Tokyo Gas to Buy 25% Texas Shale Project Stake for $485 Million

Tokyo Gas Co. (9531), Japan’s biggest gas utility, will buy a 25 percent stake in shale gas operations in Texas from Quicksilver Resources Inc. (KWK), the first entry into shale development for the Japanese company in the U.S.

Tokyo Gas, which this week said it intends to use 10.91 million tons of liquefied natural gas in the fiscal year starting April 1, will pay $485 million for the stake, the Tokyo-based company said in a statement today.

The move comes as Japan searches for alternative sources for energy after the 2011 Fukushima nuclear disaster that led to the shutdown of 48 of the country’s 50 nuclear reactors.

Tokyo Gas will obtain the stake through TG Barnett Resources LP, a wholly-owned subsidiary of Tokyo Gas America Ltd. The shale gas project in the Barnett basin produces about 275 million cubic feet equivalent per day of shale gas and natural gas liquids sold in the U.S., the statement said.

Tokyo Gas’s share of gas production, projected to be as much as 0.5 million tons a year, will be sold in the U.S., the company said.

“We would like to consider bringing the gas to Japan in the future but we don’t have a precise timeline,” Tokyo Gas spokesman Minoru Iwashita said.

Japanese Prime Minister Shinzo Abe asked U.S. President Barack Obama in February to allow shale gas exports.

Japan’s third-largest utility by generating capacity, Chubu Electric Power Co., and trading company Sumitomo Corp. (8053), have agreements to buy LNG from proposed export plants that have yet to win government approval. The U.S. has approved only one export plant for shipments to countries without a free-trade agreement.

The switch from nuclear to gas-fired generation after the accident at Fukushima forced Japan to increase LNG imports 11 percent in 2012. Japan is the world’s biggest buyer of LNG, gas cooled to a liquid for shipment by tankers.

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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