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News Desk

The Yomiuri Shimbun

Publication Date : 06-03-2013

A consortium of companies including Mitsubishi Corp. has won approval from the Canadian government to export shale gas, a relatively inexpensive form of natural gas.

This, the first official decision allowing shale gas exports to Japan, is expected, along with similar approval anticipated from the US government this spring, to contribute to stabilising the nation's energy supply.

With most of the nation's nuclear power plants idle, imports of liquefied natural gas have risen steadily, increasing 11.2 per cent in 2012 from a year before to 87.31 million tons. As North American shale gas is 20 to 30 per cent cheaper than the LNG Japan currently imports, the shale gas could help slow rising power rates.

Shale gas is so named because it is extracted from layers of shale deep underground. The extraction technology, dubbed "fracking", is a recent development, and North American production took off around 2010.

The Canadian government granted export approval to a joint venture of four firms--Mitsubishi, Royal Dutch Shell PLC, China National Petroleum Corporation and Korea Gas Corporation. The gas will be liquefied at an export facility in British Colombia, with shipments to mostly Asian countries, including Japan, expected to start in 2019.

The deal allows shale gas and other resources to be exported for 25 years from two locations in the province, with maximum exports of 24 million tons per year. Initial annual exports are expected to be about 12 million tons. Mitsubishi holds a 20 percent stake in the export project.

Exports to Japan are expected to include gas owned by the other companies in the consortium, and likewise, Mitsubishi will likely ship some of its gas to other Asian nations. It has yet to be determined how much gas Japan will receive.

In addition, three consortia that include companies such as Mitsubishi, Mitsui & Co., Tokyo Gas Co. and Chubu Electric Power Co., have applied to the US government for shale gas export approval.

Japan Petroleum Exploration Co. also announced Monday it would participate in a shale gas resource development project in Canada. The firm has acquired the rights to 1.2 million tons of LNG per year, and aims to begin exports to Japan as early as 2018. The amount the company paid for the rights was not disclosed.