Cenovus Energy (TSX:CVE) has sold its marine terminal near Kitimat, B.C., to Royal Dutch Shell, which has been looking into possibly building a liquefied natural gas plant on the province's north coast.
Financial terms of the deal were not disclosed.
Cenovus spokeswoman Rhona DelFrari said Thursday the company had been looking to sell the terminal since acquiring it from methanol producer Methanex last year for $37 million under an option agreement.
The terminal has been used by Vancouver-based Methanex to ship methanol, a substance used in fuels and to produce other chemicals used in plastics, paints, explosives and textiles.
Cenovus, a major oilsands operator, has used the terminal to import so-called diluent, a chemical used to dilute heavy oil so it can be shipped in pipelines.
"We believe this is a very good deal for Cenovus shareholders," DelFrari said. "It still allows us to continue using the terminal services for the foreseeable future and it allows us to concentrate on our core businesses."
Cenovus has oilsands operations in northern Alberta and also operates in Saskatchewan and was spun off from former parent natural gas giant Encana Corp. a few years ago.
Shell is one of the country's largest natural gas producers.
The company is working with Korea Gas Corp., China National Petroleum Co. and Mitsubishi Corp. to explore the possibility of building an LNG export terminal on the B.C. coast to send natural gas by tanker to Asia.
Shell spokesman Stephen Doolan said the company was in the early stages of assessing the potential to build an LNG export terminal on the site with its partners.
"We've been assessing LNG opportunities in B.C. for some time," he said.
North America is awash in natural gas as new technology unlocks huge volumes from shale formations that had once been too costly to exploit.
The Horn River Basin, a gas-rich shale formation in northeastern B.C., has seen an explosion of exploration and development as companies look to tap the massive reserves.
An export terminal would allow the gas to be loaded on specialized tankers and shipped to Asia.
Cenovus currently uses the terminal to import about 20 per cent of its diluent, which is used to help ship heavy oil through pipelines from the Canadian oilsands. DelFrari said it will be business as usual at the terminal, which continues to be operated by Methanex, for the foreseeable future.
Several companies have expressed an interest in building a LNG terminal on the B.C. coast.
Last week, the National Energy Board approved a licence for a group that includes Encana to export up to 10 million tonnes of liquefied natural gas a year over a 20-year period.
KM LNG and its managing partner Apache Canada Ltd. own a 40 per cent stake in Kitimat LNG and are the operators of the export terminal project, while EOG Resources Canada Inc. and Encana (TSX:ECA) each own a 30 per cent stake.
The companies hope to have the project in operation by 2015 with an initial export capacity of five million tonnes per year with the potential to double that.
Encana president chief executive Randy Eresman welcomed the development at Shell on Thursday.
"There's plenty of room for additional projects on the West Coast, so we're supporters," Eresman said.
- With files from Lauren Krugel in Calgary
16:41ET 20-10-11
