PetroChina to buy 20% of Shell's Canadian shale gas assets

PetroChina, a unit of China National Petroleum Corp., has signed a binding agreement to purchase a 20% stake in Royal Dutch Shell PLC’s Groundbirch assets in northeastern British Columbia.

“I can confirm that CNPC will join us in Canada,” said Shell’s Chief Executive Officer Peter Voser. “It’s part of our global partnership to optimize our business working environment inside and outside China.”

Shell and CNPC agreed last June to step up their cooperation in energy exploration in China where they have now drilled 15 wells in the acreage, with a further 25 wells planned for 2012. In 2009, the two firms teamed up to acquire coalbed methane producer Arrow Energy for $3.4 billion.

Shell and PetroChina declined to divulge the value of the agreement for the Groundbirch assets, but financial news site FinanceAsia reported that the acquisition could be worth “slightly more” than $1 billion.

Shell believes production from the Groundbirch assets could approach 500,000 Mcfd by 2014. In 2009, Shell said the Sunset-Groundbirch tight gas play produced 100,000 Mcfd. Shell holds 243,000 hectares in the prime Montney gas fairway.

The area is considered a key property for Shell, which has 777 sq km of drilling rights in the larger Montney gas play. The unconventional gas is trapped in tight rock formations about 2,500 m below surface and is released by horizontal drilling and fracturing.

The importance of the sale turns more on the acquisition of technology than on reserves or production as PetroChina and its domestic rivals are seeking technology to tap China’s shale gas resources through partnerships and acquisitions.

PetroChina acknowledged that point, saying it hopes to gain experience in the exploration and development of unconventional gas resources through its cooperation with Shell.

Gordon Kwan of Mirae Asset Securities Ltd. said, “Although PetroChina will gain just a minority stake, the firm can redeploy any advanced technologies acquired overseas back home to better exploit China’s vast shale-gas reserves.”

Indeed, the sale could be even more rewarding in terms of technology as industry analysts say the Groundbirch area holds the potential to transform the North American energy market.

Shell said it is using innovative technologies to help with its program there, including the Reelwell Drilling Method developed by Norway’s Reelwell AS, which is said to be “pushing the limits” of extended reach drilling.

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

BHI: US drilling rig count holds steady at 1,931

09/19/2014

The US drilling rig count was unchanged at 1,931 rigs working during the week ended Sept. 19, Baker Hughes Inc. reported.

Cenovus starts production from Phase F at Foster Creek oil sands project

09/19/2014 Cenovus Energy Inc., Calgary, started oil production earlier this month at its recently completed Phase F expansion at its Foster Creek oil sands p...

Inpex to increase recovery, lifespan at Minami-Nagaoka field

09/19/2014 Inpex Corp. plans to upgrade facilities at its Koshijihara plant to enhance natural gas and condensate recovery at Minami-Nagaoka gas field in Japan.

Wild Well completes second capping stack

09/18/2014 Wild Well Control Inc., a subsidiary of Superior Energy Services, has completed a subsea capping stack stationed in Singapore to serve the area dur...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected