(EnergyAsia, December 20 2012, Thursday) — A PetroChina International subsidiary and Canada’s Encana Corp have signed a C$2.18 billion venture to jointly develop the latter’s Duvernay gas reserves in Alberta province. (US$1=C$0.99).

Encana said it did not need to seek the approval of the Canadian government as Phoenix Duvernay Gas would acquire a 49.9% stake of its 180,000-hectare Duvernay assets.

The deal was announced nearly a week after Canada’s Prime Minister Stephen Harper said his government, which had just approved two separate takeovers of Canadian oil and gas companies by China’s CNOOC and Malaysia’s Petronas, would make it almost impossible for foreign state-owned companies to fully acquire Canadian firms.

Ottawa, however, is not opposed to joint ventures, having stated that Canada needs to attract C$630 billion worth of investments to develop its oil and gas reserves.

Encana, which has already received C$1.18 billion in cash from Phoenix, said the joint venture will focus on developing natural gas and related products like butane and ethane. Phoenix will pay the remaining C$1 billion over the next four years by covering Encana’s share of development capital.

The Encana-operated joint venture will invest a total of C$4 billion in new drilling, completion and processing facilities to develop an estimated nine billion barrels of oil equivalent reserves.

Encana said it has drilled nine wells into the Duvernay, has five producing wells and currently has two rigs actively drilling additional wells. Through the joint venture, Encana expects to more than double its planned pace of development from early 2013.

Randy Eresman, Encana President and CEO, said:

“Phoenix’s investment demonstrates the tremendous value that Encana has created in this early life liquids rich play, and enables us to accelerate the pace at which the full production potential of our Duvernay lands can be achieved.

“A transaction of this magnitude keeps us on track to create a more diversified commodity portfolio and maintain our balance sheet strength. It is a strong endorsement of Encana’s position as a reliable long term partner.”

Zhiming Li, Phoenix’s President and CEO, said:

“The Duvernay project will combine Phoenix’s integrated upstream and downstream capabilities and financial resources with Encana’s proven resource play hub expertise. This joint venture will build a foundation for the successful development of the Duvernay play and help to diversify our business portfolio. Encana is our ideal long term partner for the development of our future natural gas business.”

Last year, Encana and PetroChina called off their proposed C$5.5-billion joint venture to develop the Canadian company’s Cutbank Ridge assets.