Petronas, Progress close Montney Shale, LNG agreement

By Phaedra Friend Troy

Canadian independent Progress Energy Resources (TSX:PRQ) has closed the agreement with Malaysian national oil company Petronas to form a partnership in the emerging Montney Shale and explore LNG export opportunities in Canada’s British Columbia. 

Under the agreement, Petronas is gaining a 50-percent stake in Progress’ Montney Shale assets in the Foothills of northeast British Columbia, including the Altares, Lily and Kahta properties. 

Petronas is paying C$1.07 billion (US $1.1 billion) to enter the partnership, of which 25 percent has been paid in cash and the other 75 percent is being paid in the form of a capital funding commitment on the Montney joint venture.

“Both parties have worked diligently and cooperatively towards the completion of the agreements that form the basis of our strategic partnership,” said Michael Culbert, president and CEO of Progress. “We will now move forward on building a strong gas production growth profile from the North Montney Joint Venture assets as well as initiating the feasibility study for the development of an LNG export facility on the west coast of British Columbia.” 

Montney Shale Gas May Support LNG Export 

In addition to the Montney Shale joint venture, Petronas and Progress have formed a LNG export joint venture, in which Petronas holds 80 percent and Progress holds 20 percent. 

The LNG export joint venture is immediately launching a feasibility study to determine the potential of development an LNG liquefaction and export facility on Canada’s west coast. The British Columbia LNG facility would allow the companies to sell the natural gas internationally, beyond the glutted North American market. 

The two companies will work together to market the LNG using Petronas’ existing network of LNG customers.
If a final investment decision is made on the LNG export facility, Petronas will fund a further C$600 million (US $625 million) toward Progress’ financial obligations.

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