Penn West, Mitsubishi in joint venture

Calgary-based Penn West Energy Trust announced a joint venture Tuesday with a large Japanese partner to develop a shale gas formation in northeastern British Columbia.

The deal is with a division ofMitsubishi Corp., which is Japan's largest general trading company.

The Canadian oil and gas trust will give up a half interest in the Cordova Embayment area, as well as conventional natural gas properties in the Wildboy region.

In return, Mitsubishi will provide $250 million in cash and invest$600 million.

New technology to create and prop open fissures in shale formations has opened up previously inaccessible sources of natural gas across North America.

Penn West'stransaction is part of a trend in joint venture investment in shale gas that has been taking place in Canada and the U.S.

Natural gas giant Encana Corp. has attracted more than $4 billion in joint-venture capital over the past three years, and has said it aims to bring in between $1 billion and $2 billion per year in the future.

Encana is working on a deal to team up with China National Petroleum Corp. to develop some of its shale natural gas holdings in northeastern British Columbia.

In March, it signed an agreement with Korea Gas Corp. that saw the Asian company buy a 50 per cent stake in properties in the promising Horn River Basin and Montney shale gas plays in northeastern B.C.

Texas draws investment

In the U.S., Oklahoma-based Chesapeake Energyenlisted French energy giant Total in its Texas shale holdings and Pioneer Natural Resources announced a deal in June with a subsidiary of India's Reliance Industries, also in Texas shale.

The joint ventures give the foreign companies an "attractive entry point" into North American resources, said Rob Cooper, an analyst with Acumen Capital Partners in Calgary.

"If you're to believe natural gas is ultimately going to be the fuel of choice in North America given it's cleaner and it's abundant at these levels then that's where you'd want to be," he said.

Shares of Penn West were four cents higher at $20.52 in afternoon trading on the Toronto Stock Exchange.