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Kitimat LNG set to ‘move forward’
The stream of announcements on Canada’s first LNG export project has crested, giving the proponent, Kitimat LNG, enough confidence to declare that it is “ready to move forward.”
With Apache joining EOG Resources as a likely supplier of feedstock, Ilene Schmaltz, vice president of supply and marketing, said Aug. 10 that the privately held company now hopes to make a final investment decision in summer 2010, launching a construction phase of 36 to 40 months and start exports by late 2013.
In short order over recent months, Kitimat LNG has named Korea Gas Corp. and Spain’s Gas Natural as tentative customers and the two U.S.-based independents as gas suppliers.
Schmaltz said the fully permitted project can now start front-end engineering and design and seek financing to allow corporate sanctioning next summer.
She also expressed optimism that the final deals will be in place within two months on gas supplies to meet the target of 700 million cubic feet per day.
While conceding Kitimat LNG would like to develop a second train, she said the company wants to “walk before we run,” noting that doubling capacity would also require a fresh set of environmental approvals.
Apache 200-300 million cubic feet Apache has established a framework to supply 200 million to 300 million cubic feet per day. EOG has not disclosed what volumes it can contribute.
Kitimat LNG President Rosemary Boulton said the Apache agreement “gives our project strong momentum and reinforces the fundamental strength of our business strategy.”
Since switching last year from plans to import LNG, the company has argued the rapidly emerging shale gas plays in British Columbia give Canadian producers added reason to explore an alternative to their traditional export market in the United States, given the premium on LNG prices in the major Asian markets of China, Japan and South Korea.
Apache, which is involved in a Horn River joint venture with EnCana covering 425,000 acres, has issued a bundle of upbeat results lately, reporting that initial production from three horizontal wells has averaged 16 million cubic feet per day each; estimating that wells in the area could yield 10 billion cubic feet; and disclosing that its six producing wells are averaging 14 million cubic feet per day after a full year, with decline rates flattening out faster than expected.
—Gary Park
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