Encana, CNPC to jointly develop Canadian natural gas plays

Encana Corp. (NYSE: ECA) and China National Petroleum Corporation (CNPC) are negotiating a potential joint-venture investment to develop Encana’s natural gas plays in Horn River, Greater Sierra (Jean Marie formation) and Cutbank Ridge (Montney formation) in northeast British Columbia.

"Given the depth of our enormous unconventional natural gas resource portfolio, we are accelerating our organic growth rate and targeting a doubling of our production per share over the next five years. 

Read OGFJ Editor Don Stowers' thoughts on how drilling efficiency is impacing gas production in North America.

In the past three years, Encana has attracted commitments of more than US $4 billion of joint-venture capital through multiple agreements in Canada and the US, of which about $900 million is to be invested in 2010. Encana is targeting annual joint-venture investments of between $1 billion and $2 billion.

Under a potential joint venture, Encana would be the operator of all developments, meaning it would drill and complete the wells, build the processing facilities and pipelines and conduct all field work for the joint venture. CNPC would invest capital to earn an interest in the assets and gain an advanced understanding of unconventional natural gas development through an ongoing sharing of technical knowledge. 

Canada's Encana Corp. holds acreage in several gas resource plays including:

  • coalbed methane (CBM) in central and southern Alberta
  • Bighorn Deep Basin in western Alberta
  • Cutbank Ridge and Greater Sierra in British Columbia
  • Jonah in Wyoming
  • Piceance in Colorado
  • the Barnett shale play in Fort Worth
  • Bossier in east Texas 

The company is also active in the exploration of a number of North American shale and tight gas plays that could add to its portfolio of natural gas assets including:

  • Horn River in British Columbia
  • Montney in Alberta and British Columbia
  • Haynesville in Louisiana and Texas 

Several E&P companies, including Encana, are quietly moving forward with plans to develop yet another unconventional resource play – the Collingwood shale in Michigan.

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