2011-03-31-2011-03-18

Plans to acquire 30% WI in Kittimat LNG terminal in BC.

Encana Corp., Calgary, (Toronto, NYSE: ECA) plans to acquire a 30% interest in the planned Kitimat liquefied natural gas (LNG) export terminal on the west coast of central British Columbia (B.C.) and its associated natural gas pipeline. Financial terms of the contract were not disclosed.

The proposed Kitimat LNG export development is intended to open new market opportunities in the Asia-Pacific region for abundant supplies of Canadian natural gas. Located about 650 kilometers north of Vancouver at Bish Cove near the Port of Kitimat, the project has planned initial capacity, from the first of two potential phases, of about 700 million cubic feet per day (MMcf/d) of natural gas, or about 5 million metric tons of LNG per year.

Export volumes for the Kitimat LNG project are expected to be supplied by burgeoning natural gas resources in B.C. and Alberta from the Horn River Basin and the Montney geological formation.

The development includes construction of a new 36-inch diameter natural gas pipeline--Pacific Trail Pipelines--running 463 kilometers from the Spectra Energy natural gas transmission system at Summit Lake, B.C. to the planned Kitimat LNG export facility. Encana's 30% interest in the development includes a capacity reserve of 30% in the Kitimat LNG export facility and matching capacity on the proposed pipeline.

The partners expect to complete the front-end engineering and design for the LNG export facility later this year, after which the partners will determine plans for a capital investment decision for the first phase of the development. Project construction could begin in 2012, with exports potentially starting in 2015. The project is operated by Apache Canada Ltd., which will own 40%, with Encana and EOG Resources Canada Inc. each owning 30% respectively.

The deal is expected to close in the second quarter of 2011.