Mitsubishi, Penn West Sign $237 Million Canada Shale Gas Project Agreement
Mitsubishi will form a unit, Cordova Gas Resources Ltd., to acquire the 50 percent project stake from the Calgary-based oil and gas producer, the trading company said in a statement to the Tokyo Stock Exchange today. Mitsubishi will pay C$200 million of Penn West’s exploration costs as part of the transaction, according to the statement.
Mitsubishi joins Japanese trading houses Mitsui & Co. and Sumitomo Corp. in investing in methane trapped in shale rock thousands of feet below the surface to capitalize on growing demand for the cleaner-burning fuel. The deal is part of plans to invest as much as 2.5 trillion yen ($29 billion) in business such as energy, metals and infrastructure in three years.
“It’s a good investment to diversify Mitsubishi’s natural resources portfolio given shale gas is unconventional energy that has attracted global investors,” said Yasuhiro Narita, an analyst at Nomura Securities Co. in Tokyo.
Mitsubishi and Penn West plan to drill hundreds of wells in the Cordova Embayment area in northeastern British Columbia in the next 15 years with a daily production target of 500 million cubic feet by 2014, the statement said. Mitsubishi expects to spend a total of 300 billion yen during the period.
The area may contain a gas reserve of as much as 8 trillion cubic feet, Mitsubishi said.