Apache Corporation (NYSE: APA) and Chevron Corp. (NYSE: CVX) have completed an agreement between their Canadian subsidiaries to develop and operate the Kitimat LNG project in British Columbia, Canada.
Apache Canada Ltd. and Chevron Canada Ltd. now each own 50 percent of the Kitimat LNG facility, which is located in the Liard and Horn River basins. The deal also includes the Pacific Trail Pipelines and around 644,000 undeveloped acres.
Chevron will, after some time, take over ownership of the LNG facility and pipeline, while Apache will operate upstream assets. Apache gained around $405 million from the deal.
Daily Markets quotes from the press release:
“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 chairman and chief executive officer.
Two liquefaction trains will be in operation at the plant, each capable of processing 5 million tons of LNG per year. The facility has already been granted all requisite environmental licenses as well as a 20-year export license.
Meanwhile, Encana (TSX: ECA) and EOG Resources (NYSE: EOG), which earlier held about 30 percent non-operating ownership in the facility and pipeline, have sold their interests and are no longer part of the venture.
The pipelines span 290 miles and connect with Spectra Energy’s (NYSE: SE) pipeline system.