Pembina’s US$8B Oregon LNG project on hold as producers look to other markets
CALGARY The Coastal GasLink pipeline connected to a massive liquefied natural gas export project in Kitimat, B.C., is not the only gas project facing challenges on the West Coast. Last week, the U.S. energy regulator dealt Calgary-based Pembina Pipeline Corp. a surprise setback in its bid to build the US$8-billion project on the U.S. West coast.
The U.S. Federal Energy Regulatory Commission voted 2-1 to delay a decision on the gas export facility on the Oregon coast that would send Canadian gas to Asian markets.
It was the second time FERC had denied or deferred the Jordan Cove application, and stymies effort by landlocked Canadian gas producers to find new markets beyond Alberta.
“I’ve become so numb to all of these delays,” Raymond James analyst Jeremy McCrea said, adding that the FERC decision was disappointing but not necessarily surprising given it’s become more difficult to build major energy projects across North America. “It’s more of a surprise if something does go through,” he said.
The delay to Jordan Cove LNG comes as protesters across Canada blockade commuter and freight railways in solidarity with a breakaway group of Wet’suwet’en hereditary chiefs who have opposed the Coastal GasLink pipeline, which would connect gas fields in northern B.C. with the under-construction $40-billion LNG Canada export facility near Kitimat.
At one point, there were more than 20 LNG export projects proposed for the British Columbia coast, but so far the Royal Dutch Shell Plc-led LNG Canada is the only project under construction, while other projects have been abandoned or delayed.
Amid all the turmoil, domestic gas companies and pipeline companies are looking for more inventive ways to move natural gas out of Western Canada, clearing a glut in Alberta and B.C. that has resulted in rock-bottom prices.
Calgary-based pipeline giant TC Energy Corp. announced earlier this month that it would spend $1.3 billion to expand its natural gas pipeline network in a bid to move more Canadian gas to “growing LNG export and other markets along the U.S. Gulf Coast.”
TC Energy president and CEO Russ Girling said on an earnings call that the spending, in combination with other projects the company is pursuing, “will provide western Canadian production a seamless path to growing LNG export markets and other markets along the U.S. Gulf Coast.”
McCrea said the additional pipeline connections to the U.S. Gulf Coast and other markets are necessary as major projects in Canada have been delayed.
Strategic investors have begun looking for smaller projects, McCrea said. “The going baseline is, it’s too difficult to put forward big projects,” he said.
Natural gas producers in Alberta and B.C. are also focused on finding other ways to move more of their gas into markets in populated areas in Central Canada and the U.S.
Seven Generations Energy Ltd. announced on Feb. 10 it had signed a contract to supply natural gas to Quebec natural gas distributor Énergir s.e.c. after a year-long environmental, social and governance auditing process.
Company president Marty Proctor said part of the motivation for the audit was Seven Generation’s desire to diversify its markets away from Alberta’s AECO benchmark natural gas price, and find additional utility customers focused on ESG scores like Énergir. Financial Post