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BC dreams won’t happen ‘overnight’ Clark acknowledges LNG-dependent goal of 100,000 jobs may take a ‘little longer’ to achieve; Asian buyers’ ‘club’ not seen as factor Gary Park For Petroleum News
British Columbia Premier Christy Clark is not prepared to concede that Asian moves to establish an LNG buyers’ club will damage her lofty goals for related job creation and financial returns from the sector.
But she does admit that her election campaign promises last year of a “trillion-dollar” LNG industry and 100,000 spinoff jobs has hit a rough patch, although she pins her belief in a turnaround on hopes that some LNG proponents will make final investment decisions in 2014.
“We haven’t seen all the fruits of our labors yet, but we will,” she told reporters, while cautioning that her sizzling job forecasts “are not the kind of thing that will happen overnight.”
“We’ve set a goal to create jobs, to grow the economy, to create economic development. You do not get to that long-term goal without sticking to a plan over a good period of time. So it’s going to take us a little longer.”
Underpinning the employment growth are Clark’s goals of eight new mines by 2015, upgrades and expansions to nine currently operating mines and at least one LNG pipeline and export terminal operating in Kitimat by 2015 and three more by 2020.
Asian buyers in discussions But her upbeat assessment of a recent trade mission to China, South Korea and Japan to promote LNG has since been put in doubt by word that those three countries, along with India and Taiwan, have discussed how they can use their collective purchasing power to negotiate lower LNG prices. A follow-up meeting is scheduled for February.
There have been reports that India and Japan are considering combined LNG tenders, with the objective of delinking the price of LNG from the price of crude oil — a key element that underpins British Columbia’s economic case for LNG.
Clark said she is far from certain that there will be a “buyers’ club. ... I don’t know that all of the competitors in Asia will be able to get together to set prices. Typically, when it comes to energy exports, it has been the seller that sets the prices.”
She said the failure so far by British Columbia to land any LNG final investment decisions is part of the nature of high-stakes negotiations as the LNG project proponents vie to secure contracts.
“We have to be competitive. There is no doubt about that,” Clark said.
“If we want to attract that quantum of investment ... we have to be selling at a price the market will accept, but this is the way negotiations work.”
“Buyers want it cheaper and the sellers want it to be a little more expensive. That’s where we are at, at the moment.”
Petroleum Brunei joins The jostling among proponents has just taken another twist with Petroleum Brunei adding its name to the Petronas-controlled Pacific NorthWest LNG partnership, by acquiring a 3 percent stake, reducing the Petronas holding to 87 percent, with Japan Petroleum Exploration retaining the 10 percent it picked up earlier this year.
Petroleum Brunei is also scooping up a 3 percent stake in the northeast British Columbia gas assets of Progress Energy Canada, now wholly owned by Petronas.
Pacific NorthWest President Greg Kist said the joint venture is positioned to attract additional international investors in 2014.
US said to have edge A report by RBC Dominion Securities has warned that the United States has an edge over Canada in the competition to export LNG from North America, with analyst Greg Pardy pointing out that four U.S. projects currently being retrofitted — Sabine Pass in Louisiana, Freeport in Texas, lake Charles in Louisiana and Dominion Cove Point in Maryland — will have huge LNG export capacity.
Judith Dwarkin, chief energy economist at ITG Investment Research, said that although northeastern British Columbia has an abundance of natural gas to underpin LNG operations “it is certainly taking a long time for some of these B.C. projects to find buyers for the LNG.”
Common processing suggested Meanwhile, a study by consultants Gas Processing Management and Ziff Energy (a division of HSB Solomon Associates) said new opportunities to develop gas in northeastern British Columbia and northwestern Alberta for LNG are changing the dynamics of infrastructure systems in that region.
The North Montney and shale gas resources present a unique opportunity to “integrates and utilize the area infrastructure for the benefit of both current and developing resources,” the study said.
“Growing shale and tight gas production, when coupled with the declining existing resource base, will require constructing new infrastructure and utilizing, retooling and expanding existing facilities.”
The study estimated the existing infrastructure has processing capacity of 5.1 billion cubic feet per day, with planned expansions to 5.7 bcf per day, but only 2.2 bcf per day is currently processed in the area, while there is upwards of 3 bcf per day of unused capacity.
As a result, it suggested that a “structured approach to develop a common gas gathering and processing strategy in gas growth regions, along with a repositioning analysis in maturing regions, will improve utilization and effectiveness of the infrastructure, extend overall gas field production and ultimately result in the development and recovery of more resources.”
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