Apache finds massive Canadian shale-gas field

Apache Corp has made what it believes may be one of the world's largest shale-gas discoveries in a remote corner of northeastern British Columbia, a massive field containing as much as 48 trillion cubic feet of recoverable natural gas.

The company has drilled three wells into its holdings in the Liard Basin in British Columbia, just south of where the province's northern border meets the borders of the Yukon and Northwest Territories. Those wells tapped into a massive shale-gas reservoir that alone could supply U.S. needs for almost two years.

"This is probably the best shale gas reservoir in the world," John Bedingfield, the company's vice president of worldwide exploration, said at a company presentation on Thursday.

Only one of the three wells drilled in the region was treated with the multiple-stage hydraulic fracturing process that has been key to unlocking North America' prolific shale-gas reserves. That well, which was "fracked" six times, delivered 21.3 million cubic feet of gas per day over its first thirty days of production, which Apache said was the most prolific shale-gas test well ever drilled.

Shale gas discoveries have transformed North America's natural-gas industry. The massive fields have created a surplus of the fuel that has driven prices down to 10-year lows and sparked the creation of a nascent liquefied natural gas industry as producers look to tap high-paying markets in Asia and elsewhere.

Apache owns 430,000 acres of exploration lands surrounding its new find and its wells have already been connected to pipelines in the region.

However the field could also supply an LNG export facility the company and partners Encana Corp and EOG Resources Inc are planning to build at Kitimat on British Columbia's northern coast.

Bedingfield said the company will not rush to develop the field while gas prices remain low but called the field "a huge resource for the future."

The find was one of several the company detailed for investors on Thursday. Along with its Liard field, the company said its 580,000 acres of land in the Mississipian Lime field in Kansas and Nebraska could contain as much as 2 billion barrels of oil while its holding in Montana's Williston Basin may hold another 1 billion barrels.

As well, it's targeting as much as 1.3 billion barrels of oil in Alaska's Cook Inlet and 1.4 billion barrels from its holding off the shore of Kenya. It will drill in both regions later this year.

Apache said its holdings in western Oklahoma and the Texas panhandle could also hold another 5.4 billion barrels of oil equivalent while the Permian Basin in west Texas and New Mexico hold 3.4 billion barrels of oil equivalent.

Analysts said Apache, a company that has often focused on growing by acquisition, will now focus on building production by drilling its existing properties worldwide.

"Apache has typically ... been viewed as an M&A driven company," said Rob Cordray, an analyst at Guggenheim Securities. "But this shows a tremendous amount of organic growth potential. There's a huge drilling inventory for these guys."

Apache shares were up $1.09, 1.3 percent, at $87.10 by early afternoon in New York.

(Reporting by Scott Haggett; editing by Jim Marshall)

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