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Vol. 19, No. 11 Week of March 16, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Canada’s LNG keeps rolling

Gary Park

For Petroleum News

Canada’s LNG grab bag has delivered another mix of developments, ranging from the West to East costs and predictable to surprising.

Topping the list, though far from unexpected, is the entry of another Asian player, with state-owned refiner Indian Oil Corp. bringing years of speculation to an end by agreeing to acquire a 10 percent stake in the Pacific North West LNG project owned by Malaysia’s Petronas.

IOC did not disclose a price tag, but it has recently secured a US$900 million bridge loan to finance its stake in an LNG venture.

The deal gives IOC the right to 1.2 million metric tons per year of LNG, consistent with the Petronas plan to have initial exports from Prince Rupert on the British Columbia coast of 12 million metric tons a year, starting in late 2018. The tentative capital cost of the first phase has been pegged at US$9 billion-US$11 billion.

Canada’s National Energy Board has already issued an export permit for the project for 19.68 million metric tons a year for 25 years.

In addition, IOC will have access to about 8.35 trillion cubic feet of gas reserves in northeastern British Columbia’s Montney gas fields controlled by Petronas unit, Progress Energy Resources.

Japan Petroleum Exploration, JAPEX, bought a 10 percent stake in Pacific North West last year and Petronas has indicated it is still looking to sell another 15 percent share.

New application filed

From the ranks of the unknown, Vancouver-based Canada Stewart Energy Group emerged to file an application with the NEB for a 25-year license to export 30 million metric tons a year, placing it among the most ambitious of the other 13 projects on the British Columbia coast.

The application signed by Jialong Gong, Canada’s Stewart’s chairman and chief executive officer, said off-take contracts have been signed with two major, but unidentified cities.

The plans include a 500-mile pipeline to ship natural gas from sources that have not been disclosed by Stewart, with 5 million metric tons a year destined for export from a floating platform to launch Stewart Energy LNG in 2017, followed by the remaining 25 million metric tons at five land-based liquefaction plants.

The application said the land-based liquefaction trains would require 250 megawatts of power, which could come from a variety of sources.

The proponent said its objective is to link the gas resources of the Western Canada Sedimentary Basin with a growing global market for LNG, focusing initially on the Asia-Pacific region.

On Canada’s Atlantic coast, one of two proposed LNG ventures has received a green light from the Nova Scotia government’s environmental review agency.

It said the environmental risks of Pieridae Energy Canada’s planned C$8 billion Guysborough Country facility would be manageable, while its contribution to the local economy would be significant.

In a 73-page report, the review panel made 51recommndations to limit the project’s environmental impact.

Environment Minister Randy Delorey said the government expects to make a final decision by March 24.

The Goldboro project is designed to export 10 million metric tons of LNG per year, consuming 1 billion cubic feet per day of natural gas.

Capital costs have been estimated at up to C$10 billion and the start-up date is set for late 2019 or early 2020.



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