern British Columbia. Plans call for two liquefaction trains, each with expected capacity of 5 million tons of LNG per year. The facility has secured export rights from the Canadian government.

Chevron, based in San Ramon, Calif., said that in addition to the operating stake in the Kitimat project and Pacific Trail Pipeline, its Canadian subsidiary also will acquire a 50 percent interest in roughly 644,000 acres of petroleum and natural gas rights in the Horn River and Liard Basins.

The complicated deal is subject to government approvals and is expected to close in the first quarter of 2013.

Full financial terms were not disclosed, but Apache said it is selling the stake in its 100 percent-owned undeveloped Liard and Horn River acreage to Chevron for $550 million. It expects its net proceeds to be $400 million after it pays Chevron to equalize interests in other Horn River acreage owned by Apache, Encana Corp. and EOG, and to equalize ownership of the LNG plant and pipeline projects between Apache and Chevron.

Chevron is acquiring all of the interests currently owned by affiliates of EOG and Encana.  Operatorship of both facilities will transfer to Chevron.

George Kirkland, Chevron’s vice chairman, said the site “is ideally situated to meet rapidly growing demand for reliable, secure, and cleaner-burning fuels in Asia, which are projected to approximately double from current levels by 2025.”

The 290-mile Pacific Trail Pipeline will provide a direct connection between the Spectra Energy Transmission pipeline system and the Kitimat LNG terminal, the companies said.

Last week, Anadarko and Italian oil and gas company Eni said they hope to begin exporting liquefied natural gas from Mozambique in 2018 after inking a deal to build a massive plant in the southeast African country.

Also this month, plans were disclosed for an affiliate of French oil and gas company Total to buy liquefied natural gas from Cheniere Energy Partners’ Sabine Pass plant in western Louisiana under a $6.3 billion, 20-year contract. And  Noble Energy announced that Australian oil and gas company Woodside Energy had agreed to take a 30 percent stake in the Leviathan field in the eastern Mediterranean Sea off Israel, bringing that project closer to fruition.