OREANDA-NEWS. April 20, 2012. Toyota Tsusho Corporation ("Toyota Tsusho") has reached an agreement with Encana Corporation ("Encana"), Canada's largest natural gas producer, to acquire a 32.5% interest in a coalbed methane ("CBM") project.   Toyota Tsusho will pay 602 million Canadian dollars to acquire the interest and in capital investments over the coming seven years. Toyota Tsusho has established a wholly-owned subsidiary, Toyota Tsusho Wheatland Inc., to hold and manage the acquisition. 

 
This CBM project covers about 480,000 acres in and around Wheatland County in Alberta, Canada and is Canada's largest CBM resource play.  Production commenced in 2001 from the Horseshoe Canyon coals with current gas potential of more than about 1 Tcf. The lands are 100% Encana-owned fee lands and currently produce about 120 MMcf per day of gas from about 4,000 existing wells. Over the seven-year development period, about 1,500 wells are expected to be drilled and about 1,600 recompleted in order to increase the production volume. The peak production volume is expected to be about 140 MMcf per day.

 
Unlike many CBM projects around the world, Horseshoe Canyon coals do not produce water and production can be developed without environmental concerns and costs related to de-watering of the coals prior to production.  In addition, Encana's world-class experience and technical capabilities in CBM projects reduce business risks.       

 
Toyota Tsusho regards North America a strategic business region for building a natural gas value chain through transactions. It is the world's largest natural gas market with growing supplies that may serve as a future LNG source for Japan in the near future.

 
PLS Inc. acted as deal originator and advisor for Toyota Tsusho. Baker & McKenzie and McCarthy Tetrault LLP acted as legal advisors for Toyota Tsusho on this transaction.