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The Great Divide of Natural Gas

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But the most interesting implication of the deal is where the gas will be headed. Previously, it was assumed that HornRiver production would be hooked into Alberta gas infrastructure (there's a lot of Alberta production just across the provincial border in the Grande Prairie area), and then sent south to Chicago hubs.

But Korea is not buying into this play to sell gas to America. Korea Gas has an official mandate from Seoul to secure energy supplies for Korean domestic use.

The Koreans will almost certainly push to send the gas westward. To the British Columbia Pacific coast. Where it can be turned into LNG and shipped home.

There are already plans to build western Canada's first LNG plant at Kitimat. Having the Koreans in the Horn River play should cement demand for the 750 million cubic feet per day of capacity planned for this facility. It may even speed the development of additional LNG plants.

This is symptomatic of the global shift in energy deployment brought about by shale gas. Up until a few years ago, it was assumed America would be the world's premier gas market. But with shale now producing beyond expectations, it looks as if North America could become a major gas exporter. Adding an unexpected source of supply to global LNG markets.

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