Boosting LNG proposal for Kitimat in BC

Chevron-Woodside files application to double LNG; First Nations group bids for ownership stake in pipeline linked to Shell LNG

Gary Park

for Petroleum News

A partnership of Chevron Canada and Australia’s Woodside Energy has generated a glimmer of hope for British Columbia’s LNG sector by applying to almost double the size of its proposed Kitimat LNG operation to 18 million metric tons a year.

In an application to the National Energy Board, the coventurers, in addition to raising their proposed capacity from 10 million metric tons a year, are seeking a 40-year export license.

Dinara Millington, vice president of the Canadian Energy Research Institute, said the filing is a “positive signal to natural gas producers specifically,” coming on the heels of a string of abandoned projects.

No cost or construction deadlines were released, although Chevron said it hopes to commission the facility no later than 2029.

Ian Archer, associate director of North American natural gas for the consulting firm of IHS Markit, said the plans show a revival of public interest in Canadian LNG, while BMO Capital Markets analyst Ray Kwan said the new application could “represent a nice source of long-term demand for domestic gas in Western Canada.”

Any Mah, chief executive officer of Advantage Oil & Gas, welcomed the LNG Kitimat move as recognition that “Canada is a major natural gas supply source on the world stage.”

C$40 billion development

LNG Canada, which includes four Asian-based energy powers in its ranks, has permission to export an initial 14 million metric tons a year from two trains and eventually to double that volume.

That project also received a lift this month from a newly-formed group representing 20 elected First Nations councils.

The First Nation Leadership Group, FNLG, has submitted an offer to buy what would translate into a 22.5% stake in TransCanada’s C$6.2 billion Coastal GasLink, CGL, pipeline, the transportation link from gas fields in northeastern British Columbia to LNG Canada’s planned liquefaction plant and tanker terminal in Kitimat.

The FNLG made its bid in the wake of TransCanada’s decision to hire RBC Dominion Securities to manage the sale of up to 75% of CGL.

CGL President David Pfeiffer met with elected First Nations leaders in Vancouver in March to open preliminary talks on indigenous investment, however the company cautioned that it is still “early in the process and we are exploring all our options in securing project financing.”

FNLG said its proposal will “not inhibit CGL’s ability to raise capital for the initial phases of the project in 2019, (but) it provides a genuine opportunity for the FNLG to explore mutually beneficial partnership and investment opportunities with CGL.”