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The Great Divide of Natural Gas

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South Korea is coming to northeast British Columbia.

It was reported this week that state-run Korea Gas has signed a deal with Canadian gas major EnCana covering three fields in the province of British Columbia. Korea Gas will take a 50% interest, for a price tag of $1.1 billion.

Details are scant. EnCana itself has not commented. But the deal almost certainly focuses on gas from the Horn River Basin/Montney shale play.

Major producers have been flocking to northeast B.C. since the initial fracture-stimulated wells were drilled in the Montney a few years back. Deliverability from these wells reportedly runs in the tens of millions of cubic feet per day. Putting the play right up there with top-producing shales in the U.S.

The issue for the HornRiver area is infrastructure. The terrain is remote, hilly, prone to landslides and a long-haul from major gas markets.

Bringing in a deep-pocketed partner like Korea Gas to pay some of the big up-front costs for infrastructure is a win for EnCana (and the entire region, as producers will likely be able to piggy-back off each other's pipeline networks to bring costs down).

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