Through its own subsidiary Kitimat LNG Inc, Galveston owns 49% of the Kitimat LNG terminal, a planned liquefied natural gas (LNG) export facility to be located at Bish Cove, near the Port of Kitimat, around 652 kilometres north of Vancouver city in British Columbia province. The terminal is designed to export LNG to Asia, potentially boosting the value of naturals gas prices in the depressed North American markets.
On January 13 2010, Apache Corp announced its own agreement with Kitimat LNG Inc to acquire 51% of the Kitimat LNG project.
Upon EOG’s acquisition of the Galveston shares, EOG and Apache propose to construct, own and operate the C$3 billion LNG terminal. (US$1=C$1.06).
With a planned natural gas capacity of 700 million cubic feet per day (5 million metric tons per year), the Kitimat LNG terminal is designed to link to the pipeline transmission system serving Western Canada’s natural gas producing regions via the proposed Pacific Trail Pipelines, a C$1 billion, 463-kilometre project originating at Summit Lake, British Columbia.
Through its acquisition of Galveston, EOG will also acquire a 24.5% interest in the Pacific Trail Pipelines, a partnership between Galveston, Apache and Pacific Northern Gas Ltd. The proposed pipeline has received environmental assessment approvals from both the federal and provincial governments.
Upon reaching the terminal, the natural gas will then be cooled and liquefied in preparation for export via ship to growing global markets.
Mark G Papa, EOG chairman and chief executive officer, said: “EOG is pleased to partner with Apache in the development of this new market opportunity for natural gas from our Canadian operations. By combining our experience and resources, we are confident we can move this project to completion. As a part of this process, we look forward to continuing to build on the relationship with the Haisla First Nation and being a part of Kitimat and surrounding communities.”
He added: “Alfred Sorensen and the Galveston LNG employees deserve credit for taking a great idea and advancing it to the point where it now has the potential to attract new markets for Western Canadian natural gas supply not only in the Asia-Pacific region but globally.”
Under the terms of the agreement, EOG’s offer to purchase the shares of Galveston is conditioned upon the achievement of certain commercial and regulatory milestones.