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Calgary’s Arc Looking to Sell Natural Gas Production to LNG Canada, Cheniere’s Corpus Facility
Calgary-based producer Arc Resources Ltd. said it nearly doubled future liquefied natural gas (LNG) sales during the first quarter by landing a contract to supply an expansion to Cheniere Energy Inc.’s Corpus Christi terminal in South Texas.
The deal would expand sales into overseas markets to 290 MMcf/d, management noted. The Cheniere deal would add 140 MMcf/d to a previous sale to the Shell plc-led LNG Canada terminal under construction in British Columbia.
Deliveries to Cheniere’s Corpus terminal are forecast to start in 2027, when a seventh production train at the Gulf Coast terminal is scheduled to begin operating. Arc would be paid per the Japan Korea Marker LNG price, less shipping cost and liquefaction fee deductions.
The Cheniere deal supports a market “diversification and margin expansion strategy” that uses “long-term supply deals in support of the transition to a lower carbon economy underpinned by natural gas,” Arc management said in the first quarter results.
Meanwhile, Arc is working to reduce the carbon footprint of its production. In April the company secured the Equitable Origin 100 Standard for Responsible Development for 95% of production.
Production surged in 1Q2022 as a result of the takeover of Seven Generations Energy Ltd. last year.
Output of oil, condensate and natural gas liquids (NGL) jumped to 131,105 b/d from year-ago production of 38,079 b/d. Natural gas production climbed to 1.28 Bcf/d from 794 MMcf/d.
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Arc, which reports in Canadian dollars (C$1.00/US 80 cents), said it fetched an average oil price of $111.48/bbl, compared with $64.46 in 1Q2021. For condensate, prices averaged to $119.15/bbl versus $71.59. Realized natural gas prices averaged $5.98/Mcf, compared with $4.60 a year ago. NGL price realizations dipped to $27.94/bbl from $29.45..
Because of hedging contracts, as well as increased royalty, tax and administrative expenses, Arc booked losses of $69.4 million (minus 10 cents/share) in the first quarter, versus year-ago profits of $178 million (50 cents).
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