Asian LNG joint venture quickens pace

Aurora LNG JV, headed by Nexen, signs deal with BC government for terminal north of Prince Rupert; 3 others still in discussions

Gary Park

For Petroleum News

Nexen, a division of China National Offshore Oil Corp., heads an Asian consortium that is jostling for a place in the lineup of British Columbia LNG proponents.

The joint venture, named Aurora LNG, has signed a land deal with the British Columbia government to locate a terminal at Grassy Point, 18 miles north of Prince Rupert.

The deal requires Aurora to pay an immediate C$12 million to the province and another C$12 million in 2014 for exclusive rights to 1,500 acres at the northern end of Grassy Point and 393 acres of foreshore.

Nexen controls 60 percent of the project, with Japan’s INPEX Corp. and JGC Corp. each holding 20 percent.

Beyond announcing that the partnership will now embark on a site viability review, a comprehensive environmental impact assessment and stakeholder consultation, Nexen Chief Executive Officer Kevin Reinhart gave no indication at a news conference of a timetable for a final investment decision, an operational startup or a filing for an export permit. Neither Aurora nor the government disclosed the potential scope of the project.

The decisions depend on “acceptable cost estimates, fiscal terms and obtaining acceptably priced sales agreements,” CNOOC said.

But Aurora has edged ahead of three other partnerships that submitted eligible expressions of interest in Grassy Point sites — Woodside Petroleum, which operates six of the seven LNG processing trains in Australia; a partnership of Imperial Oil and ExxonMobil; and South Korea’s SK E&S, a multi-utility player in northeast Asia’s gas and electricity business.

The government said discussions will continue with the other three proponents for a parcel alongside the Aurora land.

A spokesman for Imperial said his partnership is “continuing to assess potential sites” in an area to the south at the deepwater port of Kitimat, where Chevron and Royal Dutch Shell have selected sites for their Kitimat LNG and LNG Canada projects.

Reinhardt said Aurora will “do everything we can to responsibly and economically advance the development of an LNG facility and export terminal.”

Government officials said they will work with First Nations in the Grassy Point area to ensure lasting economic benefits from an LNG project.

CNOOC Chief Executive Officer Li Fanrong said LNG exports are the “most attractive option for maximizing the value of our Canadian shale gas business,” acquired in last year’s takeover of Nexen to gain ownership of shale gas deposits in the Horn River, Cordova and Liard basins of northeastern British Columbia.