Husky Energy eyes Atlantic Canada LNG project to export to Europe, RI

TSE-listed Husky Energy Inc. is mulling a liquefied natural gas project in Canada?s Atlantic Coast amid interest from European countries looking to diversify their natural gas supplies away from Russia.

?We are constantly looking at ways to monetize some of our gas discoveries,? Malcolm Maclean, Husky?s senior vice-president for the Atlantic region, said in an interview with Financialpost.com on the sidelines of a conference in Toronto.

?We are looking at a world-class LNG project exporting to Europe or even Indonesia. We are in very early [stages]. We are looking at preliminary studies and need to further appraise some of the discoveries to date. In the Atlantic region, the focus has been very much on oil, not really gas.?

European countries currently depend heavily on Russian natural gas and crude oil supplies, but their sense of energy security has been shaken in recent months by President Vladimir Putin?s annexation of Crimea region in Ukraine, raising fears of an aggressive Moscow that could threaten to cut off European supplies.

After snubbing the oil and natural gas production renaissance across the Atlantic for the past few years, the European Union is now looking at North America?s oil and natural gas abundance as a possible long-term alternative.

Natural gas production from the Atlantic may present a new growth avenue for Husky, which has seen its oil production decline from Atlantic fields, despite significant new discoveries. Husky?s production from the Atlantic fell to 40,800 barrels per day in the fourth quarter, from 45,700 bpd during the same period in 2012, partly due to the maturing White Rose fields.

Last year, the company made major discoveries at Bay du Nord and Harpoon in the Atlantic region along with its Norwegian partner Statoil SA.

The companies are accelerating appraisal of the two discoveries, along with the Mizzen field discovery, which is expected to contain as much as 200 million barrels of oil. The Bay du Nord alone may contain 400 million barrels of crude oil, according to a company presentation.

Maclean believes the company can serve as a valuable partner for companies looking to explore for natural gas in the region.

In Indonesia, Husky Energy owns a 40 percent stake in the Madura Strait block, in East Java, which will produce natural gas and liquids as operator CNOOC is currently developing two fields. (*)