Low natural gas prices in North America have prompted many oil and gas companies to jettison their dry gas assets, Fort Worth-based Quicksilver is capitalizing on Asian buyers’ efforts to secure lower-cost LNG feedstock to attract joint venture partners for its acreage in areas like the Horn River and Barnett shales.
Quicksilver is in negotiations for a joint venture partner in its Horn River Basin acreage in Canada. The company appears to be favoring an Asian buyer with an eye to exporting natural gas across the Pacific.
Quicksilver announced the sale of 25% of its oil and gas assets in Texas’ Barnett shale to Tokyo Gas for $485 million on 29 March. Tokyo Gas followed up that announcement on 1 April with the news that it had reached agreement with Sumitomo and Dominion Cove Point LNG to buy 1.4 million tons per annum (mtpa) of liquefied natural gas (LNG) from the proposed Cove Point liquefaction plant in Maryland.
“Their interest, obviously, is to bring that value back to Japan,” said chief executive Glenn Darden at the Independent Petroleum Association of America’s Oil and Gas Investment Symposium in New York on Monday.
Quicksilver is finding that potential partners for its Horn River acreage in western Canada have the same goal in mind, with an eye to linking Western Canadian upstream assets to proposed LNG export plants on the country’s west coast, in British Columbia. “We’re talking to similar type players up there that have a desire to lower their supply costs,” said Darden.
Quicksilver is actively promoting its Horn River assets as a potential future source of feedstock to those plants. “We have worked very hard on developing a game plan, and a template, that someone can come in and fund,” Darden said.
But the company has no plans to take a stake in any of the proposed LNG projects. “We do not have the expertise or the dollars to play that game without a player of that caliber,” he said. “The ideal situation for us is that we sell a piece of Horn River and we get to piggyback on that bigger player as far as they can take that gas.”
The timing of development at Quicksilver’s Horn River acreage will likely be linked to progress on export options, including a pipeline from the area to Canada’s west coast, which is still years away. “Pipe will need to be built, and the game plan of the four announced projects on the West Coast is for a pipeline across the Canadian Rockies,” Darden said. “That is a several-year project, so that’s probably 2018 at the absolute earliest, 2019 before the gas gets exported,” he said.
