Is Japan Interested in U.S. Shale Investments?

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Recently signing a letter of intent for volumes from a proposed liquefied natural gas (LNG) export facility in Alaska, Japanese energy company JERA (Tokyo) is eying considerable investments in the U.S. shale patch, media reports indicated.

Claiming an exclusive, the Reuters news service reported Tuesday that JERA was the high bidder with around $1.7 billion offered for GEP Haynesville II, a joint venture between midstream operators Williams Companies (Tulsa, Oklahoma) and Blackstone-backed GeoSouthern Energy (The Woodlands, Texas). The joint venture, for its part, is a spinoff of the defunct Chesapeake Energy, which dumped around 50,000 acres in the Haynesville shale play after filing for bankruptcy in 2020.

Haynesville, spread out over parts of Texas and Louisiana, is among the top natural gas producers in the Lower 48 states, with its estimated 15.5 million cubic feet per day (Bcf/d) in production accounting for about 10% of total U.S. output.

While total net natural gas production, including offshore, is on pace to decline marginally by next year, Haynesville output is expected to climb by just over 3% to average 16 Bcf/d by next year, according to federal estimates. The deal, if concluded, would be JERA's first step in the U.S. shale sector.

JERA's interest could be a reflection of the penchant for U.S. President Donald Trump to include energy in recently-negotiated trade deals. Tokyo as part of a revamped trade deal said it would commit to as much as $7 billion in energy-sector investments in the United States.

Japan lacks many natural resources of its own and remains heavily dependent on foreign supplies to meet its energy demands. Last week, JERA signed a letter of intent to secure 1 million metric tons of LNG annually for a 20-year period from the proposed Alaska LNG facility.

Industrial Info lists the facility as low-probability in its database, though it's the only one with a federal license to export LNG from the U.S. Pacific Coast. Alaska LNG, if completed, would be a large-scale liquefaction plant with a design capacity of 19.9 million metric tons annually (MTPA). The facility is not yet under construction.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production and Pipelines project databases can learn more by viewing related project reports.

But like a European trade outlining LNG import volumes from U.S. suppliers that may be out of reach, Japan is not beholden to the United States. The same day that it signed the letter for U.S. LNG volumes, JERA brokered a memorandum of understanding with the government of Montenegro to explore LNG opportunities.

Both sides under the agreement would undertake a feasibility study for a possible LNG terminal and associated gas-fired power plant. Supplies, however, would require a far longer journey than those sourced from Alaska.

JERA is a 50:50 joint venture between TEPCO Fuel & Power and Chubu Electric Power formed in the wake of the Fukushima Daiichi nuclear disaster in 2011.

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