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Tokyo Gas buys US shale gas stake from Castleton

08 May 2017 09:52 (+01:00 GMT)
Tokyo Gas buys US shale gas stake from Castleton

Kyoto, 8 May (Argus) — Japan's Tokyo Gas agreed to buy a 30pc stake in Houston-based Castleton Resources, adding to its US unconventional gas assets as part of plans to strengthen its upstream portfolio and global LNG operations.

Tokyo Gas bought the stake from international commodity trading firm Castleton Commodities International (CCI) for an undisclosed sum. CCI is retaining a 70pc share in the venture, which was formed to develop oil and gas assets in Texas and Louisiana with a specific focus on Haynesville shale assets.

Castleton Resources has 660km² of acreage in eastern Texas, targeting the unconventional Haynesville and Cotton Valley formations. It produces 238mn ft³/d of gas equivalent.

This is Tokyo Gas' third investment in US unconventional gas assets, but its first equity investment in an upstream firm. The Japanese company previously acquired 25pc stakes in the Barnett and Eagle Ford shale gas assets. It is looking to expand its overseas upstream businesses further as part of its strategy to build a global LNG value chain.

Tokyo Gas has set a target to increase its total gas and LNG supply to 16mn t in the April 2020 to March 2021 financial year, compared with 11mn t in 2017-18. The company will add a 230,000 kilolitre (106,000t) LNG storage tank at the Hitachi LNG terminal in 2020-21 and is considering an additional tank at the Sodegaura LNG terminal in 2023-24 to accommodate rising imports from new projects in the US and Australia.