The Frontiers of Canadian Natural Gas (and more from Casey's daily dispatch)

A $5.4 billion investment by a Chinese company in one of Encana’s massive shale gas properties in northern British Columbia and Alberta is another sign that Canada wants Asia to become a major importer of its natural gas...

The $5.4 billion will buy half of Encana’s Cutbank Ridge shale gas properties, which cover 635,000 acres. The properties currently produce 255 million cubic feet of natural gas per day and contain proven reserves of more than 1 trillion cubic feet. The joint venture also covers about 700 million cubic feet per day of processing capacity, some 2,100 miles of pipelines, and a gas storage facility.

The deal is the largest foreign gas deal to date by a Chinese company. China is hunting around the world for gas reserves to support its plan to triple natural gas usage over the next decade. Chinese firms have pumped about $14 billion into Canadian oil and gas companies over the last two years.

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It is only sensible to assume that PetroChina’s decision to make such a major investment in Canadian gas, at a time when North American gas prices are low because of a supply glut, was based on a strategic premise: to secure gas supplies for China in the future. In particular the proposal to build a LNG facility in Kitimat likely encouraged the Chinese to move ahead with the deal, which has apparently been in the works for nine months.