Already North America’s largest liquefied natural gas (LNG) importer, UK-based BG Group took its natural gas natural gas strategy up a step last week with the $346 million purchase of nearly all of El Paso Corp.’s Canadian oil and gas assets.

The 690,000 net acres of leasehold, which are mostly undeveloped, had an average production rate of 57 MMcfe/d at the end of last year. BG’s purchase of El Paso Oil and Gas Canada, which is expected to close in March, includes 630,000 undeveloped acres located in four core areas of the Western Canadian Sedimentary Basin, mostly in southern and northeastern British Columbia. Exploratory drilling is expected to begin later this year.

“This acquisition secures valuable producing and exploration properties, and is another step forward in building our position in the North American gas market,” said Martin Houston, president of unit British Gas U.S. Holdings.

The latest purchase is BG’s second from cash-strapped El Paso since December, when it announced a long-term agreement to acquire El Paso Merchant Energy’s capacity in the Elba Island LNG regasification terminal in Georgia, along some related gas sales agreements (see NGI, Dec. 29, 2003). El Paso will retain some Canadian assets, including its Caribou natural gas processing plant, firm capacity on the Alliance pipeline system and lease interests in Nova Scotia.

BG already is the largest LNG importer in the United States. Since January, it has held 100% of the capacity of the Lake Charles, LA, import terminal, which currently can process and deliver 4.7 tons of LNG a year. BG also expects to complete its expansion of the facility to 8.9 million tons of LNG a year by early 2006.

BG’s latest acquisition also appears to bolster analysts’ opinions that the international company wants to establish a strong North American gas presence. BG’s key production assets up to now have been concentrated in the United Kingdom, Thailand, Trinidad and Tobago, Kazakhstan, Tunisia, India and Egypt.

“BG traditionally has tended to target more frontier areas, and this is quite a significant departure from that strategy,” said Tom Ellacott, an energy consultant with Wood Mackenzie.

However, Ellacott said BG will face competition from several strong North American producers, including Anadarko Petroleum Corp., Devon Energy Corp. and EnCana Corp, which also want to grow their Canada-to-U.S. gas supply businesses.

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.