As the top supplier of Canadian natural gas, Calgary-based independent Tourmaline Oil Corp. plans to increase Montney Shale output when tanker sailings begin from the Shell plc-led export project, LNG Canada.

AECO

Plans to boost supply for the liquefied natural gas (LNG) facility under construction in British Columbia (BC) were discussed by Tourmaline’s management team as part of its first quarter results.

Tourmaline’s Conroy North Montney project, near the inlet to the new terminal’s Coastal GasLink pipeline in northeastern BC, would be capable of combined gas and liquids production of 100,000 boe/d.

“Current timing is in the 2025-2026 time frame, coinciding with the startup of LNG Canada,” said the management team. The terminal, which could be the first completed Canadian foray into LNG exports, is “structurally positive for Western Canadian supply-demand dynamics and natural gas pricing.”

The move to diversify its marketing portfolio to supply LNG Canada follows an agreement with the top North American exporter, Cheniere Energy Inc. Last year, Tourmaline established a Gulf Coast LNG long-term netback supply agreement with Cheniere for delivery to the Houston company’s Corpus Christi export terminal in South Texas. 

Tourmaline in April raised its Montney profile with a C$224 million purchase from AltaGas Ltd. for a half-stake in two BC processing sites with combined capacity for 290 MMcf/d. Tourmaline earlier acquired 50% operating interests in the plants with a takeover of Black Swan Energy Ltd.

On the operations side, Tourmaline increased gas production year/year by 23% to 2.36 Bcf/d. Liquids output increased to 113,569 b/d from 91,971 b/d.

The average price fetched for its gas increased by 26% from a year ago to $4.86/Mcf. Liquids prices were up 62% to an average $65.54/bbl.

Net profits increased to $261.2 million (77 cents/share) from $247.8 million (83 cents).

Increased profits enabled Tourmaline to declare about $500 million in special dividends of $1.50/share for its 332.3 million shares during the remaining three quarters of 2022.