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PetroChina buys stake in Canada shale gas project

By Agence France-Presse
Friday, February 3, 2012 7:55 EDT
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Fracking platform photo via AFP
 
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State-owned PetroChina said it has agreed to take a 20 percent stake in a Canadian shale gas project owned by Royal Dutch Shell, China’s latest acquisition of North American natural resources.

PetroChina, the listed unit of China’s largest oil producer, has signed a deal to buy a share of land and assets in Groundbirch, British Columbia, according to a company statement provided to AFP on Friday.

Energy-hungry China has been investing heavily in Canadian and US reserves of the hard-to-reach gas trapped in sedimentary rock, as it seeks to reduce its reliance on dirty coal and oil imports.

The agreement comes ahead of an official visit to China by Canada’s Prime Minister Stephen Harper next week, which is expected to include discussions on potential Chinese oil purchases.

PetroChina declined to give the value of the shale gas deal but said it hoped to achieve “reasonable” returns.

“PetroChina hopes to gain experience in management and production in the exploration and development of unconventional gas through its cooperation with Shell,” the statement said.

PetroChina and the Anglo-Dutch company are already cooperating in shale gas exploration in southwest China. In 2010 the companies also took over Australia’s Arrow Energy, allowing them to develop methane gas resources.

Chinese companies are trying to gather much-needed knowledge and experience which can be used to develop the embryonic shale gas market in China, which has large reserves of the commodity.

Oil and gas giant Sinopec will invest $2.2 billion in Devon Energy, giving the firm a stake in exploring five US shale fields, Devon said last month.

Less than a year ago, Canadian energy giant Encana ended talks with PetroChina on a joint venture to develop another shale gas project.

Encana, North America’s top gas producer, said the two were unable to agree terms. PetroChina had proposed to invest $5.5 billion for a half stake in the project in Canada’s Cutbank Ridge fields of British Columbia and Alberta.

Beijing is investing billions of dollars to develop clean energy as it seeks to meet a target of generating 10 percent of its energy needs from natural gas and 15 percent from renewable sources by 2020.

But experts warn its lack of technical expertise in shale gas extraction and scarce water supplies pose challenges to developing the industry.

Shale gas extraction, developed in the United States and Canada, is more complicated and expensive than tapping conventional gas, and experts say it could take years before commercial production starts in China.

Shares of Hong Kong-listed PetroChina were down 1.38 pct to HK$11.46 on Friday morning.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
 
 
 
 
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