Jogmec to Develop Shale Technology With Encana, Mitsubishi

Jogmec to Develop Shale Technology With Encana, Mitsubishi

TOKYO - Japan Oil, Gas and Metals National Corp., or Jogmec, Wednesday said it has agreed with Encana Corp. and a unit of Mitsubishi Corp. to jointly develop technologies to extract hydrocarbon from shale more efficiently.

Thousands of horizontal wells are drilled in a typical shale block operation. "If the number of wells necessary to extract a same amount of hydrocarbon falls, production cost would decrease," a Jogmec spokesman said.

Government-funded Jogmec, together with Encana and Mitsubishi unit Cutbank Dawson Gas Resources Ltd., will conduct geomechanical and seismic studies using data from a shale gas asset in the Montney formation of northeastern British Columbia, Canada, in which both Encana and Mitsubishi have interests.

Jogmec expects the studies to increase the asset's value. The spokesman didn't specify the budget for the studies.

Energy-starved Japan is interested in natural gas in North America, made cheaper by a supply glut amid booming shale development. North American gas users have expressed concern about a price increase should it be exported.

North America's benchmark Henry-Hub natural gas prices have fallen to around $4 per million British thermal unit from above $12/mmbtu in 2008.

Copyright (c) 2012 Dow Jones & Company, Inc.

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