Japan’s Mitsubishi to invest $600-million in BC natural gas development

Penn West Energy Trust  has announced it has  entered into 50-50 joint Venture agreement with  a unit of Japan’s Mitsubishi Corporation to develop the company’s gas assets in northeastern British Columbia. Penn West will serve as operator of the Assets.

Under the agreement, Mitsubishi will commit $850-million to the joint venture which consists of $250 million in cash to acquire a half stake in the assets and $600 million for capital and development funding in Penn West’s shale gas assets in the Cordova Embayment area and conventional producing gas properties in the Wildboy area.

More specifically, according to Penn West’s press release:

Under the terms of the Agreement, Penn West will sell MC 50% of its working interest in its Wildboy conventional gas assets including current production of approximately 30 million cubic feet per day of natural gas, 550,000 gross acres of land including approximately 120,000 acres targeting shale gas in the Cordova Embayment, the Wildboy gas processing facility, a sales gas pipeline connecting the area to the TransCanada gathering system in Alberta, and associated infrastructure.

According to a Penn West statement:

“It is Penn West’s view that the joint venture will accelerate the exploration and development of this significant unconventional gas asset. The joint venture supports our corporate strategy, which recognizes the importance of maintaining a balanced exploration and development portfolio as we assess and develop the full potential of our diverse resource plays. This agreement is the foundation for a long-term relationship with [Misubishi], who has world-wide experience in major project development.”

This is the latest in a number of Asian companies that are investing hundreds of millions into BC’s shale gas industry as part of a long term strategy to export natural gas to the Asian market via a Liquid Natural Gas (“LNG”) facility to be built in Kitimat.

Press Release: Penn West Trust Announces Strategic Joint Venture with Misubishi Corporation