B.C. builds LNG momentum
While historic energy powerhouse Alberta is struggling to get its resources to new markets, british columbia is wasting no time getting its liquefied natural gas (LNG) industry off the ground.
rich coleman, head of a new super ministry to promote natural gas development in the province, said Monday the government of Liberal christy clark is on the verge of finalizing fiscal terms for LNG operators, will follow up with legislation early in the new year to ensure long-term fiscal stability and anticipates the first major investment decisions to build LNG projects on the northern coast in the third to fourth quarter of 2014.
“We are competing with other jurisdictions for customers and investment,” the minister said in explaining to reporters the urgency to launch the sector.
He was on his way to South Korea, china and Malaysia to promote the new industry, having just arrived back from meetings in Washington, d.c., with exxon Mobil corp. and chevron corp., which are “very interested” in LNG in b.c.
“We are going to be competitive,” he pledged. “We are open for business. We are getting our foundation in place with negotiations … with companies that we know are building a competitive stable fiscal regime. We are going to have efficient regulations. We will be strong in our environmental standards. And we will pursue the final investment decisions that will put us in a position to have long-term financial stability for b.c.”
Also on Monday, in a reminder about the competitiveness of the global LNG game, exxon Mobil, bP PLc, conocoPhillips and Transcanada corp. announced they picked the Kenai Peninsula as the lead site for their Alaska LNG project, which would be underpinned by Alaska’s North Slope reserves.
Still, there is a lot of LNG momentum in the western province, whose future as an energy producer and exporter seemed in doubt a few months ago, when the opposition NdP was expected to form the government. clark defied opinion polls and was re-elected in May with a prodevelopment mandate.
It contrasts to Alberta’s slow and controversial grind to secure new markets for its oil, a lot of it due to opposition to oil pipelines in b.c. and in the u.S. Alberta is also looking at what to do with its massive natural gas deposits, which are being pushed out of markets by shale gas discoveries in b.c. and in the u.S. b.c.’s LNG plants are not expected at this point to use Alberta gas.
b.c.’s LNG opportunity is supported by co-operative First Nations, large resources in shale fields, proximity to Asia, and the province’s
The first LNG tankers could be sailing to Asia in 2017 to 2018
cool climate, which means it’s cheaper to supercool the gas into liquid form than in other jurisdictions, coleman said.
After proposing an export tax in February that got poor industry reviews, the province and producers are close to determining a “sweet spot” for fiscal terms, he said. No changes are planned for royalties on natural gas production.
coleman said he expects fiscal terms to be secondary in determining whether investment decisions move forward.
He said the main consideration will be whether there is agreement on the price of natural gas — it has to be high enough that LNG developers get a return and low enough that Asian consumers can afford to buy it.
Asian buyers have made it known they want a new deal from canada so prices are closer to canadian levels, rather than the higher, oil-linked prices they are paying in Asia.
With 10 l arge players spending billions in the province to study the feasibility of LNG exports, coleman said there is momentum behind the sector and anticipates many will go forward.
Malaysia’s announcement on the weekend during Prime Minister Stephen Harper’s visit that state-owned oil company Petronas plans to spend $36-billion on LNG in british columbia “may put to bed some of the comments that … we are chasing a pipe dream,” he said.
“I don’t think we are. I think we actually have the major players in liquefied natural gas here.”
The $36-billion figure, which is higher than previous estimates, includes Petronas’s cost of acquiring Progress energy resource corp., building the terminal and the pipeline, and drilling wells, said Greg Kist, president of Pacific NorthWest LNG, the company that will operate the LNG terminal.
coleman said cNOOc Ltd., the state-owned chinese oil company that purchased Nexen Inc. last year, is also looking at building its own terminal at Grassy Point to ship supplies to china.
If all works as planned, he said the first LNG tankers could be sailing to Asia in 2017 to 2018.
That could be ahead of Alberta’s major planned oil sands pipelines.