Canada’s ARC Resources to supply LNG Canada
Canada’s ARC Resources said November 4 it has entered into a long-term agreement to supply 150mn ft3/day of its Montney natural gas production to a member of the LNG Canada consortium.
The agreement will commence when LNG Canada begins operations, expected in 2025. The consortium member was not identified.
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Each of the five LNG Canada joint venture partners will provide an estimated 2.1bn ft3/day of natural gas supply to the 14mn mt/yr first phase of the project commensurate with their respective equity positions. The five partners are Anglo-Dutch major Shell (40%), Malaysia’s PETRONAS (25%), PetroChina (15%), Japan’s Mitsubishi (15%) and Korea Gas (5%).
ARC Resources is the largest producer in the Montney formation, which straddles the Alberta/British Columbia border. Natural gas for the supply agreement will be delivered from its low-emission Sunrise facility, which in Q3 2021 produced an estimated 286mn ft3/day but will be expanded by 80mn ft3/day by the end of 2022.
ARC reported record production of 353,657 barrels of oil equivalent (boe)/day and record free funds flow of C$497mn (US$399mn) in the third quarter this year. It recorded net income of C$53.6mn in the quarter, reversing a C$66.1mn net loss a year ago.
The free funds flow supported net debt reduction of C$158mn and the return to shareholders of C$172 through dividends (C$47mn) and share repurchases (C$125mn). ARC will increase its quarterly dividend to C$0.10/share from C$0.66/share, to be paid in January 2022 to shareholders of record at December 31, 2021.
Natural gas production in the third quarter nearly doubled year-over-year, to 1.3bn ft3/day from 708mn ft3/day, mostly reflecting its business combination earlier this year with Seven Generations Energy.