Japanese Utilities to Join Mitsubishi in Penn West Led Shale Gas Project

A group of Japanese utilities will join Mitsubishi Corp. in a shale gas project led by Penn West Exploration.

Tokyo Gas Co., Osaka Gas Co., Chubu Electric Power Co. and Japan Oil, Gas and Metals National Corp. have each agreed to take a 7.5% stake in Cordoba Gas Resources, a subsidiary of Mitsubishi.

Through the formation of the consortium, all the companies expect to obtain beneficial knowledge about shale gas developments. The consortium plans to discuss studying the possibility of exporting the shale gas to Japan as LNG which will contribute to diversify energy import and to secure stable energy supply to Japan, Mitsubishi Corp. said in a statement.

The consortium has also announced CAD$ 1 billion in funding for the Cordova Embayment Project will be covered by the Japan Bank for International Cooperation and The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Penn West announced an agreement with Mitsubishi to form a joint venture to accelerate the exploration and development of the Cordova shale gas assets last August with Mitsubishi agreeing to commit approximately $850 million to the 50-50 Joint Venture.

Mitsubishi said that the goal is to raise daily production to approximately 500 million cubic feet by 2014 (approx. 3.5 million tons per year LNG equivalent). The Cordova Embayment is estimated to hold reserves of 5-8 trillion cubic feet (1110 -160 million tons in LNG equivalent).

Penn West will maintain 50% ownership of the project.

Source: Natural Gas for America