Tokyo Gas announced Tuesday that it has acquired a 25% stake in the Eagle Ford shale formation. This is one of the first shale investments in the U.S. by a Japanese company since the oil price collapse began in mid-2014.
Tokyo Gas, Japan’s largest city gas supplier, acquired the stake from VirTex Production Company. The acreage is located in Webb and La Salle counties in South Texas.
The ~34,000 acres acquired correspond to the 25% working interest in the joint project with Lewis Energy Group (operator) and BP Lower 48. Tokyo Gas estimates that the net capital required to be around $75 million assuming the natural gas production for the company could average 200,000 tonnes per year of LNG output for 20 years, depending on the pace of development. The produced gas will be marketed in the US, the company said.
Tokyo Gas Group said it will continue developing its global business “in order to expand the upstream business and build global LNG value chains.”
This is the second time that Tokyo Gas has joined in shale gas development in the U.S, following the 2013 Barnett shale gas venture. That $485 million acquisition from Quicksilver Resources gave the company gas production equivalent to 0.35 million and 0.5 million tonnes per year of LNG.
However, as Reuters reports, the fall of oil prices has resulted in the company posting impairment losses for the project on two occasions.