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Pipeline for Shale Gas Exports

Spectra, BG Group to Export to Asia

Written by Brian Hicks
Posted September 12, 2012

Houston, Texas-based Spectra Energy (NYSE: SE) has entered into an agreement with British energy firm BG Group (LON: BG) to jointly develop a 525-mile pipeline connecting flourishing Canadian shale gas reserves in northeastern British Columbia to the coast. The deal is worth $6 to $8 billion, Spectra announced on Monday.

The pipeline is intended to move natural gas to an export facility in Prince Rupert, B.C. that BG plans to develop. It is the latest in a slew of recent developments in Canada where energy companies are trying to exploit low-cost natural gas in unconventional reserves and export it to Asian markets in order to make a profit.

From FuelFix:

“The size of the resource in northeast British Columbia is as big as any of the unconventional plays anywhere in North America,” said Gary Weilinger, Spectra’s vice president of strategic development and external relations. “For the province to reach its potential, we need more markets.”

The system, jointly owed by BG and Spectra, will be capable of moving 4.2 billion cubic feet of BG gas per day. It would also connect with Spectra’s current networks in the Montney and Horn River gas fields in British Columbia. Spectra officials stated that they hope to get things up and running by 2019 assuming things go as slated.

The boom in natural gas, driven by the shale revolution, has caused some producers to quit the field due to excessive production and low costs. But Spectra’s move to export it to markets where sheer demand ensures a high markup could see a reversal of that trend.

Back in June, Shell (NYSE: RDS.A) decided to pair up with TransCanada (NYSE: TRP) to transport natural gas across British Columbia for export. With the new Spectra development, there are now two major projects with similar ambitions. It remains to be seen how this develops.

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