There is increasing speculation in the financial and energy markets that Apache Corporation, the lead investor in KM LNG partners, who propose to build the Kitimat LNG project will announce the investment decision next week. If the decision is positive, and it is expected to be positive, that means the work underway at the Bish Cove site will ramp up to full construction.
Related: Apache, Shell mark LNG progress at District of Kitimat council
The speculation is heightened by the fact that the two other partners in KM LNG, Encana and EOG, report the following morning. Rumours on the Kitimat announcement began after Encana delayed its announcement by a week from its normal time in early February. (At that time one energy market analyst who follows NWCEN on Twitter contacted this site to ask if there were rumours here. At that time, there were none)
Apache has scheduled a fourth quarter report conference call and webcast from its headquarters in Houston, Texas, Feb. 16, 2012, at 1 pm Central Time.
Apache has always said that the go/no-go decision on the Kitimat project would come in the first quarter of 2012.
The market speculation, however, may not be entirely good news. That’s because this morning, Andrew Potter, of CIBC World Markets, told a conference call that the rush to export liquified natural gas from northeastern BC and Alberta to Kitimat would mean building one or two large natural gas pipelines, instead of several small ones, to reach the terminal projects.
Reuters quoted Potter as saying: “There is no logic at all to seeing three to five facilities built with three to five independent pipelines,” he said.
At the moment, the just approved BC LNG project, a cooperative of 13 energy companies, plans to utilize the existing Pacific Northern Gas facilities which already serve northwestern British Columbia. The PNG pipeline roughly follows the communities it serves along Highway 16. KM LNG is in partnership with the Pacific Trails Pipeline project, which would take that pipeline across country.
The third LNG project, by Shell, is still in the planning stages, but it, too, would need pipeline capacity.
Although there is general support for the LNG projects in northwestern BC, and less controversy over natural gas pipelines, last fall, members of one Wet’suwet’en First Nation house blocked a survey crew for Apache and Pacific Trail Pipelines who were working near Smithers on that house’s traditional territory. The survey project was then stood down for the winter.
The fear among some First Nations leaders and environmentalists is that the Pacific Trails Pipeline could, intentionally or unintentionally, open the door to much more controversial Enbridge Northern Gateway bitumen pipeline, since the PTP and Northern Gateway could follow the same cross country route.
Whether or not Potter intended to stir up a hornet’s nest, he likely has. What appears to be logical and economic for a CIBC analyst in a glass and steel tower, one or two giant natural gas pipelines, is now likely going to be fed in to, so to speak, and amplify the controversy over the Northern Gateway pipeline.
Potter also told the conference call that together the natural gas projects do not have enough gas in the ground to support the export plans. That means, Potter said, more acquisitions and joint venture deals in the natural gas export sector. Bob Brackett of Bernstein Research, quoted by Alberta Oil magazine, also says there will likely be consolidation of Kitimat LNG projects, since there was similar consolidation in Australia.
Apache Corp. Fourth quarter reporter webcast page.