Upbeat rating for Woodfibre

Resource industry analysts are lending weight to hopes that Woodfibre LNG will become the first project to export liquefied natural gas from Canada.

Even though the plans involve only 2.1 million metric tons a year of shipments to Asian markets, a tiny fraction of the far more than 100 million metric tons of proposals on the table, the observers have checked off a list of positives associated with the venture.

Dulles Wang, an Americas gas analyst with international consultancy Wood Mackenzie, told the Canadian Press that the timing could be “right” for Woodfibre if it can be completed in time to take advantage of new market demand expected in the early 2020s.

He said the large-scale Canadian projects are faced with challenging costs that put their economics at risk, along with resistance to their environmental impact.

Wang also said Woodfibre has the added benefit of being a private enterprise that can cover its estimated capital costs of C$1.6 billion internally through debt or equity issues.

The end result is that Woodfibre is better positioned than the mega-ventures to capitalize on an expected rebound in LNG prices and Asian demand over the next decade.

Dirk Lever, head of research at Calgary-based Alta Capital Corp., said the outlook for Woodfibre is strengthened by only mild opposition to the location of its liquefaction and tanker terminal a short distance north of Vancouver compared with the massive undertakings needed to support the Petronas-operated Pacific NorthWest LNG and Shell’s LNG Canada plan.

Lever said he hopes Woodfibre is “the start of a trend, because we really need it. But I just remind myself it is a small deal.”

He said the approval of Woodfibre is a lift for the industry because it points to a belief that “there’s a market out there.”

- GARY PARK