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Koreans join Kitimat LNG lineup
Thwarted attempts over many years by companies to build LNG export terminals on British Columbia’s coast are suddenly closer than ever before to opening up Asian markets for Canadian gas, with Kitimat LNG signing a second deal with a prospective buyer, raising its tentative sales to 44 percent of planned capacity.
The privately held company said June 1 it has reached a memorandum of understanding with Korea Gas Corp., Kogas, covering 40 percent of its proposed output of 5 million metric tons a year, five months after inking a similar deal with Japan’s Mitsubishi for 1.54 million metric tons a year, although negotiations are still under way to finalize that deal two months after the expected closure.
While making strides at the Asian end, Kitimat LNG has yet to secure gas supplies from Canadian gas producers — most likely in the Horn River and Montney plays of British Columbia — although President Rosemary Boulton told the Calgary Herald that Kitimat LNG is confident deals are close.
She said Canadian producers have indicated they are “very supportive” of participating in an alternative route out of the North American marketplace.
Boulton said the appeal stems from current gas prices of about US$4 per million British thermal units in New York, compared with US$10 in Asia.
Kogas world’s largest Kogas is the world’s largest single LNG importer, which provides a major lift to Kitimat LNG’s plans and its goals of seeking financing before the end of 2009 and starting engineering work in early 2010.
The project includes a C$1.2 billion Pacific Trail gas pipeline — a joint venture by Pacific Northern Gas and Galveston LNG, the parent company of Kitimat LNG — covering 300 miles from the shale plays of British Columbia to Kitimat and a C$3 billion export terminal on Haisla First Nation land near Kitimat. The preliminary target date for completion of the pipeline is 2013.
The pipeline and terminal have received the necessary British Columbia and Canadian government environmental assessment go-aheads.
In addition to their purchase deals, Kogas and Mitsubishi have options to acquire equity stakes in the terminal.
Kitimat LNG said it is in talks with other potential terminal users and investors for terminal capacity, off-take and equity.
Kogas Chief Executive Officer Kangsoo Choo said in a statement that the agreement with Kitimat LNG is “key to our ongoing efforts to ensure a secure supply of natural gas for Korea in the long-term.”
“We are pleased to add natural gas from Canada to our portfolio and tap into the country’s growing sources of supply.”
—Gary Park
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