Denham Capital has agreed to sell Galveston LNG Inc. to the Canadian subsidiary of EOG Resources Inc. (NYSE: EOG). No financial terms were disclosed. Calgary-based Galveston LNG owns, via a subsidiary, a 49% interest in the planned liquefied natural gas (LNG) export terminal around 400 miles north of Vancouver.
EOG Resources, Inc. (NYSE: EOG) (EOG) today announced that its Canadian subsidiary, EOG Resources Canada Inc., has agreed to acquire the shares of Galveston LNG Inc. This Calgary-based corporation, through its wholly-owned subsidiary, Kitimat LNG Inc., owns 49 percent of the planned liquefied natural gas (LNG) export terminal to be located at Bish Cove, near the Port of Kitimat, about 405 miles (652 kilometres) north of Vancouver, British Columbia.
On January 13, 2010, Apache Corporation (Apache) announced an agreement with Kitimat LNG Inc. to acquire 51 percent of the planned Kitimat LNG project. Apache will be the operator of the project.
Planned capacity of the proposed Kitimat LNG terminal is about 700 million cubic feet of natural gas per day or 5 million metric tons of LNG per year. Preliminary construction costs, currently estimated to be approximately $3 billion (Canadian), will be revised at the conclusion of front-end engineering and design.
Under the terms of the agreement, EOG’s offer to purchase the shares of Galveston LNG Inc. is conditioned upon the achievement of certain commercial and regulatory milestones.
“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,” said Mark G. Papa, Chairman and Chief Executive Officer. “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.”
“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,” Mr. Papa added.
About Kitimat LNG Project
The Kitimat LNG terminal is a project developed by Kitimat LNG Inc., a Calgary-based private company, focused on the development of LNG and related facilities in North America. Upon EOG’s acquisition of the Galveston LNG Inc. shares, EOG and Apache propose to construct, own and operate the LNG terminal near the Port of Kitimat, British Columbia. At the terminal, natural gas will be cooled and liquefied in preparation for export via ship to growing global markets.
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 $1 billion (Canadian), 300-mile (463-kilometre) project originating at Summit Lake, British Columbia. Through its acquisition of Galveston LNG Inc., EOG will acquire a 24.5 percent interest in the Pacific Trail Pipelines, a partnership between Galveston LNG Inc., Apache and Pacific Northern Gas Ltd. The proposed pipeline has received environmental assessment approvals from both the federal and provincial governments.
About Galveston LNG Inc.
Galveston LNG Inc. is a privately owned Canadian energy development company capitalized with private and major institutional Canadian and United States investors.
EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the United States, Canada, Trinidad, the United Kingdom and China. EOG Resources, Inc. is listed on the New York Stock Exchange and is traded under the ticker symbol “EOG.”