|
BC LNG presses ahead with plans
Gary Park For Petroleum News
The minnow among Canada’s LNG whales is now scheduled to come on stream in spring 2015, a year behind its earlier target, but easily two years ahead of its bigger rivals.
The estimated cost of the Douglas Channel LNG Project, to be operated by BC LNG Export Co-operative, is also climbing above its C$400 million initial capital budget, say proponents.
But BC LNG, co-owned by Houston-based LNG Partners and the Haisla Nation of northwestern British Columbia, continues to demonstrate that it has to be taken as seriously as Kitimat LNG (Chevron-operated), LNG Canada (Shell), Pacific Northwest (Progress Energy) and the tentative schemes being led by BG Group and ExxonMobil.
The plans for Douglas Channel are pinned on the use of a barge-based liquefaction plant near Kitimat, which Bill Gwozd, a senior vice president with Ziff Energy, endorses because it avoid issues related to building on land.
He rates BC LNG as a “nimble rabbit rather than some of the big slow tortoises. They can hop in and get something figured out.”
Two tankers In its latest development, BC LNG said Jan. 21 that Bermuda-based LNG shipping company Golar has agreed to provide two tankers to the project to move its initial 700,000 metric tons a year of LNG.
The deal involves contracts for both feed gas supply and LNG purchase and off-take for the first train.
The contract for LNG purchase and off-take was made jointly with Golar and Houston-based LNG Partners and for feed gas supply with LNG Partners.
Like all North American LNG ventures seeking markets in Asia is the demand by potential buyers to introduce North American gas-linked price benchmarks for the LNG, rather than be tied to oil-indexed contracts.
BC LNG managing director Tom Tatham, who is talking to potential customers in Japan, said that shift among Asian buyers represents a “fundamental shift in the marketplace.”
Price differential Japanese gas prices have been above C$15 per gigajoule recently, while Alberta prices at the AECO hub are stuck around C$3, which is not enough to even pay the cost of replacing the gas in many cases.
BC LNG said the gas supply for the Douglas Channel project will be managed by Tenaska Marketing Canada, a division of TMV Corp., a private U.S. gas marketing and power company.
Canada’s National Energy Board issued a permit almost a year ago for the project to export 36 million metric tons of LNG over 20 years, or liquefy an annual maximum of 250 million cubic feet per day split between two trains.
Golar said its participation in the project and its commitment to LNG off-take remains subject to the company reaching agreement with the current proponents for financing of the facilities and the approval of permits needed for the project to go ahead on a firm basis.
| 