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Vol. 18, No. 5 Week of February 03, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

Idemitsu, AltaGas enter LNG race

Add another name to the list of contenders to export LNG from Canada — a new joint venture and limited partnership by Japan’s refining, manufacturing and products sales giant Idemitsu Kosan and fast-growing Canadian energy infrastructure company AltaGas.

If all goes according to plan they hope to start LNG shipments of 2 million metric tons a year as early as 2017 while adding 600,000-700,000 metric tons a year of LPG to the mix.

Although entering a crowded field, the partners believe they can use their combined strengths to exploit a “niche opportunity,” said AltaGas Chief Financial Officer Debbie Stein.

The answers are expected to be known later this year for the LPG proposal and by early 2014 for LNG when they complete a feasibility study to identify long-term sources of natural gas supplies and off-take buyers in Asia.

Stein said AltaGas and Idemitsu have no thoughts of combining with other projects or taking on additional partners.

If LNG shipments do start in 2017, the JV will trail only BC LNG Export Co-operative which said its Douglas Channel project plans to start exporting 1.8 million metric tons a year in spring 2015 — a year behind schedule.

None of the bigger LNG projects on the table in Canada, including Chevron-operated Kitimat LNG, Shell’s LNG Canada partnership, Pacific Northwest LNG by Petronas-owned Progress Energy, plans to come on stream before 2018-20, while BG Group and ExxonMobil are in the early stages of feasibility studies.

Pipeline in place

Stein said AltaGas’ wholly owned Pacific Northern Gas pipeline is already in place linking Spectra Energy’s transmission system from gas fields in northeastern British Columbia with Pacific Coast ports at Prince Rupert and Kitimat.

She said the PNG line has current daily capacity of 115 million cubic feet and is carrying only 30 million cubic feet, with the Kitimat LNG project partners holding an option for 80 million cubic feet.

A feasibility study is already under way to add another 170,000-195,000 million cubic feet to the pipeline and “if all goes to plan” capacity could be raised to 600,000 million cubic feet by 2017, she said.

Stein said the partners will choose between either a floating or land-based LNG/LPG terminal as part of the study after weighing the capital costs and risk-returns.

AltaGas said it is committed to “engage and work effectively with governments, First Nations and other stakeholders.”

That pledge coincides with word from aboriginal leaders that LNG projects will be added to crude oil pipelines on their list of projects they will oppose unless they are fully consulted and approve the plans.

In a statement issued by the Carrier Sekani Tribal Council, several chiefs are demanding the right to assess how the projects would affect their environmental and native title rights.

Chief Reg Louis said the Canadian government has stripped environmental protections to make it easier for resource projects to proceed.

The Carrier Sekani statement points to a disagreement with the coastal Haisla Nation, which has signed an agreement that would allow construction of the Kitimat LNG facility as part of plans to export LNG to Asia.

—Gary Park



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