South Korea invests millions into BC gas fields

Korea Gas Corporation (KOGAS) has invested C$565 million ($543 million) into three north-eastern British Columbia natural gas plays.  The state-run company has signed a three-year deal with Calgary-based gas giant EnCana for a 50 percent interest in land blocks in the Montney and Horn River Basin shale formations. The agreements cover 10,000 hectares of Horn River land and an additional 52,000 hectares of Montney land. The move is expected to further boost British Columbia's efforts to become a natural gas export hub, as well as giving EnCana the opportunity to accelerate ongoing development. The agreement will give KOGAS 50 percent control over the gas fields, which are currently owned by EnCana, and which represent 20 percent of its total portfolio. KOGAS and EnCana will jointly explore and develop the natural gas fields over the next five years. It is thought that the Asian company plans on spending a total of $1.1 billion over that period in the region, reflecting South KoreaÔÇÖs rapidly increasing hunger for natural gas. South Korea has no domestic oil or gas production and relies on imports for all of its energy needs. The deal, KOGASÔÇÖs first in North America, is in line with its initiative to produce 25 percent of South KoreaÔÇÖs gas needs and source 60 percent of its own revenue from global sources by 2017.┬áThe company┬áhas over 20 exploration and production ventures in Africa, Asia, the Middle East and Russia. KOGAS is expected to secure 20 million tonnes of natural gas through the project, and will be able to produce more than one million tonnes of natural gas in 2017, when production is scheduled to begin. The Asian company is currently the world's largest liquefied natural gas (LNG) importer. It is thought that this deal could pave the way for future investments in CanadaÔÇÖs gas fields by other Asian nations. Overseas ownership of CanadaÔÇÖs oil sands has already taken place through investment by Chinese, Japanese, Norwegian and French companies. Analysts now believe the focus could turn to gas as CanadaÔÇÖs huge shale fields continue to attract the attention of gas-poor nations, such as South Korea. There are already plans for a LNG export port at Kitimat, BC, which could supply gas to Asian nations by Pacific tankers. KOGAS was the first major name to sign up to the Kitimat project, agreeing to buy 40 percent of the portÔÇÖs 700 million cubic feet of daily export capacity. The first gas, which would be Canada's first ever overseas gas export, could be delivered as early as 2014.