Tokyo Gas Buys Stake in Haynesville Producer

Japan's largest gas utility Tokyo Gas has bought into a venture developing shale gas and oil in the southern United States. 

It announced May 8 the acquisition of a 30% stake in Castleton Resources, a subsidiary of Castleton Commodities International, which is developing US oil and gas assets in the East Texas and Louisiana with a specific focus on the Haynesville shale basin. It is Tokyo Gas’ third investment in US unconventional upstream assets and its first equity investment in an upstream company, the company said May 8.

Castleton Resources owns and operates over 160,000 net acres of leasehold in East Texas with access to the Cotton Valley and Haynesville Shale and has a net production of 238mn ft³/d.

Tokyo Gas stressed it will continue to expand its upstream business and build a global LNG value chain as stated in the Challenge 2020 Vision.

Earlier this year, Tokyo Gas acquired a 33.33% interest in the 488 MW shale gas-fired combined cycle power plant, at Birdsboro in Pennsylvania, from a fund managed by Ares EIF Management. The acquisition marked Tokyo Gas’ first investment in a new-build US power generation facility and its second investment in the US power generation market following its acquisition of the gas-fired Empire power plant in New York State in October 2016. 

On April 12, Tokyo Gas and Kyushu Electric Power announced their agreement to forge a strategic alliance in LNG procurement. The bilateral pact has similarities with a potentially more wide-ranging accord inked the previous month between Japan's Jera, CNOOC and South Korean state Kogas.

LNG buyers in northeast Asia want to achieve more competitive LNG procurement, which may mean reducing supplies from incumbent Mideast and oil major suppliers, but also stepping up volumes either bought in on a 'destination-free' basis from US suppliers, or liquefied from their own US equity gas.

Shardul Sharma