OREANDA-NEWS. May 11, 2011. A consortium comprising Mitsubishi Corporation (ЃgMCЃh, headquartered in Chiyoda-ku, Tokyo, President & CEO: Ken Kobayashi), Japan Oil, Gas and Metals National Corporation (ЃgJOGMECЃh, headquartered in Minato-ku, Tokyo, President: Hirobumi Kawano), Chubu Electric Power Co., Inc.(ЃgChubu ElectricЃh, headquartered in Higashi-ku, Nagoya, President & Director : Akihisa Mizuno), Tokyo Gas Co., Ltd.(ЃgTokyo GasЃh, headquartered in Minato-ku, Tokyo, President:

Tsuyoshi Okamoto) and Osaka Gas Co., LtdЃiЃgOsaka GasЃh, headquartered in Chuo-ku, Osaka, President: Hiroshi Ozaki. has agreed to collaborate on a shale gas project in northeastern British Columbia, Canada, into which MC invested last September. This is the first time Japanese utilities and gas companies have been involved in shale gas development.

The consortium has also announced CAD 1 billion (approx. 83 billion JPY) in funding for the Cordova Embayment Project will be covered by the Japan Bank for International Cooperation (JBIC) and The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU). The involvement of JOGMEC and „Ћthe CAD 1 billion in co-financing from JBIC makes this a joint, public-private sector initiative.

The project got underway last September with MCЃfs establishment of an unincorporated fifty-fifty joint venture between its Calgary-based subsidiary Cordova Gas Resources Ltd.(ЃgCGRЃh), and Penn West Exploration (ЃgPWEЃh*), a senior independent Canadian oil and natural gas producer also based in Calgary. 22.5% of MCЃfs shares in CGR have been now transferred to Chubu Electric, Tokyo Gas and Osaka Gas from MC, each partner receiving an equal 7.5%. JOGMEC has also gained a 7.5% share in CGR through its investment in Shale Gas Investment B.V., a subsidiary established by MC in Amsterdam.

Large-volume production of shale gas is now cost feasible due to recent advances in drilling and completion technology. As a result of these advances, large reserves have been brought to international attention. In particular, western Canada has abundant reserves of shale gas, which is garnering attention worldwide as a viable source of energy. Through the formation of the consortium, all the companies expect to obtain beneficial knowledge about shale gas developments. The consortium plans to discuss studying the possibility of exporting the shale gas to Japan as LNG which will contribute to diversify energy import and to secure stable energy supply to Japan.

Last September CGR acquired 50% of those of PWEЃfs shale gas assets located in northeastern British Columbia. Since then, development of the Cordova Embayment reserves has been underway.

The goal is to raise daily production to approximately 500 million cubic feet by 2014 (approx. 3.5 million tons per year LNG equivalent). CGRЃfs share of production (50% of the total) will be for the Canadian market. This will be handled in part by CIMA Energy Ltd., a US-based gas marketing company of which MC owns 34%.

*In conjunction with PWEЃfs conversion from a trust to an exploration and development company this past January, the company also changed its operating name from Penn West Energy Trust to Penn West Exploration.