Chinese onshore giant CNOOC Ltd.’s (CEO - Free Report) wholly-owned subsidiary Nexen Energy ULC has inked an exclusive agreement with the government of British Columbia (BC) to explore the feasibility of building a liquefied natural gas (LNG) export facility on the northern coast of the Canadian province.
The latest pact with the government of BC, represented by the Ministry of Forests, Lands and Natural Resource Operations, brings Aurora LNG joint-venture partners closer to winning exclusive long-term access to Grassy Point near Prince Rupert, British Columbia.
Nexen owns 60% of Aurora, while the remaining 40% is held by Japan-based Inpex Corp. and JGC Corp. CNOOC believes that the value of its Canadian shale gas business can only be enhanced through LNG export.
The prospective LNG export venture on Canada's west coast is also likely to attract the emerging Asian markets to significant shale-gas deposits in BC. Nexen and its partners are well positioned to take advantage of this opportunity through its strong financial capacity, considerable LNG expertise as well as track record of efficient, innovative and responsible development.
In February, the provincial government had publicized a request for expression of interest from companies for development of the province-owned Grassy Point area. A total acreage consisting of 614.9 hectares of land and 158.7 hectares of foreshore land has been offered to the Aurora LNG partners.
Nexen and its partners will now assess the feasibility of this project based on acceptable cost estimates, fiscal terms and well-priced sales agreements. The site’s viability will be evaluated and a widespread environmental impact assessment and stakeholder consultation will be executed to check the suitability of the Grassy Point site. Further, the decision is subject to various internal and external approvals.
CNOOC carries a Zacks Rank #3 (Hold). However, there are other sector stocks – SM Energy Company (SM - Free Report) , Western Gas Partners LP (WES - Free Report) and Abraxas Petroleum Corp. (AXAS - Free Report) – that hold a Zacks Rank #1 (Strong Buy) and are worth buying now.