The partners behind Kitimat LNG plan to acquire the 50% interest in Pacific Trail Pipelines LP they don't already own from Pacific Northern Gas Ltd. (PNG) for $50 million. The deal is intended to support export of gas from the Horn River Basin and other Western Canada plays as liquefied natural gas (LNG) to Asian markets.

Apache Canada Ltd. and EOG Resources Canada Inc. said they will pay PNG $30 million on closing, which is expected by the end of February, and make a second payment of $20 million when the partners decide to proceed with construction of the Kitimat LNG export facility (see Daily GPI, Dec. 27, 2010).

"Acquiring the [Pacific Trail Pipeline (PTP)] is an important step in building a comprehensive system that will enable Apache and EOG to tap Asian markets for our abundant natural gas resources in the Horn River Basin and elsewhere in Western Canada," said Kitimat LNG President Janine McArdle.

PTP would run from Summit Lake, BC to Kitimat, where the LNG liquefaction and export terminal is planned for the BC coast. Following the completion of the purchase, Apache Canada will own 51% of the partnership and EOG Canada, through subsidiaries, will own the remaining 49%.

"This purchase ensures continuity for this project and is a very positive move for the advancement of the facility," said EOG Canada General Manager Billy Helms Jr.

PNG will operate and maintain the planned pipeline under a seven-year agreement with Apache Canada and EOG Canada with provisions for five-year renewals. Apache Canada and EOG Canada also agreed to 20-year transportation service arrangements requiring them to use a portion of PNG's current pipeline capacity.

Apache Canada and EOG Canada said they are in marketing discussions with potential Asia-Pacific LNG customers. The producers expect to have firm sales commitments in place by the time the export facility is forecasted to begin operating in 2015.

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