Chevron begins Canadian partnership with Apache on Kitimat LNG exports

Apache has completed its previously-announced transaction with Chevron to build and operate the Kitimat LNG project and develop world-class natural gas resources at the Liard and Horn River basins in British Columbia, Canada.

Chevron and Apache each have become a 50% owners of the Kitimat LNG plant, the Pacific Trail Pipelines and 644,000 gross undeveloped acres in the Horn River and Liard basins, the companies said on Monday. 

After a brief transition period, Chevron will assume operatorship of the LNG plant and the pipeline. Apache Canada increased its ownership in the LNG plant and pipeline from 40% and will operate the upstream assets.

Apache's net proceeds from the transaction were $405 million.

"With Chevron's LNG experience and Apache's upstream track record, this team is ideally suited to move this project forward toward delivering the tremendous resources at Liard and Horn River to meet Asia's growing demand for LNG," said G. Steven Farris, Apache's CEO.

Liard and Horn River are two of the most prolific shale gas plays in North America, the companies said, with more than 50 trillion cubic feet of resource potential on the Apache-Chevron acreage.

Encana and EOG Resources -- formerly 30% non-operating owners in Kitimat LNG and Pacific Trail Pipelines -- sold their interests and exited the venture.

Kitimat LNG, at Bish Cove on the northern British Columbia coast approximately 400 miles (650 km) north of Vancouver, is currently completing front-end engineering and design, and early site work is under way.

Current plans call for two liquefaction trains, each with expected capacity of 5 million tpy of LNG (about 750 million cubic feet of gas per day).

Kitimat LNG has received all significant environmental approvals and a 20-year export license from the Canadian federal government.

The 290-mile (463-km) Pacific Trail Pipelines will provide a direct connection between the Spectra Energy Transmission pipeline system and the Kitimat LNG terminal.

The project has strong support from many of the First Nations along the route, according to the companies.

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