To support the new upstream gas strategy, Banpu has appointed Anon Sirisaengtaksin, a former senior executive of PTT and chief executive officer of PTT Global Chemical, as its executive director and adviser.

Banpu CEO Somruedee Chaimongkol said it had acquired a 29.4-per-cent stake in the Chaffee Corners Joint Exploration Agreement (JEA), which runs a low-cost unconventional operation in the northeastern section of the Marcellus shale play in the state of Pennsylvania.

Banpu’s net interest in the Chaffee Corners JEA is equivalent to proven reserves of 156 billion cubic feet of dry natural gas.

It targets net output of 21 million cubic feet per day this year. The gas is sold entirely in the US domestic market, mainly for power generation.

The JEA is 65.4 per cent owned and operated by Talisman, a leading unconventional US-based player, which produces more than 400 million cubic feet per day from the Marcellus play.

The Marcellus play is estimated to hold 85 trillion cubic feet of proven reserves and accounts for one-fifth of total US gas production.

Banpu is seeking support from its shareholders for its capital-increase programme. Suffering from a prolonged slump in coal prices, it has diversified into a solar-farm business in Japan. The latest move will help it to expand into natural gas, which plays a part in the coal-price slump, while diversifying its geographical footprint beyond Asia.

Banpu is also eyeing the businesses of energy-supply-chain management and smart energy systems.

“While we will continue to strengthen our conventional energy business, we will also begin to balance this with a greener new energy business,” Somruedee said.

“Our moves into solar photovoltaic power in Japan and now into shale gas in the US are our first steps towards achieving this transformation.

“These investments put Banpu directly into the mainstream of the global energy revolution,” she said.

Midstream, Banpu is evaluating synergies around managing fuel procurement for its own coal-mining operations, with the possibility of developing this into a regional energy-supply-chain management business.

Downstream, it is assessing the potential of a smart energy business. “Smart energy” systems are integrated solutions combining decentralised renewable energy sources.

Banpu conducted thorough due diligence over the past two years on the US shale-gas deal and was confident it was investing in a highly de-risked situation with proven reserves, market maturity, proven technology, favourable government regulations, a strong and experienced operating partner, an expert investment partner and access to an extensive information and talent pool – and strong domestic off-take contracts.

“The timing is good given low oil and gas prices, and we have invested at a very attractive valuation with substantial upside potential,” Somruedee said.

“We are well positioned to take advantage of new deal opportunities – both acquisition and divestment – in what is a very liquid asset market.”